topic Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a in Mortgage Loans

Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a home

4sallypat — Sun, 28 Mar 2021 00:22:46 GMT

Is it a good time to get a home loan ?

3.25% is very tempting...

So my wife and I are looking at houses in Southern California and finding it's nearly impossible due to not enough single family homes for sale.

We have a mortgage broker who is guiding us into a loan which is pre-approved but the realtor is having fits with the competition.

We are facing multiple bidders, cash buyers, high down payment buyers, super quick closings, tens of thousands over asking, etc...

Conventional 30yr loan - 5% down - under $600,000 - but prices are above that !

Is it worth looking and making offers in this market with over inflated pricing ?

Should we wait until inventory increases ?

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

Anonymous — Sun, 28 Mar 2021 01:56:39 GMT

I live in Northern California and it's the same here. I believe it's like this across most of the US. But even before interest rates dropped it was a sellers market due to lack of inventory.

I found my best option was going for a new build. I found the new build construction homes are priced slightly below market. Good luck. But with rates as low as they are it's impossible to pass up. I was able to lock in at 2.5% and I close in 2 weeks

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

1t2b — Sun, 28 Mar 2021 03:20:11 GMT

@Anonymous wrote:
I found my best option was going for a new build. I found the new build construction homes are priced slightly below market. Good luck. But with rates as low as they are it's impossible to pass up. I was able to lock in at 2.5% and I close in 2 weeks

We're seeing the same thing where we're at, except that we're first time home buyers so I suppose at least in that regard when we shop we'll have that on our sides, no need for contingency b/c we don't have a home to sell. I've wondered the same thing though, is this a bad time to buy? We've waited so long I hate the idea of waiting longer, but I watched the 2008 bubble/crash and all the devastation and it makes me weary. Then again, supposedly this isn't a bubble and it's just going to get worse...

Woops got sidetracked there. Was going to ask, is there a way to "shop around" for what a new buid might cost, similar to trulia or redfine when buying already built?

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

Anonymous — Sun, 28 Mar 2021 03:59:44 GMT

@1t2b @I used Zillow and filtered it to say new construction then I went by the communities checked out the models and got a pricing sheet. Mind you the models are usually all the bells ans whistles. The only upgrade I went for was the appliances.

I do want hard wood floors and either quartz or butcher block counter tops but I don't like the idea of paying interest on it not being limited in only their options.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

4sallypat — Sun, 28 Mar 2021 16:14:01 GMT

Yes, I am afraid of the doom and gloom videos recently if the housing bubble bursts...

Also, what about when the feds stop the mortgage forebearances and starts evictions - will that affect me as a new homebuyer ?

With the low interest rates coupled with the higher sticker price, are we setting us up for huge depreciation in these current times ??

Another issue is that I am retiring in about 5 years and want to have something that will be a forever home....

Instead of CA, maybe I should look to retire in less expensive, less demand states ??

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

Lynnow — Sun, 28 Mar 2021 16:59:55 GMT

I'm in SoCal as well and we ran into the same problem and we also decided to go with new construction bc no one can out bid us lol

However, the prices on a lot of the new build have gon up 200k in the last 6 months and I'm not exaggerating. Its literally insane.
3.25% is actually a great interest rate but sound high compared to what they were. Most ppl I know who recently bought homes got interest rates at around 2.7% and we can't lock our rate until next month so fingers crossed for us!!

I don't think there's anything left under 600k in decent areas without a high HOA. Even small, old outdated houses in San Bernardino county are going for over 600 right now. It's crazy out there.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

iced — Mon, 29 Mar 2021 17:47:58 GMT

@4sallypat wrote:
Is it a good time to get a home loan ?
3.25% is very tempting...

So my wife and I are looking at houses in Southern California and finding it's nearly impossible due to not enough single family homes for sale.

We have a mortgage broker who is guiding us into a loan which is pre-approved but the realtor is having fits with the competition.

We are facing multiple bidders, cash buyers, high down payment buyers, super quick closings, tens of thousands over asking, etc...

Conventional 30yr loan - 5% down - under $600,000 - but prices are above that !

Is it worth looking and making offers in this market with over inflated pricing ?

Should we wait until inventory increases ?

If you want to buy a home, all you can do is keep trying. Sooner or later, you'll get an offer accepted. If you want to improve those chances, you may need to go after a home that has less appeal/demand or be willing to bid even higher to entice a seller to take your offer over one with no contingencies.

