Real Estate Market. Thoughts?

[kawiracer14]

The house next door to my rental house (my first house) was purchased in August 2014 for $295k. They completely scraped it and put up a two story house with a basement. The same house design is used on at least 4 other houses in the the Berekley neighborhood. The house sold for $862k in January. They even put a balcony on the back of the second story so they can check to see what my tenants are doing in the back yard. It's pretty crazy.

The house across the street sold about 2 months ago for $355k after being listed at $375k in November. I believe it's going to get scraped as well, otherwise the top is getting popped.

I don't think the house on listed for $465k on Chase street will go for more than $400k, but you never know!

Edgewater is getting equally as crazy. Lots of monstrosities that don't fit at all in a neighborhood of single story homes. Prices are absolutely insane. The girlfriend and I will hope for prices to come down in the next couple years while we save for a down payment, but not expecting to be able to get anything less than 1/2 Mil.

[Dave_L]

I think too many people expect too much house for their first purchase; I know I did. You see the house your parents live in after years of trading up through equity, learning to manage money, general life lessons, etc. Then you move out and have a crappy job, no savings, consumer debt, etc and of course everything you look at will be WAY o5r of your budget.

When we first started looking for houses, I felt I needed at LEAST a basement and a two car garage. Now I have neither, but have a mortgage that is 2/3 of what the house would rent for, a solid 40k in equity after only three years (Zillow thinks it's 90k lol), no car payments, etc. My house is half the size I thought I needed, needs some work, and wouldn't impress anyone (assuming I'd let anyone inside); but I'd rather be in this position than living with roommates because I can't afford what "want." On top of all that, I'm finding that we have at least two rooms that we don't even use (living room and bedroom) because they are just full of "stuff" we've collected over the years that we also don't even use.

tl;dr there is a pretty large gap between what people THINK they need or should have, and what they actually need, can afford, and as a result people spend way too much of their lives in a holding pattern until they wake up and accept reality.

This. It seems a lot of first time buyers want their dream home right off the bat. Not only is that expensive to purchase, but it's harder to maintain. Like a high end car, a bigger/nicer home comes with higher maintenance/upgrade costs.

My first home was a duplex, ranch walkout, 950 sq ft above ground. Nothing crazy but it was affordable and a great starter home. Wife and I renovated it ourselves for decently cheap. We learned how to do that stuff on a home that didn't necessarily require top grade finishes. Ended up renting that home out when we bought a more traditional home (2 story, 1500 sq ft, single family). Sold that home (during this thread) after 3 years to finally get our dream home. Just closed on my rental home last week and will now be debt free, minus the house. But this is after being in real estate for 13 years or so, doing lots of work to both homes, and buying/selling at the right time. it paid off but it wasnt easy to get here.

My first home wasn't impressive at all but it was what worked for me. It sold for $230k (listed for $215k) and was the cheapest listing in my area. Sold after one open house. The market will probably climb more but I didn't want to risk a bubble pop so I cashed out while I could.

[tmckay2]

I agree for a first home people need to be realistic. However, if you could buy a few years ago it was worth it to pay a little more if you planned on staying long term. Because rates were so low we bought land and built. The cost to build to our specs was the same as buying a house of like size, we just had to pay for the land as extra. 3 percent interest rates are crazy and to know you have that locked for 30 years it's worth it to purchase a little higher than normal. They have already appraised our house at 250k over what we paid 2 years ago. We plan to live her until retirement though. 1.5 acres and plenty of room for a family and even a separate room and bath if a family or friend needs a place to stay for a while.

Now that the market is what it is you have to be careful, although rates are still low. But the prices have become insane. There's an old house on the end of our block that needs some upgrading and it's selling for more than what we paid to build brand new. It's crazy.

Cars is the thing I don't understand. They depreciate quick, are expensive to maintain and still get you from A to B. Why spend so much on a new one? Makes no sense to me. Who cares if it has power and acceleration, how often do you get to legally utilize it to its potential?

[Madeinhb]

It depends. If someone wants their dream home - nothing wrong with buying it. Some people don't like the idea of buying, paying 5-10 years and starting over. Some want their perfect house so that they can live there, pay it off and don't have to worry later in life.

Shitty houses are what's selling g because those owners are trying to capitalize on the demand for House where supply is low. People will buy houses just to be able to have one and will spend money to fix it up.

[rockhound]

I am a buyer's agent, and the truth is it is not a great time to buy. If you have crazy equity on your current home and can reinvest that into your new home in truth it is a wash. Yes you are paying a premium for your new home, but you sold your existing for the same premium. If you have crazy equity and have the ability to move to a different state and make a living it is a great time to sell. If you are coming here and thinking you will score a good deal on home in Colorado, you are dreaming. And any agent that tells you you will have equity in the next year or two or five is just blowing sunshine. In reality no one knows and to say they know what the market will be like even as far out as the next 6 months is BS. I can make an educated guess as to what will happen, but in reality no one truly knows. Make the best decision that works for your current and foreseeable future and your family and gives you the best outcome for your current finances.

I understand that people want or need to buy a home because they have to or want to move here and it is still a better investment than renting at the even more inflated rental rates, but it is not the best time to be buying compared to 2008-2009.

My very best advice is not to overspend, live within your means. If you have 200K to put down cause you just sold your existing home and cashed in on your new found equity. Don't put all of it into the new home, put half in the bank and put less down on the new house. If the market goes to hell and you lose all the equity in the new house you might still be upside down in the house, but you will be upside down in the house and still have 100K in the bank.

[Not_A_Llama]

I feel like the one real play is that condos are going to shit the bed downtown, and maybe in the metro area.

With the horizon on the builder defects law coming ever-closer, you can be assured of a maximum of 6 years before we're positively *flooded* with units for sale.

On top of that, legislation constantly threatens to remove that provision, in the name of "affordability".

[Irving]

I'd love to pick up a bunch of condos as rentals.

[Jamnanc]

The condo construction defects law is bullshit. Contractors won't build them until that changes. The lawsuits were out of hand.

I I believe the area is at or near a peak price wise.

[Wulf202]

I won't touch condos as rentals. Hoa, trailer park fees and condo fees are not something I will ever pay.

If you want some fun numbers check out the maintenance fees for time shares.

[Irving]

I so hate me some HOAs.