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Houses cost too much!

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  • berriberri Posts: 4,254

    Fin, those BRIC'ers may indeed be part of the reason behind the jump in desirable Seattle area housing. But another thing I believe is this Federal Reserve manipulating. I fear that one is going to end ugly with bubble bursts. Think about it; Volcker, then Greenspan - both ended up making a mess with their policies and the like. Don't expect Bernanke & Yellen will end up any different. Is Seattle diverse enough to absorb Boeing's apparent slow Seattle area divestiture efforts and Microsoft's apparent slow market attrition?

  • berriberri Posts: 4,254

    Stever, maybe you ought to consider just renting for awhile until you figure that market out? The tax advantages of home ownership are very overstated when you consider it on a cash flow basis and the costs of getting into and out of real estate purchases can be fairly expensive (especially if you make a mistake). A year delay isn't likely to impact you much on a long term basis.

  • fintailfintail Posts: 34,189

    There are a few factors at play here - constant in-migration combined with a lack of developable land combine to inflate prices. Many places here are now building up instead of out. Financial policies like you mention can be an impact too - but I think many if not most of the nation isn't inflating, so I don't know if it is a real overall bubble. Regarding the local economy - Boeing moved some suits to Chicago and took bribes to go to SC, but everything I hear still has decades of work at local facilities. MSFT isn't what it used to be, but the talent it attracted launched several new industries, and that seems to be continuing today - look how many tech/IT firms are based here - many employers. This area is also being seen as a cheaper alternative to SF, and newbies seem to love the quality of life here - at least those from TX and FL I work with. Combine that with the offshore influence, and the market here will continue to be strong, even if basic fundamentals might not support it. It's all also very localized - my mother lives 2 hours from here, and prices in her area are barely higher in raw dollars than 15-20 years ago, and in many cases lower, if adjusted.

    Thetax benefits of owning might be a contributor to artificial prices, too. I don't know if any other nation does it that way - definitely a subsidy given to our FIRE overlords who are so deserving of adulation. I wonder what would happen if the powers would curtail the gifts.

    @berri said: Fin, those BRIC'ers may indeed be part of the reason behind the jump in desirable Seattle area housing. But another thing I believe is this Fed

  • berriberri Posts: 4,254

    I agree that housing inflation is mostly localized right now. But what artificially low interest rates do is encourage leverage and speculation, while also driving people into hard assets like real estate and commodities. That can result in pull ahead sales that later lead to a bust in demand potentially deflating the recently bought assets. I'm presuming banks will remain more vigilant on granting mortgages here, or otherwise watch out while it turns ugly once again.

  • fintailfintail Posts: 34,189

    I think that might counteract the rates - tougher lending standards. No more 500K mortgages given to those with 50K household incomes like back in the mirage economy days when rates were higher but standards far looser and less ethical.

    If only the banks could be held accountable for their actions. Corporations are people too, my friend...right? :)

  • gagricegagrice San DiegoPosts: 29,094

    @stever said: Viewed a dozen of so houses in Las Cruces last week (and a few dozen more on the MLS sites) for our impending move from the UP.

    Found a "cheap" one in foreclosure but it needed work to fix it where we would enjoy living there. Windows, some limited remodeling, maybe $30,000 worth total. That would put the house in the higher end of the homes in the neighborhood (another attraction - very walkable and close to stuff). But it didn't really pencil out so we didn't follow through after the bank countered our offer.

    Now we're looking at a pricey (for us) custom home with a view. Not walkable (it's perched on its own little hill) and it's about 3 miles to the nearest shopping and restaurants. But it's got all the bells and whistles and needs no work.

    My wife keeps telling me to buy a more expensive house since if one of us winds up in long term care, the feds will let the other spouse stay in the home, even if we spend all our other "cash" assets on health care. The house will be the savings account if one of us dies and the other then decides to sell and move. And we starting to get of that age ....

    Homes there are pricey. How is the water situation? Cost of gas and electric service? Property taxes are not bad in Dona Ana County. I think renting may be a good idea. You may not like the dust storms that are getting more frequent. I like this place. They are proud of it.

    http://www.zillow.com/homedetails/2114-Calle-De-Picacho-Mesilla-NM-88046/2110359432_zpid/

  • steverstever Viva Las CrucesPosts: 41,630
    edited June 27

    @berri (and @gagrice), renting is definitely on the table. We fully intended to rent in the UP but the housing stock was so junky and home prices so "cheap" we decided to buy instead. And lots of absentee owners here don't trust the renters so they keep their "second" homes empty. Those owners are usually kids who inherited a house or someone who had to go to North Dakota for work. Renting would let us explore the neighborhoods more and give us an out if the dust (or ag) is too much. But we had dust and ag in Boise and it rarely bothered us (never had the highway pileups like the recent one caused by a dust storm between NM and AZ though ).

