OT Some interesting thoughts from Real Estate Investors Conference

[dailybuck777]

I doubt it will implode. Supply is still very tight. Builders are still being cautious. We don't have the sub prime variable rate scenario we had in 2007/2008. I bought a house that I'm living in 2000. Paid well north of 6%, refinanced down to 5.35%. It's just a reversion to mean after a decaded of ultra low rates. Is it going to flush a bunch of first time buyer out of the market?? Yep. In the end there will be a better balance between buyers and sellers.

Here is the latest from today. "The number of people applying for mortgages to purchase a home fell 3% for the week ending April 6, compared to a week earlier, and dropped 9% from a year ago, according to the Mortgage Bankers Association."...
"The average rate for a 30-year fixed-rate mortgage was 4.72% for the week ending April 7, according to Freddie Mac. That’s up five basis points from mortgage rates the prior week and 1.5% from the start of the year—representing the sharpest three-month jump since May 1994. Likewise, the 15-year, fixed-rate mortgage this week averaged 3.91%, up 8 basis points from the prior week and 1.48% from the first week in January." https://www.forbes.com/advisor/mortgages/mortgage-rates-april-7/

Demand is starting to erode. If rates reach 6% and I think they will, then I think we are looking at a substantial reversal.

Whenever there is a strong down turn, something negative comes out of the middle of nowhere -- that may be rising food prices and shortages. I saw something to the effect that Russia, Ukraine and Belarus supply about 50% of the world's raw materials for fertilizer. If food prices sky rocket, that could be the financial tipping point where both the psychology and economic impact of higher prices combine to precipitate substantially bad economic outcomes.

 

[dailybuck777]

cool!

Just curious what made you bump this thread after all of this time.

 

[Obliviax]

Here is the latest from today. "The number of people applying for mortgages to purchase a home fell 3% for the week ending April 6, compared to a week earlier, and dropped 9% from a year ago, according to the Mortgage Bankers Association."...
"The average rate for a 30-year fixed-rate mortgage was 4.72% for the week ending April 7, according to Freddie Mac. That’s up five basis points from mortgage rates the prior week and 1.5% from the start of the year—representing the sharpest three-month jump since May 1994. Likewise, the 15-year, fixed-rate mortgage this week averaged 3.91%, up 8 basis points from the prior week and 1.48% from the first week in January." https://www.forbes.com/advisor/mortgages/mortgage-rates-april-7/

Demand is starting to erode. If rates reach 6% and I think they will, then I think we are looking at a substantial reversal.

Whenever there is a strong down turn, something negative comes out of the middle of nowhere -- that may be rising food prices and shortages. I saw something to the effect that Russia, Ukraine and Belarus supply about 50% of the world's raw materials for fertilizer. If food prices sky rocket, that could be the financial tipping point where both the psychology and economic impact of higher prices combine to precipitate substantially bad economic outcomes.

Is demand eroding or no homes available? In my community there are typically around fifty homes for sale. Today there are six.

 

[dailybuck777]

Is demand eroding or no homes available? In my community there are typically around fifty homes for sale. Today there are six.

Good question. You are right in that the inventory is very low.

 

[Cletus11]

Good question. You are right in that the inventory is very low.

impossible to build houses as the supply chain is broken in both the timing to get materials being many months for a lot of items that used to be days or weeks and the material cost being outrageous if you do build a house.

 

[The Spin Meister]

Is demand eroding or no homes available? In my community there are typically around fifty homes for sale. Today there are six.

Local realtor said they normally have 200 listings. Now they have 30.

 

[lowhandicapper]

Except tell me why there was little demand in Jan 2020 and suddenly tons in July 2020? It was artificial rush based on 2% mortgages and trillions of stimulus for firms that did not need it. Zillows and Blackrocks of the world went on residential spending spree creating no slack in housing which drove up prices insanely over last 1.5 years. You think homes rising 30-40% in 18 months is sustainable? It was government manipulation, not free market fundamentals.

