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Author Topic: It's a Seller's Market/Purchasing a Home Perspective  (Read 16652 times)

Offline pianoman9701

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It's a Seller's Market/Purchasing a Home Perspective
« on: February 09, 2021, 03:54:52 PM »
Buyers are finding that because of extremely low inventory, they're being outbid with bids going over the property value. That means that they may need a bigger down payment and they often walk away as a kneejerk reaction. If you're a buyer, it may well be worthwhile to do some math to see if it makes sense to meet that bid and make that larger down payment. And here's why. When a house is going for $300K (appraised value) and the high bid is $310K, the bid is 3.334% higher than the value. However, housing values have been rising at a rate of 5-10% annually, and the market trends are strong. Within an average year, that house you paid more for is already worth more than what you "overpaid". Do the math before getting scared away from the deal on a house that would be your dream home. It's also wise to consider that GenXers have the highest population and because they're 24-39, they're starting to buy houses. The demand could stay long for a long time.

I'm not an investor and I'm not telling you to invest in real estate or anything else. If it's time for your dream home, just do the math and look ahead down the road. Happy hunting!

Let me know if you're looking and want to find out for how much you pre-qualify. It takes minutes.
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Offline Crunchy

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #1 on: February 09, 2021, 03:58:15 PM »
It is crazy how much houses are going for.  I found out last week what my neighbors sold their houses for, and it was 100k higher than what I would have guessed.  Sure is tempting.

Offline pianoman9701

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #2 on: February 09, 2021, 04:04:08 PM »
ours is worth more than twice what we paid for it 17 years ago, and 2008 happened during that period. I'm glad this is our dream home. The "investment" is not the house. It's our lives. :tup:
"Restricting the rights of law-abiding citizens based on the actions of criminals and madmen will have no positive effect on the future acts of criminals and madmen. It will only serve to reduce individual rights and the very security of our republic." - Pianoman https://linktr.ee/johnlwallace

Offline Magnum_Willys

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #3 on: February 09, 2021, 04:08:39 PM »
My house was over built in a rural setting so very low appreciation.  Sold it last fall for what it was appraised by County for.  A month before closing received new County appraisal - UP $250,000 from prior year  !   Not a typo!!.

I know I didn't leave that much on the table but yea - internet commuters have figured out they don't need to live in town!

Offline Buckmark

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #4 on: February 09, 2021, 04:13:55 PM »
Home prices on average double every 10yrs, look back at values/sales and its real close
To hunt and butcher an animal is to recognize that meat is not some abstract form of protein that springs into existence tightly wrapped in cellophane and styrofoam.

Offline RB

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #5 on: February 09, 2021, 04:15:40 PM »
Sold our place last October and had eight offers within 48 hours of being on the market all 15-35K over asking it was nuts!
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Online kselkhunter

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #6 on: February 09, 2021, 04:21:05 PM »
The housing market is crazy.  Bought our house in Issaquah in 2013 and sold it in 2020.  It went up 66.4% during that time from what we bought it for and sold it for.  Just looked it up on Zillow, and they have it's theoretical value already having increased 6% since we sold it.    Our 2020 sell was a handful of offers the first day, all well over list price, and with escalator clauses, and the eventual winner of the bidding war waived the home inspection contingency.   It was nuts.   

Offline Magnum_Willys

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #7 on: February 09, 2021, 04:29:28 PM »
Bought an investment condo last year - offered asking price with no contingency inspection on first morning it was listed and was lucky to beat out an offer from 30 mins prior :yike:

Offline luvmystang67

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #8 on: February 09, 2021, 04:38:26 PM »
Low interest rates drive high prices.

If you think interest rates will go lower, then expect higher prices.

If you think interest rates will go up, I dunno, maybe to curb inflation, you should expect home prices to stabilize rapidly or fall.

IMO home prices have very little to do with the actual value of the home/area, and much more to do with what people's monthly "home allowance" buys them.

Example, I've got a job, wages have not been growing as fast a home values... not nearly as fast.  So say I have $3000 a month for housing set aside.  I also had that same amount (roughly speaking) 5 years ago.  5 years ago interest rates meant that I could only afford a 30 year mortgage on a $400,000 home.  Today, I still have the same $3,000 available, but now I'm in the market for a $600,000 home.  Here's the real trick, that $400,000 home is NOW WORTH $600,000.  The only person who won is the person who might have bought that house as an investment.  As a buyer, I'm still buying the same home with the same monthly commitment. 

