Comments by "worn down" (@worndown8280) on "Real Estate Mindset" channel.

  1. People need to understand how bad these cuts can get. I bought a home in Dec 2007 from DR Horton in California. It was listed for 535k, it was marked down to 505k. When I bought it I walked out of the office paying 280k. A year later my house was worth less than I paid for it. But I was happy. If math is hard for some, thats a 48% price cut. My house "bottomed out" at $187,000, thats a 66% price drop from original listing price.
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  2. I use to live in California. I had a neighbors who lived in their house for 7 years without making a full payment once. They would just refi and then not pay anymore. A lot of people live like that believe it or not. Now they cant. But California laws intentionally make foreclosing next to impossible. They dont want the prices to drop because then tax revenue to drop.
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  3. People wont like this answer. But like most things in life, time, will resolve this issue. When markets, any market, is forced and bent out of normal shape, it will always snap back to the baseline. By future altering it with laws and rules and taxes, that just adds additional layers of warpage that effect the market as a whole. Most of these problems will resolve due to demography over the next decade. 2020 was always going to be the demand high point for housing. And then the Fed put rates in the toilet because of Covid. Give the market time to adjust back and this will resolve. But no one wants to hear that. They want it now, and they want it their way. That means if they are a buyer they want home prices to drop as much as they can even if it causes a depression. If you are a seller or a boomer trying to live a decent life the last decade or two you have, you want your home to keep its value. I can already hear the but what about the big institution buying all these homes. Yes, most of them wont make it through this recession. Most people are trying to pull assets from both the housing and commercial funds. Its not going to be pretty. The sad thing is that its going to be the public employee pensions that are going to be left holding the bag, again. repeat of 2008.
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  4. Just like the end of 2007. I bought a home from DR Horton that was priced at $535k. This was in northern California. I got the home for $216k, new washer and dryer, and the back yard completed to my wants. It got down to 183k value in 2014. I sold it last year for $520k. Its since dropped 40k below what they paid for it. The same thing is coming again.
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  5. Here in Tennessee I am actually seeing several houses who cut homes over 100k to drop their price to below the "estimated" price. I think some people have had discussions with their realtors. Whoever does this first will be able to sell, those who are stubborn and hold out are going to be left holding the bag.
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  6. Austin is leading the way because that is where most California transplants head in Texas. Now that Californian home prices are dropping all that is going to be diminished to near zero. You will even see some people move back to California because they find the new area does not "fit them" and their sensibilities. You will see that in other metro areas that California's fled too, like Dallas, Denver and Nashville.
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  7. Having the government do things to "help" the housing market will only further distort the market. About the only sane thing I have heard would be to change the tax laws on investment properties and an individuals ability to write off losses on their taxes. Please government stop helping people. You are killing us.
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  8. Its comedic that they are blaming inflation on wage growth. Wage growth adjusted for inflation is negative.
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  9. Wait until the Fed rate goes about 3.5%. Congress will have to start cutting the budget, it wont be able to afford servicing new debt at that level. And with one in 6 Americans working for some level of government (Fed, State, or local), well That alone would make an epic recession. Then considering all the individuals and businesses that require government largess to make end meets.
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  10. Even in the darkest times of 2008-2009 no one said we were going to have a massive housing correction. They said it was just a correction all the way down to the bottom. If they are saying its going to be 20% you can best your butt it will be much much worse. They are just trying to mentally prepare folks.
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  11. If anyone is interested in the worlds first bubble, the Dutch Tulip bulb bubble in 1637, the graph looks exactly the same. If you do look it up, look how fast the decline was. Peak was Feb 3, crashed to near zero by May first. At its highest Tulip bulbs were going for 6 times the average Dutch workers annual wages.
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  12. Zillow is a business. Their business is inflating the housing market to make profit.
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  13. Thats how you know they are scraping the bottom of the barrel. There is no one left to con expect those who are financially inept.
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  14. And this is before the major layoffs.
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  15. Never use averages or total wealth. You need to focus on liquid assets. Most American boomers will outlive their money for two reasons. Inflation and lack of savings.. The median boomer has saved about 200k. The median estimate that they would need if they lived to the median life expectancy is 275k. Now mind you, this is the median. Boomers own about 40% of all single family homes. So even if only 1/8 need to sell to make ends meet you are looking at several million homes hitting the market. Then there are the boomers who will need to be in some sort of care facility. They will have to sell.
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  16. Peoples debt is going to kill them and prevent them from entering markets. Auto debt, credit card debt, school loan debt, mortgage debt. With increasing interest rates, standards of living have to correct. That means massive price corrections in all asset classes. I still think people are thinking to small when it comes to the housing correction. It will at least be 40%, minimum.
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  17. Thats not really what happens. They cut prices even further and then they leverage the losses and use it as a way to protect themselves from houses. DR Horton, Lennar, Poulte, and Seeno have done this every downturn. As I have stated on this channel multiple times I got a home in 2007 for about a 46% total price cut from DR Horton. All they have to do is make enough to service any debt they have. But when they do it is important, for tax purposes. The corporations you are worried about buying all these homes are being hammered with losses and most have seen at least 15% losses to their portfolios. Rental ROI only works at ultra low interest rates. That time has past, respectfully.
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  18. I know one California home owner who is underwater. They guy who bought my house. He paid 100k over asking price last year and since then the actual value of the house declined 40k below what he paid. He also only put 3% down.
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  19. Real estate is priced on the margins. Going up all it takes is one idiot to pay 100k over asking price to make a whole neighborhood soar in value. But that also works the same way. I guy needs to sell his house because he is moving for work, getting a divorce or a myriad of other reasons and in a slow market he will have to lower the cost below the "estimated" value to get a buyer. And then every property suffers that same comparative decline in value.
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  20.  @Mnil52  New builds are fine if you want to hear your neighbors arguing. Those houses are built on top of each other.
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  21. You should do a video on the number of actual empty homes on the market. Id say here in east Tennessee its probably a 1/4 to 1/3 of homes that are outright empty, staged with minimal furniture to not look empty or straight up estate sales. Id be interested in seeing if this is the case in other areas as well. I think there is a tidal wave of homes waiting out there with no demand for them. Its all been cheap money looking for a place to go. With not more cheap money, that all goes away.
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  22. A lot of those homes sitting were flippers or people who were going to tele commute and bought during the scamdemic. Now they are looking at getting laid off in a lot of fields plus have an extra mortgage to pay for. For those people I do feel bad for. The flippers, just like in 2007-2008 got caught up in easy money. You can go through and look at the homes put up, you see them bought within the last year and a half. All of those will either get foreclosed on or short sell. They cant even rent them out, they would still lose money and if you get a bad renter the house gets wrecked. Its going to be a bloodbath.
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  23. I am from the government and I am here to help. lol
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  24.  @jayb9543  They will. It takes time for market psychology to effect. But once it happens it happens fast. And even then all it takes is one guy who sells out at a lower price to screw everyone in the neighborhood. I did this in Dec 2007 in California when I bought a new construction from DR Horton that was originally priced at 535k. They reduced it to 505k. But when I bought it I got it for 216k. My new neighbors hated me. lol
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  25.  @georuiz28  He offered. I thought it would be rude to decline it. We can at least be civil, no? lol
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  26. What kind of crap subdivision has standing water in new roads? If the roads are that badly engineered I cant only imagine the quality of the homes.
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  27.  @scotteric8711  That which is given, has no value.
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  28. They dont need to sell it yet. They want to, most people I think understand that we are at a high water point. But no one wants to be the first house on the block to have to sell for less than the last house. My neighbors this spring tried to sell. Not one person came to look at their property. They just wanted to much for it.
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  29. Yea people put the cart before the horse in regards to the last RE bubble. Prices caused the pause because people couldnt afford more even with reverse amortization ARMs, then slight downturn, then the defaults started coming when people couldnt just refi again. We have done the same thing this time. Just without the subprime loans, this time we have to unwind a metric ton of MBS's, a war, a probably famine, a probable recession and double digit inflation over most of the planet. When I type it out it makes it sound worse this time, but I have a hard time fathoming that.
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  30. Thats because they dont have to sell yet. They want to sell there is a difference. When there employers start have to cut jobs because they need to refinance short term debt that is when the bottom falls out. Over the next two years there is about 3 trillion in corporate debt that needs to be refinanced. That will murder the economy. And most people in economic forecasting are just ignoring it.
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  31. All these numbers and figures are nice. But its simpler than this. The median home in the US, according to the fed gov is 448k. Not the average, but the median. At 5.5% interest rate with 20% down, thats roughly 90k cash, your monthly mortgage note with impounds will be about $2400. That comes out to just shy of $29k per year. With the median household income of about $69k in the US that when you remove the various taxes that puts net household income at $59k. So income to mortgage ration is close to 50%. Healthy mortgage to income ration for FHA is 31%, conventional 28% and USDA 29%. To get to those levels home prices need to fall by 40% minimum. And the Fed has stated that is their goal. Every time the Fed squeezes these numbers are going to get worse. And when layoffs, hour cuts, and wage cuts happen, these numbers will get worse. And all this is dependent on people making a 20% down payment. But the truth is worse. Median down payment on a house is 12%. They only group putting down at least 20% is people over 64. I enjoy your content. The data is nice.
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  32. If the lack of Black Friday shoppers is any signal of the general economy, the future is not looking good economically.
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  33. How close are those houses to each other? It looks you could jump from roof to roof from the drone footage. Those small Surprise homes could be retirement homes for the hordes of boomers who want to downgrade.
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  34. respectfully, you need a new "realator". Shes more interested in getting a pay check than making sure you are in the right and appropriate home. Shes a pig. And pigs always get slaughtered. There are good realtors out there. You just need to vet them.
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  35. People focus on the interest rate to much. What good is a 2% interest rate when you cant afford your overpriced house because one of the earners gets their hours reduced or laid off. Good observation none.
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  36. In total dollar amounts this bubble is almost twice the last one. Last time prices peaked in 06 at around $214k for the median American home. Now its near $400k. Average inflation over the time period between 2006 and today was 2.2%. Today $214k in 2006 dollars is worth $303K. We have an extra $100k bubble in prices at least over 2006.
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  37. Over the last year the ROI on a single family rental was 1.32%. Over the last 5 years the ROI was 7.5% (this includes the massive run up in prices over the last few years). Now home prices will drop, interest rates will rise or at the very best stay high and rents are falling. Right now you can get a 52 week T bill right now for 4.794%. Why would any sane person buy a rental right now? All the risk, all the headache, for 1%. Just so much no. I dont care if you are a mom and pop, a rental mogul, or an investment fund.
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  38. I would be interested to see the overall market level of rental units in that area. Is this a case of over market saturation of rental owners or is a slight increase over baseline. But Orland is going to correct hard. Disney has started to layoff. That is going to hit Orlando and anywhere that needs Disney tax dollars hard. Good content
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  39. average mortgage is already in the 7's for people with average credit scores in the US. Only about 20% of people who have 800 credit scores qualify for the going rate loans. A lot of people forget that.
