Zillow makes money by selling advertising to real estate agents and others that cater to home-buyers. So, if they come out with an article highlighting the challenges and pitfalls of novice home-buyers, their clients gain.
Is this much of a surprise, then, that they pepper their site with stories of how you need the services of the businesses which support them (Zillow)?
From Investopedia entry about Zillow:
"The Bottom Line Zillow makes money by selling advertising on Zillow.com and the Zillow mobile app to property management companies with vacancies, real estate agents looking for buyers and sellers, and mortgage lenders looking for borrowers. And it also sells to general advertisers, especially ones in the real estate industry."
How is this different than any other time in the past?
It's different because the prices are really high now. Right now people are less likely to have gotten what is historically a good deal.
Historically low supply and crazy prices might contribute to remorse. When there are bidding wars as the rule, paying well over asking, one can imagine this is going to result in some panic purchasing and or regret. Tough time. I feel for anyone who has to move. Our house has doubled in value, but guess what...if we sell, we cant buy anything better! I dont know how young people are doing it. Getting close to 6 figures for down payment as the rule rather than exception. I know I didnt have that cash for years after graduation, many years.
It's different because the prices are really high now. Right now people are less likely to have gotten what is historically a good deal.
Historically low supply and crazy prices might contribute to remorse. When there are bidding wars as the rule, paying well over asking, one can imagine this is going to result in some panic purchasing and or regret. Tough time. I feel for anyone who has to move. Our house has doubled in value, but guess what...if we sell, we cant buy anything better! I dont know how young people are doing it. Getting close to 6 figures for down payment as the rule rather than exception. I know I didnt have that cash for years after graduation, many years.
Agree. Same situation, if we sold our house, we couldn't get anything comparable. Our home has more than doubled in value since 2013. I had buyer's remorse back in 2013 "we paid too much" ... now, we couldn't or wouldn't want to afford our own house. I am getting to the age where retirement is on the radar, with visions of selling and moving to a less expensive area - paying cash for something and putting the rest to supporting retirement.
While I like the higher home value, I will not like the higher property taxes when the next assessment comes around.
It's different because the prices are really high now. Right now people are less likely to have gotten what is historically a good deal.
Historically low supply and crazy prices might contribute to remorse. When there are bidding wars as the rule, paying well over asking, one can imagine this is going to result in some panic purchasing and or regret. Tough time. I feel for anyone who has to move. Our house has doubled in value, but guess what...if we sell, we cant buy anything better! I dont know how young people are doing it. Getting close to 6 figures for down payment as the rule rather than exception. I know I didnt have that cash for years after graduation, many years.
Down payment becomes less relevant in a crowded market because higher income can always substitute for a down payment even of 100%.
The key word in that is "RECENT" buyers. I think that is a naturally reaction. I live the NYC suburbs, bought my current house in 1995 for $250,000 with 70% bank financing. Bought a small office building ( really just an older house) in 2001 for $250,000, 80% bank financing. 2002-2005, I would have told you it was a huge mistake, the debt payments were a huge part of my monthly expenditures. Now both have a value of about $1.25 million each with no mortgage.
(Case 1) Home prices assumed to go up 20% year-over-year, equal number of buyers and sellers.
(Case 2) Home prices assumed to go up 20% year-over-year, many buyers per seller.
In Case 1, anyone can buy any house. An employed person with $0 can buy a $50 million house because they can simply not pay for 12 months and then walk away with $10 million.
In Case 2, the prices will adjust up until there are equal number of buyers and sellers.
Now, take the number 20% and change it to 3% or closer to historical average of house appreciation. Completely different market as a house is now an expense (pay more in taxes + HOA + insurance + maintenance than the appreciation of the house). Then consumers buy houses using the same economic principles they use when buying groceries.
Almost anyone can, technically, afford a $500 bottle of wine on the top shelf at the grocery store. Meaning the charge to credit or debit card will go through. The reason people generally don't buy one is because it's overpaying if a $15 bottle of wine tastes good enough to them. Even many billionaires would never pay $500 for a bottle of wine. But if buying a $500 bottle of wine pays you $100/year then the bottom shelf wine which used to costs $15 will cost $500 and people will expand their grocery budget.
