The current housing market (2021)

Inspired by Reemul’s moving adventures, I’d thought I’d discuss some of the excitement around our recent home purchase (our 3rd primary residence). Apologies if there’s already a thread on this—my search-fu isn’t the best.

So after 8 years in the current house, my wife and I have been thinking about whether we’ll 1) do a major update on the current house or 2) buy a new house in our same town. While we really love the location of our current house, there’s a lot of stuff that we don’t love. We’ve been complaining about those things for the last 8 years.

We’re bad at making decisions. Really bad. So we decided to get serious about the housing market to see what’s available, as part of deciding whether a move is worth it. We defined a very specific set of criteria for a possible new house. A really tough set, frankly, that we thought would be very hard to hit, given the smallish size of our town (we’re in the East SF Bay Area) and the low housing inventory it’s been seeing.

Looking at the market, I’m blown away by how hot it is, given the craziness of 2020. 10%+ year over year price increases for the past few years, including 2020. The aforementioned low inventory and, of course, historically low interest rates. I honestly have no clue how any new homebuyers can get in this market, at least in our area.

On our end, we interview a few agents, find one that we like, and decide to get back on the house-viewing horse—no more open houses, just scheduled showings. Our new agent says she has a house or two that might meet our criteria and schedules to show them to us the day after we sign up with her. Sunday viewing, 30 minutes or so walking around the first house. Second house can’t do Sunday, so we end up seeing only the one. We love the house. Literally hits all of the criteria on our list. It’s not on the market yet—they’re gearing to go to market in a week. A flurry of calls with our agent after looking at disclosures and such. Long story short, come Monday, we’ve made an offer and the offer is accepted. We’re now in contract. First. Friggin’. House. What idiot does that? I’m nervous as hell, but we’ve been to this rodeo before and we know what we’re looking for. Now we’re working our way to clearing our contingencies (getting a loan lined up on short notice is no fun) close of escrow.

So how’s the housing market in your neck of woods?

I think the price of our home is probably back to where it was in 2007-8 when the market hit the skids. We have had a few homes around us sell for more than I thought they would. We have never seriously considered moving (although the idea is appealing) but instead we will probably be putting $40-50k into a remodel later this year. Basically updating things as the house is approaching 30 years old.

We are in Central California.

After the real estate crash of 2008, my house had lost so much value I was basically stuck here forever. Its market value dropped from $120k to a low of $40k. Now the market value is up to around $110K. I could actually afford to move if it wanted and not lose $60k in equity.

$40K for a house? Like, with a roof and windows and doors and indoor plumbing like toilets? Is that in USD or some hyper-inflated space currency?

I live in the Greater Toronto Area. The average house price here is CAD$1,000,000. That’s the average.

My 1800 sq. ft. townhouse, which I bought 20 years ago for $209,999, would sell today for between $875,000 and $985,000. Housing prices are insane.

Wouldn’t that be deflated?

Anyway, now that someone has made a thread about the housing market on QT3, it’s probably doomed to crash.

That’s my hope - nothing against anyone that owns one now, but, you know, I’d like to eventually be able to purchase something larger than a studio.

Isnt the average house price 40K in Detroit. We could sell our house, rent a house here in the Seattle area (maybe not), buy 5 of those 40K houses…for an investment in case Detroit ever comes back.

We got lucky with ours. We needed specific layout for our house and the only one that would work was in a small town 40 miles N of Seattle. That was 3 years ago. The value has gone up 25% in 3 years and the outlook is good with an Amazon distribution center being built within 10 miles and some other decent growth nearby. Thanks in laws!

I live in a Detroit metro suburb. Its not fancy or anything but is a nice neighbor hood. When I moved in, in 2003 my house was valued at $125K, which was average for this area. This area got the double whammy in 2008 because right before the mortgage crash we had the steel industry collapse. That crushed the auto industry and especially hurt parts suppliers to the Big Three. Lots of jobs were lost and many companies went under, making matters worse because those jobs were not coming back. The loss of all of those jobs killed the real estate market in the Metro area. The mortgage collapse hit when the real estate market was already in serious trouble. In 6 months my property value dropped from the $120k area down to $40k. Every bit of equity I had was gone. This happened across the entire metro area, even the prosperous neighborhoods took a big hit.

In the part of Vermont I live in, which is Chittenden county, the area that includes Burlington and a slew of small towns like mine that are scattered around the area at greater or lesser distances (except of course to the west, which is all Lake Champlain), prices have been steadily going up.

House values though tend to vary tremendously even in the same town. Anything on the lake of course is expensive, but inland from there and it’s a crap shoot. Where I live, inland towards the mountains and up a few hundred feet of elevation, it’s a mix of older modest houses (like ours, a mid-seventies ranch with less than stellar but not terrible build quality), a few real craptacular near-shacks, and spanking new construction ranging from nice if usually fairly large houses to a few McMansion types. But inventory tends to move pretty fast, and prices in the area average around mid-$400k IIRC, though the median is more like mid-$300k. Our house, ahem, doesn’t quite make that bar, but it also is worth nearly double what it sold for a bit over twenty years ago. Even after a big refinance a few years ago, to switch into a 15 year fixed rate with money that paid off a ton of bills, we still have quite a bit of equity and the assessed value keeps creeping up even as the house ages. The land is the reason; we have an acre on a corner. The road is dirt still (thank goodness) but increasingly people are building very expensive (for here) houses all around us, so I’m pretty sure that when it’s retirement time we can sell it if we want for enough to get a condo somewhere nice. If that’s what we want to do–we like dogs a lot, and many condos just aren’t good places for Fido.

