Financial institutions are buying up single family homes at 20-50% above asking price

[Joe Republic]

"The stars aligned for my particular situation and location at just right the time.  Why can’t these other sad losers just do the same?"

[soundchaser]

As I said: I put down 3% and now have nearly half the purchase price in equity. That’s after a little over two years. I do not think an extra 7% down would make things functionally different.

[DaleCooper]

I and many people my age are eager for the housing market to collapse, as spiteful as that may sound. We're already long priced out of ever being home owners. Even if I were to get a very high-paying job, I'd be a fool to buy because "starter homes" now cost in the 150-200k range.

I would kill for a house prices in that range. I'm looking for my first home in the Bay Area... the most discouraging thing in the world.

Yeah, I recognize this, and it's why I feel obnoxious complaining. But you have to understand that when I talk about a "high-paying job" I'm referring to stuff that pays 55k.

I and many people my age are eager for the housing market to collapse, as spiteful as that may sound. We're already long priced out of ever being home owners. Even if I were to get a very high-paying job, I'd be a fool to buy because "starter homes" now cost in the 150-200k range.

Oh man, I’d kill for a bargain like that!

Tahoe was already expensive prior to the pandemic, but as soon as all the Bay Area techies realized that by working from home they could live anywhere, suddenly the house prices around here skyrocketed overnight.


Edit: lol Holmes

I suspect this is happening everywhere. As the NIMBYs from the coasts emigrate to other states and communities, they're willing to pay far more than what we locals ever would have tolerated. I have family in Idaho and they've told me about how the price of homes in Twin or Boise have skyrocketed over the course three or four years, which correlates with all the Californians moving there. This is just a theory, and as you can probably tell I'm quite bitter about it (LOL), but it's easy for me to picture all these people moving into town thinking that 350,000 dollars for a split-level three bedroom home is a bargain and buying it on sight.

[Cassandra]

Well, this news story validates my decision to dry and buy property this year. Suggests that the banks see a stock market crash coming, are trying to diversify, and see real estate as a relatively safe harbor.

I'm trying to buy a condo (houses are out of my price range), hopefully the banks are staying out of that market. Wish me luck!

[KaiserDave]

Very dangerous stuff

Society needs to abandon this model of ruthless Social Darwinism quickly

We need to get back to a more communitarian understanding

[Joe Republic]

This is just a theory, and as you can probably tell I'm quite bitter about it (LOL), but it's easy for me to picture all these people moving into town thinking that 350,000 dollars for a split-level three bedroom home is a bargain and buying it on sight.

The 4800 sq ft property next door to my house is currently on the market for $385,000.

Oh, but did I mention that the aforementioned property is an empty plot of land?

[Hope For A New Era]

Neofeudalism is coming.

[True Federalist (진정한 연방 주의자)]

As I said: I put down 3% and now have nearly half the purchase price in equity. That’s after a little over two years. I do not think an extra 7% down would make things functionally different.

Then you've been exceptionally fortunate. Obviously, your good fortune could not have been predictably guaranteed when you bought since otherwise someone else would have paid more for that property instead of what you paid. With a different real estate market, you could easily be underwater right now. Still, if indeed your mortgage, insurance, tax, and maintenance expenses are less than your rent had been, you made the right choice regardless of what the market did.

[ibagli]

I don't know what the realistic solution to this would be that wouldn't just be yet another handout to suburban homeowners. NIMBYs will stop any of the good solutions (and some of the bad ones), so what are we going to do, ban REITs from owning residential properties so that the only owners of housing are individuals and small-time penny-pinching local landlords who are too small to regulate?

It's another cool story for the NIMBYs to tell each other, though. In the cities, they'll scream about how there would be plenty of housing if only wealthy Chinese oligarchs weren't hoarding empty units, and in the burbs they'll scream about how there would be plenty of housing if only Blackrock hadn't bought everything up.

[Geoffrey Howe]

As I said: I put down 3% and now have nearly half the purchase price in equity. That’s after a little over two years. I do not think an extra 7% down would make things functionally different.

Then you've been exceptionally fortunate. Obviously, your good fortune could not have been predictably guaranteed when you bought since otherwise someone else would have paid more for that property instead of what you paid. With a different real estate market, you could easily be underwater right now. Still, if indeed your mortgage, insurance, tax, and maintenance expenses are less than your rent had been, you made the right choice regardless of what the market did.

I understand that in the UK it's often actually cheaper to own (get a mortgage) than to rent, and the only thing stopping people from benefitting from this is that it is difficult to get high LTV mortgages - the deposits are too large - and the income "stress testing" put in by the regulator after the crash.
Similarly, despite all this talk of ballooning house prices, I read somewhere that owning a home is no less affordable than before because, although the houses cost more, the mortgages cost less (lower interest rates, plus there's been a price war in the high-street lending sector).

