Would likely have to come down to the GSE's increasing their financing pricing penalty for rental purchases and/or increased tax burdens.
Housing market
- Thread starter simply1
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The Atlanta Fed says the Fed prime rate should still go up another 150 to 250 basis points if you wanted to bring the economy back into some sort of full-employment/low-inflation equilibrium --
https://www.atlantafed.org/cqer/research/taylor-rule
Assuming the Fed really means business... and maybe it doesn't... I see no reason interest rates should be coming down soon unless, of course, the Fed decides it really isn't serious about inflation after all.
I am not trying to be a smartass or ask a rhetorical question here... genuinely curious what you'll say.
What would you define as a "healthy" housing market?
How does that work with a walkout basement? I've never been able to find a solid answer on that.
If it’s a basement and basically just one wall is above grade, then it’s listed as basement square feet (not added into the house square footage) and there was a spot where we marked walk out basement. We would then assign what we gleaned that was worth.
Now let’s say that the slope basically made half the basement at grade and half under grade, then we might give half the footage. Basically, if I can’t see the foundation for the whole room/area, then it’s 100% basement.
At least around here it seems like a lot of the better opportunities for rental properties, especially those that would apply to a BRRRR method, have been snapped up. That may also be a component of sales slowing down as there is less opportunity for investors (along with the high interest rates, which have driven up costs to finance at a rate greater than what rents have increased). But that money waiting on the sidelines will still keep a floor on things.
In one of our starter homes (2nd together), my wife and I bought a house in Valley Junction and fixed it up, finished the basement, etc over the 5 ish years we lived there. The amount of effort, and unfortunately, money that goes into doing quality work is really high. We didn't want to be flippers so we did things the right way. Unfortunately that's the exception these days.
We moved out of that house in probably 2012 and couldn't get what we wanted for it so kept it as a rental until probably 2018. It's a good way to make some extra income, but I think people fail to plan for things they still need to do to maintain a house - appliances, roof, paint/siding, etc.
We moved out of that house in probably 2012 and couldn't get what we wanted for it so kept it as a rental until probably 2018. It's a good way to make some extra income, but I think people fail to plan for things they still need to do to maintain a house - appliances, roof, paint/siding, etc.
I think the comment is that people can clean up their budget and make a big difference. My wife and I only go out to eat/order in maybe once a month at most and take our lunch to work every day and it makes a big difference when you add it up at the end of each month. There are a ton of people that drive 2 brand new really expensive cars (like big trucks and SUVs) that hamper their budget too.
My first house in Ankeny I actually lost money on fixing all the **** the previous owners did wrong or failed to maintain properly. I was there for 5 years and the only updating I was able to do was the bathrooms, some paint and some flooring. Bought at 163, sold at 200, and spent 45k on maintenance/updates. I don’t feel bad about the loss because that house was driving me crazy with all the problems and we got our new house at 2.8% fixed.
That was our problem too. The person before us "flipped" the house but forgot the quality aspect and we had to not only redo all his work, but then the things we wanted to do like finish the basement, get a new roof, etc.
I think everyone sees $$$ and thinks they can make a quick easy buck but there is more to it than that. If you are going to do all the work yourself and have the capitol to do it, it may pan out financially, but it may not be much different than a full time job since to make the flip happen fast, you would have to make it your full time job. If you flip houses, you also have to pay a lot of capitol gains taxes if you sell it in less than 2 years. If you are going to rent it out, you have to deal with the fact that you may not have tenants and have to do maintenance so it is not a cash cow either for cash flow and the thought of using the rent to pay the mortgage may not come out well for you.
But big, shiny cars are ******* cool.
Next you'll say I should stop smoking and loose dat kewl factor 2.
Man, people gots to LIVE
Too bad more people didn’t watch Holmes on Homes for ideas!
The tax burden thing is interesting. Since the standard deduction was raised I can't write off interest and taxes and all that fun Schedule A stuff.
But if I had a Schedule E. Game on.
I was a landlord. I asked the management company to let me see the info. Low 500 credit scores, job hopping, poor risk. "Hey! This is a good candidate!"
Yeah. For me to not get paid and have to clean up their damage. Too many horror stories for my blood.
I think a lot of rehabbers walk in thinking everything is just a makeover. But that’s not the case. Additionally, with older houses, people want different layouts then when the house was additionally built.
My wife and I finally just bit the bullet and bought in the DSM area.
It’s expensive, and PMI sucks a bit, but I’d rather be getting equity.
Prices just aren’t going to drop with the inventory as low as it is now.. nobody wants to move and take on double interest rates.
It’s expensive, and PMI sucks a bit, but I’d rather be getting equity.
Prices just aren’t going to drop with the inventory as low as it is now.. nobody wants to move and take on double interest rates.
We'll see regarding the rate hikes, there are a lot of different opinions on that. There's some optimism they'll come down due to the current spread between the 10 year T note & mortgage rates - historically this spread is around 170 bp higher, currently it's about 300 bp due to the economic uncertainty. Honestly I'm just being optimistic so I don't have another slow year next year.
Although we were due for that after 2020-early 2022.Million dollar question regarding the market "health". The real estate market is the most imperfect market that there is (heterogenous goods, so much emotion involved in SFR purchases, etc.) so it's almost never "healthy" in the eyes of a lot of economists & other people who look at this for a living.
In my opinion there just needs to be some sort of event which brings in a bunch of inventory to the market, the shortage of supply is creating a really difficult environment for most buyers right now. How this event happens? Who knows. Possibly by a recession & people needing to sell homes, which is obviously not ideal for most.
People also need to probably come to terms with the fact that we're not going to see +/- 3% mortgage rates for the rest of our lives - this new "high rate" environment is new to so many people that have bought homes over the past 15-20 years, so there is a prevalent feeling of "there's no way I'm selling my house with a 2.5% 30 fixed rate". This makes perfect sense, I'm not planning on getting rid of mine either. However, life does happen & factors such as needing to upgrade/downsize, move, death, divorce, etc. always take place.
The issue with continuing to increase rates is this "shock" feeling of elevated rates will only be exacerbated. Also, at some point, affordability has to come into the picture - if rates go up to 9-10% it's going to be hard to afford a home for most people.
I'm mostly just spit balling here. I keep up with it because it affects my job, but I'm not close to an expert. If you're looking for a good podcast on the housing market, BiggerPockets puts one out called "On the Market" that is pretty good.
When people flip houses, they are just doing things to make it attractive to buyers. They don't care about the other stuff. Always ask (or just look it up) and see how long the people have owned the house. If two years or less, you need to investigate why they are selling.
Some of us get permits for HVAC, plumbing, electric and building if we decide to take down walls etc. If buying a flip, check to see if permits were pulled. I have my real estate license and was helping a client buy. The house was gorgeous but I checked and no permits were pulled. If you can't take the time to make sure everything is done property I don't want to take the chance on other corners that were cut. My client did not purchase this house even though she felt it was her dream home. Smart decision by her IMO.
Think long term capital gains kicks in at 13 months I believe. Under that it is just income. For those renting, there are quite a few that take depreciation. This makes the rental much more affordable due to the tax savings, but I recommend not doing that since when you sell it, you have depreciation reclamation, which is basically income and it jacks you into a high tax bracket.
The advantage of a rental is now you have a business, you can depreciate a vehicle, or take mileage, you have cell phones, internet, computers, and several other things that you can push towards that business (you mow the lawn and you can claim part of you lawn mower) and those are things that many people don't understand the savings.