The new real estate normal: Boise house that sold for $239K in 2018, sells for $523K in bidding war

[Demovictory9]

The new real estate normal
In the fracturing American economy, any house can inspire a bidding war.

Descisciolo had moved from California to Idaho a few years earlier with his wife and two young daughters, in part because the area was still affordable for a middle-class family. He’d managed to buy their home in a new suburb called Star in 2018 with help from a relative, spending $239,000 for a new three-bedroom house with a horseshoe pit in the backyard. During the next few years, he’d watched out his back window as the Boise metropolitan area continued to expand outward, until the crop dusters slowly disappeared from the sky above his house and construction crews built another subdivision behind his backyard. Then, early in the pandemic, he’d begun to receive form letters from investors offering to buy his home. “We can pay now. We can pay cash,” one read. Descisciolo started checking the estimated value of his house on Zillow, watching in disbelief as it continued to rise by $30,000 each month, until it felt to him like the only sensible thing to do was to sell and then use the proceeds to build a bigger home for his family farther from the city

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McFerrin posted the listing online and went back to her office to watch the traffic grow: 34 views in the first 10 minutes, 238 within an hour, more than 1,000 by the end of the afternoon. The Boise area had an average of 25 active buyers for each available house, many of whom were investors who offered to pay above asking price with all cash, which meant hundreds of first-time buyers had spent months trying and failing to find a home. Their standard offers now typically included a personal note written to the seller.

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There was the offer from Carl and Vickie Foster, with an escalation clause that would go up to $511,000. “Obviously, all-cash is great,” McFerrin said. Then she told them about the offer from the Christensens, which came with a small down payment but a purchase price that escalated up to $513,000. “I talked to their Realtor, and it’s actually a neat story,” McFerrin said. “They’ve missed out on multiple offers, and they’re starting to run out of hope, and they’d never been willing to do an escalation clause before. So, the fact that they managed to come in with an offer this strong, I’m impressed. They really want this house.”

https://www.washingtonpost.com/nation/2021/07/18/idaho-housing-market/

[Celerity]

1. White demographics driven, as the Boise City-Mountain Home-Ontario, ID-OR Combined Statistical Area

was 831,235 two years ago, and is growing by at least 30,000 per year (and that was 2018 to 2019 growth, probably higher per year now). It is over 90% white, and so far it looks like those California people fleeing to it are around the same percentage or higher.

[captain queeg]

2. I hope rents don't follow suit

I’m retired on a fixed income and I rent. Sold my house about 5 yrs ago, kind of wish I’d hung on longer. But you have to make decisions based on circumstances so there’s no use beating myself up, I’m doing ok. Still, if rents started jumping 50% in a few years I’ll be in trouble.

[leftyladyfrommo]

3. My brother is in Spokane and he's afraid rents will go up

His daughter is fixed income and has a little apartment. She can't afford an increase.

[captain queeg]

4. I used to live in Spokane. It was considered one of the more affordable cities in WA.

I guess it probably still is when you look at costs on the west side. Bought my first house there in the 90s. If I only knew back then about real estate. Oh well. I guess if things got bad I could get a part time job but I’m enjoying being lazy in my old age.

[leftyladyfrommo]

6. The cost of real estate there is insane now.

But people's wages aren't going up

[tinrobot]

14. They absolutely will.

It's already happening in Tahoe. Plenty of articles on it. Have a friend in Bend OR, and he says it is also happening there.

It's to the point where the people who work at restaurants, retail, etc. can't afford to live in the communities they serve.

[Wingus Dingus]

16. The rich people in beautiful areas will have to commute to where the riff-raff lives

for goods and services.

[cinematicdiversions]

22. Here on the west coast of Florida rents are increasing every year by double digits.

Much cheaper to buy a house than pay rent in these parts.

[Buckeyeblue]

5. We are seeing the same thing around here (SW MI)

Houses being sold significantly over their value. What happens in 2 years when the market cools off and people realize they owe significantly more than the home is worth.

[ScratchCat]

21. Here's another/better question

What happens when all these people who bought houses in the past two years realize they can never lower their payment on the house they overpaid for because interest rates will never go lower? We are setting up a problem far worse than the 2009 mortgage crisis. There will be no "refinance market" in a year or so for mortgage lenders. And everyone will be upside down.

[Buckeyeblue]

23. Excellent point

The next step will be 100 year mortgages to lower house payments. You'll never be able to pay them off. Your heirs will have to use whatever you leave behind to unload your house. Or move into it and continue making payments. We'll have multigenerational mortgages.

[Shrek]

7. The couple who bought my home included a 2-page handwritten letter

Along with photos of their kids.

They also had the best offer, well over asking price with no contingencies beyond a radon inspection. The home sold within a few hours of hitting the market . . . it's nuts right now.

[Vinca]

8. It's really nuts. I've been watching real estate listings in our area and properties come on the

market one day and are sold the very next day. Properties in areas I would never want to live and have always had cheap real estate are exploding pricewise. We'd love to sell our house which is 3 times too big for us, but there's nothing to buy that makes any sense. Sadly, we've seen these bubbles before and those currently winning the bidding wars may regret it in a few years.

[rgbecker]

9. Here's more craziness.

House appraised at 3 million by town, which updates appraisals every 3 years, sells for 5.2. 60% over appraisal.

This bubble is going screw up house values for years to come.

