OT: Why the real estate market is not in a bubble: Q1 2023 update video added to OP

[NotInRHouse]

Do you know the difference between affordable housing units and what @Plum Street was referring to? It's 2 completely different things.

Sure, but that's not accurate either.

I posted a link. There a new homes being built in NJ for under 300k. There are townhomes under 200k.

Are they in Edison? No. But they are in NJ.

The bottom line is, if you're truly low income, or if you're middle income, there are lots of options in NJ.

And of course with so many not needing to be in an office 5 days if at all, people could leave. And instead we see that not only did NJ's population increase during the last census, but that there's absurd bidding wars all over the state, not just in Montclair and Westfield but also in Jackson and Toms River.

 

[RUskoolie]

Sure, but that's not accurate either.

I posted a link. There a new homes being built in NJ for under 300k. There are townhomes under 200k.

Are they in Edison? No. But they are in NJ.

The bottom line is, if you're truly low income, or if you're middle income, there are lots of options in NJ.

And of course with so many not needing to be in an office 5 days if at all, people could leave. And instead we see that not only did NJ's population increase during the last census, but that there's absurd bidding wars all over the state, not just in Montclair and Westfield but also in Jackson and Toms River.

Bro, you posted some townhouses built in the middle of no where in Egg Harbor. You're proving my point. I can go to every state and find some random spot where you can get something cheap. That's not proving affordable housing is being built. Hell if I really care enough and did research you would probably learn that those townhouses are expensive relative to other prices in that area historically.

There are not lots of options for low/middle income people. The options are rentals (many of which are shitty and the remainder very expensive) or if you can qualify for a home you're under 500k in budget, likely FHA and hopelessly putting offers in.

 

[RU Cheese]

Can't ignore property tax either. Property tax for median home in NJ ($355k) is $9k a year. That's $750 a month on top of mortgage.

It's 43% higher than the second-leading state. Unreal. Worth noting NY and CT are on top 5 as well.

 

[RUAldo]

Bro, you posted some townhouses built in the middle of no where in Egg Harbor. You're proving my point. I can go to every state and find some random spot where you can get something cheap. That's not proving affordable housing is being built. Hell if I really care enough and did research you would probably learn that those townhouses are expensive relative to other prices in that area historically.

There are not lots of options for low/middle income people. The options are rentals (many of which are shitty and the remainder very expensive) or if you can qualify for a home you're under 500k in budget, likely FHA and hopelessly putting offers in.

The other issue is that just about anything “affordable” needs a ton of work due to the ages of many NJ homes/neighborhoods. In Northern NJ, good luck getting anything under $750K that doesn’t need new kitchen, baths, etc. And the cost of all of those renovations seem to have doubled in last few years. In Morris County, I see reno projects going on all over the place = New Roofs, Kitchens, baths, massive additions, you name it. Are saving and investing dead because something has to give. Job market and wages can’t support the level of spending that seems to have been going on post-COVID.

 

[Rutgers Chris]

The other issue is that just about anything “affordable” needs a ton of work due to the ages of many NJ homes/neighborhoods. In Northern NJ, good luck getting anything under $750K that doesn’t need new kitchen, baths, etc. And the cost of all of those renovations seem to have doubled in last few years. In Morris County, I see reno projects going on all over the place = New Roofs, Kitchens, baths, massive additions, you name it. Are saving and investing dead because something has to give. Job market and wages can’t support the level of spending that seems to have been going on post-COVID.

I’m strongly considering renting for a year or two and just sitting on the cash for a while. I’m not usually one who tries to time markets but all things considered (relocating, wanting to find the right neighborhood, etc) this seems like a good time to try it.

 

[Section124]

I’m strongly considering renting for a year or two and just sitting on the cash for a while. I’m not usually one who tries to time markets but all things considered (relocating, wanting to find the right neighborhood, etc) this seems like a good time to try it.

Hopefully that work for you. Our neighbor thought they did great selling their house at the Covid highs a few years ago and now want to buy back in the neighborhood. However their great selling price no longer can buy move in ready. Hardly any houses on the market and interest rates are so much higher. They know they screwed themselves being stuck in a rental for the past 2 years. No one can predict the future but housing will be tough in NJ for quite some time it seems.

 

[RUskoolie]

I’m strongly considering renting for a year or two and just sitting on the cash for a while. I’m not usually one who tries to time markets but all things considered (relocating, wanting to find the right neighborhood, etc) this seems like a good time to try it.

My wifes cousin did that. Sold his home last year, moved back in with in-laws and now can't get a house because there are bidding wars and appraisal waivers still. Be careful.

 

[NotInRHouse]

Bro, you posted some townhouses built in the middle of no where in Egg Harbor. You're proving my point. I can go to every state and find some random spot where you can get something cheap. That's not proving affordable housing is being built. Hell if I really care enough and did research you would probably learn that those townhouses are expensive relative to other prices in that area historically.

