Yesterday we learned about Real Estate Futures and how the impact your future. Now we will learn about other things driving the real estate market. Depending on which article you read, you are given different versions of the housing market. Some tell us Millennials are driving the housing market up, then others say it is the Baby-Boomers, still other tell us it is investors. The final one to supposedly be driving the housing market, the banks and the Federal Reserve. There is also that pesky housing shortage that some people keep griping about. Now it is your choice as to who you believe.
The Federal Reserve is raising interest rates. This means you could pay up to three or four times what your house is actually worth. The banks holding foreclosed property until they can claim a profit on it. Most of this property has been broken into, looted, graffitied, or in need of major repair. Since when is a broken down home worth 400,000. I am a big advocate of living within your means. To me this means if you are married can you live off one income. If not you could be in trouble down the road. We learned the hard way about counting on two paychecks. My husband went out of work with a chronic illness. Then a year later, I was involved in a horrific accident and have been out of work for four years. With a little help, we have not lost anything at this point, but there is no relief in site. Think before you buy, make a backup plan.
Millennials, they say are buying up the housing market. Most Millennials I know are either living at home or with their friends to save money. Yes, there are some in other parts of the country offering ludicrous prices for houses, just because of their location. These well to do Millenials are offering more than the property is worth, giving the illusion of a good market. What they are actually saying is I will pay a stupid amount to own the house I want. Many have one or more children so the driving force for home ownership is school districts. With home prices continuing to rise, the best place to be might be the basement, until you can purchase a home at a reasonable price or out-right.
Baby-Boomers driving the housing market. As Baby-Boomers retire, they continue to downsize their lives. They are selling those amazing child rearing homes, to buy smaller retirement homes. Can people living on pensions and medicare cause a massive increase in housing sales. The two bedroom homes that retirees are purchasing cannot influence the housing market to that degree. Recently, I looked at a house that obviously the owners must have thought was made of gold. It was a two bedroom, two bathroom home in a fair location. Crime was in the high range and nothing in walking distance. The lot size was under ten-thousand square feet. The price, 284,000.00. Being in the Baby-Boomer generation, I do not want to be paying a mortgage in my seventies and eighties.
Then we have those investors buying up crappy properties, sprucing them up, and renting or reselling them at a profit. To just give a house a new kitchen, some paint, and carpet, and not doing the updating it desperately needs is pure greed. Some of these homes need the wiring and insulation updated. The windows replaced with hurricane resistant glass. There are some investors that have done this, but I cannot say whether it was mandatory or out of personal pride, I would like to think the latter.
Let’s talk about that so-called housing shortage. First I would like to know where. I see no lines outside real estate offices waiting for homes. For there to be a shortage, there would have to be no homes for sale, long lines for newly built homes, and agents in the unemployment line. Is any of this happening in America? I looked at a major real estate website for housing sales in the five states. I will list them but would like to mention that a major percent of these homes are foreclosures up to 10 years old just sitting vacant. Here are the five states I looked at and the homes for sale:
- Florida- 104,425
- New York- 53,678
- North Carolina- 52,161
- Texas- 109119
- California- 71,343
Why are they still sitting vacant? In my opinion, they price of these homes is so high for what you are getting no one can afford them. The ones they can afford need so much work it is not worth buying. One article I read said owning real estate was an indicator of people’s wealth. I am here to tell you it is not. I bought a house because I could not see paying a landlord a huge rental amount when I could own it myself for less. I didn’t want to live under, over, or next to people. I did not want someone telling me what I could and could not do. That does not indicate my wealth, it indicates my priorities for my life. What will indicate my wealth is how much I have left in my pocket after purchasing my next home for cash. I will be one of the no bill-boomers.