We’ve had riots, inaction by mayors, and ridiculous decisions by leaders in large metro areas for the past month. Nobody in their right mind is staying in cities, especially after the insane selective application of laws and ordinances the last 5-6 weeks.
Who would buy a nice place in, for example, St. Louis right now?!
>Who would buy a nice place in, oh, for example St. Louis, right now?!
People who want to live there regardless and see an opportunity to spend less money doing so. They're the same people who buy real-estate on the cheap after it's value has been depressed by a "fresh in people's minds" disaster in any other location.
Live in a city. Deal with city problems. If you want to live in Nebraska don't be surprised if a tornado flattens your property. If you want to live in Florida don't be surprised if it's underwater. Having rioters burn your home to the ground is simply the mode of destruction you accept some risk of by living in a city.
Personally I'd rather deal with nature trying to destroy my stuff rather than people trying to destroy my stuff but I can understand why people want to live in the city.
> live in Nebraska don't be surprised if a tornado flattens your property
For what it's worth, the average person in Tornado alley will live their entire life without ever seeing an actual tornado, much less get flattened by one.
For what it’s worth I’ve lived in downtown areas for the last 10 years and I’ve never seen rioters burn down anyone’s house or shop. I’ve never even seen a single rioter (I have seen many peaceful protests though).
We shouldn't legitimize the mindset the parent is pushing, that riots have swept the nation.
Protests swept the nation. Many cities had increased vandalism. A small number had anything approaching riots.
I am renting a house very near the city center. Were it not for the home prices, I would love to own here... though another poster made a good point. All the good reasons to live in the city (night life, people watching, proximity to friends and services and hobbies) are closed down. At least I can walk to the grocery store.
You say that like it's a past event. Portland is still seeing riot activity. They have done a fair amount of damage downtown. I feel sad for the peaceful BLM protestors because much of the general public will not draw a distinction, so this kind of behavior will blunt their message.
You're misinterpreting my comment. Riots haven't swept the nation any more than a hurricane moving up the gulf coast "sweeps the nation". It's just that's the form of disaster that tends to strike cities and I don't think people should be acting like it's unexpected.
Most riots seem to be sparked by counter-protestors (the police). They could do with more training in de-escalation instead of the "warrior" training too many of them get.
I think that's wishful thinking, St Louis was declining way before covid. I don't see a stop of migration happening anytime here in the Austin metro or any of the other major Texas cities. We may see it in HCOL places but I wouldn't count on people leaving Denver, Portland, the NC Triangle, and the similar 'B cities'
> We’ve had riots, inaction by mayors, and ridiculous decisions by leaders in large metro areas for the past month.
Another factor that is (unexpectedly) making my family reconsider intown living is the school closure decisionmaking. If this turns out to be a 1 or 2 year ordeal, and urban school systems end up going full virtual for that time while (some) rural school systems are still fully face-to-face, then that becomes a huge factor for us.
In Seattle it is really difficult to find decent houses to buy right now, buyers are panicking and prices have increased significantly in the last couple of months.
My guess is that hot areas are getting hotter and colder areas are getting colder, but COVID hasn’t changed that trend yet.
tbh I feel really bad for anyone that buys during this panic phase. We are almost certainly headed for the largest recession in US history, and I don't see a future where housing prices don't crash as a result.
(I'm also in Seattle and waiting for that to happen before I buy)
True I had the same concerns, but super low interest rates distort the picture. Also, while buying now is risky, you are likely to only lose one or two hundred K of value in a recession at most, and that will pop back over time, so long term buyers should be OK.
Paid way too much recently for a townhouse in Ballard, but at the end of the day it seems like a pretty sound decision (we aren't buying for investing, but for living).
I don't think that OP (or anyone else) thinks that urban prices won't be affected. He's just responding to the article that there's a rural and suburban boom.
i would suspect as much. Home prices have been, as they cyclically trend to do, wildly inflated and overheated for quite some time now. Most homes command a minimum of 250k no matter where you look, with many of them existing as mere flophouses converted for a few thousand dollars with the cheapest lumber yard fixtures in an offensive attempt to cash in on the puerile american practice of "flipping" properties.
