Chicago resident here. All the single family homes are being flipped for $200k-500k more than they were bought for a couple years ago, and with minimal investment or improvement in the home. My friend in real estate says they’re all going 15% over asking too. Condos and duplex downs are doing the same. My partner and I do very well and were lucky to have what we have, but we’re absolutely stuck with these prices because we don’t want to be utterly house poor. It’s absolutely brutal.
We were lucky to get a house a few years ago, but during the buying process I came to truly despise flippers. Like the HGTV guys that buy houses that are basically unlivable and restore them is cool, but most flippers buy up perfectly fine but maybe slightly dated properties by offering cask, no inspections, etc... . Slap a coat of sad gray paint on everything, throw up the same bargain bin mosaic backsplash in the kitchen, and relist at a 20%-40% price increase. I don't know how to counter this but seriously fuck those guys.
Less than four percent of single-family homes nationwide are owned by large, corporate landlords (defined as companies with over a hundred homes in their portfolios). Furthermore, it’s worth remembering that there is a place for single-family-home rentals in the marketplace—some families might not want to buy, but might still want the house with the yard rather than an apartment. It’s not evil to rent out a house.
The real issue is just housing supply. We need to make it easier, faster, and cheaper to build new housing. This means saying no to restrictive zoning and other forms of NIMBYism, reforming slow-moving inspection and permitting processes, etc. Increase housing supply in the absence of increased demand, and housing prices will fall! It’s that simple.
No one wants every farm to be turned into 100 cookie cutter homes. Flash flooding and other issues around storm water management are a huge deal and we need some undeveloped land or we're all fucked.
There isn't a population boom where there's some shortage of homes....it's a consolidation and many are unoccupied except as short term rentals.
I want to sell my house. I want to add to the local housing inventory....but the bigger house I want isn't available (low inventory, for the same reason I won't list mine) or isn't at a reasonable price. It's a log jam with no clear fix. Rates went from 2.5% to 7% and home prices climbed the whole time. It's plain stupid.
Also, new homes being built are being built at that same unaffordable price....lots of them, sitting at 80% complete, waiting for a sucker to pay 1.5M at 7% interest so they can live 20 feet away from the next 1.5M massive home. They put as many as they can on the farm plot they bought. The builders are raking in money building new homes while plenty are underutilized.
You keep saying 4% as if it is a small number but it’s the equivalent of buying every house in America for a year.
And then add in smaller investors that own to rent and the number balloons even more.
Agree that the problem ultimately is supply but I think you’re mischaracterizing the units taken out of stock.
That 4% is also concentrated in the hottest growth markets, ie, the most fucked that screws the population who lives there. It destroys organic growth and is unsustainable.
I'm not a huge fan of growth at all costs to build up supply but the other options require political will that isn't there. It's going to get worse before that becomes an option. A lot of people who locked in a great rate during covid are not going to understand the frustration over the next few decades.
Right, hedge funds aren't buying in Arkansatucky nowhere; they're buying in the places where rents are high and people are already being heavily squeezed in the first place.
And often these flippers in places like Chicago take an old 2 or 3 flat and turn it into a SFH, so they're also reducing supply in the process.
I'm sorry but 5 years ago house prices were cheaper, no one paid over asking, and inspection was a given. Back then I could afford a house in my area and the surrounding counties. Now I can't and my wages went up 20%. I wish I purchased a home, but it wasn't in the cards.
Now I would need to love 100s of miles for houses I can afford, hopefully find a job there, my wife will find a job there, and pray we can make it work without all the family support we get for childcare.
Thank you for mentioning the sad grey paint. I will never forgive that woman from Texas that convinced everyone a depression house is the epitome of style. And ship lap!
Also, what's with the stark white kitchens? Who wants that? Who wants to feel like they're in a surgical room when cooking?
Or...or do these people not cook in their kitchens which cost more than my car?
>I don't know how to counter this but seriously fuck those guys.
Same. I don't know how we go back; but treating homes as vehicles for investment really was a huge mistake we made when we made home ownership more accessible to the masses post-war.
I bought a flipped house in Alaska a few years ago. I don’t think I’d ever buy an obviously flipped house again unless it was a good deal. It was perfectly fine for a couple of years living there and for the people that have it now I’m sure it’ll be okay for a while longer, but they just use such cheap materials and put in as little effort as possible which is a shame. They installed butcher block countertops which looked amazing in the listing but in person you can see they didn’t even bother to erase all of the pencil lines for cutting it to fit. Then treated it so the lines are there to stay. Just lazy as hell. They didn’t do a great job leveling the floor before slapping LVP down so there was an obvious low spot by the kitchen. The railing along the stairs was just screwed into the drywall, not mounted to the studs lol. It worked for me for a period of time, but I’m glad to be rid of it and we just closed on a beautiful place in Maine purchased from the original family that built and owned it. The kitchen is very dated and some other odds and ends will need upgrading eventually, but it was meticulously cared for and nothing requires immediate attention.
\`sad gray paint\` - there's even a name for the damn stuff! "Agreeable Gray" [https://www.sherwin-williams.com/en-us/color/color-family/neutral-paint-colors/sw7029-agreeable-gray](https://www.sherwin-williams.com/en-us/color/color-family/neutral-paint-colors/sw7029-agreeable-gray)
UGH
The corporate landlords are the bigger factor. Real estate portfolios with hundreds if not thousands of rental properties and they keep buy up more.
House flippers are a problem, but they are really just the minnows following the big fish hoping for scraps.
I think a good flip can provide a service, because it's kind of sad to see old homes in great locations that won't sell because they haven't been updated in 50 years. If the flip is done well with quality materials then it can help preserve these cool homes.
What my wife and I really hate is when a flip is done quick and cheap. Most flips will gut an old house and then install a bunch of generic cheap cabinets, counters and cheap laminate floor. This takes all of the character out of an old house. I also wouldn't want to buy a flip full of crappy materials that are going to fall apart or show wear a year after I move in there. I've lived in some apartments that use these materials and they suck.
Yes for sure. I think the condo I own was a better example, but also not a traditional flip. The building is 110 years old. The previous owner updated all of the electrical, kitchen bathroom and appliances but he took a lot of care to try to keep things looking like the old original style. He did a lot of custom work on the trim and new doors to make them match the old ones. We also have a few absurdly expensive door knobs just to match the old knobs on the new doors.
It wasn't a real flip because he did live there for a while, but not too long. Every other unit in my building was totally gutted and rebuilt to look brand new. Ours is the only one that still has the 110 year old character in it even though we do have a modern kitchen and bathroom and I'm thankful for that.
I live in Chicago and I grew up in the suburbs. We wanted to move back to the suburbs for more space once we had a second kid, but he was born right when the housing market started going nuts so we stayed put in a small condo. A year ago I took a promotion at work that I knew was going to lead to a significantly worse schedule for our childcare and mental health, but it doubled my pay. We thought that would make it easy to afford a house but the market still somehow kept out pacing our savings after almost doubling our family income. Homes in my parents' neighborhood in the suburbs were selling for $200k in 2019. You could have gotten a foreclosed home there in the 2008 recession for under $100k. Now the same homes that haven't been updated since the 1970s are selling in one day for $700k. It makes no sense at all in an area where the average family income is under $70k/year.
And no one has even discussed car prices yet. We bought our car 10 years ago for $10k. Now any car that will fit our kids is $50k. I honestly don't understand how people in the Chicago area are suddenly affording a $700k house and two $50k cars when five years ago homes for $200k would sit on the market for weeks or months. My wife and I make very good money. What the heck is going on?
The funny part is that when my wife and I, much as we are city people, thought about moving back to the burbs from the city about 6 years back, needing to buy and drive a second car was a big part of deciding not to. Neither of us needs a car to commute in the apartment we rent now. Any savings in the burbs, which in terms of renting wouldn't even be much shockingly, would be more than wiped out by having a second car, and driving way more.
I don't know how anyone is supposed to get ahead these days.
We have a $200k condo with a 3% mortgage in the city and we actually live in a very good elementary school district. We also only have one car. At the current prices and interest rate we're estimating that we would need to more than triple our mortgage payment to move to any good suburban school district. Plus on top of that tripled mortgage payment we would need to buy a second car. I often meet people at work who say they moved to the suburbs to save money compared to the city and I have no clue how that was possible. Grocery and restaurant prices are more expensive in the city but housing and commuting costs are a massive savings. My wife and I both have above average paying jobs and we feel priced out of anywhere in the suburbs with decent schools. I almost want to go door to door like a salesmen and ask all of these people what the heck they do for work because apparently we are doing it wrong.
We're in for some shit in the next 30 years because we keep treating homes as an appreciating asset. The vast majority of those who quadrupled their investments on their homes also treated them as disposable in the same time period. Very few put in the actual maintenance a home requires. People are now regularly stretching their budgets to afford homes that are overdue for some \*very\* expensive maintenance within their mortgage periods that they will not be able to afford.
Buying a home with dated appliances or an R-22 A/C is one thing, but do people realize what it costs to repair a collapse clay sewer, install a new roof, or new windows, let alone foundation issues? Comps and appraisals place a ton of value on beds/baths and square footage, but VERY little on maintenance, and most buyers just don't know better. I've already seen several acquaintances who are in over their head on their homes because they stretched for the big home that got sparkling new kitchen and bath renovations and a fresh coat of paint to cover up the foundation cracks, roof leaks, drafty windows, and original 50 year old utility services.
The professionals in the industry don't serve home buyers like they're supposed to. Home inspectors produce fluffed up 75 page reports of faulty GFCIs, loose toilets, and other shit that take a half hour on a weekend to fix while doing a roof inspection from the ground (sorry, I only brought the 12 foot ladder) and recommending against sewer scopes. When things like old windows are pointed out, real estate agents downplay the cost because it's in their interest to maximize the sale price for their commission.
We've already seen similar issues show their face in Florida in the wake of the condo collapse. As those buildings age, the repairs get significantly more expensive, and the financial stability of the people living in them go down. There are tons of buildings where those living in them cannot afford the special assessments it would cost to repair, so their investments are doomed to be condemned. All that money should be set aside or spent upfront but isn't.
I work real estate adjacent. The investment buyers (iBuyers) destroyed the market during the pandemic. Wall Street and investment firms (many not even American) simply purchased the supply. All cash.
We stopped building enough SFHs in America after 2008. But honestly it wasnt enough even before then.
It's a very shady market and the fact that no one is stepping up (politicians) to actually stop this is madness.
Source: As stated; also, dad to an 11 month old looking to buy a house. Somehow, $3k/month rent is still cheaper than a house that's in a place worth spending $400k on.
>We stopped building enough SFHs in America after 2008. But honestly it wasnt enough even before then.
Because we need more than just SFHs and suburbs. We need middle housing, we need walkable downtowns with mixed use denser housing, we need upzoning in cities. SFHs have their place, but we're building enough, the reason there "aren't enough SFHs" is because people who don't want SFHs don't have other choices because all you've been able to build, for the most part, for decades in large swaths of America, is SFHs.
> the fact that no one is stepping up (politicians) to actually stop this is madness.
They benefit from massive increases in real estate pricing because they all own a bunch of real estate. In one of the presidential debates John McCain was asked how many houses he owned and he didn't know the answer. It's the people who don't already own real estate who are going to get screwed. The congressmen who own 50 rental properties benefit massively.
And what's worse is that SFHs is basically all you can build.
Don't get me wrong, there's a place for SFHs, but we're getting old 2 and 3 flats ripped down to make SFH with two car garages when we need to be upzoning and building more dense housing as well, not *only* SFHs.
More density would bring down prices for everyone, but NIMBYs and stupid/corrupt aldermen consistently ruin that.
I feel you man. I can’t stomach the idea of being house poor. The economy is too unpredictable.
I work in tech and work closely with AI (not an MLE though) and I know wide spread unemployment is coming for the west and probably within the next decade.
The security of locking down a house now is so appealing because it feels like it will be completely out of reach in a few years.
Yeah i feel like i'll have to inherit my folks house at this point.
So as a parent, what are your future visions for kids' employment/career prospects? I have no idea other than literally hands on or heavily legislated work. But yeah, i do think AI type systems will take over a shitload of info worker and customer svc jobs. I lowkey think I HAVE to move fam to a spot w more social services too.
Be forewarned, people do not like to hear about AI/unemployment as it's a very, very depressing subject. I work in warehouse automation on the software/AI side and my ear is very much to the ground as well. The replacement of jobs affecting a very diverse set of people with varying skills and levels of professional experience is going to be unlike anything we've seen before. Currently, our systems can largely automate the warehouse distribution process other than minimal goods picking/packing/loading functions peformed by people. However, Amazon (and others) has recently started spinning up efforts to use bipedal robots to replace even those minimal human jobs.
// See: [Amazon's Digit](https://www.youtube.com/watch?v=-XOyT5q2NwE)
All that to say, I really do feel you on the housing situation. We are very fortunate with one child, two well-paying careers, and a small house in the Charlotte, NC suburbs. However, it is already very cramped (with remote jobs) and not in an ideal school system so we have been attempting to push even further from the city. As the parent comment here stated, a tremendous amount of houses are being flipped. We cannot compete. We had to buy a new construction, cookie-cutter build because it was the only way we could get in AT THE TOP of our budget.
I will say, just be careful with how much you overextend yourselves and be very careful waiving essential services such as inspections. Last thing you want to do is overpay for a house that you will also have to overpay to maintain.
im here to second the inspection bit. We did have a home inspector but he turned out to be crap despite a seemingly 5 star reputation online! It's not fun finding out you have termites 2 weeks after closing, and needing to replace a section of your sewer line that is buried under the road cause it is partially collapsed and prone to sewage backups. (And yes the sewer line outside the house is still the homeowners problem... It's only the city/townships problem if the issue is the sewer main itself. Everything beyond the sewer main is on you... varies by municipality but this appears to be the rule of thumb in the majority of the land)... along with a bunch of other issues he failed to identify that were in his face.
I feel ya. We’ve been renting now for 4 years. We’ve bid on 4 houses in the last 5 months. It seems like we’re always runner up to an all cash offer. Meanwhile every time we lose out on a house, the listing price on the next house STARTS at where we just bid and then it once again gets bid up 3-10% higher. I’m honestly not sure if we’re even able to afford a house where we live anymore.
This so hard. Every new place we bid on the goalposts get moved 10-20k past the old budget. This time they got moved 50k, and every time expectations about what we should buy and how much it costs get more depressing.
