With Home Prices Going Crazy, Where Does That Leave You?
Category: Retirement Real Estate
April 21, 2021. In most parts of the country a staple of conversation these days is the crazy increase in home prices. A big reason for that, according to Realtor.com, is a shortage of places to buy. The supply of homes for sale in the U.S. during March was down 52% from a year earlier. Another factor is continued interest low rates. The March national median listing price of a home was $370,000, up a whopping 15.6% compared to last year. The typical home spent 54 days on the market this March, which is six days less than last year. Anecdotally, almost everyone we know in Florida who has sold their home this winter sold it in just a few days, often the same day it went on the market!
While these rapid price increases tend to shut out first time buyers, they have left typical Topretirements Members, who have probably owned their home for a long time, feeling pretty comfortable. But what does this crazy real estate market mean to you as a retiree? Should you sell, stay, or trade up? That is what we are really after in this article: how are you feeling about the real estate market, and are your plans changing as a result of the current boom?
So far our personal experience seems to have two camps – those who are selling out, and a larger group that would like to take advantage of how much they could get for their home, but worry that they will not be able to find anywhere suitable to live. The phenomenon applies to snowbirds as well as people who live in one area year round.
Some friends we know have decided to cash out and move to a less expensive market for their winters (Key West to St. Petersburg). That seems like a good strategy, particularly if they like where they are moving to. Some are renting first in the new market (always a good plan), with thoughts about eventually buying. Another snowbirding friend, after taking a nice profit on the winter home he has owned for a long time, plans to travel for the winter months, maybe eventually settling on a place. Yet another couple, who decided they really only wanted to be in Florida for a few months a year, sold their winter home in Sarasota and will rent there for a few months next year.
Many others would like to trade up their winter homes, but that can be complicated. In this market you can’t put your house on the market without having a lock on your new home – otherwise you could end up on the street. Making it more difficult, many people don’t have the resources to own two homes, even if it is very briefly. Are you thinking about trading up – if so, let us know.
Two other phenomena in the market
One thing that has affected a lot of baby boomers is having their adult children (and their children) move into their homes during Covid. How will that shake out for combined families – will they try to upgrade to a larger home, or will the children move out of the nest as life starts to return to normal? If you are in that situation, please tell us your plans.
Another thing we have lately is the desperation buyer. Many Florida renters, looking at huge price increases and limited availability for next year’s rentals, are rushing to buy. Countless properties are being purchased via online video tours, the buyer never actually seeing the property. WIth buyers lined up to buy, prices keep climbing and are usually over the asking price.
Retirement homes
Finally, we would love to hear about people’s experience in buying into the active adult community and 55+ markets. Are you seeing price increases, and are folks beating down the door to buy? Or is a more normal market? Please share your thoughts in the Comments section below.
Comments on "With Home Prices Going Crazy, Where Does That Leave You?"
Roland says:
In my many years, I have seen this housing rollercoaster play out many times. I know people that bought into the crazy housing market (Boom) in 2005-06. We all know what happened a couple years later (Bust). They are happy now with this new craze.
If you do not have to buy right now, wait if possible. Let the desperate and speculators run the race to the cliff. This housing madness happens every 13-17 years and not just with housing. Remember Silver, Beanie Babies, Pet Rocks, Hummels, Tulips, Gamestop stock, etc. And today, Dogecoin!!
Be a smart buyer, not a desperate buyer.
LS says:
We, by chance, happened to time this just right. I finally convinced, after years of trying, my wife that we needed to downsize from a five bedroom McMansion to something more appropriate for two retirees. I wanted to go to an active adult community but she wasn't having it. We compromised on a new build in an all age development and signed a contract last August. I was worried about our current house not selling and being stuck with two houses when the new house was completed. We listed our house on the Friday of President's day weekend and had a contract that Sunday for above our asking price and they allowed a free lease back until our new build was completed. In all the houses we have sold over the years, I've never seen anything like this.
My son is a real estate buyer's agent. It is very frustrating for him now as his buyers have so much competition and they almost always have to offer above the listing price and pay cash. It is very hard for first-time buyers in this market.
Kate says:
I'm so glad I bought my retirement home 3-years ago! (At that time, I had a selection of approximately 8 listings.) Now houses in my suburb sell in a day with multiple offers, and there is almost no inventory. Realtors post "Coming Soon" signs, and get offers before the property even hits the multi-list. Desperate buyers are posting on the town's social media sites, in the hope that someone who plans to sell their home will respond. And I'm in a suburb in Ohio, not in a traditional retirement destination!
Our newspaper also has reported that the few developers in our region are overwhelmed with new-home buyers. New home prices have gone up significantly due to rising material costs and this increased demand. Developers are taking longer to deliver homes, due to material delivery delays and Covid-related labor issues. I can confirm that these issues are also affecting home renovations, by the way. It's a perfect storm. Great time to be a Seller, but not a great time to be a Buyer.
Tomi says:
We just purchased a home at Ovation in Pahrump Nevada. This weekend flying from Washington to finalize the plans. We wont be moving for another year or so but we sold a rental property (triple price we paid for it) to cover it.
Our house now is worth dbl and realtors contact us all the time. Almost ready to sell and and live in our travel trailer.
We have been very lucky to have timed out real estate investments for every home we bought(and rehabbed).
I bought my 1st home at 27(60 now) when it was so much easier. But remember interest rates? Mine was around 11%!!!!!!
MF says:
2021 was supposed to be the hip-hip hooray year for us in selling our big home, moving out of LI NY, going south and downsizing (early retirement). Unfortunately, it is turning out to be one big frustrating event. We are at a lost as to where to we want move to now due to the shortage of homes, skyrocketing home prices, high rental prices -plus we have family pets.
