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!"
Forwyn Member	Wed Jul 06 21:19:58 As expected, it will become harder for would-be homeowners to enter the market. Prices will remain inflated in certain markets in the face of a crash because hedgescums don't face the pressures of an imploding market to sell.
Y2A Member	Wed Jul 06 21:23:35 hope so, would be cool to buy something next year. thinking about nyc co-ops, but we'll see.
Y2A Member	Wed Jul 06 21:24:56 "This guy also told me to buy some SPAC" lol
earthpig GTFO HOer	Wed Jul 06 22:45:02 I wouldn't be planning on any 2008 style price drops, outside of your usual suspects like Florida and Vegas. Note that listing price is a marketing strategy, not an indicator of fair market value or related to expected/anticipated sales price.
Habebe Member	Wed Jul 06 23:28:35 So, we're all in agreement, lighters, right? Lighters Acetaline Flint Phenol 2 propalanime Candles Fresh water Canned goods Socks, you can always use socks. Magazine porn Shotgun slugs The basics.
earthpig GTFO HOer	Thu Jul 07 16:39:05 Long article with charts. http://www...tighter-in-the-next-recession/ Will mortgage lending get tighter in the next recession? The fact is we're already at 2008 credit availability levels [ie, it's *already* as difficult to get a mortgage today, as it was during the knee-jerk right after the collapse] As recession talk becomes more prevalent, some people are concerned that mortgage credit lending will get much tighter. This typically happens in a recession, however, the notion that credit lending in America will collapse as it did from 2005 to 2008 couldn’t be more incorrect, as we haven’t had a credit boom in the period between 2008-2022. One of the biggest reasons home sales crashed from their peak in 2005 was that the credit available to facilitate that boom in lending simply collapsed. So, could we see a similar tightening of credit when the next recession hits? The short (and long) answer is no, not a chance. When people say credit will collapse down to 2008 levels, I kind of snicker and think, well, we can’t collapse to 2008 levels because credit availability is already there.
earthpig GTFO HOer	Thu Jul 07 16:44:40 One chart I'll share, as it goes "up" that means it's easy to get a mortgage, and as it goes down, that means it's harder, and fewer people will qualify for the mortgage needed to buy a house. http://lh3...FlchjJP79_EpgHlUw_IHJDhSrlCKfw 2012 is when it was retarded to get a mortgage. That's the "retarded maximum" if you will. If you were a first time buyer, and 8 months ago you netted out the groceries with your room mate concurrent with your rent check, and the landlord got a portion of their rent in a separate check from your room mate, all of that may need to be explained and documented, you may even be asked for your grocery receipt from 8 months ago, perhaps letters attesting to it from your room mate or landlord, you get the idea, just stupid. You can see the sharp dropoff in 2020 when COVID hit. More or less the way to read that is "earthpig is so damned busy doing refinances for vanilla perfect credit people, why would he take the time to deal with your credit repair bullshit, or 'working with you' on an 'exception' or any of that?" Quicken/Rocket, famously, required that self-employed people have a MINIMUM credit score of 780 to even be considered. As of today, it's closer to 2012 than to 2019. And Freddie Mac just a week ago announced they were going to start looking at rent payments again in the near future...
earthpig GTFO HOer	Thu Jul 07 16:58:38 People talk about the MCAI as "out of 200 people, how many can get a mortgage?" That's not actually what it is, but it's what 'they' say. And 100 ("out of 200") was the baseline from the crash until like 2012, then starting in 2012 it gradually increased to 185 out of 200 people in 2019, before dropping to 120 out of 200 in March 2020 overnight, still about where it is. Hilariously, it was at about 850 out of 200 people in 2007. (Again, the "out of 200 people" isn't *actually* what it's an index of, that's just how "they" talk about it for whatever reason, ease of understanding I suppose)
nhill Member	Thu Jul 21 13:15:12 Thanks for that info, it's a bit over my head but I'll study the referenced terminology. What is MCAI? Mainly bumping this thread because I was absolutely right so far about this being the top. In my area listings are all slashed by 10-20%, and it's one of the most in-demand areas in the USA.
