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@wokark I think there are alot of Realtors on this board... I agree, the sudden price explosion feels manufactured, and it mainly was thanks to the gov printing money and free handouts and our insatiable desire to keep up with the Jones and force our spouses to work if we want to live in a safe decent neighborhood with good schools.
Some people on here talk about interest rates being "too low for too long" but they're "normal" now? What is normal? If they were too low for too long, then why can't they be too high now? Sounds like something a Realtor would say.
We all get supply/demand (well some of us do) but I think the deeper question people are asking is what's motivating or driving the demand so friggin much!
I go back to, we're just bad financially and we love debt.. It seems what when prices skyrocketed, all we did was buy more.
If you price it high, we'll perceive higher value and we want it more. Look at how many people buy an $80k pickup on our $50k salary. How many soccer moms are driving Tahoes and Escalades because that's the "standard" now days. We're NOT making that much more money.
We all get supply/demand (well some of us do) but I think the deeper question people are asking is what's motivating or driving the demand so friggin much!
One candidate answer is that more people have more money, than what the curmudgeonly-set might suppose. In my forays into open-houses in Los Angeles, I've seen plenty of showings, where the house was derelict, un-mortgageable, cash-only... and yet, the showing was crawling with young couples, maybe in their early 30s, with a baby in a stroller and a toddler in tow. I couldn't resist taunting them: "Youngin's, you're my competition, eh? Got $1.5M in cash, do you now"? - and nobody threw shoes or tomatoes or rocks at me. Look, seriously... Americans are loaded. Not all, not always, but enough... to let the housing market thrive.
Everything else - Millennials finally getting around to settling-down, the WFH revolution, flight from the stock market into real estate - all contributed, but they'd be thwarted, were in not for the underlying point: Americans are loaded! There is a lot of money sloshing around, not by Blackstone or Blackrock or Blackguard, but by John and Jane Doe.
There are those people who don't understand home maintenance. They will devalue their asset and should not own a house but can own a condo. I've sold several of these homes over the years and I encouraged them to consider condos only in the future.
One candidate answer is that more people have more money, than what the curmudgeonly-set might suppose. In my forays into open-houses in Los Angeles, I've seen plenty of showings, where the house was derelict, un-mortgageable, cash-only... and yet, the showing was crawling with young couples, maybe in their early 30s, with a baby in a stroller and a toddler in tow. I couldn't resist taunting them: "Youngin's, you're my competition, eh? Got $1.5M in cash, do you now"? - and nobody threw shoes or tomatoes or rocks at me. Look, seriously... Americans are loaded. Not all, not always, but enough... to let the housing market thrive.
Everything else - Millennials finally getting around to settling-down, the WFH revolution, flight from the stock market into real estate - all contributed, but they'd be thwarted, were in not for the underlying point: Americans are loaded! There is a lot of money sloshing around, not by Blackstone or Blackrock or Blackguard, but by John and Jane Doe.
Makes sense but I dont think that totally addresses the question. If your response is right (not that I disagree!) but where were these loaded people in 2020? Were these loaded people just sitting on their cash waiting for the price of houses to skyrocket before they buy?
We haven't mentioned this yet I dont think but it's a factor for sure... People trying to get away from bad areas and bad schools. We've seen more and more crime in certain parts and we've seen how terrible some schools can be thanks to social media and biased media. More than ever, parents want to get to the good part of town for safety and schools which drives prices up.
Anecdotally, I cannot believe the amount of young parents home schooling now days. There's a broad distrust of our public schools (I say for very good reason) and that makes it more important to have an extra bedroom etc.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by wokarK
When else have houses appreciated that QUICKLY? The shortest window of time would be to compare the end of 2020 to 2022, 2 years. How is that sustainable or normal in any way?
Who should SHOULD NOT have a personal house?
This is nothing new, but just seems worse due to the current inflation, and the huge tech salaries today. Our first house in California was $50,000 in 1978 and we sold it 5 years later for $105,000. Then we sold that one 7 years later in 1993 for $190,000. We tried to buy our first several years before but after saving the down payment, we would find the prices were so much higher that we fell short, and had to save more. That continued for 4 years until I got a big raise and we were able to qualify for the 8% loan.
When the median family income in tech industry cities like San Francisco at $126.187, San Jose is $125,075, Menlo Park $179,913 and even here in Sammamish WA is $195,648 there are plenty of people with the money to pay high prices, and they wanted to live close to work. With the pandemic came "work from home" and eventually hybrid, so those people started to move farther out, driving up those prices. That's what's "new" today that didn't happen before. The homes farther out from major employment centers are being bought, often for cash from well paid people looking for better schools and a quieter, suburban lifestyle.
