NFR How's the housing market where you live?

[swimmy]

I’m in Charleston for a couple days and out of curiosity thought I’d check out real estate. A lot of the same.

Between the old money as well as being a rich kid’s playground, $1M doesn’t get you far here.

Saw a sick ass boat on King Street last night though.

 

[cody-]

Yeah, perspective is a funny thing. We've been able to save a significant amount of money over the past few years and have paid off my girlfriend's student loan and have been hammering mine. I could pay it off but feel like having a big down payment chunk is more important. We carry no other debt and have excellent credit. We've worked pretty hard to get where we are and don't care to set ourselves up for high mortgage payments that will require 7 day work weeks in perpetuity. My bootstrap are pretty stretched out and my arms are tired. All that said, I consider myself fortunate. There are a LOT of folks out there in much worse shape than me. I'll get there, somehow. Feels like home prices are rising faster than we can save though and the competition is so disheartening.

I feel ya. I definitely should have taken a less snarky and more mature approach to try and get my point across to the others who aren't on the same boat and haven't been for a long time now (effects of not having coffee yet).

Two excellent credit scores, household income pushing the top quartile once I finish grad school, only a couple hundred in debt on a car loan I'm paying off later this month, savings and stock investments despite 4 years in a PhD program making minimum wage with no COL adjustments as our rent went up 25% in that time, saving by almost exclusively cooking our own food, etc. ... Even if there was a house on the market that matches what we want in terms of size (pretty damn small), walkability and public transit access (existent), livability (immediate), and maintenance (low), we still wouldn't feel comfortable dropping >1 year combined salaries as down payment and still paying >30% of our income on the mortgage.

The "buy a fixer upper" thing thrown around here so often doesn't really work for $400k "starter homes" when you're already trying to balance a full work schedule, any sort of social life, and maintain some degree of sanity. In the end, owning isn't a priority for us now, especially when what is available to own misses all the marks for us at this stage of our lives. Building that middle density housing and mid-rise apartments would still go a long way to driving down prices and rents though.

 

[krusty]

There is considerable well-founded discussion among residential real estate demographers that we'll experience an extreme housing glut when the massive number of boomers pass into long-term care.. and the marble orchard.

Our imminent demise will ripple through the entire economy in great magnitude. Millions of properties sitting empty as the owners attempt to extract equity that's evaporated.

Our bootstrappy Horatio Alger tales will more closely resemble "The Grapes of Wrath".

Affordable housing and better fishing is on the way!

 

[Old406Kid]

I wonder what will happen when inflation & property taxes force retirees out of their homes & theirs nobody in the position to buy these houses because they cost so much. Will all us old-timers be bragging about how much we made on real estate then. When our retirements are inadequate due to inflation?

Good point, and something that's unfortunately already happening in many of the more desireable areas.

 

[Old406Kid]

I feel ya. I definitely should have taken a less snarky and more mature approach to try and get my point across

Thanks, you saved me from having to call your comment snarky.
I'm especially touchy about the Vietnam reference as it changed my entire life.
My comment wasn't to brag but only to offer some suggestions. Yes, the numbers have changed but we could look back a few years from now and proibably have a lengthy should've conversation.

It sounds like you're on the right path career and education wise but if I were you I think I would still keep my eyes open for a potential purchase. Home prices in your area will only continue to escalate so if you can lock in a fixed rate home loan your payments will remain the same while your income rises. Unfortunately there's the property tax issue, another story, but it will most likely be far less than rent increases.

Best to you going forward,
Dean

 

[Old406Kid]

I’m in Charleston for a couple days and out of curiosity thought I’d check out real estate. A lot of the same.

Between the old money as well as being a rich kid’s playground, $1M doesn’t get you far here.

Saw a sick ass boat on King Street last night though.

