Housing Appreciation and Inflation: Future Outlook?

[SAJ-99]

Was looking at 5-10 year home sale predictions.

Came across this article. As I know little in this field, thoughts?

Will The Housing Market Crash in 2024? Experts Give 5-Year Predictions

Thanks to average mortgage rates remaining at more than double what they were in 2020 and 2021, and home prices staying sky-high, housing activity remains stagnant. Existing home sales are at their lowest levels since the height of the foreclosure crisis in 2010 and mortgage demand has dropped to

www.forbes.com

Meh. The experts all appear to be in RE, so they could be "talking their book", or jobs in this case. No one at a RE-related company is going to say "this is a terrible time to buy a house". They bring up some positive supportive points though.
It's like Wall Street analysts making predictions for the S&P for the end of the 2023. All positive, again. I heard someone say the other day that the average guess has NEVER been negative. No one wants to hear bad news or bad forecasts.

 

[SAJ-99]

From the NAR Characteristics of home buyers and seller report (NAR.REALTOR).

Like I said, beware NAR and its forecast. But it isn't all their fault. People are just a little crazy.

- First-time buyers made up only 26% of all buyers, down from 34% last year and a peak of 50% in 2010 during the First-Time Home Buyer Tax Credit. The age of the typical first-time buyer was 36 years – up from 33 years one year ago – and the typical repeat buyer's age climbed to 59 years from 56 years in 2021. Both ages are the highest in the history of the data set. The median expected home tenure for first-time buyers was 18 years, the highest ever recorded and up from 10 years in 2021.

I remember I took some flack on the other housing thread for saying the housing problem was partially related to Boomers staying in their homes. Transaction data don't lie.

- The typical home seller was 60 years old, an increase from 56 last year.

 

[AlaskaHunter]

The national inventory of single-family homes on the market is half of pre-pandemic levels.
As an example, in February 2020 there were 3622 homes for sale in western Montana. Currently, there are only 1722 homes for sale.

And with supply chain issues, inflation, high loan interest rates, the cost of building new homes has increased substantially.

Supply is likely to remain low relative to pre-pandemic levels.

 

[Deleted member 28227]

The national inventory of single-family homes on the market is half of pre-pandemic levels.
As an example, in February 2020 there were 3622 homes for sale in western Montana. Currently, there are only 1722 homes for sale.

And with supply chain issues, inflation, high loan interest rates, the cost of building new homes has increased substantially.

Supply is likely to remain low relative to pre-pandemic levels.

Unanswerable question but one I'm wondering about.

Lot of folks sat out of the 2020-Q322 craziness. How does that change everything, are those folks mostly renting who are looking to buy their first home, are there a decent number of homeowners who are looking to upgrade and were waiting to buy their second home and thus will increase entry level inventory when they move.

AirBnB/ short-term rentals what happens if there is a recession and this market takes it in the shorts. Do people sell these properties or hold and try long term rentals, how does this effect the market.

I'm not predicting anything really, but things I've been wondering about.

Also seems almost universally true that buying habits follow a curve, people notice things going up then their is an exponential acceleration as people don't want to be the left behind... same thing happens on the decline side.

 

[rustednuts]

I bought in August of 2021. We decided to be conservative with our purchase price and put 20% down so that even if the market drops we have less exposure. I'd still follow a similar philosophy right now, you are potentially buying high, and prices may drop.

Many airbnbers & investors are on the sidelines now since rates are higher. It is harder to make the house cash flow if your mortgage is up 1k/month than last year. If we hit a recession, where travel is reduced the short-term renters could be in trouble. We have no data on short-term renters in a recession.

I'd focus on finding & buying the right house in the right location, which could take several months. Be ready to buy today but also patient enough to get through the holidays.

 

[SAJ-99]

Unanswerable question but one I'm wondering about.

Lot of folks sat out of the 2020-Q322 craziness. How does that change everything, are those folks mostly renting who are looking to buy their first home, are there a decent number of homeowners who are looking to upgrade and were waiting to buy their second home and thus will increase entry level inventory when they move.

AirBnB/ short-term rentals what happens if there is a recession and this market takes it in the shorts. Do people sell these properties or hold and try long term rentals, how does this effect the market.

I'm not predicting anything really, but things I've been wondering about.

Also seems almost universally true that buying habits follow a curve, people notice things going up then their is an exponential acceleration as people don't want to be the left behind... same thing happens on the decline side.

Let's focus in the positive. You only need to find one house. The fact that there are only 1,000 listings instead of 2,000 shouldn't matter. Sure it's slow, but it's a buyers market and prices should be coming down. ABNB and recessions? I don't have anything there. Did you want to buy a place and AirBNB the basement?

Look at your situation and try to take advantage of it. You said you were only planning on being there 3-4yrs. Forced sellers are either family looking to unload after Gram's death or divorces. Find a house that has been on the market more than 30days and lowball the $hit out of it and see if they bite.

 

[Deleted member 28227]

Look at your situation and try to take advantage of it. You said you were only planning on being there 3-4yrs. Forced sellers are either family looking to unload after Gram's death or divorces. Find a house that has been on the market more than 30days and lowball the $hit out of it and see if they bite.

