Here we go again. Housing bubble. This reminds me of 2005...

[Dancing Fire]

Is it a single family house and no HOA to worry about? Can you do an extension on the first floor to add a master suite?

Yes she have HOA fee so no adding to the first flood, besides she don't need the extra space.

 

[SomethingNew]

Yes she have HOA fee so no adding to the first flood, besides she don't need the extra space.

She is very wise and lucky! I NEED that extra space but I can't afford to get it, but I don't NEED that extra piece of jewelry but I get them anyway, something's really wrong in my head!!!

 

[Dancing Fire]

She’s young. She can afford it. An extra 200k at 2 to 3 percent interest is not a big deal, especially in Ca. I would do it if I was her.

Maybe, but I'll give you one good guess who's gonna help her to payoff her current mortgage? b/c she will not qualify to carry two mortgages IF she found her single story home.

 

[GoldenTouch]

Maybe, but I'll give you one good guess who's gonna help her to payoff her current mortgage? b/c she will not qualify to carry two mortgages IF she found her single story home.

No... don’t!!

 

[nala]

Maybe, but I'll give you one good guess who's gonna help her to payoff her current mortgage? b/c she will not qualify to carry two mortgages IF she found her single story home.

I don’t think it works that way unless she intends to keep the first home as rental property. She needs to list her home with a contingency and only sell it after she has purchased the new one. In this market—she could swing that.

 

[MrsBlue]

Maybe, but I'll give you one good guess who's gonna help her to payoff her current mortgage? b/c she will not qualify to carry two mortgages IF she found her single story home.

Have you considered moving in with her? My family and I were discussing the possibility of circling back to traditional multigenerational housing recently.

 

[Dancing Fire]

I don’t think it works that way unless she intends to keep the first home as rental property. She needs to list her home with a contingency and only sell it after she has purchased the new one. In this market—she could swing that.

LoL!, No seller is gonna do a contingency in this hot market. Why would any seller wanna do a contingency when there are plenty of buyers in line?. I wouldn't if I was selling my house.

 

[Dancing Fire]

Have you considered moving in with her? My family and I were discussing the possibility of circling back to traditional multigenerational housing recently.

Then what are we going to do with our house?. Besides, ain't no way we are going to live with our daughter's family.

 

[nala]

LoL!, No seller is gonna do a contingency in this hot market. Why would any seller wanna do a contingency when there are plenty of buyers in line?. I wouldn't if I was selling my house.

Because they might be in the same situation. Also. It takes a while to close and assume the new loan. No sweat then. She has like 60 days.

 

[MrsBlue]

Then what are we going to do with our house?. Besides, ain't no way we are going to live with our daughter's family.

LOL I guess 1 big house is not a viable solution for everyone. I can get along with anyone as long as they don't touch my earrings and my good chef's knife. Or make messes. Or make too much noise.

Maybe I should rethink this.....

 

[Mekp]

Yep Toronto market is nuts. We sold our 2 bed townhouse for well over double what we thought we would and bought a 3 acre lakefront property in my hometown. The new house was cheaper than the Toronto townhouse.

A lot of friends are cashing out and moving outside of the city. Commuter towns are getting crazy though. Think average home price over $900,000 and you still have an hour on the train each way every day.

Hamilton is crazy, too. Houses on my street are listing for 3 - 4 times what we paid 10 years ago on ours, and they are getting snatched up within a day or two of listing. Bidding wars, no conditions. One of our good friends is a real estate agent and he said it is not uncommon for houses in our area to go for a couple hundred thousand over asking.
I don’t know how anyone is entering the housing market with these prices.

 

[kenny]

Same where I live.
It's nuts.

What explains this?

 

[Dancing Fire]

I don’t know how anyone is entering the housing market with these prices.

Yup, and it will not last forever. Many people will be stuck with paying these high prices.

 

[Dancing Fire]

Because they might be in the same situation. Also. It takes a while to close and assume the new loan. No sweat then. She has like 60 days.

No she doesn't, b/c in this hot market no agent will talk to you unless you are preapproved. I think she's preapproved for like 500k total.

 

[chemgirl]

Hamilton is crazy, too. Houses on my street are listing for 3 - 4 times what we paid 10 years ago on ours, and they are getting snatched up within a day or two of listing. Bidding wars, no conditions. One of our good friends is a real estate agent and he said it is not uncommon for houses in our area to go for a couple hundred thousand over asking.
I don’t know how anyone is entering the housing market with these prices.

I’m just so glad that I’m not 10 years younger.

