NFR How's the housing market where you live?

Non-fishing related
My wife and I have been looking for a while now - made an offer in Tacoma last year at 130k over asking and didn’t get it. We gave up for a while.

One thing I think about a lot is that every time we are in a bubble of sorts there are people saying this time it’s different and things will only go up from here…but you have to think at some point there’s a correction. I’m in recruiting for a tech company and so I get a lot of exposure to how much money people make and there’s only so many people who make enough to buy million dollar plus homes. I think the skyrocketing valuations at tech companies have allowed many people to get into houses that they wouldn’t be able to afford with their base salaries. Those valuations are going to ultimately come back to reality. The large cap stocks in tech have done well but there are many tech co’s that are down 80+% off their highs last year. Houses at these high valuations will only maintain those values if there continues to be people who can afford to actually purchase.

Or, maybe the reality is that with the disappearance of the middle class in America we are destined to be a nation of renters. I would like to see our politicians do something about the REIT’s that are now accounting for 25+% of single family home purchases. I’m all for capitalism, but owning a house is (or was) the American dream.

For now we are just saving as much as possible, if we never get a chance to buy oh well.
 
Things out here in Western Washington arent going to get better is my guess. Lots of high paying jobs, a geography that limits the sorts of endless sprawl you can have in say Vegas or the Phoenix area. Zoning for multi family dwellings always is posted to as the solution, unless it's where your single family dwelling is of course.
Face it, it's a nice place to live, and in comparison to a lot of places very desirable

When tech really boomed starting in the 90's, prices shot up. All those stock options cashed in and it was off to the races.
They never really went down, just the rate of appreciation slowed, only to again climb.

My view...
 
Flatwings said:
My wife and I have been looking for a while now - made an offer in Tacoma last year at 130k over asking and didn’t get it. We gave up for a while.

One thing I think about a lot is that every time we are in a bubble of sorts there are people saying this time it’s different and things will only go up from here…but you have to think at some point there’s a correction. I’m in recruiting for a tech company and so I get a lot of exposure to how much money people make and there’s only so many people who make enough to buy million dollar plus homes. I think the skyrocketing valuations at tech companies have allowed many people to get into houses that they wouldn’t be able to afford with their base salaries. Those valuations are going to ultimately come back to reality. The large cap stocks in tech have done well but there are many tech co’s that are down 80+% off their highs last year. Houses at these high valuations will only maintain those values if there continues to be people who can afford to actually purchase.

Or, maybe the reality is that with the disappearance of the middle class in America we are destined to be a nation of renters. I would like to see our politicians do something about the REIT’s that are now accounting for 25+% of single family home purchases. I’m all for capitalism, but owning a house is (or was) the American dream.

For now we are just saving as much as possible, if we never get a chance to buy oh well.
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Great insights. Be patient. Only make the purchase when you have the upper financial hand. In the meantime, keep scouting cities/towns and neighborhoods where you would love to live 5 years or longer.
 
Salmo_g said:
Same story here in Oly area. I built my house just before the recession kicked in, so I lost a for real $125,000, not just on paper. When the house was ready to move into I thought for a moment that the smart economic choice would be to drive to the bank and just hand them the key. Eleven years later and appraisals say that I've "recovered" my loss and then some. If my house were for sale for what the county and Zillow say it's worth, I wouldn't be able to afford to buy it.
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Sounds exactly like my story. I live in a 810 sqft house in Shoreline. Me and my wife will most likely just stay here, though it’s possible the market might allow us to sell higher than the price of something a bit larger somewhere else.
 
I can not believe how many are buying all cash with no inspections. Seems scary to me...

