TIL. Thank you, Toyman.
In a way the small investor angle makes more sense — sufficiently light and agile to outmaneuver large/mega while still having enough capital/equity and reno resources to throw down enticing as-is offers when they outbid individual prospects.
In reply to dculberson :
Interesting thought.
Is the system full? There are almost 3500 homes available in my area at the moment on Zillow. There are 33k available in my state and half a million homes for sale nationwide. While prices are high, there seems to be a fair amount of supply.
Unfortunately, nobody lists the number of people in the market for homes so it's hard to tell. The news says there is a shortage but I haven't been able to find any numbers to back it up. It looks like they base those numbers on prices, inventory, and the number of closings instead of a hard number on shoppers.
Here is an interesting article on it. It suggests that over all, the housing market in the US is fairly neutral with hot markets in some places and cooling markets in others.
KyAllroad said:Central Kentucky housing was a relative bargain until about 2 years ago. Then something flipped and houses and rents have literally doubled in the past 18 months. It's absolutely out of control and starter homes are over 300K now.
I hope everyone likes having their kids live at home because they won't ever be able to move out unless they are 1%ers.
It's very much the same story here (Omaha, NE). Finding a new house under 300K is impossible. There are a lot of older houses under that but most need help at that price. Right now, median sold price is $310K YTD.
Toyman! said:In reply to DancesWithCurves :
Corporate investors only own about 4% of the available market. They aren't what is driving prices. They also buy fewer homes than the rest of the investors.
If investors are driving prices, it's the small investors. The people with 3-9 homes. They represent almost 50% of the investor purchases.
Is that corporate investors buying up rental properties or corporate investors buying unmaintained single families and tossing 8 microcondos on the lot and selling off to buy more or something different? (Not trying to start anything, just understand what that 4% means.)
In reply to iansane :
As I understand it, they are buying 4% of the single-family homes and holding them as rental units.
I'm interested to see what the market is going to do when/if interest rates go significantly down.
Around here, those "small investors" are the AirBnB people. Buy a vacation home, visit it one weekend every few months, rent it out the rest of the time and profit! It's how I ended up with an unregulated flophouse next door instead of neighbors. I have Opinions about people running hotels in residential areas. But it's a strong business model if you live in a touristy type area.
According to the googlez median price is $838k here. That actually sounds about right which is berkeleying insane.
10 years ago, you could get land for 2k an acre still with 5 k being high. The guy that works with me wanted to buy the house he was renting but it was a bit steep at 40k. It's value now is almost 400k and that was 2 years ago.
Most of the reasons why this is a cool area are being driven out by people buying and dragging their crappy place they lived in here. I honestly have no idea how people make it making $12 an hour, which I see job listings still at.
In reply to Keith Tanner :
We have a fair amount of that around here as well. Charleston is a vacation destination.
Interestingly enough, there are none in my neighborhood but the neighborhoods around us have a bunch of them.
Toyman! said:I read an interesting article that opined that housing prices were going to bust in the next 5-10 years.
The reasoning was that all the boomers were going to start dying off. Most of them owning homes means all of those houses would be hitting the market and we would have a glut because the next generations that will be house hunting are smaller and less inclined to leave the city.
Japan had a similar problem from 1990 through about 2012 and still hasn't returned to its 1990 high.
There are currently over 9 million empty houses in Japan and you can buy a livable house for under 10k, it's kinda insane. One the wife and I like was $3500
In reply to Antihero :
That is supposed to have been driven by their reducing population.
Things here in MA are pretty wild. We bought our house in a rural town about 40 miles south of Boston back in 2010 for $164k. I remember the median price at the time was around $200k. Fast forward to today:
We needed to decide last year whether to renovate or move to another house closer to Boston, but skyrocketing housing prices and the fact that we like it here made the decision for us. We just finished renovating our house for much less than that median, but the worth estimates put it well above that median, and the trend seems to be going to the moon (which is GREAT for us). We couldn't have purchased a house like this for less than $900k 20mi north of here! And forget it if I wanted to move to my hometown...
My parents bought their current house for less than $100k in 1985. That house is now valued at over $1m. It's absurd. And I like the town I live in now WAY more!
