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Are Home Prices Rising Or Falling Where You Live

Bear

Well-Known Member
#1
open http://www.npr.org/2017/07/07/53578...e-prices-are-rising-or-falling-where-you-live

Home prices have finally clawed their way back to the peak of the housing bubble. That's on average nationally. The story is very different when you zoom in on different counties or cities in particular.

It's also a different picture if you adjust for inflation. A new tabulation of home price data by Harvard University's Joint Center for Housing Studies lets you do just that. You can zoom in on an interactive map to see what prices are doing in various parts of the country.

San Francisco, Nashville and Pittsburgh are among the 15 percent of housing markets around the country where prices have actually risen above their prior peaks in the mid-2000s after adjusting for inflation. Less fortunate are Cleveland, Phoenix and much of Florida, where prices are still at least 26 percent below where they were before the bubble burst.
Screen Shot 2017-07-08 at 4.54.57 PM.png
 

Roger Roger

Paid to sleep, fly for fun
#2
open http://www.npr.org/2017/07/07/53578...e-prices-are-rising-or-falling-where-you-live

Home prices have finally clawed their way back to the peak of the housing bubble. That's on average nationally. The story is very different when you zoom in on different counties or cities in particular.

It's also a different picture if you adjust for inflation. A new tabulation of home price data by Harvard University's Joint Center for Housing Studies lets you do just that. You can zoom in on an interactive map to see what prices are doing in various parts of the country.

San Francisco, Nashville and Pittsburgh are among the 15 percent of housing markets around the country where prices have actually risen above their prior peaks in the mid-2000s after adjusting for inflation. Less fortunate are Cleveland, Phoenix and much of Florida, where prices are still at least 26 percent below where they were before the bubble burst.
View attachment 39238
Wait, so we should be cheering the re-emergence of a bubble?
 

azmedic

Well-Known Member
#4
Townhouses are going for $215k+ in the MSP area which is absolutely absurd. I don't think the market can sustain these prices for long.


Sent from my iPhone using Tapatalk
 

DE727UPS

Well-Known Member
#5
Tax assessed value of my home/property just went from 665 to 900k in a year. Rural central Washington. Not sure if I should be happy or sad but I'm hoping for happy on appreciated value when I sell.
 

bike21

Stabilizer Motion
#6
The People's Republic of Boulder has forever been on an upward trajectory even during the down times. Though recent years have seen a larger spike than normal due in part to The Google building a whole freakin' campus in town. Similar reaction, not sure if ultimately good or bad news. Colorado's unemployment rate is also less than 3% but that is coming with some other issues. Can't eva win!
 

Plata

Well-Known Member
#8
The graphic is a bit misleading in the sense that the shading is based on county boundaries, and counties can be quite small in the East, but quite large in the West. Some of the western counties have a small number of towns, and all it takes is for house prices in one or two towns to be growing for it to appear that prices are going up all over the geography. There's probably better ways to represent the geographic distribution of housing price changes.

Ward's observation about ANC housing prices going down, while others see them rising unsustainably, is interesting. Based on history, the US is due to enter another recession in the next two years or so, but Alaska has already entered one due to oil prices (and the failure to develop other economic engines, like minerals). History suggests the next recession should be a mild one, but US banks have gone back to lending like drunken sailors, so maybe we will have another big correction in housing prices. I wish I had a crystal ball!
 
#9
IMHO, like the last housing bubble, this one, at least in part, is being driven by low interest rates. Yes unlike the last bubble, (Inside Job / The Big Short), the underwriting of current loans are much more sound. However this does not address what will happen with a significant rise in interest rates. When rates do go up I believe it will be difficult to sell without a loss.



The above graph shows where historic interest rates have been since the start of the 20th century. Warren Buffet has stated that the current period is unprecedented in history for interest rates to be this low. A historic norm is slightly more than 5%. The thing one needs to think about is not so much
buying the home but being able to sell later if interest rates go back to historic norms.
 
#10
, but US banks have gone back to lending like drunken sailors, so maybe we will have another big correction in housing prices. I wish I had a crystal ball!

Hey I was a drunken sailor many times over in a previous life, and I would never lend out any money :)

Been watching here in Cincinnati and I'm not quite ready to jump back in the market for a variety of reasons. However I keep saving homes to my list and seeing some pretty good movement on price cuts from originally listed price. Some swings after only a few days on the market. Not sure if they are starting out over-optimistic or the sellers are motivated by other reasons (move, pending foreclosure, estate sale....)

It has indicated to me that when I'm ready, the asking price remains a bit soft here in CIncitucky
 

CFIT99

I'm probably commenting ironically...
#11
im in Denton county, in a suburb of Dallas...only bought my house a year ago and already have realtors cold calling if i want to sell...the DFW area is insane the last few years
 
#15
Tools For Dealing With An Underwater Mortgage
Options for getting out of a home that’s worth less than what is owe on it.


http://www.debtfreecolorado.com/201...th-six-tools-for-dealing-underwater-mortgage/
No I mean like they still owe 200k but can't make the payment anymore, but refuse to sell for anything less than 250k because that's what they paid. It would sell for 200k. Rather than take the 50k loss, they take the foreclosure. It's a 50k cash loss either way, but one option is far more painful than the other.
 

