There is a housing development here where we have flipped 12 or so houses over the last few years in. These are Joe the Plumber types house. All the layouts are almost identical. The lots are mostly the same, some have garages, some don’t. Cookie cutter 3/1 ranches. If we got 135k for the houses typically, we were doing good. My partner is wrapping up one where he is thinking of asking in the upper 140’s. The guy next door is flipping one where he put HIGH END product in. I’m guessing a 12-15k kitchen when the standard for this neighborhood is 5-6k. Expensive lights, super expensive flooring. Well, he listed it last week for $199,000 and it’s under contract!!! I couldn’t believe it. Around here, in that neighborhood, that is absolutely insane! This development is one step above a trailer park.

Demand is high. Money is cheap. Americans until recently have been saving at rates unheard of for decades. Cash buyers almost equal buyers who need loans.

Yep. Prices are "insane"...or are they?

On a previous post, I mentioned reading an article from a national homebuilder association that says they will have to build 7 million unit annually just to keep up with demand. And what are they building, mostly? 3/1 ranch? My observation is 4/3/2 ranch is most popular. They start around $250k-$300k and go up depending on amenities.

I don't know anyone building 3/1 houses. Those used to be the basic entry level house when I was growing up. When I graduated college in 1999, the 3/2/2 was the starter. Now it's even more. All this means Joe the Plumber must either bid against Jack the Electrician to buy or rent.

BTW, have you seen what plumbers and electricians charge these days? We'll have to invent a new name for the humble blue collar worker. How about Bob the Barista?

Prices here are way up too. About 3-4 years ago it became too expensive to build low and even medium priced houses, so none were built. The county and city will not allow any more trailer parks which might help (nimby's), so now there is a huge shortage of affordable housing. Low interest rates and the events of the last 2 years have further increased housing prices as well.

The only thing happening in new housing is that govt backed funding made available to certain developers is allowing these developers to build subsidized housing (a fancy name for what used to be called projects). So the developers come in and throw up these projects which include a certain percentage of low income residents, making a large profit (in the millions). They then form a management company to manage the projects and rake off more money. When the project fails in a couple years, they close the management company and leave the entire mess to the city. As an example, in my town they have approved and are building a 5 story project that they say will cost about 5 million. With the inevitable overruns, it will be at least 8 million.It is projected to LOSE 300K+ per year. The city will receive almost no property taxes for years. After a couple years the management company will quit and leave an the city/taxpayers will have to deal with a project full of deadbeats losing over 300K a year and likely way more.

Is it panic buying? About 4 months ago I talked to custom builder in a near by town that is booming. His price at that time was $220 sq/ft and he had a waiting list.

It’s insane market here too. Our company bought a house beginning of January and didn’t touch it, put it back on the market 2 weeks later and hit a home run! It feels like houses are a commodity. It’s a flippers dream market.

Ray, if we hit a housing market where the mortgage is more than what the house will sale for it’s gonna be a hard landing. Keys will be left on the kitchen counter and home owners will walk like they did in 08.

Nicole, the 3/1 was the standard when this development was built in the 70’s. It was top notch then. It’s interesting when we do them, Every single house has the same old ugly gold linoleum under the carpet or hardwood when we pull it out. These were no frill houses. They’re all the same and we’ve done enough that it is a neighborhood where we can buy them from the street and not even need to go inside.

Same here. The little WWII 2/1 bungalow's I was buying for $35-40K 2-3 years ago are going for $80-100K today. The cash flow at that rate is cut to $0 as a rental.

I was speaking with a realtor a few days ago and they mentioned that they had an investor looking at a house in the 300K-400K range, I can't remember, but they bid 75K over asking price to get the house.

The prices here are insane and climbing because people are coming here from all over, mainly CA I think, and also a lot of out of state investors buying up everything.

I can't wrap my head around it. I don't see how investors are making money like that.

Where is all this money coming from that people are spending like crazy?

I can see people selling their homes in CA and FL and giving them money to retire here, but what is really going on?

*POP* (the sound of the bubble bursting as it did in 2008)

In the immediate Downtown San Antonio area what you could bought at just over land cost now cant be touched for less then 100K.

In the immediate Downtown San Antonio area what you could bought at just over land cost now cant be touched for less then 100K.

In the immediate Downtown San Antonio area what you could bought at just over land cost now cant be touched for less then 100K.

I predict a new wave of panic buying because the Fed is talking about raising rates in March.