Since we moved here, the town has made many improvements, and tons of young families have moved in due to how affordable it is compared to the rest of Eastern MA. The downtown area is being revitalized with all sorts of new businesses, they just finished building a state of the art high school, a new police station, a new DPW, and more. They are also "car friendly" here; the NEMPA press fleet headquarters is right up the street, the town regularly holds cruise nights and cars and coffee events at the town hall, and people are generally cool with having old cars around. The town DPW even has some cool classic trucks they trot out on special occasions. Hell, on my part of the street alone, we have 5 of us that have classic/performance cars. It's like that all over town. We even have a great junkyard!
Toyman! said:In reply to Antihero :
That is supposed to have been driven by their reducing population.
I definitely agree, and it seems to be getting worse rather than better. I think it's like 10k more a month from something I read?
Antihero said:Toyman! said:In reply to Antihero :
That is supposed to have been driven by their reducing population.
I definitely agree, and it seems to be getting worse rather than better. I think it's like 10k more a month from something I read?
They are supposed to drop about 16% by 2050. Eastern Europe is getting hammered as well.
Keith Tanner said:Around here, those "small investors" are the AirBnB people. Buy a vacation home, visit it one weekend every few months, rent it out the rest of the time and profit! It's how I ended up with an unregulated flophouse next door instead of neighbors. I have Opinions about people running hotels in residential areas. But it's a strong business model if you live in a touristy type area.
We live on a lake, and believe me I can commiserate. We moved in 2020, and since then, every house within 5 homes, save for 1, on either side of us has been sold and flipped to a 50/50 or 80/20 VRBO/holiday home. It's a little frustrating because you are at the absolute dice-roll every weekend as to whether you have polite and respectful neighbors, or case-race heathens...
Kreb (Forum Supporter) said:I'm interested to see what the market is going to do when/if interest rates go significantly down.
Interesting thought. The reality is that the anomaly that created this clusterberkeley was LOW interest rates, not high interest rates. The Capitalist Economy that we are all so proud of can not work if Capital has no value.
The 12 years or so of zero interest was like the bar not charging for drinks and only catering to alcoholics. Now the bill has come due if we want to continue the party and nobody wants to pay.
With money having no appreciation value, everything on the table is fair game for speculation. What is being presented as "inflation" is more like a mad scramble by everyone to convert paper to something tangible. Houses and collectibles seem to be leading the charge.
As far as the housing market, it will be interesting to see if the Gov bails out the speculators or the next incoming generation who missed the housing boat. Someone is going to have to eat it.
In 2017 my grandmother passed and we (the family) listed her house on Cape Cod for sale. It took 15 months and eventually sold for $385K in 2019. Today it's valued at $949K. Guess we should have hung on for a couple more years huh?
When grandpa built the house in 1970 for 15K he was a bus driver/oyster shucker and grandma was a waitress. They built their own home and raised a family of 5 kids in it. Where is the young family of today supposed to do that if the cheapest shack in the town is 750K or more? There are still bus drivers and waitresses, they have to live somewhere.
Re: millennials buying homes, remember that the youngest of us are 27. We are very behind compared to Gen X and the Boomers, and Gen Z is coming into the market too.
I have only very shaky hypotheses about what this means long term.
Re investors: in my area, the big issue is that investors swoop in, buy a home with cash, tear it down and put up a $1.4M McMansion. That crushes first time home buyers in the area.
Institutional investors may not have a huge impact nationwide, but their efforts are not evenly distributed across the country. The Southeast is more heavily impacted by institutional investors than other parts of the country (real estate has been relatively inexpensive in this region, and it's in high demand).
The final section about institutional investors shifting their approach to buying entire neighborhoods from new home builders is interesting to me. And this line was an eyebrow raiser: "Despite spiked interest rates, Isakson told ResiClub that ARK Homes for Rent plans to go from 4,200 built-to-rent homes to between 25,000 to 30,000 homes across the Southeast over the next four to six years."
If you're planning on buying a home in the Southeast (or anywhere with large investor interest), plan on competing against mega land lords with billions of dollars available.
Where do institutional landlords with thousands of homes own properties? There are a couple of markets where companies with over 1000 SFH rentals own more than 1/3 of all rental SFHs.