Lawman

Well-Known Member
#16
Tax assessed value of my home/property just went from 665 to 900k in a year. Rural central Washington. Not sure if I should be happy or sad but I'm hoping for happy on appreciated value when I sell.
If only I could actually sell my house for what the State of Washington taxes me for it's "worth."

That said, the retail average while only about half the assessed value has gone up around 9-11% for my neighborhood. So that's a 30k dollar increase.

It's still about 20-25k short of the price it was built for in 2006, but that's not my problem since I paid 60k under that.
 
#18
In Honolulu they are up over $400k. The AVERAGE house sale price (not assessed) is $739K right now. It's absurd.
So is the average rent over 3000 a month? Because you'd need at least that to cover the mortgage and taxes.... at 20%($148,000 wtf?!) down.

And just if you were buying it to live in like normal, for the average price to have a 3k mortgage, you'd need the average income to be somewhere in the 9k a month range. Somehow I doubt that's the case.
 

BobDDuck

Island Bus Driver
#19
So is the average rent over 3000 a month? Because you'd need at least that to cover the mortgage and taxes.... at 20%($148,000 wtf?!) down.
Rent is pretty high but property tax is ridiculously low out here (which is the only thing keeping a lot of people in the houses they already own) and accessed values are lagging well behind real estate values. The house I rent an apartment in is accessed at about $900K and only pays $3,000 in property taxes a year. If it was on the market it would probably sell (in cash I bet) for more than 1.2 million. They are charging me $2,500 a month in rent for a two bedroom unit and also have a studio unit downstairs that is paying at least $1,000. They live on in the top two stories (it's built in to a hill so they actually live at a different street address). So figure they are pulling in at least $3,500 a month in rent. They own the place outright due to buying it (building it actually) 30 years ago so they are doing well, but that math doesn't work if you are purchasing a 1 million dollar house and getting that amount of rent out of it.

And yes... getting in to the market here, even as a relatively high paid professional isn't easy. The State housing authority just released their numbers for what constitutes "low income" and for a family it's $82k a year.
 

jweldon

Well-Known Member
#20
So is the average rent over 3000 a month? Because you'd need at least that to cover the mortgage and taxes.... at 20%($148,000 wtf?!) down.

And just if you were buying it to live in like normal, for the average price to have a 3k mortgage, you'd need the average income to be somewhere in the 9k a month range. Somehow I doubt that's the case.
Rent is pretty high but property tax is ridiculously low out here (which is the only thing keeping a lot of people in the houses they already own) and accessed values are lagging well behind real estate values. The house I rent an apartment in is accessed at about $900K and only pays $3,000 in property taxes a year. If it was on the market it would probably sell (in cash I bet) for more than 1.2 million. They are charging me $2,500 a month in rent for a two bedroom unit and also have a studio unit downstairs that is paying at least $1,000. They live on in the top two stories (it's built in to a hill so they actually live at a different street address). So figure they are pulling in at least $3,500 a month in rent. They own the place outright due to buying it (building it actually) 30 years ago so they are doing well, but that math doesn't work if you are purchasing a 1 million dollar house and getting that amount of rent out of it.

And yes... getting in to the market here, even as a relatively high paid professional isn't easy. The State housing authority just released their numbers for what constitutes "low income" and for a family it's $82k a year.
People speculate and bet on the appreciation and eat a small monthly payment instead of being able to cover their mortgage in high demand areas like NYC, San Francisco, LA, and Hawaii. Everyone says it cant continue forever but they keep making money...

They pull in 42 000 a year theoretically, and you said they pay around 3000 in property taxes so that knocks it down to 39 000. Let's estimate capex at around 3 000 since prices and labor is more expensive in Hawaii. So NOI is somewhere less than 36 000, which means their cap rate is a paltry 3%. However, assuming the property continues to appreciate their cash on cash when they sell will be insane.

That's also true if a family takes out an FHA loan and bought a 740 000 property at 3.5% down and 5.6% APR. Their monthly payment will be close to $4100, so lets assume they collect $3000 a month in rent. (somehow) Let's also make a fair assumption that rent increases with inflation which is 2%. Since their mortgage terms are hopefully fixed and the rent goes up (somehow) perfectly with inflation they will make $3000 dollars just from rent at year thirty. So if the house burnt to the ground and they had no insurance they would have made -$22 900 because of the down payment. However, they decide to finally sell their house and move. During the 30 years the house has appreciated 2.38% a year. Here's the magic: they only spent $22 900 after all is said and done during that 30 years, but they got the appreciation from the full value of the house. So, the house sells for 1 498 000. Which means they essentially got a return of 15% on their money.

Everyone that buys low cap rate properties is betting on appreciation. It's a pretty sweet bet when it works though.