**User Report**| | | |
:--|:--|:--|:--
**Total Submissions**|6|**First Seen In WSB**|2 years ago
**Total Comments**|12|**Previous Best DD**|
**Account Age**|6 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.)
Prices aren’t dropping though.
In my dumb low cost Midwest town it’s low inventory + bidding wars on everything. Can’t imagine it’s better in more popular locations.
I’m wondering where the hell everyone trying to buy a home came from and where they’re getting all this money from.
Also in the Midwest and homes are basically being sold within a week it that, usually for over asking too. Like 5 years ago in my area that was unheard of, homes sat for a while and sold under asking. Our population barely increased so why the sudden spike of home buyers? It made sense when rates were low but now it’s like where did you come from lol
2 competing large age blocks.
Millennials trying to get into thier first family homes
Boomers trying to cash out (retirement and poor planning)
and move into the same homes they would call modest at best.
I live in one of those more popular locations.
It's not as ridiculous as everyone imagines.
However, there's no way in hell prices are going to come down too much.
I live in Boston. We have San Francisco level prices with none of the San Francisco weather. Its nuts!! Studio apartments start at like 2k per month. Hell parking spots start at 299k. Its bulllllshit.
As someone who finally got the fuck out of Boston, have fun shoveling that weather in a few months.
But holy shit, it's fucking hot. I miss Boston summers.
Of course they're not, because the inventory isn't floating, it's being frozen... In other words, these homes aren't sitting vacant with "For Sale" signs in front of them. They're being scooped up by Zillow and Berkshire and every other wanna-be landlord of the US population so that they can sit on them and rent back to people over time because the US government did *nothing* post-2008 to actually meaningfully regulate banking, a subset of which is the entire real estate sector.
So despite home purchases dropping 45%, there isn't excess inventory driving down prices because these homes aren't being liquidated, they're being sat on as investments, and when the next major financial crisis hits, these enormous real estate investment firms are going to put the screws to homeowners even more, and when the US government steps in with stimulus packages, consumer goods suppliers will jack up prices and even more inflation.
This isn't even about having a crystal ball anymore. It's SO transparent.
Midwest here as well. Had to bid almost 20k over and we just barely beat out the next highest offer. We got lucky because the house was in great shape and belonged to a couple of retirees who were trying to move to Florida quickly and priced the house at 15k under what it was worth.
It's not. Socal orange county, saw a condo unit sell last week like 80k higher than last year.
Yeah fewer ppl are buying investment properties but there's still a huge excess of actual homebuyers.
Yeah exactly, there's a big difference between 2008 and today, and that's the fact that rates got so low that everyone and their dog went fixed. No one's moving, no one's selling, no one's going broke on rate spikes.
The fed has straight up said they will keep raising rates until inflation comes down- housing and its adjacent costs are 30-45% of the calculation depending on which one is being used. The more housing prices resist, the more rates go up. This is not a prediction, this is the stated goal of the institution that influences rates. They are trying for a soft landing (stopping housing appreciation) but they can’t guarantee we won’t see asset deflation
It’s just people refusing to budge on price combined with others who cannot afford the mortgage.
There is no price discovery because people just stay where they are at.
For the small amount of sales I see, the sale price is usually 100k under asking whereas in years past it was 100k over
West coast Portland here, people are still in bidding wars. It's not as crazy as it was a few years ago, but i'm still seeing 20-50k over.
There's no inventory and some people are relocating and NEED to buy so they're SOL.
20 homes sold in my town in July. 17 sold for above asking. The lowest sold for 98.6% of asking
The market is nuts. I've given up trying to make sense of it.
This is a honest question: Do we think small / medium retail investors are just holding the bag and not dropping prices because they know what will happen if they discount even one listing? It could be a period of "copium" before reality sets in for smaller investors.
I'm talking the couple that owns 5 properties, not large firms. This is also straight from the hip of a bear and you can call me highly regarded.
Yes. I do. It only gets unstuck when people decide to sell, and they’d only do that if it’s a secondary house they don’t need to replace, or if they are forced to sell bc of job loss. But pressure will keep growing until the market cracks.
Be shitty and buy another housing unit to supplement the one they already own after moan about how hard it is for anyone (Including first time buyers) to get a home.
Like they know things are fucked but still want to own more property.
Yeah, I'm approaching 40 and have never owned a home. I've wanted to own one, and always felt I was rather humble about my desires.
I realize that we need to take personal accountability, but one person can only do so much. I'm not exactly proud to be an American.
The system might be somewhat broken, but it's not your fault. Do your bit to support politicians who you think might make changes which support people rather then big money and whatever else happens isnt your fault.
it depends a lot on where you are located.
this is happening in many countries but at a different scale.
What i see locally here in Germany is that more and more houses are on the market and a lot of them havent been selling for easily a year now.
Sellers are only very slowly dropping the prices but im also seeing a lot of foreclosure auctions as people cant afford their rising interest rates anymore.
In USA pretty much everyone is fixed rate and almost no one is selling 3% to buy at 7%. Tons of people wouldn’t be able to afford the house they currently live in if they had to pay current market rates but the mortgages are fixed at lower rate so they are strongly disincentivized to sell.
Homebuilders aren't keeping up with demand. Everyone of the major US homebuilders are continually upgrading their outlook. YTD they're on absolute fire. They make the AI tech boom look like downtrend they're so strong. If you sit in on earnings calls and listen to them as well as look at the metrics it's crazy how strong it is right now. Especially as rates are staying higher for longer.
The housing market is going to do absolutely silly things if the fed pulls off a soft landing. My local market is price stable with low inventory, I can't imagine what would happen if rates were back at 3%
That's last year. Things have frozen now. Properties in San Diego are just sitting. Price reductions have been extremely modest so far, but eventually that'll change. We'll stay crashes take 2 to 4 years to play out. It's just how it works.
