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What Gives With Housing ?

 
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Old 03-29-2019, 06:48 PM   #1
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What Gives With Housing ?


Why is the housing market for existing and new construction on the soft side in most of the country ? Being an old timer,Through most of '70,s '80,s and '90's mortgage interest rates were from 8--10 % heck,in 1981, they hit 17 %. It was stated then,if we ever see 10% all heck will bust loose. Well,today's headline mortgage rates hit even 4 % and we can't come close to building a million units. What gives ?
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Old 03-29-2019, 06:51 PM   #2
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Re: What Gives With Housing ?


Everything is too expensive

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Old 03-29-2019, 06:58 PM   #3
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Re: What Gives With Housing ?


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Everything is too expensive

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Yeah,but the money rent (mortgage rate) should balance that out. Do the math between payments at 4 % --10 %.
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Old 03-29-2019, 07:02 PM   #4
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Re: What Gives With Housing ?


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Yeah,but the money rent (mortgage rate) should balance that out. Do the math between payments at 4 % --10 %.
When a 2000 sq ft regular working man's house new built is 300k without a lot, or a 20 year old 2000 sq ft is 190- 250k in an ok neighborhood needing updates, or a 3500 - 4000 sq ft real custom is 700k - 1mm+ without a lot it creates a void in people who can afford them.

A single slip boat dock is 80k now...

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Old 03-29-2019, 07:12 PM   #5
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Re: What Gives With Housing ?


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When a 2000 sq ft regular working man's house new built is 300k without a lot, or a 20 year old 2000 sq ft is 190- 250k in an ok neighborhood needing updates, or a 3500 - 4000 sq ft real custom is 700k - 1mm+ without a lot it creates a void in people who can afford them.

A single slip boat dock is 80k now...

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I 'm not arguing with you John,prices are what they are in each location,however,even in markets that score good on the affordability scale are still not robust. Do you feel wages have not kept pace with cost of housing ?
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Old 03-29-2019, 07:14 PM   #6
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Re: What Gives With Housing ?


Quote:
Originally Posted by Jaws View Post
When a 2000 sq ft regular working man's house new built is 300k without a lot, or a 20 year old 2000 sq ft is 190- 250k in an ok neighborhood needing updates, or a 3500 - 4000 sq ft real custom is 700k - 1mm+ without a lot it creates a void in people who can afford them.

A single slip boat dock is 80k now...

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I'm pretty amazed what it cost anymore. This place is absolute gangbusters still. Can't find anyone not swamped. I tried to price myself out of a couple jobs this year and they still accept it.

Simply insane. Im not rich but I'm doing alright and I don't know how a guy who makes what I make could buy something new if they don't know how to do the work. I guess it's cause there these cookie cutters where you get no options for anything.

No thanks to that. It just keeps going up here too. I keep waiting for it to tick down and the custom homes with property just keep going up. Good for me, not so much other people my age...
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Old 03-29-2019, 07:20 PM   #7
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Re: What Gives With Housing ?


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I'm pretty amazed what it cost anymore. This place is absolute gangbusters still. Can't find anyone not swamped. I tried to price myself out of a couple jobs this year and they still accept it.

Simply insane. Im not rich but I'm doing alright and I don't know how a guy who makes what I make could buy something new if they don't know how to do the work. I guess it's cause there these cookie cutters where you get no options for anything.

No thanks to that. It just keeps going up here too. I keep waiting for it to tick down and the custom homes with property just keep going up. Good for me, not so much other people my age...



As you probably know all too well,with the last crash,the places that were red hot were the spots that crashed and burned the worst. Those being Vegas,Florida and good portions of California. I don't feel the Nation ever truly recovered from the last crash in housing.
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Old 03-29-2019, 07:23 PM   #8
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Re: What Gives With Housing ?


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I 'm not arguing with you John,prices are what they are in each location,however,even in markets that score good on the affordability scale are still not robust. Do you feel wages have not kept pace with cost of housing ?
Not arguing either, just my explanation.

