How are people affording these crazy home prices?

[lacofdfireman]

I’m that guy that was an idiot and sold my house in 2019 when the market was at an all time high where I live in Southern Utah and had decided that it was a good time to sell. We had a 4900sq/ft custom built home and our 2 oldest had just moved out so it left us with 1 kid at home. I talked my wife into selling because it seemed like we were due for a correction in my mind since it had been over 10 years since the last dip and we never planned on retiring in this home. Also with only 1 son at hike we didn’t need a hike the size of what we were living in. We had planned on buying property after we rented for a year or so and building our next home that would take us into retirement and live in until we die. So we ended up selling for $570k which at that time seemed like a ton since we had bought it 9 years earlier for $350k. Used some of the equity to pay off all our debt so we were debt free and kept a nice chunk of money in the bank. Now we have literally priced ourselves out of the market where we live and this is we’re we want to retire. Our house would have easily sold for a million right now. That’s over $400k that we have lost by selling. I’m so sick about how this has all worked out and not even sure what to think or do anymore. I make a great 6 figure salary but can’t imagine what people do to afford these $700k + mortgages. Are people in serious debt or is the rest of the country just making more money than I can even imagine. Talking to the realtors around here they are saying that many of the people buying the homes where we live in St. George are buying them as second homes and many paying cash. That’s just crazy. Also they say these are well qualified loans and have income to pay the mortgages unlike the 2008 housing crisis where they gave anyone a loan even without income verification.

What’s the end game here. Are these high prices here to stay (new normal) or is something catastrophic gonna happen or will there just be a small dip in real estate? I don’t know what or who to believe anymore. All I know is I’m always second guessing myself for selling but on the other hand happy I’m 100% debt free. My biggest concern is I had planned on retiring in 5 years. (Age 55). Now not owning a home I know that’s most likely a pipe dream and not gonna happen. I can’t go into retirement with a $3k a month mortgage. What are your thoughts. Should I buy now or wait it out at this point? My next home will be my forever home more than likely.


Sent from my iPad using Tapatalk Pro

 

[Nickofthewoods]

I make a great 6 figure salary but can’t imagine what people do to afford these $700k + mortgages. Are people in serious debt or is the rest of the country just making more money than I can even imagine.

Not sure about your area, but here in Southern Colorado there seems to be no shortage of wealthy Texans more than willing to overpay for vacation homes right now. Plenty of other "well qualified buyers" from all over are transplanting to live fulltime, many being the classic "just sold my home in California for 1.5 mil and paying cash for 700k home in Colorado" crowd.
At work I talk with tourists and visitors to the area regularly and I'm blown away at how many tell me they are here to meet with a realtor, at times I've wondered if there are even enough realtors in the area to meet with all these potential buyers. Properties with asking prices that would have made me laugh or scratch my head 3 years ago are actually selling. Just down the road from me a neighbor's 2 acre property with a double-wide next to a stream sold for a half million dollars. The last time it was for sale in 2016 it sold for 150k. I bet the new owner scrapes the double wide and builds a 4,000 sq ft home. It's definitely a seller's market right now.

 

[ryjack70ss]

I am of the mindset that you have to live somewhere so a home is a consumable just like a car more than it is an investment. If you have to move you have to move. If you want to move you want to move. But timing the market to make money on a home is a gamble. Luckily interest rates are low. I make a decent living and can afford much more home if you ask a realtor or bank. But I don’t trust those people that profit off telling me to spend more. Like a casino, the house always wins. So I live in a modest house that I am not “house poor.” Yes, I could sell it for 25-30% more than I paid 6 years ago, but then I have to pay that same price hike to live somewhere else. It’s a wash. Good luck!


Sent from my iPhone using Tapatalk

 

[2531usmc]

I’ve lived in my house on Maryland’s eastern shore for 30 years now. Twice I’ve seen prices explode 50 or 75 % higher. Both times the buyers were convinced prices will never drop again “because you can’t make more land”.

But both times the market corrected and prices dropped back to earth. in the process, financially destroying those that bought at the peak. Not many people can recover when your house loses $100 or $200k in value.

That being said, this was before the FED was printing trillions in paper money. It could be that home buyers see property as their only hedge against inflation and fiat money.

 

[Wrench]

I'm mid 40's own my home and vehicles and had planned to buy a vacation hunk of land that should have been available around $50k. That $50k has climbed to $250k. The area I was thinking is virtually inaccessible in the winter and can flood on any spring.

No way. I want that land about $60k bad.

Having lived through 2008, I will just be happy in my debt free life unable to afford another payment.

Around here, 300k has become a starter home in an awful neighborhood. How first time buyers do this is beyond me. I didn't want a mortgage that high earning 100k.....now that's a serious deal for kids at 60k.

I'm as baffled as you are.

 

[zacattack]

If I could find a decent rental around here i would sell my home and move until this market falls. Home prices are nuts.

 

[Jacack]

We are seeing the same thing in south fl, people from the north east buying up everything for crazy prices. I bought my house in 18 in a area out of town. All 2.5 or 5 acre lots on my street. There were 9 vacant lots at that time a a few houses for sale all under 500k. Today there are no lots and all of the lots sold for 230k for the smaller ones and much more for the bigger

When we bought there was another house for sale we liked but it needed some updates and didn't have a pool. Someone did buy it in 18 for 340 and did the updating it needed and it just sold again for 749k and was listed for 3 days and had multiple full price buyers.


