I live between DC and Baltimore. Sellers are routinely getting above asking price. White flight from BLM.
My home made a significant jump in value and it’s going to be for sale very soon. Haha if your reading this.
This is about interest rates.
100% of the “increase in value” is based on the decline in interest rates. It’s the same process that makes a bond appreciate in value.
When rates go low, it makes the monthly payment of ownership more affordable.
We have been in the longest downtrend in US history for interest rates. They have been in a decline pattern since 1982 with only one major up move, 1994 when 10 yr rates got as high as 8% when Greenspan raised rates 8 times that year. 38 yrs of declining rates... one day, we’ll start the march the other direction.
Housing prices in 1953 were relatively equal to where they’d been in peak economy of 1890.
It doesn’t take many millionaires fleeing NYC, Chicago, Californication and Oregon to drive up the price of real estate everywhere in the country.
Go visit your local uHAUL center. Count the number of trucks and trailers in the lot. Compare that to your memory. My local large one used to be 20% full. It is now overflowing.
My friends put down money on a home to build in a development in Idaho. It was in the $300k range. In the meantime, they’ve had to increase the price by $100k. Now, I don’t know how they can get away with that considering there is a signed contract, but I don’t think they can.
I say that because the whole thing was getting so weird that our friend backed out, and they sent the money back to my friend. My suspicion is that my friend could have probably sued.
BTW, I think the reason is this: 4x9 OSB sheets were $9 a couple of months ago. Now they are $24. And 2x4 studs were $3.25 and now they are $7.29.
There is a construction material hyper-inflation going on right now. For builders that signed contracts to build before actually buying the materials, they are utterly screwed.
We are seeing the first signs of the coming hyper-inflation brought on by the government printing and raining down trillions from the skies. This is why I say, 2019 was more interesting than the previous year. 2020 blew 2019 out of the water, but just wait until 2021. It will be one for the record books. Hang on tight. It’s going to be a very, VERY bumpy ride like nobody alive today has ever seed in their lifetime. We will wish for Jimmy Carter inflation.
I believe this is a very temporary, very targeted situation; most Americans are not in a better position to make mortgage and property tax payments than before. Those who can work remotely, as well as those who must get out of “newly-unsafe” areas, may be searching now, but this will be short-lived. I’d also think these rises in values in one place must be offset by falling values in others (that are losing their “makers”).
My state of NJ is experiencing a temporary surge from NYC, but this has happened before - it won’t be sustained. NJ is too similar to NY in terms of high costs and losing Americans/importing foreigners. Our Dem administration just passed a “millionaire tax” to ensure that nobody from NY with two nickels to rub together even bothers coming here...
1. Sell your home now — for tens of thousands of dollars above the asking price.
2. Live in an apartment for 18-24 months.
3. Buy another home in the same neighborhood after the hysteria subsides and prices come crashing down again.
Just an FYI ... FWIW.
Homes in non-democrat controlled areas are going up in value while the contrary is true in rat areas. Exurban Chicago here...down, down, down.
I’m an investor in Colorado with two current renovations about to be listed - one at $835k and the other at $370k. The demand for homes in the $300s has skyrocketed in the last four months in the Denver metro and I’m sure it’s due to the continued evacuation from blue state policies as well as the recent epiphany that many jobs can be done from home - wherever home might be. I’m expecting a fast sale!
I live in an out-of-the-way area of the Arizona desert. I don’t follow the local real estate market at all and have no idea if the value of my little hut is going up or down. But I have noticed a number of people, usual young or middle-aged couples, buying parcels of land — five or ten acres or more — and homesteading. Most live in RVs with plans to build something more permanent, often “green” construction of some sort. It’s lovely out here.
I follow several real estate agents on social media.
The market in our area is HOT. Homes are often selling before even making to public listings. If you are not working with an agent, you likely won’t have access to what’s truly available.
I agree with what many others have said - fleeing from the cities and the low interest rates.
However, if you would like a nice conspiracy theory, increasing prices mean increase in property taxes. They don’t index those for inflation.
I live in SW Florida...the state will be blue in four years...They cannot build homes fast enough for people fleeing the NE and mid West...
People are renting til their house is done...natives cannot afford a new house ...there up 15% in a month here....
Here in southern NH we are seeing houses go under contract within a few days with multiple offers. Some bidding wars.
Prices have probably gone up 20-25% in the last year. People are starting to put listing prices much higher just recently because houses were selling so fast.
A typical 2000-2700 sq ft house on the west side of Nashua/Manchester starts in the $450K range and goes up.
Starter homes are $325K or more. New single family homes are $500K or more.
If you go over the NH seacoast(Rye, NH) a fixer upper is $400K-600K. Almost every house is $700K or more. Lots within walking distance to the ocean have sold @ $550K. Houses within walking distance to Jenness Beach are selling for $1.2M. Oceanfront houses are $1.6-$6.5 million.
IMHO, we are at the top of the market right now. We bottomed out 8 years ago(2012). We have been goin up ever since. My house that I bought in 2013 is worth about double what I paid $270K(now $475-525).
We are seeing a lot of ex New Yorkers coming in and buying.
Supposedly Millenials are forming families and need yards. Hence, they are buying houses in the suburbs instead of renting in the cities.
House across the street from my brother went on the market last month, had 35 showings and visitors at the first weekend’s open house - and had 3 offers well above asking price within days.
A co-worker just completed a cash out refi on his property, and the appraiser pegged it at $100k more than it reasonably is worth - at least before all this inventory-constrained escalation started. That seems to be driving much of it, the fact that there aren’t very many houses out there for sale.
Lower rates is creating real estate equity. That equity is being tapped by refinance activity. The money then is going into the economy, with a majority going into home improvement/remodel. That equity is also allowing people to trade up, or down.
The trade up is where someone is buying a bigger and more expensive house to fit their needs or ego.
The trade down is for empty nester types that have too much house, too much maintenance, impractical. In those cases, many people are pocketing the cash and then improving the smaller house/condo. Or, they are putting that money into the stock/bond/investment markets or even local banks.
The economy being strong, means that incomes are rising, making more expensive houses with lower interest rates affordable to them.
There are some regions yes, that are growing disproportionately, but that kind of thing is always a factor.
The massively dominant factor in R/E right now is low interest rates with rising wages.
Here in eastern TN — definitely. Prices are up, and properties are hard to find. I did a search on the KAARMLS site with certain parameters. Twelve properties showed up; eleven are “pending” sales.
The issue is Zillow. Zillow apparently has a handle on the market but their recent increase make one wonder.
I haven’t had calls but the Zillow projected square foot price has risen considerably over a very short time
We noticed when trying to find a house for my sister to buy. Doubled in price quickly.