There are not lots of options for low/middle income people. The options are rentals (many of which are shitty and the remainder very expensive) or if you can qualify for a home you're under 500k in budget, likely FHA and hopelessly putting offers in.

Yeah, exactly. The idea that there's only cheap housing in red states is BS.

There's probably cheap places in Texas and Florida too. Are they in Austin or Miami where there's actually interest in living? Of course not.

Sorry that supply and demand is upsetting, but it's basically the way of the world.

And those states don't have affordable housing as a matter of law, which we do, even if you want to deny it.

Literally affordable housing is being built and condos are available for 100k in great towns if you qualify based on low income.

 

[RUskoolie]

Yeah, exactly. The idea that there's only cheap housing in red states is BS.

There's probably cheap places in Texas and Florida too. Are they in Austin or Miami where there's actually interest in living? Of course not.

Sorry that supply and demand is upsetting, but it's basically the way of the world.

And those states don't have affordable housing as a matter of law, which we do, even if you want to deny it.

Literally affordable housing is being built and condos are available for 100k in great towns if you qualify based on low income.

Dude you're talking out of your ass now.

I am talking about NJ and the lack of affordability because unfortunately left leaning politics for a long time have created so much damn red tape in construction and development that it makes the cost to build sky high, on top of demand for the land.

You're looking for some case study anywhere you can find to justify that your team is right.

 

[RUAldo]

Hopefully that work for you. Our neighbor thought they did great selling their house at the Covid highs a few years ago and now want to buy back in the neighborhood. However their great selling price no longer can buy move in ready. Hardly any houses on the market and interest rates are so much higher. They know they screwed themselves being stuck in a rental for the past 2 years. No one can predict the future but housing will be tough in NJ for quite some time it seems.

Yup - I know people in the same boat. They never, ever, thought that after they sold at what they thought were the COVID highs the market would not only continue to sky-rocket but now they can’t find anything they like or can afford.

 

[RUAldo]

No one can predict the future but housing will be tough in NJ for quite some time it seems.

Housing everywhere is a mess. It may be fundamentally broken. What drives me nuts is I was planning to upgrade to a larger home for years and/or buy a second home. But, I waited, and waited, for the perfect house…even had a hand-shake deal for my dream house on a lake. Then COVID ruined everything LOL. But, I figured no biggie because my investment accounts were through the roof so I’d sit tight and jump on something when the market settles down. So what happened = stock market takes a dump and I lost 25% in my investment accounts, housing prices continued to climb, and there is zero inventory now. If I had pulled some money from the market and bought something that 25% drop wouldn’t have made an dent and my new house would probably be up 30% and I’d have a 3% mortgage. Oh well…on the bright side my current home is plenty big/nice and I’ve got a 2% 15-year. Can’t predict the future. I remember people saying COVID was going to create a housing crisis because people/businesses were going broke and wouldn’t be able to pay their mortgages. What a F’in joke that prediction was.

 

[Rutgers Chris]

My wifes cousin did that. Sold his home last year, moved back in with in-laws and now can't get a house because there are bidding wars and appraisal waivers still. Be careful.

Surely there’s some risk to it. If I found something I like I’d have no problem buying. There’s just not much out there and I’m not going to force the issue if I don’t have to.

 

[RUAldo]

Kyk: Do you see any way out of this real estate gridlock in next 5 years? Only thing I can think of is institutional buyers start dumping residential properties because of rates or taxes. I was shocked to see houses in places like Bluffton, SC that have gone up 10X in past 5-10 years and now taxes have followed - some taxes jumped from $8K to $45K p/yr and there’s no way institutional buyers will eat that, especially if prices flat-line. Same goes for retirees in South - taxes have to be a factor.

 

[anon_0k9zlfz6lz9oy]

Kyk: Do you see any way out of this real estate gridlock in next 5 years? Only thing I can think of is institutional buyers start dumping residential properties because of rates or taxes. I was shocked to see houses in places like Bluffton, SC that have gone up 10X in past 5-10 years and now taxes have followed - some taxes jumped from $8K to $45K p/yr and there’s no way institutional buyers will eat that, especially if prices flat-line. Same goes for retirees in South - taxes have to be a factor.

I think were in a low inventory environment for the long haul. That was a main premise of the video in the op and why i felt we werent in a bubble when everyone was screaming bubble. It was viewed as a bold call by me but i think if people watched the video in op and looked at the data not a lot of this should come as a surprise.

