Arizona Rock Crawler

[psrivats]

The hard part is that it may be years before the prices actually start falling. I didn’t want to miss an opportunity to buy while I can still afford it because I have a feeling a year from now I wouldn’t be able to qualify for anything at the rate things are going. Over the course of a month after getting pre approved, I watched prices noticeably increase and my borrowing power decrease by like 40k as interest rates rose. Most predictions I read showed prices will rise another 16- 20% this year and continue to rise for another 5 years in our area. Thats a long time wasting money on rent and missing out on gaining equity. We just made sure to find a house we will be happy in for a long time to come if prices do end up falling for a while.

I wanted to buy in late 2020, but decided to wait a little given covid and uncertainty. Then 2021 came and the Fed QE began. Every house went up 70-100k more once interest rates went down and people started going nuts with borrowing since the money that really mattered to a lot of people is the monthly payment (just like what a lot of people do with new cars). Then, the overbidding craze started since a lot of regular people wanted to get into real estate investing/flipping. All of a sudden you started seeing "cash offers" from buyers so that you could stand out (in reality, most of these fronted by these new-age companies and you get a mortgage in the back end after paying them a hefty fee). Stock market went on a real ripper and people had more money. People started waiving all the contingencies just so that they could buy a house, no matter good or bad. Then a lot of people started taking HELOCs and investing that in a 2nd property that they could rent out. Then inflation started going up and even more people wanted to buy real estate as a hedge against that inflation. All of a sudden, we have this massive demand and the supply either stayed the same (or went down a little due to supply chain stuff on new builds).

It was (and still is) madness. I decided to stay out of it for now. Yes, there is a chance that this will go on for years and I would not be able to buy for that time. I don't consider renting as "wasting money" - right now, whatever I can afford with whatever downpayment I have, is more than the rent I pay. Renting gives me the freedom to pick and move as needed. Also I think that this madness will cool down as mortgage interest rates goes up and the buyer pool diminishes. I am not sure there will be a "crash" but there will be some softening and adjustment. The other scenario is that we end up like Canada. The Fed is playing a real time game of chess - there is no precedence to what has happened and they are also figuring it out as time goes inspite of what they say. I am not entirely confident that we can have a "soft landing" like they envision without taking us into a recession.

It is great that your financials allowed you to buy a house. As long as your job security is good and you plan to stay 5-7 years and you have not overextended yourself, you will very likely do just fine.

 

[psrivats]

The Policy that needs to be added is some fiscal responsibility. Supply chain shortages and all the "free money" that was handed out is pushing this. The .gov needs to STOP spending money that they don't have as a start.

Absolutely - this is exactly what needs to happen for things to return to some level of normalcy. But running on debt seems to the be the future - and the scary part is that they could freely issue more debt than any of us can ever imagine. The QE stuff that happened with Covid was really quite extreme - and I really wonder if that much QE was actually needed.

 

[starkey480]

I wanted to by in late 2020, but decided to wait a little given covid and uncertainty. Then 2021 came and the Fed QE began. Every house went up 70-100k more once interest rates went down and people started going nuts with borrowing since the money that really mattered to a lot of people is the monthly payment (just like what a lot of people do with new cars). Then, the overbidding craze started since a lot of regular people wanted to get into real estate investing/flipping. All of a sudden you started seeing "cash offers" from buyers so that you could stand out (in reality, most of these fronted by these new-age companies and you get a mortgage in the back end after paying them a hefty fee). Stock market went on a real ripper and people had more money. People started waiving all the contingencies just so that they could buy a house, no matter good or bad. Then a lot of people started taking HELOCs and investing that in a 2nd property that they could rent out. Then inflation started going up and even more people wanted to buy real estate as a hedge against that inflation. All of a sudden, we have this massive demand and the supply either stayed the same (or went down a little due to supply chain stuff on new builds).