It's tempting to list mine and leave this state but seems like the rest of the country is in the same boat or atleast places I would want to move.

 

[roadrunner]

People buying expensive houses in your area are moving from places where they are selling homes for 1 and 2 million.

They are either newly retired or can work from home.

 

[NV HUNTER]

Looks like you have to move to Beryl junction!!! Lol.. just kidding my family has a second home in pine valley. I don’t know how people afford living right now!!

 

[180splitg3]

It does seem crazy right now. I work in real estate and am seeing some weird stuff going on. I recently had a property for sale and the Realtor who worked with the buyer was representing her son. The house sold for 50k over asking price. The appraisal came back $10k short of the purchase price. Instead of renegotiating the price with the sellers, the Realtor (again, who is representing her son) convinced the appraiser to raise the appraisal value so they wouldn't lose the house! Just seems wrong to me...

 

[nebhunt]

If it was me I would find a house to lease on a long term and wait until this housing market drops. It can not last forever.

 

[Jimss]

Home prices here in colo have exploded. It’s super tough for young families just starting out but still a great investment compared to renting. Here on the front range rent is outrageous and is like tossing $ to the wind. At least with a mortgage you have something to show for your investment. I’ve never seen home values here in colo go down.

there are certain parts of the country where home prices are considerably less. We could buy a mansion for the same price as our smallish home here in Colorado in the Midwest, Texas, etc. many places in California would be extremely high. Obviously you want to enjoy the area you live.

 

[GSPHUNTER]

There's a lot of money out there guys. The house next door to me went on the market for $695k. First day on open house saw 22 bids, it sold for $765k. Another house, a fixer upper was listed for $649k, sold for $715k We bought our hose in 1980 for $85k. What I find amazing is the young people, in their late 20's, who bought the houses I mention had the 20% down just to get the house. I know a couple who are in the same boat as you, they sold, made a big profit but rather than taking their profit and making a big down payment on a new home they paid off the debt, bought a few things they had been wanting and now don't have the money to make a decent down payment to keep the payment on a new home at a point they can afford. They are going to end up renting and making a payment that is equal to what they would be paying for a home they bought, less the down payment. Don't be a ten cent millionaire.

 

[Loggerdude]

there are probably some buys in New York and Portland in the area where the riots were or city’s that defunded the police.
California plates are very common more than ever here. When people can work from home on higher incomes and sell and buy 3 houses here it’s crazy. 3 bed 1 bath 1940’s cheep update 1200 square feet $625000
same house rents for $1750

 

[2531usmc]

All of this is due to the federal reserve and our national gov’t flooding the nation with borrowed money we can never pay back. It will end badly......

 

[lacofdfireman]

All of this is due to the federal reserve and our national gov’t flooding the nation with borrowed money we can never pay back. It will end badly......

I really wish it would. The longer they keep this up the worse off as a nation we will be in my opinion. You can only kick the can so far down the road. And they have been kicking it for along time. How do they even get away with it. How do we even allow them to be so stupid with our money. I just don’t get it.


Sent from my iPhone using Tapatalk Pro

 

[Mosby]

A lot of people will be walking away from their homes when the market hits bottom and their mortgage is twice what the house is worth. It is difficult in a lot of markets to get financing because the homes aren't appraising for what they are selling for. Cash is king.

I wouldn't buy in this market unless I had to. Recently, I sold a property and did a 1031 exchange and I spent weeks comparing real estate markets for "relative" value. You can find markets that are a bit under priced compared to other markets but it's still a gamble and my purchase decision relied on more judgement than facts. The property I bought had 4 offers within hours of hitting the market.

It's a gamble to buy right now. I might make money on my purchase or I might loose money. I have a 10 year plan for it and we will see what happens. I made money on the property I sold and I still have $0 debt after my purchase and right now I am happy with my decision. It is a lot easier to ride markets up and down when you don't have debt.

Someone is always going to make more money than me. Someone is going to make less. Most people can't predict when the market is going to peak or fall so you take your profit when you can and hope for the best. I don't spend a lot of time looking back. IMO, that is just the way it works in life.

 

[SummitsCalling]

The federal govt is buying up all the mortgage debt out there right now, 2008 probably won't happen again with that type of money printing + record low % rates. Add in companies like Zillow, open door, redfin breaking even or slightly making a profit trying to drive out those pesky do nothing real estate agents, and it adds fuel to limited supply. Will there be a correct, yes heading into fall/winter but national home builders are behind and the supply won't catch up. I've been a buyer on several properties in this market, take it for what it's worth.

 

[ShortMountain91]

As bad as prices are for materials, if you can find some land somewhere you can still build one for WAY cheaper than buying one. Especially if you build it yourself. I'm almost done building mine. Will have about $450k in it when were done but that house will be worth probably $800k as soon as it's done (which I will never sell it). And this is with all the crazy covid material prices (yep I'm $50k+ over budget). Key is just finding a reasonable piece of land. Which can definitely still be done. You just gotta be away from the cities/towns that everyone else wants to be in

Sent from my SM-G950U using Tapatalk

 

[Poser]

Median home price in Durango is now $650k. Insanity.