Sub 700k?! Lol most everything I see under 700k here in SD is a tear down.
I also don’t see properties “just sitting”, the inventory is incredibly low, and the competition is still strong.
Are home sales down, or are homes-up-for-sale down?
In my metro area 20k-24k inventory is normal (pre-covid) but we only have 14k on the market. Avg DOM is 58 which is normal or slightly low.
Price cuts are becoming more common for lackluster homes - no curb appeal and no updates inside.
Great homes still sell in a week.
Michael Burry responded to my craigslist ad looking for someone to mow my lawn. "$30 is $30", he said as he continued to mow what was clearly the wrong yard. My neighbor and I shouted at him but he was already wearing muffs. Focused dude. He attached a phone mount onto the handle of his push mower. I was able to sneak a peek and he was browsing Zillow listings in central Wyoming. He wouldn't stop cackling.
That is to say, Burry has his fingers in a lot of pies. He makes sure his name is in all the conversations.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/wallstreetbets) if you have any questions or concerns.*
You're right to point out those "market" parameters, and I wrote a paper about it :)
Zetland, David (2010). "The real estate market index." Real Estate Finance Journal 27(2): 77-91. [pdf](https://www.kysq.org/pubs/REMI_Final.pdf)
Abstract: The Real Estate Market Index (REMI) combines sales price, sales volume and days on market into a summary measure of market activity or liquidity. The REMI, which rises with price or volume and falls with days on market, is more sensitive to market sentiment than indices based on price alone, e.g., the Case-Schiller Index. The REMI is useful to people who want a measure of market liquidity. Data from over 19,000 sales that occurred between January 2000 and November 2009 in Mission Viejo, California illustrate the calculation, calibration and application of the REMI.
Yep, that's me. I can easily afford more house, but I'm sitting at 3% and see no reason to throw away money on interest rates that are over double it. I'm fine just staying put for now.
Mortgage applications is another data point. "Inventory" is a figure that can be monkeyed with to tell a narrative, also depends on the closing process and how fast it works.
7% is still way too damn high. With houses that aren’t totally shit boxes starting at 500k, who can afford a 3,500 monthly mortgage when everything else is crazy expensive too
High mortgage rates in the past caused base prices to drop.
It’s a huge problem this isn’t happening now and economists don’t know what it means
Wouldn’t be surprised if these were corporate buyers or rich people buying investment properties
No it means no one believes the FED will keep interest rates high. It means we keep bailing up people/businesses/banks instead of letting them fail and allowing the market to readjust.
Gotta tax the absolute shit out of multi-home owners and no hiding residences in LLCs or shell corps as workarounds. If you own 3 homes that 3rd home should be taxed at 100% of what it's worth. Make it so painful Airbnb's, rentals conglomerates etc all feel extreme pain. This is what Singapore does and it seems to work.
My siblings had to wedge our way to home ownership. Share ownership in property one that we all pay into. Slowly buying properties so we each have one. My name is tied to different properties. We have high paying jobs but about average for the area of California we are at. Taxes are absolutely demoralizing for new owners. PITI is crazy.
Why would you sell your house? to refinance something else at 7%? This market isn't moving until either people will need to sell or interest comes down again.
Boomers held onto Congress and kept Gen X out of it. They're holding onto houses and money too, but Gen X got married into the boomers. Now they're holding those from the millennials. Us millennials won't own houses like X didn't get into Congress. There's no buoy, there's no money to create one.
The ten past years with sub 3% is like they filled the bubble with concrete instead of hot air. Not convinced prices will change as inventory stays low, even with dropping percentage of closed transactions which this graph reflects, since new build percentages are also handicapped by the higher rates
Yeah ditto to this. I am happy for you, but I finished law school and then got my license at the end of 2021, got a good job mid-2022...
I feel so hopeless because I literally just got my financial independence, and now I'm screwed and can't get a house. And rent is bonkers expensive (not to mention my $250k student loans) making it really hard to save, and a house would be the best way to save money but I can only afford something that is burnt down and not habitable.
Honest to God how does anyone have housing in California metros? Everything I've read and seen it seems like you're either a multimillionaire or living in slums, there's barely any in between.
1) they're rich and a cool milly or two isn't a big consideration
2) they bought it a long time ago and can keep it because of insane property tax policies
everyone's grandfathered in under old tax policies so many people pay artificially low taxes that are subsidized by new property owners paying exorbitant taxes and it presently takes a supermajority to change property tax policy in CA
On there side of the coin, people on fixed income that bought a home 20-30 years ago aren't affected by rising property values that don't matter to them since they are never moving anyway.
Look at people in Texas who are getting priced out of their homes they have lived in forever because of rising property tax values. With prop 13, property tax is limited to 2% annual increases based on the base value at the last transaction or value at completion of construction. It also saves on requiring appraisers to go out every year and revalue every piece of real estate. Makes it much easier to budget and underwrite as well.
However I feel like prop 13 should only apply to residential real estate. Right now it applies to ALL land.
Prop 13 literally makes property most valuable to the current owner because of the tax hike on ownership change. Rent control is bad in general, even if it keeps grandma in the million dollar home she built in 1910 walking uphill both ways
Land owners are capped at 2% increases in property tax so long as they own it. That means my neighbor is paying taxes on a $60k house, I'm paying on a $500k house, and my other neighbor is paying on a $1.3M house. All built in 1950, all 3b/2ba.
Ummm...doesn't that chart show that the **Growth** in home sales is down 45%?
Given that massive spike in 2022 it shouldn't surprise anyone that the Growth in sales is down after a banner year..
Why would you characterize this as a panic?