Looks like a flats type boat to me. really like the trailer. Maybe you should hang around and hold up a 'Will Fish' sign.
Great timing as you're missing the 'colder than a well diggers ass' Bozeman weather.
Partly Cloudy
-17°F

 

[Robert Engleheart]

I feel for younger folk like Cody and ARecher, when I entered the workforce in 1971 (blue collar trades), a single earner could buy a very decent home for 1-1.5X annual income and a very modest down. I built my 1st home out of pocket over a period of 6 years but my 2nd in 1989 still cost about 1.5X my annual income, again single earner family. None of my friends who went to college graduated with much debt, including law school.
I currently live in about the cheapest housing market in California, a 900 s.f. “starter” is $250-275K and median household income is $47K in the county. About the only good thing real estate wise in California is proposition 65 which limits tax basis to what your purchase price was plus any bonds passed after so people like me who bought 30 years ago are not taxed out of their homes. On the other hand, being a landlord in California is a nightmare, I have friends who haven’t been able to evict tenants for 6 months or more and when finally successful the house was destroyed.
I have noticed a lot of Millennials spend money in ways I could never have imagined; eating out, destination vacations, vehicles, etc. and don’t seem to want to sacrifice lifestyles for home ownership. Many seem content to share housing in order to live in desirable areas. I’m not passing judgement, just my observation.

 

[SurfnFish]

Iinflation is always the down side of an up cycle, it is the circuit breaker that cools over heated economies and has been in play for centuries, and we've been running a fever with extremely high corporate profits and an insane stock market runup that has blown apart the notion of fundamental P/E ratios
When we built our first Bend area home 20 plus years ago, a custom under 400K all in, it was during a very high inflationary period with 7% one years CD's and 5% mortgage rates. That home recently sold for 800K, CD's have been at .25% MOL the past few years, and interest rates have been under 2% at times. Those old enough have seen this cycle every 7 to 10 years, though never with interest rates this low, crazy 'free' money..

What has changed is the number of qualified home buyers facing a market with too damn few homes, and it's going to take at least the rest of this decade for zoning changes to catch up. Bend, as an example, has pushed their city boundries further east, and is preparing to issue the build permit for several thousand homes to go up on the SE side on 4,000 sq' lots. An aerial view of area via Google satellite using the boundry lines shows they will be built right next to homes with 8,000 sq' lots built 20 years ago, and another neighborhood with 12,000 sq' lots built 30 years ago. Denisty housing is planned for the east expansion.

It was actually fairly doable to enter the real estate market back in the day, prices were reasonable asa ratio of cost vs income, and distressed homes were common. Those days are gone and they are not coming back, their will be no magic depression in which home prices suddenly plummet and come up for sale, as between the investment companies, REIT's and first home cash rich buyers, the line is long and ready to snap up all availble.

 

[Old406Kid]

I feel for younger folk like Cody and ARecher, when I entered the workforce in 1971 (blue collar trades), a single earner could buy a very decent home for 1-1.5X annual income and a very modest down. I built my 1st home out of pocket over a period of 6 years but my 2nd in 1989 still cost about 1.5X my annual income, again single earner family. None of my friends who went to college graduated with much debt, including law school.
I currently live in about the cheapest housing market in California, a 900 s.f. “starter” is $250-275K and median household income is $47K in the county. About the only good thing real estate wise in California is proposition 65 which limits tax basis to what your purchase price was plus any bonds passed after so people like me who bought 30 years ago are not taxed out of their homes. On the other hand, being a landlord in California is a nightmare, I have friends who haven’t been able to evict tenants for 6 months or more and when finally successful the house was destroyed.
I have noticed a lot of Millennials spend money in ways I could never have imagined; eating out, destination vacations, vehicles, etc. and don’t seem to want to sacrifice lifestyles for home ownership. Many seem content to share housing in order to live in desirable areas. I’m not passing judgement, just my observation.

With the way the real estate market is going nationwide I think that something like Proposition 65 should be in all states.
Sadly, our governing entities seem to find ways to piss it all away faster than they get it and all at the expense of the voting taxpayers.
And yes, renters are taxpayers too...they just don't see it in the rent.

 

[Old406Kid]

I feel for younger folk like Cody and ARecher, when I entered the workforce in 1971 (blue collar trades), a single earner could buy a very decent home for 1-1.5X annual income and a very modest down. I built my 1st home out of pocket over a period of 6 years but my 2nd in 1989 still cost about 1.5X my annual income, again single earner family. None of my friends who went to college graduated with much debt, including law school.
I currently live in about the cheapest housing market in California, a 900 s.f. “starter” is $250-275K and median household income is $47K in the county. About the only good thing real estate wise in California is proposition 65 which limits tax basis to what your purchase price was plus any bonds passed after so people like me who bought 30 years ago are not taxed out of their homes. On the other hand, being a landlord in California is a nightmare, I have friends who haven’t been able to evict tenants for 6 months or more and when finally successful the house was destroyed.
I have noticed a lot of Millennials spend money in ways I could never have imagined; eating out, destination vacations, vehicles, etc. and don’t seem to want to sacrifice lifestyles for home ownership. Many seem content to share housing in order to live in desirable areas. I’m not passing judgement, just my observation.