earthpig GTFO HOer	Fri Jul 22 12:44:44 Looks like that link didn't work, making the rest of the post pointless. The Mortgage Credit Availability Index is updated each month. June 2022: http://www...availability-decreased-in-june
nhill Member	Fri Jul 22 12:50:27 So we still have a long way to fall it seems. Crazy. Just saw on Twitter (via Zillow) that a neighborhood near Santa Barbara have had -30% cuts on asks across the board. Still hoping for a better buying opportunity. I don't mind paying a 6% rate. Will just refinance once the fed pumps again in 23-24. I think people afraid to buy a house because of a high mortgage interest rate are silly. They are going to come way back down to stimulate the economy within 2 years. Budget accordingly. It's merely a variable in the equation ya know.
earthpig GTFO HOer	Fri Jul 22 12:54:06 Appraisals are starting to come in high more frequently. 19 in 20, long term, come in exactly at contract price. We upload the purchase contract for the appraiser to see. Most of the 1 in 20 where it doesn't hit contract price, it comes in low. So it's quite unusual to see a bunch come in higher than the contract price, the appraisers in aggregate are saying buyers are getting better deals for homes than they'd have gotten 2 or 6 months ago. One recent example was $20k high, another was a $1.5m appraisal on a $1.2m contract sales price (listed for ~$1.2m, recall I'm in the SF Bay Area for business purposes, so that price does not equal giant mansion). At a very informal imperfect off the cuff analysis, it's 100% plausible that 6 months ago a home listed for $1.2m might sell for $1.5m, in fact if someone was hunting for a $1.5m home, I very well would have given them advice to look for things listed at $1.2m or $1.3m, so they're ready for the bidding war. Appraisers do not directly adjust for prevailing mortgage rates or market sentiment, in theory that's supposed to be captured by sales prices, so it's indirectly captured there. Here's a running tally of the (so far) tens of thousands of mortgage jobs that have been lost in 2022. I started my own implosion meter thingie in December 2021, but this one is more comprehensive. http://www...-closures-mergers-and-layoffs/ June 2022 was my least profitable month in several years. Still in the green, but unlike a lot of others I *didn't* hire a bunch of people during the pandemic. Everyone I know that did, has also had to fire a bunch of people. I haven't, instead of hiring a bunch of people during COVID, we all just worked our asses off. Another headline: Mortgage demand has officially hit a 22 year low.
nhill Member	Fri Jul 22 12:55:28 This thread will be legendary.
earthpig GTFO HOer	Fri Jul 22 12:57:43 " I think people afraid to buy a house because of a high mortgage interest rate are silly. They are going to come way back down to stimulate the economy within 2 years. Budget accordingly. It's merely a variable in the equation ya know. " Preach. In 2020 and 2021, buying a house in California was an epic 9 month journey featuring 15 rejected offers each with 20 competing offers. If your realtor wasn't telling you to bid six figures over asking with all contingencies waived, you were wasting your time. Now it's "pick the house you like, go buy it." In June, and it's looking like it'll be true in July too, I spoke to at least one someone for the first time, and they got keys in hand, less than a month later. That's everything from gathering paperwork for preapproval, looking at houses, putting an offer in, and so on, to owning the thing. From a 9 month process, to a month. You can't undo the price paid for the home or the mortgage balance. But you can redo the rate. Just as rates followed inflation up, so too they will follow it down.
earthpig GTFO HOer	Fri Jul 22 13:02:01 "This thread will be legendary." My liquidity comment from a few months ago is looking more true. I think general contractors are about to see their profits rise by a number greater than inflation. Jessica doesn't want to sell her house and buy a new one for a similar price, the payment would be $1100/mo higher due to mortgage rates. So she'll just renovate the kitchen (that was her primary motivation to consider selling current home and buying a new-to-her house). As long as she can get it done for less than $1100/mo (personal loan, swiping a credit card, whatever), it'll feel like a good deal to her. That leaves a lot of wiggle room for a GC to charge more. And you might say "hey that's bullshit, I'd spot a general contractor doing that and wouldn't hire them!" -- cool, and that's why the general contractor might be less likely to call YOU back, but will certainly return Jessica's (and the many other people just like her) call ASAP. They will return your call once done working through all the Jessicas of the country.
nhill Member	Fri Jul 22 13:15:02 >You can't undo the price paid for the home or the mortgage balance. But you can redo the rate. Just as rates followed inflation up, so too they will follow it down. Yup, exactly my point! Just refinance when it comes back down. Your capital appreciation will make up for the temporary high rate anyways.