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  40. If a thing goes up 40% in value then comes down 35% in value from that high, its worth significantly less. Take a house worth 100k, if it goes up by 40% its then worth 140k. If it then drops by 35% it will only be worth 91k.
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  41. Hey! I recognize California when I hear it.
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  42. All three need to be in prison. They have done more damage than any bank robber ever dreamed of.
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  43. August was a long time ago in the current market. I bet Zillow made that forecast based on when mortgage rates started to dip down reasoning it would continue. Also they probably have the word pivot all over their report.
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  44. If you look at the trend line pre covid, housing for, even though it had a few cases of increase, was trending downward. There is no way our current price point can be supported without massive wage inflation, which employers cannot afford. So home prices will drop. And every year moving forward there will be less demand for housing. So while I think 5% drops per year will be normal going forward I do believe the first years will see larger drops. And when I say demand I mean actual real demand, like a human being who needs a place to live, not investor demand. We will see a very sharp downturn once the layoffs start. The Fed is not going to pivot. People who think that are just not willing to accept that it is the lesser of the two evils facing us now. As the boomers die, there will just not be the demand for homes, services, and goods that there was. And we will see a massive restructuring of all business sectors in the US. Anyone who can tell you how it will play out over the next 20 years is being less than truthful. The only thing we can expect is lower prices in areas, like housing, where demand drastically drops, and a much lower standard of living for most Americans. If you arent prepared, you better get ready. You dont get to spend like a drunken sailor on shore leave for 90 years and not expect a hang over.
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  45. This is the classic good intention but faulty reasoning. The average rental makes a 4.5% ROI. Traditionally you could buy bonds and get those same returns. But since 2008 with ultra low rates risk adverse renters looked to put their money in something with little risk, deflated real estate. All that needs to be done is to raise interest rates to a decent level once again. Rates should never go below 6% unless there is a recession. You will be able to get a good rate of return with little risk. So the money will move out of rental real estate and into bonds. Congress doesnt need to be involved. Stop messing with the markets, they will fix themselves if left alone.
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  46. In some markets housing has already plateaued. Its actually starting to turn down in East Tn. I imagine it is other places too, if you actually look at sold for prices, not listing prices.
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  47. Yea Tennessee is gonna get hard. The worst thing is that folks here, especially in the east are pulling homes off market instead of selling them for less. They think the market will turn around. When the layoffs start post election its going to be a blood bath here. And then you have a lot of New Yorkers, New Jersians, and Californians who bought homes here during the pandemic to work remotely. Not many are heading back so they are selling. The problem is when they get laid off they wont be able to move locally and afford the payment on local salary. So foreclosure city is around the corner as well.
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  48. Thats because the prices are to high. People want to sell, they know they should sell, but not many still need to sell. Layoffs will make more people need to sell. People need to understand that if you want to sell your asset, you house, you got to drop it below the trend line. But people are still like, my house is worth more than that. Ok enjoy holding your deflating asset.
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  49. Can you afford it if the worst happens? Is your job recession proof? Can you survive $10 gas for commute? If you paid cash, you are fine. The worst that may happen is that you lose value. But thats happening everywhere.
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  50. Nor is it a rational response to job loss from a recession that is incoming.
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  51. People are starting to want to sell, the writing is on the wall and they know it. But they think they can keep prices elevated. We shall see who will win. If the Fed cuts rates, the bottom will fall out like it always does. Then people will need to sell. Thats when the feeding frenzy will start.
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  52.  @georgia777  If you own your house outright, how is that going to cause you to die poor?
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  53. only after prices have dropped. Pride is a strong thing. No on wants to be the first to sell for less on the block.
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  54. oof, wait till they get their tax bill and it "adjusts". Found that out when I bought my first home in the 90s
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  55.  @shane5385  being smart is over rated. success is relative. If you are a responsible person you are good in my book. I only asked your age because we havent been in this type of situation since we were both kids. The inflationary environment we have now hasnt been seen since the 70s. At that time prices werent inflated. Right now they already are. The effects are going to hit at least twice as hard.
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  56.  @AB-fq4mr  Yea really anytime someone says, this deal is only good until you leave. You need to leave. High pressure is always a trap.
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  57. Thats where the issue is. Why are appraisals coming in so high? People blame the realtors and the banks. but its the appraisal companies that allow this kind of run up to happen. I mean I still remember when an appraisal was an all day thing, now you are lucky if they even drive buy your neighborhood.
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  58. If rates go back down, IF, it will be due to a massive economic recession. Buyers wont qualify. But even then I think the Fed has been clear. The only thing they care about now is inflation. Market be damned.
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  59.  @tw2800  we don't have a free markey
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  60. Its a lot of cope for the people who are over leveraged in real estate. Just like the Cathy Woods of the world in the stock market. Over leveraged and just praying for a Fed Pivot. Its all cope.
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  61.  @mandyjo4198  Yea I see a lot of people building small tracks of homes. I dont think they understand what happens when you have a huge price run up like its been in the last 7 years. I dont believe Tennessee, or at least East Tennessee has ever seen anything like that. But thats typically when a hangover hits. I hope your families business makes it through.
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  62. We have a lot of homes here in east Tennessee that have dropped at least 7 to 10%. I have even seen several that were overall $100k price drops. People are starting to understand whats coming and want out of the market now.
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  63. By fall? I mean you can buy but it wont even be close to the bottom, not by even half. You are seeing biggest pricing drops in new homes coming onto the market. Thats because builders have bills and loans they have to pay off. Servicing debt obligations is huge for them. The ones that dont drop are the current home owners who are the majority of home sellers. They always hold out. And they always lose. That could take several years honestly. It depends on market psychology and on how bad things get economically.
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  64. With the Jan CPI out showing housing costs and rents are up (shelter), maybe do a show explaining that. Because there is certainly a very large disconnect with the Feds data and the housing industry data. Even more so considering they have had to adjust up Oct, Nov and Dec data making them all positive increases. Makes one wonder what the Fed is actually measuring.
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  65. That would be about 35.5% price drop. The problem will be demand. At that price with an 8% rate, thats the rate the median American could get right now, at it will go much higher, you are looking at a $2050.43 a month mortgage note. That does not include the impounds of insurance and taxes which, estimated would bring the total to $2858.07. And even this assumes you put down 20% which is almost $70k. Most Americans dont have 70k laying around. The median income of a portland family is 78.5k a year. And that house you state would cost them 44k a year. Thats 45% of their total income. That is still far far to high. Anything above 25% is risky.
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  66. offense is taken, it is never given. The individual chooses to be offended.
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  67. They are looking to put their eggs in as many baskets as possible. This is common during a general downturn in the economy. That said while a billion sounds like a lot, at the median price of $361k, thats less than 3000 homes. The Japanese did this in the 80s. And they took about 20% losses. But if they kept their money where it was before they would have lost more than 50%.
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  68.  @ryanbianchi6582  you are right, it was 65%, I rounded the wrong way. We all make mistakes. But my point remains, math is hard for some. Good catch.
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  69. If the Fed pivots, I really do hate that word now, before inflation is tamed it will roar back like a fire that gets a fresh oxygen supply. So we will have a damaged economy and ever growing inflation. Thats what happened in the 70s. We had best hope that Powell stays the course, even if it does hurt.
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  70. Communities can pass laws. But locals love the tax revenue. Lets not pretend otherwise.
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  71.  @nicolcacola  because "appraisal contingency". That means all the risk is on him. What if the house doesnt appraise for 1.1 million but only 900k? Where you going to get that extra 200k from? If he waives if and it doesnt appraise he either cant get a lone and as to walk away paying a penalty, or he has to find someone who will loan him money for more than the asset is worth.
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  72. Even if prices stay flat through June or July, there would be a 13% national price drop year over year at that point. If home prices drop 20 percent this year you would be at roughly 280k for a median priced house. Hopefully the Fed puts their big boy pants on now and gets serious. The market is pricing in a 50 point increase now. So the Fed needs to go higher. But they wont. And this will all drag on longer, hurt more people longer and end up wrecking healthy businesses and individuals cash reserves that otherwise could have weathered this storm.
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  73. my neighbor tried to sell his house in the spring of last year. I told him to drop his price if he wanted to sell. He didnt even get people to come by at an open house. Now hes doing all sorts of upgrades and going to sell again this spring. People never learn. His realtor is a criminal, but she has nice legs. lol
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  74.  @ilikecontent2327  one of the issues it that people who are selling their homes will not sell it for less. And they dont have the ability to write off losses like home builders can from a tax point. They eventually drop, but only after they have no choice. It always hurts them more too. But thats what always happens.
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  75. Pre WWII only about 45 percent of Americans owned their own homes. The rest rented. Post WWII, with the creation of the suburbs that shot up to between 62 and 64%. Right now we are right there are 66%, though I suspect the number is much higher near 67.5%. History shows that expanding the number north of 64 percent always leads to people losing their homes. Thats the ceiling. And more than that and you are entering overbought territory.
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  76. Home builders are already giving heavy discounts. And currently there is another million homes being built in the US, along with another million apartment units. Home builders always cut prices first. Then home owners once they understand that the boat on highest prices has sold, as J K posted.
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  77.  @ImMeandYouAreYou6942  These are the ones who are shocked when they get their tax adjustment the year after they bought. I remember when I bought my first house in the 1990s. No one told me that. Not the real estate agent, not the bank, no one. But after you get screwed you tend to remember.
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  78. Poor financial policy is the problem. We never addressed the problems from 07-08. Until we do, nothing will resolve.
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  79. They will. in Dec of 2007 I got a home for about 250k off listed price. It will happen. You just have to be patient. When they need to abandon their builds is the time to buy. We havent reached that point yet.
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  80. How do you rent out your own home to Airbnb? What do you do with all your stuff? Thats crazy. lol
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  81. This reminds me of a property in East Tennessee. Its 6507 Sulphur Springs Rd in Morristown. No roof and they want 420k for it. No roof! People are still insane with the prices they want. That house should be not even $50 a sqft. But that bath tube tells it all. Those sit up baths are for the old or the severely disabled. Whoever owned it simply lacked any money to keep up the house or payments. Sad
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  82. From your comment section it seems many are unable to do even basic math and deal with percentages. It might help your viewers if they understood how percentages work. Maybe a show is in order for educational purposes?
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  83. Rescue plan. lol Thats how we got into this. Just stop. Sometimes you make a bad play. That goes from picking a stock, to buying houses to picking a bad spouse. People need to learn from their errors.
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  84.  @realestatemindset  If rates go down I think the recessionary pressures would probably be massive economic job loss. I dont know if there would be enough qualified buyers to increase demand at that point. Its like my Gunny told me, the only way out of the ambush is through it. You cant stop and go back. If the Fed stops its push we will have the worst of both worlds. Catastrophic would be putting it kindly.