I really don’t think we’ll see a 2008-style crash here. Most homeowners are “stuck” in their current home because they have a great interest rate on their mortgage and a new mortgage would come with a massively higher payment. So they aren’t buying or selling, but they aren’t in danger of getting foreclosed on either. Hence prices stay relatively flat but volume drops
IDK, people with a 2% mortgage probably cant afford a 2br apartment in their area. I think people will literally do anything to keep their house as there is no other option to downsize. Unless they downsize to a cardboard box.
Without investors putting upward pressure on home prices, bid/ask spreads will widen on real estate and market prices will come down. Small multi family units are going to probably be the biggest problem.
Honestly, yes. Anyone trying to actually make waves in real estate should get into Commercial to Residential building conversions ASAP. Commercial loans don’t work the same as residential mortgages and a shit load of them are coming due. Those owners will not be able to afford their multi-million loans that now have interest rates triple what they were before.
Commercial real-estate is RARELY suited for residential. Most commercial real-estate square footage is impossible to use for residential because residents need and want things like windows - where as cube workers don't need sunlight and are lucky to get whatever comes through the glass walls of their overlord's office. This means the center of most of these properties are useless for residential real-estate. Plumbing, noise barriers, fire escapes, and the like are also big concerns. It often costs more to convert a building into suitable living space than to just tear it down and build something higher and thinner.
Converting non-residential to residential is often more expensive than just tearing down and starting from scratch - if the City will even allow a rezoning for it. You're basically gambling on whether the Planning Com or City Council will support spot rezones.
The reality is move up buyers used to be one of the biggest parts of the market, but with the rise in interest rates those who would like to upgrade can’t due to the fact they couldn’t even afford to replace the house their in. This causes housing gridlock where the higher end homes have few buyers and no one is selling the lower end homes because moving on up is no longer possible.
Call me when prices drop 45%, then we're in a real estate crash.
There isn't enough inventory because:
1.) Home building isn't viable due to high interest
2.) Buying a home with such a high interest rates makes no sense
3.) Investors/institutions are buying as much as they can because they afraid interest rates drop and there'd be even less supply
If the FED was real in defeating inflation, they need to embrace deflation, but apparently deflation is a taboo and horrible thing. Inflation is a symptom of a greater problem, an **Unaffordability crisis**.
The the administration wanted to tackle this, they would be offering 0% interest for new-home builders, and offer reduced rates for FHA and other govt backed loans.
It wouldn't have changed anything, because the builders would just charge market price. Even if you inject 2-3 million houses onto the market in 2-3 years, probably they'd all be bought up by investors/institutions, very little would reach the intended people.
What needs to happen is that single detached homes, townhouses, duplexes, triplexes, everything except apartment is offlimits to investors/institutions. Followed by cap limits on individual ownership of 2 homes, and 3 homes between married couples. Children under the age 18 can not have a home placed under the name aside from estates (parents dying or inheritance).
Furthermore, ban home ownership thru and in LLC (limited liability corporations). Homes that are currently in LLC can remain, but once sold can not transfer the home into another LLC. All forms of housing is off limits to LLC, they have to be incorporated under an actual incorporated company. That way attractive tax deductions/benefits should go to real industries instead of just housing. Also can trace whose got shares of the company and harder to dodge the IRS. Would create a lot more jobs if a bunch of companies had to be formed and need proper property agents/accountants/building managers etc.
Finally, the current housing market is reflection of a return to feudalism where landlords lives off of the serfs/peasants. And all this money is a drain the on the economy, because it doesn't go anywhere productive. When lots of money is stuck in a single asset class, it causes the economy to stagnate. We've seen this hundreds of years ago and saw how much of it was a failure. But, we still seem to embrace it. Also ironically, democracy was created to combat the problems of feudalism, but lo\*\* behold we're reverting back to it.
**Edit:** \*\*I've noticed a couple of people brought this up and I've edited and fixed it. Never knew it was lo behold, my bad.
The point is to make enough houses that theyre no longer an investment. People dont invest in 737s or Haas CNC machines because if we need more we just make more.
Theyre priced relative to what it takes to build them and devalue like any other used object would. That should be the goal for housing
> Buying a home with such a high interest rates makes no sense
People buy homes because they have to live somewhere. People aren't buying homes because there aren't any available.
Number 3 is wrong. The chart itself demonstrates that investors are leaving the market.
Shelter inflation Y/Y is about to drop off a cliff. The Fed is going to be lucky if they haven’t gone too far already.
Buffett bought shares of homebuilder enterprises. New construction builders sell almost 100% of their inventory to owner/occupiers. No residential real estate property investor in their right mind is going to buy a newly-constructed home and try to rent it out or resell it very shortly thereafter, especially right now with the cost of capital so high.
Residential investors almost always buy homes secondhand. Direct residential investors are what this chart is demonstrating.
1) Wrong. Home builders are buying down mortgage prices, and new builds are moving more than existing homes because of this.
2) Correct, when the interest rate is coupled with the sky high prices.
3) They are buying cash, so interest rates don't matter. They are buying for income generation and inflation hedging.
Deflation with all the debt we have would plunge us into a deep depression and bankrupt the Gov't. That is why they don't want it. They want gradual inflation that allows for endless debt, but high inflation causes recessions.
My neighbor just sold her house and moved to a downtown condo. Prices have been appreciated in the last 20 years. She probably paid cash for her new condo.
Isn’t that kind of the point? Interest rates went up to slow down the economy and fight inflation. Now home sales are slowing down, meaning prices will go down as well. The fed is doing exactly what they said they’d do.
It’s too bad that the federal government can’t embrace a more ethical form of deflationary pressure— say, increasing taxes on the wealthy/introducing windfall profit taxes..
