Real estate & inflation ver. 2022.

imwjl

Doctor of Teleocity
Joined
Mar 21, 2007
Posts
12,013
Location
My mom's basement.
Yesterday I did an around town putt putt on my bike and saw houses with coming soon maybe a 1-2 weeks ago with sold. The calls to sell our main home have resumed. We just listed my mother in law's house Saturday. Now we have 5 offers more than asking price.

Something funny in all this is knowing some people who are all bent out of shape about inflation while daft to much of what causes it. I'm teasing some of them. Does a good patriot aware of inflation say no and scold these people? Just look at what's going on. Travel is up. Business is booming at one of the malls were we have a store. Should I be going to the center and start yelling stop it! After or during shopping I see people getting expensive margaritas and coffee. Maybe I should put up barriers????

One of our work contractors griped about lack of machine rentals. The neighbor's new deck and patio project is stalled waiting for materials. Maybe we should all kill all of our projects right now?

Most of the time I'm a nice guy and my wife a nice girl. I think we're going to be selfish inflation contributors here. My wife is leaning toward the 2nd and 3rd highest offers on house. One is cash, no inspection, and wants to close ASAP. The other $5000 more, no sales contingency, financing contingency, and they want us to buy a home warranty.

:)
 

Jim_in_PA

Friend of Leo's
Silver Supporter
Joined
May 31, 2019
Posts
3,239
Location
SE PA - Doylestown PA
The primary reason you're receiving offers above asking is because there is so little inventory of homes for folks to buy. It's basic supply and demand Economics in the free market. :)

Cash and no contingencies win this race, BTW. Not worth adding the financing risk and "home warranty" cost for a mere $5K.
 

Boreas

Poster Extraordinaire
Joined
Nov 3, 2019
Posts
8,756
Age
67
Location
Adirondack Coast, NY
The primary reason you're receiving offers above asking is because there is so little inventory of homes for folks to buy. It's basic supply and demand Economics in the free market. :)

Cash and no contingencies win this race, BTW. Not worth adding the financing risk and "home warranty" cost for a mere $5K.
I guess boomers such as myself just aren't dying fast enough. I mostly feel sorry for those who now can't afford large rent increases.
 

imwjl

Doctor of Teleocity
Joined
Mar 21, 2007
Posts
12,013
Location
My mom's basement.
It might be appropriate to play it some more. As much as the house needs updates it also has some magic numbers - truly a 4 bedroom with master bedroom downstairs and a two stall attached garage.

The cash and no inspection offer is a woman a few years into the remodel/flip business. She's got to know it's a good place at the core. Combing through MLS for 4 bedrooms, there's nothing like it listed within city limits right now.

We absolutely plan to contribute to inflation here. I'm still going to tease some associates not getting the big picture. It's also just some entertainment or a light hearted moment when selling the house also represents a lot of mental stuff, work and challenges with the whole of life.

:)
 

telestratosonic

Friend of Leo's
Silver Supporter
Joined
Mar 5, 2011
Posts
3,387
Location
Alberta, Canada
imwji-

Same thing up here. My wife watches Calgary supper news and ropes me into watching; I saw last night that new houses are in short supply for all of the same reasons. Inflation is through the roof. Prices of everything are waaay up, including gasoline and natural gas even though they come from here in Alberta.

I'm in a village of 200 2-3 hours southeast of Calgary. Housing prices in the big towns/small cities like Lethbridge and Medicine Hat (70,000 pop. approx. for both) are up as well.

I'm 72 and retired. We had planned to move to Vancouver Island but detached house prices are now unaffordable for us, even in small towns.
 

telestratosonic

Friend of Leo's
Silver Supporter
Joined
Mar 5, 2011
Posts
3,387
Location
Alberta, Canada
imwji-

Same thing up here. My wife watches Calgary supper news and ropes me into watching; I saw last night that new houses are in short supply for all of the same reasons. Inflation is through the roof. Prices of everything are waaay up, including gasoline and natural gas even though they come from here in Alberta.

I'm in a village of 200 2-3 hours southeast of Calgary. Housing prices in the big towns/small cities like Lethbridge and Medicine Hat (70,000 pop. approx. for both) are up as well.