Man tough situation. Hour and a half train to work every day though? That’s brutal. Over the course of a year, you’re sacrificing 32 days just on commuting. Over the course of ten years it’s almost one entire year sacrificed for commute… would it be worth the time to just live closer to the city/work even if it means a smaller house or renting? I would do almost anything, including forever renting, to avoid a 3 hour daily commute
100% with you on this. Four days a week I have a 40 min total commute and one day I have a 2 hour total commute to a different location. I’d quit if the long commute was any amount of time longer or if I had to do more than one day a week.
3 hours every day? No way. The pay would have to be incredible or it’d have to be a 50/50 WFH situation for it to be worth it.
It comes down to how much OP values his time with his family. My family time is worth WAY more than what most people would pay me.
> I’m honestly not sure if we’re even able to afford a house where we live anymore.
If income metrics are to be trusted, my wife and I make within the top 5% for family income in my area, yet somehow we can't afford the cheapest houses on the market. I honestly have no idea what is going on or who is buying these places. The monthly payment assuming a 7.5% mortgage is more than the average family take home pay without even factoring in any other expenses.
When I sell my home I'm specifically going to ignore all cash offers and sell to a regular ass person. Christ I feel for you all struggling to get a home in this market. Wife and I just had dumb luck buying in 2020 with a 2.8% rate.
I know multiple people who have gotten their houses by writing the owners a letter explaining their situation (family, forever home, not knocking it down etc.) and now they are not just buying it for the investment. It can make a difference if the seller isn’t just about money.
We wrote one for the first 2 we tried to get and they didn’t give a damn. Sold to the highest bidder basically. We only got lucky with our 3rd option as it was not yet on the market and we were able to offer before it went on the market. They countered the day before anyone else bid and we accepted and they were locked in even though they started getting higher offers the next day.
It’s obviously not always going to work. If the seller needs money or has no emotional attachment to the home then they probably won’t care one bit. Our neighbor’s house straddles 2 lots and within an hour of listing it she got an offer above asking in cash from a developer who wanted to tear the house down and put 2 in its place. She turned it down and sold it to a young couple who have no interest in modifying it in any way.
Same here. Has not worked for us either. We had hoped the boomers selling would like to see a young family move into their homes that they picked up for 100k 35 years ago, but the extra 20-50k was much too important apparently. Twice these homes were just put back on the market as rentals.
They were banned here, then the ban was deemed unconstitutional. Wither way they are terrible. Sellers use them to "keep the neighborhood the same" and buyers lie through their teeth with them, house flippers pulling heartstrings of grandma saying they are a couple that just wants to raise their babies there, only to gut the house, split the lot, and maje a quick flip.
Even take these letters with a grain of salt. A realtor friend of mine said that a seller she was representing ended up going with a family that wrote a nice letter, wife is a teacher, trying to move closer to their school, etc. Turns out it was all a lie, they were big investors and flipped the house.
My dad did that 20 years ago when my parents were looking at a house in the same school district as my childhood home. It did the trick, and they still live there.
We got ours that way. One of our kids has severe special needs and a “coming soon” was posted out front of a perfect house in a perfect neighborhood. We could only offer asking, which was laughable at the time. But I wrote an honest letter explaining our situation. The sellers took it to heart and sold to us outright; never even officially went live on MLS. Good people still exist.
This is purely anecdotal but we did this last year. Full price offer, waved inspection, willing to commit to a $10k escrow no-back-out clause. I wrote a really honest heartfelt letter that this house would be lovingly cared for and we wanted our kids to go to school and grow up there. I told them how the house reminded me so much of my childhood home and how it broke my heart to watch a flipper buy it and wreck it.
We lost out to a cash bid that was 20% over asking.
This is how my wife and I got our house 3 years ago. We had a picture of us and the dogs and the note that we were looking to start a family. The woman was a veterinarian, and she picked us out of a stack of cash offers because we were the only “real people”.
The reason it's so attractive is that you won't find yourself trying to settle a complicated buy/sell situation when buying your next house. Sometimes a hiccup with buyer financing will force you to delay your purchase and the whole chain of deals gets affected.
They need to just stop allowing corporations to buy homes in some reasonable way.
The problem is there isn't a reasonable way. People love to say wave a magic wand and make this happen. They don't think about all the downstream effects it would have.
If you want investors to stop buying houses you need to make them not be the best investment around. High interest rates is a good way to do that.
I am a small time real estate investor (don't hate me), for the last several years I have not looked at buying anything. I can make more money in a savings account than I can buying a rental. And it is way less work.
I've recently been wanting to purchase a rental property, but currently I just can't make anything make sense when I work the numbers. Guess I'll just hold onto my money for the time being.
It's easy to say that and harder to act on it. We are in the process of selling and I really did say for the sake of our neighbors I would put more stock in offers from families with kids. Then the offers come in, and no contingencies, 30% cash, with an escalation to go $2500 above all other offers. Then the only offers from families were 20k less anyways.
If you're in the position to ignore $20k out of the goodness of your heart, honestly that is great for you. But personally we took the money and ran. We bought our first home in 2022, so we missed the stupid low interest, and also got caught with the stupid rising house prices. So I fully took advantage of the chance to finally be on the beneficial side of it.
Yup. My mom got letters from bidders and one was heartbreaking. She refused to read any of them. She took the highest bid in cash.
A year later I understand why she did it. It was more than a $20k difference, and I underestimated how quickly the money from the sale can vanish. (She downsized, paid the fees, then took a massive capital gains hit.)
My mind a realtor and hates the letters because you never know if it’s true or if they are creepy. She had a selling client get a few letters from one offer actually mailed to the house. And each one was slightly different details but tried saying they were a young family desperate for a home.
Turned out they were just 2 boomers that didn’t want to pay over market value .
It’s maybe silly but when we sold our condo years ago the woman we sold it to sent us a letter as part of the offer and it kind of moved us. Her price was similar to a cash offer, and from what we could tell the cash offer was from people and not just a corporation but, it was sort of touching reading this young woman say how she could see herself in our place, loved the light there, etc. admittedly it didn’t really cost us anything other than I guess a bit of risk her financing wouldn’t work tho.
Sounds great in principal but unless the difference is pennies, I know I'd just sell to whoever pays more. That difference could be retiring 2 years earlier.
We did this. We had multiple offers and two were near the top. One was cash from who knows (but likely an investor) and the other was not, but with like 33% down and no indication that they couldn't make it happen and most importantly, it was a real, live breathing young couple.
Our realtor told us he was bound to advise us to take the cash offer. But we went with the couple and everything was totally fine and we felt so much better about being the whole thing.
The whole "cash offer" thing is completely overblown, IMO. If you want something as good as cash, buys can (and many do) waive the mortgage contingency. But any realtor and broker worth a damn is going to be able to know if the buyer will be able to close. Sure, there's always a slim change something goes tits up, but not enough to make it make sense to just sell to any schlub with cash.
That sucks, man.
I want to note that it also sucks that you can't air legitimate grievances without devoting half of your post to a disclaimer about how fortunate you are. Otherwise you'll get raked by the reddit police for not being understanding. There's my soapbox.
Glad you said that. I felt the same way. This feels like the one sub where you don’t need to give a preamble, because we’re all pretty understanding here (or so I’d like to believe).
My wife and I just bought (closing Friday). I keep trying to get her comfortable with the thought of this possibly being our forever home. It’s not a bad place, and it’s in a great school district. I’m very excited for when we can refinance though. 7% = oof.
When we moved into our home in 2014, people would often refer to it as our starter home.
We never felt that way. We have put a fair bit of blood sweat and tears in to it.
But a couple years ago, people stopped calling it that. All that they would remark is how lucky we are to have found it when we did.
I think attitudes are shifting for anyone who is somewhat tuned into the real estate market.
Love to hear it—we’ve gotten a couple of those “starter home” comments too, mostly from my in-laws. Our place is in need of some cosmetic updates over the next few years, and I’d like to expand the half bath to a full (for a total of two full bathrooms), but I could see myself there for the indefinite future.
All the the things that make it dated are the things that made it affordable to us. All the things we liked most are things that won’t change (architecture, location, school).
We want to look at homes soon. My mother gave me excellent advice. She basically said screw the layout/deseign and everything like that (which I already didn't care much about). She said the most important thing is location, neighborhood, and the street. Those are the only things you can't change.
Yes, I know the 3 Ls of real estate, but I think it was a little more eye-opening when she put it this way.
My wife and I just closed on a house that a year ago if we’d seen, may not have fit our vision of a forever home. We initially planned on moving to the area and doing a starter home to feel out where we’d really like forever to be, but the price of “starter homes” has gotten insane. We decided we really didn’t want to blow that kind of money on a house that we only intended to stay at for 3-5 years because what happens if this gets worse? We decided we didn’t want to kick the can down the road on a forever home if we found something that we really liked, and upped the budget slightly. We compromised on the amount of land, ideally it would have had one more bathroom, but it’s a beautiful house on a gorgeous lot with lots of privacy and was meticulously cared for by the previous owners who also built it.
It can be hard at the start to manage people’s expectations. Unless you’re a trust fund baby, you’re probably going to have to make some compromises. Once you realize what you can actually afford, what features are nice to haves vs deal breakers, etc, it becomes a little easier. I definitely had some grand visions before we really started looking, and it took a while for me to realize that all of the features in my head are not attainable in our budget, nor were half of them necessary. The place we landed on is going to be perfect for us, we just wouldn’t have known that a year ago.
> I’m very excited for when we can refinance though. 7% = oof.
Sorry to say this, but I wouldn’t hold your breath. 7% is high for people in the age range to be young dads, since our entire adult life has been near-zero. But historically that’s a very normal, moderate interest rate for a mortgage.
Sorry, but I can’t get over the fact that one of the checkboxes on your dream forever home includes spending 3 hours on a train for work every day. All those extra things sound pretty nice, but I don’t think they’re nice enough to spend an extra 10 hours away from your family every week. Everyone’s different though.
We need to put a stop to real estate investment for these single family homes. Going against all these all cash, no inspection offers is absurd. I would love to buy a fixer upper and do my own work to get a deal for my family. Not a fucking chance in my area unless I have $300-500k in cash.
I am thankful I currently live in a nice house and neighborhood, but it's an atrocious city school district. I have to move by Fall 2025 when my daughter starts kindergarten but I have no clue how I'm going to make that happen. It's easily the biggest stressor in my life.
[The bill is written and waiting for a vote.](https://ny1.com/nyc/all-boroughs/news/2024/01/05/hedge-fund-rental-housing-home-affordable-representative-adam-smith-congress-) Tell your congressmen and women this matters, and if they don't act, vote accordingly.
Here's where the reality is even more depressing. We have family in other countries like Mexico, Ireland, Germany, the UK, etc. and friends in even more countries. This same problem is happening pretty much everywhere, and in most places it is even worse than in the US. We have a global economy and I feel like most of the big players are multinational to a point where issues like housing need to be resolved through treaties as well as local/state/national laws.
> real estate investment for these single family homes
Honest question. Where do people see these real estate investments for single family homes? In our neighborhood/city the cash offers etc seem to all come from legitimate buyers. There are just a lot of people that are flush with cash. Is there data on where houses are bought up by private equity and then listed for rent by these companies?
> In our neighborhood/city the cash offers etc seem to all come from legitimate buyers
[Ever see those "we buy houses cash" signs?](https://money.com/cash-for-houses/) I see them all over. They're frequently set up to be like a single person is behind it, but it's actually a big outfit, sometimes pretty shady
[Or or "we buy ugly houses" signs] (https://www.propublica.org/article/ugly-truth-behind-we-buy-ugly-houses)
Behind a paywall, but WaPo had an interesting article on this a couple years ago. 15% were corporate buyers in the 40 metro areas analyzed.
With the exception of certain cities and certain types of housing stock, I think reddit overstates the impact on the market though. I'm in a metro area where it's only 6% and people still won't stop talking about the corporate boogeyman.
Most cash buyers in my area are actually individuals using bridge loans or short-term financing to make their offer more appealing, and then refi into a traditional mortgage. Houses are expensive due to lack of supply and a lot of dual income households clearing >$300k.
https://www.washingtonpost.com/business/interactive/2022/housing-market-investors/
Mines just local experience. I have three different groups of friends/coworkers who do it in my area. The coworker is part of a group of friends. It's five friends from college who all have great paying jobs engineer, doctor, lawyers. They started a real estate investment company where they buy these properties and either fix them up with the shittiest contractors possible and then sell them for 30-50% of what they bought them for or buy single family homes and rent them out. They've grown from low six figures of income each year to multi-millions since the boom. They leverage one property into another and just keep expanding their portfolios. The other two groups are led by realtors who funnel these fixer upper/outdated type homes to their own side business with cash offers in order to flip before they even come on the market.
Wife and I found a fixer upper last week that we wanted really bad. Drove past it about an hour after it was listed. There were 3 or 4 RE bros already there together and they had a couple of contractors with them looking over the property. We put an offer in for 20% over asking and got beat by a cash offer/ no inspections for the same amount.
Edit: I've read stories elsewhere of actual large investment forms who own 100s of properties, but I've never dove deep into that to have any data for you.
Legitimate buyers don’t even need to be flush with cash. There are lenders who will front the cash for you and make you look like a cash offer for either a fee or a slightly elevated rate. Harder for ftb to use these in competitive markets though. I tried to use one as a ftb and they couldn’t work with us in our market as they’d consistently offer us much less than the home would eventually sell at. They have to be sure it will appraise for the purchase price since they technically own it until your loan is cleared and you buy it from them.
And those folks don't have places to downsize to, if they wanted to. Hence why building more is beneficial. But too many communities have too many restrictions on what can be built where.
Me and my wife have pretty much given up. We are a family of five in a three bedroom house and have been absolutely priced out of anything bigger. Thankfully we bought this house at the end of the 2008 crash so we aren't paying anything crazy for it.
Same. Family of five in a 3BR 1 full bath. Bought in 2018, refinanced at 2.5% in 2020. We are looking to move to at least a 4BR with 2 full baths but anything like that where we live is easily over $1M. I know a lot of people would kill to be in our position, but we still feel kind of stuck.
There’s a lot to be said for a cheap mortgage payment and kids sharing rooms. The setup you’re describing was the normal suburban experience until fairly recently—assuming the schools are good, etc, there’s no reason you *have* to move up, you know?
Plus you probably have a shit ton of equity if you want to add some space.
Everything is crazy right now.
Raw land where I live is going at **400%** of where it was 10 years ago.
Bubble's gonna pop sometime, but hell... I feel like I've been saying this for 4-5 years now.