Edit: A BlogTo article just popped into my newsfeed. It’s about an uninhabitable garage wedged between two houses on a sliver of land; sold in two days for $700,000.

 

[Missy]

Same where I live.
It's nuts.

What explains this?

How 2020 broke the housing market: So many homes are selling that we could run out of new houses in months

Home prices are skyrocketing, inventory is tightening, and at this rate homes could run out in just 2.5 months (down from 3 months in September).

www.businessinsider.com

Experts Predict What The Housing Market Will Be Like In 2021

Homeownership by Millennials will continue to climb as they navigate the current market.

www.forbes.com

Home Prices Look Set to Keep Rising in 2021. Affordability Is Emerging as a Pain Point.

Home prices, undeterred by the pandemic and recession, have risen to new highs remarkably quickly. Now, some economists are sounding the alarm over affordability as a longer-term threat to the market.

www.barrons.com

Of course it's very regional but in a nutshell I think this applies.

"Prices are likely to remain elevated simply because there are more people who want homes than there are homes available. During the Great Recession, construction on new properties basically halted. Many builders went out of business. The industry still hasn't been able to rev back up"

"
The price of a house is tied to the supply and demand for housing: If there are fewer houses available, prospective buyers bid up the price in order to get one; if fewer people are looking for a home, the price will drop because buyers have fewer competitors. Covid-19 has affected both supply and demand.

Daryl Fairweather, Redfin’s chief economist, told me that she believes the increase in home values is mostly a demand story: People are scrambling to take advantage of plummeting mortgage rates that make the cost of buying a home much cheaper.

"
"

There aren’t enough homes​

The other factor driving housing values is supply: how many homes there are available to buy — both newly built and those being sold by their existing owners.

It’s not a new problem — but it’s yet another issue Covid-19 has made worse."

 

[SomethingNew]

I am curious, do you feel the need to help your kids to pay the down payment in order for them to own a house? Or if you are looking for your first home now, do you wish your parents can help?

My kids are only in elementary school, not only I have to worry about college, I have to worry about their future down payment. There should be a 529 alike for home ownership for kids. That'll much more useful than 529.

 

[lala646]

Hamilton is crazy, too. Houses on my street are listing for 3 - 4 times what we paid 10 years ago on ours, and they are getting snatched up within a day or two of listing. Bidding wars, no conditions. One of our good friends is a real estate agent and he said it is not uncommon for houses in our area to go for a couple hundred thousand over asking.
I don’t know how anyone is entering the housing market with these prices.

Or WHY anyone is bothering? Speaking only for the US, I think many markets can expect to see big property tax increases in the coming years as states and municipalities struggle to balance their budgets post-Covid, and end up leaning on homeowners to milk that tax base.

 

[chemgirl]

Or WHY anyone is bothering? Speaking only for the US, I think many markets can expect to see big property tax increases in the coming years as states and municipalities struggle to balance their budgets post-Covid, and end up leaning on homeowners to milk that tax base.

Not sure about the US, but at least Hamilton where @Mekp lives has some major issues with rentals (I used to rent there). That entire region is in a housing crisis where one bedroom apartments were roughly $1600 per month last time I looked. Rental houses were $2400-$3000

Nearby Toronto is even more expensive and then you have the issue of housing roulette, where cheaper rental properties either have issues or you are at risk of eviction due to redevelopment (since prices are so expensive people are selling to developers and renters are out of luck). It’s not uncommon for people in more affordable rentals to move annually.

So anyone who wants 2+ bedrooms or housing security tries to buy. Many who work in the city are buying in places like Hamilton with commuter train lines. It’s driving up the prices everywhere.

We are in a housing crisis.

 

[Arcadian]

Not sure about the US, but at least Hamilton where @Mekp lives has some major issues with rentals (I used to rent there). That entire region is in a housing crisis where one bedroom apartments were roughly $1600 per month last time I looked. Rental houses were $2400-$3000

Nearby Toronto is even more expensive and then you have the issue of housing roulette, where cheaper rental properties either have issues or you are at risk of eviction due to redevelopment (since prices are so expensive people are selling to developers and renters are out of luck). It’s not uncommon for people in more affordable rentals to move annually.

So anyone who wants 2+ bedrooms or housing security tries to buy. Many who work in the city are buying in places like Hamilton with commuter train lines. It’s driving up the prices everywhere.

We are in a housing crisis.

unsure if it happened in Canada, but when the bubble popped it was fairly ugly in the US. We weren't upside down but plenty of our friends were (for years!!)