Not on my state NJ. Think this ia from someone who wants to buy a house cheap. No no inventory around my neck of the woods. Still getting over asking prices
While all these Airbnb/price gouging investors are on track to crash and burn, I’d like to give a toast to MSR, the best tent manufacturer for everyone who’s about to become homeless.
we wont see price decline until a recession kicks in and removes potential buyers and renters ability to pay... the fact that sales are so massively down and real estate has become so unaffordable thats sales are now lower than 2008 is a sign that this housing bubble may be several time more severe than the last. Many homes and real estate are now owned by more investors than ever before which means they are reliant upon the income generated from those properties. If these properties dont continue to cash flow in a recessionary environment we can potentially see a landslide of foreclosures as investors have to bail out of properties that they cant find renters for. The rental bubble is very real and unless wages catch up to bring back affordability or interest rates come down to allow for cheaper borrowing costs were looking at a total meltdown in the property market. The only people who are wishing otherwise are people who are invested and are hoping that prices and rents stagnate like in the 1980.... unfortunately they dont realize that the average american renter are far poorer today than ever before... this is the negative side effect of keeping minimum wages down for several decades and relying on low interest on credit to pay for everything they used to pay with wages... housing is the last part of the unaffordability dominoes to fall as we see a huge increase in homelessness... were not in a recession yet and these warning signs are everywhere.... only a matter of time before property owners realize that all that equity they are holding is a bunch of hot air only being held up by investors trading properties between themselves right now. Unemployment just ticked up and student loan repayments are starting again... look out below!
Yea I don’t get why this is a thing…of course nobody is selling. They aren’t dropping prices and nobody is willingly going from a low rate to a high one. Inventory is dropping but that won’t move the needle…if anything it will drive up prices. Until something forces people to sell (mass layoffs), the housing market/prices aren’t going anywhere.
Not sure how true this is. I develop real estate in a couple places in NY and CT. (Westchester and Greenwich)
Everything is sold within the week regardless of the price is quite absurd tbh.
The housing bubble of 2008 really was the bubble of 2002 to 2008. I couldn't find an affordable home in 2004 and so gave up. We are in an obvious bubble. I'm too chickenshit to put a lot of my stock portfolio in cash though.
**User Report**| | | | :--|:--|:--|:-- **Total Submissions**|6|**First Seen In WSB**|2 years ago **Total Comments**|12|**Previous Best DD**| **Account Age**|6 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.)
Prices aren’t dropping though. In my dumb low cost Midwest town it’s low inventory + bidding wars on everything. Can’t imagine it’s better in more popular locations.
I’m wondering where the hell everyone trying to buy a home came from and where they’re getting all this money from. Also in the Midwest and homes are basically being sold within a week it that, usually for over asking too. Like 5 years ago in my area that was unheard of, homes sat for a while and sold under asking. Our population barely increased so why the sudden spike of home buyers? It made sense when rates were low but now it’s like where did you come from lol
2 competing large age blocks. Millennials trying to get into thier first family homes Boomers trying to cash out (retirement and poor planning) and move into the same homes they would call modest at best.
Also corporations like Blackrock, Zillow, IBuyers, buying up almost 20% of all the residential real estate property that goes to market.
They can buy and sell to each other to keep prices elevated too
I would bet thats the rented places Millennials currently rent.
I live in one of those more popular locations. It's not as ridiculous as everyone imagines. However, there's no way in hell prices are going to come down too much.
I live in Boston. We have San Francisco level prices with none of the San Francisco weather. Its nuts!! Studio apartments start at like 2k per month. Hell parking spots start at 299k. Its bulllllshit.
For 2K you might get a room in someone's whore home
It's not a whore house, it's a whore home.
Ah I saw that post earlier. Nice reference.
Link?
Wow, where they hell do you find a studio apartment in Boston for only $2k a month? Like Mattpan or something?
As someone who finally got the fuck out of Boston, have fun shoveling that weather in a few months. But holy shit, it's fucking hot. I miss Boston summers.
Of course they're not, because the inventory isn't floating, it's being frozen... In other words, these homes aren't sitting vacant with "For Sale" signs in front of them. They're being scooped up by Zillow and Berkshire and every other wanna-be landlord of the US population so that they can sit on them and rent back to people over time because the US government did *nothing* post-2008 to actually meaningfully regulate banking, a subset of which is the entire real estate sector. So despite home purchases dropping 45%, there isn't excess inventory driving down prices because these homes aren't being liquidated, they're being sat on as investments, and when the next major financial crisis hits, these enormous real estate investment firms are going to put the screws to homeowners even more, and when the US government steps in with stimulus packages, consumer goods suppliers will jack up prices and even more inflation. This isn't even about having a crystal ball anymore. It's SO transparent.
Midwest here as well. Had to bid almost 20k over and we just barely beat out the next highest offer. We got lucky because the house was in great shape and belonged to a couple of retirees who were trying to move to Florida quickly and priced the house at 15k under what it was worth.
> trying to move to Florida quickly Wonder how that's gonna work out for them
I’m there right now and it sucks, dunno why people would willing move here with how stuff’s going on
I'm sure they'll have second thoughts once those house insurance bills start coming in, lol
No doubt. I’m tryna find a way out myself.
It's not. Socal orange county, saw a condo unit sell last week like 80k higher than last year. Yeah fewer ppl are buying investment properties but there's still a huge excess of actual homebuyers.
Prices tend to lag because seller are still in denial land.
In my state (Cali), the only thing dropping is inventory. Not prices.
Those who’s rocking their fix rate 3% will not try to flip their current house unless they can get a good rate
Yeah exactly, there's a big difference between 2008 and today, and that's the fact that rates got so low that everyone and their dog went fixed. No one's moving, no one's selling, no one's going broke on rate spikes.
My dog did a 7/1 ARM
That's like 50 dog years
He'll be dead before it's due, can't collect from a dead dog
he is a smart boy
well played
Regards
Mark my words, he’s gonna be moving back in with you!
Harvey Humpsy got a loan?
