Housing market

[dahliaclone]

As crazy as the housing market is seemingly everywhere, the amount of new apartment buildings going up ALL OVER the Twin Cities is mind-boggling. These are the type of units that are around $1700 just for a studio that's 500 square feet. And when I say they are going up everywhere, they are everywhere. We have no idea who these people are that are moving into these places...there has to be around a 50% occupancy rate at most of this and that might be being generous.

Then there are the uber swanky condos being built like in downtown MPLS near the river and the Vikings Stadium. The CHEAPEST unit for a condo that is no more than 700 square feet is $900,000. And all the units are sold. And it's a massive building. This also blows our minds...who is moving into these places at that price? Turns out a lot of the buyers are retirees that want to be downtown now.

 

[CloniesForLife]

As crazy as the housing market is seemingly everywhere, the amount of new apartment buildings going up ALL OVER the Twin Cities is mind-boggling. These are the type of units that are around $1700 just for a studio that's 500 square feet. And when I say they are going up everywhere, they are everywhere. We have no idea who these people are that are moving into these places...there has to be around a 50% occupancy rate at most of this and that might be being generous.

Then there are the uber swanky condos being built like in downtown MPLS near the river and the Vikings Stadium. The CHEAPEST unit for a condo that is no more than 700 square feet is $900,000. And all the units are sold. And it's a massive building. This also blows our minds...who is moving into these places at that price? Turns out a lot of the buyers are retirees that want to be downtown now.

I always wonder that same thing about all of those apartment buildings. I have to imagine we are getting close to a point where there are too many of those. The $ per sqft is insane.

 

[Sigmapolis]

If it was 2007 I would say "Lawn/Landscaping Service" would be an automatic green light.

No skin in the game American Dream home purchase.

See I never sold loans. I sold the dream.

I am just going to imagine you as Matthew McConaughey's character from The Wolf of Wall Street from now on.

 

[Sigmapolis]

I am terrified we are in something of a phugoid cycle with housing markets.

Before 2007 = too much building and too loose of lending standards, supply outstrips demand, prices crash

2009 to before COVID = too little building, demand outstrips supply, but luckily things moved slowly enough and there was enough excess inventory leftover that nothing crazy happened

COVID to now = very little building, demand WAY outstrips supply with COVID, lower interest rates, and looser lending standards, prices go to the moon, cats and dogs living together, mass hysteria

Future = glut of building in response to these high prices eventually outstrip demand, the market never really finding a happy equilibrium, and the whole 10-15 year cycle starts again

 

[wxman1]

Might be getting closer to moving than we anticipated. A house we are very interested in has been sitting for close to two weeks now. We are working to get our ducks in a row and no hard feelings if we don't get it. Meeting with the FSBO office tomorrow get a better idea on that process for our current home.

 

[BCClone]

Aging in place is an interesting change too.

My neighborhood has homes 3500 sq ft on up (and up)

Looking out my front door I see a retired man living alone, kids are gone to the left, snowbirds to my right, kids off to college, etc.

Instead of downsizing they are aging in place.

If they finish the basement of a 3500 square foot home, that is putting 6500 sq ft plus of useable space. Those are some large homes. I think there are only a couple 3500 sq ft houses in the town of 2000 I live in, it that.

 

[SCNCY]

I am terrified we are in something of a phugoid cycle with housing markets.

Before 2007 = too much building and too loose of lending standards, supply outstrips demand, prices crash

2009 to before COVID = too little building, demand outstrips supply, but luckily things moved slowly enough and there was enough excess inventory leftover that nothing crazy happened

COVID to now = very little building, demand WAY outstrips supply with COVID, lower interest rates, and looser lending standards, prices go to the moon, cats and dogs living together, mass hysteria

Future = glut of building in response to these high prices eventually outstrip demand, the market never really finding a happy equilibrium, and the whole 10-15 year cycle starts again

I'll add to the future. What has me worried is that due to our slow population growth as a nation, I fear there will be a lot of inventory available once the boomer generation begins to pass away and/or moves in to retirement communities/assisted living. So basically, everyone who has purchased a house a house will probably not get the same return on their home due to lots of inventory in 10-20 years.

 

[Sigmapolis]

I'll add to the future. What has me worried is that due to our slow population growth as a nation, I fear there will be a lot of inventory available once the boomer generation begins to pass away and/or moves in to retirement communities/assisted living. So basically, everyone who has purchased a house a house will probably not get the same return on their home due to lots of inventory in 10-20 years.

Goodness knows their financial planning is probably assuming (explicitly or implicitly) a 10%+ return on those properties they can sell (in total or in part or rent out) in order to finance that retirement.

 

[ISUCyclones2015]

I honestly could care less if people's homes don't grow in value. Everyone wants to be like their parents where they bought a house for $50k in 1987 and now it's worth $600k.

**** them. I just want to buy a house. Went to an open house the other day, walked in and they told me they already had multiple cash offers over asking. Turned around and walked out.

I ain't competing with that nonsense right now. It's so dumb.

