Real Estate Crash thread

It will be interesting to see how many WFH expats to the boonies will stay more than a year or two. A bit more obvious here in bumfuck nowhere, but I’ve seen many urban and suburban refugees head to the small town for cheaper - albeit bigger - property, partly due to money and partly due to fantasy of a perceived lifestyle. Many head back to the larger towns/smaller cities within a year or two when they realize larger houses are more expensive to heat and maintain, property (especially hobby farms) keep week + long holidays unobtainium, and the nearest small town doesn’t have the culture and amenities they realize they can’t do without. Lots of dreamers in for a rude and expensive awakening.

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Originally Posted by sirbumpsalot

This will be the first downtrend post-WFH era....will be interesting to see how things work out now that there is no longer a "desire" to be "closer-in" to workplaces.

Maybe Bozeman and Tahoe will keep going up?

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Originally Posted by BCMtnHound

It will be interesting to see how many WFH expats to the boonies will stay more than a year or two. A bit more obvious here in bumfuck nowhere, but I’ve seen many urban and suburban refugees head to the small town for cheaper - albeit bigger - property, partly due to money and partly due to fantasy of a perceived lifestyle. Many head back to the larger towns/smaller cities within a year or two when they realize larger houses are more expensive to heat and maintain, property (especially hobby farms) keep week + long holidays unobtainium, and the nearest small town doesn’t have the culture and amenities they realize they can’t do without. Lots of dreamers in for a rude and expensive awakening.

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So Bozeman is still fucked? Whole Foods is all I get out of this?

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Originally Posted by BCMtnHound

It will be interesting to see how many WFH expats to the boonies will stay more than a year or two. A bit more obvious here in bumfuck nowhere, but I’ve seen many urban and suburban refugees head to the small town for cheaper - albeit bigger - property, partly due to money and partly due to fantasy of a perceived lifestyle. Many head back to the larger towns/smaller cities within a year or two when they realize larger houses are more expensive to heat and maintain, property (especially hobby farms) keep week + long holidays unobtainium, and the nearest small town doesn’t have the culture and amenities they realize they can’t do without. Lots of dreamers in for a rude and expensive awakening.

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If the market takes a turn I doubt they will be in a hurry to pack up and take a big loss!

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Originally Posted by sirbumpsalot

If the market takes a turn I doubt they will be in a hurry to pack up and take a big loss!

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The ones I saw previous to this current craze was Vancouverites or other lower mainland folk moving to Nelson and similar areas. They couldn’t move back to Vancouver without a major loss, but they did move to Kelowna and the like. That draw for Costco and a major trauma hospital helped that decision as well. Not sure where the current exodus will take them, haven’t asked, but I’ve seen several properties return to the market after their owners only staying here for 2yrs or less. And of course they have increased their asking price by 30-50% from what they purchased for. I wish them luck now.

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Originally Posted by sirbumpsalot

This will be the first downtrend post-WFH era....will be interesting to see how things work out now that there is no longer a "desire" to be "closer-in" to workplaces.

Maybe Bozeman and Tahoe will keep going up?

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Possibly as that is not what i was trying to convey when I said outlying areas. Using San Diego as an example, the communities say an hours drive from downtown SD will go down in value before areas 15 minutes from down town. Outlying areas have historically corrected first and most, then condos. This is underwriting 101.

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Originally Posted by liv2ski

Possibly as that is not what i was trying to convey when I said outlying areas. Using San Diego as an example, the communities say an hours drive from downtown SD will go down in value before areas 15 minutes from down town. Outlying areas have historically corrected first and most, then condos. This is underwriting 101.

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100% - the places that really aren't that great on their own but are only popular because they're in a certain circle are always a trap.

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Originally Posted by sirbumpsalot

This will be the first downtrend post-WFH era....will be interesting to see how things work out now that there is no longer a "desire" to be "closer-in" to workplaces.

Maybe Bozeman and Tahoe will keep going up?

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South Lake Tahoe prices seem to be on their way to stabilizing (or maybe they’ll continue dropping below stable), even with low inventory:

Attachment 417483

Current trajectory would need to turn quickly for them to keep going up, so I wouldn’t bet on it.

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Originally Posted by liv2ski

Historically no, the rents do not prop up the values if people are running for the door
In fact, the rents may decline a bit depending on available inventory.
Everything gets expensive with lack of inventory and then cheaper when the buyers disappear. Just a fact of life.
Outlying areas always correct first and then the closer in areas may start to see the effects of weaker demand

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Thanks. Appreciate your perspective.

https://www.yahoo.com/finance/news/h...163652503.html

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"The housing market has peaked…everything points to a rolling over of the housing market," Zandi says. "In terms of home sales, they're falling sharply. Housing demand is coming down fast. Home price growth [will] go flat here pretty quickly; we will see [home] price declines in a significant number of markets."
Over the coming 12 months, he expects year-over-year home price growth to be 0%. If that comes to fruition, it'd mark the worst 12-month stretch since 2012. It would also be whiplash for real estate agents and brokers who've watched home prices soar 19.8% over the past year.

