Current State of the Housing Market

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Where I live, in the middle of flyover land, it is almost impossible to buy a reasonably priced house. All of the houses on the market are either way overpriced or distressed to the point of being irreparable. You would think that after the housing bubble burst in 2008 you would be able to get one on the cheap, but that is exactly when the housing market ceased to be a good deal.

What happened is that houses quit making it to the market and began to sell directly to investors. A realtor will sign a house, ask the seller what their bottom dollar is, and contact their investors. A couple of weeks later the seller has a check and their house never made it to the MLS listing.

I know some investors and they started buying up houses in 2008. At first they had to look online at houses and compete with individuals wanting to purchase a home, but then their realtor started contacting them when they signed the house. They bought a lot of them that way, but then the houses started drying up.

They finally figured out that their realtor was selling to another investor in California. They didn’t know how to get the realtor to sell to them, so I suggested raising the commission percentage paid to sweeten the pot, and once again they had a lot of houses to buy. I’m pretty certain that this was how the California buyer got the realtor to sell to them exclusively in the first place.

A friend tipped me off to this first; he had a rental house that he wanted to turn into cash so he contacted a real estate associate. The associate looked at the house and immediately asked his bottom dollar. Two weeks later he had a check in the bank and his house never made it to the market.

Think of how easy that was; the associate didn’t have to take pictures, upload the house to MLS, post the house on various websites, worry about curb appeal, show the house to a myriad of buyers or share the commission with another associate.

Around these parts, it is almost impossible to get a real estate associate to show you a house. The only ones that will do so are the ones that specialize in HUD homes that are not eligible for purchase by investors. The larger realtors won’t even bother unless the house is really expensive or newly built.

We tried to buy another house for a few years and wondered why every house we looked at, no matter how expensive, was completely distressed. Every house we looked at had terrible foundation problems and huge cracks in the basement. The only decently priced houses were in absolutely horrible neighborhoods. It makes so much more sense now.

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11 thoughts on “Current State of the Housing Market

  1. Peregrine John

    Sounds like a repeat of the Dot Com Boom: loads of speculators calling themselves investors, thinking the old rules don’t apply any more. When they slam into those rules, house prices will drop like a stone. Reality always wins.

  2. TempestTcup Post author

    I read somewhere that the rental housing bubble is the next to pop. But really, the old rules for buying a house don’t apply right now; hopefully they will in the future.

  3. Brad

    It’s not the same as the DotCom deal, nor the house flippers pre-2008. Not exactly anyway. Sure, some flippers are coming in, and speculators on capital appreciation. But many of these investors are doing it for the rental cash flow. Some big heavy weight Wall Street funds in fact are buying houses by the thousands. I don’t know if it’s for the rental flow or if they plan to unload them in the, perhaps not too distant, future.

    Sad for first time home buyers… they have to wait I think for things to get real again (another correction), but who knows when that will happen?

  4. Brad

    I also read that some of these WS entities are packaging up (securitizing)and selling these rentals so maybe it is like pre-2008… a repeat of the same thing, slightly modified.

  5. TempestTcup Post author

    The people I know are doing it for the rental income, but I don’t know about the Wall Street funds.

    As far as things getting real again, I don’t even know what real is anymore! This is the new normal, I guess.

  6. Pingback: The Housing Market Still Hasn’t Recovered

  7. dana

    awwww i wish you were in philly so i could be your realtor! but then i would be sad for you because you are in killadelphia like me lo.l i go crazy showing buyers houses, our problem here is lack of inventory AND lack of buyers, they have finally scared everyone out of the market from what i can tell. i have one measly listing that’s moldering away because my seller refuses to lower the price because she’s “not GIVING her house away!”, yeh, shes not selling it either. sellers *shakes head*

  8. TempestTcup Post author

    Yeah, that’s why all the houses that actually make it to the market are way overpriced or damaged. We are going to build on instead.

    We realized that we could only sell our house for x amount of dollars, but if we wanted to buy the exact same house, we would have to pay 2x amount. Can’t afford to buy or sell.

  9. TempestTcup Post author

    I get you on that one – it’s like you are stuck. We bought ours so cheap that we figured out the other day that we have saved about 40K by living there free since we never had a loan. I still feel stuck, though.

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