Waiting assumes that the situation will improve soon. There's no indication, especially in some markets like LA (if that's where you are in SoCal), that the situation will change in 3-5 years. You can wait it out, but be prepared that the wait may be many years.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

jmw1 — Mon, 29 Mar 2021 18:19:18 GMT

No matter what happens, you can wait a bit longer and use that time to pay down your non-mortgage debt and build your down payment. Make use of these crazy times because I sure wouldn't feel the rush to bid against dozens of others. There is a newspaper article where there were over 100 buyers for a house in Citrus Heights this weekend. Crazy.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

joemomma — Tue, 30 Mar 2021 17:36:30 GMT

Moving from Seattle (we don't own here) and under contract in Phoenix and still questioning if we're paying too much. I know we are but to back out now it will just be the same bidding, waiving appraisal contingency to find something else and prices have gone up it seems in 10 days. It's crazy. Inventory has plummeted in our range. I'm 3 months late to the market it feels like for my price point.

From a price POV it feels like what we'd likely pay in rent +/- a couple of hundy. We don't plan to move for a long time. If we try to time the market we could just end up waiting and waiting. If it crashes and we're financially able it will be a chance to pick up some more property.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

iced — Tue, 30 Mar 2021 17:48:35 GMT

I wouldn't worry too much about a housing correction unless one is trying to buy in an area that's only hot because of a surge in WFH refugees. When those workers start fleeing back towards an office, those markets will be the most at-risk to swing back to 2018-2019 competitiveness.

That is, if your particular housing market was already competitive and expensive before the pandemic started, it's going to be competitive and expensive after it's all over, too.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

tooleman694 — Tue, 30 Mar 2021 17:54:21 GMT

Here in the Seattle area it is just insane, I cannot believe it. We are buying right now..... It has been an experience..........

If we somehow get denied in UW, I will be in deep deep crap.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

Anonymous — Tue, 30 Mar 2021 22:42:07 GMT

same issue in Texas(Austin Area)

we put in 4 offers and were out bid 4 times, 1 was listed at 200, put in at 226 as we thought it was under priced, was informed we would have to go to 245 to be considered.

a friend listed her home at 225, received 17 offers all at 275 or better with in 24 hours,

the only way we bought was to have several agents looking, when our home was listed(scheduled photos on Wednesday) we got in on Monday and put in full price offer before they even had to clean up for photos.

that is my recomendation, get with several agents and have them find a home before they are open for the public.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

iced — Tue, 30 Mar 2021 23:24:55 GMT

@Anonymous wrote:
same issue in Texas(Austin Area)

we put in 4 offers and were out bid 4 times, 1 was listed at 200, put in at 226 as we thought it was under priced, was informed we would have to go to 245 to be considered.

a friend listed her home at 225, received 17 offers all at 275 or better with in 24 hours,

the only way we bought was to have several agents looking, when our home was listed(scheduled photos on Wednesday) we got in on Monday and put in full price offer before they even had to clean up for photos.

that is my recomendation, get with several agents and have them find a home before they are open for the public.

Many agents will have you sign an exclusivity contract, so be careful of this approach if you have signed such an agreement.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

GrandBaker — Wed, 31 Mar 2021 03:58:15 GMT

Wait it out. Don't buy in to the ".. but it's different this time because ..." explanations. That is BS.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

GrandBaker — Wed, 31 Mar 2021 04:08:07 GMT

Keep Austin Weird ...

Mission Accomplished! ;-)

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

1t2b — Wed, 31 Mar 2021 07:06:08 GMT

@joemomma wrote:
Moving from Seattle (we don't own here) and under contract in Phoenix and still questioning if we're paying too much. I know we are but to back out now it will just be the same bidding, waiving appraisal contingency to find something else and prices have gone up it seems in 10 days. It's crazy. Inventory has plummeted in our range. I'm 3 months late to the market it feels like for my price point.

I'm in the Phx area and have lived here for years. The answer is a resounding yes, you're paying too much. What I don't know, is this a bubble or not? It has the feeling of the 2008 bubble, but w/o the obvious factors like the subprime mortgages, so I don't know what happens next. It's been a massive change from even 4-5 mos ago.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

iced — Wed, 31 Mar 2021 13:17:46 GMT

@GrandBaker wrote:
Wait it out. Don't buy in to the ".. but it's different this time because ..." explanations. That is BS.

It is different this time.

In '07-'08 it was people getting approved who had no business being approved for mortgages they clearly couldn't afford by banks who couldn't afford the risk but took it anyway.

