Utopia Talk / Politics / Housing Market 9/21/22 & rate hike day

earthpig GTFO HOer	Wed Sep 21 17:46:05 Since anecdotes are what we base things on, the story of the high rates reducing liquidity is validated. "We can't sell this house and give up our 3% rate, we'll just make do with the crummy kitchen, or hire a contractor to fix it!" -- spoke with a past client who literally said exactly that, right down to it being the crummy kitchen that they would make do with, until they could get around to hiring a contractor to fix it up. Rates are the lubricant, the provider of liquidity, the WD-40, whatever you want to call it. Transaction volumes will be down for some time, and even though many metrics have shifted one way YoY, they're concurrently the opposite direction compared to the pre-covid 2019/2018 baseline. It is picking up though. Not a huge amount. The data set would be like 60, 100, 20, 22, and celebrating the "10% uptick" from 50 to 50 would be a bit silly. There's no more sticker shock over the rate. I screwed up and mis-priced a mortgage, yielding 7.XX% (it should have been 6.XX%) and they accepted it. Get to make a good news phone call and apologize for the mix-up, but the fact that they didn't hang up on me and block my phone number, indeed they actually signed the disclosures and paid for the appraisal (and these are higher income white collar professionals with >800 FICO scores, she makes a tad over $200k/yr, he makes less) is interesting. Paints the picture of people so far past sticker shock that they're just expecting to be appalled at whatever they are told, and will deal with it, they had their emotional journey months ago and obviously worked through it already, with room to spare, or they wouldn't be talking to someone about buying a house at all (baby-making is a common motivator to buy one's first house, and baby-making comes from sex, an activity which isn't sensitive to inflation. On the other end, divorce is a source of business, the happy couple is going to go from consuming 1 housing unit to 2 housing units -- that's one purchase, and one court-ordered refi). BTW: 4th time in a row. Measured hour-to-hour or day-on-day, fed rate hike announcements caused mortgage rates to drop. The market had priced in a 70% chance of 0.75% and a 30% chance of 1% (or whatever), so when it switched to 0.75% with a 100% probability, consumer facing rates dropped. JPOW should switch it up to keep everyone on their toes, and go for the 1%, obviously (per above) consumers are ready/braced for it.
earthpig GTFO HOer	Wed Sep 21 18:01:53 @nhill - Austin, Tx. There's some "old wisdom" that may or may not always be true. "Vegas and Florida condos, always Vegas and Florida condos." Biggest booms yielding the biggest bust. The Vegas narrative is obvious - it's a place where people go to blow surplus money. So everything is great, provided more and more people always have more and more surplus money to waste. Business will always keep on rolling in, and the folks collecting that surplus/wasted money, from all over the country and the world, are amply equipped to bid values up to the moon. Florida narrative is a version of the fluff occupation, that you can get done in 2 hours a day from home (on the phone, on the computer, whatever), and if that's the case, and you're going to spend most of your time at the beach or whatever with the rest of your time, Florida condos look like an appealing thing. And since the rising tide is busy lifting all boats and all profits are up, no one notices you have a bullshit fluff job, because no one is really checking for that. Or (this is the "in addition to" part of the narrative, the one that I think I was "aware" of since I was a little kid on the West Coast) if you're retired and drawing on your 401k/pension, and it keeps going up significantly faster than you are drawing on it, paired with the no/limited taxes, Florida is great for retirees, "fuck it I can even afford a live-in caretaker, no need to stay close to family!" When the rising tide goes out and everyone is naked (fluff jobs held by single young college grads are eliminated, old people thinking of moving to Florida feeling are less optimistic and maybe they need their fam fam's after all), condos plummet. When you said that Austin has *already* dropped 20%, that's what I immediately thought of. That's not a bad thing, go for it and power to you. If Austin has joined the ranks of Florida condos and Vegas, by all means pick up that home when everything is in the dumps, but make sure you sell it after you've made some absurd above normal return, don't get greedy and wait until you've metaphorically got a Vegas SFR in 2022.
nhill Member	Wed Sep 21 18:06:04 I don’t think it’s the whole city, but there’s definitely neighborhoods here that have corrected over 20%. Keep in mind that they went up over 200% the past few years :)
earthpig GTFO HOer	Wed Sep 21 18:18:48 "Keep in mind that they went up over 200% the past few years :)" That's why I'd be worried/concerned/aware that it's joining the ranks of Vegas and Florida. Especially with what you said about all these sources pumping it up as a "top 10 place to live!" or whatever.
earthpig GTFO HOer	Wed Sep 21 18:19:39 Trend-of-the-moment versus something that's steady and reliable and timeless.
nhill Member	Wed Sep 21 18:27:45 Good points, thank you.
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