Housing Appreciation and Inflation: Future Outlook?

[SAJ-99]

leave your well established job... there's a reason people oft aren't moving.

The job is the key. I am a big advocate for mobility, but not if you are leaving a well-established job. But that seems like a paradox - having a well-established job but can't afford to buy a house. Should we define "well-established". If you have a well-established job that pays peanuts, then maybe you might want to take a risk and move? Everyone has a case specific to them, and they should make decisions based on their circumstances. But when I look back, a lot of the more successful people I know that took a chance and moved are in a better spot. I think lot of this goes back to making decisions with future self in mind, particularly when you choose a path out of high school. A lot of jobs are pretty similar across the country. Some jobs lock you in by the nature of the subject (ie, grizzly bear biologist) and some by the structure of the job (needing/having an established client base). Sometimes you only get one opportunity at making that choice.

 

[BuzzH]

In many instances I know that you’re right, but there are plenty of opportunities to find a better income-to-housing circumstance. The increase in remote work I’ve the past decade has made that even more doable.

I’m not arguing that housing hasn’t become way more expensive (in terms of % of annual income) than it has been in forever- it absolutely has. Just pointing out what I feel is a reality in 2024.

True, if you can bring your job along for the move to a cheaper place it can work in some cases.

I did that very thing in 2000, moved to Laramie because of housing prices back then (way cheaper here than Missoula). The difference in housing prices now between living in Laramie and Missoula is about a push. Without a really good job in either place, you're hosed.

That's the other problem, there's fewer and fewer cheaper places to move to, lots of it due to remote work.

 

[Pagosa]

People basically spent too much in 2020/2022 on investment properties (airbnb) in western Montana and now that prices have dropped they are feeling the pain.

I know a guy that built a duplex 2400 sq ft on an acre of land outside of Kalispell for $225,000 between 2016/2017 rented it out for 4 years at $2600 per month, sold it January 2022 for $820,000. The young new owners put another 30k in furnishings and have been Airbnb it. They average around $2000-$3500 per month income, but spend 2-6 hours 5-6 days a week cleaning/lawn maintenance. They listed it 7 months ago at $1,290,000 and have had two price drops. Now at $1,190,000. Payments would not justify any return at the current rate, and throughout the winter months you have to lower the price to keep it occupied.

You don't it, it's owns you, applies to a lot of these properties.

I personally don't see this ending well, I really hope I'm wrong because I'm working some in construction and it will negativity effect a lot of people and we end up with more corporations buying properties

 

[brymoore]

True, if you can bring your job along for the move to a cheaper place it can work in some cases.

I did that very thing in 2000, moved to Laramie because of housing prices back then (way cheaper here than Missoula). The difference in housing prices now between living in Laramie and Missoula is about a push. Without a really good job in either place, you're hosed.

That's the other problem, there's fewer and fewer cheaper places to move to, lots of it due to remote work.

There are cheaper places to move to but no one wants to live there. Midwest, Deep South, etc.

 

[HighDesertSage]

There are cheaper places to move to but no one wants to live there. Midwest, Deep South, etc.

I never understood why. The few years I was in Iowa I never lacked outdoor opportunity. I even skipped going out west one year and opted to stay home and chase whitetails with my bow.

 

[BigHornRam]

This was our first house. We paid $40,000 for it in 1991. Lived in it for 4 years. It was a cute little house when we sold it. Looks like a dump today. Need any more proof we are playing with monopoly money?

https://www.realtor.com/realestateandhomes-detail/431-E-Spotswood-St_Moscow_ID_83843_M26935-85978

I see a major correction coming.

 

[Forkyfinder]

This was our first house. We paid $40,000 for it in 1991. Lived in it for 4 years. It was a cute little house when we sold it. Looks like a dump today. Need any more proof we are playing with monopoly money?

https://www.realtor.com/realestateandhomes-detail/431-E-Spotswood-St_Moscow_ID_83843_M26935-85978

I see a major correction coming.

View attachment 334685

I know lots of folks who have been doom and gloom since covid, and especially after biden was elected.

Cost em a lot of money in the market

 

[SAJ-99]

This was our first house. We paid $40,000 for it in 1991. Lived in it for 4 years. It was a cute little house when we sold it. Looks like a dump today. Need any more proof we are playing with monopoly money?

https://www.realtor.com/realestateandhomes-detail/431-E-Spotswood-St_Moscow_ID_83843_M26935-85978

I see a major correction coming.

View attachment 334685

It’s a 7% annualized return. That doesn’t take into account any remodeling (from the picture I doubt there was any, LOL) or maintenance cost. You see “correction coming” I see “real estate is a horrible investment”.

 

[brymoore]

This was our first house. We paid $40,000 for it in 1991. Lived in it for 4 years. It was a cute little house when we sold it. Looks like a dump today. Need any more proof we are playing with monopoly money?

https://www.realtor.com/realestateandhomes-detail/431-E-Spotswood-St_Moscow_ID_83843_M26935-85978

I see a major correction coming.

View attachment 334685

If you were to invest the same $40k in the S&P for 33 years it would worth $687k using. 9% return. S&P average is higher than 9%.

 

[BigHornRam]

It’s a 7% annualized return. That doesn’t take into account any remodeling (from the picture I doubt there was any, LOL) or maintenance cost. You see “correction coming” I see “real estate is a horrible investment”.

It was rented out for $400 a month when we bought it. Web site says similar properties in the nearby area are now averaging $1,080 rent. Rents have not appreciated near as fast as home vaulation. House was built in 1903 and moved onto city lot. It's 33 years older now than it was back then. I sure wouldn't appraise it at $340,000.

