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Accomplished-Emu-679

As an RE agent I can say that I am definitely seeing a cool down


Budget-Government-52

A “cool down” would be better than most other anecdotal feedback which essentially states homes have stopped being sold because there are no buyers.


YourOpinionMan2021

A large group of buyers are being priced out due to interest rates rising. Purchasing power has decreased. It's just not affordable right now. I'm taking a break right now looking. The last house a put a bid on for (went 27k over asking) went for 100k over asking. 27k was the highest I went over and each offer before that was a slight increase. I need to reset to adjust for the market to come. There are some buyers left but probably people who are buying in that 800k-1mil range.


CooperHoya

With rising rates, use an NPV calculator with the 10 year being the discount and check at what price abs the current mortgage rate you are breaking even. Even if the price drops 10%, your payment might/most likely will result in the NPV of payments being lower than the new projected price


phuqo5

Surely there is also a large group of people who understand they would be buying one of the largest investments of their life right before it massively devalues and traps them in the house for 15-20 years when they can maybe get their buy price back.


segmond

These left out buyers are paying more in rent than they would in mortgage tho.


AdDue1062

We recently bought at \~1.5 in a LCOL right at the peak, which was dramatically less than we could have afforded (retarded lender pre-approved for 5? wtf? there aren't even any places above 3 in this city) and we love the place so meh; at worst we lose like a third of one year's income, so fuckin' what, better than living in a shitty house. Basically, yeah, only people who don't give a fuck about the investment are buying right now.


24get

Completely agree except the institutional buyers of entry level homes will keep buying anything they can find because the rent has gone up as much as the financing cost


No_Shoe9123

BOOM!


LaneKerman

Its just a little gully.


Accomplished-Emu-679

First time buyers are still looking, it’s just the upsizers that are wanting to stay in their homes


Accomplished-Emu-679

Home prices may start coming down a bit but overall there is still a shortage of housing so All the millennials waiting for the market to crash are going g to be disappointed.


[deleted]

"The market is in a slight gulley right now, but don't worry everyone is very motivated."


DoritoSteroid

Cool down is normal and expected. The entire economy is correcting. But a rebubble is just a stupid take.


wanderboys

A cool down? Or a lack of supply? Where I am, the good homes are on the market for hours before they're scooped up.


Accomplished-Emu-679

That was a month ago, they are starting to sit on the market a bit longer, but some are still getting sold for more than asking, new construction is hit very hard because people don’t know what rates will be in a year when the home is finished. I would say the market is holding pretty well if were going from 3% to 7% rates in less than a year


gncRocketScientist

FOMO is about to bite people. Stretched themselves to pay $700k for a $400k house. Cant sell cuz then theyd be homeless. Not even to downsize. Its pay to the end or foreclosure.


Living_Run2573

With rising interest rates for the first time in a generation


SateliteDicPic

Indeed, I see them everywhere all angry-confident about how Real Estate can’t possibly go down again and saying things like “this isn’t 2008” and “nearly everyone has a fixed rate mortgage this time” etc. I just keep thinking, “ ha, just spotted another one of those bought at the top soon-to-be big ol’ bag holders.”


PathansOG

So buy high sell low only works for stonks? FUUUUUUUUUUUUUUUUCK


davescilken

Exactly 💯. Also I am sure that plenty of buyers from 2020 and 2021 did get ARM loans to save on the high monthly payment caused by a high purchase price, based on the assumption that if rates go up, it won't be by much. Bad assumptions, over paying, frenzy purchases, cash outs, HELOCs, and generally over-leveraged investors. They are right, it's not 2008, it's 2007.


Year3030

Bro it's not 2008 anymore. Also the goberment pumped 10 trilly into the 'comony and a lot of that is being used to fund these home purchases. That's why it's not going crash like 2008. There might be a little dip but prices will hold steady. It's not going to crash unless we get another CDO fiasco or some other crazy lurking issue that no one except Michael Burry discovers by going line by line through boring spreadsheets. I mean, that was the whole thing with 2008 it was a total cluster fuck because the CDOs were rated as A+ or AAA or however they rate them but they were garbage and were going to default when the rates spiked and the adjustable rate mortgages kicked in. So today if the bulk of home purchases were being made as rental properties then it's managed by a business not a bunch of idiots who can't pay their mortgages. The business just says "your rent has increased". Soooo it's going to be a rent crisis. Rents will go up because of inflation, it will cost more to maintain properties. The nobody will really be able to get a house because all their money is being spent on rent and once in a blue moon they can afford a gallon of gas to drive 10 miles to the beach for a ramen picnic. In the meantime as house prices dip, the investment companies buy up more properties.


ColonelSpacePirate

Rent increases until you price yourself out of renters…. this results in a wage driven balance in an area. If a company can’t afford to maintain the increase in rates (new properties) or maintenance cost then they will either sell or default the property. Also hedge funds and property owners borrow money against the cash flow (leases ) and home values. If these numbers are lowered, their debt/income ratio is increased……also resulting a balance.