It was (and still is) madness. I decided to stay out of it for now. Yes, there is a chance that this will go on for years and I would not be able to buy for that time. I don't consider renting as "wasting money" - right now, whatever I can afford with whatever downpayment I have, is more than the rent I pay. Renting gives me the freedom to pick and move as needed. Also I think that this madness will cool down as mortgage interest rates goes up and the buyer pool diminishes. I am not sure there will be a "crash" but there will be some softening and adjustment. The other scenario is that we end up like Canada. The Fed is playing a real time game of chess - there is no precedence to what has happened and they are also figuring it out as time goes inspite of what they say. I am not entirely confident that we can have a "soft landing" like they envision without taking us into a recession.

It is great that your financials allowed you to buy a house. As long as your job security is good and you plan to stay 5-7 years and you have not overextended yourself, you will very likely do just fine.

I know what you mean about rent being affordable and giving you more freedom. For a while I was toying with staying in our apartment until this all cooled down. Then found out how much rent will be going up next year if we sign another lease (ridiculous amount) and it made the decision much easier.

For me there’s also an aspect of not just treating a house as an investment. We are tired of communal living and want to begin the chapter of home ownership and taking pride in a home.

There’s no right or wrong answers. Definitely different strategies and ways of looking at it. At the end of the day, if you’re comfortably living and happy then that’s all that matters.

 

[Mike_H]

Absolutely - this is exactly what needs to happen for things to return to some level of normalcy. But running on debt seems to the be the future - and the scary part is that they could freely issue more debt than any of us can ever imagine. The QE stuff that happened with Covid was really quite extreme - and I really wonder if that much QE was actually needed.

I wanted to buy in late 2020, but decided to wait a little given covid and uncertainty. Then 2021 came and the Fed QE began. Every house went up 70-100k more once interest rates went down and people started going nuts with borrowing since the money that really mattered to a lot of people is the monthly payment (just like what a lot of people do with new cars). Then, the overbidding craze started since a lot of regular people wanted to get into real estate investing/flipping. All of a sudden you started seeing "cash offers" from buyers so that you could stand out (in reality, most of these fronted by these new-age companies and you get a mortgage in the back end after paying them a hefty fee). Stock market went on a real ripper and people had more money. People started waiving all the contingencies just so that they could buy a house, no matter good or bad. Then a lot of people started taking HELOCs and investing that in a 2nd property that they could rent out. Then inflation started going up and even more people wanted to buy real estate as a hedge against that inflation. All of a sudden, we have this massive demand and the supply either stayed the same (or went down a little due to supply chain stuff on new builds).

It was (and still is) madness. I decided to stay out of it for now. Yes, there is a chance that this will go on for years and I would not be able to buy for that time. I don't consider renting as "wasting money" - right now, whatever I can afford with whatever downpayment I have, is more than the rent I pay. Renting gives me the freedom to pick and move as needed. Also I think that this madness will cool down as mortgage interest rates goes up and the buyer pool diminishes. I am not sure there will be a "crash" but there will be some softening and adjustment. The other scenario is that we end up like Canada. The Fed is playing a real time game of chess - there is no precedence to what has happened and they are also figuring it out as time goes inspite of what they say. I am not entirely confident that we can have a "soft landing" like they envision without taking us into a recession.

It is great that your financials allowed you to buy a house. As long as your job security is good and you plan to stay 5-7 years and you have not overextended yourself, you will very likely do just fine.

Very Well Said, Sri.

There are some striking parallels between what is happening now and when Nixon pulled us off the gold standard in 71. That was politically motivated, not economically motivated... He knew it would be policital suicide to admit that the US was writing checks it literally couldn't cash, there was a run on the gold reserves of people (nations, really) "calling their debt" because of all the gov programs they were sponsoring at the time. They tried a modest interest hike, but again, they didn't want to admit it was out of control, so they just pulled the gold backing from the dollar and said, "Trust us." About overnight, gold went from around 40 dollars an ounce to 820 or something insane (though today is more than double that). And then...inflation. Some of the older guys probably remember, I was just a little kid, but my parents borrowed as something like 18% interest on the house I spent my childhood in.