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  85. The law of supply and demand would say if there are less lenders that the cost of getting a loan will go up. That said what Wells is doing is what someone would do if they saw a catastrophic change in a market, in this case the housing market. Another poster remarked about who is buying all these MBS's since the Fed isnt. And that is a great question. Are the banks buying their own garbage? I suppose we shall see in a few more quarters. Regardless Wells move doesnt bode well for the future economy.
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  86.  @mariopaul8413  You would get close to the listed rate, buy you would probably have to shop around a bit. The Fed rate is going to go up around 200pts before the end of the year. So if anyone who is going to buy, and need a mortgage, they need to keep that in consideration.
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  87.  @ilikecontent2327  I cant really improve my credit score (humble brag)
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  88. Already seeing 30% price cuts here in Tenn for real estate with a lot of land. For the price that they want the appraisals dont come in high enough because they dont care about the land, just the improvements. So the banks wont loan then moneys. Ive even seen a few properties go from 600k to 350k. And they are still overpriced. And they all sit empty. Also with the three year bond being at 4.5 % you can now get a higher rate of return than most rental real estate gets in the US. So why would people invest in real estate at this point?
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  89. corelogic, collateral analytics and Quantarium are worthless. The prices they estimate are laughable. They should be investigated.
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  90. If the Fed pivots, IF, then inflation is going to explode and because people are stuck buying necessities mortgages will have to decline simply because people do not have the income to purchase everything they need. This will slow the economy further and people will get laid off. Thus putting even more downward pressure on assets. In 2010 157 banks went under. The last 4 years less than 10 have. We need a little fire to clean out the forest. So either the Fed doesnt pivot and the weak poorly run banks and businesses go under or inflation takes out an even wider chuck of both the good and the bad.
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  91. Yea you will need to see a 38% price correction to get back to that level
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  92. Early Spring through Early Fall. Typically April through Sept.
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  93. Higher interest rates are what will cause rental owners to sell. You cant roll over your loan from 3% to 7% and still keep you cap rate positive. And now that homes are losing equity its doubly bad. Thats if you can find a bank who will lend you money on a depreciating asset. Both side keep acting like its 2021 which stimi checks raining from heaven and zero interest rates. Those days are over and never coming back.
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  94. Even core logic and the others are scams. People put their house on the market for an insane amount wow shocker overnight the value of that house goes up 300k. lol Its a racket, a scam, and people who fall for it get what they rate. Shame none of these grifters will get their due though.
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  95. You arent stupid. But it could take time. The Fed has so much liquidity to soak up that at this rate, with .50 increases its going to takes us a few years of stagflation to get prices back down where they need to be. I am hoping the the next increase will be .75 and the one after that 100. But even then that wont do much.
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  96. Inflation will be 11%, officially much higher actually, by the end of the year. The input cost increases havent even entered the end point, the consumer, in the supply chain yet.
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  97. The question will be what effect does the pivot "pause" have on inflation? In the 70s, it caused inflation to scream higher. That could very well stabilize home prices. So even if the price stays the same dollar amount its technically worth less since he dollars are worth less. Even if they raise rates to 5%, they are still effectively negative vs inflation. But they cant raise rates higher because the federal government wont be able to spend like a drunken sailor on shore leave. So if they do that means the fed has to cut spending. That means God knows what. We are in uncharted territory here.
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  98. If you go to auto dealerships and auto channels you see the same things. Dealerships putting 35k "Market demand" increases on F-150s. And so they sit on the lot untouched. Same with auction centers that being flooded with trucks and SUVs no one wants to pay for. With prices so high, used dealerships wont even buy them at auction so the banks end up having to hold on to them. I think this may very well be one of the reasons Wells got out of the mortgage industry to the extent that they have. They may have so much sub prime auto debt that when this fully breaks they wont be able to deal with what will happen in the housing market. Remember, there is more sub prime auto loans now, than there was sub prime home loans in 2007. The ugly truth is, we have utterly broken our economy with untended consequences. And we have well run out of road to kick the can down.
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  99. You think people thought long term? lol thats funny. Most people have the mindset of tomorrow I might die, so tonight, I'll live. And its why they stay poor.
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  100. I would encourage anyone who is looking to buy to wait until next year. Octobers business numbers are very bad. 47% of all businesses that employ over half the private sector employees in the US couldnt make rent. The amount of layoffs coming are going to devastate the economy. You may think your job is secure, but it very well could be at risk without you knowing. Its literally 50/50 at this point.
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  101. Those same experts continued making money these last 10 months. It works until it doesnt. Thats the issue. When enough people understand that market psychology changes. Everyone in housing knew in November a downturn was coming. Its just that things were already in motion and they hope to leave others holding the bag, as they always do.
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  102. I think a lot of people dont understand the labor market. Every year now we are short 400k workers due to baby boomers retiring, by 2030 that will be close to a million a year shortage. Thats irrespective of PPP loans and the stimis. On top of that we had 11 million open jobs. Thats down to 9.6 million now but we still have a lot of jobs to eat. This could be the first economic downturn were we dont actually see higher unemployment rates for a very very long time. Our demography is that screwed up that the next two generations, the zoomers and alpha will not be large enough to replace the boomers in total numbers and thats over a 40 year period. We are in unknown territory. But one thing is for certain, because of that shortage labor inflation will run hot and that will force the fed to raise rates. that will make the bonds here in the US more attractive to overseas investment flooding our markets causing more inflation. I dont think people are really prepared for how height interest rates will go.
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  103. What will make housing prices go down? Let me introduce you to my friend, Mr. Recession and is cousin, Mr. 8% interest rates. Add to that demographic demand shifting and there is going to be a housing glut.
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  104. 100%. Easily two 50 point increases. Probably two 75 point increases. And considering the economy wont slow down and job losses arent piling up yet possibly 100 pts at least once. But it doesnt matter. Inflation will not be control even with those levels. The Fed rate has to be at least the core CPI and right now its only 2.5%
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  105. If the 1.7 trillion budget passes the Fed is going to have to get even more aggressive with its rate hikes, that means further pressure on home prices. I dont think a lot of people understand, especially the politicians the effects of their profligate spending. Way to much money out there. As far as home builders giving discounts to anyone or groups, I prefer that over bailout. If people wonder why home builders are still building, after 2007-2008 many master planned communities were half built. Many municipalities struggled with projected revenue that never existed. So this time around they wrote into the contracts with home builders, you MUST complete the build out of a development.A lot of these homes have quiet a bit of padding to drop prices. And that build you went into with just the framing. No way I would buy that. Is that up to Texas building standards? There is no strapping on anything.
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  106. Who are they going to sell to at those inflated prices? Who would buy and pay full price when you can wait and pick the meat off the bones?
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  107. Just look at all the empty retail houses. They are everywhere. There are already so many people over leveraged that need to sell and layoffs havent started. And with energy futures being with what they are, this winter combined with layoffs are going to see housing burst. Dude was all cap. If you are a home owner and think you might need to sell, you need to do it now.
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  108. "Its a transitory soft landing" lol
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  109. You are starting to see sub 100 a sqft homes on the market in East Tn. Still to high for a dated property, but its only started. So many empty homes too. Demand isnt what people think it is. They are lying about demand to FOMO. Dont fall for it people. The demographics dont lie.
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  110.  @realestatemindset  I retired last year in Feb. Made 11k working those two months, not paid in taxes, just earned gross. I got a 12k tax return from the Feds. People have no idea how much "free" money is rolling around.
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  111.  @realestatemindset  People are still asking insane prices but you see them either pull listings or relist them with downgraded prices. I dont expect a correction like 08 in most areas. But they certainly will go down to pre pandemic levels. But thats just me, I could be totally wrong. They deciding question will be what does interest rate hikes do to homeowners and how that effects foreclosures since people cant use their homes as ATMs anymore. I fear many will be in a trap. Combined with the losses companies like black rock are having in China and Russia, they may have a liquidity crisis. Interesting times.
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  112. As banks eat losses on all the bad loans they will need to sell more MBS's. But in order to compete with the Feds massive dump they will only be able to sell them at a loss so the banks will have to raise the rates on the debt they loan out or book the losses. They wont take that hit. The banks will pass the cost on to the lendee. Regardless of the Fed rate, they will have to increase lending rates for all capital loans. If the Fed rate gets higher than 3.5% thats going to make if very very difficult for Congress to write budgets like they have been doing. That means a huge draw back in Federal payouts to states, individuals and corporations. That alone would be enough to cause a serious recession, but we have more than that to look forward to dont we.
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  113. if the fed pivots, mortgage rates may get cheaper, but everything else via inflation will explode. You might be able to afford your house payment. But you wont be able to afford eggs or ground beef. Thats if you keep your job. Housing is just a symptom of a ill economy. We need to let higher rates do their job.
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  114. This is literally what happened in China. Any investor who buys these, even at a discount is a moron.
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  115. They they are going to be in trouble. They have already lost about 17% this year. Plus all the exposure they have in China.
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  116. Homes are overvalued. People dont need to sell their homes, and many think that things will turn around. But as this recession deepens that thinking will change. And then there will be the realtors. As their work dries up, many will pressure their clients to lower their properties to sell so they can stay in work. First it was start as a trickle but then market psychology will switch and people will rush to put their homes on the market. Unfortunately for them this will be after the new home builders have sold all their homes at a discount vastly lowering demand. And then again, due to demographics I think we are about to find out actual really world demand, as in terms of need, isnt what we think it is. We have enough homes in the US for a home for every 1.8 people in the US.
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  117. Ramsey and other business people are in for a shock. The economic paradigm has changed. For all of human history one factor has been counted on, the increase of humans in a market. That is changing in all of the world, outside sub saharan africa. Demand will be decreasing every year. And these people either dont see it or dont know how to come up with something new to address this no economic variable that utterly destroys all current economic theories that have ever been created. So you will see much more of this from all sorts of people who should know better because the other option is simply saying the emperor has no clothes and then everyone loses everything.
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  118. The difference today is demography. There is not the demographic demand for homes that there was in 2008. The Millennials are already fully in the family making age cohort. So as Boomers die you will see massive deflationary pressure since they, of whom 29% have already died, currently hold 44% of all homes. Over the next decade you are going to see at least another 20-30% of Boomers pass on and 44% of them will have homes that need to be liquidated as part of their estate. Gen Z created by Gen X, is the smallest generation in American history. It lacks the numbers or the wealth to keep prices high. Regardless of how much of a crash we see, housing futures look deflationary, until we have another baby boom. And the Millennials are having much fewer kids that they were projected to so that generation, Gen Alpha, is going to be smaller as well.
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  119.  @ransomemckissick8184  And that was because of oil and gas exports to Europe. Without that it would have been flat at best. Q4 is going to be a bloodbath.
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  120. People keep complaining about these investment groups. But most are going down. No one talks about how Blackrock stopped real estate fund withdrawal requests after Republican State Treasurers pull over a billion our of the real estate fund. They are going to keep hemorrhaging money and losses will pile up. This says nothing for these funds exposure in China and Europe which are being decimated. If people stay calm they will get really good deals. But, and I say this with all seriousness, people should watch how leveraged they are. A lot of people are going to err and go crazy trying to pick up properties and get into the same kind of trouble. No one ever learns.