    The water situation in Las Cruces is interesting. Like Boise, the water wars are always in the news. There's some aquifers around but people are concerned that the drought is causing farmers to sell their rights to the frackers, who pump stuff back in the ground and ruin the rest. Many of the neighborhoods have their own water company instead of being city run. Most have good reputations (and good wells). At least one subdivision in the foothills is rife with foreclosures and they've been hauling water in tanker trucks for a year or more.

    My realtor pays about $300 a month for AC. And his house is only 1300 sq. ft! So that's a bit of a concern. Another reason to look into solar to at least try to offset some of that. Natural gas is around but I don't much like it; rather have an all electric home. A couple of places have propane but the size of the tanks on the property leads us to believe that usage is pretty minimal (we're talking 100 gallon tanks vs the 250 gallon ones common in the UP).

    @gagrice), you've got us dialed in with the Calle De Picacho house. It's a bit more than I'd like to spend but may be doable. It's got the arches, stucco/adobe look, coyote fence, not much grass, tile countertops (I'm not much of a granite fan), tile floors and no carpets, vigas/beams in the ceilings and a courtyard. Nice touch with the Route 66 fabric on the overstuff chairs in one of the photos. :smile:

    And it's in Mesilla, a very desirable (and walkable) area close to their town square. And it's not far from the center of Las Cruces, where they have gotten rid of the pedestrian downtown mall that killed the city center, and they plan a new town square to be completed in a couple of years. Great new bistro has already moved in to that area.

    Read somewhere that the median home price is around $150,000. A one bedroom house we really liked had a view and was only $300,000, lol. Would give us an excuse not to entertain company.

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  • gagricegagrice San DiegoPosts: 29,094

    @stever said: gagrice), you've got us dialed in with the Calle De Picacho house. It's a bit more than I'd like to spend but may be doable. It's got the arches, stucco/adobe look, coyote fence, not much grass, tile countertops (I'm not much of a granite fan), tile floors and no carpets, vigas/beams in the ceilings and a courtyard. Nice touch with the Route 66 fabric on the overstuff chairs in one of the photos. :smile:

    And it's in Mesilla, a very desirable (and walkable) area close to their town square. And it's not far from the center of Las Cruces, where they have gotten rid of the pedestrian downtown mall that killed the city center, and they plan a new town square to be completed in a couple of years. Great new bistro has already moved in to that area.

    Read somewhere that the median home price is around $150,000. A one bedroom house we really liked had a view and was only $300,000, lol. Would give us an excuse not to entertain company.

    It really is a cool looking home. Check it out on Google maps. It is in a compound with other homes. Been on the market for a long time. Could be issues with close neighbors. I would go knock on every door and talk to them. Find out what they like about the area. Their electric is not too bad at 11 cents per KWH. I would be concerned about water, if I was buying.

  • gagricegagrice San DiegoPosts: 29,094

    This was huge in Hawaii back in the early 1980s. Many of the properties ended up being rented as Apts during down times in tourism. They went into disrepair. A lot of Alaskans bought them to have a place to go in Hawaii. And let it pay for itself the rest of the time.

    Developers across the U.S. are reviving a concept that collapsed with the real estate crash in 2008: combining condominiums and hotels. In cities including Miami, New York and Los Angeles, a rebounding hospitality market is joining with rising demand for luxury homes, spurring developers to construct new full-service hotels and ask premium prices for residential units associated with a high-end brand.

    http://www.bloomberg.com/news/2014-07-02/homebuyers-avoiding-chores-fuel-condo-hotel-rebirth-real-estate.html

  • gagricegagrice San DiegoPosts: 29,094

    With the announcement, while visiting my children in Indiana, that they are moving to Oregon, my thinking of moving back East has come to a screeching halt. Trying to find in Oregon what is all over KY, TN, TX etc is just not easy. Here is a typical place close to great fishing lakes in KY.

    http://www.zillow.com/homedetails/1630-Cypress-Rd-Benton-KY-42025/2106472956_zpid/?utm_source=email&utm_medium=email&utm_campaign=emo-propalert-hdp

    For $200k more in Oregon you get 1000 sq ft less and a fixer to boot. Not sure Oregon has that much more going for it.

    http://www.zillow.com/homedetails/36285-Row-River-Rd-Cottage-Grove-OR-97424/48429124_zpid/

  • steverstever Viva Las CrucesPosts: 41,630

    Oregon. Mountains ("real" ones), ocean, rivers.... Pretty nice place. (Maybe too many Californians there jacking up the prices, LOL?).