Same thing needs to happen to control it now. Drastically modified fiscal policy as well as a pretty dramatic hike in interest rates. I'm not smart enough to know if we're beyond the point of no return, but I do know that the government won't do things the "right" way...just the easy way...so I'm buckled up and expecting a wild ride.

 

[psrivats]

I know what you mean about rent being affordable and giving you more freedom. For a while I was toying with staying in our apartment until this all cooled down. Then found out how much rent will be going up next year if we sign another lease (ridiculous amount) and it made the decision much easier.

For me there’s also an aspect of not just treating a house as an investment. We are tired of communal living and want to begin the chapter of home ownership and taking pride in a home.

There’s no right or wrong answers. Definitely different strategies and ways of looking at it. At the end of the day, if you’re comfortably living and happy then that’s all that matters.

I stopped living in apartments about 10years ago. I lived in enough crappy ones through grad school and early years of work and I cannot do that anymore. The sad thing in last few years is that rent for a 2b2ba apartment in a decent part of town is not far from what you pay for a smaller single family home. I really like having a backyard and I really value my peace in the evenings after a long hard day at work. I never cared for any of the typical apartment amenities (pool/clubhouse/common areas stuff), it was just money wasted for me since they price all that stuff into the rent. I also do not care for living in a city .. prefer the cheaper, quieter suburbs and I can always go the city for food/meeting friends etc as needed on the weekends.

What I have done after moving to Oregon is to rent a small house directly from the owner. Mostly I know after 1-2 meetings whether it would work with the owner or not - some people are just nuts. Since I am single, don't care about school districts and such, so that gives me a little bit of freedom in terms of area. The place I live at now, I have been 3 years and the owner is a really nice older gentleman who has priced it reasonably - his goal is to have to a good tenant that will care for the place. The prev house I lived at, the owners decided to sell and I had to move, otherwise I was happy there too. While my rent has gone up every year, it has not been painful so far but it is getting to the territory where it is comparable to a mortgage. This summer when I renew my lease, I fully expect it to go up again and to cross that threshold. I still think it is the right decision for me not to buy at this time.

And you are right, there is no right or wrong. It all has do with your comfort levels and financials and happiness. I do not tend to tie my worth into material stuff I own in general .. that only leads down a rabbit hole. People have different things they want out of their lives. I seek simplicity.

 

[psrivats]

Very Well Said, Sri.

There are some striking parallels between what is happening now and when Nixon pulled us off the gold standard in 71. That was politically motivated, not economically motivated... He knew it would be policital suicide to admit that the US was writing checks it literally couldn't cash, there was a run on the gold reserves of people (nations, really) "calling their debt" because of all the gov programs they were sponsoring at the time. They tried a modest interest hike, but again, they didn't want to admit it was out of control, so they just pulled the gold backing from the dollar and said, "Trust us." About overnight, gold went from around 40 dollars an ounce to 820 or something insane (though today is more than double that). And then...inflation. Some of the older guys probably remember, I was just a little kid, but my parents borrowed as something like 18% interest on the house I spent my childhood in.

Same thing needs to happen to control it now. Drastically modified fiscal policy as well as a pretty dramatic hike in interest rates. I'm not smart enough to know if we're beyond the point of no return, but I do know that the government won't do things the "right" way...just the easy way...so I'm buckled up and expecting a wild ride.

This website is fascinating - https://wtfhappenedin1971.com/. I came across it a few years ago and then learnt all about the Nixon Shock and what happened in Japan (Lost Decades) - it led me the down the road of learning about how the governments worldwide run their fiscal and monetary policies and wrapping my head around the idea of how debt is used a tool to run a country's economy. It is sometimes very scary since it all feels like a fragile house of cards.

 

[psrivats]

Same thing needs to happen to control it now. Drastically modified fiscal policy as well as a pretty dramatic hike in interest rates. I'm not smart enough to know if we're beyond the point of no return, but I do know that the government won't do things the "right" way...just the easy way...so I'm buckled up and expecting a wild ride.

