How Is Real Estate Doing In Your Neck Of The Woods?
  • Dear FS Community,

    Given real estate is always local, I'm curious to know how the real estate market is doing in your area? All the data seems to be pointing towards healthy increases. The last national average report for May I believe showed a 12% YoY increase.

    San Francisco continues to be an interesting market. DataQuick has reports of a ~17% YoY increase while other reports show a 32% increase with median prices at $1 million. This definitely does not look sustainable, or real frankly. I'm thinking price increases are closer to 10% YoY in SF and I've got an upcoming post.

    Where do you see real estate going in the next 3-5 years?

    Regards,

    Sam
  • Real estate in Utah is on the upswing. I'm frantically trying to find properties because I believe in the next 3 to 5 years, it is going to increase. Most Zillow charts show an upswing in prices. Our old neighbors sold their house for about $30,000 more than the price on Zillow, so the market seems to be hot.
  • After looking hard for about a year, I just bought a house at 10% over asking price. It was an REO in rough shape, but in a great location. The listing agent said there was 11 offers. This is on the coast in the Santa Barbara area where I would estimate prices are up closer to 15% YoY.
  • I can confirm what Jeremy says about the real estate market in Utah. We recently completed a new home and the appraised value at closing was about 4% higher than our purchase price. A 4% gain in two months is pretty sweet!
  • I forgot to add, interestingly enough the appraisal on my house came out $1k over my offer price.
  • I wish I knew! :) I'm in Europe and we had no housing bubble as such burst in 2008 - in fact, prices have been on the rise despite the financial crisis. Sceptics say we have a bubble now, but they've repeated themselves for the last ten years.

    I'm searching for my first rental property in the capital of my home country and have decided to not buy anything unless it's a bargain - i.e. at least 10 % less than the typical price for similar apartments in a similar location. That way, I hope to at least not be underwater if we do in fact have a bubble - which I highly doubt.
  • Hardly anything that I can find in the Bay Area cashflows anymore and even devious flippers are having a hard time picking things up , so I'm looking outside of California completely now. I've heard that part of the reason why things are so up around here is because of the competition from hedge funds - they just buy up anything that's a 3br/2ba.

    I've investigated Ohio, Tennessee and Texas and the prices are still good there. And, according to others I've talked with, Atlanta GA seems like a hotbed of investment.

    Finally, my wilder side has been considering Detroit, but only as a "punt" investment. (For those of you that don't know, a punt is a higher-risk investment that you won't cry if you lose completely, but that if it does well, it really does well). I've already got a contact there and maybe next year, I'll go out and see it.
  • Real estate in Japan is not the best investment...

    Apart from the earthquake/radiation thing, houses are depreciating assets (worth nothing after 20 years) and the falling population means that land prices are likely to fall too due to falling demand.

    I envy people in normal real estate markets sometimes!
  • @hesole I saw charts of London prices busting through all time record highs. Scary expensive!

    @Sendaiben I thought with Abenomics, Japanese inflation is really happening now? Or has the stock market run up too soon too fast? Worrisome looking chart of the TOPIX and Nikkei.
  • @Jason Good luck in Detroit man. Probably a wise move in the long run as prices are so damn cheap there. Hardly anything is ever cashflow positive in the Bay Area from day one. Wasn't back in 2002-2003 when I bought and it isn't now. Gotta wait 2-3 years for positive cash flow I've found. But the principal values should hold up well.
  • @ayoungpro Hello to a fellow Utah'n. Utah is really a great place to live and I think the real estate reflects that.
  • @FinancialSamurai the stock market here went nuts for a while, but it flagged a bit just after I sold up in mid-May ;)

    I think the government don't know what they are doing and we'll have a major meltdown in the near- to medium-future...
  • 30% increases in price in the last 12 months here in the Central Valley CA. Complete lack of inventory makes it very difficult to invest thanks to Fannie Mae's price fixing strategy.... We had a good run 2009-2012.

    I see prices increasing another 10% but it will be hard to see it climb anymore with out the market introducing creative financing again (not good). The median price here is $170,000 and the Median income is $46,000. Average rents are about $1000.

  • @NorCalInvestor - $170,000 sounds so juicy cheap for California! Doesn't seem that bad with income at $46,000. Institutional investors have been buying this price range in droves over the past four years.
  • @FinancialSamurai - indeed! I am in Scandinavia but to venture a guess I would say we're up to record highs in my city as well. Wish I bought five years ago but then again, I had no clue what I was even going to be when I grow up five years ago, let alone where I would want to live/invest in real estate.

