OT: House Offer Accepted. What A Crazy Market!

DerbyDad03 · 2021-05-02T19:43:35+00:00

What a crazy housing market this is! My #1 son and his GF just found out that their offer has been accepted. Here is how houses are being bought these days?First, I should note that the submission period for offers was the 48 hours after the house hit the market. This was one of those listingswhere all offers would be reviewed at the same time and the sellerswould choose the one that they liked the best.Since my son and his GF are relocating to a different state, they haven?t even seen the house in person. Just pictures, a video tour and their agent?s assurance that the house was listed at a great price, way under what she expected it to sell for. (She was right) They submitted their offer within a few hours of the house being listed. There was a total of 12 offers submitted in that 48 hour period.They submitted an offer at full asking price ($370K), no contingencies. The offer included an escalation clause. The escalation clause would automatically increase their offer to $1000 more than the highest offer submitted, but not to exceed $410K. They also included an "appraisal clause" which stated that they would give the sellers up to $15K above the appraised value, not to exceed $425K.Their offer was accepted, not just based on the offer price, but also based on the appraisal clause. Another offer also had an escalation clause that maxed out at $410K, but the appraisal clause was only $13K above the appraisal value, $2K less than their offer. That was close!So they may pay as much as $425K, but they may pay less than the $410K if the appraisal is low ? assuming it?s not so low that the seller backs out. Their agent is sure that the appraised value won?t be low enough for that to happen. The seller is moving out of town and needs to get the house sold, thus the comparatively low asking price.One other clause was a 15 day due-diligence clause, which was accepted. Even though the offer was ?as-is? and not contingent on an inspection, they are still going to have one...

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krw 5 years ago

Buying low and selling high isn't all that hard in real estate but you have to live somewhere. Buying and selling doesn't matter much. It's the first time buy that's so difficult, and getting more so.

The problem with the 2008-2012 downturn wasn't so much that people were upside down but had adjustable mortgages they couldn't refinance because they were upside down. When the interest rates spiked, they were screwed. Now the interest rates are so low (artificially low, thanks to the FED). The ones who will be burned in the next downturn are those who lent the money.

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Markem618 5 years ago

Southern Illinois but the area has always been way behind as far as housing costs, you can find big money houses. We are on 3.45 acres paid 190k in 2007, the value on Zillow or Realtor.com is about at that on the estimates. My wifes commute was 1 stop sign on the way to work,

3 on the way home about 5 minutes. We have done some hardscaping and had Helitech fix the detroyed drainage. Had some redo of "the sun room" an addition previous owner put on for his orchids.

So we have been stimulating the local economy as best we can.

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krw 5 years ago

Right, I wasn't allowed to be there.

It was clunky but you did ask "Who said..." so it must have gotten the point across. It really doesn't matter.

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krw 5 years ago

I thought you were.

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Leon 5 years ago

Yes we were. No longer. The home we went into contract for in late September, $365K is not welling for $430K. Almost 10K per month price increases in the last 7 months.

Our home went up in value, in the past 7 months, from $232K to $274K.

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Scott Lurndal 5 years ago

There is a "reason". Whether it is good or not depends on whether you are buying or selling.

Lack of supply, high demand.

Houses in south San Jose are going for $250,000 over list or more.

House next door out here in the sticks (1 Hectare, 45 miles south of SJC) was listed for 1.3 and had close to a dozen offers, I haven't seen the final price, but I suspect it was close to 1.7M.

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Leon 5 years ago

This is what is happening now. It will be interesting to see how many people will be upside down in 2~5 Years.

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Clare Snyder 5 years ago

I paid $63700 39 years ago. That is about $170,000 in 2021 dollars. I assumed a 6.3% mortgage when the going rate was 23% - 18% if you were lucky and had an 800 credit score.

That was when people WERE upside-down on their mortgages in a lot of cases because of the 1980s recession with high rates causing prices to drop. My MIL was in real estate in Windsor and people were walking away from $800000 homes. Sadly for Windsor some of those homes are still not worth very much more than that - - -

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Clare Snyder 5 years ago

Up here that price would hardly buy you a chicken coop - even taking exchange into account.

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Clare Snyder 5 years ago

We had a semi locally went for $250 over asking. Almost $700Grand for a SEMIDETATCHED home!!!!! Toronto buyers, to a large extent, getting out of the city (60 to 70 km commute - but due to Covid working from home)

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Leon 5 years ago

40 years and 4 months ago my wife and I paid 60K. 30 years, 12% interest in Jan 1981 Refinanced 6 years later for 9% for 15 years. We accelerated the payments after refinance and paid the mortgage off Feb, 1997.

Estimated value today $164K. $98K 10 years ago when we sold.

