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My cheap fixer house has appreciated about $120K according to Zillow since I bought it in 2017. I realize the zestimates are for entertainment purposes only, but they must reflect trends in general and contain a shred of truth.
The price escalation of my house has slowed considerably, and this may be a trend also. I don't really care if the price flops because the zestimate doesn't reflect the improvements and enhancements I've made and I'm not selling.
I think as a general thing, price escalation was largest for the low end of the market.
There is undoubtedly a mania going on right now. The psychological factors -- mainly FOMO -- are the key factors driving this market, with "fundamentals" as a distant second. It's not so different from Cabbage Patch Dolls, Tickle Me Elmo and toilet paper. The frenzy will soon cool off as newly vaccinated people get into the summer swing of things. They'll soon realize that there's more to life than Redfin.
Many people experienced the pandemic as an existential threat. Understandably, perceived suburban safety became attractive.
What happens when Covid fades away?
Hmm ...
If you had a suburban house with decades of deferred maintenance, I hope you've unloaded it by now. You may not get another chance like this.
This is the silliest thing I've read here in a while. People don't buy homes on a whim. It's not an impulse buy. It's something people usually save for years to be able to do. Low rates, limited supply, and covid restrictions all contributed to people buying up homes in suburbs across America and bidding aggressively. How much each of these things were responsible for than can be debated, but just because covid will soon be behind us doesn't mean real estate values will plummet. Kids may lose interest in a $30 Tickle Me Elmo but adults aren't going to lose interest in their $500,000 home and the quality of life it provides. Bad analogy.
I honestly believe part of the reason for the demand right now is just simple human nature. There's blood in the water, people want what other people want. There is also FOMO that kicks in like uneducated people buying into a pump and dump stock thinking they're missing the run.
From 2015 to 2020 I can really only think of maybe 1 or 2 couples who bought a house. In 2020 I literally know 7 couples who decided now was the time to go out and purchase a house. A few were first time home buyers, others were all looking for a big step up.
I think a lot of what we're seeing now is just panic buying. People thinking housing prices are just going to keep going up and up and up. And part of it is just "well it's what everyone else is doing".
It's crazy... anyone else notice this?
No. Every year there are people I know that are buying or building a home. I think you are a little removed from reality.
BUY when everyone's selling; SELL when everyone's buying.
This.
Good things that come to wait.
Not saying this is the same as 2008, but think about what happened to those without patience during the smaller bubble. They lost a ton of money. In some cases, they lost $100k in net worth a matter of months.
According to the Schiller index, house prices are far past what they were during the bubble of 2007/2008.
I would recommend just sitting on the sidelines for a while.
This is the silliest thing I've read here in a while. People don't buy homes on a whim. It's not an impulse buy.
Have you been around any young homebuyers lately? There absolutely is an extreme, emotion-filled urgency. I would not call it rational behavior.
Additionally, even if they do have their wits about them, in many cases they have no choice but to make a decision within 15 minutes of laying eyes on the house. And in some cases they are buying from another state based on photos or a video tour.
Have you been around any young homebuyers lately? There absolutely is an extreme, emotion-filled urgency. I would not call it rational behavior.
Additionally, even if they do have their wits about them, in many cases they have no choice but to make a decision within 15 minutes of laying eyes on the house. And in some cases they are buying from another state based on photos or a video tour.
It is not a normal, sustainable market.
You must have missed the part about lack of inventory. It creates the urgency. If they don't make a 15 minute decision they don't have a chance at the house. It's supply and demand. Right now we have high demand and limited supply. You can only fix it by creating inventory or stopping demand. Demand would slow down with higher interest rates but we don't want that. That leaves building more homes.
Much of the demand is driven by emotional factors related to the pandemic. We didn't suddenly have millions of new millennials pop into existence as of January 2021. A lot of this dubious "demand" will fade as people get outside, get back to yoga class, take a vacation, etc.
There was a time when demand for Cabbage Patch Dolls was much higher than the supply. The same with tulips.
Last edited by FindingHomeATL; 06-03-2021 at 08:43 PM..
You must have missed the part about lack of inventory. It creates the urgency. If they don't make a 15 minute decision they don't have a chance at the house. It's supply and demand. Right now we have high demand and limited supply. You can only fix it by creating inventory or stopping demand. Demand would slow down with higher interest rates but we don't want that. That leaves building more homes.
No intervention is necessary. Prices will take care of the equation. Freedom is the ideal solution.
Much of the demand is driven by emotional factors related to the pandemic. We didn't suddenly have millions of new millennials pop into existence as of January 2021. A lot of this dubious "demand" will fade as people get outside, get back to yoga class, take a vacation, etc.
There was a time when demand for Cabbage Patch Dolls was much higher than the supply. The same with tulips.
You do in fact have millennials getting older and reaching the age where buying a home is a high priority. There was this myth that millennials want to live in downtowns and walk to stuff and be near restaurants and clubs and Starbucks. Yeah, when they are 22 and single. But once marriage and families and kids become a thing, they become Boomers and want a house because that is the best and most fun way to raise a family. Hence the fact that we have a lot of millennials suddenly wanting to buy a house. Just like every generation before them. They just waited until they were a few years older.
You do in fact have millennials getting older and reaching the age where buying a home is a high priority. There was this myth that millennials want to live in downtowns and walk to stuff and be near restaurants and clubs and Starbucks. Yeah, when they are 22 and single. But once marriage and families and kids become a thing, they become Boomers and want a house because that is the best and most fun way to raise a family. Hence the fact that we have a lot of millennials suddenly wanting to buy a house. Just like every generation before them. They just waited until they were a few years older.
We had this in 2016, 2017, 2018 ... not just starting in January 2021.
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