Mortgage rates

BMF

Bad Mother....
Lifetime Member
Sep 8, 2014
25,399
59,220
There’s going to come a point where builders can’t sell their product. Those who used fixed priced contracts may end up bankrupt. Those that didn’t will have trouble meeting any contractual deadlines.

apparently last lumber is not the issue so much as spray foam. So other products like doors are being back ordered with no ETA. Windows are apparently in actual shortage too. Does anyone really think G’ville will see $200/SF beginner homes? Because that’s not too far off the horizon.

There’s always a terminal price on things like this.

I'll be curious if builders start putting out smaller (less sf) homes, especially starter homes - w/ 9x11 bedrooms, smaller master bathrooms, laundry "room" in the garage, etc.
 

Detroitgator

Well-Known Member
Lifetime Member
Jul 15, 2014
28,227
46,731
I'll be curious if builders start putting out smaller (less sf) homes, especially starter homes - w/ 9x11 bedrooms, smaller master bathrooms, laundry "room" in the garage, etc.
ALL new construction in our area (and I'm talking about several 300+ homesite developments, one with over 700) are in what I'd call the "modern era first time new homebuyer" price range and square footage category. All right around $225K (+/- $50K), all 2100-2400 sq ft. Homes that are a step up from renting/owning a 1500+/- sq ft ranch built in the 1950's/60's.
 

BMF

Bad Mother....
Lifetime Member
Sep 8, 2014
25,399
59,220
ALL new construction in our area (and I'm talking about several 300+ homesite developments, one with over 700) are in what I'd call the "modern era first time new homebuyer" price range and square footage category. All right around $225K (+/- $50K), all 2100-2400 sq ft. Homes that are a step up from renting/owning a 1500+/- sq ft ranch built in the 1950's/60's.

For most of (working) America (except for maybe the most rural parts of the country), anything under $300K is "affordable", especially w/ today's interest rates and a dual-income household. I'd love to land a 2100sf brand new house for $225k-$275k! I don't think the 'cost of construction' has been factored into a lot of these pre-planned communities - but a lot of the builders have signs that say "From $225k" - and there's nothing anywhere close to that price available.
 

Detroitgator

Well-Known Member
Lifetime Member
Jul 15, 2014
28,227
46,731
For most of America (except for maybe the most rural parts of the country), anything under $300K is "affordable", especially w/ today's interest rates and a dual-income household. I'd love to land a 2100sf brand new house for $225k-$275k! I don't think the 'cost of construction' has been factored into a lot of these pre-planned communities - but a lot of the builders have signs that say "From $225k" - and there's nothing anywhere close to that price available.
Elite Son #2 just turned in a paper on Saturday night for his Elite Special Topics in Real Estate class at UF. It was comparing/contrasting events leading into 2007 with today. Basically, "while the current boom does appear to be truly demand driven (vs almost pure speculation going into 2007), there are several similarities that must be watched." My #1 concern is exactly what you just said. Not since 2005is have I seen these massive 300+ home developments get started... and they ALL busted here in the panhandle in 2007 and took 10 full years to build out. It is looking EXACTLY like that here all over again.
 

Detroitgator

Well-Known Member
Lifetime Member
Jul 15, 2014
28,227
46,731
Here's a "for instance." This is Ashley Plantation here. In 2006, all those streets, sewage, street lights, and power were in place. From 2007 until about 2015-16, there were exactly FIVE houses in that neighborhood (it's where I took both sons to learn to drive because it was just streets). It's a little more built out than this pic, but there are STILL empty streets to this day.
Google Maps

So yes, the fact that this still isn't built out (very nice homes though, most bigger than what I mentioned is going in now) while we have 4+ new massive ground clearings going on right now, is HIGHLY concerning to me.
 

BMF

Bad Mother....
Lifetime Member
Sep 8, 2014
25,399
59,220
Elite Son #2 just turned in a paper on Saturday night for his Elite Special Topics in Real Estate class at UF. It was comparing/contrasting events leading into 2007 with today. Basically, "while the current boom does appear to be truly demand driven (vs almost pure speculation going into 2007), there are several similarities that must be watched." My #1 concern is exactly what you just said. Not since 2005is have I seen these massive 300+ home developments get started... and they ALL busted here in the panhandle in 2007 and took 10 full years to build out. It is looking EXACTLY like that here all over again.

I see some of these big communities going in when I travel, but around here in the DC area it's so built up you rarely see enough land for more than a few houses (that a builder buys up and puts in several new homes). I have seen them in rural parts of Virginia when I drive out to our cabin property. I think Son #2 is spot on that 2005 vs. 2021 is different in the 'supply driven' sense. But another BIG difference is, in 2005-2008 there wasn't a government mandated foreclosure/eviction mandate in place.

I said this earlier, but I do think we'd have already seen a housing correction had covid not happened. It would have likely happened sometime between last fall and now. But, due to covid: 1) demand went up, 2) interest rates fell drastically, 3) lumber/building costs went up (supply issue?), 4) people are working from home more and want a larger house (home office), 5) the foreclosure/eviction mandates are still in place, 6) people relocating to Red states - and I'm sure I'm missing a few other factors. I expect once Blue states reopen and most of the country is vaccinated we'll see a little boom (some people are scared to sell/move due to covid - and people are ready to let loose/spend money/travel/move). But once that settles down (by late fall? early winter?) what happens? Will the eviction/foreclosure protections still be in place? Will interest rates rise? Who knows. I'm sellilng/moving soon, so I'm not sure what we should do (the wife is hell bent on buying something, even if it's a smaller, less desirable house/location).
 

