Real Estate Crash thread

[ötzi]

Krystal's conclusion is spot on: No matter what the outcome, regular folks are getting FUKT!

It is insane that these investment firms are running around snatching up everything like they are. Yup! Our new "Slumlords" is right. But I also think she's right in that it's quickly becoming a house of cards. There's going to be a tipping point at which point the investors will panic and dump assets, and thus those first dominos shall begin to tip over.

Folks, don't get swept up in this madness. Do NOT overpay. If you feel comfortable paying X amount for a place you want to be. Sure. That's fine. But also be ok with the fact that you may end up underwater for a while too if/when things collapse. We as a country really need to stop trying to compete with these investment firms. Stop getting in these asinine bidding wars. Be brave enough to walk. I've never upped my price over initial offers when multiple people made offers. I always won. Dirt pimps just LOVE telling people that there are multiple offers so you "better make a strong offer!" It's an annoying tactic they use to get people to preemptively pump up their offers, even though they have zero clue what the other offers even were. Kinda like War Games, sometimes the only winning move is not to play. I used to love real estate. It's one of the few things I've been good at in my adult life, but screw this noise. I'm out until things calm down.

Me and Austin are like soul mates! Well we agree on this stuff at least, and it seems we've had similar experiences in real estate. I've never been afraid to make a low offer. Hell our first house, the seller literally laughed out loud at our offer. Six months later he called me.

The only way I'd spend money on real estate right now is to try to get in front of the inevitable counter-trend and maybe pick something up where the people have been fleeing from before they start of flee back home like the sparrows of Capistrano.

[liv2ski]

But Schuss and SureBitchesalot think Prop 13 sucks. What a bunch of maroons.

[Benny Profane]

Me and Austin are like soul mates! Well we agree on this stuff at least, and it seems we've had similar experiences in real estate. I've never been afraid to make a low offer. Hell our first house, the seller literally laughed out loud at our offer. Six months later he called me.

The only way I'd spend money on real estate right now is to try to get in front of the inevitable counter-trend and maybe pick something up where the people have been fleeing from before they start of flee back home like the sparrows of Capistrano.

Like Manhattan.

[Benny Profane]

Krystal's conclusion is spot on: No matter what the outcome, regular folks are getting FUKT!

It is insane that these investment firms are running around snatching up everything like they are. Yup! Our new "Slumlords" is right. But I also think she's right in that it's quickly becoming a house of cards. There's going to be a tipping point at which point the investors will panic and dump assets, and thus those first dominos shall begin to tip over.

Folks, don't get swept up in this madness. Do NOT overpay. If you feel comfortable paying X amount for a place you want to be. Sure. That's fine. But also be ok with the fact that you may end up underwater for a while too if/when things collapse. We as a country really need to stop trying to compete with these investment firms. Stop getting in these asinine bidding wars. Be brave enough to walk. I've never upped my price over initial offers when multiple people made offers. I always won. Dirt pimps just LOVE telling people that there are multiple offers so you "better make a strong offer!" It's an annoying tactic they use to get people to preemptively pump up their offers, even though they have zero clue what the other offers even were. Kinda like War Games, sometimes the only winning move is not to play. I used to love real estate. It's one of the few things I've been good at in my adult life, but screw this noise. I'm out until things calm down.

It's the late blooming by product of Obama's inaction after the housing bubble popped, and he just stood by as all the financial actors were protected, the homeowners screwed, and no new policy to prevent that again.

[Name Redacted]

Been going through the mental exercise of selling an investment property and just paying the CGs and spending the rest on home improvements to our primary residence where we plan on staying indefinitely. Would net approximately $200K after all expenses and taxes. But we would be loosing an income generating asset. I just feel like this market could be reaching its top and cashing out an investment now doesn’t really hold much risk since we wouldn’t have to move. Maybe buy another in the future if the market drops. Just sucks to pay capital gains, but I don’t really want to roll them into another over inflated property.

[Toadman]

Her name is Krystal Ball? Sounds like a stripper's name.

[MontuckyFried]

It's the late blooming by product of Obama's inaction after the housing bubble popped, and he just stood by as all the financial actors were protected, the homeowners screwed, and no new policy to prevent that again.

"ToO BIG toO FaiL!" amiright? Remember them trotting that line out in '08? Take a look at this list (which includes one of the biggest current RE investors, JPM) from 2008 of who got massive bailout $$$:
https://money.cnn.com/news/specials/...t/bankbailout/
How many of those same clowns are at again with THIS craziness?