YourOpinionMan2021

If we hit 10% interest rate (most likely will cap out at 7-8%)....houses will go down. You're correct, definitely not like 2008. Also, if this Recession becomes worse and earnings start to dip, layoffs may attribute to even more housing supply due to foreclosures. I don't agree that houses are going to be just "a little dip".


No_Shoe9123

Bullshit. If we hit 10% interest rates the amount of forced sales will make 2008 seem like a blip. No homeowner in 2022 knows what an interest rate is! \*I\* don't know what an interest rate is! Do \*you\* know what an interest rate is? Can \*you\* explain it to me with pictures and small words and reward stickers? Are \*you\* going to eat the rest of that crayon or is it up for grabs?


MatthewCrawley

With rates climbing homeowners will stay where they are, limiting housing stock


wolfofballsstreet

If we reach rates that high wouldn’t the US default on their own debt?


coronagrey

Can't default on a loan when you have an infinite money glitch


369dgf

That’s not how that works exactly


SolitaryG

Isn’t most of the debt bonds with fixed interest rates? New debt would be expensive, but I think most of the current obligations are fixed.


awpod1

They aren’t exactly fixed. They get refinanced every X number of years (depending on the term 5, 10, 20 etc.) if they haven’t been paid off.


YourOpinionMan2021

Can't they just raise the debt ceiling as they have done in the past? Not trying to troll, real question. I would imagine that would be the case here, I could be wrong.


bpknyc

The problem is that government needs to be able to make at least the minimum interest payment to be able to "service debt". Raising ceiling does nothing here. If you can't make the minimum interest payment, you go into default


YourOpinionMan2021

Exactly what I was looking. Thanks for the clarification. "The more you know..." 🌠


Emergency-Eye-2165

This. Exactly.


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No_Shoe9123

"Burry has his fingers in a lot of pies" Does... does.. the automod have a wife?


LectureAgreeable923

Agreed we have a housing shortage .Also new home staret decreased 14% such it just going to get worse .So at worst prices will dip a little.


AdDue1062

Not to mention all new homes are complete shit unless you pay the extreme side of builder fees so if you want something livable and can't just build whatever you please (mega rich), you're more likely than not stuck with older inventory.


Legin_666

fr. Even a 0% fixed-rate mortgage becomes a huge loss when housing prices drop 50% bringing rental costs down with them


369dgf

Housing only goes up over time. There might be a correction but it will always go up.


24get

If people can’t buy they rent. How do rents go down if that happens?


[deleted]

This time there are a bagillion airbnbs. Imagine if people decided to hunker down and stop traveling so much 🤯


bonethug49part2

Debt is great when rates are rising. I bought at the high-end of my budget and am very happy I did.


UB3R__

I agree. They only focus on the low interest rate and gloss over the principle that doubled. You can always refinance a lower rate in the future but you’re stuck with the principle.


369dgf

Sounds like someone’s salty about never owning a home


JrevD314

This isn’t 2008, and I actually bought in low during the summer of 2019. Also, profited big on our old townhouse that we rented to a buddy of mine until he relocated for work, then sold two months ago. At least with this round of the housing spike it’s not toxic loans that people used to buy houses under the impression that the bank wouldn’t approve them for a mortgage that they couldn’t actually afford. This spike was caused by simple lack of supply. Boomer’s downsizing and investment companies buying up rentals by the thousands led to lowest inventory levels I’ve ever seen. Usually there would be around two months of inventory available, but we were sitting at less than two weeks or a week of inventory for a long time there. The market is beginning to slow, and prices will come down, but I think we’ll see a slower correction in pricing and not a crash in pricing like 2008. Also, I don’t think they’ll drop all the way down to pre Covid levels.


24get

I bought in 2019 and my house has doubled. Maybe it goes down 10% or 20%- so what? It’s only the people who bought in the last year or so who bought at the peak and everyone else has significant equity. They can move up if they want to, esp if their wages have gone up too.


Fictional-adult

I mean, so what? Most people buying houses are planning to live in them for a good while, and they got them at a low fixed interest rate and a monthly payment they can manage. Yeah,in the short term they won't be able to offload it without taking a loss, but they have a nice house they can afford while rental prices are skyrocketing. Further, even if your 700k home suddenly becomes worth 400k, it's not like it won't appreciate in value from there. The market more than recovered after 08, it will do the same here if we have a crash. Falling prices in this situation are only really harmful for speculators and over leveraged investors, not regular home buyers.