Mortgage rates have basically been sub 4% since 2013, in fact nearly as low as they were last year, with the exception of a short time in 2019 where they reached about 5%. Mortgage rates are more closely aligned with how much house you can buy just like the taxes and HOA fees (if applicable) are. The high cost of housing right now is by in large part due to one factor, a lack of supply for the demand. As I stated before, the country is about 4 million homes short of the demand from buyers. Currently in the West Penn Multi-List the amount of homes available for purchase is down about 40% from typical levels, !40%!, and the pool of buyers has remained the same or increased. That creates a problem. Life changing events like a world-wide pandemic drives peoples desire to move, which increases demand. Other factors certainly come into play but they are minor in the grand scheme. The only thing that truly matters is how many homes there are available to purchase and how many people are seeking to buy them. Right now the scale is out of balance. There certainly is market manipulation but there is always market manipulation, its just more visible in such times. If you made interest rates 8% it wouldn't do much for the inflated home price problem but if you fulfilled the supply needs of the housing market it would drastically change the price competition of homes.
Supply & demand is the driver of all things, everything else is just window dressing.

 

[Obliviax]

Local realtor said they normally have 200 listings. Now they have 30.

Crazy. I had a job opportunity in NY and was stunned by the home prices there back in 2010. So I’ve kind of tracked Manhattan on realtor.com They we’re in the 7000 for sale at any time. During COVID that moved to 11,000. I just checked: over 13,000 places for sale! Wow!

 

[Rip_E_2_Joe_PA]

Pretty sure Zillow’s experiment failed miserably and was stopped.

Zillow bought my Tampa house in December 2021. I still get calls and letters to sell it. They pulled out of some markets but still are fooling around in others. The home I sold along with many others in that same area are owned by Zillow and remain off the market. The Bull whip affect from in markets where they over bought is likely to be exaggerated by their market manipulation. Time will tell.

 

[lowhandicapper]

Crazy. I had a job opportunity in NY and was stunned by the home prices there back in 2010. So I’ve kind of tracked Manhattan on realtor.com They we’re in the 7000 for sale at any time. During COVID that moved to 11,000. I just checked: over 13,000 places for sale! Wow!

The oversupply of unwanted housing due to condition of the house or location only exasperates the supply and demand problem. There is a supply (NYC) without the demand for that area. At this point, I consider any home that is not under contract in less than 10 days the equivalent of the clearance isle at a department store. The unwanted stuff.

 

[Rip_E_2_Joe_PA]

Mortgage rates have basically been sub 4% since 2013, in fact nearly as low as they were last year, with the exception of a short time in 2019 where they reached about 5%. Mortgage rates are more closely aligned with how much house you can buy just like the taxes and HOA fees (if applicable) are. The high cost of housing right now is by in large part due to one factor, a lack of supply for the demand. As I stated before, the country is about 4 million homes short of the demand from buyers. Currently in the West Penn Multi-List the amount of homes available for purchase is down about 40% from typical levels, !40%!, and the pool of buyers has remained the same or increased. That creates a problem. Life changing events like a world-wide pandemic drives peoples desire to move, which increases demand. Other factors certainly come into play but they are minor in the grand scheme. The only thing that truly matters is how many homes there are available to purchase and how many people are seeking to buy them. Right now the scale is out of balance. There certainly is market manipulation but there is always market manipulation, its just more visible in such times. If you made interest rates 8% it wouldn't do much for the inflated home price problem but if you fulfilled the supply needs of the housing market it would drastically change the price competition of homes.
Supply & demand is the driver of all things, everything else is just window dressing.

True but You missed Blackrocks supply and demand manipulation 101 course I guess. The demographics of supply and demand are important to anticipating market busts or market stability...

 

[lowhandicapper]

True but You missed Blackrocks supply and demand manipulation 101 course I guess. The demographics of supply and demand are important to anticipating market busts or market stability...