I'm 72 and retired. We had planned to move to Vancouver Island but detached house prices are now unaffordable for us, even in small towns.
Reading an online news article now about a survey by one of Canada's big banks:43% of Canadians are putting off a home purchase due to high prices.

In cities like Toronto and Vancouver, prices are apparently out of reach for many first-time home buyers. But inflation is not the biggest reason for this: it's well-heeled buyers snapping up houses as investments and then renting them, in many cases, to those who got priced out of the market.

I'll leave it at that.
 

Preacher

Poster Extraordinaire
Joined
Apr 17, 2007
Posts
5,427
Location
Big D
Inflation is a real deal and I would never suggest anyone take financial advice from an internet forum. Especially a Telecaster forum where we can't agree that tone is in the wood! LOL

But look at this...and make your decisions.

Inflation rates last 10 years: courtesy of

2012 - 1.7
2013 -1.5
2014 - .8
2015 - .7
2016 - 2.1
2017 - 2.1
2018 - 1.9
2019 - 2.3
2020 - 1.4
2021 - 7.0
2022- 7.9

Last time inflation grew like this and hiked in the last twenty years? 2000 and 2008, go back and take a look at the financial sector after Inflation went above 4.5%. It really scares me as I see the same thing that happened in 2005-2008 happening now. Property values continue to go up and people get overextended, the stock market has been on a bullish trajectory for the last 13 years other than the Co%%d blip in 2020. It is due for a decline.

I had a conversation with a young couple a few weeks ago (I am not a financial or real estate advisor) who were looking at buying a house in this market. Total income for the young couple with a two year old and one on the way ($125K annually together). They were going to put an offer on a $350,000 house to purchase. I thought that might be too much house and I asked them what they had been approved for? They said they had been approved for $350K and it would equate to 35% of their net debt with a house payment around $2900 including taxes and insurance.
I asked them what their take home pay was and they said around $6500 a month. I asked if they realized that their house would take HALF of their take home income and they said it was a stretch but they could make it.

This is what I am seeing in our area, everyone "stretching" to make it. I asked them what would happen to them if their insurance went up and if their taxes increased? They said that should not happen. I told them that on my old house the taxes increased from $3800 a year (it was undervalued) to almost $10K in four years because the new tax assessments. They said that should not happen on their house as it was brand new and would be taxed right to start with. I told them that another friend of mine bought a $300K house three years ago, last month it was assessed at $400K since the market has improved here significantly. His original tax bill annually was $7,200. With the new assessment his tax bill went up to $9,500 this year. That is a $200 monthly increase on his house payment. He is now being "Stretched" to make it every month and is thinking of selling his house that he just moved into new three years ago. He has some equity in the home, IF he sells but he has no where else to go as to buy a comparable house would be to spend another $400K and he can't afford that.
 

tarheelbob

Tele-Holic
Silver Supporter
Joined
Aug 30, 2014
Posts
809
Location
Asheville
Exactly my situation. Put my house on the market this past Friday at noon. By 5:00 pm Sunday (53 hours later), we had 23 showings and 6 offers, all over asking price. The offers ranged from $10k to $80k over (this one sight unseen)! Appraisals waived, Home Inspections waived, allowances for us to stay in our home ("rent back") for up to three months at zero cost, cash offers, $50k down in due diligence, etc. It is absolutely crazy, and we, fortunately, are in a position to take advantage of it. My house sold for 2.5 times what I paid for it just four years ago in 2018.

The consumer appetite in this country is unprecedented right now, and is the least talked about contributor to "supply shortages", rising costs, etc. Supply vs. demand, indeed.

- Bob
 

imwjl

Doctor of Teleocity
Joined
Mar 21, 2007
Posts
12,013
Location
My mom's basement.
Inflation is a real deal and I would never suggest anyone take financial advice from an internet forum. Especially a Telecaster forum where we can't agree that tone is in the wood! LOL

But look at this...and make your decisions.

Inflation rates last 10 years: courtesy of

2012 - 1.7
2013 -1.5
2014 - .8
2015 - .7
2016 - 2.1
2017 - 2.1
2018 - 1.9
2019 - 2.3
2020 - 1.4
2021 - 7.0
2022- 7.9

Last time inflation grew like this and hiked in the last twenty years? 2000 and 2008, go back and take a look at the financial sector after Inflation went above 4.5%. It really scares me as I see the same thing that happened in 2005-2008 happening now. Property values continue to go up and people get overextended, the stock market has been on a bullish trajectory for the last 13 years other than the Co%%d blip in 2020. It is due for a decline.