This is nothing new, but just seems worse due to the current inflation, and the huge tech salaries today. Our first house in California was $50,000 in 1978 and we sold it 5 years later for $105,000. Then we sold that one 7 years later in 1993 for $190,000. We tried to buy our first several years before but after saving the down payment, we would find the prices were so much higher that we fell short, and had to save more. That continued for 4 years until I got a big raise and we were able to qualify for the 8% loan.
When the median family income in tech industry cities like San Francisco at $126.187, San Jose is $125,075, Menlo Park $179,913 and even here in Sammamish WA is $195,648 there are plenty of people with the money to pay high prices, and they wanted to live close to work. With the pandemic came "work from home" and eventually hybrid, so those people started to move farther out, driving up those prices. That's what's "new" today that didn't happen before. The homes farther out from major employment centers are being bought, often for cash from well paid people looking for better schools and a quieter, suburban lifestyle.
Take San Francisco out of the conversation. It has unique circumstances that make it an anomaly. These price hikes happened ALL OVER the country even in small redneck Alabama towns with NO employment driver, no new jobs, no higher salaries - they just shot up for no apparent reason.
My parents home in very small town Alabama went from $500k to $850 (and sold at $850k) from 2020 to 2022. No new companies/industries moved into town.
It's not like Covid made everyone richer, if anything probably poorer overall. I know we lost income and still haven't recouped.
Something happened or triggered in peoples' minds *must buy home now at whatever cost*... Again, there isn't that much more money, not like we all got rich. So what triggered this?? Social Media and keeping up with the Joneses? Why are SO MANY people willing to pay these high prices and high rates? That's what boggles me.
Don't say supply and demand.. That's too simplistic and obvious.
...If your response is right (not that I disagree!) but where were these loaded people in 2020? Were these loaded people just sitting on their cash waiting for the price of houses to skyrocket before they buy?
That's a fascinating question. One possible answer, is that markets can stagnate for a long time, then suddenly crashing or burgeoning. This happens in stocks, and it makes sense, that it would happen in real estate... both in the price of houses, and in the behavior of prospective buyers. In other words, a condition might be gathering for many years, without then showing an effect... only to suddenly show an effect, seemingly then for no reason.
Speculating further, maybe prices should have climbed more, during 2013-2019, as people's finances recovered from the Great Recession, and Millennials were getting older and financially more solvent. Prices did rise, but not strongly. Instead there was a knee in the curve, in 2020. Maybe the Pandemic pulled-forward a bunch of real estate activity, and price-growth? If so, well, now maybe prices will stagnate, going nowhere between now and say 2030... whereas in the alternative universe, where there was no pandemic, prices would have kept rising steadily through 2020-2030, so that the eventual prices, in 2030, would converge between the two universes?
This means that people who are considering buying now, would be missing out on price-increases, and instead would be stuck paying higher property taxes all these ensuing years.
Quote:
Originally Posted by bfmx1
It's not like Covid made everyone richer, if anything probably poorer overall. I know we lost income and still haven't recouped.
Not everyone, of course. But most...
1. Nearly 2/3 of Americans are already homeowners. House price appreciation has made them richer.
2. 2022 was an awful year for stocks and bonds, but 2020-2021 was fantastic, making anyone who participates in paper-assets, substantially richer.
3. At the bottom of the scale, minimum-wage is up noticeably, in many states. Workers at the bottom of the scale may not be prospective homeowners, but their finances have improved.
Who is worse off? Persons at the middle of the income-scale, who don't much participate in stocks or bonds, who have been renting, saving money and trying to buy a house.
it all boils down to is people are frustrated they can't afford to buy what they want, where they want. It's an age old problem, it's an economic issue, applies to cars too.
There are plenty of affordable homes available in most states, they just are not where people want to live. That's the way it's always been, the more desirable the area, the higher home prices will be. Where I grew up in Lafayette, CA the median house is at $1.9 million. Go about 30 minutes down the highway to Bay Point CA and it's only $630k, down in the far southern part of the state in the desert, Thermal CA it's just $304k.
Here where I live now in Sammamish, WA it's $1.5 million, but you can go SE to Yakima WA and it's just $346k. If you really want to buy a house, you just have to find a place with less amenities, less desirable climate, fewer good pay jobs, and away from your extended family and friends.
"Just" $364K. That's a fortune for many, many Americans out there.
This is nothing new, but just seems worse due to the current inflation, and the huge tech salaries today. Our first house in California was $50,000 in 1978 and we sold it 5 years later for $105,000. Then we sold that one 7 years later in 1993 for $190,000.
That's California for you. (Seattle real estate was also insane during the time I lived there). Prices have not historically gone up that much in this area. I remember being told many years ago that it was expected a person needed to live in a house at least five years just to break even and not lose money in the resale. I think that guideline would have still held here now if it weren't for covid and the real estate madness that followed. In the first couple of years I owned my house (pre-covid), estimates on it changed very little.
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