6 ms·

i would suspect as much. Home prices have been, as they cyclically trend to do, wildly inflated and overheated for quite some time now. Most homes command a m

i would suspect as much. Home prices have been, as they cyclically trend to do, wildly inflated and overheated for quite some time now. Most homes command a minimum of 250k no matter where you look, with many of them existing as mere flophouses converted for a few thousand dollars with the cheapest lumber yard fixtures in an offensive attempt to cash in on the puerile american practice of "flipping" properties. The market is sorely overdue for a massive "correction" to respect the near 40% unemployment in the US, widespread rioting, and crippling pandemic. Id put the counter at six months, but so far everything has defied the yield curve inversion and continued to run like a race car on nitrous. sooner or later somethings got to give.

Loughla 6y ago
I 100% agree with this. We built our home in 2009 for an even $100,000. I live 40 minutes from the nearest 'urban' center, and probably 20 minutes from the closest 'town' (less than 600 people). Now, granted, we put a massive amount of sweat equity into this home, but It's current appraisal sits at $275,000. That is just unbelievable. It's not realistic. It's completely removed from any sort of reality. I mean, we have a nice house, don't get me wrong, but it's not worth over a quarter of a million dollars. And that is every house within 20 miles of me. In the last two years our values have skyrocketed, and nobody knows why.
- doitLP 6y ago
  > it's not worth over a quarter of a million dollars What is worth a quarter million? How do you assess the value of your home?
  - Loughla 6y ago
    The home was assessed at over a quarter of a million dollars, for both taxes this year, and by an independent assessor when we refinanced. I'm saying I have a decent home, but that amount of money is unrealistic. It cost $100,000 to build, 11 years ago. I cannot be convinced it almost tripled in value, in any realistic market, in 11 years.
    - karthikb 6y ago
      What’s the value of the land and the sweat equity? You may have paid $100k and time but the buyer is paying all in currency for the finished product.
      - Loughla 6y ago
        Land is maybe 20k, 25-27k at a stretch. 15-20k in sweat equity, if I had to guess. The math just isn't there.
        carapace 6y ago
        What have comparable homes sold for in your area recently?
    - nkurz 6y ago
      I don't think you are thinking about this correctly. Have you considered the impact of compound interest? You say it cost you $100,000 plus "a massive amount of sweat equity" . I don't know what you consider massive, but let's guess at $50,000 worth. That is, if you were paying market rates at the time to professionals, how much would they have charged, plus the cost of hiring them, plus the taxes you would have paid to have the money to pay them, etc? Anyway, if we start with an actual "cost" of $150,000, you get to $250,000 with 11 years of compound interest at 5%. If we instead completely ignore your labor input, 11 years at 9% gets us from $100,000 to $250,000. Can you really not be convinced that "realistic market" might not have a 5% (or 9%) yearly increase in value? That's not to say it will always go up that much, but it doesn't seem unrealistic that it might. The bigger question of course is how we determine "value". Is $250,000 for a house today any more "realistic" than $100,000 to build it 11 years ago? Not by any objective measure. They are both just numbers, determined by how much people are willing to pay, which in turn depends on how much they have in their bank accounts, which in turn depends on how much someone is willing to pay them, which (circularly) depends on how much someone else is willing to pay for something else. There's nothing "realistic" about any particular numeric value.
      - 6y ago
- topkai22 6y ago
  2009 was near the bottom of the housing crisis in the US. You picked a really good time to build. While housing prices are likely overheated, it’s not where we were in 2007, at least adjusted for inflation. Prices are high because of stupid low interest rates, an economy that had been strong till March, and probably a few demographic trends (echo boomers finally having kids). When we pay the piper for this crisis I think we’ll see prices drop, but not at 2008 levels
- adrianN 6y ago
  Time to sell? Rent for a year or two?
- steffan 6y ago
  Part of the problem is that a quarter of a million dollars isn't worth a quarter of a million dollars any more. c.f inflation
- noarchy 6y ago
  If someone actually paid $275k for your home, then it definitely is worth $275k. But right now that value is just theoretical (maybe real for purposes of taxation, but that doesn't always reflect what a buyer will pay). The moment money changes hands, it becomes real.
quickthrowman 6y ago
I sure hope so, right now the median home price is 4.5x the median income. If that continues to increase, we’ll be creating a generation of renters captured by whoever had the ability to borrow money to purchase the inflated assets.
- titanomachy 6y ago
  4.5x sounds unbelievably amazing. In my home city it's around 16x.
  - hedora 6y ago
    16x is extreme. Silicon Valley is a bit under 10x.
    - titanomachy 6y ago
      Vancouver, Canada has sky-high home prices but is missing the high-paying jobs of the Valley. Rent isn't too bad though, so quality of life can be pretty good.
deleted 6y ago
[deleted]

