Is Your Home Value Skyrocketing?

[David in MN]

I did the paperwork exercise to refi the home (yet again) because there are some opportunities right now. Granted it's mostly about shaving points these days because we're about 9 years from paying it off (not bad for 39 year olds) but hey an extra few bucks per month going to principle is great.

In the course of the conversation with my lender he asked if I knew the home value. I always say no because I don't keep up on the real estate market and I don't really know but I spitballed a number. I was wrong. I was wrong by about 20%. When he came back with the assessed value of my house I almost choked. Don't get me wrong, I like my house but that number seemed so far off as to be wrong. I looked up local realty and holy crap; it was right.

Put it this way... We bought at the height in 2006 and have been below our purchase price the whole time we've been in the house. Not underwater because we did the big down payment thing but since bottoming in ~2008 we are roughly 45% above bottom. That's in 12 years. But all the real growth has been in the past 5. And 2020 has been an economic catastrophe except for my house.

Curious if others see this pattern too.

[Morning Sunshine]

If our house sells right now, we will have made back the purchase price PLUS all the interest we have paid over the years (we are paid off now).  So basically, we are doing our best to sell right now.  We are hoping to buy something MUCH MUCH cheaper for a few years until the real estate market levels out and we can buy our dream land and build when things are not so crazy.

We bought it for 370 in '06, could not sell it for 260 in '11, and are asking 600 for it.  At that it is the cheapest house with over 10 acres in my county, by about 2-300k.  But we do not have a barn and fencing and granite counter tops people with money for horses want.  To me, it seems better to buy my house and spend 100K on those things and still come in cheaper than the others, but whatever.

[DDJ]

I have the opposite situation.  My parents built in rural Ohio in 2001 and now that they passed my brother and I own their house.  We are being told that it is worth the same as they paid to have it built.  So you must be seeing the first rule of property investments "location location location"

[David in MN]

I don't know about location. I'm admittedly in a very strange suburb because we're almost all middle class but we also have the million dollar properties on the Mississippi. It's a bit of an unusual place so much so that our football coach became governor (Jesse Ventura).

But... Let me use some trading lingo here. My house has always been worth about the same price. Somewhere in the mid to low $200k valuation. At the height of the housing crisis when things were falling apart it never dipped below $200k. We felt reasonably sure that 200 was the bottom and 250 was the top. Which is fine by me because it was relatively stable and predictable and even on the low side you knew kind of where you stood and the value held. To think another way, it's a good market to long term plan a family but a lousy area to flip a house.

But now everything has changed. Forget 250... Comparable sales are testing the waters getting darn close to 300. If there's support and 300 becomes the new bottom, look out. For a run of the mill Midwest commuter split level? That feels real wrong.

[Remington]

This seems to be the case in the Cleveland suburbs. Both of my neighbor's sold this summer for over their asking price. In both cases the offer was made the day it went on the market.

[surfivor]

My mother's house is in a fairly ritzy town and my house is in the suburb of a small adjacent city that is not the same type of town but more of a working class area. I have half an acre and the house needs a lot of work but I have done nothing to fix it. Recently when I looked on Zillow it claims my house value has more than doubled what I paid for the house. My mother's house didn't seem to go up as much according to Zillow, I don't know why. It's a bigger house on a full acre.

My house was a foreclosure when I bought it 7 years ago and it is 35 miles outside of Boston.

I paid about 158k for my house and Zillow claims it is estimated to be 370k now or between 348k and 393k. My sister has property in Idaho near Jackson hole and I think property values out there have gone up much more

According to Zillow, my neighbors houses all seem fairly high in value as well

[LvsChant]

Interesting... maybe it is partly because of the extreme rise in building materials' cost. We've been seeing huge increases on lumber, sheetrock, etc. in the past month or so.

Truthfully, if it means that more is being produced in the USA by US workers, I'm not that unhappy. That being said, I'm really glad we got our house built before all this happened.

[bigbear]

Per Zillow: my house has increased in value by 45-50% since we bought it 7 years ago.

[CarbideAndIron]

My parents just got an offer of $555k for their home. They built it in '78 for $45k. Now obviously we're talking over 40yrs, but still nuts. It's only 1990 sq ft, on 2 acres, 3/2 with 2 car garage. Nice granite and stuff, downstairs, but up stairs still outdated.
My home is worth about same, but I got 10ac, whole house remodeled, big shop, stable, outbuildings, animal housing, etc...so like mentioned above, location is key. Their home is like 30 miles outside Seattle, and I'm 50 miles. Same price up closer to city will get you a condo, and not a very nice one.
The big question is when will this bubble blow? I had to ride out the last one because I bought in '07, and by '10 it had dropped 40%. Not a big deal since I didn't sell till 2018. I told the wife we'll stay in this home 7-10 years and get out of WA after the next recovery (hopefully, lol).

[Morning Sunshine]

The big question is when will this bubble blow? I had to ride out the last one because I bought in '07, and by '10 it had dropped 40%. Not a big deal since I didn't sell till 2018. I told the wife we'll stay in this home 7-10 years and get out of WA after the next recovery (hopefully, lol).

I think the bubble will blow some time after the election.

It just has to last until we sign on my house and I get the money in the bank.  It can pop any time after that so I can buy something reasonable in the next year.

[LvsChant]

DH just told me that, as an example, a sheet of particle board that sold for about $7 just a couple of months ago is now $24 at the same store. If this is any indication, building costs are even higher than I thought, materials-wise.

[iam4liberty]

DH just told me that, as an example, a sheet of particle board that sold for about $7 just a couple of months ago is now $24 at the same store. If this is any indication, building costs are even higher than I thought, materials-wise.

Yes.  We are doing a major project at our local range so have been pricing market over last year.  Here concrete is double what it was and lumber is three to four times as much depending on type.  However, the lumber price rise isn't all demand.  Because of covid many of the mills were closed for months creating a supply shortage.  What we are hearing is that supplies should catch up by February or March alleviating some of that price. 

However, if Biden wins it is hard to say.  Right now several major companies I work with are quietly warning of layoffs of twenty to thirty percent of their US workforce if that happens.  Some have already started.  it simply isn't clear how each sector of the economy will perform under those conditions.   Most likely it will be a general return to stagflation.

[DDJ]

We have to add in all of the Fire Damage form the West Coast.  I am sure the building materials are being funneled that way for repair and then rebuilding.  That in and of itself will drive the materials costs up.