Yes, thank goodness for the Blackrock's and Zillow's of the world. They are doing their best for the citizens of the world! They can bastardize anything.

 

[Cletus11]

The oversupply of unwanted housing due to condition of the house or location only exasperates the supply and demand problem. There is a supply (NYC) without the demand for that area. At this point, I consider any home that is not under contract in less than 10 days the equivalent of the clearance isle at a department store. The unwanted stuff.

Didn't think of that but there is a mass exodus from city's due to Covid combine with the ability now to work from home from many jobs which just 2.5 years ago didn't exist. So a lot of people moving from city apartment renting to buying houses pushing up the demand.

 

[Obliviax]

The oversupply of unwanted housing due to condition of the house or location only exasperates the supply and demand problem. There is a supply (NYC) without the demand for that area. At this point, I consider any home that is not under contract in less than 10 days the equivalent of the clearance isle at a department store. The unwanted stuff.

I was in Palm Springs last week, actually Indio. They can't build fast enough. Why? People are moving out of LA and in the post COVID/Virtual world, can live anywhere they want. PS is 2 to 3 hours away so they simply go into the city once a week or less. Everything else is done virtually. So they golf, play polo, hit the pool, play tennis, and then take a virtual meeting anywhere in the world from that idyllic setting.

 

[GreggK]

It's sort of interesting reading some of these comments because this had been happening in NYC for years. You basically had Chinese funds, Australian retirements funds etc buying up real estate, some commercial but a lot of housing, and then essentially driving up prices.

I have thought about it a bit, for as much as it was really a concern to me, which was not a whole lot, considering I always owned since 2010, but I am not sure exactly what the answer is. Banning investment buying doesn't seem like the right answer, nor does allowing a free for all. I hated the fact that there were people with absolutely no roots in NYC, driving up prices for all of the people that live there.

This is where regulation needs to step in in some fashion.

Regarding prices, there is a housing shortage and that is driving up prices as much as greedy corporations. (more so) There is this not in my backyardism that tries to stop larger buildings from going up when it is precisely what is needed to help contain prices. Then again, the people trying to stop it dont want to contain prices (lots of thinking aloud here haha)

 

[Cletus11]

It's sort of interesting reading some of these comments because this had been happening in NYC for years. You basically had Chinese funds, Australian retirements funds etc buying up real estate, some commercial but a lot of housing, and then essentially driving up prices.

I have thought about it a bit, for as much as it was really a concern to me, which was not a whole lot, considering I always owned since 2010, but I am not sure exactly what the answer is. Banning investment buying doesn't seem like the right answer, nor does allowing a free for all. I hated the fact that there were people with absolutely no roots in NYC, driving up prices for all of the people that live there.

This is where regulation needs to step in in some fashion.

Regarding prices, there is a housing shortage and that is driving up prices as much as greedy corporations. (more so) There is this not in my backyardism that tries to stop larger buildings from going up when it is precisely what is needed to help contain prices. Then again, the people trying to stop it dont want to contain prices (lots of thinking aloud here haha)

yeah, a ton of foreign money coming into the USA in real estate. a lot of ultra rich people (mulit-millionaire level rich) from Asia and Eastern Europe coming to the USA and buying up property driving up prices.

 

[PSUSignore]

Zillow bought my house in December 2021. I still get calls and letters to sell it. The pulled out of some markets but still are fooling around in others. The home I sold along with many others in that same are owned by Zillow remain off the market. The Bull whip affect from in markets where they over bought is likely to be exaggerated by their market manipulation. Time will tell.

Here in Texas I'd like to see higher property taxes for investors and lower ones for homeowners that reside on site, especially for those that own dozens or hundreds of homes and foreign investors. These companies are contributing to American families not being able to get into homes and the least we could do make them pay a hefty price to do so. Austin property taxes are getting wild, many have tax bills that exceed the mortgage and people are getting priced out purely on taxes.

