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Comment by k3oni | Hacker News Reader

I'm really not expecting to see a significant drop in home prices at least until close to the end of the year. While some vacation rentals owners might have listed their properties for sale they are doing it pricing those close to the current market value based on other properties for sale in their respective area. We're looking for a vacation home and i'm monitoring the prices in a few areas pretty close, but i don't think we'll do anything until the start of 2021.

Remember you need surplus to drive price down. Also keep in mind that the foreclosure process is currently on hold, once this opens again we'll be able to get a closer look at the impact all the closures had/have on the RE market.

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I’m seeing 50 homes under $1M in San Francisco listed in last 30 days. That’s much more in that price range than I recall seeing in a very long time

In places like SF you might see more sales because people are afraid to rent these homes. They may never get any rent and it would be very hard to evict a tenant because of local laws and policy.

Also to keep in mind that RE markets are regional. SF/NYC for example are out of bounds when it comes to this. Question is what is the actual value for each property, they might be under 1M but it might just be that that's their actual value, just more ppl trying to sell now.

Single family homes? Or condos?

At that price in SF proper, I can't imagine it's anything but town homes, condos, and the like.

There are a decent amount of row houses that go for sale under $1m in sf proper. They aren’t in nice areas or worth buying except as investment/rental properties. I don’t see many people buying them. It’s mostly investors. Most single family homes I see with home owners moving in are closer to $2-3mil.

One thing to keep in mind is that SF is a very high-income/high-price metro. Whereas the stimulus and unemployment boost is not adjusted for cost-of-living.

Therefore we'd expect places like SF to see the least support from the stimulus.

Listing prices can be a bit deceiving. Usually real estate agents play with listing prices - to get a bidding war going, they'll price well below market price. It's not unusual to see overbids of 20-30%.

That's what my agent claimed when setting our asking price. We sure didn't see a bidding war. The benefits to the agent for a lower price is in conflict with what the homeowner wants. For example, a $10K diff in sale price is $350 for the listing agent, and $9650 for the homeowner. So of course agents will push for low prices to get a quick sale.

Of course, there are many times that a seller wants a quick sale (moving etc). But often it's in the seller's best interest to be a bit more patient and price it at market.

Yup. Sold our house in January using Redfin. Best realtor we've dealt with and saved 2%.

Also watch out for realtors saying you need upgrades and recommending contractors. They likely are getting a kickback, and by boosting the listing price their commission goes up. You end up with the same proceeds, IF it sells as fast, and you had to front the upgrades.

The incentive structure for realtors is whack. At a minimum, the commissions could be tiered instead of continuous.

I don't know your location, I am not a lawyer, this is not legal advice, YMMV, but: In most locales, a kickback like you are describing is illegal and can be reported to your state's real estate commission. If you believe that your agent is acting in bad faith, you should at least find a different agent if not report them.

In many cases, smart upgrades can yield significant returns. Not all agents who recommend upgrades are trying to con you, many are providing market-aware prudent advise to help you maximize your return.

As an agent, I think it is good that tech and other competitive forces are entering the field. That said, commissions often get pointed to as a "problem." Here's the deal: If you believe your house will sell within a range of say, +/- $20K, then the agent's job is to try to get you to the top of that range. 2% in my market, for an average house works out to about $6K. If I can get you an extra $10K+ that you wouldn't have gotten by FSBO or similar, that's where I'm adding value as an agent and that's why commissions exist.

Commissions are a major reason why the market lacks liquidity. When someone buys a house, they're immediately 6% below market value, just from commissions.

To each their own.

Redfin was a fantastic experience for us. The advice was rational and unbiased (they get paid off of reviews, not commissions, if I recall my research correctly).

And the house sold, which is wonderful.

Also, kickbacks may be illegal, but that doesn't mean they're uncommon or that the laws would be enforced.

Former software developer turned real estate agent here, with this PSA: As an agent, I seek to inform you of market conditions and show you a range of pricing options based on that market. You as the seller always have and should always have the final say on the go to market price. If you believe your agent is not working in your best interests or is pressuring you in order to get a quick sale, find an agent with whom you can build the relationship you want.