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Whiplash is very necessary. Holding flat would be a blessing. Without outright declines in value, it will still take years for affordability to get back to trend. Modest outright declines, like 2018, would even be ok.

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https://www.dailymail.co.uk/news/art...dly-cools.html

Friend works in automated appraisals for banks and they’re gearing up for a lot more REO’s

More gloom

The real estate buying frenzy is over

"The buyers just stopped buying," said Shauna Pendleton, an agent with Redfin in Boise, Idaho, until recently one of the hottest markets in the country. "Californication," as she called it, drove an influx of buyers from the West coast, flush with cash courtesy of the also formerly booming stock market.

Some listings now sit for weeks without even a showing, she said; like this 4-bedroom priced at $899,000; 42 days without a look-see.


https://www.axios.com/2022/05/25/the...frenzy-is-over

Attachment 417551

Boise, like Bozeman was never sustainable at the rate prices were increasing. See if/how much prices decline.

Can’t site the source, maybe something I heard on the radio but Boise now has the most overvalued property in the US. We went from 1-2 listing at >$1m within a couple miles of my house a year ago to multiple listings under. Still overpriced imo, but we’re definitely seeing a shift.

Neighbor's house here went on the market 9 days ago for a lot of money. It'll be interesting to see what happens. Realtor showing a couple the place right now but they're the first ones I've seen, they're definitely not lining up to see it so far.

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Originally Posted by Conundrum

Can’t site the source, maybe something I heard on the radio but Boise now has the most overvalued property in the US. We went from 1-2 listing at >$1m within a couple miles of my house a year ago to multiple listings under. Still overpriced imo, but we’re definitely seeing a shift.

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These guys make that claim
https://business.fau.edu/executive-e...-100/index.php
it gets widely cited in the media. They use aggregate price data and deviation from the long term price trend to determine overvalued so #99 is Honolulu, #100 Baltimore

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Originally Posted by ötzi

Neighbor's house here went on the market 9 days ago for a lot of money. It'll be interesting to see what happens. Realtor showing a couple the place right now but they're the first ones I've seen, they're definitely not lining up to see it so far.

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Roaming packs of dogs that maim deer, to be finished off with a brutal bludgeoning by their owner, really does a number on desirability of real estate.

There's certainly a shift happening. A shift back closer to normal though. Increased DOM, price drops, etc. The last two years were so abnormal that using that as a barometer is just silly. Sure, every single listing including tear downs isn't going for 50k over asking in 12 hours anymore.....that doesn't mean we are "crashing" or remotely close. We are still so far behind on inventory. Home values will still appreciate but growth rate will slow and that's perfectly fine.

^^^ I think that's a good take. And comps will be more comparable. For instance, people here were pricing at what the neighbors got per sq ft - even when their houses were in much worse condition. Hopefully we'll return to the idea that deficiencies have a cost.

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Originally Posted by Core Shot

Attachment 417551

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I'm not doing the math on the rest but 2.65 was an awesome rate if you hit that sweet spot.

Spokane prices are still way high compared to what they should be but there’s like 10x more active listings right now than I’ve seen since March 2020. Including in some pretty attractive neighborhoods where they’d be gone immediately over the last couple years.

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Originally Posted by 4matic

Friend works in automated appraisals for banks and they’re gearing up for a lot more REO’s

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I would be curious to know which type of class of owner they expect the highest rate of default? It seems like the banks were fairly conservative with lending, and most owners have such low rates that defaults for primary residences would seem low. It seems like there have to be cracks somewhere due to the massive price increases. Maybe STR's where the rents just don't make the property profitable and a ton of inventory comes on all at once?

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Originally Posted by Whiteroom_Guardian

There's certainly a shift happening. A shift back closer to normal though. Increased DOM, price drops, etc. The last two years were so abnormal that using that as a barometer is just silly. Sure, every single listing including tear downs isn't going for 50k over asking in 12 hours anymore.....that doesn't mean we are "crashing" or remotely close. We are still so far behind on inventory. Home values will still appreciate but growth rate will slow and that's perfectly fine.

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Abnormal the last two years also doesn’t mean normal. Stocks gave back a bunch why shouldn’t houses? Still go up in what time frame? Months? Years? Once psychology shifts and people sense prices dropping they’ll pull back. Just like 2019 pre-pandemic which was soft.