As we speak lol

Let's focus in the positive. You only need to find one house. The fact that there are only 1,000 listings instead of 2,000 shouldn't matter. Sure it's slow, but it's a buyers market and prices should be coming down. ABNB and recessions? I don't have anything there. Did you want to buy a place and AirBNB the basement?

Just interesting to speculate on the trends, to your point you just need 1 so it doesn't really effect my behavior at all.

 

[Irrelevant]

It is harder to make the house cash flow if your mortgage is up 1k/month than last year. If we hit a recession, where travel is reduced the short-term renters could be in trouble. We have no data on short-term renters in a recession.

1k is like 3-4 extra nights that month... irrelevant. If you can't AirB&B for vastly more than your mortgage, then you bought in the wrong market (location).

We're still too close to COVID lock downs for the travel market abide by any previous recession norms.

 

[SAJ-99]

If you can't AirB&B for vastly more than your mortgage, then you bought in the wrong market (location).

Someone can correct me on this, but I always thought people AirBNB'd as much for the tax arb benefit as the income. If you can't rent it out you get to write off the "uncollected" rent as passive income. Makes the house 25-30% cheaper. OK, I'm not an accountant and I'm sure it is more complicated than that, but that you get the idea. The tax system is set up to encourage the process. ABNB just skims a little (or a lot) off the top for providing a website/app.

 

[Deleted member 28227]

1k is like 3-4 extra nights that month... irrelevant. If you can't AirB&B for vastly more than your mortgage, then you bought in the wrong market (location).

We're still too close to COVID lock downs for the travel market abide by any previous recession norms.

Mostly agree, though as much as folks complain about hosts jacking up prices city lodging tax/county lodging tax/sales tax exploded everyone wanted a piece of the pie, then a lot of folks try to run them "passively" ie hiring out the cleaning of each unit after guests left. In the early days this wasn't a huge deal but when huge numbers of ABNB cropped cleaning services sky rocketed as there was a ton of demand for those services... anyway margins shrank a ton as a result.

Hotel exist because you are able to efficiently deal with a bunch of rooms, ABNB once it's not folks occasionally lending out rooms becomes far more expensive as it's incredibly inefficient if your trying to run it as a primary business and not a part-time DIY side hustle.

At the end of the day just depends on how much folks borrowed.

Someone can correct me on this, but I always thought people AirBNB'd as much for the tax arb benefit as the income. If you can't rent it out you get to write off the "uncollected" rent as passive income. Makes the house 25-30% cheaper. OK, I'm not an accountant and I'm sure it is more complicated than that, but that you get the idea. The tax system is set up to encourage the process. ABNB just skims a little (or a lot) off the top for providing a website/app.

ABNB fees suck all things considered 15% of total, then add various taxes and it can be like 20-25% and that's before you get your K-1 or 1099 or however you have it set up to pay yourself.

Point being tons of room to suck at the ABNB game and you don't know what you're doing.

 

[westbranch]

Someone can correct me on this, but I always thought people AirBNB'd as much for the tax arb benefit as the income. If you can't rent it out you get to write off the "uncollected" rent as passive income. Makes the house 25-30% cheaper. OK, I'm not an accountant and I'm sure it is more complicated than that, but that you get the idea. The tax system is set up to encourage the process. ABNB just skims a little (or a lot) off the top for providing a website/app.

A lot of rabbit holes to go down. But virtually everyone that would airbnb would be a cash basis taxpayer and so there would be no write off related to rent if nothing was collected. Actual expenses may still be deductible so it could still generate a loss. Multiple factors on direct/indirect expenses or personal use days if it is a vacation home or full time rental as well. One way to think of it is you would have to show $1,000 of rental income, then write off the $1,000 of uncollected rent so it just nets to zero. But passive losses are going to have limits for anyone making >$125k AGI per year, they get suspended and carried over if there is not passive income to offset.

I am sure @wllm will hear all sorts of tips from physician friends and he could be like so many Dr. spouses that claim to be a real estate professional and then deduct passive rental losses against other earnings.

I have seen some airbnb/VRBO properties that gross >$100k a year but there is a ton of work involved and fees/expenses eat up a lot of it.

 

[SAJ-99]

A lot of rabbit holes to go down. But virtually everyone that would airbnb would be a cash basis taxpayer and so there would be no write off related to rent if nothing was collected. Actual expenses may still be deductible so it could still generate a loss. Multiple factors on direct/indirect expenses or personal use days if it is a vacation home or full time rental as well. One way to think of it is you would have to show $1,000 of rental income, then write off the $1,000 of uncollected rent so it just nets to zero. But passive losses are going to have limits for anyone making >$125k AGI per year, they get suspended and carried over if there is not passive income to offset.

I am sure @wllm will hear all sorts of tips from physician friends and he could be like so many Dr. spouses that claim to be a real estate professional and then deduct passive rental losses against other earnings.

I have seen some airbnb/VRBO properties that gross >$100k a year but there is a ton of work involved and fees/expenses eat up a lot of it.

Yeah, exactly as I described.