In terms of pricing high or pricing low - there are a range of strategies and a good agent will describe your options relative to market conditions and the marketability of your home.

My own opinion: there are a lot of bad agents in the world, but a good agent really does earn their commission by understanding the market, how to present your house, will project manage a range of things that have to happen in every transaction, and will ultimately work to get you the best outcome possible. If you don't believe any of the above, I fully recommend you find a different agent.

Honestly, no offense, but that's a bit of a marketing fluffy non-answer to the problem that essentially says "it depends". A fair bit of what people want and need from an agent is trustworthy and reliable advice. Especially when it comes to the price and price-maximizing behavior. If one can't reliably find such an agent, then the problem will always persist. With that in mind, we need to get the agent's incentives such that they don't align with dodgy behavior on the part of the agent. They should not be aligning remotely to the agent getting paid with a non-optimal outcome for the buyer, which it currently does and so attracts dodgy individuals.

>"it depends"

Yup, you understood me completely. Because it really does depend on your wants and needs as a seller.

In contemplating your message, I've come to realize that I cannot fully engage in this conversation via HN messages, so feel free to contact me directly if you want. There are a lot of agents that really care about this, as there are many who would say they too are worried that there are bad actors that bring down what is a surprisingly complex domain.

Let me ask this, as I think it's a really interesting thought exercise: how would we determine what was the optimal outcome for a buyer or seller?

Agreed. I've done a few real estate transactions using different agents. Bottomline -

1. There is no such thing as building relationship with agents and clients. It's purely a transactional encounter. 2. As you pointed out, the incentives are misaligned between Buyers/Sellers and their agents. Agents just want the deal done asap, add it to their resume, and move on. 3. Most agents are passive aggressive and dislike most of their clients except for the ones who don't have a clue and blindly trust their agents. 4. I really hope RE moves on to a more structured, online marketplace with consumer protection laws as a safetynet.

Obviously there are agents that are like this, but imagine this scenario:

-- You want to buy your first house, I sell you a house. -- You have a couple kids and want a bigger house. I help you sell your house and buy a new house. -- Your stock is doing well and you want a vacation house, I help you buy one. -- You want an investment property to send the kids to college and/or pad your retirement fund. I help you buy one. -- You are ready to retire and move someplace else, I help you sell your house and I refer you to an agent in the place you want to buy.

Thats's seven deals I can potentially help you with, if I take care of your needs and earn your trust and business. Compare to what happens if I don't do right by you and you go to a different agent - I get one deal, no referrals to your friends, no nice words from you I can put on my website, etc. So sure, there are agents that are purely transactional, but those agents are doing it all wrong - for you the client and for themselves too.

I just sold my house by owner (high end home) inside of a week for significantly higher than market comps. For anyone willing to do 20 hours of work and spend a grand or two, this will save tens of thousands of dollars.

All cash bidding wars are more typical of more expensive single family homes. Anything under $1M is not really of interest to those buyers.

And under $300k single family homes, depending on the market.

It's the opposite. The homes under $1M have far higher overbids because they're "starter homes" in SF.[1]

Yep, even during a global pandemic San Francisco still has property selling, and many of them for over asking.

[1]https://thefrontsteps.com/2020/05/08/pandemic-pricing-or-jus...

Or land value goes up because of the money printer

It won't in real terms, unless the USA establishment really have lost their minds. Output is going to be down for a significant time, that feeds into land prices. Add in WFH from anywhere, and the next leg is down.

> in real terms

The amount of land stays fixed while the amount of money changes. Other products can change their supply but land stays fixed.

It's reasonable to believe that land will become relatively more expensive imo. Looks like it's not a guarantee though https://www.caracaschronicles.com/2018/05/03/once-the-safest...

fwiw I hope land prices plummet here they are already insane https://wolfstreet.com/2019/07/12/changes-in-house-prices-re...

Real terms refers to the price vs wages.

I had a quick look at Edinburgh - which has 7000+ Airbnb properties and I the number of properties for sale doesn't look unusually high and there are still a few ~£1million pound two/three bedroom flats which seems a bit optimistic even the best of times!

