What (if anything) should be done about housing prices?

[Gary O']

It's the old Law of Supply and Demand. When people stop being willing to overpay for something, prices will fall.

Boy, ain't that the truth

And nobody, nobody knows when that is

People get hurt
Investors get hurt
Homeowners get hurt
Brokers go broke
Banks get hit.....HARD

I've been lucky
Its been said, you make yer own luck

And I've thought that over the years

Until this one house came along

It was what we came to call The Hundred Year Old House

It was smack in the middle of the historic section of Oregon City
About a block from The McLoughlin House

The place had a new roof, and a couple new amenities, but should not have been financeable by any means.
Heh, the 'foundation' was big rocks
However, we came to know this broker
They did a couple swishy things with their hands, and pens, and we were in.
Zero down.

I went right to work.
Sunk about 10 grand into it with just material
My labor was free
Neat old place, in that it was stick built, and with rough cut boards, full dimension

Anyway, the historical society (I came to call them the hysterical society) got my attention
'Do you know what you can do to refurb this place?
Nothing!....BRUUUUHAAHAHAHHAHAAAAA'
Then I found out they had zero say so in regard to what I wanted to do

Went back to work on it

Built a deck on the back

Put in a couple garden windows


The siding was from local trees
Fir mostly
Nary a knot

Just needed scraping here and there


While I was doing all this, the broker would come by every few months and put $20K in my pocket and we'd refinance (lower interest, lower payment)

You'd say things were booming....really booming

Then we sold
That was early 2008
Doubled our money
That was where luck, just plain luck, came into play

Then the crash

The people that bought that place, sank another $50K into it
To flip it
Then.....had to foreclose........

Nobody, but nobody knows when

But.....its coming

And its gonna be a doozy

 

[Jules]

You did a very fine remodel.

 

[Ken N Tx]

Down here in Texas, you better have someplace to move before putting your house on the market!!

My son put his house on the market and had 3 bids the first day! He sold for $20,000 over his asking price..His inlaws sold their house within 4 hours of posting sight unseen by an investment buyer!!

 

[rgp]

I saw an article yesterday that house prices went up 40% in the past year in Austin, Texas. The average house price here in Denver is now over half-a-million dollars! Back in the 90s, you could buy a nice house here for under $100,000. There was a thread about houses in San Francisco going for more than a million dollars over asking price!

I don't understand why there's such a housing shortage. It started back in the late '90s and doesn't seem to be letting up. The American dream is way out of reach for a lot of people.

So... what, if anything, should be done to bring prices back down or to help people buy houses?

Personally, I have no idea, but maybe other people do.

"So... what, if anything, should be done to bring prices back down or to help people buy houses?"

Should be done ? .......... nothing. It is personal property & worth what the market will bear. And we never want to interfere with that.

 

[Liberty]

Down here in Texas, you better have someplace to move before putting your house on the market!!

My son put his house on the market and had 3 bids the first day! He sold for $20,000 over his asking price..His inlaws sold their house within 4 hours of posting sight unseen by an investment buyer!!

Ken...its NYC and California money coming in around here, messing up the locals...lol.
Lots of well heeled folks wanting their "starter castles". No matter how much the houses go up, they are still way
cheaper than where they came from. Hub says "way too many humans on this planet."

 

[Gary O']

Down here in Texas, you better have someplace to move before putting your house on the market!!

I'm thinking that's pretty much anywhere, Ken

An unspoken rule;
'Making money', when selling your residence, is only garnering your down payment for the next place you buy.
And now? If you haven't been in touch with the market, you WILL get hurt.
Bidding wars are more common than I've ever seen.

 

[JimBob1952]

People need to lose the greed and sell the house for what it's worth and not what they think they should get for it. A little profit is one thing but an average house for $500,000 is ridiculous.

Most of us aren't movie stars and can't afford to buy like them either.

What's the difference between what you can get for your house and what it's worth? Seems like the same thing to me.

If I bought stock in a company at $100 and a year later it's priced at $150, should I sell it at $125 because that's "what it's worth?"

 

[WhatInThe]

Don't add to supply or demand. Let the market take of itself.

Problem is in some areas investors are gobbling up supply but the supply is already low in these areas but a house flip/reno takes it off the market is reducing supply even more. But in some markets the flippers are actually inflating prices because their discounted offers are based on local markets. If you are in a hot market and don't want to do anything to house you could make out.

It's not just flippers and investors there is unprecedented demand in many areas especially if with in an hour of a big city.

 

[Keesha]

What's the difference between what you can get for your house and what it's worth? Seems like the same thing to me.

Absolutely is NOT the same thing.
In a ‘sellers market,’ ( which it is now ) houses can be sold from about 25% more than they are worth.
We recently sold our house for 25% more than it was worth with no conditions.

 

[JimBob1952]

The market decides what it is worth. That's Economics 101. High demand = higher prices.

Absolutely is NOT the same thing.
In a ‘sellers market,’ ( which it is now ) houses can be sold from about 25% more than they are worth.
We recently sold our house for 25% more than it was worth with no conditions.

