I Haven't Been This Excited About Going Against The Herd in Years!

[aws]

While I agree that we are far from the speculative excess of the housing bubble, I do still wonder how long things can stay this hot. If the price gains have been driven by cash rich city dwellers moving to the suburbs, and by record low mortgage rates for buyers with good credit, then it seems like over time more and more people will be priced entirely out of the market. I'm assuming the banks aren't going to be loosening underwriting standards too dramatically, so how is the family with the national median income of 80k going to be able to buy a house? 

Are we going to need to see another giant homebuyer tax credit, or expansions of low-income housing projects?  If other countries like Canada have markets that are so much higher than even the US, how does anyone afford to live there if they aren't millionaires?

[cubsfan]

^ I think there are plenty of these suburban areas that have not seen any appreciation for years. Cities like Chicago, St. Louis, Minneapolis, Detroit, etc, etc - you are seeing lots of middle class families moving out of the cities because they are not safe while housing is still plenty affordable.

[Castanza]

9 hours ago, fareastwarriors said:

Are you a real estate investor? What is your specialty?

Although I do flip houses/ do small remodels on the side, I was referring to equities (REITs in particular). But I'll leave that up to ThePupil! He's got a way better knack for it than I. And a Bloomberg terminal 

 

Attached two pics of my current project. Bought the house at rock bottom price on a foreclosure in a great neighborhood. Typically don't get into whole houses as I work another fulltime job and it can get messy/expensive quick. This situation just worked out because of the price, location, circumstances of sale, work from "a home" , etc. Pics are from opposite angles. The major work was the kitchen/dinning room remodel. New wiring, custom cabinets (by yours truly), new floors/refinished throughout the home, windows in kitchen and dinning room, new drywall, new plumbing, new lights, tile, took down two walls put in a beam and post to open it up. I'm about 90% done (crown molding, trim, range hood, caulking and some other finish work to do). Basically I did everything myself except the countertop and the floors. Probably won't get into something this big again for a long time.

[Gregmal]

Jesus Castanza. You're a jack of all traits. The ideal, pre-2000s male. A white collar blue collar guy. I wish I could do shit like that. I honestly wouldnt make it passed pulling permits though. I have no tolerance for dealing with all that shit and especially little tolerance for municipal clipboard people. 

[thepupil]

Castanza, I am so impressed. 

the reason i buy RE through interactive brokers is that I have no earthly idea how to do any of that type of stuff and find it so intimidating.

I have zero handy-man type of skills, much less gut rehab. 

Edited April 27, 2021 by thepupil

[stahleyp]

I've done 2 foreclosures but that's enough for me (after getting a little older and having kids my interest on those projects has waned significantly).  So I know how much work goes into that, Castanza. Excellent work! 

[Castanza]

36 minutes ago, Gregmal said:

Jesus Castanza. You're a jack of all traits. The ideal, pre-2000s male. A white collar blue collar guy. I wish I could do shit like that. I honestly wouldnt make it passed pulling permits though. I have no tolerance for dealing with all that shit and especially little tolerance for municipal clipboard people. 

Thanks!

Permits and inspections! Exactly why I might not undertake this big of a project again for a bit. Youtube is one a hell of a resource. Most of it I learned in high school when my Dad would drag my ass out of bed on weekends to help him on jobs. Guess I'm appreciative now. 

All in all it took me a little over three months to do. I'll probably net about 2.5-3k per week spent on the project. Which is not to bad. That's probably a bit more than typical to be honest. As I said, that price was ridiculously low and mispriced. I had a few contractors in the area stop by and ask to buy it off me for 15k more than I paid. Luckily I have a buyer lined up (private sale) as I'm ready to get this one off the books. 

I make more just doing small projects. For example, those cabinets took me about two weeks to build, paint, and install. I would easily charge 20k+ for those. That tile backsplash I actually had quoted because I was feeling lazy....until I got a quote for 3.5k. Took me three days and $350 in materials (including a new laser level *thanks wifey).