Over the past two years we were looking in Florida, SC, NC, and GA; now at a tossup between SC and FL. We are leaning towards FL thinking the state may have better access to medical needs but seeing and hearing what is going on in parts of Florida, we are rethinking.
We are excited that the potential to make over $100K on our home is real but I am holding off listing our home because it will not last long on the market. (Hoping to get better handle on our retirement destination). Ideally, we were hoping to find a location outside of a city, near coast or lake, with access to decent medical/specialist, shopping. (probably just like everyone else..lol) We are not ready for the communities on top of each other but would like a neighborhood feel with some space.
We are now preparing for the reality when we are ready; we will need cash ready, jump on a deal in a moments notice, pay more than the asking price, find a great realtor that is willing to do the work to find and land that potential listing. We've heard suggestion to forgo home inspections to get the deal to contract and that inspectors in Florida are booked weeks out. We also hearing rumors from friends in SC that some builders are putting off new builds in communities due to supply shortages and skyrocketing prices.
We are planning more trips next month to visit areas; but travel has gotten so expensive and rental cars prices are insane. The shortage and skyrocketing prices of homes in FL is changing our retirement thinking, vs. other retirement friendly states that may have a home listing with more property/house for same price.
We are trying to remain optimistic that it will all come together for us; a lot of realtors we've met feel this housing shortage and prices are here to stay for some time. We also have children that are struggling to find affordable 1st time homes and as well as their friends. Thank you ;).. I got to vent a bit.
Elaine C. says:
My house has doubled in value in 3 years. I don't plan to sell it, but I may rent it through a rental manager in a couple of years when I begin travel overseas. I look at other locations where I would like to live, and I cannot afford to buy the kind of place I want with the funds I would have if I were to sell this place. Good thing I like where I live.
Larry says:
Roland, the real estate market isn't an item, like Beanie Babies; it is a market, like the NYSE. And, over time, those markets rise -- unevenly, yes, but they rise. Those of us with dreams of a finite term of retirement do not have the luxury of waiting too long. There is nothing similar about this market to the pre-2009 crash. The lowest interest rates were above 5%. Lumber and other building materials were considerably cheaper then. There was no pandemic to drive city folk toward areas they perceive as safer, thereby creating strong sellers' market. Developers were still building communities right up until the 2009 crash, then they stopped dead and are still intimidated at the risks. But, most of all before 2009, and after, employees worked on site at their companies; back then, employers were skeptical that their workers would be anywhere near as productive at home as they were in the office. Well, they have learned how wrong they were, and now they are going to keep many of those workers at home, working remotely and saving billions of dollars on building leases, utilities and the other costs of maintaining employees on site. And the employees love the new freedom. And millions of them are going to be able to work from anywhere there is a good Internet connection. For those paying, say, New Jersey property taxes on a home today, they will be able to cut them in half or more by moving to a more climate-friendly location. (Personal example: Our home in Avon, CT carries an annual tax of $12,000; same size house in Pawleys Island, SC, is assessed $5,000 in property tax.) Unless there is some national cataclysm ahead, this sellers market will continue for at least a few years, and those who wait will either be priced out of the market or will have to settle for a much smaller, not-as-suitable house.
Greg W says:
After spending a 30+ year career with 6 moves domestically (2 international stints where we kept the house), we always bought and sold on the backside of the markets. Sold in Salt Lake City just before they won the Olympic; bought at the height and sold way down in Hawaii; bought and sold flat in CA and then in Oregon, missing the surges there. Bought back in CA where we finished raising the kids. Retired now, we’re building our first retirement home in AZ. Got in contract before the double-barreled buyer explosion plus materials shortages. And are selling our CA home into a crazed market. Finally caught the wave on the right side! Pure luck, we’ll be able to travel more and help the kids when they start families.
Vj says:
A true story. I found a home and lot I wanted in the 55+ community of Del Webb Lakewood Ranch. It is all inclusive with sports, a pool, restaurant, etc. I put a deposit down, but was told Del Webb wasn’t releasing lots at that time — January 2021! They couldn’t tell me when the lot would be released. The amazing part was Del Webb kept raising the price of the home and I never knew how much the lot would cost. Everything was a lá carte in the house so the cost of let’s say, the kitchen upgrades, was also unknown. After increases of $30,000 in the cost of the house, I walked away!
Maryann says:
With Home Prices Going Crazy Where Do We Turn:
We want to move from NY with high property tax and a high state income tax to a low tax state. We got scared of Texas power and heat loss around the week of February 16, 2021. Changed plans to Florida and have concentrated on Jacksonville for hospitals and medical care. Four houses we wanted to see have gone to contract before we had a chance to see them. Our broker showed us how to put escalatory clause in our offer but price exceeded our max price. We decided it’s best to come to Jacksonville for a week or two and work with the broker to talk with us and make appointments and show us several promising houses. We put a binder on house this week, expect to move in and put NY house for sale later this summer. Have to move out 45 years of living to put house for sale. Sad our children will continue to live in other states and it’s sad to be leaving friends in NY. Expect to make friends within church groups and in volunteer activities.
LisaJ says:
Vj, May I ask where you decided to purchase? The same thing happened to us at Lakewood Ranch Del Webb. We are going to look at Bayview Del Webb. Still can’t figure out where we want to go.
anne says:
Maryann: Have you checked out "Rivertown", a multi-generation new development in St Johns, FL? It is about 30 minutes south of Jacksonville and the climate would be a little milder there. Rivertown has
a gated 55+ section called "Watersong" which has reasonably priced villas and stand alone homes.
Worth a visit.