I don't think there will be any real pressure for 3 to 6 months until the economy actually restarts properly and property transactions actually start happening again.

AirBnb landlords are going to first all flood back into the long-term rental market (yearly renewals). Many came from there but didn't do the math on maintenance so migrated to airbnb for "gold". Rents in long-term will drop due to unemployment / increasing supply, then many will become forced sellers. As these hit prices will drop and everyone else will be caught in this wave.

Furthermore, while it can probably be overstated, it wouldn't be surprising to see a fair number of people--perhaps mostly renters because they can pick up and leave more easily--who have second thoughts about city living. Why risk living in close quarters if this may be a recurring pattern and pay a premium for doing so.

Not so much the Bay Area but there are a lot of cities where you can get a lot more space for a lot less money by moving out to even a fairly close-in suburb.

Only time will tell for certain but the preemptive measures places like Seattle have taken appear to be paying dividends. Living in rural Texas is much more concerning than living in Seattle during COVID19.

As for space, cities have lacked space for as long as cities have existed but people continue to migrate for the opportunity. I wouldn't be surprised if housing prices drop from short-term rentals reentering the market as single-family homes or long-term rentals.

The decision is not so clear cut.

>Living in rural Texas is much more concerning than living in Seattle during COVID19.

That may be true but living in a suburban/exurban area outside of the Seattle core might well be better than either for many. I'm not sure how many will ultimately make a change because of this though. It will depend on people's job/commuting situation and how diminished city living seems when lease renewal time comes around.

> Why risk living in close quarters if this may be a recurring pattern and pay a premium for doing so.

Your original assertion was renters will move because the city is unsafe during COVID and that suburan areas are worth the price to commute trade-off.

Two suburban areas around Seattle are Snohomish and Pierce counties. Those "safer" suburbs are doing an objectively worse job of following Washington State's "Stay at Home" order [1]. Prior to COVID, hospitals were closing in rural and exurban areas, which reduced capacity during this pandemic [2]. Disregarding SAH/SIP orders and reduced capacity sounds dangerous, not safer and worth saving money.

As for cost, when enough housing capacity was built in Seattle then the rent stabilized. After short-term rentals are converted back into single-family homes or long-term leases then rent should continue to stabilize or decrease. When I last looked, increasing my commute from 25m to over 1h was not worth the savings in rent and would have required purchasing a car.

It's great you prefer the suburbs and there are absolutely people the 'burbs are better suited. Unless you have a valid reason to suggest people are going to move in-mass from cities to the burbs then I find "diminished city living" mistaken and comical.

[1] https://www.unacast.com/covid19/social-distancing-scoreboard... [2] https://www.npr.org/2020/04/09/829753752/small-town-hospital...

I don't live in a suburb and don't really like them. But I am in the orbit of a major city while being pretty rural. I don't really anticipate en-mass movement. A lot of the people already living in cities will just accept whatever restrictions and risk. But I do think some on the edge might reconsider living in places where you don't need to be in elevators or share transit with a lot of other people,

Some people will move away from a city and others will move to a city. It happens. Neither of us expects to see a sizable net movement from urban to "exurban" (rural) areas.

Why choose the exurbs where you pay a premium to drive long distances and live far away from opportunity and medical care? Plus, exurbs were some of the hardest hit during the '08 recession [1].

> But underlying today’s exurban fervor is an uncomfortable truth: The reason that homes in these communities are so affordable is that these areas were among the hardest-hit by the housing crisis and recession, and prices have only recently recovered.

Recessions are very difficult to predict. Maybe it will be some time before a reckoning in the exurbs comes due again.

[1] https://www.marketwatch.com/story/it-can-be-risky-to-buy-a-h...

Scottish Land Registry is currently closed so nothing can actually be sold atm, as far as I'm aware.

Does that mean banks cannot foreclose either (if nothing can be sold)?

Off-topic (sorry) - would you mind emailing hn@ycombinator.com? I'd like to invite a repost of a previous submission (a la https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...)

Agreed. There may be short term movements, but like you said, we’ll see the full effect once the courts reopen and things start moving again.

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