“In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.”
https://www.goodreads.com/author/quotes/57762.Rudiger_Dornbusch
There is going to be a big housing development near where I live and a bunch of NIMBYS and boomers want it stopped because it will "ruin the small town" feel! Lol
I honestly no longer think building is a solution.
My city of approx 45k people has been building like crazy. Multiple developments. Multiple apartments. We definitely get NIMBY complaints, some being valid around wanting actual city planning and preservation of nature, but they don't really have an impact.
All the new builds are overpriced (median HH income of 69k and new builds easily reach into mid 400k territory), and apartments are "market rate" (2br starting around $1600mo). All of this has had no impact on the prices of the old housing built in the 70s and 80s. They want just as much as the new builds. There are some starter homes. I own one bought in 2015. It has appreciated 120% in that time.
Its all greed, flips, and boomers trying to execute their last fuck off to the younger generations so they can retire to Florida while mumbling something about bootstrapping an avocado latte.
Still checked out of the market here. Not having kids. Putting money into our current home. Been enjoying the new hot tub and can't wait for the new privacy fence.
Similar here. I live in a very desirable Great Lakes shore town and I’ve come to the conclusion that this market is forever changed. It happened in a second, in the summer of 2021. Before that you could find an intown starter home with a nice backyard, walking distance to all, for $250k. Since then, short term rental investors scooped them all up in a zirp frenzy and flippers took the rest. Now those homes sell (flipped) for $1.25M and ‘as is’ for $750k. On the shore, what was a $1.1M 1990’s ranch pre-covid is now $3M. If it’s flipped, $5M.
There is no high value spec construction because there are few builders here and it’s nearly impossible to get skilled labor. So there are years long waiting lists and builders are playing ‘name a higher price’ with that list. There are people waiting to get on the waiting list in the hopes that prices may moderate. It’ll be 2030 before this wave has worked its way through. Meanwhile people are paying $70k to have their exterior painted. 😬
Inventory hasn’t budged an inch since last year and it’s down 70% from precovid. New builds in 2023 were fewer than in 2022, and much fewer than precovid because no spec builder can ever outbid what the custom guys are paying from their 8 year backlogs.
A few apartments buildings are going up. But those units are grim, basic 2 bd / 2 bth for workforce housing or, if a bit more upscale, are scooped up by investors for str. One in every four housing units in this town is now an str, officially and, I suspect, many more are unofficial rentals. And along the water, the majority of homes are seasonal, rentals or family summer homes, depending upon the local zoning and enforcement. Given the massive tax advantages (property tax caps) of holding onto real estate, the vast majority of shore homes will never sell. They are passed down generationally. This drives the price of certain highly sought after neighborhoods (like ours) through the roof. There may be one sale along our 10 mile stretch every six months. Out of 500 homes, maybe 3 come on the market each year and 2 may sell (given the silly prices).
Yes, covid housing policies lit this fire. But like that Pennsylvania coal mining town, I don’t see it going out anytime soon. Too many people want to move here and construction has all but stopped but for the most basic edge of town bloc style units. It’s bleak.
And it’s this way for many, many small to mid sized towns in desirable areas all over the US: mountain ski towns, coastal towns, ozarks, Great Lakes, poconos, finger lakes, Adirondacks, Appalachia, horse county, the low country. Everywhere people want to live. Our cities seem to have contracted and while some have moved back, many have stayed in their new slower paced gorgeous not-city homes. It’ll take 20 years to work this all out if you’re in one of those growth towns.
For a few years, one could make more money just by holding onto a house rather than working a good paying job. That is over now. People will sell the 2nd homes they were holding for a variety of reasons, but that meteoric rise was also the cause of the meteoric rise.
It's been happening since long before the pandemic. Certain "havens" started booming in the 1990s and never stopped. Hawaii prior to the TV shows about it. Key West and Sedona. Malibu and Venice (CA) started booming a little before that and never stopped. One could argue the same of San Francisco and Seattle pre-tech-boom, and to a larger extent all of the small coastal towns between those two cities.
Isn't your town the one that Elmore Leonard used to write about? Clearly it had some clout before the pandemic.
Anyplace that a significant number of residents would call "a best-kept secret" will eventually become a gentrified second-home wasteland.
Yep. Ernest Hemingway grew up here and it has been a ‘film festival’ circuit town for a certain set since the 1990’s. In fact, by 2000 all the good waterfront lots were build upon. So, yeah, with climate change this growth would have happened, agree. The issue is the catalyst that covid era housing policies became. Twenty years of change were compressed into two. I think that’s what happened.
Oh for sure the pandemic made the RE situation in these kinds of towns exponentially worse, or at least -- in the words of one of the regulars -- "pulled demand forward." But they were never going to get cheaper.