Cash for the next home in 2010.

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Leon 5 years ago

Lack of supply was a temporary fluke. Building supplies are readily available. Homes are being built at a record rate in my area. Demand is up but supply has not been an issue since summer of last year.

While economics has a theory for supply and demand, this ain't that. It is greed and demand. The builders are saying, lets see how much these people will pay.

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krw 5 years ago

When we first started (July) looking for our first home ('82, I think) we were looking at 18% interest. We bought in September, with a 14%

30-year mortgage. A couple of years later we re-fi'd to 8%. We paid $60K.

Ours is now $304K (Zillow).

I wish. The next house was in VT. We paid $150 and sold 14 years later ('07) for $300. It's now $404. Last I looked the taxes were $8K but it's not listed now.

The dangers of ARMs. Without enough equity there's no way to refinance when the interest rate climbs. Same problem in '07-'11.

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DerbyDad03 5 years ago

What's going on in your area might not be the norm.

The lack of supply appears to relate to both existing homes and building supplies.

My son is a RE agent in Las Vegas. He tells me that they usually have a 6 month of supply of houses in their listings. Currently, it's less than a month.

He, my daughter and my other son have all been on the buying side of the market in the last 6 months. NY, NV and IN. Finding a house wasn't easy in any of those areas. They all paid a lot more than they would have just a few years ago due to the lack of supply.

Now, as to building new, these articles were written in March 2021. They both discuss a shortage of wood and the associated price increase of (and delay in) getting a house built.

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Leon 5 years ago

Well I am certain different locations will be different but in San Antonio and Houston, there is no shortage of building materials. Never really was except for a brief period last year, just like groceries were.

New homes/new neighborhoods are going up at a shocking rate. There is a new neighborhood, being built by Meritage homes, across the street from our subdivision. This was in the plans a couple of years ago, a 130 home community, buy there was just an empty field of grass in December. Now there are streets and a model is going up along with 6 spec homes. Another near by neighborhood that will likely have a thousand homes started a couple of months earlier in October, also in a grass covered field. The are probably 40 or 50 new homes in that location now. And the one we were going to have a home built in has probably built 50 homes since October.

And all of these homes are going up at a going up and being sold at an alarming rate.

Covid was a dream come true for home builders and the Democratic party leaders.

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Scott Lurndal 5 years ago

50 homes in the Houston metro area isn't even in the noise....

Record low inventory:

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"\u201cI\u2019ve got more buyers than I have homes to sell them,\u201d said Shad Bogany, a broker associate with Better Homes and Gardens Real Estate Gary Greene in Houston. \u201cWe just don\u2019t have the inventory.\u201d"

Supply and Demand indeed.

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Leon 5 years ago

No kidding, the real number is probably 100 times that. I was just talking about within a 5 minute drive from our home. You cannot drive any where, in only the west Houston area, with out seeing 5~10 new neighborhoods that were not there a year ago.

And I am not saying that our market for new homes is the hottest, just that there is no shortage of materials to build these homes.

Supply of new homes yes, supply of materials NO. So there is really no reason for material prices to be as high as they are.

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DerbyDad03 5 years ago

I curious as to why you continue to say that there is no shortage of materials, when it's really easy to find current articles (like as of last week) that say that there is. I'm asking, not arguing.

I'm not in the middle of it, so I only know what I read, which seems to dispute your claim. What are you seeing/hearing/reading that indicates that there is no shortage?

e.g.

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In addition, while new homes are certainly being built, how much has the price increased due to reported lumber shortages? I've seen numbers that range from $16K to $24K on average.

I might be recalling this incorrectly, but weren't you going to build but changed your mind due to the increased cost? (It may have been someone else)

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Greg Guarino 5 years ago

The relevant difference between urban and rural is space to build. Where there's space, the price of an existing house can't significantly exceed what it costs to buy a plot and build a new one. Where we live (NYC), there's hardly anywhere left to build, except perhaps UP. But pretty much everywhere you could build a single-family home already has a house on it. Some years ago it was popular for a developer to buy a big old house, tear it down, and plant three two-family homes in its place.

We have a very small house which - if sold - could buy us several of the (much bigger) homes mentioned on this thread, together. Identical houses are going for 4.5x what we paid 22 years ago. And most of that rise was steady, not just recent.

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Spalted Walt 5 years ago

+1

Published: April 26, 2021

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"HOUSTON ? Homebuyers, builders, and even DIYers are shocked and stuck with crazy-high lumber prices. The price of lumber has increased about 180% since last year." [...] "Hollins says most new home prices are going up by $30,000 to $40,000 to help builders cover the cost of lumber. There are several reasons for the increase."

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