# Real Estate Prices going down? Where? **URL:** \ **Category:** Factual Questions\ **Created:** [May 29, 2021, 9:44pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189 "2021-05-29T21:44:23Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![elfkin477](https://avatars.discourse-cdn.com/v4/letter/e/a9a28c/32.png) [@elfkin477](https://boards.straightdope.com/u/elfkin477)\ **Post date:** [November 16, 2021, 4:53am UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/61 "2021-11-16T04:53:23Z")
> [@Jackmannii](#): > > That’s 1) a claim from a consulting firm that 2) relates to one American city, on 3) a Fox News affiliate website, that 4) plays up a link to Joe Biden as supposedly embarrassing to the Administration. > > Hardly evidence that the housing market boom in the U.S. is due to “most” homes in the U.S. being sold to absentee investors. Fine, how about the [NYT on 11/12](https://www.nytimes.com/2021/11/12/magazine/real-estate-pandemic.html) saying it’s 1 in 6 nationwide. > Combine that with the surge of millennials into the housing market — they represented more than half of all mortgage originations last year — as well as the insatiable appetite of investors, who now snatch up nearly one in six homes sold in America, and the contours of a new, lightning-fast, permanently desperate housing market come clearly into view. ---
**Author:** ![SenorBeef](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/senorbeef/32/2220_2.png) [@SenorBeef](https://boards.straightdope.com/u/SenorBeef)\ **Post date:** [November 16, 2021, 5:06am UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/62 "2021-11-16T05:06:38Z")
You’re right, I made an unjustified claim and I couldn’t find evidence of what the split between investors and people who intend to live in the properties they buy. Certainly we’re at an unusual time in terms of real estate investment involvement, though, right? I did find a site that said that first time home buyers as a fraction of buyers was near an all-time low last year, but that doesn’t necessarily inform about the investor buying issue. But all the news stories you read about the real estate market are about how it’s hard to find a home because real estate investors come in with cash offers over asking. ---
**Author:** ![Lord\_Feldon](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lord_feldon/32/341_2.png) [@Lord\_Feldon](https://boards.straightdope.com/u/Lord_Feldon)\ **Post date:** [November 16, 2021, 9:03am UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/63 "2021-11-16T09:03:42Z")
> [@elfkin477](#): > > There’s also the build-to-rent investors who aren’t buying homes to rent but [building them](https://learn.roofstock.com/blog/build-to-rent). I personally find this less alarming as they’re not decreasing the supply of single family homes available to families and other people looking to buy a home to live in. I don’t see the big difference. If I buy an existing house for $300,000, that’s a house that someone else can’t buy; if I build a new house for $300,000, that’s land, lumber, and a construction company’s time that someone else can’t buy. If it’s really so bad for a single-family home to not be owner-occupied, the badness seems pretty fungible to me. ---
**Author:** ![Jackmannii](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jackmannii/32/311_2.png) [@Jackmannii](https://boards.straightdope.com/u/Jackmannii)\ **Post date:** [November 16, 2021, 4:15pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/64 "2021-11-16T16:15:44Z")
So we’ve gone from “most” houses being bought up by investors to “24%” and now down to what, 15%? Sorry, don’t have Times access - but even if that “nearly one in six” figure was correct, it hardly qualifies as “most”. Speculators are characteristically attracted to what they see as investment opportunity, so it’s hardly surprising that some would jump in on a perceived boom market. Sometimes substantial profits are attained. Other times, they lose their shirts, as in 2008. “Real estate investments are known for providing low returns. Traditionally, the returns on real estate investments have been less than the rate of inflation. It is only in the past few years that there was a sudden spike in the capital appreciation earned on real estate. The rentals earned are also negligible. Also, in order to earn rent, a lot of time, money and effort, has to be put in. Also, many times, it is just difficult to rent out houses. Hence, there is an element of risk as well.” “On the whole, the returns earned by real estate are comparable to risk-free investments even though a lot of risks has to be taken.” > **[7 Reasons Why Real Estate Is the Worst Investment](https://www.managementstudyguide.com/7-reasons-why-real-estate-is-the-worst-investment.htm)** > > This article explains the reasons why real estate is a bad investment. The article is written from the point of view of a middle-class salaried employee. That warning is mostly aimed at the middle class, but the same risks apply to investment companies and wealthy speculators. Many if not most of them aren’t interested in being long-term landlords; they want to sell out at much higher prices. They may or may not succeed. Given all the conflicting advice by “experts” - we’re not in a housing bubble, a bust is coming, millennials mostly want the “freedom” that renting provides and don’t want to buy houses, millennials have decided it’s time to take the plunge and buy, etc. etc., the best prediction is that they don’t really know shit. As long as I have my hut in the woods, seeds and shooting irons for self-sufficiency and my faithful spaniel at my side, I don’t worry overmuch about the abyss of a new Dark Age made more sinister, and perhaps more protracted, by the lights of perverted real estate. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [November 16, 2021, 5:37pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/65 "2021-11-16T17:37:17Z")