 

[dailybuck777]

Zillow bought my house in December 2021. I still get calls and letters to sell it. The pulled out of some markets but still are fooling around in others. The home I sold along with many others in that same are owned by Zillow remain off the market. The Bull whip affect from in markets where they over bought is likely to be exaggerated by their market manipulation. Time will tell.

Zillow is really a stupid computer algorithm. About 10 years ago I lived in a place that had very different prices and conditions within a mile and a half radius. From very nice houses to complete garbage and high crime. The Zillow computer algorithm didn't take into account the neighborhood particularities. Its estimates of values was way off in many instances, and in fact substantially overvalued my house at the time.

 

[Rip_E_2_Joe_PA]

Zillow is really a stupid computer algorithm. About 10 years ago I lived in a place that had very different prices and conditions within a mile and a half radius. From very nice houses to complete garbage and high crime. The Zillow computer algorithm didn't take into account the neighborhood particularities. Its estimates of values was way off in many instances, and in fact substantially overvalued my house at the time.

 

[lowhandicapper]

Here in Texas I'd like to see higher property taxes for investors and lower ones for homeowners that reside on site, especially for those that own dozens or hundreds of homes and foreign investors. These companies are contributing to American families not being able to get into homes and the least we could do make them pay a hefty price to do so. Austin property taxes are getting wild, many have tax bills that exceed the mortgage and people are getting priced out purely on taxes.

I like this idea and I invest in real estate for a living. Homeowners need protection that they never get in many circumstances. Instead we protect the banks, make homeowners buy title insurance, which protects the mortgage company, not the homeowner. However, laws are made for wealthy donors and wealthy people buy lots of real estate and log huge sums of capital gains in real estate, stocks, business transactions, what-have-you. This being the case no politician is going to go start proposing legislation that hurts their best donors. It would be similar to legislation being proposed on campaign finance or term limits, these folks won't cut off their nose to spite their face, even though they know its the solution to move the country forward for it's citizens. Then you get the whacko politicians who double down and tell you how low tax capital gains are what makes America great, which is total bull$hit. Let me assure you that the vast majority of capital gains aren't helping a two income household that's doing pretty good or the guy next door that's upper management making 180k. In fact if you have someone you refer to as "boss" at you place of employment, capital gains probably don't help you much either. They do help Elon Musk though. In fact they help him a lot. I mean what kind of world do we live in where the richest people in the world say their wealth grew by 30% last year but then they tell the IRS they didn't make any money? It's high comedy, but unfortunately its the sad reality of today's societal sentiment and the sycophants of the almighty dollar.

Mark Twain, "Politicians and diapers must be changed often, and for the same reason."

 

[Obliviax]

Zillow is really a stupid computer algorithm. About 10 years ago I lived in a place that had very different prices and conditions within a mile and a half radius. From very nice houses to complete garbage and high crime. The Zillow computer algorithm didn't take into account the neighborhood particularities. Its estimates of values was way off in many instances, and in fact substantially overvalued my house at the time.

Agree. Living on a lake they always undervalued our home. Houses on the lake go for three times the houses across the street. They also sell for 20 to 30% above Zillow estimate. What happens is they factor in homes across the street when they sell. People getting loans to buy on the lake often have to convince the bank what market value is

 

[dailybuck777]

Interest rates over 5% now, with hikes sure to follow. Big spike in foreclosure actions. (from small base because moratorium on foreclosures is ending) https://finance.yahoo.com/news/u-foreclosure-activity-january-2022-050100796.html

Have been wondering why the supply of homes is so low. Appears a substantial factor is the foreclosure moratorium -- which kept houses off the market and didn't give rehabbers the opportunity to rehab and resell. Number of foreclosures is going to be increasing for a long time.

 

[lowhandicapper]

Interest rates over 5% now, with hikes sure to follow. Big spike in foreclosure actions. (from small base because moratorium on foreclosures is ending) https://finance.yahoo.com/news/u-foreclosure-activity-january-2022-050100796.html

Have been wondering why the supply of homes is so low. Appears a substantial factor is the foreclosure moratorium -- which kept houses off the market and didn't give rehabbers the opportunity to rehab and resell. Number of foreclosures is going to be increasing for a long time.