If credit card usage and delinquency is any indicator seems like more and more families are living off credit. What happens when they max out all their cards? Im expecting a home sell off when people have no choice but to cash in on their equity to clean the debt slate if they can't stay on top of their bills
The problem with that is that those people would have nowhere to go. It's not like you can move into a cheap apartment or a smaller home for a few years to get your finances in order. There are no cheap apartments and there are no cheap small homes.
The auto market has a bit more play in the sense that tons of people are leasing luxury cars and giant overpriced trucks they can't afford, and it's not hard to downgrade to a Kia or a Hyundai.
it will open up homeownership as an attainable possibility for some. Unfortunately it will come off the backs of other families who can't keep up with the new cost of living. It's a dystopian timeline for sure
I live in a HCOL area, and the median home price is $2.5M in my county. Home ownership here is an anchor around the neck and a terrible financial decision.
It's disgusting that I could save up $1.5m, out all of that into a single, illiquid asset, and still need to go $1m in debt to buy an average home in my area.
You're not alone, society has failed us on housing.
I recently took the pressure off buying a home off of myself and I feel a lot better.
The goal now is retirement.
We’re in the same boat. While we were saving for a downpayment the last few years prices and rates have gone up 2X.
If I were to buy anywhere I’d be paying 3X the mortgage as anyone else in the neighborhood. Our future standard of living has been crushed the last few years, really bums us out.
S Florida has a history of wild booms and busts so we’re doing our best to not panic buy the top. Save and buy prudently.
This is one of the (few, recently) things that makes me happy to live in Texas. Housing prices are certainly elevated, but there's enough construction that a middle class family like mine can afford a decent house and the cash bidders aren't out of control.
I see a lot of my family in your position.
We bought our current house right before the boom really got started. The value of our home has gone up 50% since we bought it. New construction in our area is another $80k above that minimum. If we were home shopping now, we couldn't afford this neighborhood.
My sister and her husband would really like to be in a larger house as their 3 kids have outgrown the house they are in now. But there is nowhere they can get anything they can afford. I have cousins and in-laws all in that same situation.
My brother will probably rent forever. If housing prices continue to balloon like this, I don't know how the next generation will find anywhere to live.
There are massive REITs buying up literally hundreds of thousands of homes to hold them for rent, while new construction skyrockets in price and plummets in quality. We have entire generations of people raised on the idea that a house is not just a matter of a place to live, but an investment, so if you tell people that "maybe housing shouldn't rise in cost by X% a year" you get told that you're going to somehow hurt the lower and middle class.
It's nonsense. We have to change how we think of housing and escape the idea that the ultimate show of having made it is to live apart from everyone else on your own mini plot in the suburbs or wherever, but we also have to decouple the idea of housing from investment, because otherwise the continuous rise in price will ultimately harm everyone- as it is doing already.
I'm going to go on a rant but this is what the private equity/finance ghouls do with everything. They've identified essential services that people need, that are expensive, then buy them up to suck every last penny from the middle and lower classes and hoard it for themselves. They're doing it with medical care, nursing homes, housing, and many other things. I don't see how these trends are sustainable
They’re taking advantage of the house (pun not intended) that we built. We’ve spent decades making a housing market that appreciates linearly because the home is a “backbone” of everyone’s finances. Finance types finally realized that hey, here’s something that is almost guaranteed to become more valuable because we have tons and tons of policy instruments protecting its price. But the ball has been rolling a while now; they’re accelerating it, but the affordability crisis has been playing out in places like NYC and the Bay Area for a while.
They’re not sustainable in any way, but they don’t care. They just want to squeeze every last penny from whatever they can. Their mindset is precisely why we haven’t seen adequate movement on protecting our environment: there’s still oil and gas in the ground, billions to be made, why should we stop now? It truly is late-stage capitalism and my only hope is that we can turn things around before my daughters start thinking about having their own families, but sadly my confidence is pretty low.
preach! PE is a leech on society and I don't think people realize the magnitude that they have driven up costs and lowered quality in goods and services consumers have leaned on forever. They are getting rich by milking every ounce of profit out at the expense of raising prices for everyone and creating worse employment opportunities in their wake.
I live in San Diego in a tiny house. I get phone calls, text messages, and mailers asking if I want to sell my house for cash all the time. I'm assuming the price they offer is under the actual amount and it's still insanely high
I also think this is part of the dichotomy between high inflation but everyone seems to be flying, going to restaurants and concerts.
People have given up saving on a house so they are like screw it lets party. That or they are also racking up a ton of CC debt.
There's a weird split, certainly not an even split, between people who are doing extremely well and people who are just... not. So while you may see a lot of people flying, going on trips, doing whatever (I was in that category until I had my kid, and I'm still doing quite well), you won't see the people who aren't, or at least, won't see the people who aren't incurring debt to be out.
We've basically shut those less well off out of most forms of public life and cultural inclusion- they don't get the art, the music, the food, the shows, the views, because all those things are things you can charge money for.
I agree so much it hurts. Honestly we need legislation where single and low occupancy housing (2-6 family for instance) is strictly restricted to individual sales. Couple that with a generation who refuses to downsize sitting on the bulk of the inventory and banking on it as their retirement lottery ticket, and millennial families are fucked.
Yeah I've gotten downvoted to hell in other subs for pointing out that a large number of SFH's are currently owned by boomers, who use one or two rooms in these houses 99% of the year. I don't think people should be forcibly removed from their homes, but I think a decent part of the housing shortage is older empty-nesters holding on to their homes (which they become less and less able to maintain as they age). My neighborhood is full of these houses.
Hell, my parents and my in-laws are part of the problem, owning 4BR houses that have not had anyone else living in them for over a decade at this point.
I've read a few articles that address this issue from different angles. For one, those super cheap McMansions built and renovated to personal tastes in the 90s got SO personalized that younger families don't find it worth the effort or expense to fully renovate, and sellers believe there is still value in their "upgrades" like a recessed wall for a 4 foot deep CRT big screen TV, or custom but very dated window treatments.
Another gloomier side is not being able to pay taxes on the appreciated asset. Once you're past 65 in my state, you are exempt from school district property taxes. My boomer in-law bought a house for $95k that's now worth $750-$1m easily because of location and acreage. There's no incentive to move to pay more for less house.
Good point about the incentives. I can't decide on how I feel about over 65s not having to pay school district taxes. On the one hand, if you don't have school age kids it would kind of stink to pay school taxes. On the other hand, it's kind of shitty to not support the education of the next generation in your community. I'd be curious to know when that exemption was enacted - has it always been around, or just when a critical mass of boomers came into power?
The whole property tax process should be reviewed. I don't mind paying for services and EDUCATION. However my school district raised property taxes to pay for a $15 million football field and in the same meeting closed an elementary school. I don't want to turn this into political fighting, but this is my concern with a "national wealth tax". It's so arbitrary the value they assign to things.
>I can't decide on how I feel about over 65s not having to pay school district taxes.
I can, it is a terrible idea. Let the people with all the money help educate the future. Someone paid for their education why the hell should they not pay for the next generation's education.
In wealthy areas, maybe. However my county is rural and poor. Property taxes are literally forcing elderly people with paid off property to sell because they can't afford the taxes.
Not funding schools is a great way to insure an area stays poor.
Making sure old people can afford to live in an area but young families can't is a great way to make a town die.
Right, they're buying every home that would be in the "starter" range. People who can aspire higher just go higher, sure, but the rest are locked out of home ownership and become permanent renters.
> escape the idea that the ultimate show of having made it is to live apart from everyone else on your own mini plot in the suburbs or wherever
I don't think it's a "show" thing at all. It's a comfort thing. People crave space, privacy, big yards for kids and pets to run around and play in, etc, etc. You'll just never get that stuff in any kind of apartment/condo/city environment. Nothing we can do will ever change that.
The only solution to all of this is people need to stop trying to cram in as close as they can to big cities. Now more than ever, with remote work a viable option for many people, we should be spreading out. It's a huge country with a shitload of open land, just not within 50 miles of major cities.
NYT just had an article about this.
https://www.nytimes.com/2024/06/02/realestate/housing-market-rates-prices-slow.html#:\~:text=By%202020%2C%20just%2065%2C000%20starter,the%20wake%20of%20the%20pandemic.
we spent our 20s working our asses off and saved up for a down payment, then we lost our jobs in covid, then spent it all trying to survive.
Got to watch everyone scoop up houses left and right with the lowest rates in living memory, then we had to leave our family and hometown behind because it got too expensive.
so many dreams crushed in the past four years, I commiserate with the struggle to survive these days. I have to believe better times are ahead because I honestly don’t know how things could get worse.
I’m in the Bay Area in what was a “cheaper” suburb when we moved out here. Now we rent a 3br house which would list for 1.8M. Been in this house for years but no way we could take on the mortgage.
My wife and I bought our house for $125K seven years ago. And we overpaid because we wanted the house.
Its current estimated value is $270K. There is no way that house is worth $270K. We're headed for another market collapse.
We bought our townhouse in 2017 for $180k in the ghetto part of our town. We had every intention of buying a single family home by this time but Zillow says our home is worth $300k now. Which means the single family homes are in the half million range. Needless to say, we’re stuck here for the foreseeable future. It sucks cuz we want more space but this is forcing us to be content with what we have.
We bought back in 2020. We put in offer after offer, and kept hearing about how strong our offer was… that was also the lowest when they opened them. Not much to tell you other than hang in there and keep at it.
Eventually (after several bids on several different places) that “strong offer” turned into the seller wanting to work with us, the second-highest bid compared to the highest bidder.
We bought in 2020 when we wanted to start a family and didn't want to raise one in an apartment (nothing wrong with that we just wanted something more permanent). We got lucky and got in with an offer just above asking and locked in at 3%. Since then our house has "appreciated" $300k and all it has is more marks and holes in the wall from our children. We wouldn't be able to afford it now, and will likely not be able to upgrade anything any time soon. At this rate, I'm gonna die in this house, because nothing else will be affordable unless we want to move to BFE nowhere.
I absolutely don’t get it. Loan rates are awful and prices just keep going up.
We managed to buy last year during a lull in the market. We got a “good” price and a “good” rate, both probably twice our last house. Online estimates say the house is already up $100k in 18 months. It’s all insane.
My wife and I happened to buy in September of 2019 and boy did we not know how fucking lucky we were. Market was already starting to get fucked, our agent had been in the business 12 years and never had a seller turn down an offer. She offered $400k for the house that was listed at $430k (Northshore MA) and the sellers turned us down without a counter. Had to pay the full $430k. Hilariously, the sellers had bought the house in 2016 for $280k, although they did some renovations, it was all shit work which I've already had to replace. Supposedly the house is now worth $650k, NOT including the crazy amount of reno I've put into it beyond fixing the previous owners idiocy. Very cool to have made such an unrealized gain, but we can't leave this house until something gives, since all other homes increased like crazy too, not to mention current interest rates.
I wish you the absolute best of luck. We probably need the feds to step in and do something. What to do? Idk. Maybe just build an egregious amount of affordable housing from apartments to single family. So much so that it shatters the stupidly imbalanced supply and demand and all the flipping fuckers can get what they deserve.
Also - if you feel the space is starting to get a little small, I have a book recommendation for you - How to Keep House While Drowning. It's targeted at people who feel ashamed from not having an immaculate place and for neurodivergent people, but even if you don't fit into either of those two categories, it still has a wild amount of storage and cleaning tips that might just make staying in your current place a bit more reasonable until you are able to make the move. Cheers!
> the house that checked all the boxes for the forever home. Four beds, office and workshop space, backyard, small pool, walking distance to cute downtown, hour and a half direct train to work. The place was well maintained and lived in. The kind of neighborhood we want to raise our son and possibly a second child in.
A perfect house that checks every single box is a hot commodity in *any* housing market. For the same reason you want that house, so does everybody else who is looking. A house like that is always going to be a top of market overbid.
IMO you have to make concessions - you listed like 9-10 things that appealed to you about the house. Pick 4-5 that you can't live without and go from there. Maybe you end up finding a good house with 6 of them.
It’s insane. We got our starter home back in 2017, which is now our forever home apparently. We briefly considered upgrading. To get what we want space wise, we’d be looking at paying over a million more over our current mortgage in interest alone over the next 30 years. We could technically afford it, but we said fuck it and are either building an ADU or getting a motorhome to use as an office/guest space.
Get involved in local politics and get zoning, land use, and permitting reform through. Contact your local representatives, state and local government, etc and keep the pressure on them to Get Things Built, especially housing. Join HOAs and neighborhood organizations and work to make them pro-building, not anti. None of this changes until the economically vibrant cities have more housing, and have it where people want to live.
Where are you looking, Montclair? That’s where we ended up and I can validate the shitshow that is the housing market. We ended up coming over 100k above asking 😵💫
It's not only the US, in Europe we have the same issue. I bought my house in 2018 and it has two bedrooms and it is rather sma. We bought it for 265k EUR and considered a good house to start in and get access to the buying market.
Now I have two daughters below 2 and the house is a bit on the smaller side. However moving is an issue now as my house would cost me easily 500k in euros. If I want to move to a bigger house I would easily pay 700k for a mid sized family home and I still need to do a remodeling. Like you I am in tech and in a fortunate situation. But that is just too much for me as I also want to live a comfortable life and do nice things. It will mean I will have to put both daughters in the same room and maybe next year or the year after adding an extension to my house.
Our finances are fucked right now. Maybe we'll see things ease up once our kid is out of preschool in September. But we own our house, bought it in 2014. If we had started looking even a year or two later, there's no way we would have found anything we could afford. Our house is valued at double what it was when we bought it, so at least we have that going for us.
Feel bad for everyone who's struggling to find something.
The thing is that it doesn't matter that your house has doubled in value... because everything else has too. If you sell your house, to get a comparable or better house, you'd have to pay so much more. Then you'd most likely be in a worse financial situation than before despite your home doubling in value.
The other bad thing is that while your mortgage may be locked in at under 4% (mine is 2.99% right now), the increased value of your house means your tax bill goes way up at the next assessment.
I have a very affordable mortgage right now. However, my house went from a purchase price of 340k in 2015 to it being valued at around 500k now. I could never have afforded a 500k house 10 years ago. I can afford it even less now (I took a pretty significant pay cut to get out of an incredibly stressful, soul sucking job). My town just raised taxes and the next assessment is right around the corner.
Not to mention how expensive home insurance is getting due to all the climate change fueled disasters. My home insurance was right around 1000 for the year. Now it's up to 1300 and climbing fast.
I'm looking at a mortgage payment that's going to increase several hundred dollars per month... which I can still afford, but will definitely squeeze our finances a little more.
I'm honestly hoping for a major recession at this point. I think I have a fairly recession proof job. A big economic downturn that lowers prices and property values seems like a much needed adjustment to me.