[Former President tack50]

And if you're an individual and put less than 10% down for the price of your home, you shouldn't have bought it to start with.

3% is entirely reasonable, especially with the market right now. Interest rates are low enough that you can (like I did) put down 3%, refinance a year later, and suddenly find yourself with $50,000 of equity. Just because people make less money than you do doesn't mean they can't responsibly own a home.

Not really? (And if US banks are lending out mortages with only 3% downpayents as the norm it seems they didn't learn anything from the 2008 housing bubble)

The general rule I have always heard is 20% downpayments, with anythint below that being extremely hard to apply for a mortgage (not just "it is financially risky", but also "the bank won't lend you the money")

Plus to that 20% you should add taxes and a few other bureaucratic stuff so it is closer to 25%

[Former President tack50]

We need more public housing without the stigma of it only being for poor people and being easily available for people across multiple economic classes. Look to Singapore and other countries that have figured this out.

Well, good luck with that. Unless the state goes around buying apartment units and refurbishing them, there is a lumber shortage and thanks to the skyrocketing price of lumber, a new home has added $36k on average onto its cost and for new multi-family units, the price passes itself onto costing the renter an extra $119 a month.

https://www.constructiondive.com/news/lumber-demand-shortage-price-saw-mill-board-housing-pandemic-labor/601054/

Speaking of lumber, why is most US housing built from wood? Wouldn't it be better to build housing out of concrete, brick or other more resistant materials? (I think wood might be cheaper but still)

In fact, given the spike in lumber prices you would actually expect people to gravitate towards concrete or bricks since while I think they are more expensive, their advantages would outweigh the higher cost vs wood if lumber prices have gone up.

[Geoffrey Howe]

And if you're an individual and put less than 10% down for the price of your home, you shouldn't have bought it to start with.

3% is entirely reasonable, especially with the market right now. Interest rates are low enough that you can (like I did) put down 3%, refinance a year later, and suddenly find yourself with $50,000 of equity. Just because people make less money than you do doesn't mean they can't responsibly own a home.

Not really? (And if US banks are lending out mortages with only 3% downpayents as the norm it seems they didn't learn anything from the 2008 housing bubble)

The general rule I have always heard is 20% downpayments, with anythint below that being extremely hard to apply for a mortgage (not just "it is financially risky", but also "the bank won't lend you the money")

Plus to that 20% you should add taxes and a few other bureaucratic stuff so it is closer to 25%

Yes, in the UK most mortgages being sold now are around 80% LTV. 95% was fairly common before COVID but they disappeared during the pandemic and they're making a slow return.

[dead0man]

We need more public housing without the stigma of it only being for poor people and being easily available for people across multiple economic classes. Look to Singapore and other countries that have figured this out.

Well, good luck with that. Unless the state goes around buying apartment units and refurbishing them, there is a lumber shortage and thanks to the skyrocketing price of lumber, a new home has added $36k on average onto its cost and for new multi-family units, the price passes itself onto costing the renter an extra $119 a month.

https://www.constructiondive.com/news/lumber-demand-shortage-price-saw-mill-board-housing-pandemic-labor/601054/

Speaking of lumber, why is most US housing built from wood? Wouldn't it be better to build housing out of concrete, brick or other more resistant materials? (I think wood might be cheaper but still)

In fact, given the spike in lumber prices you would actually expect people to gravitate towards concrete or bricks since while I think they are more expensive, their advantages would outweigh the higher cost vs wood if lumber prices have gone up.

a.we have a lot more trees than you do (you guys used to make more things out of wood)
2.it's (normally, and still might be) cheaper
III.it's faster
D.home building contractors know how to do it better than non-wood

[soundchaser]

I didn’t intend to veer so far off-topic, but yes, I took StateBoiler’s advice as needlessly moralistic. Probably hit me a little too personally, so apologies for not just brushing it off. But suffice it to say: I do think the economic decision I made was a smart one (for numerous reasons), and I resent the implication that I’ve made a hash of my life money-wise. If anything, buying a house has done the opposite for me. Maybe it doesn’t always work out in the purchaser’s favor, but I think paying twice the amount in rent and having nothing to show for it at the end  works out even less.

And now back to your regularly scheduled complaining about HGTV-inspired flippers.

