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Utopia Talk / Politics / Housing Market Top
nhill
Member
Sun May 08 19:35:36
Holy shit, it's really happening. My friend who is the worst investor I know bought a house. Last time he bought one was early 2006 which he capitulated for a huge loss in 2015 and became a renter.

Get ready for some cheap real estate next year.
nhill
Member
Sun May 08 19:42:12
And no, my friend isn't me. Our home base has been in the family for over 60 years and isn't going anywhere.

This guy also told me to buy some SPAC in November that was trading around $10, last I checked is worth about $3
nhill
Member
Sun May 08 19:45:08
I've also checked his old house just for shits and giggles and he literally capitulated at the pico bottom of the real estate market in that area, and was down -42% at the time. It's up 56% since selling and now he's going back into the market.

These type of people (and I love the guy, one of my oldest friends) are unironically the best indicators. 90% chance the housing market tops this year based on this alone.
Habebe
Member
Sun May 08 20:43:38
Holy shit you know Jim Cramer!
nhill
Member
Sun May 08 21:58:44
Lol yup.
Dukhat
Member
Sun May 08 23:57:52
Why wouldn’t you buy a house within the last 2 years? Interest rates were so low that mortgages were far cheaper than rents for the equivalent space.
Dukhat
Member
Sun May 08 23:58:25
I mean his timing is retarded but it makes sense to rush in before interest rates double to fight inflation.
nhill
Member
Mon May 09 00:01:40
> Why wouldn’t you buy a house within the last 2 years?

Who? I already have one as I said in the 2nd post. I also rent another but that's mainly out of convenience.

> I mean his timing is retarded but it makes sense to rush in before interest rates double to fight inflation.

You realize they're just going to do QE in 2023 right?
nhill
Member
Mon May 09 00:05:04
Having a low interest rate doesn't matter if your house is down in value by 40% btw. ;)

Fundamentally speaking, it seems like the housing market is going to remain hot all year. Unless there's data of which I'm unaware.

But I don't underestimate the power of contraindicators.

Jim Cramer, for example, said a few weeks ago that $ETH was going to be $10,000 by the end of the year. It's down over 10% since.

You can either be right or you can make money.
earthpig
GTFO HOer
Mon May 09 01:51:37
"Last time he bought one was early 2006 which he capitulated for a huge loss in 2015 and became a renter."

Could be this:

2015 + 7 = 2022.

7 years being the standard wait from foreclosure, to getting another normal mortgage.

I hear you about "This is the top, crash incoming!!!!" but at this point I've been hearing it for far longer than your buddy had to wait to get another mortgage following foreclosure, so it's white noise.

Something I've been thinking about is real estate liquidity.

Some sellers are motivated by "I hate my kitchen! But I have too many bedrooms, maybe we swap out this house for a similar one with a better kitchen but less rooms" lateral moves. But now that means they swap out their 2.875% for 5.5%, payment is $1000/mo higher for a home of identical value. Maybe they don't hate their kitchen so much, after all.

We have one less seller AND one less buyer, so it's a wash on supply and demand (Someone will quickly point out), but liquidity is reduced. People feel "stuck" in whatever home they owned as of Feb 2022, even if it's no longer a good fit. Everyone that refinanced during the COVID refi boom is going to have that massive disincentive to consider selling, for many years.
nhill
Member
Mon May 09 02:25:03
He didn't foreclose though.
nhill
Member
Mon May 09 02:25:22
Or get foreclosed, whatever the proper grammar is here.
nhill
Member
Mon May 09 02:26:18
So weird how you take something completely wrong and just ran with it, lol. Didn't even read the rest of your post.

But yeah, this year's the top, have fun.
earthpig
GTFO HOer
Mon May 09 03:41:25
"He didn't get foreclosed on though."

Heard that before.

Post his credit report, and we can talk about if he did/didn't get foreclosed on.

If there are any hints at black marks, assume the worst until you *personally* have run their credit.
nhill
Member
Mon May 09 04:04:45
He didn't have a foreclosure, there's nothing to debate. Feel free to live in your fictional world.
Habebe
Member
Mon May 09 04:09:33
I found this hilarious.