 

[chemgirl]

unsure if it happened in Canada, but when the bubble popped it was fairly ugly in the US. We weren't upside down but plenty of our friends were (for years!!)

It wasn’t too bad here when the bubble burst in the states. I was an awful selfish person looking for my first home at the time so to be honest I was a little disappointed that prices didn’t move much.

I agree that the current market isn’t sustainable. Unfortunately the rental market is also pretty awful so people are still buying.

I do wonder how much of it is a supply and demand thing here. People are resisting urbanization and moving into condos, but there aren’t enough detached homes within commuting distance of the city. I don’t know if the crash will be as profound for that reason. Or maybe the market will be flooded when my parent’s generation all start downsizing. Who knows.

 

[Dancing Fire]

I am curious, do you feel the need to help your kids to pay the down payment in order for them to own a house? Or if you are looking for your first home now, do you wish your parents can help?

Why not? if you can afford to do so. I want our daughters out of our house ASAP...

 

[SomethingNew]

Why not? if you can afford to do so. I want our daughters out of our house ASAP...

Yes and no. I don't know if I want to spoon feed our kids like that. Our kids will be provided for at least thru college, but home ownership is another new level that we never thought about. I mean we'll try to help as much as possible, but I don't want them to feel entitled.

 

[Dancing Fire]

Yes and no. I don't know if I want to spoon feed our kids like that. Our kids will be provided for at least thru college, but home ownership is another new level that we never thought about. I mean we'll try to help as much as possible, but I don't want them to feel entitled.

We help with their d/p but they also saved up some money of their own. The housing market was at its low when DD#1 bought her house. If we didn't help her with d/p she wouldn't have able to buy her house at that low level.

 

[maryjane04]

The housing market is really depressing for some. It might be a bit different in Australia but I just read an article last night about a young family saving up 100k but still not able to buy their first home. It's crazy!

$100k savings ‘impossible’ to buy house

Despite having $100,000 in savings, Amy Kitts and her husband Ben feel “hopeless” about their dream of ever owning a house in Sydney and say they are priced out of the market, despite their huge chunk of money.

www.news.com.au

I think my parents helped us with our deposit for our first home but nothing like 100k, maybe 5k? And this time around they lent us 30k to get us over the line. We will repay it when our home settles though. I can't imagine what it is like to try and get into the market for the first time.

 

[kenny]

Now I thank my rational stars that I bought over 20 years ago.
I thought then that houses were obscenely overpriced.
I had only 5% to put down so I had to pay PMI, private mortgage insurance, in case I defaulted.
GRRR! $200 a month which did not count towards the mortgage balance.

Fortunately for me prices soon shot up and rates fell so I could refi.
But it could have gone the other way.

Real estate is a roller coaster, but long term it's a good idea to buy if you can.

 

[Dancing Fire]

I had only 5% to put down so I had to pay PMI, private mortgage insurance, in case I defaulted.
GRRR! $200 a month which did not count towards the mortgage balance.

Yup, the biggest rip-off ever!.

We borrow and rob to come up with 20% down when we bought our house 35 yrs ago.

 

[SomethingNew]

Now I thank my rational stars that I bought over 20 years ago.
I thought then that houses were obscenely overpriced.
I had only 5% to put down so I had to pay PMI, private mortgage insurance, in case I defaulted.
GRRR! $200 a month which did not count towards the mortgage balance.

Fortunately for me prices soon shot up and rates fell so I could refi.
But it could have gone the other way.

Real estate is a roller coaster, but long term it's a good idea to buy if you can.

At least PMI is tax deductible... sort of.

Also PMI is the by product of the mortgage backed security market, as such the baby Kenny at the time can afford to buy into the American dream simply with a 5% down payment. Then a few years the teen Kenny was able to refi out and built equity so the now young Kenny can brag about how he wisely entered the real estate market early.

Without PMI and properly managed secondary market, no one can at the time afford to buy with less than 20% down. So overall, PMI is a good thing and as long as you get rid of it fast, it's overall a win in a long run.

 

[whitewave]

Kitchen, family room, living room, dinning area and a 1/2 bath are down stair. All 3 BRs and laundry are up stair.

Make the living room or the dining room into a bedroom. I know people who have done that.

 

[whitewave]

I hear ya, a relatively low mortgage balance is awesome! Just not having to worry about added carry costs every month is priceless. You'll be free to travel, eat well and just no baggage overall.

Is it a single family house and no HOA to worry about? Can you do an extension on the first floor to add a master suite?

Construction prices are over the top outrageous right now.