Detroitgator

Well-Known Member
Lifetime Member
Jul 15, 2014
28,227
46,731
I see some of these big communities going in when I travel, but around here in the DC area it's so built up you rarely see enough land for more than a few houses (that a builder buys up and puts in several new homes). I have seen them in rural parts of Virginia when I drive out to our cabin property. I think Son #2 is spot on that 2005 vs. 2021 is different in the 'supply driven' sense. But another BIG difference is, in 2005-2008 there wasn't a government mandated foreclosure/eviction mandate in place.

I said this earlier, but I do think we'd have already seen a housing correction had covid not happened. It would have likely happened sometime between last fall and now. But, due to covid: 1) demand went up, 2) interest rates fell drastically, 3) lumber/building costs went up (supply issue?), 4) people are working from home more and want a larger house (home office), 5) the foreclosure/eviction mandates are still in place, 6) people relocating to Red states - and I'm sure I'm missing a few other factors. I expect once Blue states reopen and most of the country is vaccinated we'll see a little boom (some people are scared to sell/move due to covid - and people are ready to let loose/spend money/travel/move). But once that settles down (by late fall? early winter?) what happens? Will the eviction/foreclosure protections still be in place? Will interest rates rise? Who knows. I'm sellilng/moving soon, so I'm not sure what we should do (the wife is hell bent on buying something, even if it's a smaller, less desirable house/location).
I'm going to do this the quick/easy (i.e., "lazy") way... ;)
  1. I understand DC, and it doesn't count in this as far as I'm concerned (neither does a place like Huntsville) because all jobs are either direct govt, govt contract, or own a business where the first two types shop for everything... the local economy is effectively "immune from reality/downturn."
  2. Son #2 addressed the eviction/foreclosure issue, even used the graph/cited the source for the post in this forum! ;)
  3. Second paragraph: agreed, and he mentioned all of those.
  4. Yeah, the decision to sell/buy now is a tough one... we've though about it too. :(
 

Detroitgator

Well-Known Member
Lifetime Member
Jul 15, 2014
28,227
46,731
@BMF @Detroitgator

Here’s our list of new developments around the Reno area. 70 different communities.

New Homes in Reno, NV | 70 Communities
Yeah, it's nuts here... Escambia County is having to reconsider impact fees (or equivalent) on developers cuz the geniuses just realized that development in certain areas is outstripping the infrastructure/schools they actually did plan for 5-10 years ago. Here in Santa Rosa, we DID put an impact fee in a few years ago, but the county commission is flip flopping given the power of the developers locally. I can't tell you how many communities we have going in around me, but there are at least 7 with more than 100-200 homes, one with over 700.
 

BMF

Bad Mother....
Lifetime Member
Sep 8, 2014
25,399
59,220
@BMF @Detroitgator

Here’s our list of new developments around the Reno area. 70 different communities.

New Homes in Reno, NV | 70 Communities

Wow. That's out of control - all the Bay Area money coming to Reno. I'm sure the locals love that! I skimmed through the list, there aren't many "affordable" communities going in (Royal Troon, looks like single family homes starting at $299k is one of the few, NV Flats starting at $304k).
 

LagoonGator68

Founding Member
mostly peaceful protester
Lifetime Member
Jun 12, 2014
7,115
6,162
Founding Member
Wow. That's out of control - all the Bay Area money coming to Reno. I'm sure the locals love that! I skimmed through the list, there aren't many "affordable" communities going in (Royal Troon, looks like single family homes starting at $299k is one of the few, NV Flats starting at $304k).

Starting at price is usually a figment of the marketing agency’s imagination.
 

NVGator

Founding Member
Member
Lifetime Member
Jun 11, 2014
14,903
20,210
Founding Member
Yeah, it's nuts here... Escambia County is having to reconsider impact fees (or equivalent) on developers cuz the geniuses just realized that development in certain areas is outstripping the infrastructure/schools they actually did plan for 5-10 years ago. Here in Santa Rosa, we DID put an impact fee in a few years ago, but the county commission is flip flopping given the power of the developers locally. I can't tell you how many communities we have going in around me, but there are at least 7 with more than 100-200 homes, one with over 700.
Santa Rosa, CA.?
 

NVGator

Founding Member
Member
Lifetime Member
Jun 11, 2014
14,903
20,210
Founding Member
Wow. That's out of control - all the Bay Area money coming to Reno. I'm sure the locals love that! I skimmed through the list, there aren't many "affordable" communities going in (Royal Troon, looks like single family homes starting at $299k is one of the few, NV Flats starting at $304k).
Our median price was up to $485,000. There isn’t any affordability here. It’s insane. I have 4 escrows right now on Buy side that are $35k-$85k over appraisal and the buyers are making up the difference. It’s nuts. Now, to win, Buyers are also offering to pay all closing costs.
 

78

Founding Member
Dazed and Confused
Lifetime Member
Jun 9, 2014
19,745
27,635
Founding Member
It’s pretty insane here, too. I bid on six properties before winning a contract. I viewed the property I’m buying on a Friday. The next day, the home attracted 100 potential buyers during a two-hour open house. On two of the previous unsuccessful bids, I even included a signed letter to the seller explaining why I was the one they should consider selling to. A lot of good that did.

The supply/demand quotient is way out of whack. Forbearance and Covid have led to a dearth of supply. The demand is driven by people from other states, esp big heavy-handed government states, being attracted to Florida’s warm climate, no state income tax, DeSantis’ hands-off governance style, a reasonable cost of living. They’re entering the bidding with big wads of cash.

And also this: More and more workers are being granted permanent work-from-home privilege. They’re cashing in on it to cherry pick where they want to live. Florida inevitably rises to the top.
 

Users who are viewing this thread

Help Users

You haven't joined any rooms.