Lots of other things like cell phones, internet, etc. have now almost become necessities and can be a substantial monthly outgo.
Gone are the days of a quarter for a pay phone and tinfoil on the rabbit ears to get three or four tv channels that signed off at midnight.

 

[Trout Trekker]

How are things in your hood?

Here in Kern County, CA our median home price is around 365K and that's with the 19% yoy increase ( about 40% in the last two years. ). Most newly built homes or those under construction ( 3/2 or 4/2.5 ) in recently created communities out of town in former ranch lands list in the high 300's to low 400's.

So what's the catch? Employment. Lots of out of area retirees ( from the bay area, L.A. basin and southwestern states. ) live around here, mostly because they'd rather spend on toys & travel than on a home that'll end up in probate. If you want to see some gorgeous classic cars, the latest in motor homes or just how many options one can load a new p/u or luxury car with, this is the place. Several gated 55 plus Khov or Del Webb developments here. This is a strongly conservative area ( Kevin McCarthys home district ).

Jobwise, if you're not in the oil, ag, aerospace, health care and support services for them, you're pretty much out of luck. Prior to landing here we've lived in many areas, most recently we had three homes in the greater Las Vegas area, in a Del Webb mountainside golf community with views of the strip. We showed up there near the tail end of the housing decline, when if you had decent credit and enough cash for dinner at Taco Bell, you could get a loan for a rental property. Talk about a crazy real estate market.....

Anyway, by most west coast standards we live out in the sticks, though suburbia is catching up with us. Grocery shopping and H.I.C's are about thirty minutes away. If you want to go clothing or furniture shopping for anything other than the bare necessities, you're going to need to drive a couple of hours. Air service is limited to two airlines with few destinations offered, so unless you're heading to one of their hubs, you'll be making a transfer. It's that or drive two to four hours to a major a city.

So what are the upsides? I can be on a trout river in ten minutes, a large lake in :35, wild trout water in :55 and the threshold of the Golden Trout Wilderness in 1:15. It's a good area to live if you're time is your own, you like open spaces and want to wander. It's also a good jumping off point for eastern Sierra jaunts. There are other rivers, streams and lakes well within easy drives and the coast (San Luis Obispo ) is a couple of hours out. Rush hour here is eight cars spread out over two lanes in a quarter mile, though the drive up the canyon along the river can get hairy with weekend warriors rushing to get their kicks in. For those who like to hit the open road, it's close to I-5 and an easy jaunt to get on I-15 in the high desert or 395 N. The temps and seasons in the valley mimic the Las Vegas area very closely, yet the nearby mountains mirror the weather range found in central Sierra and gold country when comparing altitude to altitude. In fact, it was 74 here just two days ago and now there's a fresh layer of snow on our surrounding mountains.

The area defies the "California real estate prices are out of reach" mantra, although with the current development trend I don't expect that to last.

 

[Stonedfish]

"Why won't these damn lazy kids get a good honest job losing the Vietnam War and just have their real estate agent front them the down payment on their two bedroom? Damn millennials! No wonder America's gone to shit. "

Genuinely delusional.

And a reminder... Home values aren't increasing because you put new tile in the bathroom or painted your fence or landscaped. They're increasing because there's not enough housing being constructed where it needs to be constructed, in the forms that it needs to be constructed. There isn't a shortage of quartz countertop installations or living rooms painted that specifically boring shade of HGTV gray, there's a shortage of middle density housing, driven by NIMBYs, who know that the sale price of their home increases when they can prevent the kinds of development needed for young professionals to comfortably enter the market.

The problem in areas like Seattle, the dirt is so expensive that regardless what you build it is going to be hard to make it affordable.
Being hemmed in by two large bodies of water does help either.
I guess it also comes down to what someone would deem affordable. You can get a one bedroom, less then 300 sq feet apartment in the Lake Union area for $1,550 per month. I don’t know, maybe that is affordable to some. It might also be perfect for someone’s lifestyle that has no interest in owning a car or doing yardwork.
Is a less then 1,000 square foot ADU unit with the density people talk about wanting for $800K affordable?