Institutional buyers dont own almost any single family homes, the ones they do are entire communities that were build for rent communities. Its a flat out conspiracy theory that theyre buying grandma and grandpas home off them

 

[jtung230]

I think were in a low inventory environment for the long haul. That was a main premise of the video in the op and why i felt we werent in a bubble when everyone was screaming bubble. It was viewed as a bold call by me but i think if people watched the video in op and looked at the data not a lot of this should come as a surprise.

Institutional buyers dont own almost any single family homes, the ones they do are entire communities that were build for rent communities. Its a flat out conspiracy theory that theyre buying grandma and grandpas home off them

They absolutely do buy and own SFH for rent. The MF/rental sector will start to take a hit and will trickle down to the housing market. There have been a few large defaults already.

 

[anon_0k9zlfz6lz9oy]

They absolutely do buy and own SFH for rent. The MF/rental sector will start to take a hit and will trickle down to the housing market. There have been a few large defaults already.

Correct, they own build for rent sfh communities as i stated. They arent buying individual sfh in any even halfway meaningful way. That is a pure conspiracy theory

I just finished my term on NAR’s advisory board. I have more data than you can imagine

 

[jtung230]

Correct, they own build for rent sfh communities as i stated. They arent buying individual sfh in any even halfway meaningful way. That is a pure conspiracy theory

I just finished my term on NAR’s advisory board. I have more data than you can imagine

Majority are SFH communities for rent. But institutional money is buying SFH to rent. I’m not sure how you define meaningful way.

 

[anon_0k9zlfz6lz9oy]

Majority are SFH communities for rent. But institutional money is buying SFH to rent. I’m not sure how you define meaningful way.

SFH rentals owned by institutions are BTR entire communities. Again, theyre not buying individual homes one by one. Theyre buying entire communities by the hundreds at a time.

Inconsequential owner when it comes to sfh’s. If they ever do sell them, they aint getting converted to 100 separate homes for sale. Another buyer will buy and keep them as rentals. Increase in sfh for sale inventory wont come from this.

Conspiracy theory that theyre buying grandma and grandpas house. Needs to be called out

 

[RUAldo]

I think were in a low inventory environment for the long haul. That was a main premise of the video in the op and why i felt we werent in a bubble when everyone was screaming bubble. It was viewed as a bold call by me but i think if people watched the video in op and looked at the data not a lot of this should come as a surprise.

Institutional buyers dont own almost any single family homes, the ones they do are entire communities that were build for rent communities. Its a flat out conspiracy theory that theyre buying grandma and grandpas home off them

Next question: what happens to the big cities now that everyone is still fleeing for the burbs? At least, everyone but the young, old, and foreigners?

 

[anon_0k9zlfz6lz9oy]

Next question: what happens to the big cities now that everyone is still fleeing for the burbs? At least, everyone but the young, old, and foreigners?

Im not quite sure. Theres a desire for somewhere between urban and suburban. Millenials love walkability. Not all cities are equal either. Some doing quite well, some not so much.

I think in NJ towns like westfield and cranford will become more and more popular than they already area

 

[Plum Street]

Im not quite sure. Theres a desire for somewhere between urban and suburban. Millenials love walkability. Not all cities are equal either. Some doing quite well, some not so much.

I think in NJ towns like westfield and cranford will become more and more popular than they already area

Kinda interesting . All we heard for years was the millennials and the generation behind them wanted out of the suburbs and into the cities . Suburbs and their old housing stock were gonna be depressing !

 

[Section124]

Kinda interesting . All we heard for years was the millennials and the generation behind them wanted out of the suburbs and into the cities . Suburbs and their old housing stock were gonna be depressing !

I think it’s more towns with train stations and downtown areas will continue to rule. No different than what has been going on for years.

 

[NotInRHouse]

Dude you're talking out of your ass now.

I am talking about NJ and the lack of affordability because unfortunately left leaning politics for a long time have created so much damn red tape in construction and development that it makes the cost to build sky high, on top of demand for the land.

You're looking for some case study anywhere you can find to justify that your team is right.

LOL. Case study? No it's a literal court case that provides affordable housing as a matter of law.

That's proven by another link by another poster...meanwhile you just have anecdotes

But by all means if NJ is so terrible...everyone is free to leave...but ofc it's easier to stay and whine.

 

[NotInRHouse]

Next question: what happens to the big cities now that everyone is still fleeing for the burbs? At least, everyone but the young, old, and foreigners?

Which big cities are those?

I must have missed how Gen Z is looking to graduate college and move to a cul de sac.

 

[NotInRHouse]

I think it’s more towns with train stations and downtown areas will continue to rule. No different than what has been going on for years.

This. Even though many people have been in denial about this.

There are certainly millennials who, with permanent work from home or only needing to be in the office 1-2 days a week moved to the middle of nowhere because they like a rural lifestyle, but most want to be walking distance to something.

The media hasn't wanted to talk about the insane number of people from NYC that have moved to Hoboken and JC. More people from NYC moved to Hoboken alone than Miami, but outside of Bloomberg, you don't see much ink on that.