 

[SAJ-99]

It was rented out for $400 a month when we bought it. Web site says similar properties in the nearby area are now averaging $1,080 rent. Rents have not appreciated near as fast as home vaulation. House was built in 1903 and moved onto city lot. It's 33 years older now than it was back then. I sure wouldn't appraise it at $340,000.

From the picture I would say it is probably overvalued, but I wouldn't say by much. Is it close enough to the college to attract students? That tends to support prices in those cities. What was your mortgage in 1991? 10%? That makes today's 6.5% look like a steal.

Renting is now more attractive than buying in most of the country, certainly urban centers. I just don't see anything major to correct prices. We don't have banks holding a ton of mortgages like 2007-08. Even if prices move down and owners get underwater, as long as they have a job they just sit on it. Forced sellers would be divorce, death, and job loss/relocation. In my area what i see moving are houses that need very little updating. If the house was last updated in 1980's or even 1990's, it will sit on the market for a while. I suspect your old house would do the same. Then you have the issue of the county needing the tax revenue and not wanting to reduce tax appraisals. The entire system is set up to keep prices up.

 

[Sytes]

I had a great boost of $ from our home sale though that was due to COVID and "Yellowstone".

On note, I'm curious considering how much is paid to interest from a 30 yr loan vs how much actual profit is present once set to sell.

 

[Forkyfinder]

I had a great boost of $ from our home sale though that was due to COVID and "Yellowstone".

On note, I'm curious considering how much is paid to interest from a 30 yr loan vs how much actual profit is present once set to sell.

some of this is also "devalue" of your dollar - especially the last 4years.

 

[BigHornRam]

From the picture I would say it is probably overvalued, but I wouldn't say by much. Is it close enough to the college to attract students? That tends to support prices in those cities. What was your mortgage in 1991? 10%? That makes today's 6.5% look like a steal.

Renting is now more attractive than buying in most of the country, certainly urban centers. I just don't see anything major to correct prices. We don't have banks holding a ton of mortgages like 2007-08. Even if prices move down and owners get underwater, as long as they have a job they just sit on it. Forced sellers would be divorce, death, and job loss/relocation. In my area what i see moving are houses that need very little updating. If the house was last updated in 1980's or even 1990's, it will sit on the market for a while. I suspect your old house would do the same. Then you have the issue of the county needing the tax revenue and not wanting to reduce tax appraisals. The entire system is set up to keep prices up.

About a mile from UI. Interest was in the 8% range. Monthly payments with pmi, taxes and Hoi was $400. Same as rent cost then. Definitely would be better to rent it today than buy it.

 

[elkduds]

Tax deductions are one of the factors that keep home mortgages and rental properties viable as investments. Mrs. Duds and I used 2 rental properties to zero out our income tax liability during a decade of high earnings @ work. A few 10-31 exchanges along the way.

 

[SAJ-99]

I had a great boost of $ from our home sale though that was due to COVID and "Yellowstone".

On note, I'm curious considering how much is paid to interest from a 30 yr loan vs how much actual profit is present once set to sell.

6.75% is kind of a magic number with 20% down. The total amount of interest paid is about equal to the amount of the loan.

Mortgage Payment Calculator

Calculate the monthly payments and total cost of a mortgage based on the price, term, interest rate and down payment, and see the benefit of extra payments.

www.consolidatedcredit.org

 

[BigHornRam]

There are cheaper places to move to but no one wants to live there. Midwest, Deep South, etc.

Here are 5 places so crappy, they will pay you to live there.

Looking for a fresh start? These cities will pay you cash to move

For many people, making money moves is a good call, according to Realtor.com® senior economist Ralph McLaughlin. “The double bonus of a cash subsidy combined with lower home prices could be quite a…

nypost.com

 

[Sytes]

6.75% is kind of a magic number with 20% down. The total amount of interest paid is about equal to the amount of the loan.

Mortgage Payment Calculator

Calculate the monthly payments and total cost of a mortgage based on the price, term, interest rate and down payment, and see the benefit of extra payments.

www.consolidatedcredit.org

So IS real estate one of the best investments if a person is also paying the total value of a house at the rate in your message? Makes me wonder... It would have to be sold at almost 3x's its value to be considered a cream investment opportunity or am I misunderstanding?

 

[Forkyfinder]

So IS real estate one of the best investments if a person is also paying the total value of a house at the rate in your message? Makes me wonder... It would have to be sold at almost 3x's its value to be considered a cream investment opportunity or am I misunderstanding?

Yes and no.

Rent, prop taxes, upkeep/maintenance, and appreciation are all very property specific. Its hard to really know without some assumptions/data there but those are large movers in calculating ROI.

 

[perma]

True, if you can bring your job along for the move to a cheaper place it can work in some cases.

I did that very thing in 2000, moved to Laramie because of housing prices back then (way cheaper here than Missoula). The difference in housing prices now between living in Laramie and Missoula is about a push. Without a really good job in either place, you're hosed.

Same, got to keep my job and moved to WY. It’s got its problems but generally speaking, I sleep well knowing I made the right choice.

That's the other problem, there's fewer and fewer cheaper places to move to, lots of it due to remote work.

I had this discussion with my wife the other day. I believe that’s true generally but there are a handful of beautiful places that a lot of people opted to not move to when the remote work mass started. People still need their Chik-fil-a and Lululemon. SE WY will eventually get there, only a matter of time.