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It's become basically impossible to buy a house as a normal person, even on a higher tech salary. In most markets around the US now, the expectation is that bu

It's become basically impossible to buy a house as a normal person, even on a higher tech salary. In most markets around the US now, the expectation is that buyers will waive inspection requirements, make an offer as all-cash (e.g. pre-approved financing), with no contingencies (e.g. not based on sale of their previous home). I'm currently trying to buy a different house, my older sister just bought a different farm, we both have had a horrible experience. My sister had multiple properties where her bid was beat out by someone offering $100k+ over ask, all-cash, mostly REITs and other types of corporate investors. This wasn't even in a city (farm obviously). I'm trying to find both a house and a place to rent, because my realtor/broker has advised me that I need to rent for at least a few months while I sell my existing house so I can buy with no contingencies, or I'll never get under contract. I finally found a proper spot for us to rent, was supposed to be available April 1st and was accepting leases starting March 15th according to the listing. Was just informed yesterday that the owner has already got it under application and has four other renters waiting in the wings. This market is ridiculous if you actually need a place to live, and it's not even a matter of income. I'm in the top 1% of earners overall in the US, and I can't even close the deal on a place to live. I've had my current house for a bit over ten years, and it makes me almost want to give up and not move, although I must for family reasons. When I look into it, most of the properties being swept under me (and others) aren't even being bought by people, they're being bought by REITs or other investment vehicles, mostly by foreign money. You've also got companies like OpenDoor and Zillow scooping even high-earners trying to buy a place to live.