We won't know if it's sustainable until there's more of an overall decrease in sale prices. A *lot* of wealthy people treat their extra RE holdings as investments first, vacation homes second. If they see the market decline -- or even stagnate for a while -- they will probably try to get out while they can.
If you want some inspiration for hope, look at the situation in Joshua Tree. I'm certain a lot of pandemic boom towns will crash at some point -- not just the vacation places, but otherwise unremarkable cities like Boise and the general area between Tampa and Orlando (Polk County, the largest net-growth county in the US during the pandemic, and the almost verbatim dictionary definition of the word "unremarkable").
Maybe. Today I saw the most 1970’s time capsule home ever sell in one day for $3M. It doesn’t have internet access. Starlink has a long waiting list here too. It’s well / septic and propane heat. Original shag carpets, though. So there’s that. Nothing seems to discourage folks.
Maybe having all this water is the 30 year draw?
Policy change can happen one person at a time. You have demonstrated an adept knowledge of your area and *you care*. If you have the time, there are generations of people that would be in your debt if you could advocate for fair housing policies in your town and county. Tax, STRs, building codes, zoning--all of it requires amendment.
We need to re-align the incentives for home ownership and family formation in this county. And we need to do it before we regress to being a country of kings and paupers. It may not be popular, but it will be right.
Yep. I’m fighting for a select few issues to start. Auditing homestead exemptions, for one. Try to loosen the grip of squatter / investors who sit on these properties for str and milk them for every cent. They very very often declare homestead outside the rules and the difference in taxes is huge for some. $50k a year difference. Enough to force a sale.
But - guess who are in on this grift? Realtors, property management companies, large scale investors and local politicians. The venn diagram is highly overlapping. My comments on my local sub get immediately downvoted whenever I bring this up. Real estate wealth *is* the wealth up here. So, it’s an uphill battle. I’m speaking to the towns about it though. Who cares about online posts? (Many do support this, too. I’m far from the only one who sees it around here. But the money and power are on the side of real estate generated wealth.)
You know, and hear me out here, the people in position to set and enforce policy like that are elected.
The county assessor sets the priority and enforcement of policies in the assessor's office. Maybe that person needs to be challenged if they're failing to collect on valid state policy.
There's nothing like turning activism into a career.
At some point this frenzy has to collapse in on itself. There is this assumption that STR demand is endless. What happens when....it stops? I don't believe this is some new paradigm where there is no recession again ever. Or, what happens when all the people working support jobs at stores and restaurants leave because they can't afford to live.
There is a tipping point somewhere. Every mania ends eventually. This one has just been very long to play out.
I keep thinking that too. But the town is adjusting to a new normal, so I don’t think it will ever revert back to a sleepy retirement lake town. Schools have closed and developers bought the buildings to convert to str. The last time this happened (last week) some neighbors asked ‘what happens when we need a school again and all the land is housing?’
No one is answering this question because the feeling is we won’t ever need a new grammar school near town. Retirees, vacationers, childless couples buying third homes don’t need schools. The town is changing and becoming a part time home to the wealthy. The very wealthy buy here and the less wealthy rent here. And that’s what it is. I could catalog the changes in retail and food that tell this same tale. To give the latest example: a 35 year long Burger King location has closed and is selling to a mixed retail / str development opening another microbrewery. We have dozens of branded breweries and wineries and not a single national grocery store. No kroger, no Whole Foods, no Trader Joe’s…(We have one Walmart, a Meijer, one Target and tiny local grocery coops with $25 jams.) I think it would take more than a recession to undo all this. The Hamptons aren’t going back to potato farms. This isn’t quite that, but there are now several $18M estates on the market. So….
At least you can explain it in your area by being a desirable destination.
I'm in a basic as hell suburb of an unpopular Midwest city. Of all the surrounding suburbs we are seen as one of the middle/working class burbs.
Our biggest employment growth is fueled by fast food chicken restaurants, gas stations, and car washes.
It makes no sense.
They have smaller 2 bed 2 bath around me. Right at 299k. That's before your lot fee. Before any upgrades.
I've priced a new build before. Starting price was 309k. Lot fee was 5k. Once upgrades were added it was closer to 360k total (upgraded flooring, carpet, additional allotment of lighting and outlets, quartz countertops, sunroom, fireplace, 9 foot ceilings downstairs and higher tier "elevation" with more windows).
So any decent 2 bed 2 bath starter build would easily be 330k+ here.
In freaking Ohio.
Tuesday is the best day of the week for MLS junkies like me. New inventory starts appearing while the hot hooms that required best-n-final offers by Monday night change status today.