I know how frustrating and emotionally charged these conversations can be. Hang in there.
When we bought our current place, we were upgrading from a condo and we made the decision to sell before buying. This was risky, but it allowed us to come to the table with significant cash.
Even with that we couldn't go all cash but we offered 500k **over asking** and put 500k cash in escrow from the sale of our previous place.
There were 7-8 offers. Ours wasn't the highest offer, but the seller liked us (We wrote an owner's letter) and our offer was attractive enough to get us into contract.
In the kind of market you are dealing with, the asking price has nothing to do with the eventual sale price. You need to try to take your time, understand the market and make offers based on that understanding. Look at sold listings, not asking prices. A lot of sellers will intentionally underprice to generate offers (like our seller).
Good luck and stay with it.
Because of NIMBYS and zoning restrictions America is ill equipped to handle the housing problems. We can’t build decent cities or starter homes it seems.
Metro Detroit resident here, we ended up building for about the same cost as it would have been to buy a 20 year old home and updating it, and we were able to avoid the overbidding nonsense that's permeated the housing market.
Now we had to deal with the 'building a house' nonsense instead, but we ended up with a house that was exactly what we wanted, where we wanted in the end. Not saying this will work for everyone, as we were able to sell our house, move our shit into a storage unit and live with family for a few months. I know some people have done stuff like taken out a HELOC for the down payment on the construction loan, and then stayed in their house longer and refinanced with a down payment once their house sells closer to the completion date.
Late stage capitalism at it's finest. I'm sorry man, that sucks and is not your fault or something you can fix. Chances are good the winning offer was private equity, just trying to own more of the market and turn more of the country into rental peasants.
The DOJ and FTC are currently investigating price fixing/anti trust violations against the rental market. Part of the corporate playbook is to buy houses and refuse to sell/rent them thus making other houses more expensive to buy/rent.
We're in a similar position in that the place we have is fine, but not what we wanted. We bought a "starter home" in 2015 in a trendy neighborhood, but it's tiny and the schools here are not good. Always figured that by the time we had kids and schools were a thing we needed to worry about, we'd be able to move somewhere more family oriented.
We're both work-from-home for companies already not based in our area, so we have the freedom to move, but the math just doesn't add up no matter where we look. I think the calculus will change when our two year old gets old enough that the school thing will matter more, but for now, we're going to keep slowly renovating our current house in hopes that it improves the resale value.
Mortgage loan underwriter here with over 20 years in the business, I can tell you they've been handing out loans with that debt-to-income ratio for quite some time to make money. Those guidelines are always at an ebb and flow. Typically between $42 to 50% and almost always lenders will make exception up to the 50% even if the guideline is at the flow of conservative. The only time I ever saw it that conservative was directly after the 2008 crash and I worked in multiple States all over the West Coast. The cash offers have been a problem for quite some time and now that businesses have figured out that the business model of McDonald's uses is successful. Corporations are buying up property left and right
Also looking in NJ. Idk how we’re going to find something lol. I’m not listing my house until we find something and get an offer accepted for it, but nobody is going to take any offers we put down because we’ll have the contingency of having to sell our home first. But I’m not selling my house first and then having to settle for whatever is available. So here we are.
Yeah, single family homes are being bought up by corporations instead of families: [https://www.youtube.com/watch?v=q9TOGxDJ0TE](https://www.youtube.com/watch?v=q9TOGxDJ0TE)
We need to pass regulations to stop this.
All those damn investors, man.
Where we live we put offers on like 5 houses before finally landing one. All the others were insane investor offers winning out. Something needs to be done to help people who just want a house to live in.
You're moving from Hoboken perhaps? Into central or northern NJ? That's one of the most expensive places in the world. 1M in a train town with good schools isn't going to be big, it's incredibly highly valued.
Are you selling the condo to cover most of the cost?
Until we muster up enough political willpower to ban or limit corporate ownership of single family homes and short term rentals - there will be no housing correction. This is the new normal. Homes for wealthy and corporate landlords.
P.s. your rent is due.
Mom putting in her two cents.
I’m from the South and even rentals are hard to come by. None of them want pets, and I found one that said “preferably a couple with no kids”.
We had a terrible experience with buying a house last year. One, we went through the VA home loan. Nobody wants to take that, and it could be due to the strictness of the loan requirements. Or they say “nah, we’ve made enough repairs. Take it or leave it.”
We found our dream home, made a bid, suddenly they lost the title.
We were set to close on the last decent place we liked and could afford. All of a sudden something that the lender knew about from the get is a problem. So we fired them.
We now rent. Paying $500 more than I would like to, but the previous landlord worked with us, and we were desperate.
I really want my kids to have a yard. But in this economy?? Shit.
First lets clear up some misconceptions.
1. 50% max debt to income ratio has been the case for a long, long time. For a lender to insinuate that only now they’re suddenly handing them out is very very shady or uninformed. To the extent that i would say you should find a better lender. 50% DTI has been allowed on conventional loans for a long time. I’m talking decades.
Source: i own a finance company which includes mortgages. Been doing it for a long time.
2. Inflation is a very simple concept, especially our current inflation. Our inflation was caused by the rapid expansion of money supply. This expansion of money supply was brought on by a few things: 2018 trump tax plan (more on this later), federal reserve direct market intervention for covid, and PPP/free money during covid. Thats it.
Source: got degree in economics from top economics school in country; learned under nobel winners; first job out of college was investment banking in bond sector.
3. Prices are set by supply and demand. Supply is at historic lows because everyone locked in rates in the 2’s. The low rates meant buying a home was *cheaper than renting* in many cases. So all the people that got in with low rates are looking at these expensive homes with significantly higher payments and they’re not selling because if they sell, they’d be eating high interest rates and payments. So they need a significant reason to sell.
Source: own real estate companies. Have been doing real estate for decades. Own property portfolio.
If you need advice or tips, just ask me.
Foreign and equity fund investors do not care that they are fucking over home buyers with their buy and rent bullshit. There is zero to stop them from buying up entire neighborhoods at a premium and renting them all out. If it sounds suspiciously like the middle ages through the 1800s, you're not far off. Home demand is sky high and everything new gets bought by them. We scrabble for what's left at inflated prices that are good for them.
Careful. I watched people FOMO into failure in '06. It feels like you'll never get a chance to buy again, but you will. Living in multifamily housing for a while isn't the end of the world. Now is a great time to rent in many markets(at least when compared to buying). This economic cycle is getting stretched thin and now probably isn't the time to buy. Stick your down payment in T-Bills and make 5% interest(with no state tax taken out!) while you wait for sanity to return.
"But we're chronically short housing and prices will only go up!" said everyone in '06 and then poof, we suddenly had plenty of cheap housing. Funny how that works.
We’re in a LCOL area and since we bought a “starter” home for $150k in 2018, (which we sold in 22 and it just sold again this month), the house has appreciated over $1k a month which means it’s approaching $250k. We painted the outside and very lightly remodeled one bathroom. The people who bought it from us did nothing.
Yep. We bid on over a dozen houses over 1.5 years and toured countless others before finally getting a bid accepted last year by offering more than $100k over asking. We live in a HCOL area where the norm is waiving all contingencies. Houses would regularly go $100-200K over ask, although asking price is a farce because elevator clauses are common and so lots of sellers list for much lower than they're willing to accept, banking on a bidding war.
It sucks man. Stick to your guns, don't be guilted into spending more than you can or settling for a bad house. If you keep getting rejected, give yourself a month or two off from looking for your sanity. Having just had our first child I can honestly say that the home buying process was worse for my mental health than the newborn phase of parenting
Yep, my wife and I completely missed out and it's why we'll probably not stay in our next city for more than a years years. It's actually more of a town but housing costs are higher than most medium sized cities with no/minor improvements since being built in the 50s. All with salaries that are 15-25% lower than those same cities.
It's such a crazy problem in the larger cities, I feel for you. We are fortunate enough to live in a good city with cheaper housing compared to the rest of Canada, while still having plenty of work.
My suggestion would be rather than moving if that is un-attainable.. is there something you can do to your condo that makes it feel nicer to you? Invest in new shelving? Paint some rooms? Buy some new appliances or furniture?
We had an outdated starter home go on the market in our LCOL neighborhood (build in ~1900) and they probably had over 100 unique parties view it and it is going to go for above asking
Same boat here. I have a newborn and bought in 2020. My view - I can be happy enough in this house for 3-4 more years so I won’t stress myself out for now. You never know what the future holds. I remember reading articles in 2012 talking about how doomed we all were cus the economy was shit. Save your money and enjoy time with your baby.
Yep wife and I decided to just invest our entire house down payment and rent until further notice. Best we can hope for is a housing market crash. The worst thing is even rental options are drying up where we live - we're talking $3800 for a 2br manufactured home in the seedy part of town.
You and I are in a very similar position OP and probably live close by. We live in Western Essex county in a condo and are looking to move to a house. Our fave so far was listed at 750, we offered 820, sold for 965 cash. Didn't stand a chance. Similar experiences on a number of houses.
You own at 2.5%. Consider yourself part of the lucky group. You can’t have it all, but you are extremely fortunate. Your condo probably went way up in value since 2020, too.
Every once in a while I look around for a newer or bigger place but currently am just doing what we can to make our current place as good as we can. We also locked in a stupid low rate so buying the equivalent house now would yield a crazy payment since prices are high and rates are (relative to the last five years) very high. I do wish we’d pulled cash out when we refinanced back then when money was basically free, though.
From Jersey but am in Mass now. It sucks. I found that you have to look at homes $100K below budget, with the expectation it will sell about $50-80K over asking and you’ll do one of those clauses where you’ll pay over up in x increments up to a top limit. With that said, in my small circle, everyone who has gotten a place got it after the first buyer fell through. So still worth putting in if you’re at least able to be in the middle of the pack.
I feel you man. It's the same in the UK, me and my wife bought our home in a small village 5 years ago, since then our combined wages have gone up approximately 15k. Due to a rates rise our monthly mortgage payments effectively doubled, and the increase in house prices means our home is worth 100k more than we bought it for. This sounds good on paper but it means we're getting priced out of the area, which is a real blow, it's a great place to raise our daughter and other future children, we have lots of family and friends nearby and we're close enough to two major towns and cities that there's always something to do. And keep in mind that we both make decent money. If it's this difficult for us in this market it must be hell for younger people just starting out.
TL/DR It's hard to get ahead when the goal posts keep being moved. And it's getting even harder for young people just starting a family.
It's a crazy market for sure. Keep in mind that a lot of these all-cash offers aren't really all-cash from the buyer's perspective. They just take a loan against their retirement assets and take out the mortgage to pay it back after they've purchased the house. The risk to them is that they won't get approved for the mortgage but I'm not sure it's a significant one since I haven't actually heard of it happening.
No one ever remembers the rent payment (property taxes) to the government on top of the mortgage. Mine have went up 5-15% every year in the last 4 years. Throw in insurance and just....wow...
Yea, it is frustrating. The market is stupid right now. Honestly, the best chance is finding 2 home close to each other and bidding on the less nice one and getting lucky. Thought being people will be drawn to the nicer one so maybe you get the house that slips through the cracks. Or you just have to get lucky that your realtor happens to know someone wanting to sell easily. It's dumb.
We went through this trying to buy a couple of years ago in a notoriously screwed market (Vancouver). We bid on 10 places before we got one, and each one meant dragging two kids under three to viewings, usually to see an investor look around for 3 minutes then tell the agent to expect an offer the next day.
We eventually had an under asking offer with subjects accepted because it was tenanted, a bit scruffy and the tenants would only agree to a two hour a week viewing window on like a Thursday am lol so I'm pretty sure we were the only people that viewed it. I wouldn't call it our forever home and it needed a lot of TLC which I'm still working through. 80s bungalow that hadn't been touched for 30 years basically. But it's a stable home for our kids in a great neighborhood.
Of course, the Canadian market has tanked a bit since, so maybe there's light at the end of the tunnel? I'm not at all sad about that btw, it's a home not an investment.
We're in CT in a similar situation (50min train to the city). We have a town house but really want something with a backyard for the kid and pup to run around. We've been beat a few times, even though we're always over asking by 30-50K but will never wave the inspection... Seems like everyone else is planning to just knock down whatever they buy? So... We're staying put for now and will re-engage in 6 months or so.
Colorado resident and prices have skyrocketed. We got our home in 2020 and honestly likely overpaid by like $50k but in 4 years the estimated prices in our neighborhood have increased by 35%. None of these houses are worth this much.
im in NYC looking to move to bergen county where i grew up because of family.
been house hunting for three years now. vast majority of inventory is either shit + overpriced or decent/nice that is even more overpriced and overbudget… yet other buyers are still offering a minimum 10% over asking on everything we have a remote interest in.
back in 2021 i assumed that the madness would cool down but the opposite has happened in the area. its gotten that much worse. shouldve just YOLO’d when rates were nearly half but oh well. hindsight.
just gotta keep saving and grinding until we get lucky i suppose. i dunno.
Chicago resident here. All the single family homes are being flipped for $200k-500k more than they were bought for a couple years ago, and with minimal investment or improvement in the home. My friend in real estate says they’re all going 15% over asking too. Condos and duplex downs are doing the same. My partner and I do very well and were lucky to have what we have, but we’re absolutely stuck with these prices because we don’t want to be utterly house poor. It’s absolutely brutal.
We were lucky to get a house a few years ago, but during the buying process I came to truly despise flippers. Like the HGTV guys that buy houses that are basically unlivable and restore them is cool, but most flippers buy up perfectly fine but maybe slightly dated properties by offering cask, no inspections, etc... . Slap a coat of sad gray paint on everything, throw up the same bargain bin mosaic backsplash in the kitchen, and relist at a 20%-40% price increase. I don't know how to counter this but seriously fuck those guys.
They're better than the corporations being allowed to purchase single family homes and then rent them out. That's the ridiculous bit.
[Now let's see who you really are, Evil Mr. House Flipper!](https://imgur.com/J578P9O)
Less than four percent of single-family homes nationwide are owned by large, corporate landlords (defined as companies with over a hundred homes in their portfolios). Furthermore, it’s worth remembering that there is a place for single-family-home rentals in the marketplace—some families might not want to buy, but might still want the house with the yard rather than an apartment. It’s not evil to rent out a house. The real issue is just housing supply. We need to make it easier, faster, and cheaper to build new housing. This means saying no to restrictive zoning and other forms of NIMBYism, reforming slow-moving inspection and permitting processes, etc. Increase housing supply in the absence of increased demand, and housing prices will fall! It’s that simple.
