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US Housing Thaw Belies Absurd Affordability Spiral
It's nothing to write home about (get it?) but pending home sales in the US rose slightly last month, according to data released on Thursday.
If you're like me, you were tempted to ignore the release. It's not exactly top-tier, and it hit into a holiday-thinned market.
And yet, US housing's at a crossroads. There's evidence to suggest the resale market's starting to thaw, and contract activity's a leading indicator for existing single-family homes and condos.
With that in mind, pending sales
Imagine what it’s like in countries that have seen house prices soar and where mortgages are floating rate. Like, say, Canada. Not even homeowners are happy then.
Any half decent home within an hour drive to Vancouver, bc is a million bucks. Plus our tax system is far different from the US as we can’t deduct interest costs from income. After purchasing a home there are huge “purchase taxes”, and we can’t lock in our mortgages for 30 years, many variable rate and most 5 year terms.
Several times you say : “it does not seem like a lot”. I disagree. It is a lot, plainly. It only may not be a lot if you still believe that the only way to live is to work hard and make more money. But there is no freedom in that. I’ve saved enough to have retired early, but my home payments have gone up drastically, because despite having a 30 years loan, the tax system is based on a fallacy (estimated market value, who does that ? Imagine paying taxes every year on possible stock profits if you sold).
What we are really saying is that one should always have to work (unless he becomes wealthy), and work hard.
I play, and play hard. And I’ll sell my house, buy a sailboat and live aboard before I submit and go back to work.
I say “it’s not a lot” due to the composition of my readership. In other words: “It may not seem like a lot to some people…” where “some people” means present company. I have to strike a balance between speaking for the masses and speaking to the fortunate. Truth be told, I’d rather just speak to the masses all the time. But that’s not how it worked out, so I have to appreciate and respect the fact that for a meaningful portion of my readership (probably 75%) $3,000 simply isn’t a lot of money.
Another important difference between the US and Canadian real estate market. While canada can’t deduct mortgage interest from income, when they sell their “principal residence” any capital gain is tax free. This worked great for the baby boomers, but now unless mom&dad help big time with down payment, kids don’t have much of a chance.
The other day I briefly gave some thought to really downsizing from my suburban villa to an urban center apartment in KC, MO. Three new buildings were completed in the last couple years so I went to the website. All three have wonderful views of some of the most rundown real estate in town but I checked anyway. I was delighted to discover that a 1250 sq ft two bedroom could be had for only $4000/mo. Come on, man. There is parking in the building. Wow.
I’ve been looking at smaller towns within a 4-5 hour drive from my home, for a weekend place and possible future full-time residence.
These are towns with natural beauty, outdoor recreation, at least a few blocks of pleasant commercial district, and (important to me) a not-extremely “red” political bent, but also not much of a industry or high-paying job base (because these are towns with popln 7-10K, and not ski resort towns or similar). Well, it turns out that house prices are not much lower than the city where I now live. Equivalent house price is anywhere from 0.7X to 1.2X my city neighborhood. How anyone but a city transplant can afford it, I don’t know.
I’ve decided to put this on the back burner and re-assess come November . . . after which I might want to be 4-5 hours flight away.
Ok, soooo… some of you folks’ll remember I was looking at a getaway in Indy (as part of my idea about getting a place in an NBA city so I can go to some games every now and again). Well, they’re now suggesting I can grab this place for $500k flat with all the furniture included: https://www.zillow.com/homedetails/1-Virginia-Ave-APT-603-Indianapolis-IN-46204/114424308_zpid/?
I gotta say, that seems like a good deal. The Pacers arena is right next to it. It was $554k when it was originally listed. No furniture. So this is 10% off with prob ~$15k I wouldn’t have to spend to furnish it.
Life long Indy resident here and love to here that you are considering this purchase. We have one of the most accessible downtowns you will find. Pacers, Colts, AAA Baseball Victory Field and the Indy Elven soccer team is in the process of building a state of the art facility. Add all the special events that come through the Convention Center and you would never lack for something to do. Still a Red state but Marion County is solidly blue.
Looks beautiful- I love the Eames-like chair!
I always go directly to the listing broker and figure out their commission, as if I had brought a buyer’s broker to the transaction- then in the final round of price negotiations, I directly suggest that the listing broker take a reduction of their full (both seller and buyer) commission to get the deal done! (The broker generally will still earn more than if I had brought my own buyer’s broker to the transaction)
It is always fun to have a little extra money going into a new residence to swap out the prior owner’s personal touch for your own.
Since you originally posted, I put in an offer on another rental property, but the seller would not countersign on my reduction request after the house inspection was done. It is back on the market, so far, not showing up as “pending”- so I will give it more time before I consider making another offer.
Good luck to you, H.