> [@Voyager](#): > > They said that one big reason was that Millennials have now reached house buying age, and there are a lot of them. That demographic bump overwhelms any Covid effect. I don’t really buy this as a primary explanation. I’m sure it is a contributing factor, but the timing is a little suspect. It’s not like the entire Millenial generation got old enough to buy a house last year. It’s a gradual process, and prices were moving gradually until recently. If house prices had all of a sudden spiked 2 years ago, or a year from now, that would be a more plausible explanation to me, but the fact that it happened the same year as the pandemic is strong circumstantial evidence that the pandemic had a lot to do with it. And there are good pandemic-related explanations. Interest rates are extremely low and bank accounts are flush due to government stimulus. Lots of other things people were previously spending more money on (gas, dining out, vacations) are less attractive. And with people spending a lot more time at home, the desire to have a bigger house and a yard is greater. ---
**Author:** ![nightshadea](https://avatars.discourse-cdn.com/v4/letter/n/7ba0ec/32.png) [@nightshadea](https://boards.straightdope.com/u/nightshadea)\ **Post date:** [November 16, 2021, 6:42pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/66 "2021-11-16T18:42:45Z")
> [@DorkVader](#): > > The last few families I’ve moved into the area this month have said that the market is such that you make a cash offer above asking or you don’t get the house. You don’t deliberate or negotiate. One family told me they lost a house in the span of 30 minutes while deciding. Another told me they offered 80 thousand above the asking price and no inspection, they paid all the fees, etc. It’s nuts here right now this is here … we have a preapproval for 300 k bur we want to stay at 270-290 every time we find a house under 300 k its either a "cash only"investment property kike this [https://www.redfin.com/CA/Lancaster/45324-Raysack-Ave-93535/home/6353385](https://www.redfin.com/CA/Lancaster/45324-Raysack-Ave-93535/home/6353385) or its got 5 offers and its at 325-350 k like this one [https://www.redfin.com/CA/Lancaster/1103-Ave-H-5-93534/home/6284168](https://www.redfin.com/CA/Lancaster/1103-Ave-H-5-93534/home/6284168) Here’s what our realtor told us when I inquired about the one above : “Just got off the phone with the listing agent. They have multiple offers in the $320k range. Your approval letter is up to $300k” I’d like to know how peoples getting 200-300 k in cash ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 16, 2021, 7:23pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/67 "2021-11-16T19:23:17Z")
> [@iamthewalrus\_3](#): > > I don’t really buy this as a primary explanation. I’m sure it is a contributing factor, but the timing is a little suspect. It’s not like the entire Millenial generation got old enough to buy a house last year. It’s a gradual process, and prices were moving gradually until recently. I’m not sure it is the primary explanation, but it is a significant one. Last year people weren’t moving, so inventory went way down and prices went up. In some places people wanted to move out of smaller apartments or condos to bigger houses. The increase in prices in San Francisco was less than that of the surrounding, more suburban, cities. But the article was about Austin, and I wonder if people were ever crammed into small apartments there. People are moving to more suburban regions, but that’s a matter of price, and investors are doing it because these areas don’t have regulations about renting. Where I live we had investors before the pandemic, mostly from China, using cash. Friends down the street made a bundle selling to a Chinese buyer, and it seemed no one lived in the house for several years after the sale. (It just got sold again.) Another factor is that during the pandemic people got used to buying without seeing the house except online, and this seems to have contributed to an increase in the size of the buyers market. The people featured in the Times article lived in Brooklyn and bought in Austin. All I know is that I get two or three snail mail cards a week begging me to sell my house. ---
**Author:** ![Asimovian](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/asimovian/32/172_2.png) [@Asimovian](https://boards.straightdope.com/u/Asimovian)\ **Post date:** [November 16, 2021, 7:56pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/68 "2021-11-16T19:56:00Z")
> [@nightshadea](#): > > I’d like to know how peoples getting 200-300 k in cash Sometimes from selling their home in a higher-value market. But there are also companies now that will, in essence, buy the property for you for cash and then hold it while you work out traditional financing. So not all cash buyers are actually cash buyers. ---
**Author:** ![hajario](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hajario/32/171_2.png) [@hajario](https://boards.straightdope.com/u/hajario)\ **Post date:** [November 16, 2021, 8:10pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/69 "2021-11-16T20:10:40Z")
> [@nightshadea](#): > > I’d like to know how peoples getting 200-300 k in cash Home equity loans and investment accounts primarily I would imagine. Millions of Americans are in that position. ---
