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housing market, bubble?

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BrianZ

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Useful intel posted, thanks gents. 

I am prepping my house to sell right now. I don't think there will be a huge bubble burst, but I do think their will be a market correction. I think the low inventory of single family homes is the major factor. With that said I do feel like I am chasing after it. I have just about painted the entire interior and made loads of repairs. Carpets replaced throughout. Hardwood being refinished in a couple weeks, and we should be on the market by mid June. 


Crazy though, working with an agent, and the current pricing trend is to put it on the market at a low price and fully expect to get 10%+ above asking. I am in sales, albeit a completely different industry, but this seems counterintuitive to me. :o 


Anyway, good luck with your sale Brian! 

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7 mins ago, flyangler said:

There is an overinflation that has to normalize. The ability of buyers to buy homes is always a normalizing factor, but it takes time to occur. As noted, new construction contracts signed a year ago with assumptions about <3% rates are not in sticker shock with rates north of 5%. That said, you could see some buyers who were looking at 30Y fixed moving to IOs to keep the monthly cashflows lower, hoping to refi at lower rates in a couple of years (a bet I would not make). 

 

The difference between this and 2006-2008 is that the mortgage security market is not the same today as it was back then. Sure, there are no proof mortgages and 100% funding today, but not like subprime back then, and not threaded throughout the money markets. That alone could be enough to avoid the negative feedback loop that occurred during the global credit crisis. 

 

Smart, pre-inspections. Especially if the town/city has one or two "main" inspectors. Get them to do the inspection and then the buyer can rely on that or pay for their own. When we sold our last house, we did that with the #1 guy and then fixed the few issues he found. Only thing we did not do was replace driveway, told the buyer that was on them. 

 

Yes, could also trigger a bidding war knowing that that uncertainty is out of the picture. We did not have a war, but it was easier for our buyer to put in a cash bid. 

:chug:

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6 mins ago, Gilbey said:

Useful intel posted, thanks gents. 

I am prepping my house to sell right now. I don't think there will be a huge bubble burst, but I do think their will be a market correction. I think the low inventory of single family homes is the major factor. With that said I do feel like I am chasing after it. I have just about painted the entire interior and made loads of repairs. Carpets replaced throughout. Hardwood being refinished in a couple weeks, and we should be on the market by mid June. 


Crazy though, working with an agent, and the current pricing trend is to put it on the market at a low price and fully expect to get 10%+ above asking. I am in sales, albeit a completely different industry, but this seems counterintuitive to me. :o 


Anyway, good luck with your sale Brian! 

It is counterintuitive, but when you prepare your house like you are doing it will pay off in spades.  You want to drive up interest (nothing does that like price) and get that bidding war started.  The worst thing a home owner can do is over price the home.  If it doesn't sell right away in this market (depending on where you are of course), people will think something is wrong with it and stay away.  Happens all the time.

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10 mins ago, Gilbey said:


Crazy though, working with an agent, and the current pricing trend is to put it on the market at a low price and fully expect to get 10%+ above asking. I am in sales, albeit a completely different industry, but this seems counterintuitive to me. :o 


Anyway, good luck with your sale Brian! 

Listing low can incite a bidding war. I think it's a dumb strategy in a hot market. 

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17 mins ago, HopHead said:

TLWR

How did you make it through medical school? 

14 mins ago, Otter said:

Decaf bro. It’s a thing 

:ginzo:

 

Obama's Fed Chief Has Dire Warning for Biden

https://pjmedia.com/news-and-politics/rick-moran/2022/05/17/obamas-fed-chief-has-dire-warning-for-biden-n1598567

Excerpt

 

Bernanke also expressed concern about the rapid rise in housing costs, fearing a 2008-style bubble. He told the Times that it was something that the Fed needs to keep an eye on.

 

The good news is that Mr. Bernanke isn’t worried about a 2008-style crisis. He is concerned about housing prices, saying they have “risen a lot, like 30 percent in the last two years.”

 

“That’s something that needs to be watched,” he said, but unlike in 2008, “the mortgages that are being lent to buy these houses are generally much higher quality than the subprime mortgages of 15 years ago.”