[Former President tack50]

I didn’t intend to veer so far off-topic, but yes, I took StateBoiler’s advice as needlessly moralistic. Probably hit me a little too personally, so apologies for not just brushing it off. But suffice it to say: I do think the economic decision I made was a smart one (for numerous reasons), and I resent the implication that I’ve made a hash of my life money-wise. If anything, buying a house has done the opposite for me. Maybe it doesn’t always work out in the purchaser’s favor, but I think paying twice the amount in rent and having nothing to show for it at the end  works out even less.

And now back to your regularly scheduled complaining about HGTV-inspired flippers.

The issue isn't that it was a bad financial decision, but rather that it was an extremely reckless financial decision, even if it ended up working extremely well for you.

I can't speak for anyone in the US; but there are a ton of horror stories here about people who bought expensive housing with little to no downpayments and in very precarious financial situations, the recession hit and they suddenly found themselves without a home and evicted.

But furthermore, because of how Spanish mortgage laws work, not only did they find themselves evicted, but because selling off their house didn't cover the mortgage they had taken thanks to the housing bubble collapsing, they found themselves homeless and still owing thousands to the bank! (In fact, up until 2015, not even declaring a personal bankrupcy would have eliminated the debt, and even with the 2015 "Second Chance Act", it is still quite a complicated process and far from automatic)

Now, I think US mortgage laws are a lot more sensible than ours (which are mindblowingly stupid), but still it is not too hard to see how it could have gone wrong. Plus there is also the broader macroeconomic argument. If banks start giving mortgages with little to no restrictions, the US could quickly find themselves in the middle of a 2nd housing bubble fueled recession

[DaleCooper]

This is just a theory, and as you can probably tell I'm quite bitter about it (LOL), but it's easy for me to picture all these people moving into town thinking that 350,000 dollars for a split-level three bedroom home is a bargain and buying it on sight.

The 4800 sq ft property next door to my house is currently on the market for $385,000.

Oh, but did I mention that the aforementioned property is an empty plot of land?

That's terrible, but the median household in Nebraska is probably making about 55-60k a year. People here can't afford for Bay Area prices to trickle down to our state. In communities in this part of the country, home ownership has always been a huge part of our sense of family stability, and if that is made a privilege that only the most affluent can afford, the resentment will likely explode out of control.

[True Federalist (진정한 연방 주의자)]

We need more public housing without the stigma of it only being for poor people and being easily available for people across multiple economic classes. Look to Singapore and other countries that have figured this out.

Well, good luck with that. Unless the state goes around buying apartment units and refurbishing them, there is a lumber shortage and thanks to the skyrocketing price of lumber, a new home has added $36k on average onto its cost and for new multi-family units, the price passes itself onto costing the renter an extra $119 a month.

https://www.constructiondive.com/news/lumber-demand-shortage-price-saw-mill-board-housing-pandemic-labor/601054/

Speaking of lumber, why is most US housing built from wood? Wouldn't it be better to build housing out of concrete, brick or other more resistant materials? (I think wood might be cheaper but still)

In fact, given the spike in lumber prices you would actually expect people to gravitate towards concrete or bricks since while I think they are more expensive, their advantages would outweigh the higher cost vs wood if lumber prices have gone up.

Wood-framed houses require far less labor, especially skilled labor, to build. As it is, most "brick" houses have a brick veneer over a wood frame. There aren't enough skilled masons for a rapid transition to all masonry/brick construction even if the materials costs / durability would favor it.

[Flyersfan232]

all while they are alot of op eds saying it a terrible time to buy a house and or it better to rent!

[GP270watch]

We need more public housing without the stigma of it only being for poor people and being easily available for people across multiple economic classes. Look to Singapore and other countries that have figured this out.

Well, good luck with that. Unless the state goes around buying apartment units and refurbishing them, there is a lumber shortage and thanks to the skyrocketing price of lumber, a new home has added $36k on average onto its cost and for new multi-family units, the price passes itself onto costing the renter an extra $119 a month.

https://www.constructiondive.com/news/lumber-demand-shortage-price-saw-mill-board-housing-pandemic-labor/601054/

Speaking of lumber, why is most US housing built from wood? Wouldn't it be better to build housing out of concrete, brick or other more resistant materials? (I think wood might be cheaper but still)

 There are pros and cons. In places with hurricanes and storms a lot of The United States is moving towards concrete block and now ICF construction. Many companies are also trying to innovate in the housing sector with 3d printed homes, which is inevitable. But concrete although long lasting isn't very green, the emissions it takes to make are really bad. Lumber from renewable and sustainable forests is actually the greener option. The lumber has to be engineered and produced to fight against the cons associated with lumber like pests, rot, strength, fire etc...

[AGA]

Investors buying property isn't why housing is expensive.

[CEO Mindset]

Ban corporations from owning houses. Houses should be for living in, not investment so ban home equity while we're at it.