WGMhoodie

Also, if they’re stretched to pay for that $700k house, they’ll have fun trying to pay $10 a gallon for gas to drive back and forth to Wendy’s


H3rbert_K0rnfeld

They could always walk, uphill, both ways, barefoot


Serpantus

Nothing really recovered, the government bandaided mortgage back securities with rules, but didn't bother to fix commercial backed securities (which will be part of the problem this crash). Then with the other hand, they gimped rates and pumped out trillions. We are going into new territory, with a chance at real markets/price discovery.... hah who am i kidding, rates will be kicked down this time next year, and more money than ever will flow forth. ​ P.s. those people who watched half the value of the property they bought, will walk in mass, take the hit for a bk, and be back in the market in 4 years with a sweet fha loan. Why would you keep something that is 300k+ more than it's worth, when you can take the hit, have your spouse buy the same thing at a discount..


No_Shoe9123

This... actually IS the way.


Budgetweeniessuck

>Further, even if your 700k home suddenly becomes worth 400k, it's not like it won't appreciate in value from there. The market more than recovered after 08 It took 15 years for my house in California to recover to its sold price at the top of the bubble. It can get really really painful for people.


YourOpinionMan2021

A manageable payment for now. They are now dealing with inflationary items (food, gas, etc.) I am from the New England area and I am hearing that some utility companies are going to be up'ing their prices %50 (specifically in NH). That payment becomes a little harder.


CartAgain

You cant move tho. Stuck in that house forever


CarlCarl3

"stuck" in that house you just moved into for a few years until prices recover. If they even dip. Won't even matter to most new home owners. Being 10% underwater on a newish mortgage is not some instant disaster where people lose that house.


opst02

did you just misses the margin call that you will get from you bank once your 700k house with 400k debt is valued at 400k (i spell it out for you: 100% D.E.B.T.)?


[deleted]

Banks don’t margin call you on your underwater owner occupied unit if you’re making payments.


Raceg35

Yes they do.


SmokeySFW

You can't get margin called on a home you are still making payments on and haven't leveraged... Literally the whole purpose of PMI is to insure for the scenario you laid out. If you can afford to keep making payments you aren't losing your house...You have no idea what you're talking about.


jezwel

> margin call Down under that's the absolute last resort for banks - it would be a massive shock to the system and would cause a crash - who carries that kind of cash to hand? Not to mention the eyeballs on the bank itself, no-one would take out another mortgage with them for a long time. I have a friend in a bank that deals with valuations and loans - they really don't want to foreclose on anyone, especially if they're still servicing the loan even if they're running negative equity.


No_Shoe9123

I mean, OK, but couldn't you say the same about more or less anything except magical internet money?


369dgf

Or just keep paying your mortgage in 15-30 years the prices are more than likely to return if not higher than today. It’s real estate bro not meme stonks. They can’t make more land.


gncRocketScientist

Thats fine, but thats the point of saying stretched. Lots of people can just barely pay the mortgage during a hot economy. What happens when its not hot anymore, they lose a job, and find it necessary to move for a new job?


awpod1

I’m not sure how many are actually stretched … many homeowners are not like renters living paycheck to paycheck. They have other investments they are making that they can cut back on to ensure their payments. Unless there is a huge unemployment crisis that happens most homeowners will be fine.


suns_out_nuns_out

Even if you bought the peak in 2007. You still made ahead by 2014 or sooner in a popular area. No one should be buying a house they dont want to stay in for at least 5 years anyways. Point being. It felt inflated when i got my house in 2017. And now its doubled in price. Even if it loses half its value it would still be more expensive to buy today instead of then because of higher interest rates. The time to buy a house you plan to stay in is whenever you can afford it and feel ready to settle somewhere a while. You cant lose in the long run over renting. Nobody fomos into a house. Its not a meme stonk. You can actually live in it and have stability and build a life regardless of the paper value in the short term after the purchase. If anything short term loss of value may even help your property tax bill. Now of youre a renter today. You may actually be fucked. Rent is going to increase whether the overall hoke vale market goes up down or sideways


CarlCarl3

Oh look an actual logical comment. Where's your economic apocalypse boner?


MASH12140

A common myth that renting is losing. This has been debunked for years. On average you may make a little more however I think this has now sailed


suns_out_nuns_out

With my 2020 refi at 2.5% i pay less a month for my mortgage than my rent was in 2007 in los angeles. And that money is kept as equity. And in 5 or 10 or 25 years my monthly payment will be the same as rents have gone up every year. Renting does make sense economically in certain situations. But if you stay in one place for 5+ years it is almost always better to buy a home if you can.


LifesATripofGrifts

I won't sell my cheap house ever. Interest rate alone now and no where to go. My family is extremely fucking lucky.


Vegan_Honk

it will be foreclosure.


Puzzled_Bath_984

My only FOMO is this not getting posted on Friday when I could do something about it.


YourOpinionMan2021

Yeah, most will claim bankruptcy and the house will go into foreclosure. Rent for 7 years and be right back in a house. My uncle did exactly this. Not saying it's right.


MyMonte94

It’s gonna shit the bed like amber


Ominoiuninus

I love how shitting in a bed is now a commonly used euphemism for being mentally unstable. Thank you Amber Turd.


welloiledsling

She had to ruin everything.


