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Stoopid is as Stoopids Do

Mark K

Elite Member
Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
Congratulations Mike Kennedy - it had been a bit of a drought, but your name was just added to my "Ignore" (read: blocked) list. For rudeness.
But then you'll miss all of his cut n' paste wisdom.
 

Overimprovement

Senior Member
Joined
May 31, 2017
Professional Status
Certified Residential Appraiser
State
Kentucky
The thing is, there are people buying more as an investment, or to try and cash in later, and others who are buying because life events force them to. If someone who is buying a house at this time is also selling one on the other end, that defrays some of the boom aspect of it all.

I can easily agree that paying 10% above market value for a home any time is a financial mistake, BUT...if life events force it upon you...

No one would say anyone is stupid for paying $3-4/gallon for gas when just 6 months ago it was $2/gallon. There can be massive supply/demand swings in any product or service. But when your car needs gas, it needs gas. Sure housing is much more elastic than fuel, but only to a degree. I think there are a lot of people waiting on the sidelines right now, and that is exacerbating the issue for those who DO need to buy a house now.

The last two areas I have lived in were VERY poor rental markets. If you have a family with more than 2 kids (I do), you really need to be able to own your home, just no rentals out there.

I think if anything, the next 2-4 years will be an extremely interesting time for real estate. The effects of an 18 month pandemic will still be working itself out, the nation will be deciding whether work from home really does work, which will affect nearly ALL real estate sectors, directly or indirectly (think warehousing--if there is a population shift in this country, and/or more people shop online, than warehousing/distribution makes large changes too). I am concerned with the long term headwinds res appraisers face, but the next couple years should be fun...
 

Mark K

Elite Member
Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana
.... (think warehousing--if there is a population shift in this country, and/or more people shop online, than warehousing/distribution makes large changes too).
This area (just a couple miles outside of Indpls) is being turned into the warehouse capital of the Midwest. Within 3 miles of my office there is about 30-40 Million SF of big box warehouses and 5M+ being built every year. Amazon alone has 5, each about 1M plus. The jobs pay about $15 - $20/hr avg. and there's signs on every building for 'help wanted'. A lot of these workers are competing fiercely with investors for the low end housing driving prices (purchase and rents) up about 50%-60% plus in the past 3 years.
 

Restrain

Elite Member
Joined
Jan 22, 2002
Professional Status
Certified General Appraiser
State
Florida
Down here, the investors are jumping in on the lower-end homes, buying them and turning them into rentals. But to make the mortgage, taxes, insurance, management and reserves, rental rates for a small 2/2 or 3/2 is $1400-1600, well beyond what a lot of renters can afford. What they are getting are people moving down and renting while waiting for their homes to get built. Just south of us, the county approved a whole new town of 11,000 people, all to be constructed from the ground up. Our county is already subdivided and has lot capacity for a half-million people. In the last few years, the population jumped from 125K to 200K. And they are coming down from the north with money from their homes, paying cash, and getting into bidding wars when they buy. Rate of price inflation last year was 12-15%, but now, would bet in the 25% or more range.
 

gogatah33

Sophomore Member
Joined
Feb 27, 2021
Professional Status
Retired Appraiser
State
Florida
Down here, the investors are jumping in on the lower-end homes, buying them and turning them into rentals. But to make the mortgage, taxes, insurance, management and reserves, rental rates for a small 2/2 or 3/2 is $1400-1600, well beyond what a lot of renters can afford. What they are getting are people moving down and renting while waiting for their homes to get built. Just south of us, the county approved a whole new town of 11,000 people, all to be constructed from the ground up. Our county is already subdivided and has lot capacity for a half-million people. In the last few years, the population jumped from 125K to 200K. And they are coming down from the north with money from their homes, paying cash, and getting into bidding wars when they buy. Rate of price inflation last year was 12-15%, but now, would bet in the 25% or more range.

Which County? Putnam County as well as others have tons of developed vacant lots that could handle significant population increases. It just depends on whether the communities want it.
 

NP_MAI

Senior Member
Joined
Apr 10, 2018
Professional Status
Certified General Appraiser
State
Florida
The average LP/SP in Orlando is 105%. My buddy, a residential broker has a buyer that put in 7 different offers above asking price and has not landed a home yet. It's crazy.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
It's all about expectations. If a buyer thinks that now is always a great time to buy RE and that the prices are going to do nothing but go up in perpetuity then the rising prices will cover the "excess" of their current purchase price in a few months.
 

Mark K

Elite Member
Joined
Jan 27, 2004
Professional Status
Certified Residential Appraiser
State
Indiana

"Blackstone Group Inc. President Jon Gray has some advice for investors looking to make sense of the wild real estate market in the U.S: Don’t fear a bust anytime soon.

Home prices have surged the most since 2005, cheap mortgages are encouraging buyers toward new homes, and building costs are spiking because of rising prices for raw materials. At the same time, a worker shortage means new construction is failing to keep up with soaring demand. And in commercial real estate, the wider acceptance of remote work during the Covid-19 pandemic is threatening to decimate office properties.

In spite of all that, now’s a pretty good time for the market, according to Gray, who has been at the center of the biggest booms and busts in the industry over the past three decades."


See, I can cut'n'paste too.
 

Flakey

Senior Member
Gold Supporting Member
Joined
Oct 11, 2006
Professional Status
Certified Residential Appraiser
State
South Carolina
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