diob 5y ago
For real. I bought my first house a few years ago. If I hadn't, I'd be fucked. My friends who are double income but not tech are trying to buy a home now. Same experience as you. Cash offers always arrive and beat them. I don't know how this ends but it's not going to be tenable for many folks to "live" in the USA as it stands.
- tristor 5y ago
  It's also creating a situation where the actual quality/value of properties for price is completely out of whack. There are large swaths of the country where low-grade cookie cutter houses in the suburbs that are legitimately worth maybe $350k at the current inflation rate are asking for $850k+ and generally selling $100k+ over ask. I have a $1.25M budget for a house and I can't find anything that's not a trash heap I can afford, and I'm not even looking in a coastal area, this isn't the legendary market in California, this is in the middle of the US.
  - asdff 5y ago
    It astounds me that more homes weren't wiped out from the Northridge earthquake. A lot of the housing stock in California in particular is like rotting toothpicks on eroding sand for a foundation. At least the homes generally lack basements so they will only fall a few feet off the posts. This particular reddit users is a contractor that posts their typical finds from structural inspections. People are paying between 800k-5m for the homes featured, generally: https://old.reddit.com/user/DMAS1638/submitted/ https://old.reddit.com/user/DMAS1638/submitted/ Where you see winters homes are generally even in worse shape. Basements are leaking and eroding your foundation. Roofs are leaking and rotting your studs. Poor insulation is costing you a lot more money than in California. Chances are your water mains and sewer situation, both from your parcel as well as the municipal lines on the street, are all approaching end of life. Right as climate change brings heavier rains and flooding that stresses infrastructure where there isn't money as it is to maintain it even for old climate projections.
    - tristor 5y ago
      It's a real concern of mine and it's driving me towards considering building a custom home, at this point it's almost cheaper to do, especially since much of the work I can do myself and already have the necessary skills and tools. It's really and truly absurd what people are being expected to pay in comparison to what they get... I feel like most of the houses in the US are actually unsafe to live in because they don't care in construction about efficiency, indoor air quality, or mitigating common environmental concerns in those areas like radon gas. The minimal building codes in the US are truly obscene, and yet these slapdash houses are now priced for 3-4x what they are actually "worth" given the inflation rate. I have a 5 page document of bullet points making simple asks/requirements for a new home build, and most of them are focused on safety, reliability, and efficiency, and none of them would be done by default by any builder in the US, most are required by law in Europe. It's kind of nuts.
- jimt1234 5y ago
  I'm really curious about opinions regarding "how this ends..." Seems to me that, if current trends continue, home ownership will basically become extinct; everyone will become renters. Home ownership will take the same path as music over the last 20 years, where we used to "own" music (CDs), now we just "rent" music through streaming services like Spotify. But that's just my 2-cents. I'm curious about others' thoughts.
  - allturtles 5y ago
    I don't see the analogy. I still own lots of music and don't rent it at all (unless you count listening to the radio). It hasn't gotten any more expensive to own music, either, digital tracks and CDs are still readily available and inexpensive.
    - HWR_14 5y ago
      The analogy imply that things are really good! The price of renting is so low, that even holding the price of purchasing constant people don't think it's enough savings to bother purchasing. People get to experience a wide variety of things, because the commitment is low. Multiple competing services aim to make consuming music (or housing) very easy. The real analogy is furniture rentals for low income people. Paying 10x what something is worth for low quality alternatives and an inability to escape a cycle of being stuck renting when people want to buy.
    - disqard 5y ago
      I'm like you with music, but I feel obliged to point out that folks like us are outliers today. So the GP is correct in the sense that the majority of things are moving from ownership -> renting (though there'll always exist some die-hard holdouts).
      - allturtles 5y ago
        Maybe, but economically music rental is nothing like housing rental. No one is renting music because they are unable to buy it or can't afford to.
- antihero 5y ago
  It ends with all homes being controlled and rents skyrocketing because they can make it as artificially scarce as they like and then god knows, squatting?
  - mellavora 5y ago
    Sounds like Barcelona today.
- petra 5y ago
  It's not just in the USA. It's a global phenomena. So on the one hand you've unaffordable homes/apartments, and on the other automation coming at full speed. So much uncertainty and insecurity. I'm sure civil unrest is coming.
  - deleted 5y ago
    [deleted]
agumonkey 5y ago
I wonder what would happen if it caused a large enough vanlife bubble.
- ketzo 5y ago
  I’m truly not trying to be rude or snarky, but there are a massive number of people living out of cars/RVs/vans in California already. I don’t have a source for this, but I’ve lived in LA and the Bay over the last 3 years. You just gotta drive around. The Instagram accounts with the $90k tricked-out sprinter vans are a vanishingly small fraction of that. The “bubble” you’re describing is California’s homelessness crisis.
  - agumonkey 5y ago
    No worries mate. First I knew there was a homeless crysis, and the crazy housing (students living in cars) and quite a few vanlifer, but not the real extent (instragram and youtube are bad measures indeed). Second, I meant a larger bubble, something that would pull the rug under all the investors buying land and homes thinking people will just eat the costs.
- stevenwoo 5y ago
  The book Nomadland covers the roaming vanlife pre 2017 that was supplying a lot of seasonal workers to Amazon warehouses, forest service employees and farm workers. (recruiters for all those places targeted people living vanlife who could move and live close to the place of work.) There are several streets I commuted on in the peninsula area of San Jose/San Francisco where all of the parking is used by people living in cars and RVs since 2005 at least.
  - agumonkey 5y ago
    oh, I saw there was a movie but didn't know it was based on real life ..
    - stevenwoo 5y ago
hourislate 5y ago
> My sister had multiple properties where her bid was beat out by someone offering $100k+ over ask This really isn't bad, consider Toronto, Canada where house that's over 100 years old (tear downs) cost well over 1 million and increase in value by over $2000 a week, yeah you heard that right. There are houses outside the city (almost anywhere in Southern Ontario)that were anywhere from 200k -400k pre pandemic that are now approaching 1-2 million. I have seen 50 year old 1200 sq/ft Condos in Toronto go from 300k pre pandemic to now 800k. I believe by the end of this year the average price of a house in Toronto Canada will be approaching 1.5 million plus and is probably on a trajectory of 3-5 million in the next 5-10 years. Before you say it can't keep going, it's been on this path for the last 15 years and is showing no sign of letting up. Governments are bankrupt and can't raise interest rates meaningfully ever again.