 

[BCClone]

Goodness knows their financial planning is probably assuming (explicitly or implicitly) a 10%+ return on those properties they can sell (in total or in part or rent out) in order to finance that retirement.

Why you don’t factor a residence into your net worth or financial planning. You gotta live somewhere so just pay it off and forget about the value.

 

[dahliaclone]

I honestly could care less if people's homes don't grow in value. Everyone wants to be like their parents where they bought a house for $50k in 1987 and now it's worth $600k.

**** them. I just want to buy a house. Went to an open house the other day, walked in and they told me they already had multiple cash offers over asking. Turned around and walked out.

I ain't competing with that nonsense right now. It's so dumb.

It's so hard. I feel that frustration.

 

[MJ29]

I honestly could care less if people's homes don't grow in value. Everyone wants to be like their parents where they bought a house for $50k in 1987 and now it's worth $600k.

**** them. I just want to buy a house. Went to an open house the other day, walked in and they told me they already had multiple cash offers over asking. Turned around and walked out.

I ain't competing with that nonsense right now. It's so dumb.

I feel this. We would like to buy a larger house and had hoped to this year. But the market makes that look not possible. I have no desire to overpay. We're waiting for now. Hopefully next year things will look better.

 

[ISUCyclones2015]

It's so hard. I feel that frustration.

I feel this. We would like to buy a larger house and had hoped to this year. But the market makes that look not possible. I have no desire to overpay. We're waiting for now. Hopefully next year things will look better.

Yea I might end up moving to another major city and live with a friend or two as apartment prices went down for the most part since everyone wanted more space. I was planning on moving last year or buying a house and the pandemic turned that upside down. Ah well.

 

[Sigmapolis]

I feel this. We would like to buy a larger house and had hoped to this year. But the market makes that look not possible. I have no desire to overpay. We're waiting for now. Hopefully next year things will look better.

Building on/renovating is underrated in this situation.

Seemed like every five years growing up my father was like "we need a bigger house" and he'd look into buying a new one and moving and be like "nah" and kept adding rooms/features on.

He was eventually satisfied, and then he stayed in that house the rest of his life.

 

[MJ29]

Building on/renovating is underrated in this situation.

Seemed like every five years growing up my father was like "we need a bigger house" and he'd look into buying a new one and moving and be like "nah" and kept adding rooms/features on.

He was eventually satisfied, and then he stayed in that house the rest of his life.

I should have added that we're currently in a townhouse, so our hopes are not just for more space but also for no more shared walls and no HOA drama.

 

[simply1]

I should have added that we're currently in a townhouse, so our hopes are not just for more space but also for no more shared walls and no HOA drama.

Just buy the one next to you and knock down some walls.

 

[Dr.bannedman]

Ok without going into the cave…. There is a "group of people" that thinks inflation or hyperinflation are going to hit. And your money is safer in properties instead of the stock market and or savings account?

 

[Sigmapolis]

Ok without going into the cave…. There is a political party that thinks inflation or hyperinflation are going to hit. And your money is safer in properties instead of the stock market and or savings account?

Expectations of inflation always lead to the “flight to the real” — real estate, commodities, and land, things with inherent value because of what they are known to produce rather than what they might theoretically produce in the future.

 

[usedcarguy]

Ok without going into the cave…. There is a "group of people" that thinks inflation or hyperinflation are going to hit. And your money is safer in properties instead of the stock market and or savings account?

Generally speaking, yes. Look at our current transitory environment as an example. When a 2x4 goes from $2 to $9, an existing home just became a lot more valuable because of the cost to replicate. Now imagine that dollar sitting in the bank. If you want a 2x4, that dollar just lost 75-80% of it's value.

That's not to say there won't be SOME winners in the stock market, but in that environment, higher prices are usually not able to be passed along to the consumer, which means thinner margins and lower (or no) profits. Stocks become worth less.

Sigmapolis calls it a "flight to the real." I call it "owning things you can touch and feel." In that environment, the main goal is preservation of capital. To do so, paper gains must exceed currency erosion. Cash in the bank has always had a certain level of erosion. But it picks up speed during such periods of high inflation. So if you're going to be in the stock market, own stocks that invest in real estate, oil, gold, etc.

 

[KnappShack]

Generally speaking, yes. Look at our current transitory environment as an example. When a 2x4 goes from $2 to $9, an existing home just became a lot more valuable because of the cost to replicate. Now imagine that dollar sitting in the bank. If you want a 2x4, that dollar just lost 75-80% of it's value.

That's not to say there won't be SOME winners in the stock market, but in that environment, higher prices are usually not able to be passed along to the consumer, which means thinner margins and lower (or no) profits. Stocks become worth less.

Sigmapolis calls it a "flight to the real." I call it "owning things you can touch and feel." In that environment, the main goal is preservation of capital. To do so, paper gains must exceed currency erosion. Cash in the bank has always had a certain level of erosion. But it picks up speed during such periods of high inflation. So if you're going to be in the stock market, own stocks that invest in real estate, oil, gold, etc.

Time to put in a call to William Devane