thoughts on buying and selling houses ...

[rh71]

So the real estate market turns profits like nobody's business. In the other thread, I stated the house across from us is selling for X amount and they stand to profit over $75k since they bought it 1.5 years ago.

With these rising / inflated prices, how are people supposed to afford homes anymore ? Your avg mid-20s couple isn't going to be able to afford $393k for a 3 bedroom starter. Salaries certainly aren't heading in the same direction. How do the owners actually expect to sell ?!

 

[StageLeft]

Avg mid 20's couple will have to set sights lower, or increase income. If they're making $90k/year they can get financed for a $300k+ house, so it's not terribly far off.

 

[Fausto]

It really depends where you are. There are still areas in/around Atlanta where you can get a nice house for under $200k. Everything in my 'hood is still in the $140-$160 range even though it's not the ghetto and is quite close to town. It's just an area the intown market hasn't picked up on yet.

 

[Fausto]

Originally posted by: Skoorb
Avg mid 20's couple will have to set sights lower, or increase income. If they're making $90k/year they can get financed for a $300k+ house, so it's not terribly far off.

They'd be stupid to take out a mortgage that large tho.....which isn't to say people don't do this all the time.

 

[GasX]

buy a cheaper home, get some equity, move up to a larger home...

 

[TheAudit]

Originally posted by: rh71
So the real estate market turns profits like nobody's business. In the other thread, I stated the house across from us is selling for X amount and they stand to profit over $75k since they bought it 1.5 years ago.

With these rising / inflated prices, how are people supposed to afford homes anymore ? Your avg mid-20s couple isn't going to be able to afford $393k for a 3 bedroom starter. Salaries certainly aren't heading in the same direction. How do the owners actually expect to sell ?!

They expect to sell because demand is high. That's basically it.
You live on the Island, right? What's the average selling price for a home in Nassau? Over $300k.
You live here, you know how much rent can be, it's still cheaper to own than to rent in many cases.
Property taxes in some areas are killer and going through the roof though.

 

[StageLeft]

Originally posted by: Fausto
It really depends where you are. There are still areas in/around Atlanta where you can get a nice house for under $200k. Everything in my 'hood is still in the $140-$160 range even though it's not the ghetto and is quite close to town. It's just an area the intown market hasn't picked up on yet.

$150k will buy a new 3 bedroom in decent areas around Birmingham too. People eed to move

 

[rh71]

Originally posted by: Mwilding
buy a cheaper home, get some equity, move up to a larger home...

See our house is also a starter house. We looked at 20 or so houses (I was desperate to move) and everything we saw that was halfway decent was at least $300k. We had a realtor take us around the $250k houses and we wanted to leave as soon as we saw the house. At this rate, couples will have to live with their parents till they're 30 to be able to afford "starter" houses even... nearly half a mil... come on. I can understand if the economy were in sync with the real estate market...

I mean, where is this demand coming from ???

 

[StageLeft]

Originally posted by: rh71

Originally posted by: Mwilding
buy a cheaper home, get some equity, move up to a larger home...

See our house is also a starter house. We looked at 20 or so houses (I was desperate to move) and everything we saw that was halfway decent was at least $300k. We had a realtor take us around the $250k houses and we wanted to leave as soon as we saw the house. At this rate, couples will have to live with their parents till they're 30 to be able to afford "starter" houses even... nearly half a mil... come on. I can understand if the economy were in sync with the real estate market...

I mean, where is this demand coming from ???

Somebody is paying for them. If it's not people in their mid 20's then it's people older, but you can either live in a dump or stay with the 'rents for a while, or continue to rent. Prices are what they are...

 

[sygyzy]

Yeah I don't understand it either. Also the biggest problem areas are East Coast, north of D.C. and California (all over). It's getting to the point where many cities in those areas will become exclusive areas. That's great for the rich who want to get rid of the middle and lower class. What better way to turn your middle class working town into the next Beverly Hills. Most people I know will either be forced to live in a mediocre home or (most likely) move to an city they don't want to be in.

 

[dullard]

I think what you are seeing is still the lingering effects of the movement of people to larger cities.