If you shorted every move Jim Cramer has made in 2022, you would be up 6.28%.

If you followed every move Jim Cramer made in 2022, you'd be down 20%.

Congress is only up 4%, and Pelosi is only up 6%.

Inversing Cramer is unbeatable in 2022.

Link: https://t.co/hXZ3NBMdho https://t.co/DC6lIIxeiy
nhill
Member
Mon May 09 04:17:19
Like I said he capitulated. He lost around 4% a year in equity and got tired of it. There's no way a foreclosure was involved. The house he bought was only 110K, and we were both software engineers at the time (he still is, I retired). Money wasn't ever an issue- he thought he could buy back into the market lower so he rented a cheap place. Now he’s capitulating the other direction thinking the market is never going to stop going up.

Not only that, if it takes seven years he still has 4 months to go.

I get you’re some whiz kid mortgage broker or some shit be you ain’t omnipotent, sorry.
nhill
Member
Mon May 09 04:28:44
He probably didn’t even have a mortgage on the house when he sold it, as he used those funds to relocate to the Pacific Northwest. We were in Nebraska at the time and he decided to relocate since he’s selling his house anyway. The house was only 110K in the first place. But I’ll ask him tomorrow, don’t know if he was paying a mortgage or not. I do know it wasn’t a foreclosure.
nhill
Member
Mon Jun 13 12:41:39
Looks like this indicator is working really well so far. Let's check back again in 6 months :)
nhill
Member
Mon Jun 13 12:43:38
>But I’ll ask him tomorrow, don’t know if he was paying a mortgage or not.

Oh, and as for the update (forgot about this thread), his mortgage was paid off when he sold, so that much is settled.
nhill
Member
Tue Jun 14 10:00:58
Just saw a house in our Austin neighborhood get relisted for a lower price. Usually they are bought within hours, maybe days. This shit's gonna collapse 20-30%
murder
Member
Tue Jun 14 10:20:23

Market collapses and looming recessions will do that.

murder
Member
Tue Jun 14 10:21:11

And rate increases of course.

nhill
Member
Tue Jun 14 10:26:50
Gonna get ugly out there
murder
Member
Tue Jun 14 10:29:10

Kind of a perfect storm.

And the cherry on top is that we have a moron in charge.

nhill
Member
Tue Jun 14 10:34:14
Can't argue with that
Forwyn
Member
Tue Jun 14 12:39:03
The unique factor here is that hedge funds won't be foreclosed on.
nhill
Member
Tue Jun 14 12:55:02
earthpig was arguing in another thread that hedge funds aren't a huge contribution to market share. Maybe he wants to argue that here? I wasn't entirely convinced when he brought it up.
Forwyn
Member
Tue Jun 14 16:32:45
Official reports are something ludicrous like 5%. Estimates are more like 60% of new purchases going to institutional investors.
nhill
Member
Tue Jun 14 16:38:11
I would imagine quite a few of them would seek liquidity in a recession, especially since the housing market is the only place where you can book profits right now. This shit, the US housing market, will crash at least 20%.
nhill
Member
Tue Jun 14 16:39:07
I already called the top, it is written. Nothing anyone can do about it now except sell their house and buy back cheaper next year. Or save to purchase a 2nd house
Rugian
Member
Tue Jun 14 17:31:17
5% I think is the figure given for SFRs that are classified as for-rent.

Institutional investors are just as likely to buy & flip as they are to rent their properties out. If you add both uses together, IIs are making up like 1/7th of all SFR purchases right now.

There's some huge geographic variability in that number though. In the South, these guys are basically buying up everything available lol.
nhill
Member
Tue Jun 14 17:53:09
Yeah local differences are always relevant, places people are fleeing to may be spared the worst of the crash.

But obviously people are going to need liquidity to meet margin calls and such if the market keeps trending. And the obvious place to obtain that liquidity is the housing market, since it's gonna crash anyways and you can at least book some gains as it lags.

