the prices are just insane, even all the way north to Temple area

JAW3336 said:

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Anyone care to consider a conspiracy theory? The rapidly rising cost of real estate seems to be happening nation wide, and materials are stupid high. Could this be a governments way of driving more people to depend on low income housing and government subsidies? Or maybe something else? I am not saying I believe this just something that popped into my head.

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There is something artificial that I believe might be happening.

A big development behind our home as been in progress since 2018. They were completing homes quite rapidly and selling them before they were built. However, in January, I noticed work slowed down tremendously and it would seem like this could be purposeful.

Friends of mine in Dripping Springs said that they also noticed big communities slow down in homes coming to market. The builders already acquired the land. When they decide to sell 1 home at a time per week vs 10, I think they are able to get another +10-15% in premium.

No one is motivated to hurry up and flood the market with 1,000 homes (even though they would all sell) because they can make a killing with the current demand being insane.


I also think lumber mills have no incentive to try and expand or add capacity. Again: their current hours and operations will allow them to sell cut lumber at record prices. Why double the capacity, do more work, and then only net +10% more in sales?

Ya'll do know apartment vacancies have increased, right? Rent DROPPED for the first time in many many years in Austin.

A large contributor to all of this is people not wanting to be in a small apartment when they are working from home. In addition, some of these downtown businesses are not going to come back in full work force, rather opting from a work from home model.

Where does that put people? in the subs...

Even raw land is selling for crazy high prices even in the Temple area.

That is a good point, plus anyone who's income remained the same probably realized how much money they can save by not eating out all the time, not going to show or concerts, traveling, and a variety of other expenditures.

IMO, the government does not have the ability to directly cause artificial rising demand across US real estate. This was a secular shift in housing demand that only a free market (which I consider US real estate) could drive.

Here's what is wild, is the amount of new apartment complexes getting built right now. That type of money isn't dumb money, to build those. They've got to be thinking apartment living will come back, just further from downtown.

Quote:

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IMO, the government does not have the ability to directly cause artificial rising demand across US real estate.

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they can make money so cheap to borrow that a borrower is making money on a 30 year fixed through inflation. No real savings being realized, just free money.

500,000ags said:

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IMO, the government does not have the ability to directly cause artificial rising demand across US real estate. This was a secular shift in housing demand that only a free market (which I consider US real estate) could drive.

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That's definitely not true. I've had multiple bankers (and brokers) literally ask me, "Why are you not wanting to borrow more money? You should borrow as much as possible at these rates. They are so low.".

That mentality right there is why people can go for $200,000 remodels, can buy their new Teslas, their $1M+ homes.

US housing is worth $35+ Trillion. The government can ease interest rates and provide incremental stimulus, but truly impacting or driving change in anything that size is very hard. What's impacting TX housing markets more? The Fed/government stimulus or a few million people actively migrating...

A few million people aren't actively migrating to texas. It might be 100,000-250,000.

Have you read articles about all of housing prices in the USA growing over the last year? It's not just texas.

The entire country is seeing a rise in home prices.

Yeah, exactly, I meant a few million people are actively migrating across the country. Not just to Texas. That's much more tangible to the TX and national housing markets than any Fed/stimulus actions.

I guess a majority of these people are moving out of apartments? I wonder if apartment occupancy is dropping nationwide? Very interesting.

Add I said earlier this is factually happening in texas, and even more so in austin

You also see a growing wealth gap. Man of the people being outbid on their first home are being outbids by people buying homes 2-4 which is available because of crazy low interest rates

Rich get richer.

Keeper of The Spirits said:

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You also see a growing wealth gap. Man of the people being outbid on their first home are being outbids by people buying homes 2-4 which is available because of crazy low interest rates

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Fed needs to increase rates.

Now? No they don't. Eventually they will but we have too much slack in the national economy right now. No slack in the local housing market does not equate to the total economy.

And the Fed does not directly control mortgage rates anyway. They manage very short term rates. The bond guys when it's time will welcome those hikes if they are modest anyway

SteveBott said:

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Now? No they don't. Eventually they will but we have too much slack in the national economy right now. No slack in the local housing market does not equate to the total economy.

And the Fed does not directly control mortgage rates anyway. They manage very short term rates. The bond guys when it's time will welcome those hikes if they are modest anyway

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Ha, well I guess you would know.