I don't think it's institutional investors mucking up the game, as much as it is people/corps buying homes to rent them and the renters not having any options but to buy.
If there were more single family homes available for lower prices, real estate investors would buy/build apartments because renting homes would be more risky/less profitable.
But we need both. In Flagstaff we're building apartment units like crazy. I think they are estimating that by 2025 we'll have added something like 800 new apartments and 1200 bedrooms in just two years.
Meanwhile the number of homes (owner occupant) has only increased by double digits.
That's ok if leasing rates drop, but that's my other concern - it seems like landlords are not very desperate for tenants.
Sarah Young said:Travis County (Austin area) home price averages are actually falling.
I was just made aware of this interesting stat on Reddit.
Austin has built so many homes they are approaching a glut, but I still think the problem there is that despite prices falling, anyone who can afford $500k at 6% has already bought, and anyone who might have been interested 3% can't swing the larger payments - which I suspect is still a large portion of the Austin transplant population.
KyAllroad said:In 2017 my grandmother passed and we (the family) listed her house on Cape Cod for sale. It took 15 months and eventually sold for $385K in 2019. Today it's valued at $949K. Guess we should have hung on for a couple more years huh?
When grandpa built the house in 1970 for 15K he was a bus driver/oyster shucker and grandma was a waitress. They built their own home and raised a family of 5 kids in it. Where is the young family of today supposed to do that if the cheapest shack in the town is 750K or more? There are still bus drivers and waitresses, they have to live somewhere.
When we bought in 2010 not far from the Cape, it was cheaper to buy than it was to rent by quite a bit. We looked at renting a nice apartment and were shocked at the prices. Then again, I bought a fixer-upper, so that may be a moot point. But that said, there were plenty of affordable houses around for not much more than we paid, and still cheaper than many "nice" apartments would cost. Now, they are all gone.
Anything that was remotely affordable was scooped up by flippers, contractors, and banks years ago. Most of the time, they would fix them cheap and flip them, but sometimes, they will just sit on the property for years, doing nothing with it. We have examples of both on my street. One house went for about $175k and then sold a few months later after the flippers did their thing for $300k. And worse yet, there's a house that's been vacant for 13 years up the road that no one knows who owns. It's been passed around from bank to bank to the point where no one knows who owns it. No one has maintained the property in years, and just last weekend, some kids broke the front door down. We've been calling the town on this for years asking them to do something about it, but they won't pursue it until the back taxes accrue to the point where they can legally seize it. That has to be coming up soon, since whatever entity owns it now hasn't paid those taxes in years.
So instead of having a house that someone could affordably buy and fix up, we have a dangerous structure that just sits there because a bank decided that it was better for them to sit on the thing and let it accrue value instead of letting someone live there. I'm sure this happens everywhere, too. And meanwhile, there's been a huge push to pop up tons of apartments in every town in the area while properties like this languish. It's all so dumb.
NOHOME said:Kreb (Forum Supporter) said:I'm interested to see what the market is going to do when/if interest rates go significantly down.
Interesting thought. The reality is that the anomaly that created this clusterberkeley was LOW interest rates, not high interest rates. The Capitalist Economy that we are all so proud of can not work if Capital has no value.
The 12 years or so of zero interest was like the bar not charging for drinks and only catering to alcoholics. Now the bill has come due if we want to continue the party and nobody wants to pay.
With money having no appreciation value, everything on the table is fair game for speculation. What is being presented as "inflation" is more like a mad scramble by everyone to convert paper to something tangible. Houses and collectibles seem to be leading the charge.
As far as the housing market, it will be interesting to see if the Gov bails out the speculators or the next incoming generation who missed the housing boat. Someone is going to have to eat it.
The longer the addiction, the more painful the withdrawal will be. And since nobody wants to take the blame, the can will continue to get kicked down the road and nothing will change.
I'm curious of the appreciation rate of a house on a lake, built with hand hewn timbers. I understand it's impressive.
Beer Baron 🍺 said:Franklin County (greater Columbus, OH) is showing a median house price around $300k. Zillow says $291k and Rocket Mortgage says $304k.
Mom just sold her house in Westerville for almost double what she paid for it seven or eight years earlier.
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