- tristor 5y ago
  I'm not sure you understand what I meant by someone offering $100k+ over ask. In the current market properties generally get listed and then are under contract in under 72 hours, which means in the market you're describing in GTA this would be like someone listening a property for $1.5M, expecting it to increase in value by (let's be generous) $10k in the 72 hours it takes to sell, and the bidders offer $1.7-$1.8M for that property. It's hard to express how much importance is also being put on these offers having NO clauses and being all-cash. It's just a straight, NSA cash offer, which is something investors can do with hedge fund / foreign money laundering capital, that someone who actually has to live in the place cannot. Personally, I will NEVER waive an inspection because I don't want my family's health put at risk.
  - wnolens 5y ago
    I think he's implying that it means those houses are underpriced, to be snapped up at 100k over asking so easily. By comparison, a GTA home with a sale price of 1.5M regularly sells for 1.5-1.6. But last year it would have only cost 1.2M (not joking, I've been watching that market for about 3 years). In Toronto, real estate is religion. It's how a significant fraction of the population accrues wealth. And owning a home is held as the highest ideal. Also I agree, I would never waive an inspection.. but right now that's congruent with saying "I never want to buy a home".
echelon 5y ago
> This market is ridiculous if you actually need a place to live, and it's not even a matter of income. The US needs to make a policy decision: are houses investments or a way to nurture and grow the lower and middle class? If it's the former, they can use tax policies to encourage the desired behavior. Tax every residential home (single family or condominium) at 10-30% of its total value per year, regardless of who owns it. Give a complete write off for your first home. Maybe give a partial write off for your second home. Make owners bear the cost of appraisals, and if appraisals aren't available, tax them at the most expensive 90th percentile. But of course maybe the US decides homes are investments. Great for the wealthy, but the lower and middle classes are really going to get hurt. Birth rates will slip even further.
- conductr 5y ago
  > But of course maybe the US decides homes are investments They have. By not deciding, they have decided. It would be incredibly harmful to reverse course now. Typical US policy is to get backed into a corner until doing the right & obvious thing is incredibly difficult and practically impossible.
  - echelon 5y ago
    They're also welcome to change this decision at any time if enough of the electorate demands it, or if it becomes obvious it will lead to impacts to the policy stakeholders.
    - conductr 5y ago
      But we all know not to hold our breath for that to happen right
- maerF0x0 5y ago
  > The US needs to make a policy decision: are houses investments or a way to nurture and grow the lower and middle class? They already have. home buyer loans are backed by the government. You can write off loan interest. Investors pay taxes on income from the investment (net rent and capital gains) ... Also just like in education space the more the government subsidizes the pricing, the more it gets inflated. So more incentives will just lead to more demand and higher prices. What we really need is more supply and elasticity. More houses, and more people willing to say "F--- this I'm moving to CheapTown"
buscoquadnary 5y ago
> It's become basically impossible to buy a house as a normal person, even on a higher tech salary. In most markets around the US now, the expectation is that buyers will waive inspection requirements, make an offer as all-cash (e.g. pre-approved financing), with no contingencies (e.g. not based on sale of their previous home). In some places that may be true, but I was able to get a home last January on a single relatively moderate-high tech salary, I have a friend that signed for a home on a single person decent salary as well near me, and my next door neighbors again single relatively decent tech salary just bought a new home elsewhere. You may be right about places in like LA or Toronto or NYC, but to generalize that everywhere is a little absurd. I know that the market I fled in UT was that way, and things are getting pricier here in the neighborhood that I am living in, but we are definitely in the middle of a crazy bubble right now; however it won't last forever, things are going to pop eventually. There are good affordable places to live even if they aren't in CA. Much of the Midwest is great, I think part of the bump we are seeing is rise of remote work exacerbated an already existing bubble brought about by government subsidization as it allowed tech salaries to be redistributed geographically. I do agree that part of the problem is large investment firms purchasing housing as an investment and an article the other day on here pointed out how they are able to take advantage of government subsidies to purchase more homes, but a bubble can't last forever it will pop, and I feel like the popping is going to come soon.
- cmiles74 5y ago
  It's just more anecdata but I live in Western MA and this is exactly the situation we have out here: people are being pressured to waive inspection and to offer in cash and without contingencies. Honestly, it seems crazy risky to me to buy a home under those terms and I suspect that regular people simply end up renting.
dymk 5y ago
> In most markets around the US now Do you actually have any evidence this is true in "most" markets? It seems like only in a few markets around highly-desirable cities is this true. Farms don't sound like they're going to be representative of the types of housing that most people are looking for. I'm 45 minutes south of Seattle and I purchased a large house with a backyard, recent-ish construction, no contingencies waived, for less than what a 500sqft loft is going for in Seattle.
- bluGill 5y ago
  Farms are also what investors are looking for, at least the types of farms this person seems to be talking about. "Farm" the land for 10-20 years, and then put in a development as the city grows out. These investors are betting that the land will be worth a lot more in a few years. I put farm in quotes because they are intentionally mining the land of all long term fertility - not a problem as it won't be farmed in a few years anyway, but if you intended to farm for more than 10 years then proper care for the land will ensure better profits of the wrong run.
  - rcpt 5y ago
    And on top of that farms get all kinds of tax advantages on top of real estate gets. There's a reason Bill Gates is the nation's biggest farmer.
    - nomel 5y ago
      This explains why a half assed, poorly maintained, corn crop would randomly pop up in a lot between commercial buildings, across from where I used to live.
- ejb999 5y ago