nhill Member	Mon Aug 01 11:38:22 >Median single-family home prices just experienced the largest two-month drop in recorded history at -11.9%, topping even the Great Financial Crises. More evidence of nailing the top call.
earthpig GTFO HOer	Mon Aug 01 13:07:18 Mortgage rates have been trending down for well over a month at this point. I cannot find the article you pulled that quote from. Google searching the text returned this article: http://www...ding-to-housing-data-firm.html " Home prices are still higher than they were a year ago, but the gains slowed at the fastest pace on record in June, according to Black Knight, a mortgage software, data and analytics firm that began tracking this metric in the early 1970s. The annual rate of price appreciation fell two percentage points from 19.3% to 17.3%. " 17% is still far above normal.
nhill Member	Mon Aug 01 13:26:44 Hm I may have been bamboozled. http://twitter.com/DylanLeClair_/status/1554134398785802240 Thought the tweet had a source for the information, but apparently not. Oops. <homer-disappearing-into-bushes.gif/>
nhill Member	Mon Aug 01 16:58:55 http://fred.stlouisfed.org/series/MSPNHSUS Found the source. Looks like it's Median Sales Price for *New* Houses Sold in the United States. Was hard for me to find, but this appears to align with the news.
nhill Member	Mon Aug 01 17:04:13 That said, it being *NEW* houses drastically changes the scope. Not sure why % of home purchases are new homes but I imagine it's a minority :p
earthpig GTFO HOer	Mon Aug 01 18:53:01 Oh, yeah, developers get fucked harder than anyone else over rates going up. All of their commercial debt is adjustable, so you modeled coming out profitable assuming it would take X months to build at Y% rate (+/- 0.25%), and then it doubles (+3%), yeah, you need to unload some inventory, and quick, since that is by far your largest holding cost, and it doubled. If a rate bump causes consumers to let their foot off the gas, it causes a developer to slam into a tree and go flying out the front of the car. They are a small percentage of the market overall. The existing academic literature says it takes ballpark 3 years of rate change movement in the *same direction* for rate changes to impact the overall housing market (2005-2008 rates were going up the whole time, and 2009-2012 rates were trending down the whole time, to use 2 examples [the phd people obviously cite a lot more than 2 anecdotes, they use models and shit]), but with developers it's measured in weeks/months.
Rugian Member	Mon Aug 01 19:34:17 earthpig GTFO HOer Mon Aug 01 18:53:01 "Oh, yeah, developers get fucked harder than anyone else over rates going up. All of their commercial debt is adjustable, so you modeled coming out profitable assuming it would take X months to build at Y% rate (+/- 0.25%), and then it doubles (+3%), yeah, you need to unload some inventory, and quick, since that is by far your largest holding cost, and it doubled." Rate changes definitely hurt a development proforma. At the same time though, that's a secondary concern when compared to materials pricing escalations and lead times to order. Trying to lock in hard costs has been absolutely impossible on every single project we've seen.
earthpig GTFO HOer	Mon Aug 01 22:30:14 @rugian The materials thing was an issue through 2020/21 though. They chugged along. The "new housing starts" and permit applications kept going strong until they nosedive as rates went up.
nhill Member	Fri Sep 16 23:11:05 Another gentle reminder that I absolutely nailed this call. Everything around here is -20% or more :) Gonna let it bleed for another 6-9 months before snagging up some additional real estate.
Earthpig GTFO HOer	Sat Sep 17 11:05:10 Closed sales prices (listing prices are not a data point) are down 20%? Prob not a desirable place to live....
nhill Member	Sat Sep 17 22:35:15 Doesn't seem like you have much knowledge about how desirable places to live have been speculated upon. Lol. It is the *most* desirable metro area (Austin, TX) to live, and that was why we've seen such volatility. Durr. The rampant speculation on the housing market has caused some neighborhoods (avg home valuation well over 1M) to correct more than 20% in closing costs, including our own neighborhood.
Sam Adams Member	Sat Sep 17 23:22:18 Austin might be the most desirable place in texas.
nhill Member	Sun Sep 18 06:26:13 It's easily top 10 USA in every list I read. But my point is the assumption that desirable places to live wouldn't see downside volatility after the prices went up over 100% is pretty weird... as I said in multiple threads, during a bear market people will book gains where they can find them in order to increase available liquidity.
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