Don't lurk on this section much so not sure if this has been addressed recently....will likely post on 'real estate' also...

Am curious to hear from housing/real estate people on the future of those markets, including rental vs. purchase.

Wife and I in central PA just sold our house, closing in August. We needed to downsize, wife wants to move towards a coast somewhere (NC?), and we wanted to take advantage of the strong market. Sold the house at asking price within a few weeks. Phase one complete.

We have been looking for the next house via Zillow in several general areas. Prices are high, some ridiculous. We own another small house in eastern PA that we rent out, the current tenants' lease is up in August. We could move into that house for a year but it is not a desirable area for us to live long term. Renting a house in a more desirable area is an option but there is not much available and costs are high.

So the big question is where will the housing market be within the next year or so? We are going to travel to a few areas in the next 2 months to visit areas in person. Looking for a house that needs a bit of work as opposed to a new build. But if we fail to find anything worthwhile, is it wise to pause on purchasing? Where do you think prices will be one year from now? And where do you think inventory will be? If a recession is coming, how does a recession effect the housing market?

Any help/advice would be appreciated. Thank you.

Charlotte area is terrific, particularly near Lake Norman.

Raleigh is not my cup of tea but rural and suburban folks enjoy it.

Wilmington if you want to be on the coast but is not nearly as nice as the South Carolina beaches and towns.

I live (just southwest of Raleigh) and work in the Triangle area. Absolutely love it here for all kinds of reasons. But prices are through the roof and are expected to stay hot for the foreseeable future (Apple, Fujifilm and others coming here). You will need to look in certain parts around Raleigh (actually in Raleigh...forget about it). Our home value has almost doubled since 2015...ridiculous.


Can't speak to Charlotte but happy to share whatever I know about this area.

south Charlotte, Lake Wylie, Lake Norman all fantastic and affordable places to live.

downtown areas too expensive.

Saw a tweet earlier today that single family home sales decreased ~17% in April compared to March, and is down ~27% year over year. No idea about the next year, but it does seem like the feverish pace of the market is decreasing.

I can't speak on the specifics for the PA and NC market, but in general...

I think prices will maintain current values or decrease slightly (~5%). Inflation, material costs, and supply constraints are providing upward pressure on prices. Interest rate and consumer sentiment (recession) are providing downward pressure. Inventory (days on market) is still way below historical levels.

It will depend on how well the fed "sticks the landing" on tightening. They stuck with QE too long driving up inflation and now the only way to drive down inflation is to plunge us into a recession. If the fed over tightens, I could see home prices falling a bit further, but my guess is they err on the side of under tightening.

Prices of homes dont really go down per se in nice areas. They mainly just stay stagnant based on historical norms - please call me out if someone has evidence to refute this.

Interest rates on homes are what will eat people alive coming up as those should be up around 7.5% next year and 9-10% in 2024.

Tom Kazansky 2012 said:

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Prices of homes dont really go down per se in nice areas. They mainly just stay stagnant based on historical norms - please call me out if someone has evidence to refute this.

Interest rates on homes are what will eat people alive coming up as those should be up around 7.5% next year and 9-10% in 2024.

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The last time there was any kind of price decrease that had any level of scale was the 2008 recession. Lot's of people got upside down in Florida and Arizona back then, specifically. Never seen that in Dallas in my 22 years here.

You bring up a good example. What you and Tom K said...housing prices rarely decrease, unless something significant like 2008 happens. Not being an economics guy, I guess I would have been more clear asking if another 2008 is around the corner?

We sold our house high, have the $ to not take out a huge mortgage. So if I have to buy high, it's not the end of the world. Would like to see inventory creep up a bit because my wife and I are a bit picky on type of house, layout, land, etc.

So we get to hear more bttching from renters that they are being oppressed?

1988PA-Aggie said:

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You bring up a good example. What you and Tom K said...housing prices rarely decrease, unless something significant like 2008 happens. Not being an economics guy, I guess I would have been more clear asking if another 2008 is around the corner?

We sold our house high, have the $ to not take out a huge mortgage. So if I have to buy high, it's not the end of the world. Would like to see inventory creep up a bit because my wife and I are a bit picky on type of house, layout, land, etc.

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Well, we are on our way to another 2008 with the way things are going. Recession was already pretty inevitable and Biden admin literally today announced they were going to ease loan requirements for minorities which was also done under Clinton and the primary reason 2008 happened in the first place.

So, you might see another large scale home price decrease event here fairly shortly. Probably won't happen in urban Texas but other parts of the country could see 2008 housing bust again and you might be able to pick something up at a good discount.

Good quick read posted on the real estate board.

Not saying things might not go to crap but a good reminder that it's good to take a closer look.

https://housingbrief.com/article/628d19614b29897c86d9f2c2/5e6f887d13238419a4de4c03?sr=true

CS78 said:

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Good quick read posted on the real estate board.

Not saying things might not go to crap but a good reminder that it's good to take a closer look.

https://housingbrief.com/article/628d19614b29897c86d9f2c2/5e6f887d13238419a4de4c03?sr=true

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Narrator: It all went to crap.

Ghost of Bizbee said:

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The Debt said:

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So we get to hear more bttching from renters that they are being oppressed?

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This is in poor taste.

If you currently own a home, have empathy for us renters. Cost of homeownership has never been higher in the US. It ain't right.