The market is sorely overdue for a massive "correction" to respect the near 40% unemployment in the US, widespread rioting, and crippling pandemic. Id put the counter at six months, but so far everything has defied the yield curve inversion and continued to run like a race car on nitrous. sooner or later somethings got to give.
I 100% agree with this. We built our home in 2009 for an even $100,000. I live 40 minutes from the nearest 'urban' center, and probably 20 minutes from the closest 'town' (less than 600 people). Now, granted, we put a massive amount of sweat equity into this home, but
It's current appraisal sits at $275,000.
That is just unbelievable. It's not realistic. It's completely removed from any sort of reality. I mean, we have a nice house, don't get me wrong, but it's not worth over a quarter of a million dollars.
And that is every house within 20 miles of me. In the last two years our values have skyrocketed, and nobody knows why.
If someone actually paid $275k for your home, then it definitely is worth $275k. But right now that value is just theoretical (maybe real for purposes of taxation, but that doesn't always reflect what a buyer will pay). The moment money changes hands, it becomes real.
The home was assessed at over a quarter of a million dollars, for both taxes this year, and by an independent assessor when we refinanced.
I'm saying I have a decent home, but that amount of money is unrealistic. It cost $100,000 to build, 11 years ago. I cannot be convinced it almost tripled in value, in any realistic market, in 11 years.
I don't think you are thinking about this correctly. Have you considered the impact of compound interest? You say it cost you $100,000 plus "a massive amount of sweat equity" . I don't know what you consider massive, but let's guess at $50,000 worth. That is, if you were paying market rates at the time to professionals, how much would they have charged, plus the cost of hiring them, plus the taxes you would have paid to have the money to pay them, etc?
Anyway, if we start with an actual "cost" of $150,000, you get to $250,000 with 11 years of compound interest at 5%. If we instead completely ignore your labor input, 11 years at 9% gets us from $100,000 to $250,000. Can you really not be convinced that "realistic market" might not have a 5% (or 9%) yearly increase in value? That's not to say it will always go up that much, but it doesn't seem unrealistic that it might.
The bigger question of course is how we determine "value". Is $250,000 for a house today any more "realistic" than $100,000 to build it 11 years ago? Not by any objective measure. They are both just numbers, determined by how much people are willing to pay, which in turn depends on how much they have in their bank accounts, which in turn depends on how much someone is willing to pay them, which (circularly) depends on how much someone else is willing to pay for something else. There's nothing "realistic" about any particular numeric value.
Inflation is about 2-3% per year, so that brings the real appreciation down to 2-6%.
That doesn’t tell the whole story, however. The 2008 stimulus plan basically printed money in the form of increased stock valuations and cheap mortgages. Stocks and housing have inflated well over 3% per year since then, while consumer prices have not.
Eventually that has to unwind. One option is for the federal government to claw the money back. That will lead to deflation and immediate economic ruin, so they can’t do it.
The more likely option is that we eventually hit a patch of high consumer price index inflation as workers start charging a living (housed) wage for their time.
2009 was near the bottom of the housing crisis in the US. You picked a really good time to build. While housing prices are likely overheated, it’s not where we were in 2007, at least adjusted for inflation.
Prices are high because of stupid low interest rates, an economy that had been strong till March, and probably a few demographic trends (echo boomers finally having kids).
When we pay the piper for this crisis I think we’ll see prices drop, but not at 2008 levels
I sure hope so, right now the median home price is 4.5x the median income. If that continues to increase, we’ll be creating a generation of renters captured by whoever had the ability to borrow money to purchase the inflated assets.
Vancouver, Canada has sky-high home prices but is missing the high-paying jobs of the Valley. Rent isn't too bad though, so quality of life can be pretty good.
Who would buy a nice place in, for example, St. Louis right now?!