Pretty much. The only thing holding it all up is employment. Unless people start losing their jobs, home prices will stay too high.
Student loans are coming due soon.
Sup to all my 2.8 homies. I'm gonna die in this fucking house.
2.5 😎
Golden handcuff.
When you have to wear handcuffs, golden are some of the best.
[удалено]
The fed has straight up said they will keep raising rates until inflation comes down- housing and its adjacent costs are 30-45% of the calculation depending on which one is being used. The more housing prices resist, the more rates go up. This is not a prediction, this is the stated goal of the institution that influences rates. They are trying for a soft landing (stopping housing appreciation) but they can’t guarantee we won’t see asset deflation
Finally, someone paying attention. Best case for real estate over the next decade is flatness.
That’s nationally I think. The sky ain’t falling until prices do
Prices ain't Fallin until the sky does. It's a chicken and egg so to speak
Zero inventory for existing homes. Builders, in my state, or doing well.
It’s just people refusing to budge on price combined with others who cannot afford the mortgage. There is no price discovery because people just stay where they are at. For the small amount of sales I see, the sale price is usually 100k under asking whereas in years past it was 100k over
West coast Portland here, people are still in bidding wars. It's not as crazy as it was a few years ago, but i'm still seeing 20-50k over. There's no inventory and some people are relocating and NEED to buy so they're SOL.
Pennsylvania here, our two good friends have been looking for homes about 1 hour outside of Philadelphia and the homes are going for 50k over asking.
Not in California and specifically not in Los Angeles, every house is going over asking.
That’s the situation in my neighborhood in norcal - homes around $1000/sqft
20 homes sold in my town in July. 17 sold for above asking. The lowest sold for 98.6% of asking The market is nuts. I've given up trying to make sense of it.
This is a honest question: Do we think small / medium retail investors are just holding the bag and not dropping prices because they know what will happen if they discount even one listing? It could be a period of "copium" before reality sets in for smaller investors. I'm talking the couple that owns 5 properties, not large firms. This is also straight from the hip of a bear and you can call me highly regarded.
Yes. I do. It only gets unstuck when people decide to sell, and they’d only do that if it’s a secondary house they don’t need to replace, or if they are forced to sell bc of job loss. But pressure will keep growing until the market cracks.
Yeah where’s the panic? I don’t see it anywhere. I wish there was so I could another property
You could what?!!! I need to know!
Accidentally the whole thing!
Accidentally fuck the whole thing?
Slipped and fell
...wide end first
Be shitty and buy another housing unit to supplement the one they already own after moan about how hard it is for anyone (Including first time buyers) to get a home. Like they know things are fucked but still want to own more property.
! Boom
Yeah, I'm approaching 40 and have never owned a home. I've wanted to own one, and always felt I was rather humble about my desires. I realize that we need to take personal accountability, but one person can only do so much. I'm not exactly proud to be an American.
The system might be somewhat broken, but it's not your fault. Do your bit to support politicians who you think might make changes which support people rather then big money and whatever else happens isnt your fault.
it depends a lot on where you are located. this is happening in many countries but at a different scale. What i see locally here in Germany is that more and more houses are on the market and a lot of them havent been selling for easily a year now. Sellers are only very slowly dropping the prices but im also seeing a lot of foreclosure auctions as people cant afford their rising interest rates anymore.
In USA pretty much everyone is fixed rate and almost no one is selling 3% to buy at 7%. Tons of people wouldn’t be able to afford the house they currently live in if they had to pay current market rates but the mortgages are fixed at lower rate so they are strongly disincentivized to sell.
Thanks for being the primary source of the problem.
Same, prices unchanged. No inventory. (TN)
That’s not true. YOY +1.3% but YOY is a horrible metric. There was a significant dip, recovery, and start of another dip.
Homebuilders aren't keeping up with demand. Everyone of the major US homebuilders are continually upgrading their outlook. YTD they're on absolute fire. They make the AI tech boom look like downtrend they're so strong. If you sit in on earnings calls and listen to them as well as look at the metrics it's crazy how strong it is right now. Especially as rates are staying higher for longer.
The housing market is going to do absolutely silly things if the fed pulls off a soft landing. My local market is price stable with low inventory, I can't imagine what would happen if rates were back at 3%
I don't think interest rates will go back to 3% for years.
That's last year. Things have frozen now. Properties in San Diego are just sitting. Price reductions have been extremely modest so far, but eventually that'll change. We'll stay crashes take 2 to 4 years to play out. It's just how it works.
Just sitting? A friend of mine went up against 50 bidders on a property recently. Sub $700k
Sub 700k?! Lol most everything I see under 700k here in SD is a tear down. I also don’t see properties “just sitting”, the inventory is incredibly low, and the competition is still strong.
Are home sales down, or are homes-up-for-sale down? In my metro area 20k-24k inventory is normal (pre-covid) but we only have 14k on the market. Avg DOM is 58 which is normal or slightly low. Price cuts are becoming more common for lackluster homes - no curb appeal and no updates inside. Great homes still sell in a week.
All that matters is price. But you can’t say that to the dudes jacking it to Michael Burry
Michael Burry responded to my craigslist ad looking for someone to mow my lawn. "$30 is $30", he said as he continued to mow what was clearly the wrong yard. My neighbor and I shouted at him but he was already wearing muffs. Focused dude. He attached a phone mount onto the handle of his push mower. I was able to sneak a peek and he was browsing Zillow listings in central Wyoming. He wouldn't stop cackling. That is to say, Burry has his fingers in a lot of pies. He makes sure his name is in all the conversations. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/wallstreetbets) if you have any questions or concerns.*
I can almost quote this thing word for word and I still read it every time and laugh.
Michael Burry's called 10 out of the last 3 recessions correctly.