I had a conversation with a young couple a few weeks ago (I am not a financial or real estate advisor) who were looking at buying a house in this market. Total income for the young couple with a two year old and one on the way ($125K annually together). They were going to put an offer on a $350,000 house to purchase. I thought that might be too much house and I asked them what they had been approved for? They said they had been approved for $350K and it would equate to 35% of their net debt with a house payment around $2900 including taxes and insurance.
I asked them what their take home pay was and they said around $6500 a month. I asked if they realized that their house would take HALF of their take home income and they said it was a stretch but they could make it.

This is what I am seeing in our area, everyone "stretching" to make it. I asked them what would happen to them if their insurance went up and if their taxes increased? They said that should not happen. I told them that on my old house the taxes increased from $3800 a year (it was undervalued) to almost $10K in four years because the new tax assessments. They said that should not happen on their house as it was brand new and would be taxed right to start with. I told them that another friend of mine bought a $300K house three years ago, last month it was assessed at $400K since the market has improved here significantly. His original tax bill annually was $7,200. With the new assessment his tax bill went up to $9,500 this year. That is a $200 monthly increase on his house payment. He is now being "Stretched" to make it every month and is thinking of selling his house that he just moved into new three years ago. He has some equity in the home, IF he sells but he has no where else to go as to buy a comparable house would be to spend another $400K and he can't afford that.
I get all that but have also been in a few industries and economies in my life.

Not everyone is so stretched. We have two Americas where I take from a great writer. Good and broken. It's not so bad if you have a skill where the whole world pays a living wage. In some cases pretty great. A lot more people could pursue those skills. I've been a truck driver, poured foundry ingots, did ag work. Some of us down right worked out asses off the way others just made a stink or become losers to get out of that.

In my 60s I still work my butt and brain to be competitive and don't see much of my cohort in the same way.

I'm also sure we'll see the current cycle reverse.

:)
 

Telekarster

Poster Extraordinaire
Gold Supporter
Joined
Aug 14, 2019
Posts
5,718
Location
Earth
The cash and no inspection offer is a woman a few years into the remodel/flip business. She's got to know it's a good place at the core.

FWIW but I know at least 3 people who've sold their homes in the last year and all of them have cleared at least 80-100K above what they listed it at, and none of them were in particularly desirable places per say, and AFAIK they were all sold as-is. One of the homes was a small bungalow that hadn't been updated since it was built in the 50's. It's wild right now man, is what it is. It's really starting to feel like 2007-8 to me, wondering if there's a ceiling to it all... and then bottom out? Anyway, good luck man!
 

tarheelbob

Tele-Holic
Silver Supporter
Joined
Aug 30, 2014
Posts
809
Location
Asheville
FWIW .... It's wild right now man, is what it is. It's really starting to feel like 2007-8 to me, wondering if there's a ceiling to it all... and then bottom out? Anyway, good luck man
Oh, it will definitely face a significant correction, if it doesn't topple completely. I see signs on the horizon of some slowing coming already due to rising interest rates. By the end of this year, the market may look very different.

As others have said, though, there is TONS of money out there. There are folks who are seriously well-off and can move swiftly in these times of historically low inventory. My heart goes out to the younger, first-time home buyers. They don't stand a chance.
 

Telekarster

Poster Extraordinaire
Gold Supporter
Joined
Aug 14, 2019
Posts
5,718
Location
Earth
Oh, it will definitely face a significant correction, if it doesn't topple completely. I see signs on the horizon of some slowing coming already due to rising interest rates. By the end of this year, the market may look very different.

As others have said, though, there is TONS of money out there. There are folks who are seriously well-off and can move swiftly in these times of historically low inventory. My heart goes out to the younger, first-time home buyers. They don't stand a chance.

Yeah man... this is my gut feeling as well, which was the same feeling I had in 07-08. It's most certainly not a buyers market right now, that's for sure, and I too feel sorry for the young folks out there that want to own their own home but simply can't afford it right now. Maybe if they're patient things will change in the next year or so, and the markets will come back down for em.
 

