this.
However, not one person in the market (brokers, realtors, bankers, mortgage folks) that we have spoken to has said "just wait. It's gonna get better." In fact, it's just the opposite. We sold Janet's home a while back and were hoping by now it would go back to being a buyers market. Not happening. At our age, we cannot afford to be upside down on a home. When I get an alert saying "price drop" on a home, I'll click and sure it did....from 499K to 489K. Home was purchased in 2016 for 275K. Absolutely ridiculous.

Should probably proofread a reply before you bash people about not being able to do simple math and writing…js

Hehehe

I was thinking the same thing but now I can say it. Lol.

But on a serious note... I’ve been looking at building a lake house and in 2 wks the price has dropped $18k and that’s with one of the large building groups. So somebody’s noticing the bubble.

That's good news to hear.

All those people you mention are only interested in selling NOW, because they know that when the music stops they may not have a job.

Same way in 2007-8.

Yup

Your quoted price drop is mostly likely related to lumber prices returning to historical levels in the last couple months and possibly your builder and their subs slowing down and trying to load up their booked business going into the predicted economic slowdown/recession coming in the next few months. Labor in some less desirable areas is getting hungry now that the market is slowing with the higher mortgage rates. Most everything, materials wise, other than lumber, is actually up. Concrete up, drywall up, 12/2 Romex is still ridiculous at $1/ft, shingles up, (dimensional lumber, plywood & osb) down, builders risk insurance up, hvac up (thanks EPA & Joe Biden) etc etc. Until all three, lots/land, materials and labor all start to fall hard, you wont see any significant price movement. Price increases on the finished product on the south end are still increasing each month, granted the amount of the monthly increases has slowed, but there are no significant price drops anywhere that I've seen and especially not on custom homes. You might see some good sales price reductions if you can catch a builder that has a bunch of specs on the ground and has to get the bank paid. Most construction lines are prime + so the continued interest rate hikes might incentivize those builders that are in trouble with their banks and forced to offload product.

Example on the lumber side, I was paying $48/sheet for 7/16 OSB in Jan-Feb of 2022. It's currently $10.21/sheet today. Nothing but speculation and price fixing among the few remaining mills drove that price up like that. There was never a shortage of material, it was always available and I never saw a single supplier with low inventory. Any savings on lumber that could be potentially passed on to the customer in the form of price reductions has been completely wiped out by the 20-25% increase in HVAC due to the Biden's EPA's new green regs and steady increases every couple months on everything else. What I used to be able to build for $90/ft in vertical cost 3 yrs ago, is now $135-140/ft.

It's just so frustrating because it's all rigged. We've been the buying market for a year and a half. We can't find a darn thing that we could buy and me sleep well ever again. I mean I would be stressed forever worrying if my investment would be upside down in a year or 2. Even with interest rates creeping up, the inventory is still low and properties are selling at a premium. At least where we want to live (Elmore county). For example, a home hit the market last week. 2100s/f with 3B/2.5bath on 14 acres with a nice metal building big enough for a tractor, a big 5th wheel, and all kinds of stuff with room to spare. I loved it. Totally fenced and gate at the entrance. $425K. I called just to look at it and see what it was about. The sellers accepted an offer yesterday. I don't know what it was but based on what I've seen, they probably got asking price for it.

What leaves me shaking my head is that in 2016 that home could not sell it for 309K. Dropped the price and it sold in February 2017 for about 260K (I don't know if the barn was on it then or not). Anyway, in 6 years you're telling me that property and home has really increased 60% in value??? My other question is this: How is a bank looking at this and it getting apprasied for that price. OR is the bank saying it's only worth 350K and we'll lend you this but the buyers have made a pile of $$$ and can put the rest down on the home. Either way, I just can in my mind square how this is going to continue. We need a new home desperately but I just can't pull the trigger on spending that kind of money for that at this phase of my life. I'd never sleep well again and I damn sure would never be able to retire...ever.