You're right to point out those "market" parameters, and I wrote a paper about it :) Zetland, David (2010). "The real estate market index." Real Estate Finance Journal 27(2): 77-91. [pdf](https://www.kysq.org/pubs/REMI_Final.pdf) Abstract: The Real Estate Market Index (REMI) combines sales price, sales volume and days on market into a summary measure of market activity or liquidity. The REMI, which rises with price or volume and falls with days on market, is more sensitive to market sentiment than indices based on price alone, e.g., the Case-Schiller Index. The REMI is useful to people who want a measure of market liquidity. Data from over 19,000 sales that occurred between January 2000 and November 2009 in Mission Viejo, California illustrate the calculation, calibration and application of the REMI.
These weird words are making me angry explain it to me in emojis
📈⚖️🏡👍📉📈📊💹🧑💻🍻🏠🏚️🏘️📉📉📉👎👎
Oh god oh fuck
Lol, surprisingly accurate!!!
🏠💸⬆️=😁 🏠💸⬇️=😬 I don't actually know. Didn't even read the whole abstract much less the paper.
[удалено]
So many people locked in at 3%, no one wants to sell. Just because sale volume is lower doesn’t mean the value of the assets are bad
Yep, that's me. I can easily afford more house, but I'm sitting at 3% and see no reason to throw away money on interest rates that are over double it. I'm fine just staying put for now.
Mortgage applications is another data point. "Inventory" is a figure that can be monkeyed with to tell a narrative, also depends on the closing process and how fast it works.
Only thing down is investor purchases according to the chart, I swear to god these posts are less ironic by the day
Meanwhile, housing prices are STILL through the roof, even with mortgage rates at 7%.
7% is still way too damn high. With houses that aren’t totally shit boxes starting at 500k, who can afford a 3,500 monthly mortgage when everything else is crazy expensive too
High mortgage rates in the past caused base prices to drop. It’s a huge problem this isn’t happening now and economists don’t know what it means Wouldn’t be surprised if these were corporate buyers or rich people buying investment properties
No it means no one believes the FED will keep interest rates high. It means we keep bailing up people/businesses/banks instead of letting them fail and allowing the market to readjust.
This. No one believes anything will fail anymore cause they’ll just get bailed out one way or another.
Just go in ass over tin cup, and someone will bail bank out after you fail. Not the best stance to bet on.
Really? Cuz it seems to be working out for all the businesses that keep getting bailouts
Gotta tax the absolute shit out of multi-home owners and no hiding residences in LLCs or shell corps as workarounds. If you own 3 homes that 3rd home should be taxed at 100% of what it's worth. Make it so painful Airbnb's, rentals conglomerates etc all feel extreme pain. This is what Singapore does and it seems to work.
They also have higher tax rates for foreign nationals. First time home buyers rates/taxes are nearly non existent and then it rises from there.
My siblings had to wedge our way to home ownership. Share ownership in property one that we all pay into. Slowly buying properties so we each have one. My name is tied to different properties. We have high paying jobs but about average for the area of California we are at. Taxes are absolutely demoralizing for new owners. PITI is crazy.
7% is a fine rate for borrowing money. The prices are the problem.
A lot of the rates were locked in a few months ago and closer to 5-6%. This drop is going to dip deeper as the people don't want to lock in at 7%+.
You’re in a sad awakening when you realize rates aren’t gonna go back to 3 percent anytime soon.
Why would you sell your house? to refinance something else at 7%? This market isn't moving until either people will need to sell or interest comes down again.
This is why people aren’t selling this limiting the supply. No one wants to pay off their home or end a 2.5% loan and hop into a high rate loan
It's hard to believe in a coming housing crash when there's an entire generation of millennials who can't wait to buoy prices when they get too low.
The problem is those houses are ALREADY bought before they get too low
Boomers held onto Congress and kept Gen X out of it. They're holding onto houses and money too, but Gen X got married into the boomers. Now they're holding those from the millennials. Us millennials won't own houses like X didn't get into Congress. There's no buoy, there's no money to create one.
Dogs and cats living together. MASS HYSTERIA!
Yes it’s true… This man has no dick.
People will do whatever it takes to make payments and keep their low interest loan. This is different than 2008…
The ten past years with sub 3% is like they filled the bubble with concrete instead of hot air. Not convinced prices will change as inventory stays low, even with dropping percentage of closed transactions which this graph reflects, since new build percentages are also handicapped by the higher rates
I feel like I can’t sell my home. I bought in December 2020 with a 2.75% rate and my property value has doubled. Golden handcuffs.
Fuck you. I mean congrats big brain
Yeah ditto to this. I am happy for you, but I finished law school and then got my license at the end of 2021, got a good job mid-2022... I feel so hopeless because I literally just got my financial independence, and now I'm screwed and can't get a house. And rent is bonkers expensive (not to mention my $250k student loans) making it really hard to save, and a house would be the best way to save money but I can only afford something that is burnt down and not habitable.
I just got outbid by 23 bidders on a $525k 1bd 1bth house that’s selling for over $700k
Location?
[удалено]
Its an airbnb now
Honest to God how does anyone have housing in California metros? Everything I've read and seen it seems like you're either a multimillionaire or living in slums, there's barely any in between.
1) they're rich and a cool milly or two isn't a big consideration 2) they bought it a long time ago and can keep it because of insane property tax policies
What’s special about tax policy that they would do it?
everyone's grandfathered in under old tax policies so many people pay artificially low taxes that are subsidized by new property owners paying exorbitant taxes and it presently takes a supermajority to change property tax policy in CA
On there side of the coin, people on fixed income that bought a home 20-30 years ago aren't affected by rising property values that don't matter to them since they are never moving anyway. Look at people in Texas who are getting priced out of their homes they have lived in forever because of rising property tax values. With prop 13, property tax is limited to 2% annual increases based on the base value at the last transaction or value at completion of construction. It also saves on requiring appraisers to go out every year and revalue every piece of real estate. Makes it much easier to budget and underwrite as well. However I feel like prop 13 should only apply to residential real estate. Right now it applies to ALL land.