  I live in a rural area (relatively speaking - town of about 1000 people) - around me if you don't show up to look at a house, ready to buy, and with no contingencies - you are not going to get a house. I know many folks near me who have listed their house, had 40 people show up the first day (open house) and sold it the next day, for cash, for 20% over the asking price - around me, those stories are very common. I study the RE market in several places that I am connected to every day - I watch houses come on the market, and are under deposit within days. I feel really bad for young people looking to buy their first place (including my kids) - they can't pay cash, and they are on a budget - they have almost zero real options other than to continue to rent and wait for a RE crash. IMO, it's coming, but who knows when.
conductr 5y ago
I find it silly that appraisal waivers are the norm now. It's like saying, "yes, I know I'm going to overpay for this house" before any negotiation even takes place
- hackerfromthefu 5y ago
  Imagine another buyer is in the identical situation to you, and you want to be the one that is selected to get the house. Now image you missed out on ten houses you wanted to buy before this one, and are exhausted by all the effort.
maerF0x0 5y ago
> It's become basically impossible to buy a house as a normal person, even on a higher tech salary. In the highest demand cities. Move somewhere that is either 1) Building a crap ton or 2) in lower demand
- johnny_canuck 5y ago
  Calgary (albeit Canada in this case, but [Canada is just as bad if not worse than the US with regards to housing](https://www.cbc.ca/news/business/crea-housing-december-1.6317503 https://www.cbc.ca/news/business/crea-housing-december-1.631...) is a great example of a city like this. They aren't landlocked and so they can expand as they want. Also a decent sized city, and world class skiing within an hours drive. My gut tells me people will then complain that the housing market in places like this are not worth buying into as houses are only increasing at the cost of inflation.
  - acchow 5y ago
    Housing market in places like this are not worth buying because it regularly drops to -20C in the winter here and the economy is heavily reliant on one industry (oil) so even if you work in tech, you will dramatically feel the ebbs and tides of oil prices in the community around you
    - Izikiel43 5y ago
      > because it regularly drops to -20C Everywhere in Canada but Vancouver/Victoria have -20C in winter. > the economy is heavily reliant on one industry (oil) This is the real issue.
      - acchow 5y ago
        > Everywhere in Canada but Vancouver/Victoria have -20C in winter. But it only happens for a couple days a year in Southern Ontario, even less common near a Great Lake
  - moistly 5y ago
siruncledrew 5y ago
> "In most markets around the US now, the expectation is that buyers will waive inspection requirements, make an offer as all-cash (e.g. pre-approved financing), with no contingencies (e.g. not based on sale of their previous home)." It's ridiculous trying to buy a house now is like it's buying from the Louis Vuitton store or trying to get into a fancy club - especially when the "thing" is a normal-ass house in the suburbs.
ren_engineer 5y ago
the last 2 years were the biggest wealth transfer in human history and a large chunk of the population begged the government to do it to them
david38 5y ago
Not at all. On a tech salary I see people buy homes all the time in Silicon Valley.
lost_soul 5y ago
3 things I don't hear much about: * Plenty of places in the Midwest (Arkansas and Kansas, for example) are depopulating. Affordable real estate exists there - https://www.arkansasonline.com/news/2021/oct/08/populations-decline-a-redistricting-worry/ https://www.arkansasonline.com/news/2021/oct/08/populations-... * Mobile homes seem a not-great-but-doable alternative. Still money to be made, particularly if they have a "tiny home" vibe. * Multi-generational mortgages. Again not great, but not everyone has access to $1-2MM.
- deleted 5y ago
  [deleted]
- tristor 5y ago
  > Multi-generational mortgages. Again not great, but not everyone has access to $1-2MM. This sounds like literal debt slavery. I'm not sure this is even legal in the United States, and if it is, it shouldn't be. This is a type of financing that cannot be described in any other terms than being predatorily usurious. I imagine you are getting downvoted because other users believe that you are proposing these as viable options. Mobile homes are not constructed to even the horrid minimal building codes that a free-standing structure must meet, so don't even remotely qualify as "efficient, reliable, and safe", and I've already said my piece about multi-generational mortgages. So, why not the Midwest? I actually grew up in the Midwest and have nothing against it, in point of fact. I think a lot more people should move to the Midwest and that it has a lot to offer. For me, particularly, I am moving locations for family reasons, so the location I move to isn't so much my choice. If I had my choice, I'd actually really enjoy some places in the Midwest, in fact one of my favorite cities is KCMO and I also really enjoy parts of Arkansas. The reality though, is even in the Midwest the places that are actually nice to live and have real broadband Internet service cost quite a bit, maybe not $1M, but at least $450-500k for a decent house.
steelstraw 5y ago
The article says that only accounts for 1 in 7 homes though. I don't get how people are still buying houses at these prices. Are they paying beyond their means? Wiping out their savings? Or what?
- hackerfromthefu 5y ago
  Pricing and other buying behaviour is set at the margins
seneca 5y ago
This doesn't mirror my experience looking at housing over the last year in a major metro. Houses are going quickly and for maybe 5 to 10 percent over asking, but that's about it. You must be in an abnormally hot market. That sounds pretty awful.
acchow 5y ago
> You've also got companies like OpenDoor and Zillow scooping even high-earners trying to buy a place to live. Zillow’s home-buying program called “Zillow Offers” has been shut down. They overpaid and had $400 million losses in 3 months https://www.nytimes.com/2021/11/02/business/zillow-q3-earnings-home-flipping-ibuying.html https://www.nytimes.com/2021/11/02/business/zillow-q3-earnin...
- tristor 5y ago
  Yes, and in the interim, their behavior overpaying worsened the housing crisis and further inflated the assets in the markets they operated in. They absolutely did (and continue to) contribute to the problem.
  - acchow 5y ago
    Barely a drop in the bucket. But they did incur losses and are offloading their properties at losses. So wherever they did bid up properties, they are now providing discounts.
deleted 5y ago
[deleted]
fillskills 5y ago
Very true. We have faced this and we know friends across different cities facing the same issue. Houses in previously affordable neighborhoods are so expensive that even with 2 tech salaries people are barely able to afford. This is great for people who already have home whose prices have doubled but I cant imagine how anyone is able to afford a home let alone good homes near good schools (this may be specific to the US). I am personally really hoping for a real estate correction.