Would never want to do this full-time. There is certainly money to be made and I enjoy it now since I have no kids etc. But I'll be damned if I end up old crippled and arthritis ridden . Ideally I'd love to build high end built to spec custom furniture on the side. The marketing is the difficult part. 

ProTip: If you're looking to avoid the high lumber prices and you happen to have some Amish individuals within a few hours of you. Give one of their sawmills a call. Bribes may be needed! 

[Viking]

Castanza, very impressive. You are an artist... the finished product looks great!  

i am ok painting and simple jobs. The rental we are moving into i am completely repainting (including kitchen cabinets), new flooring in kitchen, upgrading some light fixtures and lots of other small improvements. And, yes, youtube is an amazing resource (i have tried to explain to my kids what life was like before the internet existed...)
 

[cubsfan]

Great stuff Castanza - you are one busy guy. 

[fareastwarriors]

@Castanza Awesome! Everything looks great. Custom cabinets? You fancy.

[Spekulatius]

@Castanza Holly Molly, what a project. We just do small stuff like painting, replacing faucets etc. but nothing like this.

I agree on YouTube being an amazing resource. There is almost nothing that can done that can’t be found in YouTube.

[stahleyp]

Slightly off topic, but is it cheaper to buy Amish cabinets/furniture then regular custom cabinets? I'd assume the quality for Amish is much higher. 

[Castanza]

2 hours ago, Spekulatius said:

@Castanza Holly Molly, what a project. We just do small stuff like painting, replacing faucets etc. but nothing like this.

I agree on YouTube being an amazing resource. There is almost nothing that can done that can’t be found in YouTube.

Thanks! This guys channel in particular has been great. He's Canadian so some of the code stuff varies a bit compared to the states but it's still relevant. https://www.youtube.com/channel/UCnorhjQR4zJkT7AVNhu395Q

1 hour ago, stahleyp said:

Slightly off topic, but is it cheaper to buy Amish cabinets/furniture then regular custom cabinets? I'd assume the quality for Amish is much higher. 

I'd say prices are generally cheaper, but the quality can vary quite a bit. 

 

Also, sorry for derailing the thread haha

[DooDiligence]

1 hour ago, Castanza said:

Thanks! This guys channel in particular has been great. He's Canadian so some of the code stuff varies a bit compared to the states but it's still relevant. https://www.youtube.com/channel/UCnorhjQR4zJkT7AVNhu395Q

I'd say prices are generally cheaper, but the quality can vary quite a bit. 

 

Also, sorry for derailing the thread haha

No derailment at all, since you can reconstruct a primo set of rails anyway.

[JRM]

More anecdotes.  I haven't spent any time looking at housing, but was perusing zillow this morning for houses in our neighborhood (for some friends).  I saw the zestimate on my house, and was blown away.  We've been in our house 7 years and the zestimate was about 10% below the purchase price at the time or purchase.  Naturally, I felt like we may have overpaid a little, but we liked the location.  The zestimate is now 40% above our purchase price.  

Even crazier, my wife's parents sold their beach house in the Gulf Shores area in Alabama (closed yesterday).  They owned it for two years and realized a 50% gain.  

[rkbabang]

22 minutes ago, JRM said:

More anecdotes.  I haven't spent any time looking at housing, but was perusing zillow this morning for houses in our neighborhood (for some friends).  I saw the zestimate on my house, and was blown away.  We've been in our house 7 years and the zestimate was about 10% below the purchase price at the time or purchase.  Naturally, I felt like we may have overpaid a little, but we liked the location.  The zestimate is now 40% above our purchase price.  

Even crazier, my wife's parents sold their beach house in the Gulf Shores area in Alabama (closed yesterday).  They owned it for two years and realized a 50% gain.  

 

It is crazy.  A few houses have sold on my street in the past month similar to my house and they both went the 1st weekend on the market one for $50K above asking and the other 2 weeks ago for $80K above the already high asking price.  Based on that I could get about 50% more for my house than I bought it for 5 and a half years ago.