**Author:** ![SenorBeef](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/senorbeef/32/2220_2.png) [@SenorBeef](https://boards.straightdope.com/u/SenorBeef)\ **Post date:** [November 16, 2021, 9:00pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/70 "2021-11-16T21:00:34Z")
I’ve never understood why it matters whether the sellers buy it in cash or not. Even if they’re financing, the bank holding their mortgage pays the seller in cash, right? So as long as someone is preapproved for a mortgage, what’s the difference? ---
**Author:** ![TheGunIsMightierThanThePen](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/thegunismightierthanthepen/32/2981_2.png) [@TheGunIsMightierThanThePen](https://boards.straightdope.com/u/TheGunIsMightierThanThePen)\ **Post date:** [November 16, 2021, 9:06pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/71 "2021-11-16T21:06:02Z")
With cash, the seller of the house get the money immediately. If the buyer chooses to finance, there’s a lot of paperwork to fill out to satisfy the bank, the whole process gets drawn out longer than you want, and it’s possible things fall through and the bank decides at the 11th hour not to lend to the buyer. ---
**Author:** ![DavidNRockies](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/davidnrockies/32/6279_2.png) [@DavidNRockies](https://boards.straightdope.com/u/DavidNRockies)\ **Post date:** [November 16, 2021, 9:14pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/72 "2021-11-16T21:14:22Z")
I think this is a good high-level take on the participation of institutional investors in the US and UK single-family markets: [https://www.cnn.com/2021/08/02/business/family-homes-wall-street/index.html](https://www.cnn.com/2021/08/02/business/family-homes-wall-street/index.html) Trajectory (which way is the trend going) matters, obviously, as does location. While the figure may hover around 16% right now, if those purchases-turned-rentals are concentrated in a few specific markets, then the amount (over)paid by asset-rich titans could easily distort a modestly-sized market. What we also don’t know is the degree to which these institutions endeavor to further reduce supply of new housing stock, by lobbying governments to reduce available development sites, enacting onerous building codes, “anti-mini-dorm” legislation, etc., etc. Largely because I don’t buy the argument that these new over/landlords are uniquely beneficent\*, I don’t see this as a good thing for the majority of prospective home buyers (or renters). And if one set of institutional buyers makes money in the bull housing market, there’s another waiting to profit handsomely from the all-but-inevitable bust cycle. Leaving the masses – as always – ska-rood. \* > “We would argue that [institutional money] is driving standards up in the rental market, which is a positive thing for households and the sector,” said Oliver Knight, head of residential development research at Knight Frank. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [November 16, 2021, 9:30pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/73 "2021-11-16T21:30:19Z")
> [@Voyager](#): > > I’m not sure it is the primary explanation, but it is a significant one. Last year people weren’t moving, so inventory went way down and prices went up. Yeah, I’m sure it had an effect. I think last people a lot of people _were_ moving, causing a lot more people to buy (or try to). I, personally, am a Millenial who bought a house unseen in another state last year, so I am apparently nailing the demographic trends to which I belong. > [@SenorBeef](#): > > So as long as someone is preapproved for a mortgage, what’s the difference? There are a number of ways in which a preapproval can end up not translating into an actual mortgage, and the seller takes on some of that risk. When we bought our first house, the initial appraisal came in way lower than our offer, which put our loan into jeopardy, and caused us to have to scramble. We ended up having a close friend with a personal relationship with the banker in question who said “hey, this appraisal looks bogus” and got them to order another. Not sure exactly what we would have done without that personal connection, but one possibility is that, regardless of preapproval, we would not have been able to get a mortgage on _that_ house. The house we bought last year fell out of escrow 2 days before the previous would-be buyers would have closed and had to go back on the market, apparently due to a personal dispute between the buying couple. The previous owner had to scramble because _she_ was trying to close on another house (and as a result we got a great deal on it because we could put in an offer the same day it went back on the market). None of that happens if you just get a nice big wire transfer a few days after you sign the papers. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [November 17, 2021, 2:58am UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/74 "2021-11-17T02:58:35Z")
> [@iamthewalrus\_3](#): > > I, personally, am a Millenial who bought a house unseen in another state last year, so I am apparently nailing the demographic trends to which I belong. Hell yes. As a Boomer, when I moved 25 years ago I got a week paid for by my new company to look at houses, and that was very stressful in the sense I wished I had more time. (We picked well, as it turns out.) I’d be very nervous doing it unseen. > [@nightshadea](#): > > I’d like to know how peoples getting 200-300 k in cash If I chose to move just about anywhere else in the country, I could generate $200K - $300K of cash easily. And a lot more if I sold, but my stuff in storage, and then bought. The Times article said that buyers local to Austin hated Californians coming in with tons of money, and I’d be one of those. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [November 17, 2021, 5:17pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/75 "2021-11-17T17:17:47Z")