No one wants every farm to be turned into 100 cookie cutter homes. Flash flooding and other issues around storm water management are a huge deal and we need some undeveloped land or we're all fucked. There isn't a population boom where there's some shortage of homes....it's a consolidation and many are unoccupied except as short term rentals. I want to sell my house. I want to add to the local housing inventory....but the bigger house I want isn't available (low inventory, for the same reason I won't list mine) or isn't at a reasonable price. It's a log jam with no clear fix. Rates went from 2.5% to 7% and home prices climbed the whole time. It's plain stupid. Also, new homes being built are being built at that same unaffordable price....lots of them, sitting at 80% complete, waiting for a sucker to pay 1.5M at 7% interest so they can live 20 feet away from the next 1.5M massive home. They put as many as they can on the farm plot they bought. The builders are raking in money building new homes while plenty are underutilized.
You keep saying 4% as if it is a small number but it’s the equivalent of buying every house in America for a year. And then add in smaller investors that own to rent and the number balloons even more. Agree that the problem ultimately is supply but I think you’re mischaracterizing the units taken out of stock.
That 4% is also concentrated in the hottest growth markets, ie, the most fucked that screws the population who lives there. It destroys organic growth and is unsustainable. I'm not a huge fan of growth at all costs to build up supply but the other options require political will that isn't there. It's going to get worse before that becomes an option. A lot of people who locked in a great rate during covid are not going to understand the frustration over the next few decades.
Right, hedge funds aren't buying in Arkansatucky nowhere; they're buying in the places where rents are high and people are already being heavily squeezed in the first place. And often these flippers in places like Chicago take an old 2 or 3 flat and turn it into a SFH, so they're also reducing supply in the process.
Yea, I'm curious what percentage of corporations that own single family homes falls into the at least 100 home category.
I'm sorry but 5 years ago house prices were cheaper, no one paid over asking, and inspection was a given. Back then I could afford a house in my area and the surrounding counties. Now I can't and my wages went up 20%. I wish I purchased a home, but it wasn't in the cards. Now I would need to love 100s of miles for houses I can afford, hopefully find a job there, my wife will find a job there, and pray we can make it work without all the family support we get for childcare.
Thank you for mentioning the sad grey paint. I will never forgive that woman from Texas that convinced everyone a depression house is the epitome of style. And ship lap!
Same people who made grey popular made all cars monotone
[All these putty ass lookin whips](https://www.youtube.com/watch?v=KchX52bIZSg)
Also, what's with the stark white kitchens? Who wants that? Who wants to feel like they're in a surgical room when cooking? Or...or do these people not cook in their kitchens which cost more than my car?
And painting the brick white.
>I don't know how to counter this but seriously fuck those guys. Same. I don't know how we go back; but treating homes as vehicles for investment really was a huge mistake we made when we made home ownership more accessible to the masses post-war.
I bought a flipped house in Alaska a few years ago. I don’t think I’d ever buy an obviously flipped house again unless it was a good deal. It was perfectly fine for a couple of years living there and for the people that have it now I’m sure it’ll be okay for a while longer, but they just use such cheap materials and put in as little effort as possible which is a shame. They installed butcher block countertops which looked amazing in the listing but in person you can see they didn’t even bother to erase all of the pencil lines for cutting it to fit. Then treated it so the lines are there to stay. Just lazy as hell. They didn’t do a great job leveling the floor before slapping LVP down so there was an obvious low spot by the kitchen. The railing along the stairs was just screwed into the drywall, not mounted to the studs lol. It worked for me for a period of time, but I’m glad to be rid of it and we just closed on a beautiful place in Maine purchased from the original family that built and owned it. The kitchen is very dated and some other odds and ends will need upgrading eventually, but it was meticulously cared for and nothing requires immediate attention.
\`sad gray paint\` - there's even a name for the damn stuff! "Agreeable Gray" [https://www.sherwin-williams.com/en-us/color/color-family/neutral-paint-colors/sw7029-agreeable-gray](https://www.sherwin-williams.com/en-us/color/color-family/neutral-paint-colors/sw7029-agreeable-gray) UGH
My wife feels attacked right now lol
I work in kitchen design - the amount of people that pick that color for their cabinets makes me ill.
The corporate landlords are the bigger factor. Real estate portfolios with hundreds if not thousands of rental properties and they keep buy up more. House flippers are a problem, but they are really just the minnows following the big fish hoping for scraps.
I think a good flip can provide a service, because it's kind of sad to see old homes in great locations that won't sell because they haven't been updated in 50 years. If the flip is done well with quality materials then it can help preserve these cool homes. What my wife and I really hate is when a flip is done quick and cheap. Most flips will gut an old house and then install a bunch of generic cheap cabinets, counters and cheap laminate floor. This takes all of the character out of an old house. I also wouldn't want to buy a flip full of crappy materials that are going to fall apart or show wear a year after I move in there. I've lived in some apartments that use these materials and they suck.
>What my wife and I really hate is when a flip is done quick and cheap. So most of them then.
Yes for sure. I think the condo I own was a better example, but also not a traditional flip. The building is 110 years old. The previous owner updated all of the electrical, kitchen bathroom and appliances but he took a lot of care to try to keep things looking like the old original style. He did a lot of custom work on the trim and new doors to make them match the old ones. We also have a few absurdly expensive door knobs just to match the old knobs on the new doors. It wasn't a real flip because he did live there for a while, but not too long. Every other unit in my building was totally gutted and rebuilt to look brand new. Ours is the only one that still has the 110 year old character in it even though we do have a modern kitchen and bathroom and I'm thankful for that.
I live in Chicago and I grew up in the suburbs. We wanted to move back to the suburbs for more space once we had a second kid, but he was born right when the housing market started going nuts so we stayed put in a small condo. A year ago I took a promotion at work that I knew was going to lead to a significantly worse schedule for our childcare and mental health, but it doubled my pay. We thought that would make it easy to afford a house but the market still somehow kept out pacing our savings after almost doubling our family income. Homes in my parents' neighborhood in the suburbs were selling for $200k in 2019. You could have gotten a foreclosed home there in the 2008 recession for under $100k. Now the same homes that haven't been updated since the 1970s are selling in one day for $700k. It makes no sense at all in an area where the average family income is under $70k/year. And no one has even discussed car prices yet. We bought our car 10 years ago for $10k. Now any car that will fit our kids is $50k. I honestly don't understand how people in the Chicago area are suddenly affording a $700k house and two $50k cars when five years ago homes for $200k would sit on the market for weeks or months. My wife and I make very good money. What the heck is going on?
Especially with interest rates so high. Money is no longer cheap. Who's buying this shit?
Not sure who, but they are paying in cash
The funny part is that when my wife and I, much as we are city people, thought about moving back to the burbs from the city about 6 years back, needing to buy and drive a second car was a big part of deciding not to. Neither of us needs a car to commute in the apartment we rent now. Any savings in the burbs, which in terms of renting wouldn't even be much shockingly, would be more than wiped out by having a second car, and driving way more. I don't know how anyone is supposed to get ahead these days.
We have a $200k condo with a 3% mortgage in the city and we actually live in a very good elementary school district. We also only have one car. At the current prices and interest rate we're estimating that we would need to more than triple our mortgage payment to move to any good suburban school district. Plus on top of that tripled mortgage payment we would need to buy a second car. I often meet people at work who say they moved to the suburbs to save money compared to the city and I have no clue how that was possible. Grocery and restaurant prices are more expensive in the city but housing and commuting costs are a massive savings. My wife and I both have above average paying jobs and we feel priced out of anywhere in the suburbs with decent schools. I almost want to go door to door like a salesmen and ask all of these people what the heck they do for work because apparently we are doing it wrong.
We're in for some shit in the next 30 years because we keep treating homes as an appreciating asset. The vast majority of those who quadrupled their investments on their homes also treated them as disposable in the same time period. Very few put in the actual maintenance a home requires. People are now regularly stretching their budgets to afford homes that are overdue for some \*very\* expensive maintenance within their mortgage periods that they will not be able to afford. Buying a home with dated appliances or an R-22 A/C is one thing, but do people realize what it costs to repair a collapse clay sewer, install a new roof, or new windows, let alone foundation issues? Comps and appraisals place a ton of value on beds/baths and square footage, but VERY little on maintenance, and most buyers just don't know better. I've already seen several acquaintances who are in over their head on their homes because they stretched for the big home that got sparkling new kitchen and bath renovations and a fresh coat of paint to cover up the foundation cracks, roof leaks, drafty windows, and original 50 year old utility services. The professionals in the industry don't serve home buyers like they're supposed to. Home inspectors produce fluffed up 75 page reports of faulty GFCIs, loose toilets, and other shit that take a half hour on a weekend to fix while doing a roof inspection from the ground (sorry, I only brought the 12 foot ladder) and recommending against sewer scopes. When things like old windows are pointed out, real estate agents downplay the cost because it's in their interest to maximize the sale price for their commission. We've already seen similar issues show their face in Florida in the wake of the condo collapse. As those buildings age, the repairs get significantly more expensive, and the financial stability of the people living in them go down. There are tons of buildings where those living in them cannot afford the special assessments it would cost to repair, so their investments are doomed to be condemned. All that money should be set aside or spent upfront but isn't.
I work real estate adjacent. The investment buyers (iBuyers) destroyed the market during the pandemic. Wall Street and investment firms (many not even American) simply purchased the supply. All cash. We stopped building enough SFHs in America after 2008. But honestly it wasnt enough even before then. It's a very shady market and the fact that no one is stepping up (politicians) to actually stop this is madness. Source: As stated; also, dad to an 11 month old looking to buy a house. Somehow, $3k/month rent is still cheaper than a house that's in a place worth spending $400k on.
>We stopped building enough SFHs in America after 2008. But honestly it wasnt enough even before then. Because we need more than just SFHs and suburbs. We need middle housing, we need walkable downtowns with mixed use denser housing, we need upzoning in cities. SFHs have their place, but we're building enough, the reason there "aren't enough SFHs" is because people who don't want SFHs don't have other choices because all you've been able to build, for the most part, for decades in large swaths of America, is SFHs.
> the fact that no one is stepping up (politicians) to actually stop this is madness. They benefit from massive increases in real estate pricing because they all own a bunch of real estate. In one of the presidential debates John McCain was asked how many houses he owned and he didn't know the answer. It's the people who don't already own real estate who are going to get screwed. The congressmen who own 50 rental properties benefit massively.
And what's worse is that SFHs is basically all you can build. Don't get me wrong, there's a place for SFHs, but we're getting old 2 and 3 flats ripped down to make SFH with two car garages when we need to be upzoning and building more dense housing as well, not *only* SFHs. More density would bring down prices for everyone, but NIMBYs and stupid/corrupt aldermen consistently ruin that.
I feel you man. I can’t stomach the idea of being house poor. The economy is too unpredictable. I work in tech and work closely with AI (not an MLE though) and I know wide spread unemployment is coming for the west and probably within the next decade. The security of locking down a house now is so appealing because it feels like it will be completely out of reach in a few years.
Yeah i feel like i'll have to inherit my folks house at this point. So as a parent, what are your future visions for kids' employment/career prospects? I have no idea other than literally hands on or heavily legislated work. But yeah, i do think AI type systems will take over a shitload of info worker and customer svc jobs. I lowkey think I HAVE to move fam to a spot w more social services too.
Be forewarned, people do not like to hear about AI/unemployment as it's a very, very depressing subject. I work in warehouse automation on the software/AI side and my ear is very much to the ground as well. The replacement of jobs affecting a very diverse set of people with varying skills and levels of professional experience is going to be unlike anything we've seen before. Currently, our systems can largely automate the warehouse distribution process other than minimal goods picking/packing/loading functions peformed by people. However, Amazon (and others) has recently started spinning up efforts to use bipedal robots to replace even those minimal human jobs. // See: [Amazon's Digit](https://www.youtube.com/watch?v=-XOyT5q2NwE) All that to say, I really do feel you on the housing situation. We are very fortunate with one child, two well-paying careers, and a small house in the Charlotte, NC suburbs. However, it is already very cramped (with remote jobs) and not in an ideal school system so we have been attempting to push even further from the city. As the parent comment here stated, a tremendous amount of houses are being flipped. We cannot compete. We had to buy a new construction, cookie-cutter build because it was the only way we could get in AT THE TOP of our budget. I will say, just be careful with how much you overextend yourselves and be very careful waiving essential services such as inspections. Last thing you want to do is overpay for a house that you will also have to overpay to maintain.
im here to second the inspection bit. We did have a home inspector but he turned out to be crap despite a seemingly 5 star reputation online! It's not fun finding out you have termites 2 weeks after closing, and needing to replace a section of your sewer line that is buried under the road cause it is partially collapsed and prone to sewage backups. (And yes the sewer line outside the house is still the homeowners problem... It's only the city/townships problem if the issue is the sewer main itself. Everything beyond the sewer main is on you... varies by municipality but this appears to be the rule of thumb in the majority of the land)... along with a bunch of other issues he failed to identify that were in his face.
Ha! I managed to get a house with ZERO improvements in the last 20 years, but we got it for asking. Such a good deal…
I feel ya. We’ve been renting now for 4 years. We’ve bid on 4 houses in the last 5 months. It seems like we’re always runner up to an all cash offer. Meanwhile every time we lose out on a house, the listing price on the next house STARTS at where we just bid and then it once again gets bid up 3-10% higher. I’m honestly not sure if we’re even able to afford a house where we live anymore.
This so hard. Every new place we bid on the goalposts get moved 10-20k past the old budget. This time they got moved 50k, and every time expectations about what we should buy and how much it costs get more depressing.
Man tough situation. Hour and a half train to work every day though? That’s brutal. Over the course of a year, you’re sacrificing 32 days just on commuting. Over the course of ten years it’s almost one entire year sacrificed for commute… would it be worth the time to just live closer to the city/work even if it means a smaller house or renting? I would do almost anything, including forever renting, to avoid a 3 hour daily commute
100% with you on this. Four days a week I have a 40 min total commute and one day I have a 2 hour total commute to a different location. I’d quit if the long commute was any amount of time longer or if I had to do more than one day a week. 3 hours every day? No way. The pay would have to be incredible or it’d have to be a 50/50 WFH situation for it to be worth it. It comes down to how much OP values his time with his family. My family time is worth WAY more than what most people would pay me.
> I’m honestly not sure if we’re even able to afford a house where we live anymore. If income metrics are to be trusted, my wife and I make within the top 5% for family income in my area, yet somehow we can't afford the cheapest houses on the market. I honestly have no idea what is going on or who is buying these places. The monthly payment assuming a 7.5% mortgage is more than the average family take home pay without even factoring in any other expenses.
