No. of Recommendations: 3
I'm seeing housing prices that are so disconnected with
what wages are...
Sure, as has been the case most of my 60+ years. I left the Boston area in the 1980's precisely because I knew I would never be able to afford it. Like Boston, our area is constrained to new builds, which has been further reduced because of a pulling back on new build permit requests from developers who are feeling the pain of the current market and are wisely not sticking their neck too far out to the uncertain future. More retirees are aging in place, rather than sell their home and move to the extremely priced retirement communities. Some older homes will come on the market, but they are not HGTV ready and the young buyer will turn their nose up at the properties, while the flippers will be strapped for cash given today's resale market. Not much points to improved inventory, which is what is keeping prices high. Add to that the tariffs on building materials and the decrease in construction workers due in part to ICE, and there is only one direction housing will go in...up.
So I don't think lower mortgage rates are going to spur demand.
They will at some point, but it is not primarily rates that are currently holding buyers back, IMO. It's uncertainty, which seems to be the key approach to our current gov't. When the uncertainty dissipates, or we become numb to it, that is when buyers will return. Right now all we are seeing are bargain hunters who want to pay us 3/4 of the value of the property, as established by an appraisal from last Spring. Happily our 2% mortgage and strong rental market allows us to move on without selling, giving us up to 3 years of income before risk of losing capital gains exclusion on sale. (I would rather risk the loss than donate what we could save in capital gains exclusion to a bargain hunter's pockets.) Or we just keep it as our primary and put it on Homeexchange.com and use that towards travel. Not considered an event that changes your primary residence designation.
But even as someone with assets, I would have no interest in buying at these prices.
One of the things I love about real estate is that there are inefficiencies to the market, and bargains can be found. Sadly we just lost out on one that went under contract in less than 1 day, because our agent was booked until the next day. We are concerned about having too much cash in inflationary times and are trying to buy now. We have also proposed to Eldest that we could finance the purchase of his first home, which he is in the process of looking for now. It's never easy to buy your first place.
We have changed our purchasing strategy to that of a transition home that will eventually become a rental, when we sell our existing primary and buy a replacement. That allows us to not have to worry about which property to consider as primary. And yes, we will maintain true residency here until sale of property. It's where our mail is received, cars registered, doctors visited, we vote...
IP