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  121.  @realestatemindset  Fear. Fear of an unknown future makes people rather bothersome.
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  122.  @realestatemindset  I have my moments where I worried. Then I remember that most of history was much more cruel and brutish than today. Keep the faith friend. We will make it.
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  123. Im not sure where Redfin is getting their data. But here in East Tennessee the average home needs price cuts of at least 10% to sell. But Redfin's data doesnt show that. Neither does Zillow. The market is so bad most pull their houses off because they cant cope with the idea that they cant get what they "should" for their house and or property. You have people trying to sell a 20 year old mobile home on 5 acres for 400k. People just dont have that money here. Even with this Redfin says there is a 20% increase in home value year over year to date. Its laughable. Nothing will sell at that price. I have a fear that these companies, if they place these home assets that they own at a high price can still look solvent on paper. But if the valuation of them drops, they will get margin called and then the market liquidates.
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  124. You can blame whoever you like, the Fed, via political pressure, has so warped the market, every market, that nothing is priced what it should be. As they tighten, it will adjust back. Then we will see rental units getting foreclosed on like in 2008-2009 because the market is always, always chasing demand. And then poof, demand is gone.
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  125. New housing is always the first to drop prices. The bad holders are actual home owners who have insane prices like a 1975 ranch home that has never been updated in rural Tennessee for 450k, I am sure you have similar places in Florida. Those people are always the ones to drop their prices last. And they are the ones who get hurt the worst.
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  126. If it is 9.1% inflation, adjusted for how we measure inflation we are at the same inflationary rate as we were in the late 70s. So much for peak inflation. They need to put on their big boy pants at the fed and raise rates by more than 100 points then. 2 or 300 at least.
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  127. Myspace 2.0
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  128. Those 8% rates will make it so many business, who only survived due to cheap money, folding. Then there will be more unemployment which will further reduce the ability of people to service their debt obligations. Perhaps we will learn the ills of free money, but I doubt it.
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  129. Wages should continue to raise for at least the next decade. The boomers have almost all retired but are still consuming so demand hasnt dropped yet. But they are starting to die. When they do mostly die off, in the next ten to 15 years, you will seed the demand curve turn and then workforce need will do likewise. Its why I dont think we will see tons of layoffs this recession.
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  130.  @28ericgilley  the idea that technology may address labor issues could be a false one. Automation requires massive cost inputs. And at the same time that capital has become more expensive, increasing interest rates, you will also have shrinking markets which reduce your ROI and may make any technological improvements non cost effective. And at the same time we could even see a spike in commodities due to a lack of labor to harvest or mine whatever commodity is in question. Our current economic theories only work when we have a positive growth assumed. Demographics as they stand now show a massive implosion about to happen in the developed world. Fun times.
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  131.  @Jeff__M  So just in my local area I have three homes re enter the market that were purchased in march. All three homes were bought by out of state workers who thought they would be able to tele commute. The amount of people who did this is off the charts. When you throw in stimi checks, some folks got 12k checks and at 2% interest rates a lot of people went home shopping for additional properties. I am seeing more of these homes, partially renovated put back on the market. That said ultimately people cannot pay more for a home more than they earn, and with inflation soaring ever higher, that amount is less and less each day. The housing market has lost all its inertia at 5% interest rates and 8% inflation. By the end of the year the interest rates will easily be 7% and inflation 11%. Housing prices will have to go down. And then there are the boomers dying who hold 44% of all single family homes. Then there is the recession with job loss, hour cuts and pay cuts. I can keep going. And as far as the MBS's no one wanted to buy them in the first place, which is why the Fed had to. Once it sells them it will have to do so at a loss. But this extra competition will make banks have to increase rates to make their new securities more attractive to purchase in a real market.
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  132. Cathy Woods. Lmao Should the Fed be raising interest rates now, no. But it has to because it chickened out in 2018 when they tried to raise rates then. They have no choice now. The real problem isnt going to be here in the US. Its going to be overseas. Europe is screwed and so is Asia.
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  133. Relisting is super common. In 20 and 21 the would list get offers then take it off the maker then jack up the price. Rinse and repeat. It was funny watching home buyers chase the rabbit. Buying homes unseen. With an "inspection" where the guy drives by the property. It would be funny if it wasnt so sad. But I do see to recall a quote about a fool and his money.
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  134. People assume its these companies that are causing the high home prices. They are incorrect of course. Its just demography.
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  135.  @shane5385  Which means the price must fall. But the sellers psychology hasnt shifted yet. And when it does it will be to late. And then buyers will wait until housing hits the bottom unless they absolutely must buy. I never thought that it would be as 2011, but with a heavy recession and high inflation we could very well get back to 2011 numbers once liquidity has been pulled from the various markets.
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  136.  @shane5385  Yes they are, lots of liquidity, which is why the Fed will have to raise rates to reduce inflation. Inflation will not go away until that liquidity is gone. Once the Fed puts its big boy pants on and does its job, the effects overseas will be catastrophic. Foreign money will pour into the US for protection and increase inflation. So the Fed will have to raise rates even higher. The problem for home buyers is none of them have liquidity to buy. And as inflation rises and wages stagnate, any savings they do have will quickly be eaten away. That means no down payments. And this is even before talking about recession, job layoffs or the greater effects of inflation on all the markets including housing. If I may ask, how old are you?
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  137. Those in the know have to take time to change their positions. If you do it all at once, if you are a big enough player, the market notices. But if you do it slowly, day after day, You can completely change your position without anyone knowing. Thats been going on since Nov of 2021. Most of these big players have fully changed their positions now. So everything can fall. But I got to disagree with you about the Fed sounding the alarm. People wouldnt have paid attention. Just like people today think the Fed isnt serious about keeping interest rates higher longer. People just keep saying pivot pivot pivot. At the end of the day people hear what they want to hear and see what they want to see.
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  138.  @Jason-andTheArgonauts  I know. It would end a lot of this stuff. But with Freddie buying all the mortgages from lenders I guess banks dont even care. I wonder if they will care if they dont get bailed out this time?
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  139. Wages cant increase. Those expenses cant be passed on anymore. Hence recession and layoffs. The question is how low will housing fall not if?
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  140. The core issue is that this correction, economically, should have started in 2018. But the fed relented because the stock market took a dive. That is when you start to see the bubble for there and in housing. in 2018 through 2020 real demand for people looking to buy a home peaked, meaning people who actually need a home to live in. So what should have been a slow and steady 4 year decline to today with a continuing decline until either massive housing losses or increase family formation with children occurs. But even that will take about 3 decades for that demand to kick in. People need to understand the demographics and trends we face going forward have NEVER happened in modern human history. Only the massive die off in the Americas was larger. You would have to go back to the 13th century with the bubonic plague ravaging the world before you saw something similar.
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  141. How do you get hyperinflation when the money supply is actively shrinking. Can you square that circle for me?
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  142. The question is will you be able to get DEF
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  143. Some people just like to look at houses.
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  144. The real unemployment rate is 8%. Only in the modern era do they just stop counting people because its convenient . We never truly recovered from 07-08. Not even during Trump. And its not covids fault. We have to much debt, to much fractional reserve banking, and bad demographics.
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  145. With price drops, houses that are relatively well prices still pop off the market in short order. Its the boomer houses, where the owner has died or someone who has over leveraged that the prices are still high on. When these people finally understand that they cannot get what they want or need for their homes you will see prices drop dramatically. But these people still put their houses on the market at a high price so they can say prices havent dropped. But the mask is slipping.
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  146. Probably not until after the mid terms.
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  147.  @CaptainCaveman1170  So you are telling me demand will be the same when the boomers, who currently own 44% of all single family housing, die, and no one is living in that house? You wont even be able to rent them for a decent ROI, you could just buy bonds and not deal with the hassle. I dont think a lot of folks understand what the demographics and demand is going to look like going forward. But that wasnt my question. Why question was is there data that states how many people want into the housing market, if so how many? That will tell you if our current level of homes is anemic or where it should be. But I do understand your position on price point vs demand.
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  148.  @CaptainCaveman1170  why would they invest in depreciating assets with diminishing roi? There are easier ways to make money. Most of these investment funds haven't been through a single downturn. I don't think many of them will survive this recession. But with populism on the rise, you are probably right about the legislation. California is already banning foreclosures and evictions.
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  149.  @CaptainCaveman1170  it was only roi positive because of the near zero interest rates though. Those are never coming back.
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  150.  @CaptainCaveman1170  I would point you to the Phoenix market for whats in store for the rest of the US. Rental rates are dropping and vacancies are through the rood. Corporate REITs are losing their shirts there. Small timers too. When locals cant afford the rent prices, they crash. You cant pay more than you make. And when these companies go to refi, REITs always do short term adjustable rate financing because it increases the ROI, they will need to raise rental prices, which are already falling. It will spread, especially after the mid terms.
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  151. These companies, like the banks, wont mind if they have losses. They just need to control the losses so they can write them off for tax purposes without going bankrupt. That means spreading out the losses slowly.
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  152.  @ronaldwhite4223  The worst part is people dont want to see it. I get it its scary. But we have let every market, world wide, just go to crazy because of the cheap money for almost a decade. Only people who provide value to their companies will have a job. I can really understand why that scares people. Most people dont add anything to their companies bottom line. I dont wish ill on anyone. I just want them to be ready.
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  153. A lot of that was because of the tariffs the current admin had on lumber so Canada reduced exports. But apparently they sorted it out now and so lumber is just rolling in. The only thing keeping lumber up is excess liquidity in the market.
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  154.  @jimbobarooney2861  Maybe they do like my mother, shes a member of the silent generation though, and move in with me? Not to mention the millions of rooms at care facilities nation wide. I feel like we are going to see a lot of family consolidation simply for financial reasons. But I could totally be wrong.
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  155.  @ilikecontent2327  This is true, but im 47. when I was 23, my credit score was low. I was never a credit risk, just didnt have much credit before getting my first house at 23. First time home buyers usually have lower credit for that reason.
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  156. The house I sold in California in 2021 has seen the tax payment on the house go from $2900 (the last year I owned it) to $6500. Thats an extra 300 bucks a month that the purchaser has to pay. Also the home is in a flood zone and as the state hasnt kept up with the levies, my old neighbor said they raised rates 17%. On top of this you have millions of Americans with student loan debt, over 10 million who owe over 40k. The average loan payment is about $400 a month. And their deferment ends this month or at the latest, in September.
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  157. Because fools are easily parted from their money.
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  158. I understand your frustration, but the added money to the American economy is a blessing. Just like in the 80s with the Japanese, everyone thought they would own everything, they had to deleverage everything at a massive loss. The same will happen in this crash. This isnt the first time, the business cycle ever turns. Just make sure you dont get crushed under the wheel.
