Similar story with our second home in Sedona, Arizona.
I hear you - who would have imagined that COVID would create this type of housing madness. We need workers to go back to NYC because they are invading NJ. I hear the same on the West Coast. My mother lives outside L.A. and every house in her neighborhood is now $1M+ and up 30%+ in the last two years. The CA market is worse than NY. Not to mention that NYC is still like a ghost-town compared to the past so my question is how can big cities survive long term without daily workers/commuters?
Why would prices be lower in 2-3 years especially when you factor in money you threw away renting.
Money is coming from a massive move higher in equity markets, still cheap financing despite backup in rates and a very tight labor market that has seen huge raises in certain industries.
If you do a traditional 30-year fixed, you don't pay off much principle in the first few years. So initially, renting isn't a big deal.
Exactly right. It is a roadblock to our dream house right now. As we were selling our home through 2019, we found a home in Mt. Arlington, right on the lake. Incredible house, completely in the taste of how my wife would have had it built for here. Owner is a realtor, and they had a plan to buy a condo on the lake but that fell through and then they took theirs off the market. They began looking down in Florida and we ended up becoming very good friends with them. They were going to allow us to make an offer on their home if they found their perfect Florida home. Then, pandemic hit...They would still love to sell us their house but the Florida market is even worse than what we are seeing up here. So- they are not planning to move until things settle down as you said, you sell your house now, you make a good profit but then you have to buy something else, and good chance you may lose that additional profit buy over bidding on your next purchase.
Because In 2-3 years the people who are psychotic about covid will have calmed down or been voted out, people running the cities will come to their senses or be voted out, and all the city people fled will look to return. Also, as life becomes normal less people will look to move out of state and there will be people who risked to move down south that will realize it’s not for them.
Add in The Great Wealth Transfer. $40-70 trillion will be inherited by GenX/Millennials from their parents. How much of that money is pumping or will pump into the housing market?
Ha - if it makes you feel better I had basically the same scenario. Had a hand-shake deal for lake front property in my town before COVID hit at great price point and even set closing date. Became friends with the owners and waited years for that house. Owners were planning to move down the shore. Then COVID screwed up everything and they reneged because they can’t find anything to buy. The whole housing situation is a disaster.
That's what we plan to do. Higher rates will lower asset values...equities, real estate, fixed income, etc. My hope is to sell in the next month or two, wait for the inevitable market crash, put my money into equities at lower prices when things feel terrible, then when that turns around, buy my retirement home with the equity gains. I'm thinking it'll be a 3-5 year process.
Also if you are sitting on the cash for a down payment, you can now put that into short term bonds at 3% or so and at least offset some of the cost of renting.
Is it ? I think each situation would be different and really need to crunch numbers . I saw one-bedroom rentals going near garwood train station going for about 3k in rent . You do that for 3 years and you’re looking 100k
I wish it was a few years from now. If I could have gotten my youngest through most of HS, I could downsize and rent a condo.
So less than half of what people are getting over asking. Not to mention, these people are all forgoing inspection. So no new roof, etc. and that hundred is over 3 years not up front. How much am I earning on that money even if I’m only getting 5-7% returns.
Other factor is the WFH point and you're one of the first to mention it. People in genera are placing more emphasis on their homes given time they'll spend there, and locally (although would likely apply nationally, this expands the range of locations for commuters. A 2 hour commute to NYC is brutal, but if you o lot have to do it 1-2 times a week, it's totally manageable.
Things that go up must come down. Not sure when but the market will drop.
I don’t think prices will come down much with or without a recession, especially once people are fixated on what they believe their house is now worth based on outrageous increases, not to mention if you paid top dollar in last 2 years you are less likely to take a haircut. Need return to the office to force people back into the cities. Or, some event that dramatically impacts employment, wages, investments, etc.
Reassessing home values doesn't directly increase tax revenue for towns. The overall tax revenue amount is set every year. Assessments just figure out who pays what portion of that amount.
At this rate I think there’s a chance that people get fed up and go the extreme route of RVs/mobile homes. A fraction of the price of a SFH, much lower expenses, and fits the work from anywhere model.