It just feels like the low rates are a factor getting people wanting a house, when now is maybe not the best time to be making the move. Meaning like someone living in an apt. Might want to look at renewing the lease for another 6 mo-to a year to let things cool off.

Oh rates are just above all time lows and I see them going up later this year as we get better control of the virus. I could see the Fed starting to retract it bond buying significantly starting fourth quarter. That will have much more impact then them raising their borrowing costs.

But even then I think the market will have capacity to absorb that move. At least for a while

Here's a fun discussion: How much would they have to actually increase the rates for it to scare people from buying a house right now? If you are already overbidding by 20, 30 percent... do you give a **** about a 0.5% move?

We are right at 3.0 right now on 30's. I'd say north of 5 would start getting the market's attention. Or at least heading to 5.

Yeah, so something pretty drastic. It shows how insane demand is

Population demanding homes is growing non linearly while the supply is basically linear. The Millenials have kids, good jobs, paid student debt mostly, are settling down, and they are a BiG generation.

I don't know what people's rationale is for overbidding one way or another, but a 3% rate vs a 4% rate basically let's you borrow another $90,000 while keep payments the same. I suspect home prices will be impacted before we get to 5% rates.

*edit* thanks Steve. Loan of $700,000.

You left key info out of your post. What loan amount?

Here is 400k loan.

3.0 1686 payment
4.5 2027 payment
341 increase in payment

That would suck but my numbers are just 15-20% of the decision. Schools, taxes, commute, lifestyle, government, security all are more important than that 341 cost.

Now take it 5.0. Payment 2247z increase of 461 for same money. A 27% increase in costs. That stings.

Lumber up over 10% to $1,125 this week.

I agree. As someone who is in the construction industry, infrastructure is not here at all. Labor is hard to come by, raw material costs is up 200-300 percent since beginning of 2020. The freeze really set a lot of raw products back. Polyethylene chemicals are being allocated nationwide and in turn is causing shortages in PVC, foam, etc. this is one asset of the industry that is strained. Steel is up tremendously, demand has not slowed and has increased while supply has dropped. It's literally the perfect storm. DR HORTON, pulite, lennar, etc are preselling so many new constructions home before they even dig dirt it's insane.

Oh man. I'm going through the selling process and it's pretty stressful on the other side as well.

These offers aren't as black and white as you would imagine. We are on the market for one more day today. Needles to say it's not what I thought it was going to be like. Traffic was relatively low, I chalk it up to other agents listing properties WELL below market, sucking up attention. However we did list closer to what we expected to get to reduce foot traffic.

If anyone is interested send me a message.

I know it's not the sole driver, just one factor among many, but people who owned homes in California moving to other places tend to wreak havoc on home prices anywhere they move in significant numbers, because California's insane real estate market gives them big wads of money to spend after they sell.

I grew up in the Bay Area, and my parents and sister still live there.

My sister has a 2/2, 1000~ sf condo in San Mateo (midway between SF and SJ) that she bought 10-12 years ago. She'd make probably $400-500k if she sold today.

My parents bought their ~1600 sf, 3/2 house in Livermore (about an hour from SF or SJ if the traffic isn't bad) in 1972, for $36k. If they sold today, they'd probably make $900k - 1M.

If they're making that kind of cash off selling, that means they're making big, fat cash offers wherever they go.

On another note, the .gov might not have a lot of influence on the demand end of the market, but they can have a big influence on the supply end, slowing/restricting supply. That's one of the reasons for California's market being so high - it's really difficult to build new houses.

It's no bull***** My agent said the large majority of people who looked at my house were transplants from California

tailgatetimer10 said:

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It's no bull***** My agent said the large majority of people who looked at my house were transplants from California

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The dollar goes insanely far in Texas compared to California. With last year and Covid as a catalyst, it's just too good of an option to live somewhere else in a much nicer home, or even have the ability to have a home, than to rent in CA or live in a home with way less bang for your buck.

We listed our house in 78739 this past weekend and had about 30 showings.... around 10 of them were agents facetiming their clients in California. Crazy.

I wonder how much CA homeownership is impacted by the desire to never sell a property.

With taxes frozen at purchased values, I can't imagine many people want to give up a home if it's a tremendous value.