I will say a lot of older folks take the blame for things that are happening now, but put yourself in their shoes.
I bought a house when I was 26 and it was a huge stretch for me financially. I stuck my neck out and took a chance. It took me way out of my comfort zone but it all worked out.
Best of luck to all those looking for housing.
SF

 

[krusty]

Much of the economy relies upon people pissing away money on things they don't really need...like flyfishing.

 

[Peyton00]

I’m in Charleston for a couple days and out of curiosity thought I’d check out real estate. A lot of the same.

Between the old money as well as being a rich kid’s playground, $1M doesn’t get you far here.

Saw a sick ass boat on King Street last night though.

King st.

That place is a party on the weekends.

 

[SurfnFish]

when asked why he invested all of his money into land, Mark Twain replied..'Because they ain't making any more of it'....

 

[krusty]

when asked why he invested all of his money into land, Mark Twain replied..'Because they ain't making any more of it'....

An easy mark, he actually pissed most of it away on dubious and poorly performing business interests.

I will say, however, that the basic premise of the statement is quite correct.

 

[krusty]

Land, like the quality equity stock market, is an excellent investment IF you're able to hold onto it and eventually realize (in the financial meaning of the term) its value. But you must have the resources and fortitude to stay the course through bumpy times.

I believe I mentioned that my family (maternal side) arrived in Spokane in the 1880's. German immigrants with apparently a fair amount of coin because they bought up most of the Five Mile plateau (OldKid knows what that means), chunks of Wildrose Prairie (near Deer Park), and significant portions of downtown Spokane.

While the family didn't suffer during the depression and its aftermath, the patriarch (a miserly, onery, and quite fertile man) died and as typical of very large families...it tore itself to pieces in disputes regarding the disposition of the estate.

The male heirs, being farmers and small businessmen, wanted to keep the holdings, while the female contingent (a somewhat larger and even more vociferous group) relentlessly agitated for its liquidation on the basis it would never be worth much anyway. The 'liquidate' group eventually held sway.

The last holdings were sold in the 1970's.

A protip...never leave land to your inheritors in the form of 'undivided interests', unless your intent is to further divide your spawn.

I missed being 'Old Spokane Money' by a heir.

 

[Old406Kid]

they bought up most of the Five Mile plateau (OldKid knows what that means),

In 1978 I built one house up there in the black muck and basalt. Lesson learned and I moved down to the sandy loam in your neck of the woods where I built around 200 homes over the years. I did go back up to Five Mile and put in the footings for the Five Mile Heights entrance, once again in the muck. My memory was refreshed and I soon retreated back to Indian Trail.

 

[krusty]

In 1978 I built one house up there in the black muck and basalt. Lesson learned and I moved down to the sandy loam in your neck of the woods where I built around 200 homes over the years. I did go back up to Five Mile and put in the footings for the Five Mile Heights entrance, once again in the muck. My memory was refreshed and I soon retreated back to Indian Trail.

Hence my lack of interest in living up there!

Spokane County and the City generally lack the resolve to tell developers they can't build in areas with severe stormwater issues! Home buyers find out when its too late. The developers, of course, defend themselves by stating that local government let them do it. Those houses heading towards the sandy cliffs above Latah Creek are prime examples.

 

[RCF]

While many may think 'times of old' will never happen again, I believe 'times of old' are continuing to happen just in different places. I also believe that the trend to work remotely will be driving this as well as affordability of places for first-time buyers.

Any bets that high-speed internet accessibility will be a driving force of where the growth and demand happen in remote areas? Look where there is no high-speed accessibility and then find out where T-Mobile will be expanding in the near future, Turns a 'low desirable place' into a lot more saleable and desirable. Hmmmm.

In today's society there is a stronger attitude for I want it all and I want it now. People no longer have the skills nor want to develop them. Looking into the future people with those skills will be in greater demand. There has been a trend that for trades people are earning higher and higher incomes. Look at what it costs to hire a plumber or electrician now - $250+/hr. And it is only going up. That is a far cry from people in the service industry like cooks, servers, bartenders, retail sales, etc. And where are most of the job openings?

I still believe in sweat equity a lot. House appraisals for homes with unfinished basements are at one value and finished basements are a lot higher. As the sq.ft price of a house goes up (one way to access price) then that now finished basement goes up proportionally faster and higher than an unfished basement. It also improves the marketability and desirability of the property. It is a passive investment increase that will not be realized until the house sells. In the mean time it improves the quality of living - a good thing...