Here's what is not hard to imagine.  Say this 1.9T stimulus package finally does it, finally we see some inflation.  All of the savings that the middle class and wealthy have been able to save in COVID is deployed all at once when we get out of these lockdowns.  We have more money, and we all compete for the same goods.  This is what drives inflation.  The ONLY way to combat inflation, is to raise interest rates.  Guess how much my $3,000 buys me when interest rates go back up to 6%?  Maybe more like a 300-400 home.  This automatically puts downward pressure on home prices and why there was so little appreciation in home prices when interest rates are high and/or stagnant.

Its easy to see then why house prices have risen dramatically since the 80s.  Sure its part because people are moving to the area, but housing prices are up EVERYWHERE.  It has a lot to do with the amount that $3,000 buys you at 16% from the early 80s to the <3% its at today.  Each rate step down means the same money buys a more expensive house.  If you want to make money on real estate, buy when rates are sky high and are predicted to drop.  If you want to lose money on real estate, buy when rates are expected to rise.  If you need a place to live, sure you're "locking" in an old rate, but don't plan on underlying asset appreciation.

Here's some food for thought.  Think about the type of house a certain type of job would buy you back in the early 80s when everyone bemoaned high rates.  Now think about that same job and the type of house a person is likely to have.  I don't think many UW professors are buying single family homes on Queen Anne today, but I know several who bought in the 80s are still there.

Rates don't have to go up though, we're making history today, we'll see.

Offline Magnum_Willys

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #9 on: February 09, 2021, 05:01:02 PM »
Given the current interest rates buy your first house or next house Now! You won’t see these rates once we start printing money to pay the 6 Trillion covid spend off.

Offline Stein

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #10 on: February 09, 2021, 05:18:36 PM »
I laugh when I hear about how we don't have inflation yet.  Shop for a house, boat, car, bullets, canning stuff, sausage making stuff, aka any stuff and I have a hard time seeing that we aren't in a high inflation period now.

For the average Joe, their house is the best and most significant investment they will ever make.

Offline Miles

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #11 on: February 09, 2021, 05:34:56 PM »
Getting ready to buy #3 now.  This one will be in Florida for when we’re done with snow and cold weather. 

Offline Sandberm

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #12 on: February 09, 2021, 05:43:11 PM »
I laugh when I hear about how we don't have inflation yet.  Shop for a house, boat, car, bullets, canning stuff, sausage making stuff, aka any stuff and I have a hard time seeing that we aren't in a high inflation period now.

For the average Joe, their house is the best and most significant investment they will ever make.

Yes, count housing and its horrible. All this low interest rates have done is raise home pries. Its terrible. We bought our place in 2015 for $320,000...a neighboring place just sold for $520,000 that is comparable.

I saw 10-15 years ago that 25% of first time home buyers get help from family in the down payment....no wonder poor people are bent out of shape and think the rich have advantage...they do!

Horrible housing market here in the Tri -Cities for buyers, only 300 or so listings, half what it was a year ago.

Offline TooTallMike

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #13 on: February 09, 2021, 05:43:39 PM »
Getting ready to buy #3 now.  This one will be in Florida for when we’re done with snow and cold weather.

Congrats! Hoping to be where you're at one day!

Offline OutHouse

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Re: It's a Seller's Market/Purchasing a Home Perspective
« Reply #14 on: February 09, 2021, 05:52:16 PM »
Good points in this thread. I bought my first back in 2014 (maybe it was 2015) either way I thought it was too much but my better half said "we will regret not getting this place" and so we bought it even though it was about 40k more than I wanted to spend. Then the market just kept going up and it became clear to me had we passed on that one we would have got much less for the same price by waiting several more months. Right now Zillow (for what that's worth) has it priced at 140k more than I paid for it. Of course the problem is if I sell for the equity then the only thing I could afford would be something very similar for a high price. Only ever bought this one house and I could see myself staying for life. Not because the house is anything special, but the location/views are great and I love the community I'm in. I think Pianoman is absolutely right. Pay more and you won't regret it.

 


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