I haven't looked in a week or so but if you go to the HUD website and search homes available in the greater Pittsburgh area via HUD, there might be 4 or 5 listed, that's it. Typically there would be in the neighborhood of 30-40 at any given time. That said, the foreclosure market is not one I recommend for a 1st time homebuyer or anyone for that matter not buying homes with cash or understanding the true nature of what buying a vacant house as/is with no contingencies, that has problems. It just isn't that type of market. It's an investors market and it's minimal to overall effects on the retail inventory market. Foreclosures typically require a fair amount of money, know-how and time, all things that retail buyer in that lower end market typically don't have.
On top of all that, foreclosure deals aren't what they used to be and I'm not just talking about the last two years. The foreclosure market has become all but an investor's auction place over the past 5 years.

 

[dailybuck777]

I haven't looked in a week or so but if you go to the HUD website and search homes available in the greater Pittsburgh area via HUD, there might be 4 or 5 listed, that's it. Typically there would be in the neighborhood of 30-40 at any given time. That said, the foreclosure market is not one I recommend for a 1st time homebuyer or anyone for that matter not buying homes with cash or understanding the true nature of what buying a vacant house as/is with no contingencies, that has problems. It just isn't that type of market. It's an investors market and it's minimal to overall effects on the retail inventory market. Foreclosures typically require a fair amount of money, know-how and time, all things that retail buyer in that lower end market typically don't have.
On top of all that, foreclosure deals aren't what they used to be and I'm not just talking about the last two years. The foreclosure market has become all but an investor's auction place over the past 5 years.

Retail buyers as you say shouldn't buy foreclosures. However what happens in practice is that rehabber buys the foreclosures, fixes them and then sells them to the retail market. This portion of the retail market has been closed off.

 

[Lion-skier]

This was a real estate investors conference where nationally known people came to sell their wares. Many very experienced and knowledgeable people were there as well as newbies. However, 85% of the courses offered would probably not help most people because they wouldn't be able to execute what they were instructed.


1. One of the vendors had a girl friend who was a realtor. She is telling him that hedge funds are buying real estate willy nilly, not having any real idea of what they are buying. Also, they are only seeking returns in the 5% range which doesn't give them much room for error. Lots of room here for a big, negative explosion.

2. At a meeting for very experienced investors, many people thought that the reason there hasn't been greater rise in interest rates was that the velocity of money was low.

3. At the same investors meeting virtually all thought that substantial inflation was baked into the system and that it was foolish not to get loans at low rates and leverage your investments.

Myself, I think there is a substantial chance of a harmful rise in interest rates in the next 18 months which could implode the real estate market. I have a decent amount of cash available if that were to happen.

Nothing is going to implode the real estate market in the next 18 months. We are sitting at historic low inventory and 48% of the closed sales were above their asking price last month. We are a long way from the real estate market imploding.

 

[lowhandicapper]

Nothing is going to implode the real estate market in the next 18 months. We are sitting at historic low inventory and 48% of the closed sales were above their asking price last month. We are a long way from the real estate market imploding.

Let's take that a step further. People saying mortgage rates gonna cool the market? Hahaha, in the NAR newsletter last month, 33% of home purchases were made with straight cash. 1 in 3 homes being sold without a mortgage!
The amount of money in the system is straight changing economics as we know it.

 

[Lion-skier]

Let's take that a step further. People saying mortgage rates gonna cool the market? Hahaha, in the NAR newsletter last month, 33% of home purchases were made with straight cash. 1 in 3 homes being sold without a mortgage!
The amount of money in the system is straight changing economics as we know it.