That's before we get to the constant bidding wars in places like Bloomfield- never mind Montclair and Westfield. Small shore towns with walkability as well. Red Bank. A lot of places people wouldn't think of.

 

[NotInRHouse]

Kinda interesting . All we heard for years was the millennials and the generation behind them wanted out of the suburbs and into the cities . Suburbs and their old housing stock were gonna be depressing !

Millennials still want to be walkable.

The towns with the highest prices have at least one hook:

- Walkable
- Solid PT
- Solid Schools

If you have more than one of these, you're especially golden.

And then there's some externalities...for example, proximity to booming places like Lakewood or boomer effects- boomers looking for 55+ or their millennial kids plunking down their parents' money on second homes at the shore, etc

 

[RUAldo]

Kinda interesting . All we heard for years was the millennials and the generation behind them wanted out of the suburbs and into the cities . Suburbs and their old housing stock were gonna be depressing !

So true…6 months before COVID I looked at a few neighborhoods in Chester and Mendham. Those markets were flat and houses barely moved. My agent said the general perception was they are too far from local highways, just a bit too far from Morristown train, and folks wanted more restaurants/entertainment nearby. Fast forward and today those same neighborhoods that were dead are almost untouchable unless you want to mess around with bidding wars.

 

[jtung230]

So true…6 months before COVID I looked at a few neighborhoods in Chester and Mendham. Those markets were flat and houses barely moved. My agent said the general perception was they are too far from local highways, just a bit too far from Morristown train, and folks wanted more restaurants/entertainment nearby. Fast forward and today those same neighborhoods that were dead are almost untouchable unless you want to mess around with bidding wars.

You can say the same for beach houses

 

[RUAldo]

You can say the same for beach houses

Beach houses were always desirable just not insanity we see now. I have friends that bought LBI right after major hurricanes and are now 5X value. Once in a lifetime buying opp.

 

[Plum Street]

Millennials still want to be walkable.

The towns with the highest prices have at least one hook:

- Walkable
- Solid PT
- Solid Schools

If you have more than one of these, you're especially golden.

And then there's some externalities...for example, proximity to booming places like Lakewood or boomer effects- boomers looking for 55+ or their millennial kids plunking down their parents' money on second homes at the shore, etc

I mean the three things you mention are gonna be valued in any market, pretty much at any time . It’s like saying if a team has good football players that team will win some football games.
It’s fair to say all those predictors of what milennials were gonna do, and what was going to happen to the suburbs was wrong.

 

[jtung230]

Beach houses were always desirable just not insanity we see now. I have friends that bought LBI right after major hurricanes and are now 5X value. Once in a lifetime buying opp.

Not always. The market was flat for a very long time.

 

[Plum Street]

What about the banking issues going on now ? Do folks here think recession , more banks folding and housing depressing ?

 

[jtung230]

What about the banking issues going on now ? Do folks here think recession , more banks folding and housing depressing ?

Don’t forget the sky is falling. Where do you see housing depressing?

 

[anon_0k9zlfz6lz9oy]

Which big cities are those?

I must have missed how Gen Z is looking to graduate college and move to a cul de sac.

They said the same thing if millennials and once they hit gamily formation age guess what theyre doing. Moving to cul-de-sacs

Fun fact, Gen Z has a larger homeowner % than their parents at the same age

 

[Plum Street]

Don’t forget the sky is falling. Where do you see housing depressing?

I was just asking if people thought that was a possibility.

 

[Plum Street]

They said the same thing if millennials and once they hit gamily formation age guess what theyre doing. Moving to cul-de-sacs

Fun fact, Gen Z has a larger homeowner % than their parents at the same age

Wow is that gen z stay true ? Who are the gen z parents? I would think this parent group is mix of boomers and generation x .

 

[anon_0k9zlfz6lz9oy]

Wow is that gen z stay true ? Who are the gen z parents? I would think this parent group is mix of boomers and generation x .

That stat is true.

 

[Plum Street]

That stat is true.

View embedded media

But are gen z parents mostly boomers or generation x? I thought x waited longer to have kids.
In the northeast , I would guess it’s mostly boomers, making that stat untrue at least around here ?

 

[anon_0k9zlfz6lz9oy]

But are gen z parents mostly boomers or generation x? I thought x waited longer to have kids.
In the northeast , I would guess it’s mostly boomers, making that stat untrue at least around here ?

I believe X. Average age of female birth 25 years ago I think was 26? Putting a 25 year olds mother in her early 50’s making her an X-er

 

[RUTGERS95]

all about employment and spending

we won't see meaningful price reductions until those two are hit

I do think we'll see some disclocations as ARMS come through but not sure the lock pipeline on this yet but will look