 

[WhatInThe]

People need to lose the greed and sell the house for what it's worth and not what they think they should get for it. A little profit is one thing but an average house for $500,000 is ridiculous.

Most of us aren't movie stars and can't afford to buy like them either.

In "normal" times many would do that with an inherited house just to get rid of it. It wasn't until these HGTV reno shows became part of pop culture right before the first bubble collapsed that prices increases would become the norm.

It's not just the seller doing a reno for more money much of the buying public wants and expects many of those renos. Throw in the realtors everyone has incentive to sell the house higher. Many neighborhoods there's a cartel of realtors, contractors and home inspectors doing just enough to put some extra money in their pockets.

There's greed but alot of it is just market forces at work.

 

[fuzzybuddy]

In 1960, my parents bought their 'cape cod' style home for $11,500. Last year my brother sold it for $200,000. Same house, same lot. While most everything we have has been made by automated machines, houses are still built by lots of expensive people. And there's the old saying, "They ain't making any more land". You have inflation, McMansions, "the view', and location, location, location, which add to the cost of a home. And this may come as a shock, but for most of civilization, home ownership has been out of the reach for great numbers of people. I believe they are called "poor people".

 

[Buckeye]

Absolutely is NOT the same thing.
In a ‘sellers market,’ ( which it is now ) houses can be sold from about 25% more than they are worth.
We recently sold our house for 25% more than it was worth with no conditions.

No you didn't. You sold it for what the market determined it was worth. Nothing more, nothing less.

 

[Keesha]

The market decides what it is worth. That's Economics 101. High demand = higher prices.

Right. I misunderstood you.
There is a difference between what a bank will lend you when purchasing a house and what the house is selling for and they don’t always match up. That’s what ‘I’ meant.

For instance, first time buyers might not be able to compete with buyers who don’t need financing. If the bank estimates the house lower than the house is being sold for, then they might not qualify for a loan.

 

[Keesha]

No you didn't. You sold it for what the market determined it was worth. Nothing more, nothing less.

Yes!

Right. I misunderstood you.
There is a difference between what a bank will lend you when purchasing a house and what the house is selling for and they don’t always match up. That’s what I mean.

For instance, first time buyers might not be able to compete with buyers who don’t need financing. If the bank estimates the house lower than the house is being sold for, then they might not qualify for a loan.

But THIS is what I meant.

 

[JimBob1952]

Absolutely is NOT the same thing.
In a ‘sellers market,’ ( which it is now ) houses can be sold from about 25% more than they are worth.
We recently sold our house for 25% more than it was worth with no conditions.

In 1960, my parents bought their 'cape cod' style home for $11,500. Last year my brother sold it for $200,000. Same house, same lot. While most everything we have has been made by automated machines, houses are still built by lots of expensive people. And there's the old saying, "They ain't making any more land". You have inflation, McMansions, "the view', and location, location, location, which add to the cost of a home. And this may come as a shock, but for most of civilization, home ownership has been out of the reach for great numbers of people. I believe they are called "poor people".

In 1960, a Hershey Bar cost five cents. Now it's about a dollar. That's actually a faster price increase than for the $11,500 house.

Want to see real inflation? Tuition at Harvard was $1250 in 1960. Today it's about $48,000. Same school, much worse education. At that rate your parents' house would have sold for $437,000.

 

[Remy]

That's the thing, if people get an offer or an offer over asking, of coarse they will take that. You can't blame people.

The housing thing is out of control. In my area, fires have done it. But what do they build? Stand alone houses to buy and more apartments that collect rent. No new mobile home parks, condos, small houses or cluster houses. I'm not talking 150 square foot tiny homes. I mean small houses with a very small yard a single person could buy or a retired couple downsizing. I see none of it. Just prices going up.

I agree, I hear this being discussed on news talk. But there seems to be no real solution. I'm fine with helping people with low income apartments but what about people who can and want to buy but are getting priced out? It seems my savings is worth less everyday.

 

[rgp]

Absolutely is NOT the same thing.
In a ‘sellers market,’ ( which it is now ) houses can be sold from about 25% more than they are worth.
We recently sold our house for 25% more than it was worth with no conditions.

I disagree, what it's worth, is whatever the buyer is willing to pay.

If you paid $10 for it, and you think it's "worth" $100 , and someone comes along & offers you $1000 for it. Then that is what it is worth to them.............You just hit the jackpot !! <grin>

 

[Keesha]

I disagree, what it's worth, is whatever the buyer is willing to pay.

If you paid $10 for it, and you think it's "worth" $100 , and someone comes along & offers you $1000 for it. Then that is what it is worth to them.............You just hit the jackpot !! <grin>

Yes. Please see post number 39.
It IS worth whatever someone is willing to pay & we ‘did’ hit the jackpot so to speak.

BUT whatever someone’s willing to pay and what the bank and insurance may see it as are too entirely different numbers. If you can finance the house yourself, you won’t have any problems. If you are counting on a bank to finance a mortgage, you may be out of luck.

