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Old 05-20-2021, 10:29 AM
 
Location: Sandy Eggo's North County
3,646 posts, read 1,367,527 times
Reputation: 5164

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Quote:
Originally Posted by KemBro71 View Post
Where do property taxes/assessments go down based on increased interest rates? The assessed values don't get adjusted like that.
They don't. However, If/when rates go up, then pricing should go down, due to affordability. When value goes down, an owner can petition the county to re-assess the property to a lower tax base.

Speaking of demand... the local fishwrapper (San Diego Union Tribune) has a piece in the business section today: 14000 people interested in 200 homes in Mire Mesa.

There's supposed to be 1800 homes in the project in total. Pricing starts in the "low $600's" for the attached condo's, to the detached 2500 sqft homes that start @ $1,200,000 a copy.


https://www.sandiegouniontribune.com...an-diego-homes
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Old 05-21-2021, 11:50 AM
 
685 posts, read 477,677 times
Reputation: 1427
Demand right now is a confluence of a few things:

1. Very low interest rates. A drop from 5% to 3.5% interest means someone with a $1600 mortgage budget a month can buy a 360k house instead of a 300k house for the same mortgage payment. So lots of trading up is happening. If you lived in a 250k house for ten years then you've got the equity to "move up" combined with the low interest rates.

2. There is some sign work from home and having kids at home has pushed urban millennials(a large demographic) to buy houses and give up apartments. This is especially true since apartment lease rates have not fallen with interest rates.

3. Tourism went "local". All that money that went into people flying to the Caribbean or Europe instead went to "local" drive locations like the rural lake or the beach a few hours away. Lot's of people went and said "hey I like this let's buy a second house here".

4. The same is generally true for entertainment expenses. All that money that was getting spent on going out to eat, bars, concerts got spent on pools, additions, game rooms, man caves or buying a new house with the room for those things.

5. Trade war with China/Canada pushed up lumber and material costs. Transportation disruptions caused materials to become scarcer and thus more expensive. Burned by the 2009 crash local material suppliers have been less willing to invest in expanding production. Tighter immigration has made some trades(like framing) more expensive. So with new housing costing more existing housing comps look better and it's easier to buy one, fix, and flip. Hell any structurally intact 50-100k house in the U.S. now has 100-150k of land, lumber, foundation, and framing labor in it.

6. The change in mortgage interest deduction(capped) has made it optimal for some people with businesses that have financing to do cash out refis on the business and pay cash for a house. Same with selling a house somewhere else and buying a new one. Used to be much greater benefit tax wise to keep a healthy mortgage for the interest deduction and put the extra cash into your business or stock. Math isn't so simple now.

In economic parlance both the demand curve and supply curve shifted so the new equilibrium prices are much higher than before.

About the only thing working against price increases is that the rate of decline in average household size has slowed, stopped, or reversed in a number of places as people move towards multi generational adult housing.
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Old Today, 07:53 AM
 
13,078 posts, read 4,061,935 times
Reputation: 11381
Quote:
Originally Posted by jackalope48 View Post
Demand right now is a confluence of a few things:

1. Very low interest rates. A drop from 5% to 3.5% interest means someone with a $1600 mortgage budget a month can buy a 360k house instead of a 300k house for the same mortgage payment. So lots of trading up is happening. If you lived in a 250k house for ten years then you've got the equity to "move up" combined with the low interest rates.

2. There is some sign work from home and having kids at home has pushed urban millennials(a large demographic) to buy houses and give up apartments. This is especially true since apartment lease rates have not fallen with interest rates.

3. Tourism went "local". All that money that went into people flying to the Caribbean or Europe instead went to "local" drive locations like the rural lake or the beach a few hours away. Lot's of people went and said "hey I like this let's buy a second house here".

4. The same is generally true for entertainment expenses. All that money that was getting spent on going out to eat, bars, concerts got spent on pools, additions, game rooms, man caves or buying a new house with the room for those things.

5. Trade war with China/Canada pushed up lumber and material costs. Transportation disruptions caused materials to become scarcer and thus more expensive. Burned by the 2009 crash local material suppliers have been less willing to invest in expanding production. Tighter immigration has made some trades(like framing) more expensive. So with new housing costing more existing housing comps look better and it's easier to buy one, fix, and flip. Hell any structurally intact 50-100k house in the U.S. now has 100-150k of land, lumber, foundation, and framing labor in it.

6. The change in mortgage interest deduction(capped) has made it optimal for some people with businesses that have financing to do cash out refis on the business and pay cash for a house. Same with selling a house somewhere else and buying a new one. Used to be much greater benefit tax wise to keep a healthy mortgage for the interest deduction and put the extra cash into your business or stock. Math isn't so simple now.

In economic parlance both the demand curve and supply curve shifted so the new equilibrium prices are much higher than before.

About the only thing working against price increases is that the rate of decline in average household size has slowed, stopped, or reversed in a number of places as people move towards multi generational adult housing.
Good post by someone who actually understands economics.
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Old Today, 09:49 AM
 
Location: California
1,376 posts, read 1,302,976 times
Reputation: 2907
Houses don't need to vanish. They just need to not be put in the market. If you have a house that you like, you are not putting it on sale, so you don't have to compete in the crazy bidding market. As a result, supply is tiny. I live in San Francisco and the market for condos is soft, but for SFH, it is on fire. It used to be that houses showed for at least two weekends. Now they are going for <10 days. There are barely any hones for sale.

https://www.bayareamarketreports.com...et-trends-news
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Old Today, 11:54 AM
 
Location: Raleigh NC
22,670 posts, read 11,848,810 times
Reputation: 13257
y'all keep trying new angles, but the fact remains that right now, it is all about inventory.

Inventory = houses for sale and new listings.

In "my little market" that was not Recession-crushed, has a growing population, growing economy, and growing personal incomes:

total closings annually peaked at 30,000 homes in May 2007. We didn't get back to 30K until the end of 2016. As of 4/21, annual closings were 38K. Other than a 2 month spring '20 Covid blip, it's a pretty smooth increase for the last 7 years. That means "steady demand". We're not suddenly selling 7K more homes (20% increase) annually.

What we don't have - and what is missing nationally - is several years of new construction. The chart has been posted, but there was a big dip in new construction during the decade from '09 - '19. Locally, we didn't get back to 2007 sales levels until just before Covid (Oct 2019).

To this day, we are not building as many homes as we did in 2007.

And so, we have to sell that many more existing homes to meet the normal growth in demand. And so, with 2007's 33K resale homes listed vs Feb 20' pre-Covid's 31K, we're still WAY behind "normal" demand in providing normal supply.

Our Buyers WANT to buy 38K homes. There isn't as much new construction, and there aren't as many resales.
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