I'm closing on my first house on Monday. $170k for a ~2400 sq. ft. (if you count the finished basement), 4 bedroom, 3 bathroom house. The bank said we qualified for much more than that - but we chose to buy less and then we can afford a car and furnature. I haven't even gotten my first paycheck yet (I graduate this Saturday). If my wife had a job, we'd easilly have qualified for a $350k house.

Why is my house so cheap? Since people are moving from the moderate sized cities into the big cities. You still have a huge influx of people who are wealthy moving in - leaving few houses for the poorer people in the big cities.

Plus you have people less and less worried about debt. I just saw the other day that the entire rebound from the last small recession has come from debt. People just decided to spend more even though they don't have the money. This type of behavior makes people think they can afford $400k houses when in fact, they really shouldn't be buying that much.

 

[woowoo]

Intrest rates drop
House prices rise
Rates go up
House prices fall

(BTW I paid 76k for a small three bedroom house)
(I owe 60k)

 

[SuperMachoMan]

Originally posted by: rh71

Originally posted by: Mwilding
buy a cheaper home, get some equity, move up to a larger home...

See our house is also a starter house. We looked at 20 or so houses (I was desperate to move) and everything we saw that was halfway decent was at least $300k. We had a realtor take us around the $250k houses and we wanted to leave as soon as we saw the house. At this rate, couples will have to live with their parents till they're 30 to be able to afford "starter" houses even... nearly half a mil... come on. I can understand if the economy were in sync with the real estate market...

I mean, where is this demand coming from ???

What you are seeing is the result of low interest rates, lax lending standards, and unscrupulous financing gimmicks. Many of the people currently buying up homes are people who would never have qualified for financing in the past. With the inception of such things as "subprime" lending, zero down payment purchases, ARMs. and interest only loans and with Freddie Mac/Fannie Mae assuming all the risk... now anyone can get a loan. That + everyone thinking how "easy" it is to make money in real estate = real estate bubble.

Even though, as you said, jobs and wages remain stagnant. The enitre real estate market is dependent on easy credit and will not react kindly to rising interest rates.

 

[SuperMachoMan]

Originally posted by: Skoorb
Avg mid 20's couple will have to set sights lower, or increase income. If they're making $90k/year they can get financed for a $300k+ house, so it's not terribly far off.

300K will buy you a 1 bedroom condo where I live.

 

[StageLeft]

Originally posted by: SuperMachoMan

Originally posted by: Skoorb
Avg mid 20's couple will have to set sights lower, or increase income. If they're making $90k/year they can get financed for a $300k+ house, so it's not terribly far off.

300K will buy you a 1 bedroom condo where I live.

heh, here it will get you a brand new 4 bedroom on a large enough piece of land that you may want a ride on mower - and not way out of the city either.

 

[CPA]

350K bought me a 2 story, 5 bedroom, 3 and 1/2 bath, study, media room, 2 - 2 car garages on an acre and a half. Houston area home prices are very good.

 

[KevinH]

Originally posted by: woowoo
Intrest rates drop
House prices rise
Rates go up
House prices fall

(BTW I paid 76k for a small three bedroom house)
(I owe 60k)

You know, this only partly explains the phenomenon occuring in most of California right now. I've been giving this a bit of though as myself and and several of my friends have been considering buying and selling homes. Here's a little anecdote on how it's like in CA right now. My brother has recently purchased a home in Victorville...yes, dang near BFE in CA for 425 during the first phase of homes. By the last phases completion, the property went up 75K. That's less than 6 months! Needless to say he's selling the house and buying another one that he's had an eye on.

That said, I think A LOT of people are buying homes strictly for the purpose of reselling. This includes a TON of small time investors. Believe me, I know quite a few people who are making payments on 3-4 homes just to sell within a few moonths. One reason (as woowoo mentioned)why this is possible is the absurdly low rates of the last few years. However, there are SOO many new loan programs that have come around in the last few years that're being offered that are allowing new buyers into the game (i.e. Option Arms, etc. etc.). Without some of these programs, certain buyers would never be able to buy a home. In essence, I don't think the price of homes is due to just the people buying homes for their own uses but primarily to people buying homes with the intention of reselling (basically soaking up what supply there is and manufacturing demand). Obviously this is just based on what I've personally witness as a lender.