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  159. Thats not enough job losses. We have 10 million unfilled job positions. Each year going forward as the boomers retire, we will be short an additional 400k workers. Or are they not counting those jobs? I have yet to see a super market or meat processing plant that is fully staffed. Most mean plants are at less than 40% staffing. There are so many jobs out there that need to be filled we need many many more job losses, either that or to cut all welfare spending to able bodied people. The latter would kill two birds with one stone. The Fed savings rate is a joke. Its an average. So you have people like me, who before I retired saving well over half my monthly income, how many people did I wipe out statistically who saved zero?
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  160. People got stimi checks. Some people got 12k. 12k is a 5% down payment on a 250k house and 2% loan rates equals lets buy some assets. And so people did. There isnt a housing shortage. And because of the coming recession, people will have to liquidate their assets, which means selling things. The smart ones are selling their 2nd houses now.
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  161. Black Knight's earnings came in the other day, down 41 or 44% I think. The band is still playing and people are still dinning, but the lower part of the ship is filling with water. Auto loan defaults continuing to rise. Banks cant sell vehicles at auctions because the prices are to high. Credit card defaults continuing to rise. Roughly 50 percent of commercial real estate is empty. Inflation starting to come back, which yea it is because it never went away. But hey, the new GDP numbers are in at 2.6, which means the economy is on fire so the Fed can do more rate hikes. Everything is fine folks. lol
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  162. Its actually worse than this for the average American. The average American has a credit score of around 700. Interest rates for individuals with that credit score is over 7% now.
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  163. No that goes to the Fed for the overnight rate.
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  164.  @Shinka213  I don't blame you for not buying from flippers. But there are two types, those tgat improve a property's value and those that just hold. At least the first kind provides some value. The second kind is just a vulture.
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  165. There is a home outside Knoxville Tn. Last March, in 2021 it went on the market for 600k. It is 47 acres and a 2200 sd ft house with basement, barn, pond, and a few out buildings. Steadily cut the price down to 350k, finally its gone contingent, but we will see if they can get a mortgage. People are still asking insane prices for properties. They still dont understand. Anyone who is sane and needs to sell should do it now. Once the layoffs happen and everyone start short selling its going to get multiples worse
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  166. None of those things really matters. With the data we have now we know inflation will hit at least 11% before the end of the year. That means the Fed will have no choice to increase the Fed basis rates regardless what the mortgage market wants. Everyone is living in denial. They think interest rates might go to 7%, but they will have to go much higher once the foreign money starts pouring into the US for a safe haven. The smart people who are selling now are going to put their house below market rate to get out now. Once the layoffs start in mass and people start missing payments there will be no one to buy. Even most cash buyers will wait for the bottom unless they need to buy. Its literally the worst case scenario. Every time I look at the future data it looks worse and worse. Way worse than I even thought two months ago.
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  167. Meta is a nightmare of a company.
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  168. They stopped, like people just stopped buying unless they absolutely had to. The housing market didnt really pick up again until like 84. But back then you had to actually put down a down payment.
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  169. Not if they require liquidity. The main reason why Feds are raising interest rates, per their own words, is to dry up liquidity. So they can sell the asset and gain liquidity. Or hold the asset, keep the steady stream of income and lower their standard of living because of other losses in areas. Most people wont lower their standard of living. They will sell the asset, in this case, a house. And because of that, once people do, and housing starts declining it will be a race to sell first to get maximum value. Then the stampede begins.
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  170. The Fed isnt going to flip because of the housing market. Inflation is killing everything. If they lower rates inflation will grip he housing market again and up will go prices and people still wont be able to afford. The Fed only has one path forward, raise rates until it crushes inflation. And all these people saying oh it cant be worse than 2008 are either coping or hedging their bets so after they dont like over reactors. Putting housing aside and looking at the rest of the economy, inflation is still eating at everything. To get back to where we need to be on an earnings to mortgage ratio, so the rest of the economy can operate healthy we need housing prices to drop 40%. And the higher rate increases go the more homes will have to drop on top of that 40%. People seem to forget that every dollar they are paying extra on a mortgage is not being invested or spent in other economic activity altering the greater economy.
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  171.  @jamisonmunn9215  This is just a replay of the migration from the East Coast to California that occurred in the late 60s early 70s. The problem is that California spoils you as far as weather. And modern people are so, I dont even know what the proper word would be, that they cant handle the difference.
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  172. If prices drop 50% it will be very different from pre covid prices. March of 2020, when lock downs started, the median American home was valued at $273,000. May of 2022, they were $387,000. That is an increase of $114,000 or roughly 31%. If houses fall 50% in value that would bring the new median price to $193,500. Thats a difference of $79500. Increasing and decreasing percentages work differently.
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  173. Wait until the corporate debt starts to get rolled over. Its going to be nuclear.
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  174.  @ShinkuGouki  They are always stubborn at first. But when you are a house flipper having to pay a mortgage every month eats into your profit margin. A lot of houses out there on the market are flips. When they have to drop their prices to sell in a timely manner it pulls down prices for the normal joe as well.
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  175. Technically they are losing money on each mortgage they give, the interest on the debt doesnt even equal inflation.
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  176. These companies are still playing chase the tigers tail. These cuts arent enough to draw in people to take the risk to buy in. By Dec they will offer even better deals to clear this bad debt off their books before the 2nd quarter starts, just like in Dec of 2007. What doesnt get sold will be sold for even less come the new year. We already did this in 2007 and 2008, except then we had lowering interest rates. What makes these people think that its going to be different or better this time with interest rates climbing?
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  177.  @realestatemindset  It is the doom of men that they forget. Its always different this time. Until its not.
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  178. All of the things discussed are trailing indicators. If you want to look at leading indicators, look at transport. And ocean and rail transport are a dumpster fire right now. After the holiday season its going to be a blood bath. Just so little is being shipped right now and everything is discounted be retailers. Just look at Nike's numbers. Way worse than 08 and we arent even in the shit yet. 44% of its product base is being discounted right now to make way for the new stuff coming in. And then there is the strength of the dollar that is murdering them and tons of other companies.
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  179.  @realestatemindset  You are welcome. I enjoy your channel. Unfortunately for those of us waiting to buy real estate, it, like unemployment is a trailing indicator. So for us, in that case, patience is a virtue. Even if you want to pull a trigger on a some good property. It can be nerve wracking. But in the end, we will win.
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  180. Nah the recession is canceled. We have a 2.6 annual GDP, decreasing CPI, and now a jobs report with over 500k new jobs. Why do I feel like I am being gaslighted?
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  181. Dont worry, the banks already have a plan for this. Socially equitable banking. Have a bad credit history, no problem, if you are the right demographic. What people dont understand is that this is just a leash and a collar to force you to keep on the work treadmill. I keep hoping people will see this, but im shocked how even the smartest and most educated seem blind to this.
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  182. I have always believed banks never fully liquidated their foreclosed assets after the last housing crash. Also some of these homes may be the estates of recently deceased boomers and silent geners that have yet to be liquefied or settled.
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  183. April, by April at the current rate reverse repo will be empty. Once that happens banks will have to massively increase rates to square the circle. No one is getting a car loan or auto loan below 10% after that.
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  184. How does a person make an estimation on how far home prices will decline without taking into consideration the massive amounts of layoffs that will be coming? Earnings report after earnings report see corporations just bleeding money. When the layoffs start it doesnt matter how good your mortgage rate is. When you dont have anything saved and are over leveraged to the gills, you will be done.
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  185. With a 43% increase you would need to see a 28% price decrease to come back to pre covaids baseline. That is easily going to happen. If you bought in late 2021 or 22, you bought peak market.
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  186. In East Tn we are seeing houses that are appropriately price go fairly fast still, but the ones with 40 year out of date features or need a lot of work cant ask the same prices as they did even 6 months ago. Typically seeing 40-50k price reductions before selling.
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  187.  @armchaireconomist8648  Well currently there are a million single family homes under construction in the US. Also there are an additional million apartments units under construction. Add to that boomers getting older and passing away, going into nursing homes, or moving in with kids (Boomers own 44% of all single family homes) these assets will be liquidated. Then there is recession. People lose jobs, have pay cuts, and have hour cuts. In a household thats over extended, needing two incomes to make it, even a cut in hours will force homeowners to sell. For an Arm Chair Economist, you would think this is pretty easy to see, no?
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  188. Why do you assume these are investors? How do you know they arent owned by banks or 2ndary residences aka summer homes? But if alot of those homes are bank owned, never regained their values from 2008, if banks sell them, then they take a loss. Then add a decade of maintenance and damage issues. Back taxes too. Also home prices need to stay high, what happens when tax revenue falls and states start going bankrupt?
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  189. Probably because they closed their businesses. In San Francisco something like 50% of small businesses in the city closed for good. The PPP was the small business owner severance package.
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  190.  @realestatemindset  once you see it, it cannot be unseen. Health to you and your family.
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  191.  @user-zk6fc3dw9e  I've seen houses re listed the same day.
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  192.  @realestatemindset  it will not be pretty. Considering how many investors are literally betting on a fed pivot. It's like a religion at this point.
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  193. No, they are just trying to live another day. Margin calls are starting. They cant just hold the cash, they have to at least try to invest it. This is what happens when you are over leveraged. You dont have the option to just stop.
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  194. New construction always drop prices first. Then home owners follow suite. No one wants to be the first in their neighborhood to sell for less. But once it does, people understand that to sell they have to drop prices. Its why we are starting to see all these insane price drops. They dont understand that their houses are priced way to high, yet.
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  195.  @galeriafuentes  You can have the same outcome, with very different causes. You have blinders on my friend.
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  196.  @galeriafuentes  Not really, one typically gets hit by things they dont see. But you are right, this time is nothing like last time. Its actually worse. We never really fixed the issues from before. Just covered them up with free money.
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  197.  @AJSHOPE  indeed. Another factor that many arent taking into consideration is that commodity prices have fallen to points where these houses being constructed now are almost half as cheap to build as they were a year ago. Home builders have huge margins that they can cut before they hit any flesh.
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  198. Yea they have to compete with the Fed dumping their MBS's. Thats what caused the spike in interest rates. And when the Fed doubles the amount they are going to be selling every month, there will be another spike. I am not sure how people havent put this together. But I am glad im not alone in my thinking.
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  199.  @danielfiore8865  The problem with that definition is that millennial family formation is well below the historical trend.
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  200.  @mikesoreal  You just nod a lot and say, "Ah. I see." "You are so knowledgeable." "You dont sound like you are appreciated enough by your peers." They are two of the easiest professions to manipulate.
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  201. Since these small banks, the ones who are at risk of collapse, are the one who do most of the lending for mortgages the exact opposite would happen. These banks will end up having to tighten lending standards making it harder for homer purchasers to get a mortgage. Perhaps you are talking about all cash purchasers?
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  202. My sister bought a home in Folsom in the early 90s. 125k. lol This is crazy
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  203. Appropriately priced homes still sell rather quickly, but thats going to dry up once the recession starts.