Part of mine is also location - labor here is very high compared to the cities

Still a robust Market here, just not as desperate. People have cared about their Rising costs for several years but when it was just gangbusters the builders were basically like f*** off if they didn't want to pay. Lol now we have to get creative to get the budgets in line with the scope. Desperation is not there

Also yeah, a 2200 mortgage- 300k with insurance taxes and interest for say two teachers making 80k together before taxes is a lot

Still pretty good though. I'm trying to get my name back out there for remodels, all I've got going is new stuff besides about 700k in decks/boat docks and a simple industrial project.

I even took on a bathroom remodel stand alone, trying to train the new super on our systems for it. Try to get geared up for when the little dip comes eventually.

From my understanding the cities in Texas are still doing well also

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Old 03-29-2019, 07:26 PM   #9
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Re: What Gives With Housing ?


Land is crazy here. A new development just came online with 3/4 acre lots for $150K each. You can still buy lots in the sticks for fairly cheap but that’s because no one wants to live there.
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Old 03-29-2019, 07:30 PM   #10
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Re: What Gives With Housing ?


Wages here have definetly not kept up with housing.

180,000 grand for an old house way out of the way. 200,000 for a cookie cutter in a crappy tract. These are starter homes.

Wages are like 15-25 bucks an hour for normal working folks. More towards the 15 end usually. It takes two to just make ends meet, let alone buy a house.

Rent here is running 800-1000 for a one bedroom and 1,100 to 1,400 for a decent rental house or apartment, if you can find one to rent.

They just put in state rent control, so it might help folks now, but as soon as rental turn over starts to move, rents will probably double just so owners can make enough to cover the expenses as they can barely raise them enough to cover taxes while occupied. Or owners will just sell off and there will be even less rentals, though there may be a slight relief for buyers.



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Old 03-29-2019, 07:30 PM   #11
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Re: What Gives With Housing ?


John; You are smart to cultivate some remodeling work,there will be dips no doubt. I've been doing this since 1974,have seen some really intense dips. 1981 was probably the worst.
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Old 03-29-2019, 07:31 PM   #12
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Re: What Gives With Housing ?


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Land is crazy here. A new development just came online with 3/4 acre lots for $150K each. You can still buy lots in the sticks for fairly cheap but thatís because no one wants to live there.
A lot in the sticks might still be cheap but you have to do a dance with your states DNR on water and waste....you could easily be over 100 dimes deep before you get a foundation in.
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Old 03-29-2019, 07:40 PM   #13
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Re: What Gives With Housing ?


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Land is crazy here. A new development just came online with 3/4 acre lots for $150K each. You can still buy lots in the sticks for fairly cheap but thatís because no one wants to live there.
That's the opposite of us. The sticks, where I've always lived used to be the cheaper side of things because it's further away from the beach. Now we're up to almost 30-40k per acre for 5 acres.

It's insane. As far as the market here crashing harder then the others that is true. At the same time we were one of the first areas to recover. Location makes a big difference. People just want to live in Florida and with Boomers retiring they are going to continue to drive prices up.

Happens fast here. 2 years ago housing was back in line with about where it should be traditionally at a 3% increase year over year from the 90's before it got crazy in the early '00's. We don't follow the 3% increase though. Or we haven't for 30 years. My parents first house they bought here in the late 60's was around 22k on the beach. That house sold for over 900k just for the lot in 2003. They just sold the house I grew up in for 700k and bought it for 65k in the early 80's.

We are a boom and bust construction industry here. You tend to get used to it after a while I guess. Just didn't expect it to go on this long. I don't really deal with it anymore because I have chosen a different path than playing big when things are big and cutting back when things tighten up. I stay pretty much on the same path always now because I only work for a very select few people.
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Old 03-31-2019, 08:10 AM   #14
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Re: What Gives With Housing ?


First timers can't afford their first house.
That ends up putting the brakes on everybody else that wants to move up.
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Old 03-31-2019, 08:20 AM   #15
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Re: What Gives With Housing ?