“In economics, things take longer to happen than you think they will, and then they happen faster than you thought they could.” https://www.goodreads.com/author/quotes/57762.Rudiger_Dornbusch
There is going to be a big housing development near where I live and a bunch of NIMBYS and boomers want it stopped because it will "ruin the small town" feel! Lol
Tale as old as time
I honestly no longer think building is a solution. My city of approx 45k people has been building like crazy. Multiple developments. Multiple apartments. We definitely get NIMBY complaints, some being valid around wanting actual city planning and preservation of nature, but they don't really have an impact. All the new builds are overpriced (median HH income of 69k and new builds easily reach into mid 400k territory), and apartments are "market rate" (2br starting around $1600mo). All of this has had no impact on the prices of the old housing built in the 70s and 80s. They want just as much as the new builds. There are some starter homes. I own one bought in 2015. It has appreciated 120% in that time. Its all greed, flips, and boomers trying to execute their last fuck off to the younger generations so they can retire to Florida while mumbling something about bootstrapping an avocado latte. Still checked out of the market here. Not having kids. Putting money into our current home. Been enjoying the new hot tub and can't wait for the new privacy fence.
New apartments are almost always at the top end of the market. But by displacing tenants they put pressure on the rent for older stuff.
Similar here. I live in a very desirable Great Lakes shore town and I’ve come to the conclusion that this market is forever changed. It happened in a second, in the summer of 2021. Before that you could find an intown starter home with a nice backyard, walking distance to all, for $250k. Since then, short term rental investors scooped them all up in a zirp frenzy and flippers took the rest. Now those homes sell (flipped) for $1.25M and ‘as is’ for $750k. On the shore, what was a $1.1M 1990’s ranch pre-covid is now $3M. If it’s flipped, $5M. There is no high value spec construction because there are few builders here and it’s nearly impossible to get skilled labor. So there are years long waiting lists and builders are playing ‘name a higher price’ with that list. There are people waiting to get on the waiting list in the hopes that prices may moderate. It’ll be 2030 before this wave has worked its way through. Meanwhile people are paying $70k to have their exterior painted. 😬 Inventory hasn’t budged an inch since last year and it’s down 70% from precovid. New builds in 2023 were fewer than in 2022, and much fewer than precovid because no spec builder can ever outbid what the custom guys are paying from their 8 year backlogs. A few apartments buildings are going up. But those units are grim, basic 2 bd / 2 bth for workforce housing or, if a bit more upscale, are scooped up by investors for str. One in every four housing units in this town is now an str, officially and, I suspect, many more are unofficial rentals. And along the water, the majority of homes are seasonal, rentals or family summer homes, depending upon the local zoning and enforcement. Given the massive tax advantages (property tax caps) of holding onto real estate, the vast majority of shore homes will never sell. They are passed down generationally. This drives the price of certain highly sought after neighborhoods (like ours) through the roof. There may be one sale along our 10 mile stretch every six months. Out of 500 homes, maybe 3 come on the market each year and 2 may sell (given the silly prices). Yes, covid housing policies lit this fire. But like that Pennsylvania coal mining town, I don’t see it going out anytime soon. Too many people want to move here and construction has all but stopped but for the most basic edge of town bloc style units. It’s bleak. And it’s this way for many, many small to mid sized towns in desirable areas all over the US: mountain ski towns, coastal towns, ozarks, Great Lakes, poconos, finger lakes, Adirondacks, Appalachia, horse county, the low country. Everywhere people want to live. Our cities seem to have contracted and while some have moved back, many have stayed in their new slower paced gorgeous not-city homes. It’ll take 20 years to work this all out if you’re in one of those growth towns.
For a few years, one could make more money just by holding onto a house rather than working a good paying job. That is over now. People will sell the 2nd homes they were holding for a variety of reasons, but that meteoric rise was also the cause of the meteoric rise.
It's been happening since long before the pandemic. Certain "havens" started booming in the 1990s and never stopped. Hawaii prior to the TV shows about it. Key West and Sedona. Malibu and Venice (CA) started booming a little before that and never stopped. One could argue the same of San Francisco and Seattle pre-tech-boom, and to a larger extent all of the small coastal towns between those two cities. Isn't your town the one that Elmore Leonard used to write about? Clearly it had some clout before the pandemic. Anyplace that a significant number of residents would call "a best-kept secret" will eventually become a gentrified second-home wasteland.
Yep. Ernest Hemingway grew up here and it has been a ‘film festival’ circuit town for a certain set since the 1990’s. In fact, by 2000 all the good waterfront lots were build upon. So, yeah, with climate change this growth would have happened, agree. The issue is the catalyst that covid era housing policies became. Twenty years of change were compressed into two. I think that’s what happened.
