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I'm seeing it play out here in Orlando. Everyone who was waiting for prices to rise are now selling their homes like made while the market is crazy in the desirable areas. Neighbor who bought a year ago for 335,000 relisted at 480,000 and just now did a price reduction to 469,000. He's crazy and this is in a cookie cutter neighborhood where there are 7 house models.
Another area (wedgefield, florida) which is having a water crisis because the water is tainted and managed by a private company and the county might take over which means higher taxes. Homes are being snapped up there as if the water issue is unknown to buyers. Just google water issue Wedgefield florida.
Lake Nona area is going bonkers. I've been watching the market for a year and houses that were 275,000 are now priced at 315,000. That much in 6 months time?? If you look at zip 32827-no price limits-you can see the insane number of houses especially the million dollar ones listed. Everyone is trying to get out at the top but that means someone has to buy at the overpriced level.
I live in the Orlando area and I do agree that home prices are increasing rapidly - but I don't believe we are looking at the same Condo Conversion/Liar Loan/Stupid Mom/Pop Investor atmosphere of 10 years ago.
Prices will level off and probably pull back a bit, but I don't think we are looking at 50% reductions or short sales unless there are some other financial/unemployment issues affecting us.
While I know you are concentrating on the price of the home, most only look at the monthly payment - a $300K PITI mortgage would only cost about $1800 per month which is well within the realm of affordability for most dual-incomers.
I'd even go as far as to say we are actually priced "correctly" if you look at what a gradual progression in home prices would have been if you took a "straight" line 4% approach from the year 2000 to now.
A Millennial couple bought our home last year in the $400k range! An there are Millennials all around us in our new state buying up the new construction homes. So yes, Millennials are buying homes!
New construction across the board is doing their best to get people to buy... Many times, these buyers are being given crazy incentives to buy new construction- closing costs, plus new pool, plus 30k "worth" of upgrades- just to name a few of the types of deals in my area... But most importantly, "guaranteed" loans- for buyers that is appealing, but especially young buyers without a history of taking on such a sizable risk.
Add to that...
Mortgage companies that are an extension of builders are requiring financing through them, at least at the time of contract... It's guaranteeing a sale, and sometimes with very little down. Which is just propping up a real estate market that might not be "real"... If a builder can guarantee a loan, is that much different than what the government did in the 00's by guaranteeing loans, with lots of risk and big promises???
Millennials are buying homes for sure. I am one and we bought our house 3 years ago. Our friends all have homes they own except for one couple (currently looking) and a few singletons. With one exception, everyone bought a home when they were in their early 30s as opposed to the previous generation who generally purchased a starter home when they were in their 20s, but that is the result of the cost of housing vs wages earned (and students loans).
My husband and I waited until we could afford a home large enough to grow into as opposed to a smaller starter home, which post-bubble, doesn't make much financial sense unless the home is in some insanely hot real estate market.
So, if interest rates climb to a point that foreigners are dissuaded, housing will become more affordable?
I hate this local market. A market out of balance is not good for anyone, and this market with low and declining inventory with strong population growth is way out of balance.
DOM may well reflect buyer burnout, and I am seeing well-qualified buyers pausing or gravitating toward the sidelines, in the hopes that some semblance of sense is restored.
I am not sure what will precipitate that restoration over the next year or so. I just hope it is gradual and not earth-shaking.
i dont think gov is currently trying to discourage foreign investors in RE. in fact if i recall correctly they made it easier for foreign based REITS to invest in US properties recently . but i can't remember the exact details.
Millennials are buying but maybe they aren't buying in hot markets. Places like Holland, Michigan have tons of factories and all of my 35 year old brother's friends bought homes in their 20s.
Millennials are buying homes for sure. I am one and we bought our house 3 years ago. Our friends all have homes they own except for one couple (currently looking) and a few singletons. With one exception, everyone bought a home when they were in their early 30s as opposed to the previous generation who generally purchased a starter home when they were in their 20s, but that is the result of the cost of housing vs wages earned (and students loans).
I'm part of the previous generation. When we bought our first house decades ago, my husband was 31 and I was 26. It takes time saving money after student loans are paid. Gotta finish college and get a good paying job. I only know 1 couple who bought a house in their mid 20's. They got a steal because they inherited it. When you get a house for less than half of it's worth, it's MUCH easier to buy a house!
New construction across the board is doing their best to get people to buy... Many times, these buyers are being given crazy incentives to buy new construction- closing costs, plus new pool, plus 30k "worth" of upgrades- just to name a few of the types of deals in my area... But most importantly, "guaranteed" loans- for buyers that is appealing, but especially young buyers without a history of taking on such a sizable risk.
Add to that...
Mortgage companies that are an extension of builders are requiring financing through them, at least at the time of contract... It's guaranteeing a sale, and sometimes with very little down. Which is just propping up a real estate market that might not be "real"... If a builder can guarantee a loan, is that much different than what the government did in the 00's by guaranteeing loans, with lots of risk and big promises???
Great point. But the mortgage companies that are builder controlled and those mortgage firms/banks that are making the loans have always provided reps and warrants and I would say most if not all are selling the loans to the agencies along with the MSRs Keep an eye on lenders chasing volume due to slow down in refi's Not to mention the secondary markets and ever expanding u/w standards. It's getting much easier to qualify.
New construction across the board is doing their best to get people to buy... Many times, these buyers are being given crazy incentives to buy new construction- closing costs, plus new pool, plus 30k "worth" of upgrades- just to name a few of the types of deals in my area... But most importantly, "guaranteed" loans- for buyers that is appealing, but especially young buyers without a history of taking on such a sizable risk.
Add to that...
Mortgage companies that are an extension of builders are requiring financing through them, at least at the time of contract... It's guaranteeing a sale, and sometimes with very little down. Which is just propping up a real estate market that might not be "real"... If a builder can guarantee a loan, is that much different than what the government did in the 00's by guaranteeing loans, with lots of risk and big promises???
None of the builders in our immediate area offer loans. You have to find your own lender. So your scenario might be happening elsewhere, but not here. Most that are buying here are 30 something millennials that are "move-up" buyers. Even if there are builders that are still offering loans, they still have to obey the regulations. Lending is much different than back in 2000's.
If builders can guarantee financing, they can offer the same 3% down loans that we saw last go-around... And they are doing that... Creating risk.
Where I live, with regard to new construction, also... To some extent part of the problem lies with the conundrum for people that were able to buy at the lowest point (2011 in FL), yet can't afford to move now to larger homes or better neighborhoods because home prices are again inflated, which leaves current homeowners deciding to stay put, contributing to the low inventory. Thus, leaving millennials, or even first time buyers or those that want to 'upgrade' unable... And with new construction an easier means to and end, in a position where they feel the pressure to buy "or miss out". I am convinced there is already market correction occurring where I live (which I don't think is necessarily a bad thing- in fact in most cases it's good)... Existing home sales here are starting to see more price drops and builders are offering more incentives as time goes on... Like I said, low money down, 30k upgrades, closing costs covered, free pool, 50% off lot premiums on less than 1/4 acre lots ($38k a year ago in one neighborhood around the corner from me when we went perusing ourselves just last August, for a 8,000 sq ft lot! Looked it up again, now $16k). Dejavu... Maybe slightly different reason (not that I see too much between bad govt loans and bad private sector loans), but happening nonetheless.
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