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Housing Appreciation and Inflation: Future Outlook?

@neffa3 speaking of rentals...

My parents built there house in 1997 back then it was illegal to build a lock-off and/or to rent out part of your house.

Fast forward 2022 the county is loaning folks money at crazy low interest rates to build lock-offs to increase housing.

"The term of the Loan shall be fifteen years (“Term”). During the first three years of the Term (the “initial period”), the Loan shall not carry any interest and no Loan payments shall be due. After the expiration of the initial period, the Loan shall carry a maximum simple interest rate of 2% annually for the remainder of the Term or until the Loan is paid in full, whichever occurs first. Loan payments of principal and interest may be made on an annual basis."

You know the market has completely priced out middle to upper middle class families when...
 
wllm said:
@neffa3 speaking of rentals...

My parents built there house in 1997 back then it was illegal to build a lock-off and/or to rent out part of your house.

Fast forward 2022 the county is loaning folks money at crazy low interest rates to build lock-offs to increase housing.

"The term of the Loan shall be fifteen years (“Term”). During the first three years of the Term (the “initial period”), the Loan shall not carry any interest and no Loan payments shall be due. After the expiration of the initial period, the Loan shall carry a maximum simple interest rate of 2% annually for the remainder of the Term or until the Loan is paid in full, whichever occurs first. Loan payments of principal and interest may be made on an annual basis."

You know the market has completely priced out middle to upper middle class families when...
Click to expand...
I bought one here with an illegal lock-off, the RE agent warned me but in knew there was no way it was going to be enforced due to the housing situation. 2 years later the town allowed all the old lock offs to be grandfathered in!
 
SAJ-99 said:
I don't see how you walk away making money in that scenario, especially given the transaction costs with selling a home. Unless you know someone with a Realtor license that will do for free.
Click to expand...
I disagree, especially with the price point @wllm is looking at. I've owned 4 houses. The first two were sold after a couple of years. Each time we made a good chunk to put down on our next house. If one is set on 4-5 years and has to do it with a mortgage, a 15-year mortgage after 5 years, plus equity in the home...I say they are sitting pretty good. I suppose it depends on where you live.
 
Leinenkugelsfreak said:
What blows my mind is how many cash buyers there still are our there and were not talking shitty flip houses either.
Click to expand...
One reason is there is a record equity - debt even at today's prices, and with the baby boomers having houses that are paid off and using cash when downsizing.

Another reason is migration from high cost markets like Seattle, California, etc. to more affordable regions.
 
fowladdict said:
I disagree, especially with the price point @wllm is looking at. I've owned 4 houses. The first two were sold after a couple of years. Each time we made a good chunk to put down on our next house. If one is set on 4-5 years and has to do it with a mortgage, a 15-year mortgage after 5 years, plus equity in the home...I say they are sitting pretty good. I suppose it depends on where you live.
Click to expand...
Did you buy pre 08' and sell 10-12?

Not a gotcha, genuinely curious. I did very well buying/selling our place in Denver but that was a very different market, even though it was only a couple of years ago.
 
fowladdict said:
I disagree, especially with the price point @wllm is looking at. I've owned 4 houses. The first two were sold after a couple of years. Each time we made a good chunk to put down on our next house. If one is set on 4-5 years and has to do it with a mortgage, a 15-year mortgage after 5 years, plus equity in the home...I say they are sitting pretty good. I suppose it depends on where you live.
Click to expand...
I don't think I'm going out on a limb with the statement. I am also more confident given home prices are going to most likely decline from here a little. Not crash, but decline. Average home appreciates at about 3% annually. His target time frame was 4-5 years. You can't just look at purchase price minus sales price. People love to do this with RE. There are a lot of costs in selling and a lot of costs incurred over the time frame it was owned. Building equity is good, and I highly recommend it. But it isn't a "gain" in the investment sense. Eyes wide open, is my only advice. I do agree everyones mileage will vary depending on local conditions.

www.forbes.com

Selling Your Home Within 2 Years Of Buying? Read This First!

Whether you bought your home as an investment or as your primary residence, 1-2 years is generally not enough time for a property to appreciate. Read my three financial issues you WILL face when selling a home before the two-year mark!
www.forbes.com www.forbes.com

finance.yahoo.com

Canadian Home Prices Grind Lower as Winter Freeze Grips Market

(Bloomberg) -- Canadian home prices fell for a ninth straight month as sharply rising interest rates prompted buyers and sellers to withdraw from the market heading into the traditionally slower winter season.Most Read from BloombergIs Putin Finally Getting Smart About His Ukraine...
finance.yahoo.com finance.yahoo.com
 
fowladdict said:
I disagree, especially with the price point @wllm is looking at. I've owned 4 houses. The first two were sold after a couple of years. Each time we made a good chunk to put down on our next house. If one is set on 4-5 years and has to do it with a mortgage, a 15-year mortgage after 5 years, plus equity in the home...I say they are sitting pretty good. I suppose it depends on where you live.
Click to expand...
I bought our first house in 2007 and were underwater for over a decade, at 14 years, we turned a 15% profit. It's all about timing.

With the existing market I don't envy Will - wait, yes I do, the guy's livin' the friggin' 'Merican dream.
 