    Got one guy low balling us on our house (and houses are already cheap here). We're only about a used Subaru apart at this point but as much nickel and diming that he's doing on the offer/counter-offer, we're ready to just to let the house sit for a while and wait for the next interested party. He's waived the home inspection but who knows what crap he'll pull closer to closing. We have about the best house in the county for our price range as it is and the holding costs are pretty low, so snowbirding a year or two won't kill us either.

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  • gagricegagrice San DiegoPosts: 29,094

    Hold in there. If you have it priced right, there are always bargain hunters wanting to turn a quick buck. 3 more months of good selling weather for the UP. I have two on the market now in Indiana. I won't give them away. I should get all I put into them and a few bucks for my trouble. Then likely put the cash into Oregon property, if the right place comes along.

  • fintailfintail Posts: 34,189

    329K might get you a literal teardown (say, fire damaged) on a small lot on an unmaintained block where I live.

    Oregon west of the mountains definitely has nice scenery, mild climate, and proximity to expensive RE markets, which makes for competition, and higher prices. No doubt Californicators (as they are called here), too.

    Kind of a dumb site, but a fun read about the influence had on domestic real estate by the most favored kleptocracy.

  • gagricegagrice San DiegoPosts: 29,094

    @fintail said: 329K might get you a literal teardown (say, fire damaged) on a small lot on an unmaintained block where I live.

    Oregon west of the mountains definitely has nice scenery, mild climate, and proximity to expensive RE markets, which makes for competition, and higher prices. No doubt Californicators (as they are called here), too.

    Kind of a dumb site, but a fun read about the influence had on domestic real estate by the most favored kleptocracy.

    It may already be declining. I have about 50 properties I watch. And I am getting about 6 a day showing price reductions. These are not the homes they are talking about. It is a trickle down result. I knew the cash was coming from somewhere. With 60% of homes being paid for with cash, there is something going on.

  • fintailfintail Posts: 34,189
    edited July 13

    Lots of local listings in the 600K+ range (which is still merely moderate here) have multiple "8"s in the price. That says something. Of course, nobody questions where the money comes from.

    Get outside of the cities, and it is different. You can get a mansion in many small towns for 300K, but the economy doesn't allow normal people there to pay that mortgage.

  • gagricegagrice San DiegoPosts: 29,094

    I am in Orange county with my brother. He just finished putting $200k remodeling a home he paid $915k for. Total fixer in Santa Ana hills. Was listed at $1.2 million. Should bring $1.4 million with the remodel. That home near me would bring maybe $700k. Both his sons make over $100k a year and cannot afford to buy anything but a condo, which they don't want. They are all talking about moving to Sacramento where houses are about 1/3rd the price of OC. The Niece that got married today is moving to San Jose. Her husband just got his masters and has a high paying tech job. They plan to rent for a while.

  • steverstever Viva Las CrucesPosts: 41,630

    The realtor ate some fees to make the deal work, so barring the usual potential hiccups, we should be closing in late August. The realtor will get around 4% so she'll do okay anyway since there's no other realtor involved. She's been so good on both transactions (and hopefully the MIL's house) that she really deserves all she can get.

    Some of the houses we looked at Las Cruces (that we veto'd for various reasons) have sold so that's encouraging I guess. There's a lot of housing inventory there to absorb, and if we don't like the town, it'd be nice not to get stuck and not be able to afford to move. We're pretty much focused on the great neighborhood at this point and those locations are usually better insulated against price dives.

    Fun, fun. B)

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  • steverstever Viva Las CrucesPosts: 41,630

    Oh, "3 more months of good selling weather for the UP."?

    I dunno, the temp at 10 am this morning was 56°F. The durn furnace would have kicked on if we had not shut it off. There could be snow on the ground in 3 months.

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  • stickguystickguy Posts: 15,469

    I could never live up there. Too cold and depressing.

    My dog, however, would probably live it.

    2015 Hyundai Sonata 2.4i Limited Tech (mine), 2013 Acura RDX (wife's) and 2007 Volvo S40 (daughters college car)

  • steverstever Viva Las CrucesPosts: 41,630
    edited July 14

    We're ready to move but we enjoyed being close to the MIL in her last few years and we made some good friends here. Surprising number of creative people, especially writers and weavers. And it was two days closer to my family than Boise was so we visited twice as often.

    Usually the local news around here is who hit a deer and banged up their car. This morning it was someone hitting a wolf on the highway.