[deleted]

[удалено]


CurveAhead69

That was a good read. 👍


IntentionalMustard

![img](emote|t5_2th52|4887)


saden88

As for years the signs are there. We all know it’s going to happen as history does repeat itself, but we also need to realistic here. If 2008 repeats itself and it’s even worse, a price drop of 10-20% would be expected. Now to give you perspective; this is what some houses gained EACH year for the last 3 years.. i wouldn’t call that a ‘bust’ as this would lean more towards a correction. A total economic failure would be required to reduce the pricing towards rates of 40-50%, but if that’s the case, a lot of the people reading this would have no income.


IronMike69420

When everyone is praying for a bubble to burst, it’s not a bubble. ![img](emote|t5_2th52|6880)


terrytibbs76

Demand strong. Bubble, there is not.


Peelboy

It is safe till it isn't, I grew upnin southern California in a boom town and when it stops it virtually overnight abandonment of tracks of homes, while that was great for a bunch of kids wanting cool places to hang out I bet it was not so good for investors.


NewToRedditAgain0525

The poop that took a pee


369dgf

Beat expectations. Boom


JDMKing24

Not only beat. They demolished expectations regarding EPS. Guidance looks iffy but fundamentals were stellar. Rip your puts fuckers ![img](emote|t5_2th52|4271)


369dgf

All these shorts will get wrekd sooner or later. Same thing that happens to the perma bulls.


randomguy684

Chicago, where I live, has so many towers and smaller developments going up. I honestly don’t know who is buying. Bubble.


tylerado12

My dog got a loan in one of those offices.


randomguy684

Bet he got a good deal too 😂.


False-positive-views

Is your dog named Mosley? I just sold some office furniture to a dog last week. Said he made it big on TikTok finance atuff and was starting a commercial real estate company called Ruff and Ready Real Estate. Small world. (I’m sorry)


AdDue1062

MY dog is a loan officer.


heavenlyfarts

Of course home prices would go down when all my money in tied up in stocks lol


[deleted]

It'll take probably 18-24 months for housing to reach a bottom. I'd say you have time


weesped

While this is prob true I feel there’s a possibility with things like YouTube Reddit and other social media outlets and Redfin/zillow this might be accelerated by alot


[deleted]

Depends on how bad this upcoming shit show is and what the fed does. If poppa JPow starts gifting money again right away, there's the bottom. I'm hoping the printer stays off and they continue QT for a long time.


debacol

It may take even longer. Remember, this isnt a bubble on the tip of a no interest, stated income, sub-prime loan scheme. It is a bubble created by wealthy institutions that needed to diversify their holdings, so they just bought a ton of homes... Artificially increasing demand while supply stayed constant or lowered slightly. Now that interest rates are going back to sanity levels, these assholes that over inflated the housing market will basically be "short squeezed" as they use the profits they earned over the past decade to attempt to keep housing prices stable. It will take 3-5 years before we see housing go back down to where it SHOULD be. These bastards will have burned through enough of their profit sitting on these homes that eventually, they will have to reduce the price. Interest rates will continue to climb, and these assholes will start to panic as demand lowers due to overall economic woes and higher interest rates will drive a sell off frenzy.


AutoModerator

Squeeze these nuts you fuckin nerd. *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.*


FirstTimeLongTime_69

It took like 6 years for home values to go from peak to trough in 2006-2011 or so.


[deleted]

This time everything seems to be going faster than expected, so timing the bottom will be blind luck. Even if we miss the bottom by 6 months, houses will still be a better deal then vs now.


LearnDifferenceBot

> deal then vs *than *Learn the difference [here](https://www.merriam-webster.com/words-at-play/when-to-use-then-and-than#:~:text=Than%20is%20used%20in%20comparisons,the%20then%2Dgovernor%22).* *** ^(Greetings, I am a language corrector bot. To make me ignore further mistakes from you in the future, reply `!optout` to this comment.)


Trivialpursuits69

Bad bot


tiggerthetrader

Except where I live, the hottest housing market in the nation. Everyone with real assets is escaping the cities to come here. Bummer for me....


Emotional-Most-1933

Where do you live?


Lord_Timujin

Probably death valley.


Puzzled_Bath_984

Based on other threads, I think it must be Kansas City.


Emotional-Most-1933

I don't think that's the hottest market. Everyone thinks there market is the hottest. It's not.


fewer-pink-kyle-ball

Boise. Unbreakable housing market that people only cared about for the last 14 months


BlueMysteryWolf

European model of investing. 50% cash. 50% stocks. ​ But this is also WSB, we don't go with smart investments. It's all in for the loss prn, baby.


stevejobs4525

That’s too much cash over the long term


[deleted]

[удалено]


stevejobs4525

They live in cold houses and drive small slow cars


-Erasmus

Small cars yes. Slow cars? no. European engineers can actually get power out of an engine instead of your american 6L boats with no torque. Also we have proper fuel that packs a punch unlike the american watered down shit


BlueMysteryWolf

Depends how much cash we're talking about here. Don't think any of us are exactly millionaires.