Exactly. Everyone is referencing the 2008 mortgage meltdown which is a completely different scenario then now. There has been a big shift in home ownership. The regulation from the meltdown has produced 99.9% qualified homeowners that are now cemented in their homes with fixed record-low interest rates and lots of equity. You will not see a large number of foreclosures in our current scenario. 20% of sales are investor sales. Mortgage applications have multiple borrowers more often than previous which allows bigger purchases. The amount of buyers bidding on homes was not reduced much by the huge short term interest rate increase. When you have (10) people bid on a house and only one gets the house, but (9) still need to find another home. The amount of existing home sales does not even come close to representing the amount of pent-up buying demand due to the limited inventory.

 

[dailybuck777]

Is demand eroding or no homes available? In my community there are typically around fifty homes for sale. Today there are six.

Interesting discussion with my brother who just sold [ 2 days ago] one of his condos in the least desirable part of Oahu, the west side. He said his and another were the only two available in his district and that he used to get offers all of the time although his condo was listed as pending. Said for the most recent period of time, he was getting zero offers and that it spooked him.

 

[dailybuck777]

30 yr. mortgage rate up to 5.66% today. Definitely, in territory where it will dampen demand. Don't think at this rate, it will cause housing price to go down although it will probably moderate housing increases. I would say real pain would start coming with rates around 6.25% or 6.5%. https://www.investopedia.com/today-...trends-april-20-2022-rates-rise-again-5235709

 

[lowhandicapper]

30 yr. mortgage rate up to 5.66% today. Definitely, in territory where it will dampen demand. Don't think at this rate, it will cause housing price to go down although it will probably moderate housing increases. I would say real pain would start coming with rates around 6.25% or 6.5%. https://www.investopedia.com/today-...trends-april-20-2022-rates-rise-again-5235709

I've been looking for a new home personally for about 7 months. During that time I have had to have my mortage pre-authorization renewed twice. During those multiple renewals my overall buying power (authorized top dollar amount allowable from the lender) has been reduced by about 120k due to the increase in rates during that same time. That has not changed my demand for the specific home I am seeking one bit. It has however changed how much cash I will have to put down or how expensive of a house I can buy. Mortgage rates have little do with demand or inventory. Do they have something to do with it? Sure, but not like the YahooNews articles people read that are put out solely for the need for content.
Demand and inventory drive pricing, look around right this moment at pricing and see if the rate hikes and offer fatigue of current buyers are affecting new listing prices.....I see nothing that indicates this to be the case.

 

[john4psu]

Crazy. I had a job opportunity in NY and was stunned by the home prices there back in 2010. So I’ve kind of tracked Manhattan on realtor.com They we’re in the 7000 for sale at any time. During COVID that moved to 11,000. I just checked: over 13,000 places for sale! Wow!

They're all moving to Del Boca Vista!

 

[Obliviax]

They're all moving to Del Boca Vista!

 

[KCLion]

Zillow is really a stupid computer algorithm. About 10 years ago I lived in a place that had very different prices and conditions within a mile and a half radius. From very nice houses to complete garbage and high crime. The Zillow computer algorithm didn't take into account the neighborhood particularities. Its estimates of values was way off in many instances, and in fact substantially overvalued my house at the time.

My observation is that they also tend to “undervalue” a property that has not been sold and has not been on the market for years. I.E. the owner has had no reason or desire to sell.

 

[lowhandicapper]

My observation is that they also tend to “undervalue” a property that has not been sold and has not been on the market for years. I.E. the owner has had no reason or desire to sell.

I never really thought Zillow's value algorithm is all that bad, it operates on very static information...trending market, sold pricing, psf pricing, market location and on market pricing. I'm not sure a computer could do any better than using such metrics. It takes humans to adjust pricing based on condition, style etc. Lots of 3 bedroom homes are very different from other 3 bedroom homes but nobody is going to know that unless they are specifically looking at them.