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  • gagricegagrice San DiegoPosts: 29,094

    @stever said: We're ready to move but we enjoyed being close to the MIL in her last few years and we made some good friends here. Surprising number of creative people, especially writers and weavers. And it was two days closer to my family than Boise was so we visited twice as often.

    Usually the local news around here is who hit a deer and banged up their car. This morning it was someone hitting a wolf on the highway.

    Is you MIL going to Las Cruces with you? I think I would rent for a while. The dust would get to me. I would rather live in Cottonwood AZ and get away from the dust and high taxes. Also a bit lower elevation. Just as hot I would guess. Then for me TN has more to offer than AZ or NM. Except for the mountains. That is what my wife loves along with the lower humidity. Though So CA has been humid the last 3 weeks since we returned.

  • steverstever Viva Las CrucesPosts: 41,630

    Oh, she passed away over the winter. So there's nothing keeping us in the UP any more. Yesterday wasn't bad - this morning's low when I got up was 48°.

    Renting is a definite possibility (although we said that when we moved here). There are some furnished condos with 3 month terms available.

    We want a bigger town than Cottonwood. Las Cruces is pretty "small" at 100k.

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  • steverstever Viva Las CrucesPosts: 41,630

    Closing on the sale of our house in a few weeks. Have a furnished condo rented for two months in Las Cruces while we explore neighborhoods. Who knows where we'll be living come November.

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  • fintailfintail Posts: 34,189

    I assume another decent MI house that sold for the price of a nice Toyota? B)

    A co-worker of mine is closing on a place next week - something like 1500 sq ft, more distant from work than I would prefer, but it has a nice lot anyway, still 300K

    @stever said: Closing on the sale of our house in a few weeks. Have a furnished condo rented for two months in Las Cruces while we explore neighborhoods. Who knows where we'll be living come November.

  • steverstever Viva Las CrucesPosts: 41,630

    Hey, we're in the Honda Odyssey Touring Elite stratosphere.

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  • gagricegagrice San DiegoPosts: 29,094

    I kind of thought there would be a leveling of home prices. Guess that was wishful thinking for some places.

    The average square footage of newly built single-family homes in the U.S. ballooned by nearly 57 percent to 2,598 square feet in 2013, compared with 1,660 in 1973. The Northeastern region of the country claims the second-highest average square footage, which rose by 65 percent – an even faster rate than the rest of the nation – to 2,636 from 1,959 during the same span, according to the U.S. Census Bureau, which does not track the figures by state.

    Yet the number of people living in each home continues to steadily decline. The average number of people per household in the U.S. dropped to 2.54 in 2013 from 3.01 in 1973. Families, more specifically, fell to 3.12 members from 3.48 during the same span.

    As expected, bigger homes mean far heftier price tags. The average sales price of newly built single-family homes in the U.S. exploded by 419 percent to $324,500 in 2013 from $62,500 in 1978, the earliest available year. Even with inflation, that 1978 figure would work out to only about $228,000 today, according the Bureau of Labor Statistics calculator. The Northeast owns the highest average sales price, which rocketed by 646 percent – also at a faster pace than the rest of the nation – to $469,000 in 2013 from $63,000 in 1978.

    "The people that are buying houses, more and more, tend to be the better-off-financially people," said Reinhart, of the Kislak Real Estate Institute.

    In fact, all-cash sales accounted for 42.7 percent of all U.S. residential property sales during the first quarter of 2014, up from roughly 20 percent during the first quarter of 2011

    http://www.usatoday.com/story/money/personalfinance/2014/08/10/demand-grows-for-bigger-fancier-homes/13842881/

  • steverstever Viva Las CrucesPosts: 41,630
    Week two in the new house and we're about settled in. Not jonsing for a road trip.

    Yet....

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  • gagricegagrice San DiegoPosts: 29,094
    Not in Flint Michigan. I told Rocky he should buy it and start fixing it up. Then rent it out and buy another. Too lazy, wants a guaranteed return for his work.

    Flint, Mich., was one of the hardest hit cities before and during the recession. Once one of the state's largest cities, and a prosperous one when auto production plants were there, it came under the control of an emergency manager, appointed by the governor, during two periods, long before Detroit did. While Detroit may be the home of the $1,000 house, one home in Flint is on the market for $188.

    The house does not have much to recommend it. Located at 2518 Dakota Ave., it only covers 1,225 square feet, which accommodates three bedrooms and a single bath. It sits on a lot of just 5,663 square feet. The house was built in 1928, before the Great Depression.

    http://www.usatoday.com/story/money/personalfinance/2014/11/07/247-wall-st-least-expensive-house/18649751/
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