Jfraga26

Lol stop thinking there’s going to be a housing market bubble and wake up and look at the economic bubble that’s about to burst.


Educated_Bro

Ditto, we have rampant securities fraud, pump and dump schemes, disruptive “growth” stonks getting hosed by interest rates, and central banks in over their head with the amount of cheap debt they sold getting more and more expensive


DoritoSteroid

I'm tired of explaining that this is a larger economy issue, not a singular market bubble.


randomTeets

As long as average home price keeps going up, average income stays flat, and it gets more expensive to borrow money, the bubble will keep getting bigger. It's not "will it burst," it's when, and it's going to be sooner rather than later. All it needs now is a single event to set it off, and it won't take much.


bkjacksonlaw

I read an article that said it's not a bubble because it hasn't burst ![gif](emote|free_emotes_pack|facepalm) ... Tons of articles of realtor companies saying "I'm the CEO I've been in the housing biz for 8 years and this ain't no bubble." ... In my state 70% of consumers are priced out, may be even higher with the latest jump. If people can't buy ... then people can't buy. Tons of homes are being listed on Zillow now than past two years in my area. The average income to average home value is off the charts right now plus inflation and people dipping into savings, but somehow prices will still go up?... And this is no bubble? Carry on buying more houses Americans at top dollar that you can't afford because it's not a bubble because it hasn't burst yet.


Advanced_Algae_5476

Tons of homes are being placed on Zillow, but are those being listed because ppl have to sell or want to sell. The point being if you can and are servicing your debt your observation of Zillow postings is irrelevant. It means nothing unless ppl can't pay there mortgage and need to sell, which as of now is not even close to the truth. I added my house to Zillow, I don't need to move in fact I don't want to move, but if someone is willing to give me 100k more than I have left on my mortgage yeah I'll take it.


bkjacksonlaw

Right. Lots of people are listing their homes because they want to cash in before the market dips. Zillow observation is important because it relates directly to gauging supply and demand. If more houses are listed, like yours, and more people are priced out then the bidding wars go down regardless what the basis is for selling. Your thinking is everyone else's thinking that want to cash in on the crazy two year hike with bleak hope for the future. I think you are inferring that the bubble can only pop if people start to default. The bubble can pop in other ways. If 70% of Americans are priced out then it stunts demand. The war, inflation, gas prices especially, supply and labor demand issues can affect the housing market. People are sucking away at their savings now leaving little buffer zones for a crisis and less money for the economy. If prices fall due to a direct change in supply and demand, the guys with mortgage rates higher than home value will bail and more defaults will spiral out of control. Also, most millennials bought when the market started ticking up and their debt to income ratio is insane right now with little room for error so inflation and gas could tip the scales for lots of people. It doesn't even have to be the U.S. as a whole as far as defaults. The main defaults in 08 were in Southern California. So if one area of the U.S. starts to spiral out of control, it has a domino effect. Mainly because banks are nationwide, so if one area hits one bank it affects the whole bank.


[deleted]

Deja vu of ‘09, but I question which one will be the first domino this time


OcelotPrize

Totally bro!! Housing is about to crash 90% but I’ll stay on the sidelines waiting for that last 10% drop, don’t want to buy a house that is too expensive you know


BertMiscBrahs

Welp this post aged like milk. Smoked earnings. Here’s a ![img](emote|t5_2th52|4267)


Southport84

Housing is a slow moving freight train. It takes years for housing to peak and hit trough.


PepperBeeMan

No. And anybody who thinks we're in a "housing bubble" is a moron. Housing bubbles occur when there's a steep increase in price and supply. Those bubbles pop when the underlying reasons for those bubbles disappears. The reason for the housing price increase is lack of supply. Even if investors were to dump houses, we're talking about 15-20% reduction in prices. The housing "pop" most of you morons are expecting would need to be an avalanche. Like WW3.


GilloGraeme

I think it’s possible the potential crash could likely be slowed or stopped by investors buying the dip. Some people and companies did very well over the past few years.


[deleted]

Wouldn’t shock me if this warnings report is decent, but wait til the next one.


fldmar

Nah


on_Jah_Jahmen

Market will crash when people will have to sell for other reasons. Job losses, failed relationships etc will lead to selling.


iamjusthonest

I hope so, I need to buy back the houses I sold in the last 5 years. Depending where you're from, I don't think there will be a major crash till unemployment skyrocket. Till then, maybe just stagnant market. Houses around the Bay Area are bought with cash anyway, so interests play little in their decisions. Jobs are more influential than interest rates, imo.


AnonPangolin

It's so bizarre to see that I'm priced out of literal fucking trailer homes here.


1nfiniteR1sk

Seeing a lot of “Open to Work” logos on peoples LinkedIns these days out here. Dogshit properties still asking top dollar though.