For those of us that are buying and require a mortgage to make it happen, how does the mortgage company determine the loan-to-value to base it's loan on? If a house is listed for $600k and sells for $200k over listing is the mortgage company only going to have a loan for up to $600k and requires a larger down payment by the buyer or will they loan up to $800k? Note: not including down payment for ease of discussion.
 
swimmy said:
If you have any feedback/coaching, I'm open. I've only bought two properties and it was nowhere near this crazy back then.
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If you are handy enough that you can inspect a house yourself, better than the average inspector, here's my advice...
  1. Don't use a realtor. Make the seller's realtor dual agent. This puts their economic self interest in your favor. They will, much of the time, manipulate the seller to your benefit.
  2. In my experience, good inspectors are nearly impossible to find. I don't think you can rely on them at all. Stick your head in the crawlspace and check everything out yourself. In this market, many homes are "pre-inspected" (lol) and the seller won't let you do your own third party inspection anyway.
  3. Pay a real estate lawyer a flat rate to handle the legal stuff, rather than a realtor, if you aren't able to handle it yourself.
  4. If possible, sort out your finances in advance and make it a cash transaction for the seller.
  5. Offer a good amount of earnest money, but only escalate enough to beat people that are offering the bare minimum.
  6. If you have an escalation clause, make it require proof.
  7. Be prepared to miss a lot of houses.
  8. If a house is pre-inspected, don't even bother going out there until you see the report. This saves a lot of time. We only had a 10% hit rate on houses not having major problems, but developers might be better in your area.
This is how we purchased our home and also helped my in-laws buy theirs, both in the last year. In both cases, we were not the highest offer and still won. Don't underestimate the power of self interest.
 
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HOG said:
Person who said time is 120% correct. Chelan County, Chelan and Leavenworth in particular are insane, to put it mildly. Just thankful my grandparents and parents purchased houses and land in the 80s. Could always knock some trees out an orchard and build, once lumber prices straighten out…
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'der town has been nuts for quite some time. Bought a house there in 2003 and sold it in 2006 for twice as much as we paid for it. Didn't even list it.
 
@Flatwings - thank you for your insight. I had no clue or even thought about REITS being part of the equation but it makes sense. Did a couple of searches and depending on how one defines 'investor' it can be up to 30% of the buyers are REITS, large-scale investment companies, pension funds, etc.
 
Regarding not using a realtor:
We purchased our current home in 2006. Only moved 4 doors down the street. Within a few days of the offer on the new place being accepted our old next door neighbors knocked on our door and said they would like to buy the old place. They are good people and we quickly worked out reasonable terms for both parties. I hired an attorney to help me with the legal stuff. Took some time for me to complete the necessary steps and forms. But all in all was pretty smooth going. I’d do it again in the same circumstances. Not sure if I’d do it if I didn’t know the other parties.
 
If housing is so hot, why not ride the wave and get as much appreciation as one can. Buy what is not as hot ---> land. Then in a couple of years build on it when material costs stabilize or go down (which they are starting to do). Not as much competition for land and one can build a place that they want.
 
RCF said:
I can not believe how many are buying all cash with no inspections. Seems scary to me...

For those of us that are buying and require a mortgage to make it happen, how does the mortgage company determine the loan-to-value to base it's loan on? If a house is listed for $600k and sells for $200k over listing is the mortgage company only going to have a loan for up to $600k and requires a larger down payment by the buyer or will they loan up to $800k? Note: not including down payment for ease of discussion.
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The former 'rules' are long gone..at one time to qualify for a house at 20% down needed a 4 to 1 ratio of income to mortgage payment...now some companies will fund 2 to 1. And the traditional home appraisal is now a choke point for conventional loans, as the appraisers are so backed up, they often can't get it done before the contract appraisal period expires in escrow.
Broker I know won't work with anybody not able to put down 50% of the accepted offer, and requires they work directly with one of the three local lenders she knows who will run the process through in 5 days, having seen deals go south because of slow banks and credit unions.
The broker also push's for a 48 hour inspection window with zero repairs to seller regardless of findings, gives the buyer an out if they find something major, and she has the inspectors on tap to meet the deadline.
Around here, spec contractors are competing with each other for every lot and parcel they can find.
 
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O Clarki Stomias said:
'der town has been nuts for quite some time. Bought a house there in 2003 and sold it in 2006 for twice as much as we paid for it. Didn't even list it.
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Parents had a rental off icicle since the 80s and sold in ‘09, same story, didn’t require listing. Only thing affordable is old Longview fibre land and even that has been threatened with development. We have close to 1000 acres at the bottom of Blewett, only reason, besides hunting, was to put a stop to potential development.
 