I don't think anyone knows, including the Fed. That is why you hear all this talk about them considering discussing taking action (ie thinking about thinking to do something) just to test the waters, and depending on market response they will either proceed to hike the FFR or just take it at a slower pace. They are being extremely cautious and that may be detrimental in itself since they absolutely cannot predict what thing will see a run up or down and how the bigger picture will change. Butterfly effect in real life!

 

[Gollywomper]

From what I can see there doesn’t seem to be an over qualifying issue. It was very difficult for us to qualify but that’s also the nature of being self employed. Prices may not be able to climb at this rate for much longer, but I don’t see the bubble problem happening. With the current issue it seems more likely the prices will slowly parachute down as the supply chain recovers and we can build houses faster. In our area at least, I don’t see the demand to live here changing anytime soon.

Investors charging 20-50% over mortgage for rent is a large part too.

 

[starkey480]

Investors charging 20-50% over mortgage for rent is a large part too.

Absolutely. The price of rent is sky rocketing. My apartment is wanting close to 2k per month next year for our little 600 sq ft studio apartment. A mortgage started to look pretty good when I saw that.

 

[Gollywomper]

I could imagine living apartments much less having close neighbors. Living on a couple acres is very nice. However our eventual move to nevada looks to be challenging with housing prices.

 

[starkey480]

I could imagine living apartments much less having close neighbors. Living on a couple acres is very nice. However our eventual move to nevada looks to be challenging with housing prices.

I can’t stand apartments anymore. My garage has been blocked by moving trucks at least 10 times this month and I have to track down the owner and am late for stuff as a result. Little shit like that is just driving me mad with communal living.

 

[5632]

Around the Phoenix area the supply chain will continue to be short. We have over 400 people moving in daily.

 

[freedom_in_4low]

We bought our lumber two months ahead of being ready for it because it was jumping 20% in March. Once the March price was announced we had about a day (in mid Feb) to get it ordered before all the delivery slots filled up for the rest of the month. Our contractor could be better in the communication department, but it's probably helped that her husband works at the mill so she gets insider info.

 

[someguysjeep]

Investors charging 20-50% over mortgage for rent is a large part too.

that's the latest rage around here. investment corps buying every thing they can, jackin up cost's for rentals.
but TBH it's always been that way here, financial segregation is just as if not more prevalent than racial segregation.

 

[Gollywomper]

that's the latest rage around here. investment corps buying every thing they can, jackin up cost's for rentals.
but TBH it's always been that way here, financial segregation is just as if not more prevalent than racial segregation.

Yup. To rent my house I would be paying double my mortgage.

 

[Gollywomper]

Around the Phoenix area the supply chain will continue to be short. We have over 400 people moving in daily.

Till summer. Then the new folks won’t like the heat. Lol. Such a large percentage of the work force is now working remotely from home folks are living anywhere. Businesses found that they could save a lot by not leasing office space.

 

[Alex01]

Around the Phoenix area the supply chain will continue to be short. We have over 400 people moving in daily.

I wish it was 401 lol

Edit.... 405 can't forget the rest of the family

 

[5632]

I wish it was 401 lol

When adding in the Californian's it's much more than 401.

 

[psrivats]

I don't buy the theory that the run up in prices is all from people from high cost of living areas moving to lower cost of living. Sure, there is a definitely a portion of those people, but I think that the primary cause for the run up in prices is the availability of cheap debt. Give people access to cheap money and they will borrow .. and borrow a LOT.

 

[rasband]

I don't buy the theory that the run up in prices is all from people from high cost of living areas moving to lower cost of living. Sure, there is a definitely a portion of those people, but I think that the primary cause for the run up in prices is the availability of cheap debt. Give people access to cheap money and they will borrow .. and borrow a LOT.

Yep, and in an inflationary environment it's better to be in debt than a lender as you're paying back inflated dollars. Money has been really cheap, if not free, for a few years.