And you better believe that the current administration (or any admin) will bail their sorry asses out once again while average homeowners get boned.

[altasnob]

Move into the investment property for two years and then you qualify for capital gains exclusion.

[Toadman]

With the Fed having ‘inflation worries’ over so many years, and Yellen getting criticism for her 2015 worries (https://www.bloomberg.com/news/artic...inflation-risk), you really think the current Fed is going to take data at face value?

And here it comes! Been seeing it in steel, aluminum and some chemicals since last December. Transportation costs are off the hook. More than 100% YOY increase on ocean container freight rates. Maybe 10% increase on domestic FTL rates (Full Truck Load).

Consumer prices rise 2.6% year-over-year in biggest jump since 2018
Consumer prices increased more than expected in March as prices began to bounce above last year's pandemic-pressured levels, showing early signs of upward price pressure during the COVID-19 recovery.

The consumer price index (CPI) from the U.S. Bureau of Labor Statistics rose 0.6% in March over February, following a 0.4% rise the month earlier. Consensus economists were looking for just a 0.5% monthly rise in March. Excluding volatile food and energy prices, the CPI was up 0.3%, also outpacing expectations for a 0.2% gain.

Over last year, the headline CPI jumped 2.6%, or the most since mid-2018. This was faster than the rise of 2.5% expected, and February's 1.7% year-over-year rise. Excluding food and energy prices, the CPI was up 1.6% over last year versus the 1.5% rise expected. Energy prices were a big contributor to both the monthly and yearly gain for the CPI, and gasoline prices specifically were up more than 9% over last month and 22.5% over last year.

[Hopeless Sinner]

It's the late blooming by product of Obama's inaction after the housing bubble popped, and he just stood by as all the financial actors were protected, the homeowners screwed, and no new policy to prevent that again.

Dodd-Frank was signed into law in July 2010 and brought sweeping reforms to the U.S. financial sector. It branched out into many of the governing regulations already in place for setting standards in the securities and financial trading markets.1 It also built several new types of protections, namely the Consumer Financial Protection Bureau (CFPB),5 which has become an important agency in helping monitor and protect the financial interests of American consumers.



DF and the CFPB has since been gutted by Trump so "Obama's inaction" is a complete misrepresentation of the facts.

[schuss]

Whelp looks like we’re getting screwed with this market. New tax assessment came in the mail yesterday. Attachment 371409

The current appraisal was done last year after we got the CO for the renovation. 270k to 448.8k in a year. Talk about over improved for the neighborhood, highest on the block now. The scary thing is it would probably sell for that amount right now which would cover everything we’ve done to the house and pay us nicely for all the labor we put in.

Any advice on challenging the assessment? Looks like our condition is rated as very good while most neighbors are average to fair. No plans to sell, good size and location for retirement.

So if it's accurate to market, what grounds do you have for challenging? Isn't that what assessments are?

Also, if there's a bunch of reassessment, tax rate SHOULD change to be less $ per thousand.
A good sample - https://www.revenue.nh.gov/mun-prop/...-tax-rates.pdf
Look at Durham NH at $27/thousand vs. Portsmouth at $14/thousand, where Portsmouth has many more services/expenses BUT 6 times the assessed value.

Prop 13 is trash because it disincents housing movement (like rent control), which leads to lower supply and higher pricing. Great if you already own property, shitty if you don't. Laws that favor those already with wealth and incentivize capital accumulation beyond basic need end up being bad for most people, as a small group will accumulate more at a lower cost basis vs. new entrants.

[Name Redacted]

Move into the investment property for two years and then you qualify for capital gains exclusion.

I wish that was an option but it isn’t. Living in a condo for two years to save ~$40k isn’t worth the amount of pain I would incur from the wife. Plus, what happens to prices in that two years?

[Conundrum]

Prop 13 is trash because it disincents housing movement (like rent control), which leads to lower supply and higher pricing.

I know we've debated property taxes and I swear I'm not trying to do that here. I'm trying understand your argument. If housing movement is disentivised, how does that affect supply and demand? If I move, I would sell my place but then buy or rent another right? My movement seems to net no additional housing. Other than death or a geographically distanced moves, supply in one locale doesn't seem to change . But, even if we're talking large geography, wouldn't my move increase demand in one place and open supply in another. What kind of geography are we talking for supply and demand? As for concentration of wealth, if property taxes are high, only wealthier can afford to live in a place. So, wouldn't that just create gentrification, not necessarily and increased supply. The only way supply is going to increase is if we build more or have less people. Not sure how increasing taxes helps there. Or is your argument that taxes get so high that the SFH is turned to multifamily to increase supply. Educate me.