[MineralMan]

10. This is happening all across the country.

My wife and I just bought a townhome to downsize from our previous house. The market was crazy, with multiple bids on every place we looked at, even those with issues I couldn't handle. After three weeks of going showings, we were almost ready to give up.

Then, we were shown a townhome that suited our needs and that we liked. It was listed for $215k. We wanted it. So we made a cash offer of $240k, with us paying closing costs and waiving inspection contingencies. Fortunately, the seller took our offer and we moved in almost four weeks ago.

Our old house? Well, the painters are in it right now, it has a new roof and some other improvements and will probably hit the market in a couple of weeks. It's not in perfect shape, but we think that won't matter, and we'll also get multiple offers in these market conditions. I expect to accept some offer within a week of it showing up in listings.

[Demsrule86]

19. I sold my house a couple of weeks ago above asking and contingencies in

Austintown Ohio. The house was listed far above what i paid for it two years ago.

[MineralMan]

20. Well, if you're a buyer, you have to plan for that.

We had a fixed limit for how much we were willing to pay. So, we only looked at places priced below that. When we found one that suited our needs and wishes, we just bid what we were willing to pay, which was $25k or 11.8% more than the asking price. Two weeks later, townhomes in that development were all listing for what we paid or more. So, had we waited much longer, we'd have effectively been priced out of the market.

It only took us three weeks, which is a much shorter time than most buyers are taking to have an offer accepted. It was pure strategy. The realtor we used wasn't sure about our plan, but was pleased and surprised when it worked. While it's a good idea to take suggestions from realtors, you shouldn't rely solely on their advice if you're a buyer in a market like this. You have to look at everything and have a maximum amount you won't exceed. Looking for houses listed for about 10-12% below that maximum is the secret. That way, you can bid your maximum on a place you like and pretty much guarantee that your offer will be accepted, I think. Worked for us.

That was the first and only offer we made on a house we were shown. The rest, we couldn't see paying that much for. They still sold for that much, though, in the end. It's a nutso market, for sure. So, if your maximum is $240k, only be looking at places in the $205-220 range, and be willing to make an immediate cash offer, or you'll be outbid by someone willing to pay above your maximum. If you're thinking about an FHA or VA loan, you're not going to have much luck, either, since those loans take a long time to get funded.

A month after our offer was accepted, the price range has jumped already to a point that would have made finding what we wanted among the limited number of homes on the market almost impossible at our maximum price point.

[Demsrule86]

24. Very smart on your part. We had an offer on our house an hour after it hit the

market and since I am a crazy woman, it was like 7:00 PM before I finished making the house perfectly clean and organized...I mean I started late and all 6:00 AM by 7:30 PM, we had our first offer.

[Wingus Dingus]

11. These people are fucking crazy.

Enjoy your overpriced house.

[peggysue2]

12. Same escalation of prices in my neck of the woods

I live outside Knoxville, TN. My youngest son and daughter-in-law faced a similar dilemma in the Philly suburbs. They spent over 9 months getting outbid on homes they liked by other buyers, people willing to buy without an inspection (basically as is), cash down.

The average buyer just can't compete with this. My son and his wife were finally successful but with lots of angst and frustration.

My husband and I decided to put our house up again. Two years ago, we tried but had no offers. This year, I had two days of showings, 10 hours each day with back-to-back prospective buyers. We had three offers, two of which did not pan out. But the third stuck and the price was higher than we ever expected getting for the place.

So yes, the market is crazed at the moment.

Meanwhile my mother-in-law's house which was left to my husband when she died has had scads of inquiries and it's not even on the market. We've had calls, postcards, letters, emails, all wanting to make a cash offer.

It's nuts!

[JI7]

13. Are they buying it as a regular home for themselves or a financial investment with intention to rent

out ?

[Wingus Dingus]

15. I know in "hot" areas they're being bought as investments, but even with that

and Californians cashing out, I can't figure out where all the rest of the all-cash buyers for $500,000+ homes are coming from. Apparently a lot more people in America than I realized are sitting on huge piles of cash--younger people, too. If you need a mortgage for a house I guess you're screwed.

[Demsrule86]

25. My buyers are living there with their kids which makes me very happy...my realtor told

me that the kids, Mom and Dad love the house which makes me happy. It is hard to let a house you spent so much time renovating go...I love that kitchen! I put a red retro fridge in the lower level family room (there is a full kitchen there). It was exactly as I envisioned it.

[Johnny2X2X]

17. Work from home consequences

There is an increase in permanent WFH, people are going to be able to move to a "cheaper" area and still do their jobs. Get ready, this is the new normal. People coming from expensive areas are willing to pay more for homes in cheaper areas.

Here in West Michigan, we saw it at the lake shore for decades, where upper class Chicagoans bought a lot of the property on Lake Michigan because it was cheap to them, but expensive to locals. I remember a friend 20 years ago who bought a place near Grand Haven on the Lake who couldn't get over how much you could get for only $800K back then.

Price is relative. People in the big cities an in most of California see $500K for an average house as a great bargain.

[Demovictory9]

26. yep... i know people making decision on housing based on assuming they will get to continue to WFH

[Fix The Stupid]

18. Yep...Canada too...

I bought my property in 2002 for $80,000.

I wouldn't take a penny less than $1,000,000 for it today.

Which is nuts.

This is not sustainable. How is a young person/couple supposed to afford this?

[HAB911]

27. Can't count how many of these I have lived through

It's like musical chairs, where will the cycle be when you have to liquidate. In my case, guess I won't care, I plan to die in place