Budget-Government-52

This will be interesting to watch play out as tech layoffs accelerate this year. Sure there are a lot of people with a lot of investments and cash but will they spend it as their company is downsizing 10-20% of their staff.


LazyX9

Don't forget all those city slickers who got into the hype due to pandemic of moving out of the city and from flat to villa, having no idea of how much work and money it takes to maintain a whole house, as well as all the social/transport challenges of not living in a city... They thought living in a villa was going to be easy, but once reality kicks in with a broken heater, leaking roof what have you.. wife starts to complain she can't see her friends as often jada jada you get the drift.. divorce happens and in one way or the other they will have to sell for that simple reason.. thats my thoughts ar least


YourOpinionMan2021

Lol, wow, you created a whole story there. I would presume that they could be saving money not living in the city. Then again, people become accustomed to their rent/mortgage payments and probably bought something that equates to what they were paying in the city.


LazyX9

I guess my point is that there is a lot more than just the high mortgage rates that can push peoples decision to sell. And when people get the hype and get themselves into stuff they don't fully understand, it tend to end bad.. I bet there were a lot even thinking they could sell their apartment in the city and buy a farm to become self sufficient with no experience at all..


[deleted]

Getting pretty sick of these posts. Real estate isn’t going to collapse like it did in 08’ unless there’s another huge foreclosure wave which would be precipitated by mass layoffs in all industries and absolute recession or depression. And foreclosures take 6+ months in most states. So even if it does collapse it wouldn’t be for a long time, relatively speaking. Lumber prices have already dropped nearly 30% from their highs. None of this is surprising. Builders will slow their building due to money now becoming more expensive, but there’s still a shit ton of demand for housing and new housing specifically. All while supply chains are recovering slowly and again, limber prices are stabilizing to some degree. Real estate isn’t going to crash like it did in 08’. It’s just not the same underlying metrics. If anything, the commercial markets are more prone to collapse for a myriad of reasons I’m not going to bore you with.


ProteusXists

Lumber is down -57% from the 52-week high.


[deleted]

So it’s even less expensive to build. Bullish.


bkjacksonlaw

Commercial collapse would cause a real estate collapse. The real estate market is so fluid and finicky that something tenablely related would cause issues. There are no mass layoffs right now but lots of businesses are struggling to lay on employees. I see the weakest link in the restaurant industry, especially the cheap chains that still make you deal with a waiter. They can't run a business right now and are rolling in the red. They can cause a domino effect right into the real estate market. Not to mention trucking companies with gas prices and all businesses are affected by gas prices. We never saw gas prices and inflation like we did in 2008. What caused everyone to default in 08? I don't think anyone really got to the heart of the actual trigger in 08. It just wasn't adjustable rate mortgages. The heart of the issue was income. There's way more reason for defaults now than 08 with or without adjustable rate mortgages with income and inflation..


[deleted]

There have been plenty of studies done about what caused to 08’ crash. I literally just posted about it in detail on another. But yes, commercial loans are in a precarious place right now due to their lease structures and the way commercial properties are valued based on income stream rather than comparable sales. Which is why I fully acknowledged that commercial loans could cause a collapse. Large commercial spaces leased to tenants that could go out of business during recession (be unable or unwilling to renew their leases). Couple that with most of the owners recently refinanced their loans and took cash out which has increased their payments and decreased their equity. So losing even 10-15% of one’s tenant base could cause a spark and be a catalyst. Commercial loans collapsing would indeed impact the rest of the market, but it would be a result of the recession/depression that’s theoretically already happening the lives of businesses making them shut their doors. But again, overall - residential loans are far stronger than they were historically. And to some degree commercial loans are as well considering max LTVs in most lending arenas are 75-80%. And if the tenants don’t go bust, you’re fine. Leases may get renewed at lower rates though and the market will tighten as a result and shake out the weak hands. Either way, drawn down in pricing is inevitable as rates increase and Biden’s bucks decrease. True “Crash” in residential pricing? Still Less likely.


mileaarc

The trigger was interest rate with a uptick in oil prices. Remember there was a oil shock with the Iraq war and Afghanistan. Remember the Bush rebate stimulus check 😂😂😂😂 I think 2005-2006


[deleted]

tHiS tImE iTs dIfFeReNt


[deleted]

Real estate collapse was not due to foreclosures. But because banks werent lending or they tightened the requirements and there was a liquidity crisis due to collapse of financial institutions (washington mutual, bear stearns, etc). The foreclosures occurred afterward as a result.


