My cousin in Boise would strongly disagree with this. Her and her husband have had their home on the market for almost 4 months and still have not received any offers that have gone through. They have reduce the price another $10,000, that is a total of $40,000 since the house was initially listed. It’s a newer home in a very nice area of Boise.
Looking at Zillow listings for Boise, I get the sense that either it remains a hot market with people desperate to move there, or sale prices are unrealistically high, or both.
For example, an 85-year-old house with 930 square feet, 1 bathroom and no land to speak of is going for 425K. That might be a bargain in a big West coast city, but Boise?
Favorite real estate-ese of the day, from another Boise listing: “Smaller yard is quick to mow…Lots of Privacy”
Um, sure.
Entering the seasonal change from household moves to office moves now. My thinking based on what you said about your cousin’s situation, is that I wonder if the local politics are starting to have an impact. Lots of people I’d call crazy announcing running for governor and politics does have a noticeable affect on the moving industry. Hard to say, not enough info, nicer doesn’t always seem to equate to desirable.
Eta, what is meant by newer? One of the more popular parts if town is full of homes that are nearing 100 years old (I know which part of town jackmanni’s zillow ad is referencing) all the way through several areas being developed right now and most of the subdivisions are built in phases so that one section may be 10 years old before the next section is built
My question is rather the opposite. If lots of people are moving to Boise, thus increasing demand for houses and raising the prices, where are those people moving from? If demand is increasing in one place, it should be decreasing somewhere else.
And not to get too morbid, but shouldn’t a pandemic lower the overall demand for houses? Without COVID, the U.S. would have ~700,000 more people needing a place to live.
I just did a road trip to Western New York a couple months ago. It was lovely. Although, to be fair, I was seeking out the best parts.
Of course not. People are shuffling from one area to another and new homeowners are filling in. Plus, people moving there aren’t necessarily homeowners in their previous city. They are moving from a more expensive place to a place where they can afford a home.
That’s 0.3% of the adult population. A tiny blip. And not all of them left behind an empty house.
If they’re moving out of apartments and buying homes for the first time, then demand for apartments should be lessening and rental prices going down.
All of these people who are bidding up prices in some markets must be coming from somewhere.
Agreed. Probably very few of them left behind an empty house. They either weren’t homeowners or didn’t live alone.
They’re coming from living with their parents, living with roommates, living in college dorms. New people are being born and eventually getting older. People are immigrating. All of that at a faster rate than those dying. How is this not obvious?
Given that home prices are going up and rents are going up and both are severely impacted despite some amount of new units being built, your premise is wrong.
Yes, those things are happening, but they’ve always been happening. Why should they be having such an impact on the housing market now? Are more people moving out of their parents’ homes, or their college dorms, than there were 5, 10, or 25 years ago? What has changed recently to make housing prices go up faster than usual?
I can think of four factors that have changed recently:
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People started working from home and telecommuting due to COVID. They don’t need to live close to an office anymore, so they are moving away from large cities to places with a better quality-of-life. That could account for the increase in prices in places like Boise, but would also mean that housing demand would be less than usual in the cities those people are moving away from.
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As sad as it is, more than 700,000 people in the U.S. have died of COVID. Wherever those people lived became vacant. They weren’t all homeowners, I’m sure, and it’s less than 1% of the population, but I would think a number like that would show up as a trend somewhere. Maybe we’ll see higher-than-usual vacancy rates in nursing homes for a while.
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We’re probably building fewer homes than usual due to COVID. Construction workers, raw materials, and everything else to build a house may be in short supply. I’ve also heard that home renovations have increased now that people are spending more time in their homes. All the contractors working on those renovations aren’t building new homes.
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I suspect what’s going on with the housing market has more to do with psychology than with a nationwide increase in demand. People are racing to buy houses today because they’re afraid they won’t be able to afford to buy one tomorrow. It’s rather like stores running out of toilet paper early in the pandemic. It’s not like there was a true increase in demand; Americans weren’t shitting any more than before the pandemic.* People heard there were shortages, so they started stocking up, which made the shortages worse.
* To be fair, Americans started shitting in different places than before, so we needed more toilet paper at home and less in our offices. My point is that overall demand didn’t change.
Around my area (middle Tennessee), the trend is investors buying houses and then renting them out as a business. I get spam calls and spam texts daily asking if I want to sell my house for a cash offer. And the last several houses sold in my neighborhood are now rentals.
One factor, in Boise anyway, is that many builders are building apartments and condos and a significant portion of those building single family homes are building larger higher end homes, or focusing on the more currently desirable areas of town. There are several large middle income developments being built, in various areas of the treasure valley, but at what seems to be a slower pace than other more expensive parts of the area.
The Times had a big article in the Magazine yesterday about the crazy market in Austin. 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 wonder also if increasing life expectancy has an impact. I know lots of people 80 or more who are in houses. Not all that long ago they might be dead or incapacitated enough to have needed to move to assisted living.
The Times article also mentioned that a lot of buyers are buying as investment, and putting houses on AirBnB. I wonder how long that will last, before the glut of rental houses cause people to start losing money and then dump the house.
It probably has more to do with investor/wealth changes than consumer/occupant changes. The pandemic actually accelerated wealth movement to the top and increased wealth inequality. Rich people have such incredible wealth, but the common person is struggling and there probably aren’t as many stock opportunities as there used to be because businesses aren’t getting as many customers. So what are they going to do with all their money? Buy up all the real estate. Most of the new buying is real estate investors and flippers rather than people who will live there. There are also a lot of foreign investors who want to park their money in an investment their government can’t get at, and most goverments don’t have any problem with this.
This probably causes secondary effects, like the inflated market causes people who live in houses they bought for a hundred thousand dollars now worth over a million selling them and moving somewhere cheaper and using the difference to fund their retirement.
I suspect in 10 or 20 years, we’ll be even further along to our new feudalism. Giant property investment companies will partner with giant corporations and we’ll start providing people with housing as a “benefit” of their job, giving employers an unprecedented in modern times level of control over people’s lives.
This is all just speculation on my part - I’m not an expert in any part of this - but it makes sense given that all of the fighting over housing prices are between real estate investors.
Gosh, maybe they could also build their own stores for people to spend their wages at too. They could even invent their own currency to dispense wages.
The “new feudalism” theory is fascinating.
Odd then that all of the analysis I’ve seen centers on factors like very low mortgage rates, undersupply of houses, more people working from home with freedom to move to locales with lower cost-of-living and (echoing what Voyager said) first-time buyers deciding now’s the time to take the plunge.
“Many millennials entered the market for the first time last year, and more are likely to do so in 2022. “This age group is the driving force of the U.S. housing market,” says Vander Stelt. He says that by buying their first homes, millennials support the bottom of the housing market. “This will keep the U.S. housing market overly stimulated for the next several years,” he says.”
If most homes are actually being sold to U.S. and foreign investors who aren’t living in them, a lot of residential neighborhoods should resemble ghost towns. 
The investors can rent them out, they’re not necessarily empty. When ownership is out of reach for most Americans we’ll be an even more subservient nation of renters with less control over our destiny.
And your evidence that most new home sales are to real estate investors is…?
Is 24% alarming enough for you?
There’s also the build-to-rent investors who aren’t buying homes to rent but building them. 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.
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.
Is CNBC concealing evidence that the housing market is being massively manipulated to further enrich the 1%?