There is renovated 4 bedroom home on my street that is for sale, in a top 10 school district in the state, in one of the most desirable communities in western PA, in one of the most desirable neighborhoods in the community....But it's not like other 4 bedroom homes, its exceedingly small, not laid out well, its the oldest house in the neighborhood, the only house in the neighborhood that has a one car garage, has zero curb appeal and an odd setback from the street. So it has been on the market for nearly a year in a market that gets multiple offers in 48 hours. The reason is that it is overpriced by a solid 100k because the owners priced it against other 4 bedrooms on the market when it really isn't like other 4 bedroom homes in the area. The house should actually be comped against a lower end 3 bedroom because the layout and functionally of the house more closely aligns with such.
I'm just not sure how a computer could discern such information. However the computer could provide a guideline in which the seller/buyer can further investigate to adjust the properties real value if they have the knowledge and understanding to do such.

 

[The Spin Meister]

I never really thought Zillow's value algorithm is all that bad, it operates on very static information...trending market, sold pricing, psf pricing, market location and on market pricing. I'm not sure a computer could do any better than using such metrics. It takes humans to adjust pricing based on condition, style etc. Lots of 3 bedroom homes are very different from other 3 bedroom homes but nobody is going to know that unless they are specifically looking at them.

There is renovated 4 bedroom home on my street that is for sale, in a top 10 school district in the state, in one of the most desirable communities in western PA, in one of the most desirable neighborhoods in the community....But it's not like other 4 bedroom homes, its exceedingly small, not laid out well, its the oldest house in the neighborhood, the only house in the neighborhood that has a one car garage, has zero curb appeal and an odd setback from the street. So it has been on the market for nearly a year in a market that gets multiple offers in 48 hours. The reason is that it is overpriced by a solid 100k because the owners priced it against other 4 bedrooms on the market when it really isn't like other 4 bedroom homes in the area. The house should actually be comped against a lower end 3 bedroom because the layout and functionally of the house more closely aligns with such.
I'm just not sure how a computer could discern such information. However the computer could provide a guideline in which the seller/buyer can further investigate to adjust the properties real value if they have the knowledge and understanding to do such.

And the worst thing .....when that home finally sells at $100,000 below the asking price, Zillow and others will immediately downgrade the estimated value of the other four bedrooms homes in the neighborhood.

 

[PSUSignore]

I never really thought Zillow's value algorithm is all that bad, it operates on very static information...trending market, sold pricing, psf pricing, market location and on market pricing. I'm not sure a computer could do any better than using such metrics. It takes humans to adjust pricing based on condition, style etc. Lots of 3 bedroom homes are very different from other 3 bedroom homes but nobody is going to know that unless they are specifically looking at them.

There is renovated 4 bedroom home on my street that is for sale, in a top 10 school district in the state, in one of the most desirable communities in western PA, in one of the most desirable neighborhoods in the community....But it's not like other 4 bedroom homes, its exceedingly small, not laid out well, its the oldest house in the neighborhood, the only house in the neighborhood that has a one car garage, has zero curb appeal and an odd setback from the street. So it has been on the market for nearly a year in a market that gets multiple offers in 48 hours. The reason is that it is overpriced by a solid 100k because the owners priced it against other 4 bedrooms on the market when it really isn't like other 4 bedroom homes in the area. The house should actually be comped against a lower end 3 bedroom because the layout and functionally of the house more closely aligns with such.
I'm just not sure how a computer could discern such information. However the computer could provide a guideline in which the seller/buyer can further investigate to adjust the properties real value if they have the knowledge and understanding to do such.

I always thought Redfin was more accurate but neither are perfect. I question how desirable this neighborhood is in your example. Homes in desirable areas don't stay on the market for a year unless there are major, major issues. The price could be one but hell 100k pricing variance is nothing in my market where most homes are under contract in less than a week and routinely sell for way over list price.

