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I don’t know where the OP is posting from, but in many Western markets and in many Sun Belt markets, it often has been a crush of out-of-town buyers (often from coastal California and even from the urban Northeast) who have been responsible for spiking housing prices as they sold their homes in California and/or the Northeast for record prices and then bought significantly lower-priced upscale homes for all cash often for noticeably above the sellers’ asking price in other states in the West and the South.
Housing markets in Western areas (including Portland, Seattle, Phoenix, Denver, Idaho, etc) and in Southern areas (including the DFW Metroplex/Austin/Houston/San Antonio-anchored Texas Triangle, Nashville, Atlanta/North Georgia and even as far east as Orlando, Charlotte, Raleigh-Durham and the DMV (Washington DC/Maryland/Northern Virginia)) have experienced significant upwards pressure in prices from a noticeably large number of people using the money that they made from selling their homes for asking price in always-expensive coastal California and urban Northeast housing markets to pay all-cash (often above sellers’ asking prices) for upscale homes in affluent neighborhoods.
I often keep up with the Atlanta market where there has been a noticeably large influx of California residents paying all-cash sums for upscale homes (and even many dated homes) in Atlanta’s affluent northern suburbs after selling their California homes for multiple millions.
That’s in addition to an increased influx of Northeasterners who constantly move into the Atlanta suburbs in very high numbers along with people from the Midwest, other parts of the South, Asia and Latin America.
Lol, in high-demand North Atlanta suburbs like Alpharetta and Cumming, there literally have been heated bidding wars between California transplants, New York transplants and affluent South Asian immigrants over homes (that are sometimes in noticeable need of updates) in affluent neighborhoods that are served by the highest-rated public schools and that are located near the highest paying jobs and the highest quality amenities.
It has been insane at times seeing homes come on the market for as low as $700k and sell for as high as $1.5m or more in hot North Atlanta suburbs like Alpharetta, Cumming and Suwanee.
There also seem to have been many companies that have moved their corporate operations into the Alpharetta area from coastal California.
Though, Texas markets (particularly Austin and North Dallas) seem to have experienced much more of the brunt of the California exodus than other Southern markets, which consistently experience much migration into their areas from the Northeast.
Hedge funds appear to remain noticeably active throughout much of the rest of the Atlanta metropolitan area where demand for housing has not been as insane as it often has been in suburban North Fulton and South Forsyth counties since the start of the pandemic.
You’re looking at this the wrong way. Comparing the median income of an entire city to the median sales price of a recently sold home doesn’t make sense. Everyone in the city didn’t buy a new house recently. In fact, a lower percentage than usual likely did due to low inventory. If you were to somehow be able to find the median income of just the people who purchased a home over the last 2 years in a particular city, I would be that their income is above the median income for that city.
Are there people who bought homes recently that are now house poor? Sure. But there are also just people who make good money. Those are the ones who have been buying homes recently.
I wonder what percentage of people currently could actually afford to purchase their home at current value compared to their purchase price. Mines tripled since I bought in 2011, my friend I asked recently said nope, my brother said nope.
I'm interested in this as well. In my area which is fairly poor, a friend decided to "cash in" to the boom, and her house was sold for double what it appraised for a few years ago. Then when she went out to get another house, she couldn't afford it, and no bank would loan her the money for what people were asking. She's now renting at a much higher rate than her mortgage in a less desirable neighborhood.
I got curious and looked up my very first house that I owned on my own, which I bought for $40k in a fairly rundown neighborhood in 2000. It was listed for $175k! This was in 2021, and the price on Zillow and other generic realty websites has gone down since then but it's still far above what it is truly worth, since that neighborhood has gone even further downhill (which is one of the reasons I sold it, also for $40k).
From before the pandemic to now the Case-Shiller US National Home Price index has gone up about 50%, which is absurd. What I’d like to know from realtors is: who were the buyers? Were they corporations mostly or individuals? Were they buying as an investment or to have a place to live? Mostly cash or loans? I’m just trying to understand where this insanity came from. Thanks in advance.
All of the above. Most owner occupant buyers take out a loan. Many investors or corporate buyers had cash that could have been theirs or could have been borrowed but not a like a traditional mortgage.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Originally Posted by wamer27
I wonder what percentage of people currently could actually afford to purchase their home at current value compared to their purchase price. Mines tripled since I bought in 2011, my friend I asked recently said nope, my brother said nope.
We paid $190k for our house in 1993, current value is $1.6 million. With our current income we could only afford a house at about $900k, so no, we couldn't buy our own house now. In our neighborhood the last 4 homes sold were to tech workers at Amazon in Seattle, who came from apartments in Seattle or Redmond, and have young kids. Whether they paid cash or have mortgages I wouldn't know, but in 3 cases they have spent over $100k more doing extensive renovations after moving in.
I have a home in northern AZ where a large influx of folks have come not from California, but from California via Phoenix. They apparently thought that living in Phoenix would be comparable to SoCal? I have no idea.
Other than that it's investment (short term rentals) owners. Making it near impossible to afford a home here for most people.
I understand and agree with the thesis that Californians sold their million dollar homes and moved to places such as Austin, TX, bidding a typical suburban home from $400k to $700k because they could, but who bought all those million dollar California homes? And why did it happen during the 2021-2022 period? For the national (not just some trendy area) median home price to surge by 50% in two years, there’s some massive capital that needs to be mobilized. Where did it come from? Foreigners? Americans with savings? Central bank printing?
And why did it happen during the 2021-2022 period?
I don't know the answer for ALL your questions, but this one I know... COVID and riots in the city. That's why people were buying in my area. Our demand was driven by the laptop class. People getting out of the city because of germs and lawlessness and the ability to work almost any office job from home.
I don't know who bought their homes in the city. Someone else will have to answer that one.
Appreciation. People who had sold their 3 BR rambler in California or Seattle for a million dollars and could buy a bigger house here on acreage for half that. At least that's how it started. By the end of it we were seeing our fair share of million dollar places here, too.
And bargain basement interest rates.
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