If you have looked at housing prices recently, you can say it is beyond insane, it's surreal. I thought the housing market was bad in California, but in the past three years in North Texas, WOW! And, it is not limited to Texas area, as this is being experienced across multiple counties. Just to put the proper context to the causes:
- The Covid Pandemic and the resulting Work-From-Home had people realizing that their apartment is too danged small, and they need more space.
- Until very recently, the mortgage interest rates were at record lows (https://markholtz.info/freddiemac), with the 30 year mortgage rates being below 3% per FreddieMac at multiple points in 2021.
- In some areas, the housing inventory (https://markholtz.info/2j6) is at a very low levels. In DFW (https://markholtz.info/dfwhousinginventory), Austin (https://markholtz.info/austinhousinginventory), and Houston (https://markholtz.info/houstonhousinginventory), the housing inventory is starting to improve after experiencing some record lows, but this has meant that some folks such as empty nesters who would be selling their existing homes for smaller versions aren't because they're not sure they can get a new home.
- Supply chain challenges increasing the cost of a new home. One builder has discontinued construction of two-story homes (https://markholtz.info/2j5).
- Companies are using the pandemic as an opportunity to move out of states that are not friendly to business (https://markholtz.info/2j7).
- FOMO - Fear Of Missing Out
It is so bad that some home purchasers are willing to waive the home inspection and and appraisal contingencies and are willing to purchase the home "as-is" (https://markholtz.info/2j8) to the point that purchasers are willing to pay
above the asking price just to try and land a home.
I consider myself damn lucky that I was able to land a home when I moved to North Texas in early 2019 that was remarkably close to my workplace, a DART transit station, and shopping. At the time I purchased my home, I think I overpaid a little bit for those conviences. However, when I take a look at the value gain on my home since purchase:
- Redfin - 51.72% (38.09-60.88%)
- Zillow - 57.68% (48.10-67.27%)
- Realtor - 60.35%
That puts the value gain averaged across the three services at 56.59%. There is just one problem... as the value goes up, so do the property taxes. Because Texas has no state income tax, the property tax rates are among the highest in the county. Even so, I received the property assessment for this year, and my property tax has gone up the full 10% thanks to the Homestead Exemption. The market value of my home went up 26.63%, and that value is still way below what those listing services consider to be the value of my home. I am filing a property tax protest, but it will end in failure because the number of repairs needed won't make up the difference. :pan: At least I consider myself lucky. There is no homestead exemption for homes that are used as rentals, so those who are renting a home are in for some severe rental increases.
If things had progressed as they were before the plague, maybe I'd be considering buying property recently, but we don't live in that world so I'm not going to bother. I have what I need with my rental, so I'm gonna stick with it as long as I can. In several years, perhaps things will be different.
My house has almost doubled in value in the past 5 years. I'm thankful I'm in a state where we pay our taxes through income more so than property, otherwise I'd be a bit bummed about this.
Quote from: JayhawkCO on May 16, 2022, 04:26:36 PM
My house has almost doubled in value in the past 5 years. I'm thankful I'm in a state where we pay our taxes through income more so than property, otherwise I'd be a bit bummed about this.
Mine has in the less than four years since I moved here. I realize I live in California, but I live in a trailer court.
Quote from: skluth on May 16, 2022, 04:47:46 PM
Quote from: JayhawkCO on May 16, 2022, 04:26:36 PM
My house has almost doubled in value in the past 5 years. I'm thankful I'm in a state where we pay our taxes through income more so than property, otherwise I'd be a bit bummed about this.
Mine has in the less than four years since I moved here. I realize I live in California, but I live in a trailer court.
Equity is fun though, no matter where you live. :)
Quote from: JayhawkCO on May 16, 2022, 04:49:58 PM
Quote from: skluth on May 16, 2022, 04:47:46 PM
Quote from: JayhawkCO on May 16, 2022, 04:26:36 PM
My house has almost doubled in value in the past 5 years. I'm thankful I'm in a state where we pay our taxes through income more so than property, otherwise I'd be a bit bummed about this.
Mine has in the less than four years since I moved here. I realize I live in California, but I live in a trailer court.
Equity is fun though, no matter where you live. :)
All it took was just a couple things like a school being built and the state migration patterns switching to Central Valley to crank up our equity. The problem with equity though is that you actually have to sell your home to get the value out of it, no guarantee it will last either.