The Current Real Estate Market

[BlackoutRam2500]

When the housing bubble burst (it was more than just 2008) the case shiller was down about 34%. Some areas were worse. It brought on a recession with people forced to sell at distressed prices and they couldn't because they were so far upside down. Perhaps 50% is hyperbole but there most certainly some that took that big of a hit while others took very little. Overall, it was a financial disaster, though. If things don't flatten severely and soon, the same will happen again. Fortunately sub prime lending isn't nearly as bad as that era so it will be mitigated.

And the key was "if they held out". A LOT of people lost their jobs and COULDN'T hold out.

A few things have happened since then though. #1 Stated income loans aren't what they were. #2 Banks are stronger. #3 We are 10 million houses short based on demand vs. the amount of houses that weren't built over the past decade BECAUSE of 2008. #4 Borrowers on average have more in savings.

When Covid hit the government changed the rules and offered forbearance AND loan modifications to keep people in their homes. They have ready shown they are willing to go above and beyond to keep a real estate crash from happening based on a crashing economy.

I agree with the others that the rate of appreciation is going to have to slow down at some point and we may even see a 10 -15% correction but a crash is wishful thinking in places like Austin and Dallas where new companies are coming in droves.

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[44mAG]

What goes up must come down. Interest rates will start to rise and cool the market back down. When exactly that happens, unsure. But its coming and be prepared.

The crazy prices around us have all been cash offers, so interest rates aren’t even coming into play for these out of state people doing the buying.


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[91cavgt]

My wife and I bought a new home in Bexar county last summer. Got a decent deal due to the original buyer backing out due to covid. Now a year later we may have to sell due to unexpected health problems. If we do have to sell I just hope we get enough to pay cash for a nice RV to move into till land and house prices settle back down.

[BigDraw]

Houses in my neighborhood are going for $160-$200 sq. ft

I can only hope

[P.J.]

Sounds like I have the same thought as a few others. Strongly considering putting my house & 14 acres on the market & downsizing to a camper for a few years to see what happens. Been here 16 years but if someone offers crazy money I’m all ears. Wife’s friend who’s a realtor comes to discuss tomorrow evening so we will see.

[spread5150]

Ramsey says this is the new price. As long as demand is there it’s gonna keep prices consent. He goes on to say the demand will be there as long as California has a push out of people. If you can stop the output you can stop the increase. Ain’t gonna happen. It’s a dump. Markets will have their specific ups and downs but the Housing market is here to say. As others have put it. The secret is out on Texas. We are LA soon. San Antonio sure is turning into a dump :/.

[Black Ice]

We are taking the gamble and selling.. temporary stay with the in laws. Hoping we don’t get priced out of our market. Hard to turn away from prices being paid - we had a move in our future within 5 years, this just accelerated it.

Not uncommon to see $200/sq ft sales price in our area for a regular old cookie cutter home.


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I’ve had many friends do this but I could never move in with my parents or in laws.

I took in a buddy for 12 months and then another three months when he came back from being deployed.

I didn’t charge him a penny and I thought I may have to ask for a favor for a month or two while my new house was being built but it worked out.


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[spread5150]

https://youtu.be/r8B-Com5Z2k

[BlackoutRam2500]

Personally I would cash out to trade up in houses or land but no way would I cash out to sit on the sidelines and pray for a crash. Those who are cashing out need to find something safe other than the bank to put your money in.

God forbid you sell your house to make 100k and put that in the stock market. So, when a crash does come along you lose 60% of that money, your job, and have no home.

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[CaptainDave]

Few thoughts on all these out of State people moving to TX

- Rising home prices are great for the folks wanting to sell. However, most sellers still need to buy another home and if it's in the same or similar market, you literally are just transferring built-in equity from one property to another. Only people that make bank cash out and move far out of the area to a lower market. It's not like you can cash out in Austin and move to SA, Dallas, Houston, etc., and come out much ahead.

- I'd also say most people need to get ready and buckle up for the Tax man. Many will soon find out the property tax deduction is capped at $10,000 for married filing jointly, if you itemize. Good luck arguing value down in these markets.