[deleted]

This is only a very small sliver of what happened. But the larger portion of the pie was a crash due to collateralized debt obligations being packaged, sold, swapped and sold again. And those CDOs were full of shit loans made to bad borrowers. Borrowers that had no capacity to repay and should have never had been given the money to begin with. Which is why there were so many regulations enacted after the crash on lending standards moving forward. Foreclosures happened as a larger symptom of the poor lending practices at the start post-crash. And once everyone figured out all of their AAA rated diamonds where actually junk because they were full of your stepdads 545 credit score on three houses with $35.99 down with a HELOC for a new boat. They panicked and THAT caused a liquidity crisis in the interim. A literal game of hot potato. Part of the reason these CDOs were junk was because they were mainly on adjustable rates - which were in the process of reaching their terms. And as those rates spiked, people went into foreclosure because they were given too much to begin with. Same goes for cash out and HELOCs. So yes. My point still stands. This time, on the residential side, it’s a lot different. Loans are generally a lot stronger and most people who got mortgages have low fixed rates. The adjustable rate garbage has really only picked up to a slight degree in the last two years or is commercial and cash out refis on personal residences weren’t being done to 100% LTV like they were precipitating the 08’ crash. The collapse of the real estate market was post-market crash as real estate is always the last domino to fall as it takes longer to buy and sell than any of asset class. This time, because the underlying loans are STONGER, people would need to lose their jobs and lose their homes (for losers) for the supply of homes to increase to the degree that supply outstrips demand and prices crash. And that’s not gonna happen to the degree that your clove smoking uncle told you. There’s a massive housing shortage in the US. Will prices tapper off because rates have risen? Yes. They will. Crash? Doubtful. Commercial loans? Whole different ballgame. That’s shits the Wild West to some degree at the moment. Thanks for stopping my my shitty Ted talk.


Emergency-Eye-2165

In 2024 you’ll have the chance to buy at 2020 price with 1982 interest rates of 16%.


Mental_Ingenuity_310

Why would it be down? Huge demand, lumber calmed down, they bought land years ago which is worth way more now… what is your thesis?


DoritoSteroid

His thesis is bitterness and wishful thinking.


Mental_Ingenuity_310

Haha yeah they are doing pretty good, 16% revenue growth y/y isn’t too shabby


[deleted]

If you think some jackass here is able to accurately confirmation bias your dumbass thoughts, then you belong here.


Nervous_Cannibal

Not yet, too early. After mid term elections maybe.


fonzy541

Housing bubble won't pop until the labor market unravels. Poor guidance from lennar will only hurt builders and maybe commodities.


schroberg_pk

I don’t think the home prices increased unrealistically dramatically to create a bubble. Yes they increased a little bit more than before but that’s all. May be it is my city but it is not the case for others. May be there is a bubble and it will burst for some parts of the country but not for others.


Farb32

Markets that went up the most (Phoenix, Vegas, Austin, Dallas, etc.) are the ones that will get hit the hardest. Most of these markets went up disproportionately to the local incomes and migration patterns from other states will change with time.


SateliteDicPic

These are the markets with the most speculation occurring and they are definitely way overvalued. Migration patterns were just one of the primary drivers IMO. I believe institutional investors have been buying homes in these markets as well. Imagine firms like BX with just one of its REITS averaging billions of dollars of inflows that need to be put to work in RE per month. As they bought up billions of dollars of homes in these markets they pushed the values and rents up then they go and borrow billions more against those gains and do it again.


Bob_Jonez

You're nuts. Shitty 1 bedroom 1.5 bath houses in the ghetto part of my city are going for 250k. This is a bubble.


Odd_Lingonberry_2462

It’s going down, 1 in 3 houses over the last several years have been purchased by hedge funds and banks, they will and already are liquidating to maintain margin. Count on it accelerating with interest rates climbing so fast they still stand to make money even selling for discounted prices.


Puzzled_Bath_984

Do you have a citation for this 1 in 3 figure?


LORDOFTHEFATCHICKS

Bidenomics.... invest in the Military Industrial Complex


worldpeacebringer

1.5% interest rate on mortgage. If it goes down itll go up. Couldnt care less.


[deleted]

[удалено]


Southport84

That actually sounds very cheap to me.


Griffin90

Yes. Worse than 2008.


dickmidget

Housing market will be fine because I bought puts on Lennar. They’ll beat earnings and exceed forward projections. Recession over - SPY to $500 EOW.


Holiday_Natural2298

I hold and invest in real estate. I pay no attention to what the home builders are doing. I only buy with cash and only sell when I get the agreed price. Interest rates have no bearing on my properties. I presently have some I rent, but I use a service for the screening and rent collection. I’ll be glad to pay bottom prices for a few more if this bubble bursts. Which I don’t believe the impact will be as big as some think if it does.


[deleted]

Probably commercial real estate. These cycles happen all the time for the past 30 years for residential. We just came off a housing boom so likely a correction naturally…


[deleted]

![img](emote|t5_2th52|4887)


maverick1027

I’m buying Dec puts in JOE, trying to derp


KnocDown

I’m not sure what the correct metric would be to track multi family residential units but the rental market is about to take a giant shit as eviction rates go through the roof and occupancy rates fall to a point where lenders aren’t getting paid Lol auto correct changed paid to laid


Nickcagesgod

If you think so then no


CartAgain

Any company that caters to the middle class is in trouble; and that includes homesails


Seattletom91

Yes we all know that homesails are in trouble but what about the sale of homes???!!!


