4 ms·

> the main driving factor is very low interest rates and massive amounts of credit. This doesn't tell the whole story. Low interest rates don't make people off

> the main driving factor is very low interest rates and massive amounts of credit. This doesn't tell the whole story. Low interest rates don't make people offer 150k over asking while waiving all contingencies. I'm closing on a home soon and I saw this kind of stuff. I myself went 25k over with all contingencies waived on a condo in a 100 year old multifamily building. Relatively speaking, I was quite lucky to get this condo for this cheap. There's a legitimate demand here: people, like myself, who renewed a lease on a tiny apartment shortly after the pandemic started then spent a miserable year indoors. Informing each other of your meeting schedule so you aren't loud in the kitchen while your partner is presenting in a meeting. Wishing your relaxation space wasn't the same as your work space. I'm now roughly doubling the square footage of my living space, adding a garden and a patio. I'm thrilled. And yeah, I'm paying a million bucks for it.

bko 5y ago
> Low interest rates don't make people offer 150k over asking while waiving all contingencies Paying above offer always struck me as strange. In my housing market its very common as well, to the point I believe under-pricing the home is intentional. There's no reason the home should be priced considerably below the market price. Sometimes you get it wrong but homes consistently selling above ask tells you the sellers are under-pricing intentionally. The upside for the seller is that bidders enter blind bids where the top bidder could bid significantly higher than the next highest bid. I think systematic under-pricing could happen when prices increase a lot in a short period and it takes the brokers a while to adjust their pricing as the trend becomes more clear. But it could also be cultural to a market where brokers feel comfortable under-pricing homes to encourage a bidding war, but that obviously doesn't work in all markets. As for waving contingencies, that's just another form of incentive in lieu of cash.
- helen___keller 5y ago
  > There's no reason the home should be priced considerably below the market price. Partially because you comp against recent sales in the area to determine market rate, it takes a while to close so the comps you have available are usually a few months old, and the price moved a lot in a few months This happened to me multiple times. Recent sales as late as January suggested X could win this house, I put in an offer at X+15, I'm later contacted that there's an offer at X+50 and I can put another bid in if I want to one up them Of course in this example X is already over asking so you're right I think that this is done intentionally.
- jebdbdb 5y ago
  It is definitely intentional. I would disagree with the part about the bidding war. Purchasing works more like a blind auction. Everybody puts in one bid on the offer date. Often buyers agents will avoid situations that can turn into a bidding war, and I got the sense that shopping offers (by sellers) is considered bad form among agents and can lead to reputational damage. Imo widespread underpricing has more to do with getting eyeballs on Zillow, Redfin, Trulia, etc. People set list prices to show up in searches.
- hellbannedguy 5y ago
  The USA is the only country, I can think of, that allows anyone, from anywhere, to buy our land. You don't need to be a citizen of this country in order to buy our land? Just money, and a email will buy a house. The federal government could stop some of the insanity of buying a home, if they just made it a bit harder for foreigners to buy our land? Isn't the federal governments purpose to put Americans first?
  - bidirectional 5y ago
    I don't think this is unique to the US at all. As far as I'm aware most countries allow foreigners to buy land, many even give you residency if you do so. Also would this have any affect outside of places like Manhattan?
  - pjc50 5y ago
    Almost all countries allow foreign nationals (or their local subsidiary businesses) to buy land. The only change in recent years is that more ID checks are performed to reduce the extent this gets used for money laundering. You could campaign to change that, but since it goes strongly against the free market and countries like money it's unlikely to go anywhere.
  - yunohn 5y ago
    > if they just made it a bit harder for foreigners to buy our land I fully empathize with how you feel, and I see the same sentiments in various countries. But I think it’s important to not bring the immigrant straw man into this discussion, when it is easily shown that the problem is much much larger than that. Institutions and investors are the real perpetrator, not an immigrant middle class.
  - TimPC 5y ago
    Canada allows foreign ownership of property. Some provinces have an additional tax at purchase time for foreign ownership.
  - dragonwriter 5y ago
    > The USA is the only country, I can think of, that allows anyone, from anywhere, to buy our land. The only other country I've specifically looked at, Mexico, only has restrictions on non-citizens owning land near coasts or international borders, for the vast majority of the country anyone can buy land.
homero 5y ago
Low interest rates do make the monthly payment much much lower so people can pay more and still have a low payment. Someone might just compare against monthly rent vs mortgage.
TimPC 5y ago
Over asking is a misleading metric as realtors are allowed to list a house at any price they choose. Some properties are listed artificially low to get more people to view them. Since people have some sense of what a property is actually worth, they know after viewing it when an over asking offer is needed. In the same neighborhood I've seen similar properties go for $1.6 mil to $1.65 mil Canadian, one at $50K over asking and the other at $363K over asking.

