House building and buying prices are nuts right now

Realtors drive up the property prices, partly because part of the price is also a commission and fees. Add about ten percent to property values as the property is sold, taxes follow sales prices and go up. People get homeowner credits to lower the tax to keep it affordable, but once it is sold, the taxes jump way up.

I was a real estate sales person back in the late eighties, I didn't sell long but they taught us how they were trying to raise property values to get higher commissions some day. The county is not going to complain, they get more income from the extra value of the homes. They can keep the tax rate the same and keep getting big increases in income for their projects.

States love it too, so do banks, they can lend more money and make way more interest. Seems like banks are not worried about people defaulting as much anymore, before you had to have a steady job, twenty percent downpayment, and good references to get a loan from a real bank. They had lonesharks that would lend you money at high rates, but businesses like quicken loans were avioded like the plague years ago.

originally posted by: Edumakated

Second, mortgage financing has inflated prices. People are able to finance larger purchases and this has driven up prices.

LOL
There should be a discount for paying cash

originally posted by: Lumenari

originally posted by: Edumakated
There are a number of factors as to why housing is so expensive in many areas.

First, it is simple supply and demand. Areas with good jobs, good schools, commuting times, amenities, etc will be more expensive and desirable.

Second, mortgage financing has inflated prices. People are able to finance larger purchases and this has driven up prices.

Third, builders are only building luxury homes. The cost of land, regulations, permitting, etc make it nearly impossible to build cheap houses so it is easier to build more expensive homes.

By in large, real estate is a good long term investment. Once you lock in a rate and price, you are protected from inflation. I bought my house about 15 years ago. A house is a forced savings account. You pay the mortgage off and you are left with an asset that is usually worth more than you paid. In addition, you are protected from inflation. Your mortgage payment will stay the same even as costs increase around you.

Um... yea.

Unless you are buying your property for the purpose of dying there, you are going to get hosed on the next housing bubble, which is basically here already.

123,000 homes selling for 700k in a market that has 6 buyers doesn't bode well for the long-term.

Ask Chicago.

Chicago market is doing quite well... if you are talking downtown. Yes, some of the suburbs are getting killed but that is because people want to live closer to the loop. Also, some of the suburban markets have out of date housing stock that isn't as favorable with younger buyers.

The vast majority of people who buy for at least a five year time horizon tend to do ok.

originally posted by: Edumakated

originally posted by: Lumenari

originally posted by: Edumakated
There are a number of factors as to why housing is so expensive in many areas.

First, it is simple supply and demand. Areas with good jobs, good schools, commuting times, amenities, etc will be more expensive and desirable.

Second, mortgage financing has inflated prices. People are able to finance larger purchases and this has driven up prices.

Third, builders are only building luxury homes. The cost of land, regulations, permitting, etc make it nearly impossible to build cheap houses so it is easier to build more expensive homes.

By in large, real estate is a good long term investment. Once you lock in a rate and price, you are protected from inflation. I bought my house about 15 years ago. A house is a forced savings account. You pay the mortgage off and you are left with an asset that is usually worth more than you paid. In addition, you are protected from inflation. Your mortgage payment will stay the same even as costs increase around you.

Um... yea.

Unless you are buying your property for the purpose of dying there, you are going to get hosed on the next housing bubble, which is basically here already.

123,000 homes selling for 700k in a market that has 6 buyers doesn't bode well for the long-term.

Ask Chicago.

Chicago market is doing quite well... if you are talking downtown. Yes, some of the suburbs are getting killed but that is because people want to live closer to the loop. Also, some of the suburban markets have out of date housing stock that isn't as favorable with younger buyers.

The vast majority of people who buy for at least a five year time horizon tend to do ok.

Chicago recently was trying to auction off houses for 50 dollars and couldn't get rid of about 7,000 of them.

Keep typing whatever you want but it doesn't matter...

Because markets.

originally posted by: Lumenari

originally posted by: Edumakated

originally posted by: Lumenari

originally posted by: Edumakated
There are a number of factors as to why housing is so expensive in many areas.