I'm going to buy another house next year (or maybe the year after depending) for a nice discount. -20% discount on a levered purchase is fantastic. Can't wait!
murder
Member
Tue Jun 14 18:07:05

"Official reports are something ludicrous like 5%."

Even if it was 1%, it still has an impact. And even if they walk away empty handed 99% of the time, every time they make an offer, that's an offer that someone else has to beat.

nhill
Member
Tue Jun 14 18:10:52
^he's right, you know.

Any each ask makes it harder to find a bid, especially with 6% mortgage rates. -20% minimum.
nhill
Member
Tue Jun 14 18:11:03
And each ask*
nhill
Member
Wed Jun 15 09:28:24
"Seeing houses on the peninsula with $600k price cuts across the board. Full panic mode."

http://twitter.com/gwestr/status/1536701500050747393

Don't fade me. I'm always right. Lmao
nhill
Member
Wed Jun 15 09:29:58
House in my neighborhood took another 30K price cut.

This shit is crashing in real time and I called it first (well, technically the worst investor I know called it with his actions, but w/e). Don't fade me ;)
Rugian
Member
Wed Jun 15 10:09:16
75 bps Fed rate hike likely coming in 3 hours. Get the popcorn ready:)
nhill
Member
Wed Jun 15 10:15:12
More blood for the blood gods!
nhill
Member
Wed Jun 15 13:06:20
75 it is
Nimatzo
iChihuaha
Wed Jun 15 13:08:43
Let's see what the Master of coin has to say next.
nhill
Member
Wed Jun 15 13:30:21
http://www.youtube.com/watch?v=Azr9FRuFED0 presser just started
Nimatzo
iChihuaha
Wed Jun 15 13:42:05
hehe I bought some NEAR :) around 3.2
Nimatzo
iChihuaha
Wed Jun 15 13:42:42
We may be getting a small rally, language as I am interpreting is more dovish.
nhill
Member
Wed Jun 15 13:43:22
Looks like a positive impulse so far, but a lot is probably shorts covering at this point. *popcorn time*
Nimatzo
iChihuaha
Wed Jun 15 13:50:55
Yea nothing that I was gonna let run for long. Closed +4.5% :)
nhill
Member
Wed Jun 15 13:55:20
Boom headshot!
Habebe
Member
Wed Jun 15 14:43:30
Nimatzo, Success is an accumulation of small wins, make another notch.

I kind of wish they plopped a full 100 today and be done with it. Are we headed for a recession? Probably, uncertainty seems worse than certain bad news though.
earthpig
GTFO HOer
Wed Jun 15 15:05:33
Well, if JPOW is going to say that housing needs to correct, and tell first time buyers not to buy, then I guess that's one way to force-fuck a housing correction.

Here I thought his dual mandate was inflation and employment.
nhill
Member
Wed Jun 15 15:08:07
You may give me my clout now, ser. I nailed it. :)
nhill
Member
Wed Jun 15 15:10:58
But on the real, hope your industry does okay through this. Some areas are already slashing listings by -40% I'm reading. Mainly vacation homes for now, but once one chip falls...
earthpig
GTFO HOer
Wed Jun 15 15:30:07
"The industry" is kind of fucked, I'll personally be fine as will others like me. Refinances are rate an equity sensitive, but people looking to buy houses exist in any market.

Simple biz model to be rate-proof and housing up/down proof, to smooth out the ups and downs:

Run your P&L for the quarter. Great, that's real today.

Subtract out all revenue and expenses from refinances. Run numbers now. Oh shit, it's a much smaller number, innit (if rates are down, if it's 2020 or 2021). This is your sustainable rate and market-proof profitability. This is the number you optimize for when it comes to expenses, bla bla bla, the cynical number that you pay much closer attention to.

And the difference between those two numbers, that's what you put away in your piggy bank for a rainy day.