- It's inevitable that supply will eventually catch up with demand. There will be a market correction at some point. Probably not a significant decline, but at least a flattening of the curve so to speak. I don't really see a 2008 type of bubble again, but it's crazy how much people write-off on events that transpired, not even 15 years ago.

- I thought Central TX and Austin metropolitan area had water shortage issues in general over the last several years. What the heck are they planning to do with this influx of people?

[BrianL]

Some of it is migration and investors but remember the Dow was 8,000 in 2009 and the Nasdaq was 2,000. Right now Dow is 34k and Nasdaq is 14k. That's 4 fold and 7 fold increases for those that were invested and kept investing the entire time. Even more for those who bought Facebook at $18 a share or Tesla or Amazon.

There have been some pullbacks here and there but if a person followed an aggressive plan of investing, was job hopping for better opportunities and more money, and then buying and selling their houses for profit 2-3 times over the last 10-12 years things should be looking quite good right now in their portfolio.



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Agreed, I think people that were invested are in a really good position right now to buy, and their net worth has really gone threw the roof.

Few thoughts on all these out of State people moving to TX

- Rising home prices are great for the folks wanting to sell. However, most sellers still need to buy another home and if it's in the same or similar market, you literally are just transferring built-in equity from one property to another. Only people that make bank cash out and move far out of the area to a lower market. It's not like you can cash out in Austin and move to SA, Dallas, Houston, etc., and come out much ahead.

- I'd also say most people need to get ready and buckle up for the Tax man. Many will soon find out the property tax deduction is capped at $10,000 for married filing jointly, if you itemize. Good luck arguing value down in these markets.

- It's inevitable that supply will eventually catch up with demand. There will be a market correction at some point. Probably not a significant decline, but at least a flattening of the curve so to speak. I don't really see a 2008 type of bubble again, but it's crazy how much people write-off on events that transpired, not even 15 years ago.

- I thought Central TX and Austin metropolitan area had water shortage issues in general over the last several years. What the heck are they planning to do with this influx of people?

One main advantage to selling is your capital gain value is reset. Buying and selling your home after 2 years is the best way I know of to make tax free capital gain. You are allowed tax free gain of $250k single or $500K as a couple. Any amount over that and you pay 20% capital gain. Better to sell and reset gain value than hold on and continue to lose 20%(current)-28%(Biden tax rate) off future value increases

[Txtourist]

Just cashed out a rental that we bought in ‘05 when they gave out mortgages like candy. Watched the bottom fall out on that one in ‘08 and for a few years wondered if it would ever come back.
Can’t believe what a 2 bedroom 1 bath no garage in a so so neighborhood brought in.
Feels good to close the book on that one and going to hold on some others, but it seemed like a good time to unload that one.

[ram04]

A huge factor is the housing price increase and the scariest part to me is the amount of housing, country wide, that huge hedge funds are buying up with cash way over asking. Pricing out the working man from buying a home, then forcing them to rent from the same hedge funds that priced working people out of the market. The big money elites are increasingly screwing over normal working people in this country creating a very toxic situation.

[DRT]

I’ve had many friends do this but I could never move in with my parents or in laws.

I took in a buddy for 12 months and then another three months when he came back from being deployed.

I didn’t charge him a penny and I thought I may have to ask for a favor for a month or two while my new house was being built but it worked out.


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Good on you for being there for him.

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[Aggie PhD]

One main advantage to selling is your capital gain value is reset. Buying and selling your home after 2 years is the best way I know of to make tax free capital gain. You are allowed tax free gain of $250k single or $500K as a couple. Any amount over that and you pay 20% capital gain. Better to sell and reset gain value than hold on and continue to lose 20%(current)-28%(Biden tax rate) off future value increases

This is the primary reason I am trying to renovate the barndominium to move into from our current home.

Price per sq ft in my neighborhood has doubled since we bought in 08. And the place we are moving has significant upside based upon location. And if I can, I want to avoid the capital gains on the new place. I told my wife that we need to live there for two years. And if she doesn't like it, we can look for something else


One is naive to think there will not be some sort of correction. When, where, and to what degree is uncertain. But it will happen. People in 2006 and 2007 thought things would keep going up. And there were a lot of people in the 1980s that didn't expect the savings and loan crisis either.