Sytes said:
What are lock offs?
Click to expand...
"A lock-off apartment or a lock-off unit is a term used to describe a rental unit that can be divided into separate rooms or units. The terms are used interchangeably and mean the same thing. A vacation home that has two separate units with two separate entrances is an example of a lockout suite"
 
neffa3 said:
I bought our first house in 2007 and were underwater for over a decade, at 14 years, we turned a 15% profit. It's all about timing.

With the existing market I don't envy Will - wait, yes I do, the guy's livin' the friggin' 'Merican dream.
Click to expand...

If you had purchased a house in Montana in the last 30 years, I think it would have been very difficult to be underwater for long.

1671126549827.png
 
At this point I am not thinking I would be in the house flipping habit. I know a few people that lost a LOT in the 2008 crash, including some who were on this forum. The housing market is at a tipping point IMO
 
wllm said:
Did you buy pre 08' and sell 10-12?

Not a gotcha, genuinely curious. I did very well buying/selling our place in Denver but that was a very different market, even though it was only a couple of years ago.
Click to expand...
I guess I look at things differently than some of you. In my mind, I would take into consideration that you are already ahead of the game having already been successful by turning a profit in Denver (and intend to use that profit on the next home). All things considered, if you move from one side of the States to the other side that is probably a different situation and my RE experience isn't valid. Since 1999 ( time of purchase of first home) I have only seen the market where I was "underwater" for 4-5 years (2008-2012ish). Although I never really felt "underwater" because I think I always owed near-to or less than what the market value was at that time.

First House: 1999 for 130K. Sold for 180Kish in 2001
Second House: 2001 for 210K. Sold for 280kish in 2003
Third House: 2004 (new build) for 310K. Divorced wife in 2007 and bought her out based on assessed value at the time which was about 430k. Sold the house in March 2020 for 575k. Should have sold for 650Kish, but two accepted offers both backed out for COVID reasonings. I wish I would have waited until June/July and we probably could have sold that house for 700Kish.
Fourth House: 2020 for 610K. Plan to be here until I retire around 2035. House will be paid off pre 2035 if all goes to plan.
 
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neffa3 said:
I bought our first house in 2007 and were underwater for over a decade, at 14 years, we turned a 15% profit. It's all about timing.

With the existing market I don't envy Will - wait, yes I do, the guy's livin' the friggin' 'Merican dream.
Click to expand...
Geez. It wasn't anything like that in our neck of the woods. Like Brymoore mentioned earlier, I wish I could invest in RE at the 2007 prices.
 
SAJ-99 said:
I don't think I'm going out on a limb with the statement. I am also more confident given home prices are going to most likely decline from here a little. Not crash, but decline. Average home appreciates at about 3% annually. His target time frame was 4-5 years. You can't just look at purchase price minus sales price. People love to do this with RE. There are a lot of costs in selling and a lot of costs incurred over the time frame it was owned. Building equity is good, and I highly recommend it. But it isn't a "gain" in the investment sense. Eyes wide open, is my only advice. I do agree everyones mileage will vary depending on local conditions.

www.forbes.com

Selling Your Home Within 2 Years Of Buying? Read This First!

Whether you bought your home as an investment or as your primary residence, 1-2 years is generally not enough time for a property to appreciate. Read my three financial issues you WILL face when selling a home before the two-year mark!
www.forbes.com www.forbes.com

finance.yahoo.com

Canadian Home Prices Grind Lower as Winter Freeze Grips Market

(Bloomberg) -- Canadian home prices fell for a ninth straight month as sharply rising interest rates prompted buyers and sellers to withdraw from the market heading into the traditionally slower winter season.Most Read from BloombergIs Putin Finally Getting Smart About His Ukraine...
finance.yahoo.com finance.yahoo.com
Click to expand...


WAGS... but I think the most honest approach is to consider renting versus buying for a primary home. This table is assuming you sell for your purchase price, last four values are buying versus renting for years 1-4.
1671126543181.png

... but to your point, if you sell your house for 20% more than you bought it for after one year of ownership
1671127785666.png

@fowladdict the other variable that makes things weird are rental rates. For instance Boston and Denver are wildly different.

Using Zillow numbers

Boston
Price
$750,000
Rent
$3,000 a month

Denver
Price
$548,000
Rent
$3,000 a month

So the above table which is maybe Denver esk it starts to make sense to buy around year 2, Boston stretches out to year three +, and there are rent controlled buildings where it's like 1.5MM v. $800 a month where it starts to never make sense to buy.

1671129812407.png
 
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Kind of figured the land auction prices would shoot up in the last minutes. The 34 acre timber parcel must have some nice trees on it. It's highest price of the bunch with a bidding war going on.

Screenshot_20221215-131024_Chrome.jpg
 
wllm said:
@Sytes been thinking about this hard last couple of weeks, thanks for starting the thread as I'm curious to what people have to say.

We are looking at buying in the next few months, with the knowledge we will be selling in 4-5 (years).

I'm not trying to make a bunch, but I'm definitely worried about losing some and/or struggling to sell when we want to leave.
Click to expand...
Losing some is still a hell of a lot better than renting in most cases. You’d have to lose a lot to come out worse than renting I would think.

Not being able to sell is a valid concern.
 
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