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  204. with the water shortage out there its insane that local jurisdictions are allowing this. I mean it looks like they have built all the way to the Red Rock Canyon National Conservation Area. When Lake Meade goes dry and the new water agreement gets passed, many of these little communities are going to find themselves on permanent water rationing. If regards to why Lennar is throwing all in, because of 2006-2008 and builders utter abandonment of many master planned communities, many municipalities require home builders to completely build out master planned communities now, to make sure they get the tax revenue that they were promised when they approved the projects.
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  205. We have had historically low interest rates bubble prices higher than they ever have been. Now we have the highest inflation in US history and an incoming recession of epic proportions and demographic shift away from a growing population. Housing will never, outside a few urban places, be a growth asset ever again. Not until people start having babies, them you will have to wait a quarter of a century for that growth demand to kick in.
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  206. These values are in nominal dollars. They arent even adjusted for inflation. When you adjust for inflation the worth of the house is already in decline in most places. Inflation is eating everything. Meanwhile we hear talk of soft landing or no landing and Congress spending like there is no tomorrow. Put your hip waders on, they are going to shovel it deep. We have an election year coming up.
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  207.  @HappyandBlessed-wj7gc  I own multiple properties. I'm cool. But you don't understand the difference between real and nominal prices do you?
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  208. Because only the south saw home price increases. lol Respectfully, yea prices here in the south have gone up a lot. But they are much worse in Texas, Arizona, Utah and Idaho. On the positive side for southerners is that home prices are so high that the average southerner can no longer afford the average house sold. That means prices will fall. They have to. There is no support for them to be that high, only "irrational exuberance".
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  209. Layoffs have hit the tech heavy west first. But it will roll like a tsunami to the east coast pretty soon. There are just way to many over leveraged companies that make no profit for there not to be massive layoffs.
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  210. That doesnt include bond measures, only assessed value. So if a county or city doesnt get the money it needs from that assessed value it just throws bond measures on the ballot. They get you either way. But you "feel" protected.
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  211.  @eric3969  ballot measures have bonds in the very often. 2% increases my ass. Lol
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  212.  @flawlessvic  I think thats more an assessment of the value of the dollar more than the value of your house. Thats what happens when you make money out of nothing.
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  213. Each individual is smart, but people, plural, are dumb. This video on its own, if Americans werent so caught up in the Kardashians, Yellowstone or sportsball would be enought to cause bank runs. They are wise to be wary of telling the truth. Also never put anything in a bank except what you need to pay your monthly bills. The shortest T bill matures in 4 weeks. If you are buying real estate, in a down market, it should be easy to get a buy to agree to wait anywhere from a few days to 4 weeks for a cash deal.
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  214. Those home prices are nominal dollars. What happens when you adjust for inflation in real dollars. Prices are down. Its not like we are in a near zero percent inflation environment like we were the last two decades.
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  215.  @HappyandBlessed-wj7gc  tell me you dont understand nominal dollars vs real dollars without telling me you dont understand. lol
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  216.  @HappyandBlessed-wj7gc  you do understand that real estate, prior to the 1940s was a deflationary asset, right? That moment in time, where real estate held value or even grew in value vs inflationary pressures is done. Which again has nothing to do with the monetary value of a thing adjusted for inflation. Hence my nominal vs real point. But perhaps you dont know what that is. Thats ok. Why do you like your own posts?
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  217. Thats all this is. I am glad someone else sees this.
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  218. Lumber is in the high 400s low 500s. its fairly stable. what are you talking about?
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  219.  @sues3218  I don't know how old you are, but Millennials are more scared than greedy. They were hit hardest in 07 and now they are going to get hit again. I think fear, some of it justified led to fomo. I hear boomers and fellow xers just mock Millennials. But they are going to be the ones hit hard, again.
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  220. why hold a rental that you get a 4% return with all the additional work needed when you can hold a corporate bond for the same price or more with next to no risk?
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  221.  @MHiggins  No there is a point. Its why duplexes and apartment buildings are a thing. The dwelling isnt the commodity, the people are. Or more exactly their rental revenue is. But rentals shouldnt make up a plurality of neighborhoods. Thats not good for the community, the owners or the renters. Most American homeowners are going to be upset as their on paper wealth shrinks with the devaluation of their real property though. I personally think that housing will return to being a deflationary asset like it was before WWII. And this says nothing of city and county tax assessors. Some communities are going to go broke.
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  222. The median size of an American home is over 2200 sq ft. That combined with aging boomers and smaller levels of family creation scream for more multigenerational living arrangements. Boomers SSI wont be able to keep pace with inflation or the property tax burden and the younger generations dont have to get a mortgage, its win win. Currently multigenerational households account for 18% of all households. Thats only going to increase as the demography of the US greys. This will have a further deflationary push on real estate prices and rents. The question as always, how fast will this happen. It happened very fast in 2008 as people lost their homes. It will be interesting to see what comes of it in the future.
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  223. When I was a kid back in the early 80s we had something like this happen where I lived. A development on the other side of the freeway had to be stopped not because the builders couldnt build or didnt have the money, but because the residential area needed at least two ingress and egress points for fire and safety codes. That sounds like what has happened here. The company that was contracted to build said roads and bridge lack funds. The question is that since they are a subsidiary of the builder was it an intentional delay. The home builder company might be trying to earn extra money by wanting them out so when the bridge and roads are completed, they will be able to sell those homes for a higher price. All that said, this women and the other 40 odd buyers should get a lawyer and sue for damages both to the home builder and the construction company doing the roads and bridges.
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  224. Notice the house at 17:00 is empty. Like no furniture empty. Like cant even bother to stage it with furniture empty. These homes are everywhere. In some markets one in five homes are like this. The demand was all fake. Driven by uber cheap money trying to find a home. Now these assets have to be deleveraged so their purchasers can maintain liquidity.
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  225. I am unsure if they will be able to get the unemployment to spike like in previous recessions. The reason why is there are not enough young workers to replace all the boomers who are retiring. At the same time you are seeing a reshoring of many industries post covid. This means wage inflation is to be expected and probably wont be controllable. This is what happens when you dont have enough children for 3 generations. Eventually the last large generation retires. This says nothing for the roughly 7 million working age men, like myself who are no longer working. In my case I am 47 and retired. I am done with the rat race. No amount of money will get me to return to be abused. The tax burden makes it not worth it. As for the stock market, a lot of the money coming is from panicking state funded retirement schemes, calPERs being the largest. Most of them are short so much money that they are going to bankrupt states. They MUST have returns. The only way to get that is to gamble in the market.
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  226. If the inflationary rate is 6.5, they need a 150 pt increase to get that rate to just be neutral. People are talking pivot when we are still at effectively negative interest rates.
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  227. California wont have a foreclosure wave. They have already made that choice politically. If they allow homes to be foreclosed on it will cause a drop in home prices and therefore tax revenue that the state and municipalities just couldnt survive. Its going to happen there regardless, but covid sped things up by about 5 years. If you live there and wont leave, you really need to prepare for that.
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  228.  @chrisdaniel2759  Thats because of boomer demand. You had the largest demographic in American history entering the housing market in that time period. It is the same reason, why today, 40 years later, as these same boomers start to die, you will see deflating demand. In 1981 the average age of the first time home buyer was 31. The Boomer cohort demand caused all sorts of inflationary and deflationary actions. We dont have that today. Then next two upcoming generations, the Zoomers and gen Alpha are together not as large as the Boomers were and thats over twice the time span. All sorts of economic variables, that people have long taken for granted, are about to change.
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  229.  @johnnydoe2672  they higher housing prices go, the more they can assess them for. So the more the municipality makes off them.
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  230. The Federal government wont be able to do that due to higher interest rates. Not without cutting in other areas.
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  231. we are going to have a recession with inflation. Just like at the end of the 70s and early 80s. As the recession hits they will try to fix it by lowering rates and pumping more money in, that will cause inflation as the US continues to reshore so much that we have pushed overseas for the last 40 years. How good or bad it will be no one can say. What I will say is that the Federal government cant just spend more. Interest rates will explode if they continue to spend like they are.
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  232. If anyone thinks mortgage rates arent going to keep rising you are nuts. We still have effective negative rates when you take inflation into consideration. Before mid year next year, the Fed rats will increase at least 500 pts. If you think that wont have an effect on mortgages, well, good luck with that.
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  233. is 20 to 30 mile and hour wind a lot in Texas? Its pretty common in parts of California. Ive noticed that since moving to the South East that folks tend to get anxious about anything over 20 miles an hour as well.
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  234. Demographics wont allow it to recover. The great lie is that demand is every increasing. It is not.
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  235. Thats because Ramsey and people like him fail to understand that demand has reach an inflection point. This is a completely foreign idea to him and many others. So his idea is everything will increase in value, including housing. But it wont. Housing as an inflationary item is done. As the boomers die and the Zoomers pick up there just arent enough zoomers to keep demand where it is. So you will have a glut. From a demographic standpoint 2020 was the high water mark. But insanely low interest rates and piles of cash kept the frenzy going. All of that is done. This is a new world, those that wont adjust to the new realities will be dead.
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  236. People forget the number of flippers in 2005-2008 time period. These people drive up the price of real estate. The smart ones get out early. The greedy ones are always left holding the bag. On the street behind me in California over 50% of the new homes built were all bought by house flippers. They sat empty for two years.
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  237.  @Pilostudio  Yea thats sad. I mean by the end of that time period everyone and their cousin where trying to flip homes. I do feel bad for the people who did it for like a normal job and not as a get rich quick scheme. Those cable home channels made it seem like easy money.
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  238. Yeah it bough homes in the highest bubble cities, Atlanta, Dallas, and Charlotte. And I have no idea where you got that 350k homes bought in 2021. Thats just factually wrong. As of June 30 2021 American Homes 4 Rent only owned 54,785 homes compared to 53,984 from the previous quarter. Are you saying since then they bough 350k homes? Where are you getting your data from?
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  239. This will stop when they hit the realtors and the mortgage originators for assisting in said fraud. Fraud always pops up when people get hungry. Starving people are very short sighted.
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  240. Digging that Alf shirt.
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  241. Did you know in Blackrock's most recent earnings numbers the value of the assets they managed declined by 17%. All of these companies you are so worried about are going to have to liquidate assets to pay off investors in the near future. If you regulate them, not only will that still happen, which will hurt everyone's 401ks and pensions, but you will have another layer of intrusive ever further grasping government entity crushing Americans. Regulation doesnt work. It never has. It just keeps the little guy out while the big players drink tea with those in power. I am not sure how most people dont understand this now, especially after 2008 and the SEC.
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  242. education is often expensive.
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  243. You could just as much as cheap buyers dont want to pay full price for a house. You act like getting the most for asset is a crime. Is housing overvalued right now, yea I think it is. But I dont begrudge a owner for selling the asset for what they can, its the fool buyer who is at fault.