    I actually saw a news article about how people can't get housing loans here anymore, or at least not as easily as before - which supposedly should mean less buyers in the market. Apparently the person I'm in the process of bidding against right now did not get the memo. He is either plain rich or one of the few that could actually get a vey decent loan. Just my luck. I'll lose the bidding war for sure, but the seller should send me a thank you note for raising the price and earning him extra money ;)
  • @hesole - If it's a bidding war, then i pity the winner b/c = winner's curse of nobody but him willing to pay!

    Don't underestimate the power of Bank of Mom and Dad in home buying.

    I love Scandinavia. Was in Denmark and Finland last year trying to do research on the happiest people on Earth :)
  • @FinancialSamurai - It was great for years. I was able to purchase almost 20 individual single and multi-units all rendering 10-20% return on cash. We all got spoiled on the returns.
    Now we are looking at 4-7% ROI on cash still good but the risk of high unemployment, vacancy and capital improvements makes it a riskier investment.
  • @NorCalInvestor The mania really seems to be returning though, at least here in SF. If it continues, the fever will spread once again and you'll have your chance.

    Why folks buying didn't buy from 2009-2012 when it was more calm is beyond me. Bless the fever!
  • Here in the Raleigh area, the inventory of available homes is down dramatically versus last year. Homes in the $250k to $400k that are in good shape will often have a contract within 24 hours of listing and have multiple offers. Homes over $400k, up to $800k seem to be doing okay, but new construction in that range is hard to find and will also sell quickly. When the price gets over a million, there is still a bit of a challenge. Most buyers in that range will prefer to just custom build versus buying a resale (except in a few very key areas where land is hard to come by).
  • I just got word that our investment property appraises for ~$120,000 right now, as opposed to only $108,000 at this time last year. That is good news for me!
  • @AyoungPro big ballin! Congrats! U refinancing or something?
  • @FinancialSamurai We just closed on a refinance (3.25% for a rental property?!?!). I was mostly interested in the value because a higher value could lead to higher rents...
  • @ayoungpro You got it backwards. Higher rents lead to higher value. No tail wagging the dog!
  • @FinancialSamurai Good to know! I'm a real estate investing newbie. Time to go raise my rent...
  • In Alabama, real estate has just stabilized on price but it is still really a buyer's market. Hoping it will experience the upturn everyone else is seeing but it doesn't look like it will happen until next year.
  • @reach003 Did Alabama not fall as hard as other states during the crash? Any numbers would be great.
  • Over in the northeast house flipping is alive and well. Unlike markets in Florida and Nevada, its as if the the housing crisis never happened here. A house up the road, 2000 sf (includes finished basement) built in 1970 sold for 103k. A company gutted it and now has it listed for 210k. 210 is actually low for the area most homes 1500 sf+ go for at least 300k, so I question what is still wrong with this house. All still, it gives me time to dream of a second career flipping houses someday. You need motivation and cash, I have both so maybe not a totally crazy idea..
  • @jb2193812 - Sounds hot. But 300K is such good value compared to SF, so which cities are you talking about? When I think North East, I think expensive NYC!
  • Latest news out 6/25 - The question is: Too fast, too much, too soon??

    U.S. home prices took a major leap in April, setting a new monthly record for gains. From March to April, home price gained 2.6 percent and 2.5 percent for the top ten and top 20 U.S. markets respectively, according to the latest S&P/Case-Shiller Home Price Indices. Average prices rose 11.6 percent and 12.1 percent in April from a year ago.
    "The recovery is definitely broad based," said David Blitzer of S&P Dow Jones in a release. "The two composites showed the largest year-over-year gains in seven years."
    (Read More: Rising Home Prices Are 'Unsustainable'-Realtors )

    Atlanta, Las Vegas, Phoenix and San Francisco posted year-over-year gains of over 20 percent in April, with San Francisco leading the way at 23.9 percent. Phoenix posted 12 consecutive months of double-digit growth, as investors there continue to compete for what few distressed properties are for sale. Inventories did rise in Phoenix in May slightly, but demand is still outstripping supply, and pushing prices higher.
  • @financialsamurai - I don't think home prices are ready to crater again yet. But the 10 year is going to stall the price increases we have been seeing. The mass layoffs from the drop in refis was the beginning. I bought in at half the $/sqft from the peak and have since appreciated, but I bought because it was cheaper to buy than rent, not because I think of my home as an investment. Three charts:
    http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2013/06-2/20130624_loan1.jpg
    http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/06-2/20130624_renters.jpg
    http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/06-2/20130626_CS2.jpg
  • Real estate is on the upswing in Southern California, too. It's too bad for me since I now feel I've missed the great deals. They've been swiped by investors!
  • @little_house Do you know many people who could buy over the past four years but didn't? If so, what do you think the reasoning was?

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