bko 5y ago

> Low interest rates don't make people offer 150k over asking while waiving all contingencies Paying above offer always struck me as strange. In my housing market its very common as well, to the point I believe under-pricing the home is intentional. There's no reason the home should be priced considerably below the market price. Sometimes you get it wrong but homes consistently selling above ask tells you the sellers are under-pricing intentionally. The upside for the seller is that bidders enter blind bids where the top bidder could bid significantly higher than the next highest bid. I think systematic under-pricing could happen when prices increase a lot in a short period and it takes the brokers a while to adjust their pricing as the trend becomes more clear. But it could also be cultural to a market where brokers feel comfortable under-pricing homes to encourage a bidding war, but that obviously doesn't work in all markets. As for waving contingencies, that's just another form of incentive in lieu of cash.

helen___keller 5y ago
> There's no reason the home should be priced considerably below the market price. Partially because you comp against recent sales in the area to determine market rate, it takes a while to close so the comps you have available are usually a few months old, and the price moved a lot in a few months This happened to me multiple times. Recent sales as late as January suggested X could win this house, I put in an offer at X+15, I'm later contacted that there's an offer at X+50 and I can put another bid in if I want to one up them Of course in this example X is already over asking so you're right I think that this is done intentionally.
jebdbdb 5y ago
It is definitely intentional. I would disagree with the part about the bidding war. Purchasing works more like a blind auction. Everybody puts in one bid on the offer date. Often buyers agents will avoid situations that can turn into a bidding war, and I got the sense that shopping offers (by sellers) is considered bad form among agents and can lead to reputational damage. Imo widespread underpricing has more to do with getting eyeballs on Zillow, Redfin, Trulia, etc. People set list prices to show up in searches.
hellbannedguy 5y ago
The USA is the only country, I can think of, that allows anyone, from anywhere, to buy our land. You don't need to be a citizen of this country in order to buy our land? Just money, and a email will buy a house. The federal government could stop some of the insanity of buying a home, if they just made it a bit harder for foreigners to buy our land? Isn't the federal governments purpose to put Americans first?
- bidirectional 5y ago
  I don't think this is unique to the US at all. As far as I'm aware most countries allow foreigners to buy land, many even give you residency if you do so. Also would this have any affect outside of places like Manhattan?
- pjc50 5y ago
  Almost all countries allow foreign nationals (or their local subsidiary businesses) to buy land. The only change in recent years is that more ID checks are performed to reduce the extent this gets used for money laundering. You could campaign to change that, but since it goes strongly against the free market and countries like money it's unlikely to go anywhere.
- yunohn 5y ago
  > if they just made it a bit harder for foreigners to buy our land I fully empathize with how you feel, and I see the same sentiments in various countries. But I think it’s important to not bring the immigrant straw man into this discussion, when it is easily shown that the problem is much much larger than that. Institutions and investors are the real perpetrator, not an immigrant middle class.
- TimPC 5y ago
  Canada allows foreign ownership of property. Some provinces have an additional tax at purchase time for foreign ownership.
- dragonwriter 5y ago
  > The USA is the only country, I can think of, that allows anyone, from anywhere, to buy our land. The only other country I've specifically looked at, Mexico, only has restrictions on non-citizens owning land near coasts or international borders, for the vast majority of the country anyone can buy land.

homero 5y ago

Low interest rates do make the monthly payment much much lower so people can pay more and still have a low payment. Someone might just compare against monthly rent vs mortgage.

TimPC 5y ago

Over asking is a misleading metric as realtors are allowed to list a house at any price they choose. Some properties are listed artificially low to get more people to view them. Since people have some sense of what a property is actually worth, they know after viewing it when an over asking offer is needed. In the same neighborhood I've seen similar properties go for $1.6 mil to $1.65 mil Canadian, one at $50K over asking and the other at $363K over asking.