My 2021 was only 3x my 2019 (the baseline), but overall demand was up 700% relative to the baseline, so relative to market I did very very poorly (I know people that did indeed do 7x or better, they also 10x'd their marketing type expenses, and in some cases 15x'd their payroll, signed new 5 year commercial leases with 5x the office space, purchased call center telephone banks and services....). So my "up" was "smoothed," and it was a lot less than it could have been. Some would argue that I and everyone else should have done what better dot com did, what rocket/quicken did, what loan depot did, what those small guys like me above did - hire hire hire, expand expand expand, expenses going through the roof just because they had a good quarter or two. And that's fine, the senior high mucky mucks made a shit ton of money, the really high mucky mucks (not guys like me) made even more on the pump-n-dump SPAC IPOs (the stocks that have lost 75% of their value, relative to IPO week, the ones I am now buying :P ), and now are firing tens of thousands of people, in panic mode, law suits about lying to investors about sustainability (rockets investor lawsuit might actually go somewhere) bla bla bla.

No right or wrong, but I don't enjoy drama, and prefer stability. My up was smoothed, I do believe my down will be similarly smoothed.
earthpig
GTFO HOer
Wed Jun 15 15:30:16
Thanks, btw.
nhill
Member
Wed Jun 15 15:50:56
Glad you've got a plan to navigate the turbulence. It'll all blow over eventually, always does. QE & rate decreases by late 2023, maybe 2024 at latest or I eat my shorts.
earthpig
GTFO HOer
Wed Jun 15 16:44:34
Yeah, and the pattern is of course that every single person buying a house today, will of course refinance whenever that QE and rate decrease comes. And the higher rates go, the more eager they will be to refi in N years.

The person that helped you buy a house, assuming they did a good job, has an automatic leg up v the refi spammers and junk mailers, when it's time. I did zero marketing in 2020/2021, it was my own clients getting that junk mail, supposing that maybe it's all for a reason, and calling me to ask what's up, sometimes referring a couple friends in the process, and in a couple cases we did entire extended families all at once. Designate that probability at 50%.

The other probability is picking one of the random junk mailers. So if 20 junk mailers came in, each one has a 5% probability.

Better to be the 50% probability than the 5% probability.

Reason 13,552 why you build a mortgage business around homebuyers, not refinancers.
nhill
Member
Wed Jun 15 17:06:00
Smart moves.
earthpig
GTFO HOer
Fri Jun 24 18:21:25
OK, it's a buyer's market now.

We've been seeing more concessions, for example the old bait-and-switch of "oh the inspection revealed this thing, I'll be needing a $10k price reduction or closing cost credit to move forward, or I'm backing out" works again. From about 0% success, to half of my pipeline having that (if planning to sell, may as well assume the seller's going to want an 11th hour credit or price reduction, FYI).

Nhill, we could quibble a bit on the timing of this month or that, but I'm inclined to give you props for the "my dumb friend" index doing pretty good.

"Get ready for some cheap real estate next year."

I don't think so. Who knows, but nothing I'm aware of in the historical record would make me think that. Appreciation has topped off, that doesn't mean values have, +5% is still +5% after all.

Inflation being something that tends to cause houses to go up in value, for example.

We still built more houses in the 1970s than in any year in the 2010s, like 40% less, for example... builders were gutted by 2008, and still have not recovered.

The end of the cold war recession, when everyone knew all these bases would shut down, and the military hardware factories being about to lay people off, caused a concentrated decline in values in those areas (who is going to bid up home values in a "Boeing town" when the Boeing factory might be about to fire 30% of it's workers?), which in turn (once you bake those hard hit areas into the national average) caused an overall decline in values. So that was a rare example of a recession causing real estate to actually go negative appreciation.

A tech implosion, as seemingly implausible as it might be, I guess could do that to Silicon Valley, and in fact I'll say that so many of them have been buying based on RSU income (which amounts to buying a home at a price and monthly budget that assumes "apple stock always goes up!"). I wouldn't be shocked. Not even close.

2008 was of course an example of a real estate crash causing a general recession, not a general recession causing a real estate crash.

Who knows, no crystal ball. Single digit green numbers wouldn't at all surprise me, that would be a return to the normal recession levels of appreciation. You get to say "I told you so" if we have low single digit red. But I think we'll still be in the green. +4% or +7% or whatever (trailing general inflation).