Loughla 6y ago

I 100% agree with this. We built our home in 2009 for an even $100,000. I live 40 minutes from the nearest 'urban' center, and probably 20 minutes from the closest 'town' (less than 600 people). Now, granted, we put a massive amount of sweat equity into this home, but It's current appraisal sits at $275,000. That is just unbelievable. It's not realistic. It's completely removed from any sort of reality. I mean, we have a nice house, don't get me wrong, but it's not worth over a quarter of a million dollars. And that is every house within 20 miles of me. In the last two years our values have skyrocketed, and nobody knows why.

doitLP 6y ago
> it's not worth over a quarter of a million dollars What is worth a quarter million? How do you assess the value of your home?
- Loughla 6y ago
  The home was assessed at over a quarter of a million dollars, for both taxes this year, and by an independent assessor when we refinanced. I'm saying I have a decent home, but that amount of money is unrealistic. It cost $100,000 to build, 11 years ago. I cannot be convinced it almost tripled in value, in any realistic market, in 11 years.
  - karthikb 6y ago
    What’s the value of the land and the sweat equity? You may have paid $100k and time but the buyer is paying all in currency for the finished product.
    - Loughla 6y ago
      Land is maybe 20k, 25-27k at a stretch. 15-20k in sweat equity, if I had to guess. The math just isn't there.
      - carapace 6y ago
        What have comparable homes sold for in your area recently?
  - nkurz 6y ago
    I don't think you are thinking about this correctly. Have you considered the impact of compound interest? You say it cost you $100,000 plus "a massive amount of sweat equity" . I don't know what you consider massive, but let's guess at $50,000 worth. That is, if you were paying market rates at the time to professionals, how much would they have charged, plus the cost of hiring them, plus the taxes you would have paid to have the money to pay them, etc? Anyway, if we start with an actual "cost" of $150,000, you get to $250,000 with 11 years of compound interest at 5%. If we instead completely ignore your labor input, 11 years at 9% gets us from $100,000 to $250,000. Can you really not be convinced that "realistic market" might not have a 5% (or 9%) yearly increase in value? That's not to say it will always go up that much, but it doesn't seem unrealistic that it might. The bigger question of course is how we determine "value". Is $250,000 for a house today any more "realistic" than $100,000 to build it 11 years ago? Not by any objective measure. They are both just numbers, determined by how much people are willing to pay, which in turn depends on how much they have in their bank accounts, which in turn depends on how much someone is willing to pay them, which (circularly) depends on how much someone else is willing to pay for something else. There's nothing "realistic" about any particular numeric value.
    - 6y ago
topkai22 6y ago
2009 was near the bottom of the housing crisis in the US. You picked a really good time to build. While housing prices are likely overheated, it’s not where we were in 2007, at least adjusted for inflation. Prices are high because of stupid low interest rates, an economy that had been strong till March, and probably a few demographic trends (echo boomers finally having kids). When we pay the piper for this crisis I think we’ll see prices drop, but not at 2008 levels
adrianN 6y ago
Time to sell? Rent for a year or two?
steffan 6y ago
Part of the problem is that a quarter of a million dollars isn't worth a quarter of a million dollars any more. c.f inflation
noarchy 6y ago
If someone actually paid $275k for your home, then it definitely is worth $275k. But right now that value is just theoretical (maybe real for purposes of taxation, but that doesn't always reflect what a buyer will pay). The moment money changes hands, it becomes real.

quickthrowman 6y ago

I sure hope so, right now the median home price is 4.5x the median income. If that continues to increase, we’ll be creating a generation of renters captured by whoever had the ability to borrow money to purchase the inflated assets.

titanomachy 6y ago
4.5x sounds unbelievably amazing. In my home city it's around 16x.
- hedora 6y ago
  16x is extreme. Silicon Valley is a bit under 10x.
  - titanomachy 6y ago
    Vancouver, Canada has sky-high home prices but is missing the high-paying jobs of the Valley. Rent isn't too bad though, so quality of life can be pretty good.

deleted 6y ago

[deleted]