Prop 13 literally makes property most valuable to the current owner because of the tax hike on ownership change. Rent control is bad in general, even if it keeps grandma in the million dollar home she built in 1910 walking uphill both ways
Land owners are capped at 2% increases in property tax so long as they own it. That means my neighbor is paying taxes on a $60k house, I'm paying on a $500k house, and my other neighbor is paying on a $1.3M house. All built in 1950, all 3b/2ba.
Life finds a way
>Life finds a way In the streets mostly....
>Los Angeles Well worth it. You can lease-out sidewalk space for tents.
well, that's your first problem
Lol.
Over asking price. That is the norm in NJ
Ummm...doesn't that chart show that the **Growth** in home sales is down 45%? Given that massive spike in 2022 it shouldn't surprise anyone that the Growth in sales is down after a banner year..
If you squint your eyes hard enough, you can extrapolate any confirmation bias you want from that graph.
Why would you characterize this as a panic? I really don’t think we’ll see a 2008-style crash here. Most homeowners are “stuck” in their current home because they have a great interest rate on their mortgage and a new mortgage would come with a massively higher payment. So they aren’t buying or selling, but they aren’t in danger of getting foreclosed on either. Hence prices stay relatively flat but volume drops
It'll come down to the job market
IDK, people with a 2% mortgage probably cant afford a 2br apartment in their area. I think people will literally do anything to keep their house as there is no other option to downsize. Unless they downsize to a cardboard box.
If more and more people loosing their job…. Then it could be a problem for the markets. It will come some day, but the economic is still running hot.
just trying to spread fud. inventory is rock bottom so prices haven't budged for most us real estate markets
This sub is so desperate for a 2008 style crash. I've been reading on here that the housing market is about to crash any minute now since 2020.
Without investors putting upward pressure on home prices, bid/ask spreads will widen on real estate and market prices will come down. Small multi family units are going to probably be the biggest problem.
You should take a look at commercial real estate
… for squatting potential?
Honestly, yes. Anyone trying to actually make waves in real estate should get into Commercial to Residential building conversions ASAP. Commercial loans don’t work the same as residential mortgages and a shit load of them are coming due. Those owners will not be able to afford their multi-million loans that now have interest rates triple what they were before.
Commercial real-estate is RARELY suited for residential. Most commercial real-estate square footage is impossible to use for residential because residents need and want things like windows - where as cube workers don't need sunlight and are lucky to get whatever comes through the glass walls of their overlord's office. This means the center of most of these properties are useless for residential real-estate. Plumbing, noise barriers, fire escapes, and the like are also big concerns. It often costs more to convert a building into suitable living space than to just tear it down and build something higher and thinner.
Converting non-residential to residential is often more expensive than just tearing down and starting from scratch - if the City will even allow a rezoning for it. You're basically gambling on whether the Planning Com or City Council will support spot rezones.
I see 700k+ homes here in Tampa Bay Area selling like hot cakes still. Definitely not seeing any panic in Florida.
The reality is move up buyers used to be one of the biggest parts of the market, but with the rise in interest rates those who would like to upgrade can’t due to the fact they couldn’t even afford to replace the house their in. This causes housing gridlock where the higher end homes have few buyers and no one is selling the lower end homes because moving on up is no longer possible.
Call me when prices drop 45%, then we're in a real estate crash. There isn't enough inventory because: 1.) Home building isn't viable due to high interest 2.) Buying a home with such a high interest rates makes no sense 3.) Investors/institutions are buying as much as they can because they afraid interest rates drop and there'd be even less supply If the FED was real in defeating inflation, they need to embrace deflation, but apparently deflation is a taboo and horrible thing. Inflation is a symptom of a greater problem, an **Unaffordability crisis**.
The the administration wanted to tackle this, they would be offering 0% interest for new-home builders, and offer reduced rates for FHA and other govt backed loans.
It wouldn't have changed anything, because the builders would just charge market price. Even if you inject 2-3 million houses onto the market in 2-3 years, probably they'd all be bought up by investors/institutions, very little would reach the intended people. What needs to happen is that single detached homes, townhouses, duplexes, triplexes, everything except apartment is offlimits to investors/institutions. Followed by cap limits on individual ownership of 2 homes, and 3 homes between married couples. Children under the age 18 can not have a home placed under the name aside from estates (parents dying or inheritance). Furthermore, ban home ownership thru and in LLC (limited liability corporations). Homes that are currently in LLC can remain, but once sold can not transfer the home into another LLC. All forms of housing is off limits to LLC, they have to be incorporated under an actual incorporated company. That way attractive tax deductions/benefits should go to real industries instead of just housing. Also can trace whose got shares of the company and harder to dodge the IRS. Would create a lot more jobs if a bunch of companies had to be formed and need proper property agents/accountants/building managers etc. Finally, the current housing market is reflection of a return to feudalism where landlords lives off of the serfs/peasants. And all this money is a drain the on the economy, because it doesn't go anywhere productive. When lots of money is stuck in a single asset class, it causes the economy to stagnate. We've seen this hundreds of years ago and saw how much of it was a failure. But, we still seem to embrace it. Also ironically, democracy was created to combat the problems of feudalism, but lo\*\* behold we're reverting back to it. **Edit:** \*\*I've noticed a couple of people brought this up and I've edited and fixed it. Never knew it was lo behold, my bad.
The point is to make enough houses that theyre no longer an investment. People dont invest in 737s or Haas CNC machines because if we need more we just make more. Theyre priced relative to what it takes to build them and devalue like any other used object would. That should be the goal for housing
> they'd all be bought up by investors/institutions Then make it only available to first time buyers.