Sorry. Rant over....for now.

I've been kicking the idea of selling around but, my kids are nearby and I'd had to give up my basically free unlimited hunting to head South.
I could sell now, give an agent .05% and still profit roughly $280K in the current market. Home prices here make it to where my son making roughly 100k a year can't afford one.

I have a lot of the same questions and no answers. When you remove the emotion and rose colored glasses the landscape looks really bad.

When I think about these crazy prices in residential I think about replacement costs and how that impacts the overall supply/demand for new construction vs. existing homes. Both are impacted. We are kind of in a perfect storm of rising interest rates but inflated costs for higher profits which are 100% fueled by low inventory IMO. Interest rates and prices are going to prevent a lot of movement in the short term IMO. Demand and prices remain inflated as a result. This could take a few years to work itself out if nothing bad happens.

The other is simply inflation and our economy. The prices have gone up because of the money supply. We've added $20T in debt in just 15 years. When Obama took office we were only $10T in debt. BUT wages have not gone up correspondingly.

I think we are upside down. My little blue collar explanation.... I just don't see how the average American can afford a $500k house in town. That's what they are looking at to live in a large swath of Birmingham. All those office workers didn't get the pay increases necessary to keep up with this. Not even close IMO. They are in a $500k housing market getting paid the same wages they were paid when that home was worth only $300k. Economically that is not good in any way. If they move and maintain their standard of living they have to move to a smaller home? They aren't moving unless forced OR unless they get a big raise and their wages go up. Those wage increases are then sucked right up. All your money goes somewhere... so expect household discretionary spending to drop. Maybe significantly. i think you are seeing this in the Q1 earning reports.

It hasn’t increased in value. They printed more dollars and now each dollar is worth that much less.

More dollars doesn’t mean more value. It just means more, cheaper dollars. Think about it.

Next year there will be even more dollars. And the house price will be more. And the value will be the same.

Agent gets how much commission??? .05%? They get 5-6% here. And I get the 280K profit. I'm betting you've had your home a while and have some equity. I'm just trying to figure how the market can handle someone making dang near 200K profit in 6 years on a 250K home. damn government....

i make 45,000 a year my fiancee about the same we have no house payment one truck payment no cable or internet and if we had a house payment i wouldnt be fishing and hunting nearly as much. in years past i could save money pretty easily just this year ive reallly been feeling it. luckily ive been able to win enough money to pay my truck payment so that helps me out considerably. financially i feel like i was better off making $12/hour when i was 18 living on my own

Doc, look at it like this. In 6 yrs, building costs have doubled. Not just on one item, but every single thing involved, materials, labor, subs, land/lots, permits, insurance, tap and sewer fees. Part is inflation, part is new regulations and environmental laws, part is the fact that the govt has printed so much money in the past 15 yrs that the dollar is no longer worth what it used to be. That 6 yr old house is now worth $450K because that is what it would cost buy the lot and to build it new today.

Dont even get me started on real estate commissions and agents. Most dont do anything but meet the customer at the house, unlock the door, walk them through and fill out 5-7 pages of extremely basic paperwork (takes maybe 5 min of work) and then walk away at closing with 20-25% of what the builder actually makes in net profit after closing, and after taking the risk to fund the build of the house and 5-9 months of hard work. They spend maybe 8-10 total hours dealing with the customer and walk away with $25,000 in commissions (if they have both sides of the deal) on a $500,000 house. I recently got my RE license (test was a joke by the way) and in another 14 months, I'll get my brokerage license (have to wait two years after getting the RE license). Then I'll just market and sell what I build myself and will cut the middleman out completely (other than possibly paying 2% if another agent brings a buyer). With the internet, the MLS, and social media today, most buyers dont need an agent and already know which houses they are interested in. Real estate agents being involved adds 5-6% to the total cost of the house too, for which you get virtually nothing in value.