Real Estate is a Circus Right Now

[Brian Elfert]

Brian, ZEstimate is a pretty reliable thing at this point and is rarely far off from a selling price. If anything, it's been low recently on quite a few places we've looked at. And prices have gained substantially. The offer we made early in the week was for $65K over listing on a property that was clearly undervalued after a comparable sales

The reason I think Zestimates, at least for my property, are not accurate is because last February my property had a Zestimate of $325,000. The appraisal for my refinance at the end of March 2020 was $300,000. The current Zestimate for my property is $392,000 which would be over a 30% increase in less than one year from the $300,000 appraised value.

[Jim Becker]

Oh, I understand that, Brian. It can seem weird for sure and there are certainly some properties that have a slight miss on this. But "in general", they have been refining things from the massive amount of data they have available to them and seem to be confident enough that in some markets, they will buy the property for the ZEstimate outright. Our current property's ZEstimate spiked up a bit awhile ago, but settled back to within the range that our RE agent felt was valid. When we do list, it will be at the high end of the range...maybe $20-30K above the current ZEstimate and we'll adjust accordingly based on activity. But to the point of this thread...the RE market is really whacky right now. You could very well sell your place for more than the $392K ZEstimate if your local market is running hot and it has desirable features. There are a lot of folks who want to buy a first home, "move up" from their first home or like us, "downsize" but stay nice. That's three different groups vying for the same opportunity. An acquaintance of our RE agent was speaking to him the other day and she was actually getting "sight unseen" offers on some properties she has listed...no visit, no inspections, just straight offers. Crazy it is!

[Dave Seng]

Those "sight unseen" offers can get weird - one of my friends just had a home here in Montana listed in the mid $600's - first day on the market he got a full price offer from a family in Southern California. BUT...when they came up here - they backed out of the deal before even seeing the house. The reason given - "Montana is too cold for us." And that was on a weekend when the temps were only in the upper 20's!

[Curt Harms]

An acquaintance of our RE agent was speaking to him the other day and she was actually getting "sight unseen" offers on some properties she has listed...no visit, no inspections, just straight offers. Crazy it is!

The last "crazy" Real Estate market I remember is 2008. I also remember what happened after. I'm hoping for no repeat.

[Jim Becker]

The last "crazy" Real Estate market I remember is 2008. I also remember what happened after. I'm hoping for no repeat.

Yes, we did our addition about that time simply because the market wasn't conducive to moving rather than adding on and we need more space (and bathrooms) with our two girls in the family.
-------

Dave, I bet the contract had wording inserted that allowed them to backout without penalty for some reason that could be cited. Sellers and more importantly, their agents/attorneys (whichever is being used in a given area), have to read the offers carefully since even normally, there are very limited ways to retain a deposit as a seller.

[Brian Elfert]

The last "crazy" Real Estate market I remember is 2008. I also remember what happened after. I'm hoping for no repeat.

A large part of 2008 was allowing anyone with a pulse to take out a mortgage. There were a lot of so called "liar" loans where no documentation of income was required. A lot of people were becoming homeowners who didn't have the resources to buy a house. Some of the borrowers didn't have the financial resources to make the payments from day one. I thought it was crazy that people who could pay their mortgage payments walked away from houses simply because they fell by $100,000 in value or whatever. A house is a place to live, not an investment. You still have to live somewhere.

Housing values will eventually level off or fall a bit, but I doubt we will have the mass foreclosures like 2008.

[Malcolm McLeod]

A large part of 2008 was allowing anyone with a pulse to take out a mortgage. There were a lot of so called "liar" loans where no documentation of income was required. A lot of people were becoming homeowners who didn't have the resources to buy a house. Some of the borrowers didn't have the financial resources to make the payments from day one. I thought it was crazy that people who could pay their mortgage payments walked away from houses simply because they fell by $100,000 in value or whatever. A house is a place to live, not an investment. You still have to live somewhere.

Housing values will eventually level off or fall a bit, but I doubt we will have the mass foreclosures like 2008.

A particular entity (taboo'd) maybe fell in love with the concept of universal home ownership? This possibly tips the normal supply/demand equation on it's ear, and we get a 2008?

Surely, no such entity would allow this to happen again? Or even allow such manipulation of other positively necessaries? Surely, we're better educated now? Surely.

[Rick Potter]

Well, the circus is finally over for my son in Texas. After over 9 weeks in escrow, his loan was finally approved. This with loan pre-approval going in, plus buyer and seller both wanting quick escrow.

Then the pipes froze and burst. That added a few more days to fix.

He moved in Friday.

He would probably be still waiting if he hadn't refused to extend the escrow for the third time, and again when the loan company tried to up the cash down payment they had agreed to at the beginning.

[Jim Matthews]

Housing values will eventually level off or fall a bit, but I doubt we will have the mass foreclosures like 2008.

This situation is remarkably different.

There are fewer houses than buyers, in places people want to live. It's a supply problem.
Housing starts were down during the first half of 2020 due to Covid restrictions.

There is a tremendous amount of money arising from stock market gains rather than easy underwriting so the demand isn't artificially boosted, or backed by invented money.

I'm hearing anecdotes of buyers from NYC showing up to listing in the Hudson River Valley in minivans full of clothes and suitcases full of cash.

[Jim Becker]

Woo-Hoo! We finally scored!!! Great home...actually originally custom built and quality that we are used to in a smaller 1800 sq ft package on a half acre. Near our daughter’s apartment and her work so it eases our transportation situation. But darn...I have to build a shop from the ground up. What a sad thing

[James Cheever]

Great news, Jim!!!

I know you'll have so much fun planning your new shop.

[Jim Becker]

Thanks, Mr C! It will be an adventure.

[Steve Wurster]

Woo-Hoo! We finally scored!!! Great home...actually originally custom built and quality that we are used to in a smaller 1800 sq ft package on a half acre. Near our daughter’s apartment and her work so it eases our transportation situation. But darn...I have to build a shop from the ground up. What a sad thing

I've been occasionally checking this thread and was happy to see this. Congrats, Jim. Where about is this place?

[Zachary Hoyt]

Congratulations, that's wonderful news. I hope the new shop build will be fun, and that everything will go smoothly.

[Bruce King]

Congratulations Jim!
Word of advice, keep the shop smaller than the house to prevent marital poaching upon sacred ground.