In '20-'21 it is increased WFH availability allowing the concentrated wealth in certain cities to spread out and dominate in comparatively cheap markets. Engineers and financial analysts in CA or the Northeast who were competing with multiple other 7-figure bidders for 1,500 square feet near work now have many more options available to them. Even after driving up prices 50-100% more than those areas were seeing 2 years ago, it's still a steal for someone who was living in an area where the median home price is over $1 million.

What we're seeing is what happens when years of pent-up wealth inequality in the US has the commuting/logistical barriers separating that inequality vanish. Those on the wrong side of that inequality are going to get crushed out if they didn't already own.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

4sallypat — Wed, 31 Mar 2021 14:36:16 GMT

@iced wrote:
@GrandBaker wrote:
Wait it out. Don't buy in to the ".. but it's different this time because ..." explanations. That is BS.
It is different this time.

In '07-'08 it was people getting approved who had no business being approved for mortgages they clearly couldn't afford by banks who couldn't afford the risk but took it anyway.

In '20-'21 it is increased WFH availability allowing the concentrated wealth in certain cities to spread out and dominate in comparatively cheap markets. Engineers and financial analysts in CA or the Northeast who were competing with multiple other 7-figure bidders for 1,500 square feet near work now have many more options available to them. Even after driving up prices 50-100% more than those areas were seeing 2 years ago, it's still a steal for someone who was living in an area where the median home price is over $1 million.

What we're seeing is what happens when years of pent-up wealth inequality in the US has the commuting/logistical barriers separating that inequality vanish. Those on the wrong side of that inequality are going to get crushed out if they didn't already own.

Well summarized and makes sense!

Due to the pandemic and people able to work further away from work, the housing market just exploded.

Paying way over comps for a house is ludicrous.

Recently heard about that Citrus Heights home in Sacramento that sold in 3 hours with over 100 buyers offering - $50K over asking !

I guess we will wait a bit and go back in the mortgage garden to see what happens when foreclosures, forebearances, and evictions happen.

Thanks for everyone's input!

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

GrandBaker — Wed, 31 Mar 2021 16:22:15 GMT

@iced wrote:
@GrandBaker wrote:
Wait it out. Don't buy in to the ".. but it's different this time because ..." explanations. That is BS.
It is different this time.

In '07-'08 it was people getting approved who had no business being approved for mortgages they clearly couldn't afford by banks who couldn't afford the risk but took it anyway.

In '20-'21 it is increased WFH availability allowing the concentrated wealth in certain cities to spread out and dominate in comparatively cheap markets. Engineers and financial analysts in CA or the Northeast who were competing with multiple other 7-figure bidders for 1,500 square feet near work now have many more options available to them. Even after driving up prices 50-100% more than those areas were seeing 2 years ago, it's still a steal for someone who was living in an area where the median home price is over $1 million.

What we're seeing is what happens when years of pent-up wealth inequality in the US has the commuting/logistical barriers separating that inequality vanish. Those on the wrong side of that inequality are going to get crushed out if they didn't already own.

You are missing my point. I am not disagreeing with your reasoning and infact will add that lack of inventory (boomers not moving due to pandemic etc.) is only adding to the issues. But the point remains that even though it is different this time it will come crashing down. For example just like sub-prime mortgages were the cause of the 2008 crash this time it could be due to income rich borrowers. And since they waive contingencies they're either all cash buyers or make up for the difference in appraisal vs. sale price with their own money thus depleting any cash reserves by overpaying. Or it could be a simple case of employers wanting their employees back in the office. Anyway, there are multiple ways this will go wrong and it's not going to be pretty.

Re: Crazy experience buying: over bidding, cash in full, low inventory - is it a good time to buy a

iced — Wed, 31 Mar 2021 16:39:31 GMT

@GrandBaker wrote:
You are missing my point. I am not disagreeing with your reasoning and infact will add that lack of inventory (boomers not moving due to pandemic etc.) is only adding to the issues. But the point remains that even though it is different this time it will come crashing down. For example just like sub-prime mortgages were the cause of the 2008 crash this time it could be due to income rich borrowers. And since they waive contingencies they're either all cash buyers or make up for the difference in appraisal vs. sale price with their own money thus depleting any cash reserves by overpaying. Or it could be a simple case of employers wanting their employees back in the office. Anyway, there are multiple ways this will go wrong and it's not going to be pretty.

Or many of these employers go to a hybrid model and some go back to cities but enough stay to keep prices elevated. All it takes is one buyer with cash to bid over asking to sink every other contender. That is, I expect we'll see a bit of a pullback from the high mark an area ends up seeing in this, but they won't be going back to pre-pandemic pricing and homes will be permanently more expensive for those who are in a market that's appealing to the WFH crowd but earn based on local wages.