[Flounder]

So if it's accurate to market, what grounds do you have for challenging? Isn't that what assessments are?

That’s what I figure. The reality is the house is over improved compared to the neighborhood. Only challenge would be who the hell would pay that when you’ve got to deal with the neighbor who collects pit bulls and who’s yard is dog crap covered dirt?

Luckily the house is just the way we like it and we will stay. I’ll see what the numbers are when we get the new tax bill in a couple of months. Since the last appraisal there are a ton of new apartment buildings in the city. Hoping a much larger tax base helps soften the blow. At least I can use that new appraisal and watch our net worth jump a couple hundred thousand.

[schuss]

I know we've debated property taxes and I swear I'm not trying to do that here. I'm trying understand your argument. If housing movement is disentivised, how does that affect supply and demand? If I move, I would sell my place but then buy or rent another right? My movement seems to net no additional housing. Other than death or a geographically distanced moves, supply in one locale doesn't seem to change . But, even if we're talking large geography, wouldn't my move increase demand in one place and open supply in another. What kind of geography are we talking for supply and demand? As for concentration of wealth, if property taxes are high, only wealthier can afford to live in a place. So, wouldn't that just create gentrification, not necessarily and increased supply. The only way supply is going to increase is if we build more or have less people. Not sure how increasing taxes helps there. Or is your argument that taxes get so high that the SFH is turned to multifamily to increase supply. Educate me.

Prop 13 means for equal properties, your taxes are lower for staying, so it creates an additional financial barrier to moving as you will pay more for the same somewhere else. If you're in a place 20 years, that becomes significant enough it's better to rent out or not move instead of sell. This constrains supply, not to mention unfairly punishes those forced to move due to employment changes vs business owners that can dictate things.
Property taxes are a function of municipal priorities, and I don't know of any community that would willingly raise to gate out people (that's more easily accomplished via pocket listings etc.)
There's a bunch of other stuff wrapped in it from a "local financial levers" standpoint as well. Like if Malibu wants to spend a ton of money to save property, they can't raise taxes to cover the cost.

[Garbowski]

Dirt pimps just LOVE telling people that there are multiple offers so you "better make a strong offer!" It's an annoying tactic they use to get people to preemptively pump up their offers, even though they have zero clue what the other offers even were.

When I bought my last house I was fed the line about "another offer" from the other agent allegedly. House was on the market for 30 days already and things were selling in 3 at the time. I dropped my price and added an escalation clause- that pissed everybody off but saved us $20k.

[Danno]

Whelp looks like we’re getting screwed with this market. New tax assessment came in the mail yesterday. Attachment 371409

The current appraisal was done last year after we got the CO for the renovation. 270k to 448.8k in a year. Talk about over improved for the neighborhood, highest on the block now. The scary thing is it would probably sell for that amount right now which would cover everything we’ve done to the house and pay us nicely for all the labor we put in.

Any advice on challenging the assessment? Looks like our condition is rated as very good while most neighbors are average to fair. No plans to sell, good size and location for retirement.

So if it's accurate to market, what grounds do you have for challenging? Isn't that what assessments are?

I have challenged my assessment every time. IME, it depends on the assessor and their approach. The previous assessor always threw a bone to the challenger, the current assessor rarely does.

As for how, the process is of course different in different places so I will only speak about here. Don't worry about whether you think their value is accurate. First off, it's supposed to represent the value at a certain point in time, here it's June 30 of the prior year, so it should NOT be the present day value. Second, the goal is (at least it is for me) to lower my taxes slightly. If I can knock off a couple of hundred bucks for two years, great. It's not to see if they got my house right. There are houses all over my town that have valuations way lower or way higher than they are truly worth; I want to be one of the former.

My jxn provides a list of comps for the two-year period in question. If there aren't enough, you can use other comps, but if there are enough, focus just on the comps for the two-year period since the last valuation (ie, the period here is from June 30 of the prior year to exactly 24 months before that). Find comps that match your house and have adjusted sales prices (they adjust the actual sale price by some factor to make it a June 30 sale price) that are lower than yours. Find reasons why your property isn't as nice or desirable as those comps. List those comps on the form and make the argument. There's no harm in trying, IMO.