Really sorry to hear that. Here in the SF Bay Area, housing prices stalled in the better cities/neighborhoods in 2008, but didn’t really drop and came roaring back just a couple years later. We bought our first house in 2007 and sold it in 2014 for almost 75% over. Our current house will likely do about the same or better selling later this year, if market trends hold. The new house is costing us an arm and a leg, but we’re in the market. I really feel bad for the new buyers. Median home costs in our town are north of 1.8M.

I live in the Portland metro.

You don’t want to know what a house bought 10 years ago goes for now. Depending on the neighborhood doubling is not off the table.

House prices are mad in the UK. I bought my house in 1999 for £60,000 and sold it for £260,000. No way I could afford to buy it today as a first time buyer.

We have a tax called stamp duty that has been put on hold until the end of March and since last year has driven the housing market up a lot. On our new house we have saved £10,000 on stamp duty which is a decent saving.

I live in Dorset and it’s an expensive area. A 2 bedroom house will cost around £200k a 3 bedroom between £250k and £300k and a 4 bed around £400k.

Our house needs a lot of work and it was a choice between doing the work and extending or buying something bigger, we chose to move but it was not easy finding something.

We have really lucked out, our new house is in the same road as my wife’s sister and a 1 minute walk from her parents in the next road over. Her family are very close with 5 brothers and sisters and 12 grandkids so this works amazingly well especially in these Covid times.

Another issue is timescales, due to the stamp duty removal and flood of buyers everything is taking much longer. Mortgage applications normally take 10 days to 2 weeks now taking 25 working days and then the solicitor searches instead of a week or 2 are taking the same as mortgages meaning it’s taking a lot longer to complete the process. It has taken us almost 6 months to get to this point normally used to be 8 -12 weeks.

Now we have the need for new stuff for the bigger house and the delays are massive, one of our downstairs rooms has no furniture and getting a sofa is looking like taking 20 odd weeks unless you are willing to just buy what is there, also the choices are very restricted.

Roll on Friday when we are in.

Here in our area where we seem to see 10% increases in the market, year after year, I think the biggest disfunction is a lack of depreciation. The return isn’t crazy, since it tends to pace the equity market, if we were talking new/rebuilt/majorly renovated homes. I honestly don’t get the markets where returns are long-term negative or in the low single digits—why would anyone buy in markets like that? But here, we see close to the same returns on homes that don’t get all that fixed up, just maintained.

For some reason, here in the SF Bay Area, an older home goes for only a few % less than a new home. I suppose some of that is because the older homes occupy more desirable locations in the same town, but it still seems nuts to me. If there was greater depreciation, new buyers could get in the market by buying older properties in need of restoration. But even those are out of reach for almost all new buyers, when you see median prices at the 1.7M mark in a town.

So they can have somewhere to live without fear of getting evicted/having their rent jacked up?

You know what they say about location. It’s the same where I am; a huge chunk of my property’s value is in the lot. The structure itself is older and unexceptional (though the limestone exterior is a plus, and would be insanely expensive new).

In terms of square footage and mod cons you could get more bang for your buck in newer developments a few miles away. But particular schools and “walking/biking distance to X, Y, and Z” are in strictly limited supply.

The eviction bit is a very good point, but on the rent increases, home owning is EXPENSIVE. Without the appreciation that we’re having in our area, I’d say it would be a huge money pit due to the costs of property tax, maintenance, and interest on the loans, with renting being a much, much better economic decision.

I get that Detroit is a bit of an edge case, but I really feel for rshetts—being underwater on a major investment like your home would stress me out.

We got a bit lucky on our first home purchase in eastern Boulder County in late 2011 just before the market turned around. At the time, the appraisal came in $25k under offer and owner still sold at the lower price. When we moved out to NC in 2019, the CO home sold for more than double what we paid as the Boulder real estate bubble had passed us by. The home we bought outside Raleigh was about $70k less than what we got for the other home, about a 1000 SF bigger and only 5 years old. As we moved out here to be closer to family, the extra space gives my parents and niece their own rooms when they visit. We offered a little under asking price and didn’t have an issue at the time. However, it sounds like the Raleigh market is getting about as hot as Boulder with people offering cash over asking price. Hopefully we got lucky again on this purchase as the outer beltline will be about a mile away when it is finished and should be driving up value.

Where I live, the mortgage on a three bedroom house on a good sized lot will usually be far less than the price to rent something similar. One bedroom studios rent for more than most house mortgages here, the rental market for anything decent being so tight. A legacy of restrictive development rules is one reason but overall renting is super expensive even when you consider the costs of home ownership. Though yeah, in a place with actual rental housing markets, the calculation is different.

I guess it’s a bit different here because the equivalent of property tax is paid by the tenants anyway, and rental yields are higher than mortgage rates (for the last 25 years or so anyway) so the other stuff is pretty much a wash. I’m certainly paying far less as a homeowner than I was when I was renting, though I’ll grant London is not representative. Obviously, though, if house prices are depreciating for a long time, it’s likely that rents aren’t particularly high either.

I’m in Toronto and I think the average price for a house is close to a million dollars. That’s CDN, but even still it’s a lot of cash. I don’t know how anyone could buy a house here.