 

“No nation in history has survived once its borders were destroyed, once its citizenship was rendered no different from mere residence, and once its neighbors with impunity undermined its sovereignty.”

- Victor Davis Hanson 

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13 mins ago, bridgerat said:

Exactly.

Banks are using the same complicated instruments as last time because there wasn’t any consequence last time.

no, they are not, at least in the securitization market. 

 

and if you think there were no consequences last time, either you were not paying attention or something else. 

“No nation in history has survived once its borders were destroyed, once its citizenship was rendered no different from mere residence, and once its neighbors with impunity undermined its sovereignty.”

- Victor Davis Hanson 

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17 mins ago, Gilbey said:

Useful intel posted, thanks gents. 

I am prepping my house to sell right now. I don't think there will be a huge bubble burst, but I do think their will be a market correction. I think the low inventory of single family homes is the major factor. With that said I do feel like I am chasing after it. I have just about painted the entire interior and made loads of repairs. Carpets replaced throughout. Hardwood being refinished in a couple weeks, and we should be on the market by mid June. 


Crazy though, working with an agent, and the current pricing trend is to put it on the market at a low price and fully expect to get 10%+ above asking. I am in sales, albeit a completely different industry, but this seems counterintuitive to me. :o 


Anyway, good luck with your sale Brian! 

I think with this market and what I have seen when I sold my house in 7/2020 and then purchased another in 9/2020 I think even without listing it low it will still go quickly and above asking.

 

What really blew my mind though, I sold a 1000 sq. ft., 3 BR ranch.  My old neighbor recently passed away and he had the exact same house, it is currently under contract at $110,000 more than I got and I got well above asking when I sold.

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28 mins ago, fishinambition said:

ALWAYS get a home inspection and ALWAYS use a good inspector. ALWAYS read the inspection report yourself.

Key word being "good". We sold in October, hit a home run on that, and downsized. I expected a good bit of work required, and since absentee owner marked every disclaimer "Unknown" I did not waive inspection. Inspector had a good reputation but most of what has cost me $$$ was not picked up. Report said things like "Recommend having an electrician look at it" "Recommend having a plumber look at it" etc. I'd need to hire 3 or 4 more inspectors. I think it cost me like $800 and was not really worth it. What it does do is give you an out on the P&S if you decide not to buy though.

 

Does OP already have a rental lined up? That seems to be the hardest part around here...

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The house next door just sold for 20% over ask. 

 

In part, Covid is fueling the flight to NE PA, many folks are leaving NYC and NJ because they only have to go to their office once or twice a week. The other parts being lower taxes and being able to double or triple their living space for the same money.

 

New construction is slowing locally as building material prices have continued to climb north and folks are getting anxious when they see escalation clauses linked to material and fuel prices. 

 

I think what will finally bust the bubble is fuel prices. 

 

:v:

"I came into this world naked, screaming at the top of my lungs, and covered in someone else's blood. I got no problem leaving it that way."
Who can hope to be safe? Who sufficiently cautious? Guard himself as he may, every moment's an ambush. Horace

 

 

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another consideration is that people may be removing money from stocks giving them more capital to throw at homes. 

 

i enjoy hearing the above market stories, but always wonder where the buyer was coming from. did they sell existing house up 20% so buying new with similar above-asking price bid did not "hurt" as much. 

 

always tough to monetize those gains unless you downsize like Stormy, or move out of high-priced area to somewhere more modest. 

 

renting to weather the normalization may work, assuming normalization happens. 

“No nation in history has survived once its borders were destroyed, once its citizenship was rendered no different from mere residence, and once its neighbors with impunity undermined its sovereignty.”

- Victor Davis Hanson 

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21 mins ago, flyangler said:

no, they are not, at least in the securitization market. 

 

and if you think there were no consequences last time, either you were not paying attention or something else. 

They’re still using CDS, CDOs, still packaging sub prime mortgages.still leveraging +10x, etc. There’s too much money to made not to do it.

The consequences to the banks was minimal which is why they’re doing it all over again. 

Edited by bridgerat
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