diob 5y ago

For real. I bought my first house a few years ago. If I hadn't, I'd be fucked. My friends who are double income but not tech are trying to buy a home now. Same experience as you. Cash offers always arrive and beat them. I don't know how this ends but it's not going to be tenable for many folks to "live" in the USA as it stands.

tristor 5y ago
It's also creating a situation where the actual quality/value of properties for price is completely out of whack. There are large swaths of the country where low-grade cookie cutter houses in the suburbs that are legitimately worth maybe $350k at the current inflation rate are asking for $850k+ and generally selling $100k+ over ask. I have a $1.25M budget for a house and I can't find anything that's not a trash heap I can afford, and I'm not even looking in a coastal area, this isn't the legendary market in California, this is in the middle of the US.
- asdff 5y ago
  It astounds me that more homes weren't wiped out from the Northridge earthquake. A lot of the housing stock in California in particular is like rotting toothpicks on eroding sand for a foundation. At least the homes generally lack basements so they will only fall a few feet off the posts. This particular reddit users is a contractor that posts their typical finds from structural inspections. People are paying between 800k-5m for the homes featured, generally: https://old.reddit.com/user/DMAS1638/submitted/ https://old.reddit.com/user/DMAS1638/submitted/ Where you see winters homes are generally even in worse shape. Basements are leaking and eroding your foundation. Roofs are leaking and rotting your studs. Poor insulation is costing you a lot more money than in California. Chances are your water mains and sewer situation, both from your parcel as well as the municipal lines on the street, are all approaching end of life. Right as climate change brings heavier rains and flooding that stresses infrastructure where there isn't money as it is to maintain it even for old climate projections.
  - tristor 5y ago
    It's a real concern of mine and it's driving me towards considering building a custom home, at this point it's almost cheaper to do, especially since much of the work I can do myself and already have the necessary skills and tools. It's really and truly absurd what people are being expected to pay in comparison to what they get... I feel like most of the houses in the US are actually unsafe to live in because they don't care in construction about efficiency, indoor air quality, or mitigating common environmental concerns in those areas like radon gas. The minimal building codes in the US are truly obscene, and yet these slapdash houses are now priced for 3-4x what they are actually "worth" given the inflation rate. I have a 5 page document of bullet points making simple asks/requirements for a new home build, and most of them are focused on safety, reliability, and efficiency, and none of them would be done by default by any builder in the US, most are required by law in Europe. It's kind of nuts.
jimt1234 5y ago
I'm really curious about opinions regarding "how this ends..." Seems to me that, if current trends continue, home ownership will basically become extinct; everyone will become renters. Home ownership will take the same path as music over the last 20 years, where we used to "own" music (CDs), now we just "rent" music through streaming services like Spotify. But that's just my 2-cents. I'm curious about others' thoughts.
- allturtles 5y ago
  I don't see the analogy. I still own lots of music and don't rent it at all (unless you count listening to the radio). It hasn't gotten any more expensive to own music, either, digital tracks and CDs are still readily available and inexpensive.
  - HWR_14 5y ago
    The analogy imply that things are really good! The price of renting is so low, that even holding the price of purchasing constant people don't think it's enough savings to bother purchasing. People get to experience a wide variety of things, because the commitment is low. Multiple competing services aim to make consuming music (or housing) very easy. The real analogy is furniture rentals for low income people. Paying 10x what something is worth for low quality alternatives and an inability to escape a cycle of being stuck renting when people want to buy.
  - disqard 5y ago
    I'm like you with music, but I feel obliged to point out that folks like us are outliers today. So the GP is correct in the sense that the majority of things are moving from ownership -> renting (though there'll always exist some die-hard holdouts).
    - allturtles 5y ago
      Maybe, but economically music rental is nothing like housing rental. No one is renting music because they are unable to buy it or can't afford to.
antihero 5y ago
It ends with all homes being controlled and rents skyrocketing because they can make it as artificially scarce as they like and then god knows, squatting?
- mellavora 5y ago
  Sounds like Barcelona today.
petra 5y ago
It's not just in the USA. It's a global phenomena. So on the one hand you've unaffordable homes/apartments, and on the other automation coming at full speed. So much uncertainty and insecurity. I'm sure civil unrest is coming.
- deleted 5y ago
  [deleted]

agumonkey 5y ago

I wonder what would happen if it caused a large enough vanlife bubble.

