civilservant

Negative equity is nothing to be afraid of if you’re keeping the house long term.

interest rates will not have risen a significant enough amount to be a consideration.

Steerpike

Your terminology 'survey contingencies' is not common here, at least, not out west. Do you mean inspection contingencies? I recognize the term 'survey' from my brother's experiences in the UK, but I never bought property in the UK so am not familiar with it.
I made a similar comment above regarding San Francisco, but the numbers I presented contradicted that. It may be that 'San Francisco' above, in the Case-Shiller reports, is the SF Bay Area metropolitan area, in which case a rise in the SF Bay Area of 8% could still possibly allow for a drop in the city of SF itself, but I'm not 100% sure.

civilservant

Forgive me, I dropped the British term in there mid-stride.

Yes I mean inspection contingencies.

excpomea

I'm sure the market varies widely across America, I can only comment on the local situation.
House prices have been rising very fast, every house we see listed around us is sold in a day or so.
More disturbing, most of them are being snapped up by rental companies and are quickly cleaned up and put up for lease.
Can't recall this year a local house being bought by the actual people intending live in it.
Our neighborhood has quickly turned in to a mostly rental area.

Close friends after losing out 6-7 times had to bite the bullet and offer 10% over asking price to secure a house.
No idea what's happening but it's sure a little weird.

civilservant

- Low inventory
- Very low interest rates
- COVIDs slight recession as the vaccine rollout proceeds has unleashed pent up demand.
- US Government has created a whole crap-ton of money in the last year.

Add that to the Fear Of Missing Out (FOMO) on those low rates, and you get the current housing bubble - and a bobble it is, because the current rises are unsustainable and not built on anything other than that mentioned above.

Steerpike

A related development is that SOME of these houses are being bought by investors who turn them into 'AirBnB' properties - ie, short-term rentals. In my neighborhood in AZ, we are a sleepy community of mostly huge houses (I'm in a town-house development within the bigger community). In the past couple of years, houses have been bought by these investors and literally converted to 'party homes' - living rooms converted to dance floors, etc - and they are rented out for weekend parties with 30-40 people attending. As you can imagine, the neighborhood is up in arms because these parties go on till the early hours, and since they are just temporary visitors they have no incentive to be 'nice to the neighbors'. So - and this is a HUGE plus for 'HOAs' (Homeowners Associations) - the HOA just had a vote and 75% of us voted to ban short-term rentals (minimum 30 days now), so the measure passed. I know everyone hates HOAs but this is an example of a situation where an HOA can do some good.

Wh431

All valid reasons but the rate of price rise is a bit extortionate (atleast in the parts of Chicago where i am looking).

Such a steep increase in such a short space of time makes me wonder that it will also come down as quickly.