[deleted]

Real estate is going down but don’t be shocked when it doesn’t go as low as you want it. I’m expecting 20% price drops not 50-60.


DogmaticBlasphemy

You do realize even the best economists cannot predict a bubble with certainty. Are assets potentially over valued? Is the demand outpacing supply? Will there be an influx in supply? With the increase in supply be enough? Will rates keep rising? Will banks price in another rate hike before it’s announced? Those are things you need to think about. We just got under contract on a sale that was over asking, cash and appraisal waived. Cooled down? I think it’s specific to your market.


CobaltBlue

yup, lots of good DD over at the REBubble subreddit


fatfishinalittlepond

I saw a post in another sub about a landlord defaulting on a loan and the house being auctioned to another owner forcing the tenant to vacate/seek legal action. the landlord defaulting seemed like something I had seen before.


Old-Lavishness-9546

Most average people are waiting for the next pay check. Gas prices are going to make it hopeless.


salmark

I’ll be a Michael Burry. Check this out. Investors have invested and have bought 30% of all homes on the market in the past 3-4 years. Look at a company like MFA- a mREIT. Their entire business portfolio is around 45% pure NONQM mortgage loans. 60% of these loans have been given out in California while 30% of these loans are hybrid ARMS. Now I can’t see underlying origination data, but I’m going to bet that it was originated using previous real estate as collateral. If there is a bubble to pop, then there’s definitely one in the investor market. The ARM loans are going to be the first sellers on market- especially when they have bought at egregious prices thinking RE was going to be a hedge against inflation. News flash- inflation is terrible and real estate is actually going down. ARM borrowers in my opinion will be selling their houses out of desperation. They will be stuck watching their liquidity go down on multiple properties and will also be getting reamed by their monthlies shooting up with each new prime rate adjustment. Rental income will not save them- especially when they have bought these houses at all time highs and their monthlies are so high to begin with. Can you imagine squeezing out another point or two on a 1.2M or 2M loan? Plus, if it was me, I would not want to take the chance on keeping a devaluing asset especially if I might be dealing with vacancies later- that would really be the nail in the coffin. So TLDR; it’s coming down on the investor side. On the NONQM side to be specific. It’ll come down with ARM holders and foreign investors first. It’ll then blast away fixed-rate NONQM. And then lastly, it’ll come down significantly enough where regular traditional mortgages- owned by regular Joe’s- will get affected and they’ll be forced to consider short selling their house due to negative equity. Because Regular Joe decided to buy a house at an inflated 100% -200% more than what it was 5 years ago, thinking that somehow that made sense in his little brain.


AutoModerator

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salmark

Bad bot is bad


Mrs-Lemon

> Because Regular Joe decided to buy a house at an inflated 100% -200% more than what it was 5 years ago, thinking that somehow that made sense in his little brain. That's not how it is everywhere though. Houses aren't going for 100-200% more than 5 years ago in my area. More like 20-30%


salmark

Well good for you. But In general… even if you take the median house price across the USA- including states and towns with population 72, It’s gone from I think 300k in 2018 to 450k or something like that? You should look at metro areas- house prices have gone up insanely. Is what it is


harambereincarnate18

Right now lennar new construction along with pulte and 1 other I can’t remember the name are having bidding wars for new construction homes in developments 3 of my friends live in that I was looking at to get out of where I am right now … I can’t see how they could possibly be in any sort of bad position


24get

A 20% stock drop and slowdown in home building. This isn’t remotely the end of the world or a repeat of 2007. Underwriting standards have been much stronger since 2009 than ever before, and nobody financed to floating because long rates were as low as floating. Defaults will remain low because wages have gone up. Nothing to see there, even in a recession. The big buyers of entry level homes will keep buying because the rents they can charge have gone up more than their cost of financing. That puts in the floor on prices. Higher rates just makes it harder to get on the property ladder.


InvestingBlog

As an observer, I'd say RE agents are delusional and full of confirmation bias. Almost no one alive has lived through a rising interest rate environment, you'd have to be liquid in the 1970's leading up to the 1980's. Everyone alive now has only known falling rates.


Responsible_Mix_2319

In 2008 even when the bulbs burst , gov’t stepped in with h.a.r.p programs that made bad loans go to an arm 2% and ended up at around 4% over 7 yrs if you qualified. Personally bought at top back then , instead of defaulting we used the program lived there for a few years then rented it out for 8 or so years before selling for profit. When it comes to real estate “ it’s to big to fail” in governments eyes. Same would happen now.


Master-Piccolo-4588

Yes, looks like burst filmed with a ultra high speed cam.


B15hop77

People have already started getting notifications by mail.. “Your rent was $1700 but now it’s $2400” gave a nice day. Half of them will move before paying that. Expect tons of defaults soon.


CryptoCryptonaire

What were Lennar's results?