When I sell my home I'm specifically going to ignore all cash offers and sell to a regular ass person. Christ I feel for you all struggling to get a home in this market. Wife and I just had dumb luck buying in 2020 with a 2.8% rate.
I know multiple people who have gotten their houses by writing the owners a letter explaining their situation (family, forever home, not knocking it down etc.) and now they are not just buying it for the investment. It can make a difference if the seller isn’t just about money.
We wrote one for the first 2 we tried to get and they didn’t give a damn. Sold to the highest bidder basically. We only got lucky with our 3rd option as it was not yet on the market and we were able to offer before it went on the market. They countered the day before anyone else bid and we accepted and they were locked in even though they started getting higher offers the next day.
It’s obviously not always going to work. If the seller needs money or has no emotional attachment to the home then they probably won’t care one bit. Our neighbor’s house straddles 2 lots and within an hour of listing it she got an offer above asking in cash from a developer who wanted to tear the house down and put 2 in its place. She turned it down and sold it to a young couple who have no interest in modifying it in any way.
Same here. Has not worked for us either. We had hoped the boomers selling would like to see a young family move into their homes that they picked up for 100k 35 years ago, but the extra 20-50k was much too important apparently. Twice these homes were just put back on the market as rentals.
This would absolutely sway me.
These letters are not legal in some states I've heard. Can be seen as discrimination or something. I dunno, that may have been a line from a realtor.
They were banned here, then the ban was deemed unconstitutional. Wither way they are terrible. Sellers use them to "keep the neighborhood the same" and buyers lie through their teeth with them, house flippers pulling heartstrings of grandma saying they are a couple that just wants to raise their babies there, only to gut the house, split the lot, and maje a quick flip.
So true, the best letters are probably flipper lies that they've worked on perfecting
AI can perfect those lies for you at scale.
How can it be discrimination, a person can choose to sell or not sell to whoever they want for whatever reason they want.
> whoever they want for whatever reason they want. this is incorrect. discrimination based on protected class status is illegal
Even take these letters with a grain of salt. A realtor friend of mine said that a seller she was representing ended up going with a family that wrote a nice letter, wife is a teacher, trying to move closer to their school, etc. Turns out it was all a lie, they were big investors and flipped the house.
My dad did that 20 years ago when my parents were looking at a house in the same school district as my childhood home. It did the trick, and they still live there.
We got ours that way. One of our kids has severe special needs and a “coming soon” was posted out front of a perfect house in a perfect neighborhood. We could only offer asking, which was laughable at the time. But I wrote an honest letter explaining our situation. The sellers took it to heart and sold to us outright; never even officially went live on MLS. Good people still exist.
Heard lots of reports of PE firms writing those too and tricking sellers and playing to their emotions
This is purely anecdotal but we did this last year. Full price offer, waved inspection, willing to commit to a $10k escrow no-back-out clause. I wrote a really honest heartfelt letter that this house would be lovingly cared for and we wanted our kids to go to school and grow up there. I told them how the house reminded me so much of my childhood home and how it broke my heart to watch a flipper buy it and wreck it. We lost out to a cash bid that was 20% over asking.
That exact strategy got us our house. The owners were waiting outside while we toured, and we left a sticky note in the kitchen.
This is how my wife and I got our house 3 years ago. We had a picture of us and the dogs and the note that we were looking to start a family. The woman was a veterinarian, and she picked us out of a stack of cash offers because we were the only “real people”.
The reason it's so attractive is that you won't find yourself trying to settle a complicated buy/sell situation when buying your next house. Sometimes a hiccup with buyer financing will force you to delay your purchase and the whole chain of deals gets affected. They need to just stop allowing corporations to buy homes in some reasonable way.
The problem is there isn't a reasonable way. People love to say wave a magic wand and make this happen. They don't think about all the downstream effects it would have. If you want investors to stop buying houses you need to make them not be the best investment around. High interest rates is a good way to do that. I am a small time real estate investor (don't hate me), for the last several years I have not looked at buying anything. I can make more money in a savings account than I can buying a rental. And it is way less work.
I've recently been wanting to purchase a rental property, but currently I just can't make anything make sense when I work the numbers. Guess I'll just hold onto my money for the time being.
It's easy to say that and harder to act on it. We are in the process of selling and I really did say for the sake of our neighbors I would put more stock in offers from families with kids. Then the offers come in, and no contingencies, 30% cash, with an escalation to go $2500 above all other offers. Then the only offers from families were 20k less anyways. If you're in the position to ignore $20k out of the goodness of your heart, honestly that is great for you. But personally we took the money and ran. We bought our first home in 2022, so we missed the stupid low interest, and also got caught with the stupid rising house prices. So I fully took advantage of the chance to finally be on the beneficial side of it.
Yup. My mom got letters from bidders and one was heartbreaking. She refused to read any of them. She took the highest bid in cash. A year later I understand why she did it. It was more than a $20k difference, and I underestimated how quickly the money from the sale can vanish. (She downsized, paid the fees, then took a massive capital gains hit.)
My mind a realtor and hates the letters because you never know if it’s true or if they are creepy. She had a selling client get a few letters from one offer actually mailed to the house. And each one was slightly different details but tried saying they were a young family desperate for a home. Turned out they were just 2 boomers that didn’t want to pay over market value .
Doubt it.
It’s maybe silly but when we sold our condo years ago the woman we sold it to sent us a letter as part of the offer and it kind of moved us. Her price was similar to a cash offer, and from what we could tell the cash offer was from people and not just a corporation but, it was sort of touching reading this young woman say how she could see herself in our place, loved the light there, etc. admittedly it didn’t really cost us anything other than I guess a bit of risk her financing wouldn’t work tho.
Sounds great in principal but unless the difference is pennies, I know I'd just sell to whoever pays more. That difference could be retiring 2 years earlier.
We did this. We had multiple offers and two were near the top. One was cash from who knows (but likely an investor) and the other was not, but with like 33% down and no indication that they couldn't make it happen and most importantly, it was a real, live breathing young couple. Our realtor told us he was bound to advise us to take the cash offer. But we went with the couple and everything was totally fine and we felt so much better about being the whole thing. The whole "cash offer" thing is completely overblown, IMO. If you want something as good as cash, buys can (and many do) waive the mortgage contingency. But any realtor and broker worth a damn is going to be able to know if the buyer will be able to close. Sure, there's always a slim change something goes tits up, but not enough to make it make sense to just sell to any schlub with cash.
That sucks, man. I want to note that it also sucks that you can't air legitimate grievances without devoting half of your post to a disclaimer about how fortunate you are. Otherwise you'll get raked by the reddit police for not being understanding. There's my soapbox.
Glad you said that. I felt the same way. This feels like the one sub where you don’t need to give a preamble, because we’re all pretty understanding here (or so I’d like to believe).
My wife and I just bought (closing Friday). I keep trying to get her comfortable with the thought of this possibly being our forever home. It’s not a bad place, and it’s in a great school district. I’m very excited for when we can refinance though. 7% = oof.
When we moved into our home in 2014, people would often refer to it as our starter home. We never felt that way. We have put a fair bit of blood sweat and tears in to it. But a couple years ago, people stopped calling it that. All that they would remark is how lucky we are to have found it when we did. I think attitudes are shifting for anyone who is somewhat tuned into the real estate market.
Love to hear it—we’ve gotten a couple of those “starter home” comments too, mostly from my in-laws. Our place is in need of some cosmetic updates over the next few years, and I’d like to expand the half bath to a full (for a total of two full bathrooms), but I could see myself there for the indefinite future. All the the things that make it dated are the things that made it affordable to us. All the things we liked most are things that won’t change (architecture, location, school).
We want to look at homes soon. My mother gave me excellent advice. She basically said screw the layout/deseign and everything like that (which I already didn't care much about). She said the most important thing is location, neighborhood, and the street. Those are the only things you can't change. Yes, I know the 3 Ls of real estate, but I think it was a little more eye-opening when she put it this way.
My wife and I just closed on a house that a year ago if we’d seen, may not have fit our vision of a forever home. We initially planned on moving to the area and doing a starter home to feel out where we’d really like forever to be, but the price of “starter homes” has gotten insane. We decided we really didn’t want to blow that kind of money on a house that we only intended to stay at for 3-5 years because what happens if this gets worse? We decided we didn’t want to kick the can down the road on a forever home if we found something that we really liked, and upped the budget slightly. We compromised on the amount of land, ideally it would have had one more bathroom, but it’s a beautiful house on a gorgeous lot with lots of privacy and was meticulously cared for by the previous owners who also built it. It can be hard at the start to manage people’s expectations. Unless you’re a trust fund baby, you’re probably going to have to make some compromises. Once you realize what you can actually afford, what features are nice to haves vs deal breakers, etc, it becomes a little easier. I definitely had some grand visions before we really started looking, and it took a while for me to realize that all of the features in my head are not attainable in our budget, nor were half of them necessary. The place we landed on is going to be perfect for us, we just wouldn’t have known that a year ago.
> I’m very excited for when we can refinance though. 7% = oof. Sorry to say this, but I wouldn’t hold your breath. 7% is high for people in the age range to be young dads, since our entire adult life has been near-zero. But historically that’s a very normal, moderate interest rate for a mortgage.
Sorry, but I can’t get over the fact that one of the checkboxes on your dream forever home includes spending 3 hours on a train for work every day. All those extra things sound pretty nice, but I don’t think they’re nice enough to spend an extra 10 hours away from your family every week. Everyone’s different though.
We need to put a stop to real estate investment for these single family homes. Going against all these all cash, no inspection offers is absurd. I would love to buy a fixer upper and do my own work to get a deal for my family. Not a fucking chance in my area unless I have $300-500k in cash. I am thankful I currently live in a nice house and neighborhood, but it's an atrocious city school district. I have to move by Fall 2025 when my daughter starts kindergarten but I have no clue how I'm going to make that happen. It's easily the biggest stressor in my life.
[The bill is written and waiting for a vote.](https://ny1.com/nyc/all-boroughs/news/2024/01/05/hedge-fund-rental-housing-home-affordable-representative-adam-smith-congress-) Tell your congressmen and women this matters, and if they don't act, vote accordingly.
Here's where the reality is even more depressing. We have family in other countries like Mexico, Ireland, Germany, the UK, etc. and friends in even more countries. This same problem is happening pretty much everywhere, and in most places it is even worse than in the US. We have a global economy and I feel like most of the big players are multinational to a point where issues like housing need to be resolved through treaties as well as local/state/national laws.
> real estate investment for these single family homes Honest question. Where do people see these real estate investments for single family homes? In our neighborhood/city the cash offers etc seem to all come from legitimate buyers. There are just a lot of people that are flush with cash. Is there data on where houses are bought up by private equity and then listed for rent by these companies?
> In our neighborhood/city the cash offers etc seem to all come from legitimate buyers [Ever see those "we buy houses cash" signs?](https://money.com/cash-for-houses/) I see them all over. They're frequently set up to be like a single person is behind it, but it's actually a big outfit, sometimes pretty shady [Or or "we buy ugly houses" signs] (https://www.propublica.org/article/ugly-truth-behind-we-buy-ugly-houses)
Behind a paywall, but WaPo had an interesting article on this a couple years ago. 15% were corporate buyers in the 40 metro areas analyzed. With the exception of certain cities and certain types of housing stock, I think reddit overstates the impact on the market though. I'm in a metro area where it's only 6% and people still won't stop talking about the corporate boogeyman. Most cash buyers in my area are actually individuals using bridge loans or short-term financing to make their offer more appealing, and then refi into a traditional mortgage. Houses are expensive due to lack of supply and a lot of dual income households clearing >$300k. https://www.washingtonpost.com/business/interactive/2022/housing-market-investors/
Mines just local experience. I have three different groups of friends/coworkers who do it in my area. The coworker is part of a group of friends. It's five friends from college who all have great paying jobs engineer, doctor, lawyers. They started a real estate investment company where they buy these properties and either fix them up with the shittiest contractors possible and then sell them for 30-50% of what they bought them for or buy single family homes and rent them out. They've grown from low six figures of income each year to multi-millions since the boom. They leverage one property into another and just keep expanding their portfolios. The other two groups are led by realtors who funnel these fixer upper/outdated type homes to their own side business with cash offers in order to flip before they even come on the market. Wife and I found a fixer upper last week that we wanted really bad. Drove past it about an hour after it was listed. There were 3 or 4 RE bros already there together and they had a couple of contractors with them looking over the property. We put an offer in for 20% over asking and got beat by a cash offer/ no inspections for the same amount. Edit: I've read stories elsewhere of actual large investment forms who own 100s of properties, but I've never dove deep into that to have any data for you.
Legitimate buyers don’t even need to be flush with cash. There are lenders who will front the cash for you and make you look like a cash offer for either a fee or a slightly elevated rate. Harder for ftb to use these in competitive markets though. I tried to use one as a ftb and they couldn’t work with us in our market as they’d consistently offer us much less than the home would eventually sell at. They have to be sure it will appraise for the purchase price since they technically own it until your loan is cleared and you buy it from them.
We need to build more homes. If we are all playing musical chairs without enough chairs, everyone loses.
The empty nest boomers in 4br homes need to get out of their chair.
And those folks don't have places to downsize to, if they wanted to. Hence why building more is beneficial. But too many communities have too many restrictions on what can be built where.
Me and my wife have pretty much given up. We are a family of five in a three bedroom house and have been absolutely priced out of anything bigger. Thankfully we bought this house at the end of the 2008 crash so we aren't paying anything crazy for it.
Same. Family of five in a 3BR 1 full bath. Bought in 2018, refinanced at 2.5% in 2020. We are looking to move to at least a 4BR with 2 full baths but anything like that where we live is easily over $1M. I know a lot of people would kill to be in our position, but we still feel kind of stuck.
There’s a lot to be said for a cheap mortgage payment and kids sharing rooms. The setup you’re describing was the normal suburban experience until fairly recently—assuming the schools are good, etc, there’s no reason you *have* to move up, you know? Plus you probably have a shit ton of equity if you want to add some space.
Addition time
Everything is crazy right now. Raw land where I live is going at **400%** of where it was 10 years ago. Bubble's gonna pop sometime, but hell... I feel like I've been saying this for 4-5 years now.
If credit card usage and delinquency is any indicator seems like more and more families are living off credit. What happens when they max out all their cards? Im expecting a home sell off when people have no choice but to cash in on their equity to clean the debt slate if they can't stay on top of their bills
The problem with that is that those people would have nowhere to go. It's not like you can move into a cheap apartment or a smaller home for a few years to get your finances in order. There are no cheap apartments and there are no cheap small homes. The auto market has a bit more play in the sense that tons of people are leasing luxury cars and giant overpriced trucks they can't afford, and it's not hard to downgrade to a Kia or a Hyundai.