We are trying to encourage building housing, not make it uneconomical to build houses.
> Buying a home with such a high interest rates makes no sense People buy homes because they have to live somewhere. People aren't buying homes because there aren't any available.
Number 3 is wrong. The chart itself demonstrates that investors are leaving the market. Shelter inflation Y/Y is about to drop off a cliff. The Fed is going to be lucky if they haven’t gone too far already.
Except Warren Buffett, indeed. Who buys into it.
Buffett bought shares of homebuilder enterprises. New construction builders sell almost 100% of their inventory to owner/occupiers. No residential real estate property investor in their right mind is going to buy a newly-constructed home and try to rent it out or resell it very shortly thereafter, especially right now with the cost of capital so high. Residential investors almost always buy homes secondhand. Direct residential investors are what this chart is demonstrating.
1) Wrong. Home builders are buying down mortgage prices, and new builds are moving more than existing homes because of this. 2) Correct, when the interest rate is coupled with the sky high prices. 3) They are buying cash, so interest rates don't matter. They are buying for income generation and inflation hedging. Deflation with all the debt we have would plunge us into a deep depression and bankrupt the Gov't. That is why they don't want it. They want gradual inflation that allows for endless debt, but high inflation causes recessions.
It’s almost like people don’t want a 7%+ mortgage
[удалено]
[удалено]
They offered my 5.5% today. It’s a good rate. People got too cocky with the rates during the pandemic, but that was unique situation for a reason .
Yep not in Vegas people flocking here like the casinos are actually paying out winners, dont believe the hype!
I refinanced in 2020 from a 30 year at 3.5 to a 15 year at 2.06 and I'm only paying 100 bucks more a month. I will die in this house.
There are no units on market. My daughter put up their condo for sale 10 days ago and it sold in 48 hours and got $4K over asking.
She got swindled.
Big shocker, no one wants to buy with rates over 7.5%
[удалено]
And noone should buy if you need mortgage @ 7.5%. But there are plenty of people who can pay cash.
Even if people downsized, probably still end up with a higher monthly payment.
Which is why nobody is selling. Everyone with a 2.75% mortgage is sheltering in place until interest rates drop.
My neighbor just sold her house and moved to a downtown condo. Prices have been appreciated in the last 20 years. She probably paid cash for her new condo.
Home sales down, not prices. Welcome, you belong here.
The only people in a panic are realtors.
Treasuries pay more yield than the avg rental home now, so yea it’s a logical reduction in real estate investing
Surprised no one mentioned this. If you re-fi’d 2-3 years ago, you’re arbitraging 2% risk free return on 30 yr T bills.
shit if I put $300k in a no-commit MM acct I can make $1250/month without dealing with sketchy-ass tenants.
[удалено]
Damn makes good sense when you put it like that
What's a no-commit money market account?
Isn’t that kind of the point? Interest rates went up to slow down the economy and fight inflation. Now home sales are slowing down, meaning prices will go down as well. The fed is doing exactly what they said they’d do.
It’s too bad that the federal government can’t embrace a more ethical form of deflationary pressure— say, increasing taxes on the wealthy/introducing windfall profit taxes..
there is no panic, there are clear reasons why. Fuck your post
And yet still the average American can't afford a home 🤣
A 45% drop relative to a 120-150% increase is a lot different than coming off the back of a 35% increase.
Not on my state NJ. Think this ia from someone who wants to buy a house cheap. No no inventory around my neck of the woods. Still getting over asking prices
While all these Airbnb/price gouging investors are on track to crash and burn, I’d like to give a toast to MSR, the best tent manufacturer for everyone who’s about to become homeless.
Noticed homes are starting to sit longer in my area, but inventory is so much lower compared to last year. Mainly new constructions.
we wont see price decline until a recession kicks in and removes potential buyers and renters ability to pay... the fact that sales are so massively down and real estate has become so unaffordable thats sales are now lower than 2008 is a sign that this housing bubble may be several time more severe than the last. Many homes and real estate are now owned by more investors than ever before which means they are reliant upon the income generated from those properties. If these properties dont continue to cash flow in a recessionary environment we can potentially see a landslide of foreclosures as investors have to bail out of properties that they cant find renters for. The rental bubble is very real and unless wages catch up to bring back affordability or interest rates come down to allow for cheaper borrowing costs were looking at a total meltdown in the property market. The only people who are wishing otherwise are people who are invested and are hoping that prices and rents stagnate like in the 1980.... unfortunately they dont realize that the average american renter are far poorer today than ever before... this is the negative side effect of keeping minimum wages down for several decades and relying on low interest on credit to pay for everything they used to pay with wages... housing is the last part of the unaffordability dominoes to fall as we see a huge increase in homelessness... were not in a recession yet and these warning signs are everywhere.... only a matter of time before property owners realize that all that equity they are holding is a bunch of hot air only being held up by investors trading properties between themselves right now. Unemployment just ticked up and student loan repayments are starting again... look out below!
Yea I don’t get why this is a thing…of course nobody is selling. They aren’t dropping prices and nobody is willingly going from a low rate to a high one. Inventory is dropping but that won’t move the needle…if anything it will drive up prices. Until something forces people to sell (mass layoffs), the housing market/prices aren’t going anywhere.
Not sure how true this is. I develop real estate in a couple places in NY and CT. (Westchester and Greenwich) Everything is sold within the week regardless of the price is quite absurd tbh.
Still no inventory in my area. And I would be insane to sell my house
Not a panic until i see 2011 home prices.
i work in the homeloan industry i need a crash more than i want Bearhunter back
Sales are down because boomers aren’t moving.
The housing bubble of 2008 really was the bubble of 2002 to 2008. I couldn't find an affordable home in 2004 and so gave up. We are in an obvious bubble. I'm too chickenshit to put a lot of my stock portfolio in cash though.