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I made a post here about the lack of starter homes being built


https://texags.com/forums/59/topics/3291220

Hooms always go up.

chris1515 said:

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One big unknown in the housing market IMO is the large influx of institutional buyers and to a lesser degree all the new small guys that view this as a can't lose proposition to buy homes to rent out.

Im not smart enough to determine exactly HOW those could cause problems, but it feels like that "could" be the source of a negative surprise somehow.
I am sorta curious how the institutions are funding all the purchases, are they at risk of a forced liquidation if values decline enough so that they are then underwater on their financing? Could that cascade and drag multiple big owners all down together as the market floods with these properties that someone is being forced to sell?
A drop in the value of homes does not seem to be something you can easily/effectively/affordably hedge against…

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It goes back to market dynamics.

Cheap fixed debt and decently strict equity requirements virtually guarantee that income producing single family is healthy and can even sustain a small downturn. It's actually hard since 2008 to get "over leveraged." The only threat is a SHARP drop in demand, out migration, a quick release of cheap new supply, or a sudden significant drop in wages or employment.. and most likely all of those paired together.

The investor, both institutional and small time, is healthy.

Now if we're talking multifamily investors, that's another story. A lot of them have gotten in the game only recently during this biggest runup in prices in a decade. If an economic event happens like a recession, there's a lot of investors holding assets purchased at peak price with peak rents using bridge debt due within 3 years, some on floaters, that would all of the sudden have no pathway to increasing their bottom line and being able to pay off their bridge debt with a refinance or sale.

chris1515 said:

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One big unknown in the housing market IMO is the large influx of institutional buyers and to a lesser degree all the new small guys that view this as a can't lose proposition to buy homes to rent out.

Im not smart enough to determine exactly HOW those could cause problems, but it feels like that "could" be the source of a negative surprise somehow.
I am sorta curious how the institutions are funding all the purchases, are they at risk of a forced liquidation if values decline enough so that they are then underwater on their financing? Could that cascade and drag multiple big owners all down together as the market floods with these properties that someone is being forced to sell?
A drop in the value of homes does not seem to be something you can easily/effectively/affordably hedge against…

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I'm not sure we have a clear picture of this yet, really. I've seen opposing claims on the topic. Some people say there are huge numbers of institutional buyers that have skewed the entire system, and others say they are not that much more of a % of ownership than they have been historically.

I love everything about NC. I've told anyone who will listen, it will be the next "Texas" after we hit our ceiling with everyone moving here.

chris1515 said:

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I'm all of the opinion that there is a huge problem coming up with commercial office space. Every day I go into my office building that used to house 1,200 every day, and now it's maybe 100 people on-site (rest remote).
As long as we are locked into a lease, it doesn't matter that much. But I feel like there is a lot of office space about to be vacant, and that's going to put pressure on the owners of those spaces…do they have exposure to residential also? Will that matter?

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I've been wondering about this as well. This topic was breathlessly covered during COVID that we would have a massive commercial RE failure coming out of it, but I have seen nothing on this topic in months. It might just be that our Texas bubble has protected us?

I drive around north Texas and all I see is more and more development underway.

chris1515 said:

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I think the fact that so much office space is locked up in multi-year leases that haven't come up for renewal yet since the covid-work from home shift became an issue has postponed the day of reckoning for office space.

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Very well could be. Might be like the electricity bill reckoning some of us are now facing.

Many have not seen that reality yet.

YouBet said:

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chris1515 said:

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I think the fact that so much office space is locked up in multi-year leases that haven't come up for renewal yet since the covid-work from home shift became an issue has postponed the day of reckoning for office space.

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Very well could be. Might be like the electricity bill reckoning some of us are now facing.

Many have not seen that reality yet.

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I had two neighbors get solar panels installed on their house this year. NOW I know why they did it…

Carlo4 said:

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YouBet said:

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chris1515 said:

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I think the fact that so much office space is locked up in multi-year leases that haven't come up for renewal yet since the covid-work from home shift became an issue has postponed the day of reckoning for office space.

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Very well could be. Might be like the electricity bill reckoning some of us are now facing.

Many have not seen that reality yet.

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I had two neighbors get solar panels installed on their house this year. NOW I know why they did it…

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They will still have a lengthy ROI, but current rates will certainly shave some years off of that if they stay at this level going forward.

Solar companies make 10x

they need more competition

YouBet said:

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chris1515 said:

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I'm all of the opinion that there is a huge problem coming up with commercial office space. Every day I go into my office building that used to house 1,200 every day, and now it's maybe 100 people on-site (rest remote).
As long as we are locked into a lease, it doesn't matter that much. But I feel like there is a lot of office space about to be vacant, and that's going to put pressure on the owners of those spaces…do they have exposure to residential also? Will that matter?

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I've been wondering about this as well. This topic was breathlessly covered during COVID that we would have a massive commercial RE failure coming out of it, but I have seen nothing on this topic in months. It might just be that our Texas bubble has protected us?

I drive around north Texas and all I see is more and more development underway.

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Average office leases are 10 year terms (some exceptions of course). That means only approximately 10% roll each year. Of that, most companies are renewing or possibly downsizing, but some are growing too. And the demise of the office is way overstated, especially as COVID starts to fade from our day-to-day, so when you think of it in those terms, it's not surprising that we haven't seen much effect.