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  244.  @1Skeptik1  Housing prices didnt decrease then because the boomer demand inflated everything. We dont have that today. In fact, boomers are leaving the market, 29 percent of baby boomers have died and 44% of all US home owners are boomers. And as they inflated everything when they entered, as they exit it will deflate.
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  245. the Shadow banking system is going to collapse. And its utterly unregulated. So it will be worse than anyone thinks when it does unwind They will need to sell assets to keep from imploding their own positions but the overall economy as well, including real estate. You are very correct that housing will come on the market from them. The question, as always, is when. And considering the Fed is "pausing" I would guess they are close to their breaking point. People dont understand how companies like Blackstone and Blackrock actually make up over 40%, as of 2015, of all lending in the world. God only knows what it is now. This wont just be a US problem. It will be world wide. And it will make 2008 look cute.
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  246.  @JIMFED63  So you have sold your home for a 45k gain? Or are you just looking at what someone tells you its worth. I hate to tell you this, your house, just like any other asset is not worth what you paid for it. Its only worth what someone else will pay for it.
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  247.  @JIMFED63  Thats not your house now is it? And just because thats the asking price, that doesnt mean thats what is sells for. In 2008 I bought a home in California for 216k. DR Horton was asking 523k for it. Do the math! Listed prices arent sold for prices. But keep coping.
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  248. Serious question, is the 4.4 months of supply on your supply graph resale, new homes, or a combination of both? If so what is the difference between new homes vs resale? Is this data even available? Excellent content as always.
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  249. Those houses at the 13 minute mark are future cat lady houses. Low footprint, easier maintenance, and small yards. Morgan Stanley pretty much hit the nail on the head with this one, I believe their prospectus said that 50% of women under the age of 40 will be childless and single by 2030. Those houses may be higher cost per square foot, but a lot of people are going to be living in them. Thats what happens when you dont make families. Why would a single person want a 2500 sq ft house?
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  250. I bet people wont be complaining when they get buys of a lifetime when housing declines in these markets. From the comments here I dont think people understand the real effects of regulating a market. It keeps the new people from joining, they cant break in due to the effects of the higher costs of regulation and that only crystalizes the power and control that the companies they dislike even more. The end result is less people who own a few rentals and more mega corps and hedge funds owning them. Its like people dont think beyond the first step. Only that the price is to high and not WHY the price is to high.
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  251. These are sucker cuts. The same thing happened in early 2007. By Dec of 2007 it was a fire sale. This time wont be any different.
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  252. I remember when the only thing on mountain house was a bar and cattle.
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  253.  @asw654  40% of houses are owned by boomers. If you look at a population pyramid of the US demographics all you see is declining demand because each age cohort is smaller and smaller. That is going to last at least the next 30 years while the largest demographic cohort dies. That leads to a housing glut.
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  254.  @JohnWick-su2nh  Really, I wasnt aware. I left in 2020. The only thing I regret is not leaving sooner. Its a shame what has happened to California but I couldnt stop it. And everything all my extended family owned burned. So there was little to keep us there at that point.
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  255.  @realestatemindset  Mind yourself, i heard its pretty wild down there now.
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  256. I think it depends on how bad this recession will be. If it hits hard quickly we will see more home buyers unable to purchase anything and more homeowners forced to sell due to not being able to make their mortgage note.
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  257.  @georgia777  If you are living in it the rest of your life how is its potential value any concern? Real estate, like any asset class can be an investment. Thats not what you as some who lives in it should be looking at. Especially since you own yours outright, as you said on another post. Its just a place to live. Now that may mean you may not have as much in valuable assets to transfer to your heirs but that doesnt make you poorer. Unless you intent to sell your house in a down market. In fact it might make you more money because when your property gets re assessed it will be at a lower value, thus reducing your property taxes.
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  258.  @donwhittaker5899  That only covers the assessed value. That doesnt do anything about bonds. Looking at my last property tax statement from when I lived in California the assessed value was only have the cost of of my total tax liability. The other half was county and school bond measures. Prop 19 doesnt touch them. Do you really think that the state wont just push more bond measures if they lack the desired revenue?
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  259.  @donwhittaker5899  Well, if you dont want to believe it thats fine. In most Californian counties the average costs of bonds on their annual property tax is 25-50% of the tax owed. If property values decline, the state will just squeeze money out via bond measures. Thats what they did in 2010-2015. And as you said you have been in your house for 28 years so your assessments have been capped. The average Californian cannot say that. You are in a much better position than they are.
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  260. I am sorry your dishwasher is broken. Seems to be going around. Bonkers.
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  261.  @xiangli2452  Right, that is the big question. And we will find out in a few days. One will be a lot of pain quick, which is better for everyone; business, governments, the regular joe. Holding on to them so they just roll off will make the pain so much longer. The Fed is totally in a pickle now. The never should have lowered rates in 2018. That made everyone thing the Fed is always going to back the markets. Powell needs to be flogged then hanged from the nearest light post. I am an Xers and retired early, my heart goes out to Millennials who got screwed in 08 and now are about to again. That generation is never going to be able to recover. They are going to have to raise rates so high now it will cripple the economy.
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  262. I dont believe your FRED chart is adjusted for inflation. The charts that show both the inflation adjusted costs and nominal costs are best. It shows people the true destructive power of inflation and the reason why prices for homes are so much higher. As always I appreciate you content.
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  263. You are paying back in inflated currency, so the price is cheaper than it appears. At least until the debt bubble bursts and the dollar dies. But that could be a tomorrow or in 100 years. And if the dollar dies tomorrow, making your mortgage note will be the least of your problems. Why do you think the Fed has a target of 2% interest and not zero? It makes the repayment of all debts cheaper. This keeps the economy moving more than it otherwise should. Also you can write off all your interest on your taxes thus keeping that money for yourself. Even today a 5.5% loan really a negative interest loan at 8.6% inflation.
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  264.  @Canadian_Eh_I  The smart drop them early, to sell the asset. Pride makes people into holders. Holders are always left holding the loss.
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  265. USD is backed by Oil. You dont have to like it. But thats just the way it is.
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  266.  @Tony-hx2fj  Housing has inflated because of demand. There is no more demand. Demand for all goods peaked in 2019. Demography tells all. Housing will return to the deflationary asset it was prior to WWII.
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  267.  @Tony-hx2fj  I actually bought in Dec 2007 in Northern California. the house was valued at 510k, I bought it for 216k. DR Horton just wanted to close its offices so took the loss. My house dropped in value to 165k. Those were good times. When I sold it in June of 2020 it sold for 505k. Got the hell out of that state. You are right about people who use their house as a piggy bank, which they cant do anymore. Those folks are going to be some of the first to go down, they have to be so way over leveraged it isnt funny.
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  268.  @Tony-hx2fj  Dont say that, let me dream a little. lol
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  269. Look at all those nations demographics. You will have your answer as to why the prices are crashing. Home prices will crash less here in the US because we at least had a sizeable Millennial generation unlike other nations whose were flat. There is no demand. The only thing keeping the markets propped up where the crazy low interest rates and all the Chinese buyers. In the US our largest age cohort is now past 30. After another 5 years there will be no demand here either. That will be about 55 years since the US had a birth rate above 2.1.
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  270. Adjustable rate mortgage use is through the roof. Also a lot sold their previous home and then with that extra added equity could pay higher down payment for the new home. Its not sustainable. Higher house prices are required for there to be people with enough money to purchase. Since the market is now flat everything has stalled so no new houses will be sold without price drops. And new constructions are giving all sorts of discounts. But like always home owners who are selling dont want to do that. So they hold out but then the market starts its downward track and they lose even more by holding out for top price. Finally there is acceptance of price dropping then its a race to the bottom. People needing to sell will drop prices more so that their house sells Finally when all demand is met prices stabilize. This is the same thing that happens in the stock market. Also this isnt even taking into consideration how bad this recession is likely to be and with the number of people losing their jobs it could very well be a blood bath in the housing markets. Any one who thinks they know cant really. it could be 10% to 60%. But right now it looks like its the calm before the storm.
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  271. Two younger couples I know bout who have mid 700s low to no debt and good jobs only qualified for 180k. There is your big disconnect. The banks already know whats going to happen to the housing market. They know they arent getting bailed out again.
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  272.  @sound4mation  you make 200k congrats. No disrespect but the median household income in the US is 68k. You are a poor example of "normal". And as I stated their scores were in the mid 700s. Young people don't have 800s because it takes time to get there. Still they both were only approved for around 180k each. But this is in the south east. No idea where you live.
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  273.  @sound4mation  Ah, I see. Well with 200k yearly earnings, depending on your spending habits and your tax burden, you should be able to at least have 100k per as spendable income. With that, so long as you could afford a down payment you could afford a 400k house pretty easily, that down payment would be about 80k though. Yearly servicing of that debt would be about 28k per year at todays rates. But I dont know your personal spending habits. But outside the west coast and the north east it should be doable. Though that income generally states you live in those areas. You dont want to buy right now anyways. Next two years will be a blood bath.
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  274.  @joeswanson733  lmao yes we did. Blackrock has existed since 1988. They buy all manner of things, including homes. REITs, Real Estate Investment Trusts, have existed since the 1960s, you just think that its a problem now because people make a big deal out of it. But the homes they own is a rounding error. REITs own about 500k properties, not homes, properties, and slightly more than 15 million acres of land. If you think REITs owning less than 500k American homes is causing all these problem, well your thinking meat aint good, respectfully. So walk with me here. If REITs own 500k properties, the maximum number of homes REITs could own is 500k, right? Well right now, there is over 83 million single family, detached, homes in the US. That means, in your head, REITs owning a possible 0.6% of the housing market is the problem? And lets be honest, the real number is lower. Most REIT holdings are in commercial real estate. We have this problem for one reason, inflation. Our nation, and many others have had horrible monetary policies since 2008. And now, there is no more room to wiggle. Prices will come down. Why would Blackrock invest in a deflating asset?
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  275.  @joeswanson733  Things are never as bad or as good as people say. Dont be so down. Just be ready. Always be ready.
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  276.  @njerseydavid  It only works with adjustable rate mortgages. But then you have to refinance. That is the gamble. And its what happened in 2007-2008.
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  277.  @njerseydavid  They will be if they arent presently. But some may have enough padding to get through a year or so thinking, "the fed will pivot", "interest rates will drop so I can refinance" and other such things. Its all cope as the kids say. This is the same thing that the renters and flippers ran in to back in 2007-2008. And we are going to have a repeat. But this time if the Fed loosens credit inflation will explode. So there will be no reduction in rates unless there is some sort of systemic failure but then the markets are dead anyways. I would imagine in many rental markets they are negative in rents vs costs already as you stated. It will get ugly.