The flip side to buyers regret is non-buyers regret. These are would-be buyers that passed and watched prices soar while they sat on the sidelines.
Now some of them are panicked that the train is leaving the station and overpay for a house they could have bought for a lot less a few years ago - thus becoming regretful buyers.
And this is how bubbles form, and subsequent, inevitable crashes.
Historically low supply and crazy prices might contribute to remorse. When there are bidding wars as the rule, paying well over asking, one can imagine this is going to result in some panic purchasing and or regret. Tough time. I feel for anyone who has to move. Our house has doubled in value, but guess what...if we sell, we cant buy anything better! I dont know how young people are doing it. Getting close to 6 figures for down payment as the rule rather than exception. I know I didnt have that cash for years after graduation, many years.
Agree. Same situation, if we sold our house, we couldn't get anything comparable. Our home has more than doubled in value since 2013. I had buyer's remorse back in 2013 "we paid too much" ... now, we couldn't or wouldn't want to afford our own house. I am getting to the age where retirement is on the radar, with visions of selling and moving to a less expensive area - paying cash for something and putting the rest to supporting retirement.
While I like the higher home value, I will not like the higher property taxes when the next assessment comes around.
You are the one demo that has it good. With retirement coming you can cash out high, and with a little flexibility (no job telling you where to go) you can make out! Glass half full.
Historically low supply and crazy prices might contribute to remorse. When there are bidding wars as the rule, paying well over asking, one can imagine this is going to result in some panic purchasing and or regret. Tough time. I feel for anyone who has to move. Our house has doubled in value, but guess what...if we sell, we cant buy anything better! I dont know how young people are doing it. Getting close to 6 figures for down payment as the rule rather than exception. I know I didnt have that cash for years after graduation, many years.
Down payment becomes less relevant in a crowded market because higher income can always substitute for a down payment even of 100%.
I thought 0 % down was extinct after 2008? I would assume 10% is going to required by most mainstream banks still after the subprime fiasco?
The flip side to buyers regret is non-buyers regret. These are would-be buyers that passed and watched prices soar while they sat on the sidelines.
Now some of them are panicked that the train is leaving the station and overpay for a house they could have bought for a lot less a few years ago - thus becoming regretful buyers.
And this is how bubbles form, and subsequent, inevitable crashes.
I know someone like that. He's in a 2 br/2 ba condo (maybe 1K sf) with his wife and two young kids in a hot market. Oldest child is now school age and they had agreed to stay put for family reasons until that point. They cannot afford anything larger in that neighborhood or even within a 10-mile radius now. He was already window shopping to read where he could go in the vicinity and then he started searching in earnest yet for some reason his wife wouldn't get on-board. It looks like prison to me to be stuck in a small condo with two kids and a spouse who's indifferent. I don't know what his path out of that will be, but it will come at some significant cost now.
Of course down payment doesn't matter in a super hot environment.
Hypothetically, if a house is up for sale for $1 and you make $1,000,000/year but aren't willing to throw down $1 up front, I'm sure a bank will be happy to sell you the house on payments of $0.04/yr.
Less hypothetically, if a house is up for sale for $500k and you have $500k cash to buy and your income is $70k/yr, you won't win the house if someone with $0 cash and $250k/yr income and equal interest in buying the house, because they'll bid it up to around $800k because your ability to pay a $300k loan is somewhere around the same as their ability to pay a $800k loan, and of course the bank gets more interest payments from them than from you.
Terrible post about a survey asking people who just spent most of their money on a house in a sellers market. Ask people who have owned for 5-10 years. That's a better measure of it. New home owners are just upset their neighbors paid less for the same home. My neighbor next door put down payment of less than $100 when she bought her place before I was born, and the neighbors across the street who moved in last fall paid 50 percent more than we did just 7 years ago when all the neighbors were shocked by how much we paid.
It's silly to post just a photo of a property when 75%+ of the value is in the location and size of the lot underneath the building.
Post the link to the listing jamin (there's usually a 'share link' button which allows you to easily copy and paste the site address - let us know if you're having trouble with this).