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First timers can't afford their first house.
That ends up putting the brakes on everybody else that wants to move up.
That's it, right there.

Here, its generally agreed the bottom half of 2018 in new builds - the entry level and just above - hit a big hole.
In turn, apartment builds are tracking on the rise.
I do not know what its like closer into Detroit or downriver.
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Old 03-31-2019, 09:52 AM   #16
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Re: What Gives With Housing ?


I think part of the problem around here is people think you to build a McMansion or nothing.

Except for 1,500 foot ranch tract homes, all I see being built are large ungainly homes in the 2,500 to 3,000 foot range or more. That used to be a fancy home, now it is the norm.

That means that there wont be any affordable used homes in the market in the future, so the cycle keeps going. Let alone any new rental sized houses. When just the permits and bcf fees are in the 25-30,000 dollar range or more, it tends to skew prices.

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Old 03-31-2019, 11:47 AM   #17
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Re: What Gives With Housing ?


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I think part of the problem around here is people think you to build a McMansion or nothing.

Except for 1,500 foot ranch tract homes, all I see being built are large ungainly homes in the 2,500 to 3,000 foot range or more. That used to be a fancy home, now it is the norm.

That means that there wont be any affordable used homes in the market in the future, so the cycle keeps going. Let alone any new rental sized houses. When just the permits and bcf fees are in the 25-30,000 dollar range or more, it tends to skew prices.

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Yep. Size of homes have changed considerably and so have finishes. When I was a kid my dad built a lot of 12 to 1500 square foot Ranchers with inserts Shower systems, laminate countertops, cheap fixtures. 8 foot flat ceilings.

Now no one will build anything under 2,000 feet, we usually under 2500, for fear it won't sell. My brother is having a hard time selling his house at 2000 feet because people wanted to be bigger. He has awesome finishes in his too.

Now everybody wants tile showers, granite or quartz countertops, tile backsplashes, frameless glass, vaulted ceiling in the living room, taller ceilings, coffers, Etc.

I formed the foundation, framed, roofed and trimmed a 1225 sq ft rancher on the corner of 5th and oak in Burner when I was 18 for my dad's boss. Total bill time with all subs and everything for that house was like 12 weeks, he sold it for $119,000 and I think he made 20. Nice little house, three bedrooms, small utility room, small kitchen and living room and a garage. Insert showers and tubs, laminate, cheap tile. Good paint work and mechanicals

No one would buy that house now if it was new built. It would take a while if it did and it would be 180-195k

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Old 03-31-2019, 12:21 PM   #18
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Re: What Gives With Housing ?


TimNJ,S.T.G.,VHanger,Jaws; I think you guys nailed it. Between the people needing starter housing not having money,and the rest wanting huge sq. footage,those two have caused the problem. Having been at this since early '70,s each year I kept seeing the size grow and consequently quality diminish.The "experts" were writing in trade publications at the start of the last crunch that that would trigger smaller homes. Well,that lasted a few years and then wham,business as usual.

Question is,how the heck will the buyers mindset change ? It is like a runaway train.
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Old 03-31-2019, 12:37 PM   #19
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Re: What Gives With Housing ?


I just did a full kitchen, bath and new central air system for $80k in an old house the owner paid $375 for.
So in reality they still spent over $450. This was in a small low tax town. I did ok but not even what I should be doing.

These things need to drop. Still to many flippers jacking up the cost. In many cases buying a dated house is a bigger financial liability than knocking it down and building new. And how many can do that.

We have a ginormous inventory of 1950 homes often no ever updated or perhaps 1 in the 1980s
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Old 03-31-2019, 01:12 PM   #20
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Re: What Gives With Housing ?


Tom M, you are so correct regarding the logic of placing so much money in old homes. The part that is always a concern of mine,any house built prior to 1978 most likely has lead paint. That is by far a field that is not my strong side. From all the trade articles out there on that topic I don't want to be the guy that gets involved with it.Not to mention the vinyl asbestos tile and mastic.

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