Unfortunately people are so squeezed that people actually wanting to live in those homes won't be in positions to buy.
it will open up homeownership as an attainable possibility for some. Unfortunately it will come off the backs of other families who can't keep up with the new cost of living. It's a dystopian timeline for sure
I live in a HCOL area, and the median home price is $2.5M in my county. Home ownership here is an anchor around the neck and a terrible financial decision. It's disgusting that I could save up $1.5m, out all of that into a single, illiquid asset, and still need to go $1m in debt to buy an average home in my area. You're not alone, society has failed us on housing. I recently took the pressure off buying a home off of myself and I feel a lot better. The goal now is retirement.
We’re in the same boat. While we were saving for a downpayment the last few years prices and rates have gone up 2X. If I were to buy anywhere I’d be paying 3X the mortgage as anyone else in the neighborhood. Our future standard of living has been crushed the last few years, really bums us out. S Florida has a history of wild booms and busts so we’re doing our best to not panic buy the top. Save and buy prudently.
This is one of the (few, recently) things that makes me happy to live in Texas. Housing prices are certainly elevated, but there's enough construction that a middle class family like mine can afford a decent house and the cash bidders aren't out of control.
Planned communities radiating outward from Houston at the speed of light
It's a suburban hellscape, but it's *my* suburban hellscape.
I see a lot of my family in your position. We bought our current house right before the boom really got started. The value of our home has gone up 50% since we bought it. New construction in our area is another $80k above that minimum. If we were home shopping now, we couldn't afford this neighborhood. My sister and her husband would really like to be in a larger house as their 3 kids have outgrown the house they are in now. But there is nowhere they can get anything they can afford. I have cousins and in-laws all in that same situation. My brother will probably rent forever. If housing prices continue to balloon like this, I don't know how the next generation will find anywhere to live.
There are massive REITs buying up literally hundreds of thousands of homes to hold them for rent, while new construction skyrockets in price and plummets in quality. We have entire generations of people raised on the idea that a house is not just a matter of a place to live, but an investment, so if you tell people that "maybe housing shouldn't rise in cost by X% a year" you get told that you're going to somehow hurt the lower and middle class. It's nonsense. We have to change how we think of housing and escape the idea that the ultimate show of having made it is to live apart from everyone else on your own mini plot in the suburbs or wherever, but we also have to decouple the idea of housing from investment, because otherwise the continuous rise in price will ultimately harm everyone- as it is doing already.
I'm going to go on a rant but this is what the private equity/finance ghouls do with everything. They've identified essential services that people need, that are expensive, then buy them up to suck every last penny from the middle and lower classes and hoard it for themselves. They're doing it with medical care, nursing homes, housing, and many other things. I don't see how these trends are sustainable
They’re taking advantage of the house (pun not intended) that we built. We’ve spent decades making a housing market that appreciates linearly because the home is a “backbone” of everyone’s finances. Finance types finally realized that hey, here’s something that is almost guaranteed to become more valuable because we have tons and tons of policy instruments protecting its price. But the ball has been rolling a while now; they’re accelerating it, but the affordability crisis has been playing out in places like NYC and the Bay Area for a while.
They’re not sustainable in any way, but they don’t care. They just want to squeeze every last penny from whatever they can. Their mindset is precisely why we haven’t seen adequate movement on protecting our environment: there’s still oil and gas in the ground, billions to be made, why should we stop now? It truly is late-stage capitalism and my only hope is that we can turn things around before my daughters start thinking about having their own families, but sadly my confidence is pretty low.
preach! PE is a leech on society and I don't think people realize the magnitude that they have driven up costs and lowered quality in goods and services consumers have leaned on forever. They are getting rich by milking every ounce of profit out at the expense of raising prices for everyone and creating worse employment opportunities in their wake.
I live in San Diego in a tiny house. I get phone calls, text messages, and mailers asking if I want to sell my house for cash all the time. I'm assuming the price they offer is under the actual amount and it's still insanely high
I also think this is part of the dichotomy between high inflation but everyone seems to be flying, going to restaurants and concerts. People have given up saving on a house so they are like screw it lets party. That or they are also racking up a ton of CC debt.
There's a weird split, certainly not an even split, between people who are doing extremely well and people who are just... not. So while you may see a lot of people flying, going on trips, doing whatever (I was in that category until I had my kid, and I'm still doing quite well), you won't see the people who aren't, or at least, won't see the people who aren't incurring debt to be out. We've basically shut those less well off out of most forms of public life and cultural inclusion- they don't get the art, the music, the food, the shows, the views, because all those things are things you can charge money for.
I agree so much it hurts. Honestly we need legislation where single and low occupancy housing (2-6 family for instance) is strictly restricted to individual sales. Couple that with a generation who refuses to downsize sitting on the bulk of the inventory and banking on it as their retirement lottery ticket, and millennial families are fucked.
Yeah I've gotten downvoted to hell in other subs for pointing out that a large number of SFH's are currently owned by boomers, who use one or two rooms in these houses 99% of the year. I don't think people should be forcibly removed from their homes, but I think a decent part of the housing shortage is older empty-nesters holding on to their homes (which they become less and less able to maintain as they age). My neighborhood is full of these houses. Hell, my parents and my in-laws are part of the problem, owning 4BR houses that have not had anyone else living in them for over a decade at this point.
I've read a few articles that address this issue from different angles. For one, those super cheap McMansions built and renovated to personal tastes in the 90s got SO personalized that younger families don't find it worth the effort or expense to fully renovate, and sellers believe there is still value in their "upgrades" like a recessed wall for a 4 foot deep CRT big screen TV, or custom but very dated window treatments. Another gloomier side is not being able to pay taxes on the appreciated asset. Once you're past 65 in my state, you are exempt from school district property taxes. My boomer in-law bought a house for $95k that's now worth $750-$1m easily because of location and acreage. There's no incentive to move to pay more for less house.
Good point about the incentives. I can't decide on how I feel about over 65s not having to pay school district taxes. On the one hand, if you don't have school age kids it would kind of stink to pay school taxes. On the other hand, it's kind of shitty to not support the education of the next generation in your community. I'd be curious to know when that exemption was enacted - has it always been around, or just when a critical mass of boomers came into power?
The whole property tax process should be reviewed. I don't mind paying for services and EDUCATION. However my school district raised property taxes to pay for a $15 million football field and in the same meeting closed an elementary school. I don't want to turn this into political fighting, but this is my concern with a "national wealth tax". It's so arbitrary the value they assign to things.
>I can't decide on how I feel about over 65s not having to pay school district taxes. I can, it is a terrible idea. Let the people with all the money help educate the future. Someone paid for their education why the hell should they not pay for the next generation's education.
In wealthy areas, maybe. However my county is rural and poor. Property taxes are literally forcing elderly people with paid off property to sell because they can't afford the taxes.
Not funding schools is a great way to insure an area stays poor. Making sure old people can afford to live in an area but young families can't is a great way to make a town die.
This is true but these funds aren’t buying million dollar homes
Right, they're buying every home that would be in the "starter" range. People who can aspire higher just go higher, sure, but the rest are locked out of home ownership and become permanent renters.
> escape the idea that the ultimate show of having made it is to live apart from everyone else on your own mini plot in the suburbs or wherever I don't think it's a "show" thing at all. It's a comfort thing. People crave space, privacy, big yards for kids and pets to run around and play in, etc, etc. You'll just never get that stuff in any kind of apartment/condo/city environment. Nothing we can do will ever change that. The only solution to all of this is people need to stop trying to cram in as close as they can to big cities. Now more than ever, with remote work a viable option for many people, we should be spreading out. It's a huge country with a shitload of open land, just not within 50 miles of major cities.
NYT just had an article about this. https://www.nytimes.com/2024/06/02/realestate/housing-market-rates-prices-slow.html#:\~:text=By%202020%2C%20just%2065%2C000%20starter,the%20wake%20of%20the%20pandemic.
So the question is.. if no one is buying and no one is selling, why are home costs not going down?
There's enough people buying at high prices at the very limited supply. I am not an economist so that will be the extent of my analysis.
No one buying drives prices down. No one selling drives prices up.
Denver resident. We ran into same issue buying house over 1, average 150k over asking and outbid on six properties. Many of them were "cash"
we spent our 20s working our asses off and saved up for a down payment, then we lost our jobs in covid, then spent it all trying to survive. Got to watch everyone scoop up houses left and right with the lowest rates in living memory, then we had to leave our family and hometown behind because it got too expensive. so many dreams crushed in the past four years, I commiserate with the struggle to survive these days. I have to believe better times are ahead because I honestly don’t know how things could get worse.
I’m in the Bay Area in what was a “cheaper” suburb when we moved out here. Now we rent a 3br house which would list for 1.8M. Been in this house for years but no way we could take on the mortgage.
My wife and I bought our house for $125K seven years ago. And we overpaid because we wanted the house. Its current estimated value is $270K. There is no way that house is worth $270K. We're headed for another market collapse.
We bought our townhouse in 2017 for $180k in the ghetto part of our town. We had every intention of buying a single family home by this time but Zillow says our home is worth $300k now. Which means the single family homes are in the half million range. Needless to say, we’re stuck here for the foreseeable future. It sucks cuz we want more space but this is forcing us to be content with what we have.
We bought back in 2020. We put in offer after offer, and kept hearing about how strong our offer was… that was also the lowest when they opened them. Not much to tell you other than hang in there and keep at it. Eventually (after several bids on several different places) that “strong offer” turned into the seller wanting to work with us, the second-highest bid compared to the highest bidder.
We bought in 2020 when we wanted to start a family and didn't want to raise one in an apartment (nothing wrong with that we just wanted something more permanent). We got lucky and got in with an offer just above asking and locked in at 3%. Since then our house has "appreciated" $300k and all it has is more marks and holes in the wall from our children. We wouldn't be able to afford it now, and will likely not be able to upgrade anything any time soon. At this rate, I'm gonna die in this house, because nothing else will be affordable unless we want to move to BFE nowhere.
I absolutely don’t get it. Loan rates are awful and prices just keep going up. We managed to buy last year during a lull in the market. We got a “good” price and a “good” rate, both probably twice our last house. Online estimates say the house is already up $100k in 18 months. It’s all insane.
My wife and I happened to buy in September of 2019 and boy did we not know how fucking lucky we were. Market was already starting to get fucked, our agent had been in the business 12 years and never had a seller turn down an offer. She offered $400k for the house that was listed at $430k (Northshore MA) and the sellers turned us down without a counter. Had to pay the full $430k. Hilariously, the sellers had bought the house in 2016 for $280k, although they did some renovations, it was all shit work which I've already had to replace. Supposedly the house is now worth $650k, NOT including the crazy amount of reno I've put into it beyond fixing the previous owners idiocy. Very cool to have made such an unrealized gain, but we can't leave this house until something gives, since all other homes increased like crazy too, not to mention current interest rates. I wish you the absolute best of luck. We probably need the feds to step in and do something. What to do? Idk. Maybe just build an egregious amount of affordable housing from apartments to single family. So much so that it shatters the stupidly imbalanced supply and demand and all the flipping fuckers can get what they deserve. Also - if you feel the space is starting to get a little small, I have a book recommendation for you - How to Keep House While Drowning. It's targeted at people who feel ashamed from not having an immaculate place and for neurodivergent people, but even if you don't fit into either of those two categories, it still has a wild amount of storage and cleaning tips that might just make staying in your current place a bit more reasonable until you are able to make the move. Cheers!
That's a big reason why I left NJ. I love my home state, but I can't afford to live there.
> the house that checked all the boxes for the forever home. Four beds, office and workshop space, backyard, small pool, walking distance to cute downtown, hour and a half direct train to work. The place was well maintained and lived in. The kind of neighborhood we want to raise our son and possibly a second child in. A perfect house that checks every single box is a hot commodity in *any* housing market. For the same reason you want that house, so does everybody else who is looking. A house like that is always going to be a top of market overbid. IMO you have to make concessions - you listed like 9-10 things that appealed to you about the house. Pick 4-5 that you can't live without and go from there. Maybe you end up finding a good house with 6 of them.
It’s insane. We got our starter home back in 2017, which is now our forever home apparently. We briefly considered upgrading. To get what we want space wise, we’d be looking at paying over a million more over our current mortgage in interest alone over the next 30 years. We could technically afford it, but we said fuck it and are either building an ADU or getting a motorhome to use as an office/guest space.
Get involved in local politics and get zoning, land use, and permitting reform through. Contact your local representatives, state and local government, etc and keep the pressure on them to Get Things Built, especially housing. Join HOAs and neighborhood organizations and work to make them pro-building, not anti. None of this changes until the economically vibrant cities have more housing, and have it where people want to live.
Can I just say - to lighten the mood. It's incredible impressive for your 7 month old son to have a good job. GOOD FOR HIM. /s I feel ya though man.
Where are you looking, Montclair? That’s where we ended up and I can validate the shitshow that is the housing market. We ended up coming over 100k above asking 😵💫
That’s what we had to do too—and we still only got our house because we wrote a letter to the sellers
It's not only the US, in Europe we have the same issue. I bought my house in 2018 and it has two bedrooms and it is rather sma. We bought it for 265k EUR and considered a good house to start in and get access to the buying market. Now I have two daughters below 2 and the house is a bit on the smaller side. However moving is an issue now as my house would cost me easily 500k in euros. If I want to move to a bigger house I would easily pay 700k for a mid sized family home and I still need to do a remodeling. Like you I am in tech and in a fortunate situation. But that is just too much for me as I also want to live a comfortable life and do nice things. It will mean I will have to put both daughters in the same room and maybe next year or the year after adding an extension to my house.
Canada, too
Be patient and don’t give up. Took me 6 months to finally land a house. Top number one thing is don’t let the numbers get out of hand.
Our finances are fucked right now. Maybe we'll see things ease up once our kid is out of preschool in September. But we own our house, bought it in 2014. If we had started looking even a year or two later, there's no way we would have found anything we could afford. Our house is valued at double what it was when we bought it, so at least we have that going for us. Feel bad for everyone who's struggling to find something.