ketzo 5y ago
I’m truly not trying to be rude or snarky, but there are a massive number of people living out of cars/RVs/vans in California already. I don’t have a source for this, but I’ve lived in LA and the Bay over the last 3 years. You just gotta drive around. The Instagram accounts with the $90k tricked-out sprinter vans are a vanishingly small fraction of that. The “bubble” you’re describing is California’s homelessness crisis.
- agumonkey 5y ago
  No worries mate. First I knew there was a homeless crysis, and the crazy housing (students living in cars) and quite a few vanlifer, but not the real extent (instragram and youtube are bad measures indeed). Second, I meant a larger bubble, something that would pull the rug under all the investors buying land and homes thinking people will just eat the costs.
stevenwoo 5y ago
The book Nomadland covers the roaming vanlife pre 2017 that was supplying a lot of seasonal workers to Amazon warehouses, forest service employees and farm workers. (recruiters for all those places targeted people living vanlife who could move and live close to the place of work.) There are several streets I commuted on in the peninsula area of San Jose/San Francisco where all of the parking is used by people living in cars and RVs since 2005 at least.
- agumonkey 5y ago
  oh, I saw there was a movie but didn't know it was based on real life ..
  - stevenwoo 5y ago

hourislate 5y ago

> My sister had multiple properties where her bid was beat out by someone offering $100k+ over ask This really isn't bad, consider Toronto, Canada where house that's over 100 years old (tear downs) cost well over 1 million and increase in value by over $2000 a week, yeah you heard that right. There are houses outside the city (almost anywhere in Southern Ontario)that were anywhere from 200k -400k pre pandemic that are now approaching 1-2 million. I have seen 50 year old 1200 sq/ft Condos in Toronto go from 300k pre pandemic to now 800k. I believe by the end of this year the average price of a house in Toronto Canada will be approaching 1.5 million plus and is probably on a trajectory of 3-5 million in the next 5-10 years. Before you say it can't keep going, it's been on this path for the last 15 years and is showing no sign of letting up. Governments are bankrupt and can't raise interest rates meaningfully ever again.

tristor 5y ago
I'm not sure you understand what I meant by someone offering $100k+ over ask. In the current market properties generally get listed and then are under contract in under 72 hours, which means in the market you're describing in GTA this would be like someone listening a property for $1.5M, expecting it to increase in value by (let's be generous) $10k in the 72 hours it takes to sell, and the bidders offer $1.7-$1.8M for that property. It's hard to express how much importance is also being put on these offers having NO clauses and being all-cash. It's just a straight, NSA cash offer, which is something investors can do with hedge fund / foreign money laundering capital, that someone who actually has to live in the place cannot. Personally, I will NEVER waive an inspection because I don't want my family's health put at risk.
- wnolens 5y ago
  I think he's implying that it means those houses are underpriced, to be snapped up at 100k over asking so easily. By comparison, a GTA home with a sale price of 1.5M regularly sells for 1.5-1.6. But last year it would have only cost 1.2M (not joking, I've been watching that market for about 3 years). In Toronto, real estate is religion. It's how a significant fraction of the population accrues wealth. And owning a home is held as the highest ideal. Also I agree, I would never waive an inspection.. but right now that's congruent with saying "I never want to buy a home".

echelon 5y ago

> This market is ridiculous if you actually need a place to live, and it's not even a matter of income. The US needs to make a policy decision: are houses investments or a way to nurture and grow the lower and middle class? If it's the former, they can use tax policies to encourage the desired behavior. Tax every residential home (single family or condominium) at 10-30% of its total value per year, regardless of who owns it. Give a complete write off for your first home. Maybe give a partial write off for your second home. Make owners bear the cost of appraisals, and if appraisals aren't available, tax them at the most expensive 90th percentile. But of course maybe the US decides homes are investments. Great for the wealthy, but the lower and middle classes are really going to get hurt. Birth rates will slip even further.