Our realtor told us that since we were going to have a bidding war that we’d be best off taking the offer which has NO conditions due to the very reason that if new sellers need financing , then the deal most likely will fall through. A bank won’t mortgage and insure a house for more money than it’s worth to them ( meaning if they have to sell it down the road if sellers foreclose )

Right. I misunderstood you.
There is a difference between what a bank will lend you when purchasing a house and what the house is selling for and they don’t always match up. That’s what ‘I’ meant.

For instance, first time buyers might not be able to compete with buyers who don’t need financing. If the bank estimates the house lower than the house is being sold for, then they might not qualify for a loan.

 

[rgp]

Yes. Please see post number 39.
It IS worth whatever someone is willing to pay & we ‘did’ hit the jackpot so to speak.

BUT whatever someone’s willing to pay and what the bank and insurance may see it as are too entirely different numbers. If you can finance the house yourself, you won’t have any problems. If you are counting on a bank to finance a mortgage, you may be out of luck.

Our realtor told us that since we were going to have a bidding war that we’d be best off taking the offer which has NO conditions due to the very reason that if new sellers need financing , then the deal most likely will fall through. A bank won’t mortgage and insure a house for more money than it’s worth to them ( meaning if they have to sell it down the road if sellers foreclose )

"A bank won’t mortgage and insure a house for more money than it’s worth to them ( meaning if they have to sell it down the road if sellers foreclose )"

I believe they will sooner or later. Otherwise they will go out of business if they are mortgaging & or insuring none at all. Maybe adjust their "value" opinions ?.........But maybe I'm wrong ?

I had this house built 21 years ago. It has doubled + in "selling price" / "value" in that time. Doesn't do me any good for profit, where would i go & spend less ? A less desirable neighborhood ? No thanks.

I believe it is the schools that are driving prices up.

I have two new neighbors , that have spent a ton on the inexpensive / small houses. Landscape, remodeling , beautiful on the outside & I believe on the inside as well. Plus they each have over $100,000 in cars sitting out front. But they are young & intend on having children........it is said that the schools are that good, & worth it ?

I never had any little rug-rats <grin>.........So I don't know.

 

[Dancing_Queen]

I saw an article yesterday that house prices went up 40% in the past year in Austin, Texas. The average house price here in Denver is now over half-a-million dollars! Back in the 90s, you could buy a nice house here for under $100,000. There was a thread about houses in San Francisco going for more than a million dollars over asking price!

I don't understand why there's such a housing shortage. It started back in the late '90s and doesn't seem to be letting up. The American dream is way out of reach for a lot of people.

So... what, if anything, should be done to bring prices back down or to help people buy houses?

Personally, I have no idea, but maybe other people do.

1. There's a housing shortage and has been one for years.
2. There's a shortage of the materials used to build new houses.
3. People are moving from high priced areas such as New York and San Francisco because they can now work from home and can live in less dense areas.
4. Mortgage rates are extremely low.
5. Etc., Etc.

I don't think anything can be done about it although it will probably slow once all of the pent up buying has been satisfied.

Here's an article on the subject: https://www.forbes.com/sites/petert...over-heating-everywhere-how-long-can-it-last/

 

[Packerjohn]

prices are like that here in the UK... but here the problem is land..we don't have enough of it... Houses are selling for eye watering prices...

Lack of land? With all of North Africa and the Middle East plus the Indian Subcontinent wanting to immigrate to the Uk, you guys better start moving back the Atlantic Ocean to make more land room or keep building those high tower residences. Pretty soon everyone will be walking and rubbing elbows whether they want to or not. I'm saying, you cannot take in the whole world. There just isn't enough room for everyone.

 

[Packerjohn]

I was looking at a place on the coast but decided to pass on it.
View attachment 168165

Same thing happened in Edmonton, Alberta when I lived there. Some hot shot built this fancy mansion overlooking the river valley. Trouble is he built too close to the edge and the soil was rather sandy. The newspaper had a wonderful time coming out each day and watching his palace move closer and closer to the cliff. Yup! It finally went down. Goodbe view, goodbye mansion. I think there is a lesson in this!

 

[Dancing_Queen]

Same thing happened in Edmonton, Alberta when I lived there. Some hot shot built this fancy mansion overlooking the river valley. Trouble is he built too close to the edge and the soil was rather sandy. The newspaper had a wonderful time coming out each day and watching his palace move closer and closer to the cliff. Yup! It finally went down. Goodbe view, goodbye mansion. I think there is a lesson in this!

They keep rebuilding on the cliffs in California and on the beaches of many other places. And the insurance companies keep rebuilding and insuring although they're beginning to make some changes in these cases.

 

[Dancing_Queen]

Lack of land? With all of North Africa and the Middle East plus the Indian Subcontinent wanting to immigrate to the Uk, you guys better start moving back the Atlantic Ocean to make more land room or keep building those high tower residences. Pretty soon everyone will be walking and rubbing elbows whether they want to or not. I'm saying, you cannot take in the whole world. There just isn't enough room for everyone.

And there's going to be a lot less land that's not underwater. Miami, Florida, U.S.A. is already having to raise the streets because of constant flooding.