> [@Voyager](#): > > I’d be very nervous doing it unseen. I was kind of nervous too! But: We had toured the area and we knew we liked the neighborhood, we knew we _could_ back out after the inspection and were only risking whatever earnest money we had put up ($6000 maybe?), we had a good video walkthrough with our realtor, and we got a really good deal due to the distressed seller who needed to close asap. In retrospect it’s _really_ good we did, since our plan in the absence was to rent for a while and then buy and we would have had to pay hundreds of thousands more for a comparable house even 6 months later. Crazy times. ---
**Author:** ![hajario](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hajario/32/171_2.png) [@hajario](https://boards.straightdope.com/u/hajario)\ **Post date:** [November 17, 2021, 7:29pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/76 "2021-11-17T19:29:03Z")
@iamthewalrus_3 you should see the old neighborhood. I live in Hidden Valley. A 3 bed/2 bath house that was recently totally remodeled and immaculate is going for nearly $2.1M. A similar one that hasn’t been updated since the 70s just sold for $1.6M. ---
**Author:** ![Ulfreida](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ulfreida/32/8014_2.png) [@Ulfreida](https://boards.straightdope.com/u/Ulfreida)\ **Post date:** [November 27, 2021, 3:02pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/77 "2021-11-27T15:02:20Z")
A lot of the buyers, especially in Western states and the North East, are coming from California, where real estate prices are **quadruple** what they are in the rest of the country. It makes selling and moving very tempting, especially for those whose mortgages are paid down. We sold a cute but tiny 2 bed 1 bath house with no usable outdoor space in California and bought a 25 acre farm in New England with a new horse stable and a 3500 square foot antique farm house with a new high-end kitchen, “great room” and garage, and had $300K left over. For example. As for where real estate prices are going down, I suggest looking in Afghanistan. ---
**Author:** ![Snipe70e](https://avatars.discourse-cdn.com/v4/letter/s/51bf81/32.png) [@Snipe70e](https://boards.straightdope.com/u/Snipe70e)\ **Post date:** [November 27, 2021, 5:47pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/78 "2021-11-27T17:47:16Z")
It is nutzs to purchase a house with no inspection. You are trusting that the seller is disclosing everything. The house that we bought had a long list of things that we found in the inspection. My realtor asked a contractor what he thought it would cost to correct all the problems. His estament was over $24,000. Some things he bid real high, like adding insulation was $8.000. We got a $15,000 credit because of all the faults… There is much more to this story but I am keeping it short. By the way this is Souther California. ---
**Author:** ![Snipe70e](https://avatars.discourse-cdn.com/v4/letter/s/51bf81/32.png) [@Snipe70e](https://boards.straightdope.com/u/Snipe70e)\ **Post date:** [November 27, 2021, 5:55pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/79 "2021-11-27T17:55:05Z")
When I sold my 2nd house in San Jose last year I thought the sale was going to be hard because of the pandemic. My agent told me the pandemic was flooding the market. People who were living in apartments and condos we now stuck in there homes and wanted more room. The housing market was on the rise, but the condo market not so much. ---
**Author:** ![Snipe70e](https://avatars.discourse-cdn.com/v4/letter/s/51bf81/32.png) [@Snipe70e](https://boards.straightdope.com/u/Snipe70e)\ **Post date:** [November 27, 2021, 6:10pm UTC](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189/80 "2021-11-27T18:10:38Z")
Voyager about those cards or calls to buy your house, have you ever answered one? I did on my section of the old family farm. His offer was less than the apprased vlaue of the land which was about 1/4 of the true vvalue. And a years ago I was possibly going to sell my house in San Jose. I answered one of those cards. I spent some time with the buyser’s agent explaining why I was going to sell and the fact that I believed the house was worth over 1 million. There was a question about the solar panel on the house and assuming the contract or buying out the contract. She said her boss would not let her make an offer until I had that all figures out and left. She came back about 5 minutes later all excited. Her boss had told her that she could make an all cash offer on the spot and they would assume the solar panel contract. Then smilling she tole me the off was 500K. I look at her ansd told her the house was worth 1 million. she said that she could only offer 500k but did I want to make a counter offer? I just looked at her and said 1 million. she said that her boss would not go that high. I just repeated 1 million. What they are truly looking for is someone who is going to loose their house or does not know the value of their house. That was March and in October I sold the house for 1.1 million. The house was really worth about 1.3 but the neighborhood would not suport that price with comps. See I bought the biggest houst in the subdivision with the biggest lot then added ont to the house twice. I over priced the house to the neighborhood. If it had been in another neighbor hood I would have easily gotten the 1.3M just 1 mile away. [Previous page](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189.md?page=3) [Next page](https://boards.straightdope.com/t/real-estate-prices-going-down-where/943189.md?page=5)