The house is up fo sale

[MileHighGrowler]

(10-10-2021, 01:16 PM)fredtoast Wrote: I know interest rates are low.  But just look what happened during the last housing bubble.  Many people ended up walking away from their mortgage when it was twice the value of the house.  Why keep paying on a $300K mortgage when the house is just worth $150K?

I think that really depends on where you are.  There are some places in the country where it's probably an artificial bubble, created by the shortage of people selling their homes compared to the people wanting to buy.  

However, I know in areas like Denver, we just literally don't have enough housing for the number of people who live and are moving here.  We are several years away from building enough new to even that out, which would also mean the numbers of people moving would need to slow.  For the market to "crash", we'd have to reverse the trend, and dramatically so.  So effectively, there is no reason to think values will drop again unless there's a major national economic collapse that puts a significant number of homes into foreclosure.  

[fredtoast]

(10-11-2021, 10:22 AM)MileHighGrowler Wrote:  So effectively, there is no reason to think values will drop again unless there's a major national economic collapse that puts a significant number of homes into foreclosure.  

We shut down half of our businesses and the stock market hit record highs just because the government created $6 billion out of thin air.

You don't think there will be any "correction" for this?

[MileHighGrowler]

(10-11-2021, 12:39 PM)fredtoast Wrote: We shut down half of our businesses and the stock market hit record highs just because the government created $6 billion out of thin air.

You don't think there will be any "correction" for this?

We were hit here with that the same way.  And yet, we still have a shortage of homes and the demand is still there, so the numbers keep going up.  And interestingly enough, the economic impacts and fears have caused the market to jump even higher because less people are wanting to sell/move.  If there's a correction, I think it's going to be that the rise slows down, not that it quits.  I only speak for the area I live in, but our prices have gone up consistently 5-15% YOY for well over a decade.  The last housing crash caused those numbers to flatten for a couple of years, and then it was back to climbing again.  

The last housing crash was also related to the way mortgages were approved, which is not what is being seen now.  The fear now is that the actual assessed home value will drop to below what was secured through a loan (not because it was a bad loan), but there are a lot of things that need to happen for that.  And given the equity you can build on a home that's increasing in value even 5% a year is remarkable and it's very little wonder people are so interested in buying vs renting. 

[fredtoast]

(10-11-2021, 01:14 PM)MileHighGrowler Wrote:  And interestingly enough, the economic impacts and fears have caused the market to jump even higher because less people are wanting to sell/move. 

I don't believe this is true at all.  I see the bubble as being created by the immense amount of money pumped into the economy.  And all of that "new wealth" has gone to the people and corporations who already had wealth/investments before the pandemic.

If no one was wanting to move then there would be fewer buyers looking for new homes.

[MileHighGrowler]

(10-12-2021, 08:01 AM)fredtoast Wrote: I don't believe this is true at all.  I see the bubble as being created by the immense amount of money pumped into the economy.  And all of that "new wealth" has gone to the people and corporations who already had wealth/investments before the pandemic.

If no one was wanting to move then there would be fewer buyers looking for new homes.

But that's exactly why this is a regional issue, and not a commentary from me on the national housing market.  In the front range, we've had an average of 1,000 people moving here a week for the past decade+.  There are simply not enough houses available for a) new people moving to the area and b) people looking to upgrade.  And there's another factor to bear in mind here for future growth:  A decent percentage of the people moving to Colorado right now are younger, single people, moving into apartments or shared housing (2-4 roommates in a single family home).  In say 3-5 years, if they decide to start families, or want to just have more space (this was a huge desire across the country during COVID when people were stuck in their homes), the SFH market will jump even more.  I just don't see it changing.  People would have to leave the state in droves.  A mass exodus.  And with infrastructure improving, more companies moving and many other companies giving people the ability to remote work, I just don't see an exodus on that scale to turn the tide anywhere in the near future.  

There are other nuances to the local conversation (like how much harder it is now to be a landlord vs what it was even a year ago as a result of new laws), and I find it all really fascinating, but I don't want to completely hijack the thread to talk about Colorado real estate  

[fredtoast]

(10-12-2021, 10:54 AM)MileHighGrowler Wrote:   In the front range, we've had an average of 1,000 people moving here a week for the past decade+.  

And if the pandemic stopped people from wanting to move then that number would be dropping.

I am pretty sure Colorado has been growing for years now and that growth did not drive up housing prices like we are seeing right now.

Are you in the real estate business?  One of my best friends is a mortgage broker in Bailey.  LeaderOne Financial.

[George Cantstandya]

(10-12-2021, 12:47 PM)fredtoast Wrote: And if the pandemic stopped people from wanting to move then that number would be dropping.

I am pretty sure Colorado has been growing for years now and that growth did not drive up housing prices like we are seeing right now.

Are you in the real estate business?  One of my best friends is a mortgage broker in Bailey.  LeaderOne Financial.