conductr 5y ago
> But of course maybe the US decides homes are investments They have. By not deciding, they have decided. It would be incredibly harmful to reverse course now. Typical US policy is to get backed into a corner until doing the right & obvious thing is incredibly difficult and practically impossible.
- echelon 5y ago
  They're also welcome to change this decision at any time if enough of the electorate demands it, or if it becomes obvious it will lead to impacts to the policy stakeholders.
  - conductr 5y ago
    But we all know not to hold our breath for that to happen right
maerF0x0 5y ago
> The US needs to make a policy decision: are houses investments or a way to nurture and grow the lower and middle class? They already have. home buyer loans are backed by the government. You can write off loan interest. Investors pay taxes on income from the investment (net rent and capital gains) ... Also just like in education space the more the government subsidizes the pricing, the more it gets inflated. So more incentives will just lead to more demand and higher prices. What we really need is more supply and elasticity. More houses, and more people willing to say "F--- this I'm moving to CheapTown"

buscoquadnary 5y ago

> It's become basically impossible to buy a house as a normal person, even on a higher tech salary. In most markets around the US now, the expectation is that buyers will waive inspection requirements, make an offer as all-cash (e.g. pre-approved financing), with no contingencies (e.g. not based on sale of their previous home). In some places that may be true, but I was able to get a home last January on a single relatively moderate-high tech salary, I have a friend that signed for a home on a single person decent salary as well near me, and my next door neighbors again single relatively decent tech salary just bought a new home elsewhere. You may be right about places in like LA or Toronto or NYC, but to generalize that everywhere is a little absurd. I know that the market I fled in UT was that way, and things are getting pricier here in the neighborhood that I am living in, but we are definitely in the middle of a crazy bubble right now; however it won't last forever, things are going to pop eventually. There are good affordable places to live even if they aren't in CA. Much of the Midwest is great, I think part of the bump we are seeing is rise of remote work exacerbated an already existing bubble brought about by government subsidization as it allowed tech salaries to be redistributed geographically. I do agree that part of the problem is large investment firms purchasing housing as an investment and an article the other day on here pointed out how they are able to take advantage of government subsidies to purchase more homes, but a bubble can't last forever it will pop, and I feel like the popping is going to come soon.

cmiles74 5y ago
It's just more anecdata but I live in Western MA and this is exactly the situation we have out here: people are being pressured to waive inspection and to offer in cash and without contingencies. Honestly, it seems crazy risky to me to buy a home under those terms and I suspect that regular people simply end up renting.

dymk 5y ago

> In most markets around the US now Do you actually have any evidence this is true in "most" markets? It seems like only in a few markets around highly-desirable cities is this true. Farms don't sound like they're going to be representative of the types of housing that most people are looking for. I'm 45 minutes south of Seattle and I purchased a large house with a backyard, recent-ish construction, no contingencies waived, for less than what a 500sqft loft is going for in Seattle.

bluGill 5y ago
Farms are also what investors are looking for, at least the types of farms this person seems to be talking about. "Farm" the land for 10-20 years, and then put in a development as the city grows out. These investors are betting that the land will be worth a lot more in a few years. I put farm in quotes because they are intentionally mining the land of all long term fertility - not a problem as it won't be farmed in a few years anyway, but if you intended to farm for more than 10 years then proper care for the land will ensure better profits of the wrong run.
- rcpt 5y ago
  And on top of that farms get all kinds of tax advantages on top of real estate gets. There's a reason Bill Gates is the nation's biggest farmer.
  - nomel 5y ago
    This explains why a half assed, poorly maintained, corn crop would randomly pop up in a lot between commercial buildings, across from where I used to live.
ejb999 5y ago
I live in a rural area (relatively speaking - town of about 1000 people) - around me if you don't show up to look at a house, ready to buy, and with no contingencies - you are not going to get a house. I know many folks near me who have listed their house, had 40 people show up the first day (open house) and sold it the next day, for cash, for 20% over the asking price - around me, those stories are very common. I study the RE market in several places that I am connected to every day - I watch houses come on the market, and are under deposit within days. I feel really bad for young people looking to buy their first place (including my kids) - they can't pay cash, and they are on a budget - they have almost zero real options other than to continue to rent and wait for a RE crash. IMO, it's coming, but who knows when.

conductr 5y ago

I find it silly that appraisal waivers are the norm now. It's like saying, "yes, I know I'm going to overpay for this house" before any negotiation even takes place

hackerfromthefu 5y ago
Imagine another buyer is in the identical situation to you, and you want to be the one that is selected to get the house. Now image you missed out on ten houses you wanted to buy before this one, and are exhausted by all the effort.