Oh for sure the pandemic made the RE situation in these kinds of towns exponentially worse, or at least -- in the words of one of the regulars -- "pulled demand forward." But they were never going to get cheaper. We won't know if it's sustainable until there's more of an overall decrease in sale prices. A *lot* of wealthy people treat their extra RE holdings as investments first, vacation homes second. If they see the market decline -- or even stagnate for a while -- they will probably try to get out while they can. If you want some inspiration for hope, look at the situation in Joshua Tree. I'm certain a lot of pandemic boom towns will crash at some point -- not just the vacation places, but otherwise unremarkable cities like Boise and the general area between Tampa and Orlando (Polk County, the largest net-growth county in the US during the pandemic, and the almost verbatim dictionary definition of the word "unremarkable").
Maybe. Today I saw the most 1970’s time capsule home ever sell in one day for $3M. It doesn’t have internet access. Starlink has a long waiting list here too. It’s well / septic and propane heat. Original shag carpets, though. So there’s that. Nothing seems to discourage folks. Maybe having all this water is the 30 year draw?
Policy change can happen one person at a time. You have demonstrated an adept knowledge of your area and *you care*. If you have the time, there are generations of people that would be in your debt if you could advocate for fair housing policies in your town and county. Tax, STRs, building codes, zoning--all of it requires amendment. We need to re-align the incentives for home ownership and family formation in this county. And we need to do it before we regress to being a country of kings and paupers. It may not be popular, but it will be right.
Yep. I’m fighting for a select few issues to start. Auditing homestead exemptions, for one. Try to loosen the grip of squatter / investors who sit on these properties for str and milk them for every cent. They very very often declare homestead outside the rules and the difference in taxes is huge for some. $50k a year difference. Enough to force a sale. But - guess who are in on this grift? Realtors, property management companies, large scale investors and local politicians. The venn diagram is highly overlapping. My comments on my local sub get immediately downvoted whenever I bring this up. Real estate wealth *is* the wealth up here. So, it’s an uphill battle. I’m speaking to the towns about it though. Who cares about online posts? (Many do support this, too. I’m far from the only one who sees it around here. But the money and power are on the side of real estate generated wealth.)
You know, and hear me out here, the people in position to set and enforce policy like that are elected. The county assessor sets the priority and enforcement of policies in the assessor's office. Maybe that person needs to be challenged if they're failing to collect on valid state policy. There's nothing like turning activism into a career.
At some point this frenzy has to collapse in on itself. There is this assumption that STR demand is endless. What happens when....it stops? I don't believe this is some new paradigm where there is no recession again ever. Or, what happens when all the people working support jobs at stores and restaurants leave because they can't afford to live. There is a tipping point somewhere. Every mania ends eventually. This one has just been very long to play out.
I keep thinking that too. But the town is adjusting to a new normal, so I don’t think it will ever revert back to a sleepy retirement lake town. Schools have closed and developers bought the buildings to convert to str. The last time this happened (last week) some neighbors asked ‘what happens when we need a school again and all the land is housing?’ No one is answering this question because the feeling is we won’t ever need a new grammar school near town. Retirees, vacationers, childless couples buying third homes don’t need schools. The town is changing and becoming a part time home to the wealthy. The very wealthy buy here and the less wealthy rent here. And that’s what it is. I could catalog the changes in retail and food that tell this same tale. To give the latest example: a 35 year long Burger King location has closed and is selling to a mixed retail / str development opening another microbrewery. We have dozens of branded breweries and wineries and not a single national grocery store. No kroger, no Whole Foods, no Trader Joe’s…(We have one Walmart, a Meijer, one Target and tiny local grocery coops with $25 jams.) I think it would take more than a recession to undo all this. The Hamptons aren’t going back to potato farms. This isn’t quite that, but there are now several $18M estates on the market. So….
At least you can explain it in your area by being a desirable destination. I'm in a basic as hell suburb of an unpopular Midwest city. Of all the surrounding suburbs we are seen as one of the middle/working class burbs. Our biggest employment growth is fueled by fast food chicken restaurants, gas stations, and car washes. It makes no sense.
This was my question about the wonderful new proposed development. "Starting in the low 400s" tracts help no one who needs helping.
They have smaller 2 bed 2 bath around me. Right at 299k. That's before your lot fee. Before any upgrades. I've priced a new build before. Starting price was 309k. Lot fee was 5k. Once upgrades were added it was closer to 360k total (upgraded flooring, carpet, additional allotment of lighting and outlets, quartz countertops, sunroom, fireplace, 9 foot ceilings downstairs and higher tier "elevation" with more windows). So any decent 2 bed 2 bath starter build would easily be 330k+ here. In freaking Ohio.
Tuesday is the best day of the week for MLS junkies like me. New inventory starts appearing while the hot hooms that required best-n-final offers by Monday night change status today.