From my understanding of this "bubble" is that there is indeed a shortage of houses for sale due to few reasons.  One there are not a lot new houses being built.  Two due to Covid banks started lowering interest rates to attract buyers during a time when people were afraid of buying.  Those lowered rates increased the amount of buyers. 

The 2008 crash had lot going on as I understand it.  There were a lot of houses being built prior to 2008 and and banks were trying to cash in on the over supply of houses.  Often handing out subprime mortgages to people that would not normally qualify for a home loan.   A lot of them were ARM loans given to people that didn't understand how they work.   Then when the market crashed the people that signed into those bad loans found themselves in a bad situation while the banks that approved them got bailed out.  

This is different this time.  Banks are much more conservative about the home loans they approve.  Now it is a housing shortage instead of an over supply 2008 and prior.  But as I mentioned earlier and linked, nation wide 24% average increase in home value since 2019.  That's not really a big bubble and as the article I linked earlier, it seems it will self correct.  

On average a home appreciates around 3% per year depending on location. So even if buying a bit over now in ten years there should be no loss.

[MileHighGrowler]

(10-12-2021, 12:47 PM)fredtoast Wrote: And if the pandemic stopped people from wanting to move then that number would be dropping.

I am pretty sure Colorado has been growing for years now and that growth did not drive up housing prices like we are seeing right now.

Are you in the real estate business?  One of my best friends is a mortgage broker in Bailey.  LeaderOne Financial.

(10-12-2021, 06:49 PM)George Cantstandya Wrote: From my understanding of this "bubble" is that there is indeed a shortage of houses for sale due to few reasons.  One there are not a lot new houses being built.  Two due to Covid banks started lowering interest rates to attract buyers during a time when people were afraid of buying.  Those lowered rates increased the amount of buyers. 

The 2008 crash had lot going on as I understand it.  There were a lot of houses being built prior to 2008 and and banks were trying to cash in on the over supply of houses.  Often handing out subprime mortgages to people that would not normally qualify for a home loan.   A lot of them were ARM loans given to people that didn't understand how they work.   Then when the market crashed the people that signed into those bad loans found themselves in a bad situation while the banks that approved them got bailed out.  

This is different this time.  Banks are much more conservative about the home loans they approve.  Now it is a housing shortage instead of an over supply 2008 and prior.  But as I mentioned earlier and linked, nation wide 24% average increase in home value since 2019.  That's not really a big bubble and as the article I linked earlier, it seems it will self correct.  

On average a home appreciates around 3% per year depending on location. So even if buying a bit over now in ten years there should be no loss.

Your understanding is the same as mine, George. It's a completely different scenario than what led to the last housing crash.

To your question, Fred, no, I'm not in real estate. But the Colorado front range is an odd beast. 3%/ year may be the national average (and I'm guessing roughly coincides with inflation rates), but for the past decade, Denver has been around 10% growth each year, with zero signs of slowing down. Which is why I don't see much risk with buying a house in Colorado as long as you can properly afford it.

[grampahol]

(10-12-2021, 06:49 PM)George Cantstandya Wrote: From my understanding of this "bubble" is that there is indeed a shortage of houses for sale due to few reasons.  One there are not a lot new houses being built.  Two due to Covid banks started lowering interest rates to attract buyers during a time when people were afraid of buying.  Those lowered rates increased the amount of buyers. 

The 2008 crash had lot going on as I understand it.  There were a lot of houses being built prior to 2008 and and banks were trying to cash in on the over supply of houses.  Often handing out subprime mortgages to people that would not normally qualify for a home loan.   A lot of them were ARM loans given to people that didn't understand how they work.   Then when the market crashed the people that signed into those bad loans found themselves in a bad situation while the banks that approved them got bailed out.  

This is different this time.  Banks are much more conservative about the home loans they approve.  Now it is a housing shortage instead of an over supply 2008 and prior.  But as I mentioned earlier and linked, nation wide 24% average increase in home value since 2019.  That's not really a big bubble and as the article I linked earlier, it seems it will self correct.  

On average a home appreciates around 3% per year depending on location.    So even if buying a bit over now in ten years there should be no loss.

Dad's house jumped in value from $70K to an estimated $120K right after the pandemic began. We put it up for 115 and got 3 offers for 117 within a day or two..

[grampahol]

(10-12-2021, 08:01 AM)fredtoast Wrote: I don't believe this is true at all.  I see the bubble as being created by the immense amount of money pumped into the economy.  And all of that "new wealth" has gone to the people and corporations who already had wealth/investments before the pandemic.

If no one was wanting to move then there would be fewer buyers looking for new homes.

The neighborhood my dad's place is always had 4-5 houses for sale every week, but when I decided to sell we were the ONLY house in the entire neighborhood for sale. 5 years ago we tried to sell it for $70K and got no takers The last place sold 6 months ago for 103K..We're going to get 117K this time around..  Closing is mid-November assuming all goes right with inspections and appraisals..