maerF0x0 5y ago

> It's become basically impossible to buy a house as a normal person, even on a higher tech salary. In the highest demand cities. Move somewhere that is either 1) Building a crap ton or 2) in lower demand

johnny_canuck 5y ago
Calgary (albeit Canada in this case, but [Canada is just as bad if not worse than the US with regards to housing](https://www.cbc.ca/news/business/crea-housing-december-1.6317503 https://www.cbc.ca/news/business/crea-housing-december-1.631...) is a great example of a city like this. They aren't landlocked and so they can expand as they want. Also a decent sized city, and world class skiing within an hours drive. My gut tells me people will then complain that the housing market in places like this are not worth buying into as houses are only increasing at the cost of inflation.
- acchow 5y ago
  Housing market in places like this are not worth buying because it regularly drops to -20C in the winter here and the economy is heavily reliant on one industry (oil) so even if you work in tech, you will dramatically feel the ebbs and tides of oil prices in the community around you
  - Izikiel43 5y ago
    > because it regularly drops to -20C Everywhere in Canada but Vancouver/Victoria have -20C in winter. > the economy is heavily reliant on one industry (oil) This is the real issue.
    - acchow 5y ago
      > Everywhere in Canada but Vancouver/Victoria have -20C in winter. But it only happens for a couple days a year in Southern Ontario, even less common near a Great Lake
- moistly 5y ago

siruncledrew 5y ago

> "In most markets around the US now, the expectation is that buyers will waive inspection requirements, make an offer as all-cash (e.g. pre-approved financing), with no contingencies (e.g. not based on sale of their previous home)." It's ridiculous trying to buy a house now is like it's buying from the Louis Vuitton store or trying to get into a fancy club - especially when the "thing" is a normal-ass house in the suburbs.

ren_engineer 5y ago

the last 2 years were the biggest wealth transfer in human history and a large chunk of the population begged the government to do it to them

david38 5y ago

Not at all. On a tech salary I see people buy homes all the time in Silicon Valley.

lost_soul 5y ago

3 things I don't hear much about: * Plenty of places in the Midwest (Arkansas and Kansas, for example) are depopulating. Affordable real estate exists there - https://www.arkansasonline.com/news/2021/oct/08/populations-decline-a-redistricting-worry/ https://www.arkansasonline.com/news/2021/oct/08/populations-... * Mobile homes seem a not-great-but-doable alternative. Still money to be made, particularly if they have a "tiny home" vibe. * Multi-generational mortgages. Again not great, but not everyone has access to $1-2MM.

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tristor 5y ago
> Multi-generational mortgages. Again not great, but not everyone has access to $1-2MM. This sounds like literal debt slavery. I'm not sure this is even legal in the United States, and if it is, it shouldn't be. This is a type of financing that cannot be described in any other terms than being predatorily usurious. I imagine you are getting downvoted because other users believe that you are proposing these as viable options. Mobile homes are not constructed to even the horrid minimal building codes that a free-standing structure must meet, so don't even remotely qualify as "efficient, reliable, and safe", and I've already said my piece about multi-generational mortgages. So, why not the Midwest? I actually grew up in the Midwest and have nothing against it, in point of fact. I think a lot more people should move to the Midwest and that it has a lot to offer. For me, particularly, I am moving locations for family reasons, so the location I move to isn't so much my choice. If I had my choice, I'd actually really enjoy some places in the Midwest, in fact one of my favorite cities is KCMO and I also really enjoy parts of Arkansas. The reality though, is even in the Midwest the places that are actually nice to live and have real broadband Internet service cost quite a bit, maybe not $1M, but at least $450-500k for a decent house.

steelstraw 5y ago

The article says that only accounts for 1 in 7 homes though. I don't get how people are still buying houses at these prices. Are they paying beyond their means? Wiping out their savings? Or what?

hackerfromthefu 5y ago
Pricing and other buying behaviour is set at the margins

seneca 5y ago

This doesn't mirror my experience looking at housing over the last year in a major metro. Houses are going quickly and for maybe 5 to 10 percent over asking, but that's about it. You must be in an abnormally hot market. That sounds pretty awful.

acchow 5y ago

> You've also got companies like OpenDoor and Zillow scooping even high-earners trying to buy a place to live. Zillow’s home-buying program called “Zillow Offers” has been shut down. They overpaid and had $400 million losses in 3 months https://www.nytimes.com/2021/11/02/business/zillow-q3-earnings-home-flipping-ibuying.html https://www.nytimes.com/2021/11/02/business/zillow-q3-earnin...

tristor 5y ago
Yes, and in the interim, their behavior overpaying worsened the housing crisis and further inflated the assets in the markets they operated in. They absolutely did (and continue to) contribute to the problem.
- acchow 5y ago
  Barely a drop in the bucket. But they did incur losses and are offloading their properties at losses. So wherever they did bid up properties, they are now providing discounts.

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fillskills 5y ago

Very true. We have faced this and we know friends across different cities facing the same issue. Houses in previously affordable neighborhoods are so expensive that even with 2 tech salaries people are barely able to afford. This is great for people who already have home whose prices have doubled but I cant imagine how anyone is able to afford a home let alone good homes near good schools (this may be specific to the US). I am personally really hoping for a real estate correction.