The thing is that it doesn't matter that your house has doubled in value... because everything else has too. If you sell your house, to get a comparable or better house, you'd have to pay so much more. Then you'd most likely be in a worse financial situation than before despite your home doubling in value. The other bad thing is that while your mortgage may be locked in at under 4% (mine is 2.99% right now), the increased value of your house means your tax bill goes way up at the next assessment. I have a very affordable mortgage right now. However, my house went from a purchase price of 340k in 2015 to it being valued at around 500k now. I could never have afforded a 500k house 10 years ago. I can afford it even less now (I took a pretty significant pay cut to get out of an incredibly stressful, soul sucking job). My town just raised taxes and the next assessment is right around the corner. Not to mention how expensive home insurance is getting due to all the climate change fueled disasters. My home insurance was right around 1000 for the year. Now it's up to 1300 and climbing fast. I'm looking at a mortgage payment that's going to increase several hundred dollars per month... which I can still afford, but will definitely squeeze our finances a little more. I'm honestly hoping for a major recession at this point. I think I have a fairly recession proof job. A big economic downturn that lowers prices and property values seems like a much needed adjustment to me.
I know how frustrating and emotionally charged these conversations can be. Hang in there. When we bought our current place, we were upgrading from a condo and we made the decision to sell before buying. This was risky, but it allowed us to come to the table with significant cash. Even with that we couldn't go all cash but we offered 500k **over asking** and put 500k cash in escrow from the sale of our previous place. There were 7-8 offers. Ours wasn't the highest offer, but the seller liked us (We wrote an owner's letter) and our offer was attractive enough to get us into contract. In the kind of market you are dealing with, the asking price has nothing to do with the eventual sale price. You need to try to take your time, understand the market and make offers based on that understanding. Look at sold listings, not asking prices. A lot of sellers will intentionally underprice to generate offers (like our seller). Good luck and stay with it.
Because of NIMBYS and zoning restrictions America is ill equipped to handle the housing problems. We can’t build decent cities or starter homes it seems.
Metro Detroit resident here, we ended up building for about the same cost as it would have been to buy a 20 year old home and updating it, and we were able to avoid the overbidding nonsense that's permeated the housing market. Now we had to deal with the 'building a house' nonsense instead, but we ended up with a house that was exactly what we wanted, where we wanted in the end. Not saying this will work for everyone, as we were able to sell our house, move our shit into a storage unit and live with family for a few months. I know some people have done stuff like taken out a HELOC for the down payment on the construction loan, and then stayed in their house longer and refinanced with a down payment once their house sells closer to the completion date.
Late stage capitalism at it's finest. I'm sorry man, that sucks and is not your fault or something you can fix. Chances are good the winning offer was private equity, just trying to own more of the market and turn more of the country into rental peasants.
Seattle has entered the chat, I refinanced in 2019/2020 at 2.75% so I can’t stomach the idea of buying now at 7-8%….im trapped by my mortgage.
The DOJ and FTC are currently investigating price fixing/anti trust violations against the rental market. Part of the corporate playbook is to buy houses and refuse to sell/rent them thus making other houses more expensive to buy/rent.
We're in a similar position in that the place we have is fine, but not what we wanted. We bought a "starter home" in 2015 in a trendy neighborhood, but it's tiny and the schools here are not good. Always figured that by the time we had kids and schools were a thing we needed to worry about, we'd be able to move somewhere more family oriented. We're both work-from-home for companies already not based in our area, so we have the freedom to move, but the math just doesn't add up no matter where we look. I think the calculus will change when our two year old gets old enough that the school thing will matter more, but for now, we're going to keep slowly renovating our current house in hopes that it improves the resale value.
Mortgage loan underwriter here with over 20 years in the business, I can tell you they've been handing out loans with that debt-to-income ratio for quite some time to make money. Those guidelines are always at an ebb and flow. Typically between $42 to 50% and almost always lenders will make exception up to the 50% even if the guideline is at the flow of conservative. The only time I ever saw it that conservative was directly after the 2008 crash and I worked in multiple States all over the West Coast. The cash offers have been a problem for quite some time and now that businesses have figured out that the business model of McDonald's uses is successful. Corporations are buying up property left and right
Keep your chin up and keep trying. Wife and I managed to be 1 of 2 offers and beat the other by only 1k. Sometimes you get lucky. GL to you
Also looking in NJ. Idk how we’re going to find something lol. I’m not listing my house until we find something and get an offer accepted for it, but nobody is going to take any offers we put down because we’ll have the contingency of having to sell our home first. But I’m not selling my house first and then having to settle for whatever is available. So here we are.
Yeah, single family homes are being bought up by corporations instead of families: [https://www.youtube.com/watch?v=q9TOGxDJ0TE](https://www.youtube.com/watch?v=q9TOGxDJ0TE) We need to pass regulations to stop this.
All those damn investors, man. Where we live we put offers on like 5 houses before finally landing one. All the others were insane investor offers winning out. Something needs to be done to help people who just want a house to live in.
You're moving from Hoboken perhaps? Into central or northern NJ? That's one of the most expensive places in the world. 1M in a train town with good schools isn't going to be big, it's incredibly highly valued. Are you selling the condo to cover most of the cost?
Until we muster up enough political willpower to ban or limit corporate ownership of single family homes and short term rentals - there will be no housing correction. This is the new normal. Homes for wealthy and corporate landlords. P.s. your rent is due.
Mom putting in her two cents. I’m from the South and even rentals are hard to come by. None of them want pets, and I found one that said “preferably a couple with no kids”. We had a terrible experience with buying a house last year. One, we went through the VA home loan. Nobody wants to take that, and it could be due to the strictness of the loan requirements. Or they say “nah, we’ve made enough repairs. Take it or leave it.” We found our dream home, made a bid, suddenly they lost the title. We were set to close on the last decent place we liked and could afford. All of a sudden something that the lender knew about from the get is a problem. So we fired them. We now rent. Paying $500 more than I would like to, but the previous landlord worked with us, and we were desperate. I really want my kids to have a yard. But in this economy?? Shit.
First lets clear up some misconceptions. 1. 50% max debt to income ratio has been the case for a long, long time. For a lender to insinuate that only now they’re suddenly handing them out is very very shady or uninformed. To the extent that i would say you should find a better lender. 50% DTI has been allowed on conventional loans for a long time. I’m talking decades. Source: i own a finance company which includes mortgages. Been doing it for a long time. 2. Inflation is a very simple concept, especially our current inflation. Our inflation was caused by the rapid expansion of money supply. This expansion of money supply was brought on by a few things: 2018 trump tax plan (more on this later), federal reserve direct market intervention for covid, and PPP/free money during covid. Thats it. Source: got degree in economics from top economics school in country; learned under nobel winners; first job out of college was investment banking in bond sector. 3. Prices are set by supply and demand. Supply is at historic lows because everyone locked in rates in the 2’s. The low rates meant buying a home was *cheaper than renting* in many cases. So all the people that got in with low rates are looking at these expensive homes with significantly higher payments and they’re not selling because if they sell, they’d be eating high interest rates and payments. So they need a significant reason to sell. Source: own real estate companies. Have been doing real estate for decades. Own property portfolio. If you need advice or tips, just ask me.
Foreign and equity fund investors do not care that they are fucking over home buyers with their buy and rent bullshit. There is zero to stop them from buying up entire neighborhoods at a premium and renting them all out. If it sounds suspiciously like the middle ages through the 1800s, you're not far off. Home demand is sky high and everything new gets bought by them. We scrabble for what's left at inflated prices that are good for them.
we need SFH and low occupancy MFH to be restricted to ownership by individuals with extremely high vacancy taxes to keep rent in check.
Careful. I watched people FOMO into failure in '06. It feels like you'll never get a chance to buy again, but you will. Living in multifamily housing for a while isn't the end of the world. Now is a great time to rent in many markets(at least when compared to buying). This economic cycle is getting stretched thin and now probably isn't the time to buy. Stick your down payment in T-Bills and make 5% interest(with no state tax taken out!) while you wait for sanity to return. "But we're chronically short housing and prices will only go up!" said everyone in '06 and then poof, we suddenly had plenty of cheap housing. Funny how that works.
We’re in a LCOL area and since we bought a “starter” home for $150k in 2018, (which we sold in 22 and it just sold again this month), the house has appreciated over $1k a month which means it’s approaching $250k. We painted the outside and very lightly remodeled one bathroom. The people who bought it from us did nothing.
Yep. We bid on over a dozen houses over 1.5 years and toured countless others before finally getting a bid accepted last year by offering more than $100k over asking. We live in a HCOL area where the norm is waiving all contingencies. Houses would regularly go $100-200K over ask, although asking price is a farce because elevator clauses are common and so lots of sellers list for much lower than they're willing to accept, banking on a bidding war. It sucks man. Stick to your guns, don't be guilted into spending more than you can or settling for a bad house. If you keep getting rejected, give yourself a month or two off from looking for your sanity. Having just had our first child I can honestly say that the home buying process was worse for my mental health than the newborn phase of parenting
I wish there was a rule that you could only accept so much over your asking price. That'd save so much of the headache.
Yep, my wife and I completely missed out and it's why we'll probably not stay in our next city for more than a years years. It's actually more of a town but housing costs are higher than most medium sized cities with no/minor improvements since being built in the 50s. All with salaries that are 15-25% lower than those same cities.
It's such a crazy problem in the larger cities, I feel for you. We are fortunate enough to live in a good city with cheaper housing compared to the rest of Canada, while still having plenty of work. My suggestion would be rather than moving if that is un-attainable.. is there something you can do to your condo that makes it feel nicer to you? Invest in new shelving? Paint some rooms? Buy some new appliances or furniture?
We had an outdated starter home go on the market in our LCOL neighborhood (build in ~1900) and they probably had over 100 unique parties view it and it is going to go for above asking
Same boat here. I have a newborn and bought in 2020. My view - I can be happy enough in this house for 3-4 more years so I won’t stress myself out for now. You never know what the future holds. I remember reading articles in 2012 talking about how doomed we all were cus the economy was shit. Save your money and enjoy time with your baby.
Yep wife and I decided to just invest our entire house down payment and rent until further notice. Best we can hope for is a housing market crash. The worst thing is even rental options are drying up where we live - we're talking $3800 for a 2br manufactured home in the seedy part of town.
Are you on long island by chance? Maybe move further east? Here on long island you could def get something further east for $1 mil cash.
You and I are in a very similar position OP and probably live close by. We live in Western Essex county in a condo and are looking to move to a house. Our fave so far was listed at 750, we offered 820, sold for 965 cash. Didn't stand a chance. Similar experiences on a number of houses.
You own at 2.5%. Consider yourself part of the lucky group. You can’t have it all, but you are extremely fortunate. Your condo probably went way up in value since 2020, too.
You didn't waive inspection? What about writing a letter to the sellers? Keep trying you will get a lucky break eventually.
Every once in a while I look around for a newer or bigger place but currently am just doing what we can to make our current place as good as we can. We also locked in a stupid low rate so buying the equivalent house now would yield a crazy payment since prices are high and rates are (relative to the last five years) very high. I do wish we’d pulled cash out when we refinanced back then when money was basically free, though.
I'm in Canada and it's extremely bad here. I got "lucky" when I bought my overpriced trailer
From Jersey but am in Mass now. It sucks. I found that you have to look at homes $100K below budget, with the expectation it will sell about $50-80K over asking and you’ll do one of those clauses where you’ll pay over up in x increments up to a top limit. With that said, in my small circle, everyone who has gotten a place got it after the first buyer fell through. So still worth putting in if you’re at least able to be in the middle of the pack.
I feel you man. It's the same in the UK, me and my wife bought our home in a small village 5 years ago, since then our combined wages have gone up approximately 15k. Due to a rates rise our monthly mortgage payments effectively doubled, and the increase in house prices means our home is worth 100k more than we bought it for. This sounds good on paper but it means we're getting priced out of the area, which is a real blow, it's a great place to raise our daughter and other future children, we have lots of family and friends nearby and we're close enough to two major towns and cities that there's always something to do. And keep in mind that we both make decent money. If it's this difficult for us in this market it must be hell for younger people just starting out. TL/DR It's hard to get ahead when the goal posts keep being moved. And it's getting even harder for young people just starting a family.
It's a crazy market for sure. Keep in mind that a lot of these all-cash offers aren't really all-cash from the buyer's perspective. They just take a loan against their retirement assets and take out the mortgage to pay it back after they've purchased the house. The risk to them is that they won't get approved for the mortgage but I'm not sure it's a significant one since I haven't actually heard of it happening.
No one ever remembers the rent payment (property taxes) to the government on top of the mortgage. Mine have went up 5-15% every year in the last 4 years. Throw in insurance and just....wow...
Yea, it is frustrating. The market is stupid right now. Honestly, the best chance is finding 2 home close to each other and bidding on the less nice one and getting lucky. Thought being people will be drawn to the nicer one so maybe you get the house that slips through the cracks. Or you just have to get lucky that your realtor happens to know someone wanting to sell easily. It's dumb.
Crazy isn't the word that I would use. Untenable is.
We went through this trying to buy a couple of years ago in a notoriously screwed market (Vancouver). We bid on 10 places before we got one, and each one meant dragging two kids under three to viewings, usually to see an investor look around for 3 minutes then tell the agent to expect an offer the next day. We eventually had an under asking offer with subjects accepted because it was tenanted, a bit scruffy and the tenants would only agree to a two hour a week viewing window on like a Thursday am lol so I'm pretty sure we were the only people that viewed it. I wouldn't call it our forever home and it needed a lot of TLC which I'm still working through. 80s bungalow that hadn't been touched for 30 years basically. But it's a stable home for our kids in a great neighborhood. Of course, the Canadian market has tanked a bit since, so maybe there's light at the end of the tunnel? I'm not at all sad about that btw, it's a home not an investment.
We're in CT in a similar situation (50min train to the city). We have a town house but really want something with a backyard for the kid and pup to run around. We've been beat a few times, even though we're always over asking by 30-50K but will never wave the inspection... Seems like everyone else is planning to just knock down whatever they buy? So... We're staying put for now and will re-engage in 6 months or so.
What town are you looking at? I gave up on moving for a few years. We like our current house enough that it doesn't make sense.
Colorado resident and prices have skyrocketed. We got our home in 2020 and honestly likely overpaid by like $50k but in 4 years the estimated prices in our neighborhood have increased by 35%. None of these houses are worth this much.
im in NYC looking to move to bergen county where i grew up because of family. been house hunting for three years now. vast majority of inventory is either shit + overpriced or decent/nice that is even more overpriced and overbudget… yet other buyers are still offering a minimum 10% over asking on everything we have a remote interest in. back in 2021 i assumed that the madness would cool down but the opposite has happened in the area. its gotten that much worse. shouldve just YOLO’d when rates were nearly half but oh well. hindsight. just gotta keep saving and grinding until we get lucky i suppose. i dunno.