[gfp]

There is just no inventory of homes for sale.  Nationally, inventories of homes is way down and replacement cost to build a new home is way up.  Everything halfway decent in my city goes under contract after the first open house, way less than one week on the market.  If you want something in my market you have to bid above asking and work it back after inspections.  We've stopped buying anything locally.  We'll see if that ends up being something we regret.  ("we" is my wife and I, not the bullshit "we" so common on message boards fwiw)

[thepupil]

14 minutes ago, gfp said:

There is just no inventory of homes for sale.  Nationally, inventories of homes is way down and replacement cost to build a new home is way up.  Everything halfway decent in my city goes under contract after the first open house, way less than one week on the market.  If you want something in my market you have to bid above asking and work it back after inspections.  We've stopped buying anything locally.  We'll see if that ends up being something we regret.  ("we" is my wife and I, not the bullshit "we" so common on message boards fwiw)

ha, there aren't any inspections anymore, here. when we bought 2019 there was no such thing as an inspection contingency, but now in many cases, there's no such thing as a pre-inspection. In 2019 at least you could pay the $600 and know what you're getting into. Now ya just gotta put in the offer.

 

All cash, no contingencies, no inspections! 

Edited April 30, 2021 by thepupil

[Gregmal]

If you've bought a home in the past half decade why wouldn't you be looking at a cash out refi right now?

[thepupil]

Some anecdata from my neck of the woods

https://www.redfin.com/MD/Chevy-Chase/23-Primrose-St-20815/home/10640879?utm_source=ios_share&utm_medium=share&utm_campaign=copy_link&utm_nooverride=1&utm_content=link

$360K 1983 sale price

$2.7mm 2017 sale price

$3.7mm 2021 list price

$4.5mm Sold $900/foot

The home was renovated in 2018, but not structurally, new systems/refresh/kitchen, no more than $500K at most

It's starting to feel a bit bubbly. 

EDIT: you can actually see the old 2017 listing photos on redfin and compare. 

Edited May 4, 2021 by thepupil

[Gregmal]

Any way you cut it, homebuilders will be very busy, for a very long time. There is no credible bear case for something like NVR, IMO. 

[Gregmal]

https://www.yahoo.com/news/youre-californian-state-wants-cover-160016223.html

 

1st inning. Expect a long runway and plenty more crap like this...loosening of lending standards, homebuyer programs, etc. 

[Gregmal]

*Starting to come back. Thats the key. From there its still a long ways away from when all the debauchery can take place and cause things to melt up.

 

I'm currently working on a 40 year fixed, stated income, IO first 10 years, sub 5% rate loan. Feel like a total dork getting excited about nontraditional or exotic financial products, but thats pretty awesome we're seeing these products again. 

[fareastwarriors]

9 minutes ago, Gregmal said:

*Starting to come back. Thats the key. From there its still a long ways away from when all the debauchery can take place and cause things to melt up.

 

I'm currently working on a 40 year fixed, stated income, IO first 10 years, sub 5% rate loan. Feel like a total dork getting excited about nontraditional or exotic financial products, but thats pretty awesome we're seeing these products again. 

 

I think you're responding to me but I ended up deleting my post.

 

Yes, as mentioned, the stated income/no income verification loans are coming back. As a RE investor, I'm loving it.

 

I think the underwriting is still okay since they only letting me do a cash out refi at 65% LTV with rates in low 4%, 30 Years fixed.

 

I got other properties with higher than 5% loans. Can't wait to refi those!

 

[Parsad]

Rosenberg comments on prices in North Bay, ON.  Cheers!
 

David Rosenberg on Twitter: "I'm going to change the Einstein definition of insanity to this: when home prices in North Bay, Ontario begin to look like a dotcom stock in 1999. There's a whole lot of pain, globally speaking, if (when) this housing bubble bursts. https://t.co/NTR4H2Z7WT" / Twitter