as someone in and around professional tradecraft its always burned my ass to watch a husband wife couple buy a slab on grade clapped out flophouse with structural failure, pump $2200 worth of cheap contractor fixtures bathtub inserts and granite counters into it, and demand triple its price before it falls into the earth and their overleveraged low interest loan blows up an already teeterng market.
Americans still think they can make money flipping houses
41–50 of 194 posts
Re: Americans still think they can make money flipping houses
#42It is an amazing contrast with the situation when I was younger. House prices were bounded by wages and were understood to be depreciating assets. That is, without constant investment they lost their value and became unusable and difficult to trade. Even in the best of times it takes time, preparation, and fees to sell real estate. Landlording was a rich person's game because of the risk involved and if you really wa…
> House prices were bounded by wages and were understood to be depreciating assets.
When was this ever true?
If you literally abandoned a house and let it rot then yeah maybe in ten years it will have lost value because it will need a lot of work, but other than that I think it's never been the case they're depreciating in any meaningful sense.
Re: Americans still think they can make money flipping houses
#43Easy way to save money when selling a home is to just sell it yourself. Real estate agents are, imho, one of the most useless professions. All you need is a real estate attorney, which you’d need one anyway.
I just sold my house for a ridiculous number. My realtor got 50 people to tour the house in a single weekend, and 5 places offers and I took the one 10% over the asking price. It's not a mansion or anything, and not in some high tech city, but nice area and a bit of land. The 6% commission is not really that much. Just prepping the house took all of my energy; trying to do marketing as well would have been too much.…
>The 6% commission is not really that much.
Sure, because you (or your agent) managed to sell 10% more than asking price.
Try re-evaluating this 6% if all offers were 85-90% of asking price, and confirm that it is not really that much.
Re: Americans still think they can make money flipping houses
#44Earlier quoted context omitted.
Eventually, people just move away. US states with a high cost of living have lost millions of residents to low cost of living states during the last 10 years, to the point when California and New York are about to lose an electoral college seat each. And, yes, California and New York landlords are partially responsible for that for the reasons mentioned above. The financial industry is moving away from the northeast…
Property taxes,income taxes, fuel taxes, high utilities costs all limit growth of prices in blue states.
On the flip side, "red" states are seeing rapid population growth from climate and economic migration, so inflation is high for low wage earners in the low cost of living areas. We're probably going to see a smaller range in costs between LCOL and MCOL than we have recently.
Re: Americans still think they can make money flipping houses
#45This isn’t 2008, at this point I think people are underestimating the speculative home buyer. The people who are buying houses now are more likely people looking to build rental income cash cows. In a world where productivity is somewhat slowing after massive growth, people are taking to rent seeking activity and the disincentives aren’t there to encourage productive behavior. Why buy and sell when you can buy, charg…
So, if houses were to become investments on a massive scale, and -- as seems inevitable -- they ended up in the hands of only a few, does that change the politics of housing supply? Before, your neighborhood's voters were homeowners who benefit from rising property values; after, they're renters who benefit from falling rents. I've heard that Germany has more of this renting situation but no idea about the politics o…
Are houses not considered an investment where you’re from? Ever hear the term “safe as houses”?
Re: Americans still think they can make money flipping houses
#46“Between 2006, the peak of the previous housing bubble, and 2019, average home prices have increased just 13%, according to the S&P/Case-Shiller Home Price Index. In that same time period, the S&P 500 rose 125%. In other words, stocks did 10 times better than real estate” I can’t take an article seriously when it purposefully ignores what’s happened in the last three years because it negates the point it’s trying to…
Weasel words. Should have said "In other words, stocks did 10 times better than real estate... if you bought and sold at those exact times". It's easy to cherrypick these high and low marks to prove whatever point you need.
Re: Americans still think they can make money flipping houses
#47It is an amazing contrast with the situation when I was younger. House prices were bounded by wages and were understood to be depreciating assets. That is, without constant investment they lost their value and became unusable and difficult to trade. Even in the best of times it takes time, preparation, and fees to sell real estate. Landlording was a rich person's game because of the risk involved and if you really wa…
What area are you referring to where housing was understood to be a depreciating asset? Though that’s true in the literal sense, there are only a handful of instances in American history where they was empirically the case. Not to mention you don’t specify a locale which is the most important thing in real estate, heck, these days perhaps a neighborhood.
In much of the North and Rust Belt of the US, houses declined in real dollars between the heydey of the mid-20th century and now. Detroit is a good example.
Re: Americans still think they can make money flipping houses
#48It is an amazing contrast with the situation when I was younger. House prices were bounded by wages and were understood to be depreciating assets. That is, without constant investment they lost their value and became unusable and difficult to trade. Even in the best of times it takes time, preparation, and fees to sell real estate. Landlording was a rich person's game because of the risk involved and if you really wa…
There was one obvious reason: too much money was printed, for decades. Virtually unlimited supply of cheap money not only push up asset prices but also make it super easy to blindly take loans to invest in assets and make tones of money. Once you tasted the easy money, you want more and earn from hard working would look super stupid. Properties are the most accessible way of getting involved, so people flock in. It's not only America, it's virtually everywhere.
Look around the globe, for how long have all central banks been doing nothing but printing money? Printing money to economy just like adrenaline injection to body, it for sure helps in some scenarios but it also kills if you don't know when to stop. All the central banks delayed the crisis by printing money and got away by manipulating the data to make CPI looking low. It would be probably okay if they did that only one time or two.
So here we are.
Re: Americans still think they can make money flipping houses
#49Is real estate in the US one of those industries where corner cutters think, “oh that’s an easy career” ? My Instagram timeline has become filled, for some reason, with local (not to me) agents insisting that there is no bubble and now is the time to buy. And they’re all really unprofessional looking and sounding and seem to be worried about one thing: their business.
A lot of people in America is looking for a quick buck. Real estate flipping was very successful in the last decade with cheap money. There are entire TV channels ( yes, channels, not shows) showing flipping and renovation in various ways. Many Americans are so tired of the rat race that they are lured by the glory of being able to get off the treadmill and riding off to the sunset. Bubble economies help fuel that dr…
The people who host those shows are extremely good. They are excellent designers or builders and have connections to specialists for landscaping, architecture or whatever area they are deficient in. Not only that, but they know how to market themselves.They have an HGTV show because they were able to get the word out about their work.
The other part of that is that I don't think most realize how much work something like that takes—it basically is a full-time job. I've got an endless list of projects for my own home and I'm not doing anything close to knocking down walls or updating the kitchen.
Re: Americans still think they can make money flipping houses
#50Earlier quoted context omitted.
To a real estate agent, it's always the perfect time to buy. Market is up? "Buy before prices rise!" Market is down? "Buy while prices are low!" There are training classes you can take to get your agent's license, so entering the field is pretty straightforward. There are usually a lot of part-time agents who make enough off each sale to justify staying in the field. And a very few who have worked their way up to sel…
>So the more a house sells for, the more they make. A falling market will drive some agents out of the field. Yes and no. This was a chapter in Freakonomics which showed how since their fee is a small fraction of the value, changes in prices would not affect them so much (within limits), i.e. the 3% fee on - say - 1,000,000 is 30,000, if the house price gets to 900,000 the 3% fee is still 27,000, but in order to be a…
Aka. “volume.”