Told my website guy to work some stuff up for divorcee mortgages. Those court cases should start to resolve, so and so is ordered to do a cash out refi to pay off the other spouse's equity, the other spouse then needs to buy a home based on alimony income, etc. And to also work up some stuff for "buying a house isn't an epic 9 month journey with 15 rejected offers" any more, appeal to the demographic that tried in 2020/2021 and gave up.

To do list includes picking up some of the refi bubble tech bro's technology they developed. The tech bros, invariably all refi focused, have all imploded. See better dot com for an example. So their stuff should be on sale soon, gotta see what of it is actually decent for the more difficult/complex/challenging purchase transactions. As inflation declines, so too will rates, so even if that software is only good for refis, there will be a use, and I suspect the tech bros will not be back for some time, since they all just lost their hats.
earthpig
GTFO HOer
Fri Jun 24 18:25:10
typo fix in caps:

(if planning to sell, may as well assume the BUYER'S going to want an 11th hour credit or price reduction, FYI).
nhill
Member
Fri Jun 24 20:00:53
When talking about the top of the housing market you have to give a buffer period of at least 3 months. These aren't day trades. Most indexes aren't even updated more than day-to-day. :)

Nailing the year itself is valuable knowledge, but if we want to keep track, technically May 31st was the top of the housing futures market, about 3 weeks after posting. ;)

Not that it matters either way, but my friend isn't dumb, he has bad timing. He's had over a decade of mild success in software engineering, but when it comes to timing his asset purchases, he has struck out more often than not. :p
nhill
Member
Fri Jun 24 20:01:42
Many indexes are month-to-month, also. Because there's few people day trading houses. :p
earthpig
GTFO HOer
Mon Jun 27 17:52:42
Nhill, are you also user name "f-s" (with words after the 2 letters) on reddit? He too has a "dumb friend" index that he uses to buy/sell assets, including real estate, with.
nhill
Member
Mon Jun 27 18:01:52
Negative sir! Do not have an active user on reddit, and my old user posted like 5 times in history.

Never liked Reddit very much, at least for commenting.
murder
Member
Mon Jun 27 18:03:28

Maybe they just have the same friend. ;o)

nhill
Member
Mon Jun 27 18:10:56
It is possible! What's the full username?
earthpig
GTFO HOer
Tue Jun 28 22:31:30
Dave Ramsey has a thing going around on tik tok wherein he says right now best time to buy or sell real estate. Both. At the same time.

There was a commercial from the National Association of Realtors saying the same thing. In 2007. :P
nhill
Member
Tue Jun 28 23:29:50
They got the sell part right ;)
Forwyn
Member
Tue Jun 28 23:30:37
Gotta keep up the churn! Pad those accounts before we start eating rats.

Pro-tip: Czech war civilians say lighters, even cheap ones, were worth more than virtually any other commodity
nhill
Member
Tue Jun 28 23:37:26
Shit, I'm buying 1000 lighters. Why not.
earthpig
GTFO HOer
Wed Jul 06 17:24:17
Formerly one of the top back-end (not necessarily consumer-facing) players in the non-qm mortgage space (aka subprime v2.0, higher risk loans not backed/subsidized by the gov't like your 'normal' mortgage is), as recently as a year ago in the "top 3" for it's niche, Sprout Mortgage just pulled the plug via mass email. Just for kicks I called the 1-800 number on their website, pushed the button for California, and the line was dead.

Folks with in-progress loans, including some that are reportedly a done deal except for funding, have just had the rug pulled.

This is from facebook rumor mill with screenshots and fairly credible people in the private facebook groups (realtors and loan officers are still on facebook for whatever reason), not in the news yet.
earthpig
GTFO HOer
Wed Jul 06 17:53:11
There it is, the book of faces beat housing wire by about an hour it seems --> http://www...es/sprout-mortgage-to-shutter/

The only difference in reporting (facebook v HW) is they say "The status of loans in Sprout’s pipeline was not immediately clear. A spokesperson for the company did not immediately respond to a request for comment." while facebook rumor mill says "yeah y'all are fucked, sorry no house for you!"
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