 

[Cletus11]

I always thought Redfin was more accurate but neither are perfect. I question how desirable this neighborhood is in your example. Homes in desirable areas don't stay on the market for a year unless there are major, major issues. The price could be one but hell 100k pricing variance is nothing in my market where most homes are under contract in less than a week and routinely sell for way over list price.

if it is overpriced, then nobody is going to buy it. i would say the more like the homeowner isn't really interested in selling it unless they can get a huge premium price as certainly they are getting offers but just are not willing to sell at a lower price.

 

[lowhandicapper]

I question how desirable this neighborhood is in your example. Homes in desirable areas don't stay on the market for a year unless there are major, major issues. The price could be one but hell 100k pricing variance is nothing in my market where most homes are under contract in less than a week and routinely sell for way over list price.

You're actually making my point.....The house is the original farmhouse from the farm that was sold to the neighborhood developer. It is nothing like any of the others but the owner and agent are representing it as such. They are pricing it against modern four bedroom homes when its a 1940's small Cape Cod that the bedrooms are 10x10 and one is in the basement with egress, shared bathrooms. It is the only house that sits near the street and the only one that has a 1 car garage. It's completely renovated but it doesn't comp with other 4 bedroom homes in the area because its not like the other four or even 3 bedroom homes. Houses in my neighborhood get multiple offers over asking price in 48 hours and have for over 2 years. The neighborhood goes around a lake, its highly sought after. The house is nice but they've outpriced their market. The potential buyer of a 4 bedroom house in that neighborhood is not going to be interested in that house. Zillow and algorithms are not going to be able to take in the details as I mentioned but I think they've used some Zillow info to price it. They have not lower the price since they listed it. They are living in fantasy land. All that said, I am actually surprised some sucker hasn't bought it. I think it's actually the only house currently listed in the neighborhood which is pretty large.

 

[PSUSignore]

You're actually making my point.....The house is the original farmhouse from the farm that was sold to the neighborhood developer. It is nothing like any of the others but the owner and agent are representing it as such. They are pricing it against modern four bedroom homes when its a 1940's small Cape Cod that the bedrooms are 10x10 and one is in the basement with egress, shared bathrooms. It is the only house that sits near the street and the only one that has a 1 car garage. It's completely renovated but it doesn't comp with other 4 bedroom homes in the area because its not like the other four or even 3 bedroom homes. Houses in my neighborhood get multiple offers over asking price in 48 hours and have for over 2 years. The neighborhood goes around a lake, its highly sought after. The house is nice but they've outpriced their market. The potential buyer of a 4 bedroom house in that neighborhood is not going to be interested in that house. Zillow and algorithms are not going to be able to take in the details as I mentioned but I think they've used some Zillow info to price it. They have not lower the price since they listed it. They are living in fantasy land. All that said, I am actually surprised some sucker hasn't bought it. I think it's actually the only house currently listed in the neighborhood which is pretty large.

It sounds like the owner doesn't really want to sell it, and it just putting it out there for someone that might be willing to pay a premium. Sitting on the market for surely has told the buyer their price isn't right, and by not lowering it the owners have basically said they don't care, they can wait.

 

[lowhandicapper]

It sounds like the owner doesn't really want to sell it, and it just putting it out there for someone that might be willing to pay a premium. Sitting on the market for surely has told the buyer their price isn't right, and by not lowering it the owners have basically said they don't care, they can wait.

It's owned by a family trust in North Carolina that apparently renovates properties.

The interesting thing and the one thing I see over and over in real estate is most people don't understand that buyers dictate pricing, you can't price a home......like whatever you want or whatever you think or want it to be worth. It just doesn't work that way. While the people who buy don't set housing prices, they dictate them. The trend now is to list low and let the buyers drive up the price against each other. Once you lock them into bidding pride and competitiveness get involved. Whoever is advising the people on this property is doing a really poor job. The funny thing is a lot of people in the neighborhood were asking me about the house and what I thought and I said it will never sell near that number, they didn't believe me. I literally valuate properties for a living. It isn't hard to understand that person looking in that price range isn't looking for a house equipped like that, in fact they are looking for house to get out of a house like that.