First, it is simple supply and demand. Areas with good jobs, good schools, commuting times, amenities, etc will be more expensive and desirable.

Second, mortgage financing has inflated prices. People are able to finance larger purchases and this has driven up prices.

Third, builders are only building luxury homes. The cost of land, regulations, permitting, etc make it nearly impossible to build cheap houses so it is easier to build more expensive homes.

By in large, real estate is a good long term investment. Once you lock in a rate and price, you are protected from inflation. I bought my house about 15 years ago. A house is a forced savings account. You pay the mortgage off and you are left with an asset that is usually worth more than you paid. In addition, you are protected from inflation. Your mortgage payment will stay the same even as costs increase around you.

Um... yea.

Unless you are buying your property for the purpose of dying there, you are going to get hosed on the next housing bubble, which is basically here already.

123,000 homes selling for 700k in a market that has 6 buyers doesn't bode well for the long-term.

Ask Chicago.

Chicago market is doing quite well... if you are talking downtown. Yes, some of the suburbs are getting killed but that is because people want to live closer to the loop. Also, some of the suburban markets have out of date housing stock that isn't as favorable with younger buyers.

The vast majority of people who buy for at least a five year time horizon tend to do ok.

Chicago recently was trying to auction off houses for 50 dollars and couldn't get rid of about 7,000 of them.

Keep typing whatever you want but it doesn't matter...

Because markets.

Yeah... I only live here and been in mortgage business for 16 years. I have no idea what I am talking about...

So according to you, all the buyers of the multi-million properties in downtown Chicago don't exist... You can barely find a 2 bed / 2 bath condo for under $500k in most neighborhoods. A fixer upper single family will run you $1 million.

Yes, there are some crap neighborhoods where you can't give a home away. However, those neighborhoods are not areas people think of when you say "Chicago". Those are the same areas with all the violence. Chicago is a massive city. The downtown area and surrounding neighborhoods are doing VERY WELL. The city is one of the top 5 cities right now for economic growth.

If you are an educated professional, things are booming.

a reply to: Edumakated

Let me put this another way.

My property value doubled in the last 2 years to roughly $980,000.

My property taxes doubled as well... now I have to pay $1,400 a year.

Now in my case, I mow a section of one of my pastures and it is considered an emergency aircraft landing, giving me a tax discount.

I let the forest service come in and plant a tree farm, which gives me another tax discount.

What is left I usually sell 3 bottles of my wine to pay the difference.

Now I have to sell 6 bottles...

That chaps my ass.

How are your property taxes?

a reply to: Edumakated

I really don't care if you have spent the last 300 years in the mortgage business.

It doesn't take a rocket scientist to see that your whole state is cratering economically, much less Chicago.

So your housing values will peak soon, people will leave because they have to, the state is insolvent and there you are...

Having the nicest house that nobody wants to buy.

Let's see where your pretty dream is in 2024.

Everything begins and ends with the banks. Interest rates are low so borrowers can borrow more money - and sellers can sell higher. Everyone is making more money.

Now houses are selling for more and the incomes are not keeping up. Fewer people owning houses now than the 1960s.

Florida is mostly owned by seniors and non-American investors whoo can't snatch it up fast enough. All this activity drives the values higher than the working class can keep up, drives up rental incomes - outpacing most renters. Getting serious here.

Many see this unsustainable housing bubble possibly creating a situation worse than 2008. That was the year, after almost 30 years, that I left the real estate area for good.

After one year, my Florida home has increased, according to taxes, by almost 35%. This is ridiculous. Wish I hadn't paid cash. Lapse of judgment but I do plan on staying here forever because I love it.

a reply to: Edumakated

If you are an educated professional, things are booming.

These were the people in 2007/8 that fell the hardest in Illinois.
Those were the jobs that were cut first. I remember it.

Yes I know there will always be some places in Chicago that will always, always have value. It doesn't mean
that it is untouchable, or won't decline in value either. Hotels know that all too well.