[Shredhead]

^^
It’s pretty easy.
In CO there are three levels to challenge your assessment.
The first two you can do yourself, the third I chose mediation and hired a professional appraser.

[altasnob]

Re Prop 13 in CA, by capping property taxes it also gives an incentive to old people whose kids have moved out of their giant house in the cities to stay put in their giant house rather than sell and move to a smaller condo. Rather than a family living in all those giant homes in San Francisco you have retirees who are provided a financial incentive not to move. So each home is now less densely populated than it should be.

[Flounder]

I have challenged my assessment every time. IME, it depends on the assessor and their approach. The previous assessor always threw a bone to the challenger, the current assessor rarely does.

As for how, the process is of course different in different places so I will only speak about here. Don't worry about whether you think their value is accurate. First off, it's supposed to represent the value at a certain point in time, here it's June 30 of the prior year, so it should NOT be the present day value. Second, the goal is (at least it is for me) to lower my taxes slightly. If I can knock off a couple of hundred bucks for two years, great. It's not to see if they got my house right. There are houses all over my town that have valuations way lower or way higher than they are truly worth; I want to be one of the former.

My jxn provides a list of comps for the two-year period in question. If there aren't enough, you can use other comps, but if there are enough, focus just on the comps for the two-year period since the last valuation (ie, the period here is from June 30 of the prior year to exactly 24 months before that). Find comps that match your house and have adjusted sales prices (they adjust the actual sale price by some factor to make it a June 30 sale price) that are lower than yours. Find reasons why your property isn't as nice or desirable as those comps. List those comps on the form and make the argument. There's no harm in trying, IMO.

Thanks for the advice. One neighbor is a real estate agent, I’m doing some design work for them so I’ll have him pull some comps. I was successful with keeping it a 2 bedroom, they wanted to count the office as a third bedroom. I used the no built in closet to keep it as is. Can’t imagine how high it would be as a 3/2 instead of a 2/2.

[Conundrum]

Prop 13 means for equal properties, your taxes are lower for staying, so it creates an additional financial barrier to moving as you will pay more for the same somewhere else. If you're in a place 20 years, that becomes significant enough it's better to rent out or not move instead of sell. This constrains supply, not to mention unfairly punishes those forced to move due to employment changes vs business owners that can dictate things.
Property taxes are a function of municipal priorities, and I don't know of any community that would willingly raise to gate out people (that's more easily accomplished via pocket listings etc.)
There's a bunch of other stuff wrapped in it from a "local financial levers" standpoint as well. Like if Malibu wants to spend a ton of money to save property, they can't raise taxes to cover the cost.

Once again, how does supply increase if I move? I have to live somewhere. So I leave my place and move into another place. That is a net gain of zero for places for people to live.

I can appreciate most of your argument against prop 13. I just don’t grasp how prop 13 hurts the supply side. Unless your theory is the higher taxes go, the more people leave. But that then says that supply will decrease somewhere else.

As for densely populated areas, isn’t prop 13 really impacting SFH. So to increase supply, we would need to have those SFHs turned into multi-family. And given trends, don’t these larger SFHs allow multi generational situations to happen easier?

I’m really not arguing for prop 13. I’m trying to understand how it is hurting supply. If you want more supply, it seems you need to create more supply. Not just get people to move so certain others get more supply while some get higher demand.

[schuss]

Once again, how does supply increase if I move? I have to live somewhere. So I leave my place and move into another place. That is a net gain of zero for places for people to live.

I can appreciate most of your argument against prop 13. I just don’t grasp how prop 13 hurts the supply side. Unless your theory is the higher taxes go, the more people leave. But that then says that supply will decrease somewhere else.

There is more incentive to hold and rent (as your cost basis will be lower than a new entrant, giving you a pricing advantage on rents) or not move to a different place in the area.

[ColMan]

"West Virginia will now give you $12,000 to move to its state and work remotely"

https://finance.yahoo.com/news/west-...165421688.html

[skaredshtles]

"West Virginia will now give you $12,000 to move to its state and work remotely"

https://finance.yahoo.com/news/west-...165421688.html

There have GOT to be some strings...

[Conundrum]

There is more incentive to hold and rent (as your cost basis will be lower than a new entrant, giving you a pricing advantage on rents) or not move to a different place in the area.

I see. I was talking supply of places for people to live. You're talking about supply of places of people to own. I don't understand prop 13 enough but I would think if you're renting it out, you shouldn't get the tax benefits. If it's your primary, I don't see a problem with it.