CharlieO

Friend of Leo's
Ad Free Member
Joined
Mar 2, 2003
Posts
3,186
Location
Sarasota, FL
Most of the time I'm a nice guy and my wife a nice girl. I think we're going to be selfish inflation contributors here. My wife is leaning toward the 2nd and 3rd highest offers on house. One is cash, no inspection, and wants to close ASAP. The other $5000 more, no sales contingency, financing contingency, and they want us to buy a home warranty.

:)
As a Realtor, I would recommend that when you have a good cash offer on the table in this market you should always consider it above all others that have a financing contingency. I have had two buyers for my listings who came with mortgage pre-approval letters, and who were later unable to close because their lenders refused to provide a loan commitment. I am also seeing loans that were declined because the home did not appraise for the contract price.

In a multiple offer situation you might want to think about presenting a counter offer to the cash buyer to see if they will come up with a little more money. If you do that, however, you risk having them walk away. In Florida at least, your counter offer makes their initial offer void and they would be under no obligation if you then decide to accept it.

One more thing. The cash buyer should be required to show you "proof of funds," such as a bank or brokerage statement with account numbers removed, or a letter from their bank or brokerage stating that they have liquid funds available. And if they are paying cash and closing quickly, they should have no problem with paying a fairly large deposit to ensure that they won't walk away.
 
Last edited:

Timbresmith1

Friend of Leo's
Joined
Oct 1, 2010
Posts
3,369
Location
Central TX
I guess boomers such as myself just aren't dying fast enough. I mostly feel sorry for those who now can't afford large rent increases.
Inflation is a real deal and I would never suggest anyone take financial advice from an internet forum. Especially a Telecaster forum where we can't agree that tone is in the wood! LOL

But look at this...and make your decisions.

Inflation rates last 10 years: courtesy of

2012 - 1.7
2013 -1.5
2014 - .8
2015 - .7
2016 - 2.1
2017 - 2.1
2018 - 1.9
2019 - 2.3
2020 - 1.4
2021 - 7.0
2022- 7.9

Last time inflation grew like this and hiked in the last twenty years? 2000 and 2008, go back and take a look at the financial sector after Inflation went above 4.5%. It really scares me as I see the same thing that happened in 2005-2008 happening now. Property values continue to go up and people get overextended, the stock market has been on a bullish trajectory for the last 13 years other than the Co%%d blip in 2020. It is due for a decline.

I had a conversation with a young couple a few weeks ago (I am not a financial or real estate advisor) who were looking at buying a house in this market. Total income for the young couple with a two year old and one on the way ($125K annually together). They were going to put an offer on a $350,000 house to purchase. I thought that might be too much house and I asked them what they had been approved for? They said they had been approved for $350K and it would equate to 35% of their net debt with a house payment around $2900 including taxes and insurance.
I asked them what their take home pay was and they said around $6500 a month. I asked if they realized that their house would take HALF of their take home income and they said it was a stretch but they could make it.

This is what I am seeing in our area, everyone "stretching" to make it. I asked them what would happen to them if their insurance went up and if their taxes increased? They said that should not happen. I told them that on my old house the taxes increased from $3800 a year (it was undervalued) to almost $10K in four years because the new tax assessments. They said that should not happen on their house as it was brand new and would be taxed right to start with. I told them that another friend of mine bought a $300K house three years ago, last month it was assessed at $400K since the market has improved here significantly. His original tax bill annually was $7,200. With the new assessment his tax bill went up to $9,500 this year. That is a $200 monthly increase on his house payment. He is now being "Stretched" to make it every month and is thinking of selling his house that he just moved into new three years ago. He has some equity in the home, IF he sells but he has no where else to go as to buy a comparable house would be to spend another $400K and he can't afford that.
Almost like someone has figured out how to wrench every last penny from us…
 

schmee

Telefied
Silver Supporter
Joined
Jun 2, 2003
Posts
20,191
Location
northwest
The American Dream is gone. We allowed foreigners and conglomerates to buy up real estate driving prices out of reach, now the average Joe cannot afford a house while we let foreign companies buy 300 houses to rent at profit. Essentially we are back to 1000 AD, where the rich Lords own it all and the serfs/workers slave to pay them rent. The Mexican system of requiring nationals to own 51% of any real estate is a good one.
 




Top