In my area, north of the border, house prices are up 32% in one year....never thought I'd be living in a million dollar house w/o moving...can't wait to pay my property taxes. As of now there are no capital gains taxes on sale of principal residence...but rumours abound that the federal gov is taking a hard look at it.
 
SurfnFish said:
The former 'rules' are long gone..at one time to qualify for a house at 20% down needed a 4 to 1 ratio of income to mortgage payment...now some companies will fund 2 to 1. And the traditional home appraisal is now a choke point for conventional loans, as the appraisers are so backed up, they often can't get it done before the contract appraisal period expires in escrow.
Broker I know won't work with anybody not able to put down 50% of the accepted offer, and requires they work directly with one of the three local lenders she knows who will run the process through in 5 days, having seen deals go south because of slow banks and credit unions.
The broker also push's for a 48 hour inspection window with zero repairs to seller regardless of findings, gives the buyer an out if they find something major, and she has the inspectors on tap to meet the deadline.
Around here, spec contractors are competing with each other for every lot and parcel they can find.
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TYVM for a complete and thorough response! I have bought and sold a number of properties/land in normal times. 1031 Exchanges on a number of them. Just one more sell and buy once kids are out of the house...

Welcome to the "New Normal"!
 
RCF said:
I can not believe how many are buying all cash with no inspections. Seems scary to me...

For those of us that are buying and require a mortgage to make it happen, how does the mortgage company determine the loan-to-value to base it's loan on? If a house is listed for $600k and sells for $200k over listing is the mortgage company only going to have a loan for up to $600k and requires a larger down payment by the buyer or will they loan up to $800k? Note: not including down payment for ease of discussion.
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Loan to value is still based on an appraisal using comparable sales. If a buyer qualifies for a higher loan amount and the house actually appraises for that higher amount, then the bank would likely give them a higher loan that is supported by the appraised value (assuming of course that they can cover a higher down payment). If they bid the house up, but the appraisal comes in short, then there are options including counteroffering or cancelling if the original offer had the correct contingencies in place, but if things like inspection/financing/appraisal contingencies are waived...which many are these days, the buyer would have to make up the difference or risk losing their earnest money.
 
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jaredoconnor said:
If you are handy enough that you can inspect a house yourself, better than the average inspector (which isn't hard), here's my advice...
  1. Don't use a realtor. Make the seller's realtor dual agent. This puts their economic self interest in your favor. They will, much of the time, manipulate the seller to your benefit.
Click to expand...
This can be risky. The realtor who holds the listing has a fiduciary responsibility to the seller first and foremost. They also hold all the cards since they can see all the offers coming in so how do you know they're not manipulating you to get the sweetest possible deal for the seller while cashing in on both sides of the commission? But sure....there are plenty of low integrity realtors in this business who will do whatever' is necessary to double dip even if means the seller doesn't get the best offer.
 
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Herkileez said:
In my area, north of the border, house prices are up 32% in one year....never thought I'd be living in a million dollar house w/o moving...can't wait to pay my property taxes. As of now there are no capital gains taxes on sale of principal residence...but rumours abound that the federal gov is taking a hard look at it.
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With the crazy price increases here in PNW, people (sellers) are going to get surprised with the Capital Gains tax (15% or more), even with up to $500k exception, that is due at year-end.
 
RCF said:
With the crazy price increases here in PNW, people (sellers) are going to get surprised with the Capital Gains tax (15% or more), even with up to $500k exception, that is due at year-end.
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For sure. We are actually started to prep our home in Seattle for sale. My wife was downstairs going through boxes and shouts at me..."can I toss this box of receipts from 2008-2010?" My response to her was..."only if you want to dumpster dive our own trash can to dig every single one of them back out". If a nut or a screw from Home Depot was used to improve my house, you can be damn sure it's getting added to our cost basis.
 
RCF said:
With the crazy price increases here in PNW, people (sellers) are going to get surprised with the Capital Gains tax (15% or more), even with up to $500k exception, that is due at year-end.
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I was talking to a guy recently that sold a house then bought another house that was more expensive. He was under the assumption that the old rules applied, not realizing being single he could only get $250k tax free.
He was in shock when he got a letter from the IRS stating what he owed in capital gains.
As he was walking away, he mumbled “keep every fucking receipt”…….
SF
 
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