 

[dud]

See our house is also a starter house. We looked at 20 or so houses (I was desperate to move) and everything we saw that was halfway decent was at least $300k. We had a realtor take us around the $250k houses and we wanted to leave as soon as we saw the house. At this rate, couples will have to live with their parents till they're 30 to be able to afford "starter" houses even... nearly half a mil... come on. I can understand if the economy were in sync with the real estate market...

LOW interest rates combined with much economic uncertainty (especially in the market) resulted in people dumping their $$$ in tangible assets like houses, further pushing up demand further pushing up prices further ... you get the picture.


I agree with all that say these increases are getting way out of hand. I'm older and feel for the young. The only place that many younger people will ever be able to afford a home is deep in the sticks.

 

[DougK62]

I hear of a lot of young people that are upset because they can't afford the house that they WANT. Well maybe you should be buying something cheaper. You aren't entitled to owning a big fancy house. That's something that you earn. Buy a smaller house that has some problems and move up to a bigger house. Stop with the GIMME GIMME GIMME attitude. Everyone starts at the bottom. My first house was a $50k two-bedroom in the ghetto.

 

[Jumpem]

My plan is to ask my Gramma for five acres or so. She owns several large fields surrounding her house. Probably 50 acres atleast. Then I'll build a small 1500sq.ft. house. I don't need anything huge, just enough for me, the gf, and a couple of kids.

I'm not sure if this would be more expensive than buying a preowned house.

 

[rh71]

Originally posted by: DougK62
I hear of a lot of young people that are upset because they can't afford the house that they WANT. Well maybe you should be buying something cheaper. You aren't entitled to owning a big fancy house. That's something that you earn. Buy a smaller house that has some problems and move up to a bigger house. Stop with the GIMME GIMME GIMME attitude. Everyone starts at the bottom. My first house was a $50k two-bedroom in the ghetto.

cheapest house on LI

or if you're feeling a bit wealthier

"Hey honey I think we found a house ! It's in perfect crack-dealing condition in one of the worst towns around! Oh and we'll be paying the same taxes as a $400k house too."

 

[KevinH]

Originally posted by: DougK62
I hear of a lot of young people that are upset because they can't afford the house that they WANT. Well maybe you should be buying something cheaper. You aren't entitled to owning a big fancy house. That's something that you earn. Buy a smaller house that has some problems and move up to a bigger house. Stop with the GIMME GIMME GIMME attitude. Everyone starts at the bottom. My first house was a $50k two-bedroom in the ghetto.

Hehe. I don't think people are upset. I just think people feel that the price increases have gotten out of hand. Sitting in the front row, I can say without a doubt that they have.

 

[Jzero]

Originally posted by: rh71

Originally posted by: DougK62
I hear of a lot of young people that are upset because they can't afford the house that they WANT. Well maybe you should be buying something cheaper. You aren't entitled to owning a big fancy house. That's something that you earn. Buy a smaller house that has some problems and move up to a bigger house. Stop with the GIMME GIMME GIMME attitude. Everyone starts at the bottom. My first house was a $50k two-bedroom in the ghetto.

cheapest house on LI

I put an offer in on a smaller house that had some problems.

An investor jumped in with a cash organization and that was the end of that.
Funny thing is, I feel like my fiancee and I are among the few that just want a little house that isn't going to kill us on payments. Doesn't have to be huge or have a giant yard. Just a place to call home.

It's harder than it sounds. Cheap houses get snapped up by investors around here.

 

[imprezawrxwagon]

Miami, specifically Miami Beach and SoBe are booming areas for real estate. An OK condo (~800 square feet, one bedroom, decent view) goes for 300K or so (but, even if one pays in full in cash, the property taxes and association fee will amount to 700 a month at least). But the vast majority of the buyers are investors. A while ago $300 per square foot seemed expensive. Now $600 does not seem all that far off. But for now it's all out of town people buying preconstruction. What will happen when the interest rates rise (and they will, following the elections) and when condos are built and ready to be moved in is anybody's guess.

 

[richardycc]

move to albany, NY.