 

[Deleted member 28227]

I am sure @wllm will hear all sorts of tips from physician friends and he could be like so many Dr. spouses that claim to be a real estate professional and then deduct passive rental losses against other earnings.

Had to clean up/ sell a rental for a family members estate.

I have 0 interest in that racket, anyone who says “its passive income” is crazy.

ABNB should be on @BigFin’s list of stuff to avoid, like power tools, if you want to go hunting a lot.

 

[BigHornRam]

Anyone have experience with Real Estate auctions? Seems to be a popular way to sell Estates in some parts of the country. This one closes tomorrow, has a house and 12 acres at $108,000 right now. Interesting to see where they end up. Couple details with this auction are, no finance contingency and a %10 buyers fee. Still could be a way to get a good deal if you know what you are doing.

Beautiful Farm Land for Sale in Floyd VA | United Country Blue Ridge Land & Auction Co Inc

Buy At Auction. Offering 1 - 6.59 Acres, Offering 2 - 12.9 Acres, Offering 3 - Country Home & 12.35 Acres, Offering 4 - 47.91 Acres, Offering 5 - 36.79 Acres, Offering 6 - 34.03 Acres at BLUERIDGELANDANDAUCTION.HiBid.com - Page 1 of 1

blueridgelandandauction.hibid.com

With an aging population there could be more of this in years to come.

 

[BigHornRam]

Had to clean up/ sell a rental for a family members estate.

I have 0 interest in that racket, anyone who says “its passive income” is crazy.

ABNB should be on @BigFin’s list of stuff to avoid, like power tools, if you want to go hunting a lot.

If you can't handle power tools wllm, you shouldn't play with weapons either. Agree on the landlord part. It sucks. The ABNB part probably sucks too.

 

[Irrelevant]

Mostly agree, though as much as folks complain about hosts jacking up prices city lodging tax/county lodging tax/sales tax exploded everyone wanted a piece of the pie, then a lot of folks try to run them "passively" ie hiring out the cleaning of each unit after guests left. In the early days this wasn't a huge deal but when huge numbers of ABNB cropped cleaning services sky rocketed as there was a ton of demand for those services... anyway margins shrank a ton as a result.

Hotel exist because you are able to efficiently deal with a bunch of rooms, ABNB once it's not folks occasionally lending out rooms becomes far more expensive as it's incredibly inefficient if your trying to run it as a primary business and not a part-time DIY side hustle.

At the end of the day just depends on how much folks borrowed.

3 people in our office get hotels for 1 weekend a month and ABnB their entire homes. That one weekend pays the mortgage in 2 of the 3 cases. Hotels only still work because some people still don't understand that they can rent a house for the same costs and not have to listen to someone else having fauk great sex 18" from your head though a paper thin wall.

Anyone can find ways to lose money, but ABnB is one of the harder ways.

 

[westbranch]

Had to clean up/ sell a rental for a family members estate.

I have 0 interest in that racket.

ABNB should be on @BigFin’s list of stuff to avoid, like power tools, if you want to go hunting a lot.

I know the feeling. We had bought a rental duplex the year after moving to ID. Did well cash flow wise but PITA with things coming up in the summer and fall. Since we were in the hottest housing market in the country in 2021 it was a pretty easy decision to sell for way more than we would have thought possible in 3 years. Fortunately we had bought a different house in the meantime before the market took off.

 

[Deleted member 28227]

Anyone can find ways to lose money, but ABnB is one of the harder ways.

I’m speaking of ABNB rentals rather than renting your house for a couple of weekends a year, like 60+ days a year occupancy.

It’s a separate part time job.

There are occasionally some decent ABNBs but I’m mostly back to hotels only. Less hassle and cheaper.

 

[TOGIE]

3 people in our office get hotels for 1 weekend a month and ABnB their entire homes. That one weekend pays the mortgage in 2 of the 3 cases. Hotels only still work because some people still don't understand that they can rent a house for the same costs and not have to listen to someone else having fauk great sex 18" from your head though a paper thin wall.

Anyone can find ways to lose money, but ABnB is one of the harder ways.

what makes you think all that hotel sex you're hearing is so great?

 

[Irrelevant]

I’m speaking of ABNB rentals rather than renting your house for a couple of weekends a year, like 60+ days a year occupancy.

It’s a separate part time job.

There are occasionally some decent ABNBs but I’m mostly back to hotels only. Less hassle and cheaper.

IDK, I know a lot of people that own short-term rentals, so many in fact, that our county now has a specific lottory permit system for new ones. Everyone seems to find the level of engagement they're looking for. One person has already left a career as an engineer to make more money and work less with two ABnBs, another is on the verge with only 1 house (though it has a second living space for additional guests).

The latter argues there's almost no work involved. If you think about a weekend stay, most people show up late Friday and go straight to bed, get up Saturday and after breakfast go do something all day, often eat out, then leave early Sunday to get home. They're not even in the house long enough to get it dirty.

I tried going back to a hotel twice in the last year, both times I regretted it and would have gladly paid the extra $20 a night for a quiet house and the ability to make a breakfast burrito in a undies in the morning.