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  278. The idea that real estate will increase is because its assumed demand will increase. The problem with that is since 1972 the US has not been at replacement levels. Now that the boomers are beginning to die, demand will crash. And either those houses will transfer to their child or children, or they will sell that asset. One way the demand is neutral, if they keep the asset. But if they sell it, demand is dropping. Currently Boomers own 44% of all single family homes. Thats a lot of homes. Add to that the Fed can only raise rates to curb inflation and nothing else. Everything will drop in value. The more I look at this, I think historians will look at what happened in 2008 to 2022 as one event. We failed to take even basic steps to prevent something like this again, all so fake wealth could be generated in the stock market. I have recently, here in east Tennessee, seen three houses purchased in the first part of the year re hit the market. They say the same thing. Seller decided not to relocate from their home state, meaning they couldnt work from home. So they want to sell what they paid for it. The problem is that all overbid each property that was already over priced. Then you have the house flippers. And then the people who are going to get laid off in this recession. If you arent liquid now its going to be a blood bath and its going to be your blood. Powell will go down in infamy for destroying the American lifestyle for at least a generation to come.
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  279.  @realestatemindset  keep up your content. The weekend talk q&a seems awesome for those who want knowledge. Health to your family.
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  280. Dont forget taxes
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  281.  @ShayeSells  Thats an extra 700 per year, not just once, every year. People can account for an upfront cost of a mortgage. Yes it will price some out, but nothing surprises a new home owner than the first tax bill. It adds up. As a former Californian who left I can attest to that. Your mortgage doesnt change, unless you have an adjustable. And then there are the rental buyers who dont get protections that live in owners do. Their taxes just scream up.
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  282.  @realestatemindset  there was a report several months ago of people renting out rooms just to maintain their mortgage payments. But since then I haven't heard anything about it.
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  283.  @kevinflynn5916  Energy suppliers never have fully ramped back up since covid, they have a lot of padding. And if Russia's oil and gas goes offline permanently, which it seems we are intent on causing, we will be short 5 million barrels a day on just oil world wide. Oil companies will do fine either way. If you are talking about electrical generators, on that you may very well be correct. Some places over half of people are behind on their gas and electric bills. Going forward, I dont see how that doesnt get worse.
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  284. Hungry Hungry Hippos. Its a simple game. But there are limited players. When you do play chance is the major factor but you can always tell when someone isnt playing their hardest. Whats the point of doing anything if you dont go all out? And of course the Green Hippo is superior. Semper Fi
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  285. Nah, panic is setting in. People will start dumping their prices. You are already seeing double digit price reductions in many markets. As recession kicks in and people have to sell or foreclose due to job loss or reduced hours, the people who are willing to cut prices will sell their assets. The ones who are stubborn wont and will end up defaulting when they lose all their equity.
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  286.  @matthewsmith2362  They have to there just arent enough dollars to do all the trades with. At the end of the day, they would still rather have dollars. Anyone telling you otherwise is lying to you.
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  287.  @animaladvocate8938  Commercial will cause contagion via RIETs and banks that cant meet cash flow demands.
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  288. With China, its no different than what the Japanese did in the 80s. Any Japanese person or company that could by assets in the US did. And even taking a massive loss which they ended up doing, they still lost less than they would have if they invested that money in Japan. Thats what Chinese investors are trying to do, lose less. But China is going to implode and take most of the world with it in the next few years.
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  289. The MBS's for commercial real estate are what is going to kill the economy this time around, currently they are rated at about 20 trillion US dollars. You have damn near 20% vacancy rates and RIETs are needing to roll over their debt but cant when its going from 3% to 7%. So companies like Blackstone are just letting buildings go, multiple 100 million dollar type buildings. They are defaulting on MBS's. All of this is going to blow up by the end of the year and its going to take a lot of banks with them. At the same time thats going to make it even harder for banks to lend for regular folks for mortgages and eventually that will hit businesses ability to get capital for day to day operations let alone expansion. The kicker is the news media has either no idea this is going on or just dont want to talk about it. This next recession is going to see a massive deflationary crash. And while people are like yea now I can buy, that means all these companies, companies you have your 401ks in, companies you work for, companies you buy from, are going to get utterly crushed. We never resolved the issues from 2008, we just papered over them. If they try to again, inflation will eat everyone. So everyone is going to have to take a big bite of this doo doo sandwich. Great time to be alive.
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  290. "used" home price drops always trail new home sales. No one who ones a home wants to be the first to sell their home for a decrease over the last guy. But when it does happen it changes everything in the market. If things happen the way they have in the past, you will see that in June or July of this year. And by the end of the year it should just drop. That said, I am just some guy. But I did manage to retire at 46.
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  291. You wouldnt have needed any regulation if interest rates werent insanely low. The low interest rates caused this. Both this and the previous administrations did this.
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  292.  @realestatemindset  If Powell has balls and doesnt waffle. The Fed loves to waffle. Its like trying to figure out what a cryptic answer from the oracle at Delphi means. Honestly they need a 50 point bump for the markets to take them seriously. And he needs to be painfully direct. I dont have hopes on either of those two things. They are to worried about the market to do their jobs.
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  293. Governments and the economic folks dont want to say a recession yet because job losses havent piled up to the point that we see an increase in unemployment rates, but we have already lost almost 2 million jobs. The problem with that thinking is that layoffs have always been a trailing indicator of a recession. Add to that that we currently have over 9 million empty jobs that boomers use to hold. And as more leave the job market there will be no new people to take their place, the boomer generation will just be that large. But eventually all of those empty jobs will be culled and we will start getting to real job losses that increase the unemployment rate. And when that happens there will be short sellings and foreclosures.
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  294. Question, have there been any recent polls or studies that show how many Americans who dont own homes want to buy? Why is it assumed that the demand for homes in 2022/2023 is the same as in 2018? The oldest Millennials are outside the family creation range which is generally the main reason people buy homes in the first place. The next generation, the zoomers is so small it wont even make up half the numbers of millennials. So should we assume that demand for housing is the same? It certainly wont be going forward. Just wondering what industry data says on this?
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  295.  @CaptainCaveman1170  a land lord does. Even more so when the asset he is renting, in this case real estate, is not gaining in value.
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  296.  @CaptainCaveman1170  You do understand that as everything devalues, the people who have money invested in these REITs will need their money back to make margin calls right? As the boomers retire and retirement and pension plans have to pay out the money they put in REITs will be pulled out to make payments. The majority of these companies wont be in business in 5 years. And even if the other ones that survive buy up all their assets it still wont be as bad as it is now. This will improve. I promise.
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  297.  @politicrackedpodcast9868  define mistake? I mean everyone needs a place to live. If you can afford it and your job is secure, it might not be the best economic choice to make, but it wont be crippling. Now if you over extended, need both income earners to barely make ends meet. Live far from where you work because thats all you could afford. Yea that probably was a mistake. More so if you over bid to get it. A lot of people are going to lose their jobs by the end of the year. And even more next year. Most people never plan for things like that. Like less than 10% of Americans have 6 months worth of savings to weather any hardship. Thats insane. And a recipe for disaster. Edit: And this recession already looks to be different. The drone workers will be spared, the garbage men, the truck drivers, the ditch diggers, the grocery store clerks all will be fine. Its the white collar college educated workers who are going to get absolutely mauled. And whats worse is they generally have little skill set outside of their office cubicle. Those people are boned.
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  298. the bottom will fall out in the 3rd quarter, right before the election. The failure of anyone in political authority to address this will show in spades. There is no more wiggle room. And most of the small and mid cap businesses will be out of cash by then. I still say either Walmart or Target will declare bankruptcy this recession, probably target, and have to reorganize. People dont understand what we are on the edge of. Thats not even talking about all the food issues.
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  299. Blackstone's earning numbers came out, revenue was down over 70%.(How their stock continues to rise is suspect at best) Their net income was down 75%. This doesnt even include them preventing people from withdrawing their money from them. Most of these RIETs, housing or commercial, arent going to survive. I mean right now half of all commercial real estate is empty. I dont think people understand the catastrophic systemic failure that is about to occur. People are looking at things like foreclosures and employment numbers. But those are all down stream things. Respectfully, I think a lot of people are worried about the icing on the cake while the cake itself is rotten. Make sure you are in a position to take care of your loved ones.
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  300. Realtors need to start being honest with their clients and tell them if they want to move their house then need to drop it at least a few percentage points below their nearest competition. I sometimes wonder if these people have the homeowners best interest at heart. Its only going to get worse from here.
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  301.  @realestatemindset  I enjoy your content greatly. I don't know how you content creators have time to do all that you do.
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  302. It use to be. Tell Bill Clinton and a Republican Congress thanks. It, Glass-Steagall was overturned in 1999. If you are unaware of what that was it was laws passed in 1933 that separated commercial and investment banking from each other. This is what caused the downturn in the Great Depression. Ironically, less than a decade after this was revoked we had the 2nd biggest crash in American history.
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  303.  @deborahcurtis1385  There is less than a zero percent chance of that happening. No way they forgive student loan debt. Only Congress can. And if they didnt do it when the party that cries about it held the House, the Senate and the White House, its never going to happen. I 100% agree with you about stagflation. With the change in demography, labor prices will remain high, but there will still be a lot of job cuts. And States need their pensions funded so taxes wont drop. Especially California.
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  304. The average age of a home buyer is because family creation, ie marriage is all but dead in the millennial age cohort. And the childbirth rates, well there are more women who are having their first kid in their 40s now than in their 20s. When you have this kind of change, its going to really alter the demand for traditional things, like homes.
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  305. The idea that most people get that low rate is funny. Less than 20% of Americans have the highest credit rating. And most of them already own homes. Most first time home buyers get a 6.5 rate right now if they are lucky.
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  306.  @josefj1776  its the churn. And a lot of those are just cheating the system so they can get benefits. If we cut off those benefits we would be doing much better. Lower inflation more products, lower prices.
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  307.  @janicenunn101  Only if they lack skills. Everywhere is short people. There just arent enough people to replace the boomers retiring, that and so many went into white collar and not blue collar we have a job mismatch. And so very many of those who are college educated to do non office work. They are to good for it in their minds. Thats fine, let them go hungry, most Americans are vastly overweight. Blaming computers is pure copium.
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  308.  @wageslave387  You can doubt what you like, in 2020 when the stimis started the average American home cost 258k. I guess you have a hard time with math like most Americans.
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  309. This wont end badly. Nah, it will be fine.
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  310. No. Kamala Harris's top economic advisor works for black rock. Did you misread something or do you have to try hard to be this wrong intentionally? Why would a criminal lawyer be a financial advisor?
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  311.  @realestatemindset  gratitude
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  312. Cost prohibitive. Re zoning fees, and all of that. Just wont happen.
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  313.  @realestatemindset  Yup either way I mean its a dumpster fire. Thats what happens when you just make it rain money. Monetary supply must have a natural and not a political constraint. It was a good video. I always enjoy your content.
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  314. Or you could just not buy homes from those people.
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  315. People complained about Japanese investment in the 80s. People were screaming that the Japanese were going to own everything. Union workers tearing up toyota cars on the evening news in protest. The Japanese invested their money here, over paid for assets here, because they understood that even if they took a 20% loss here, it would be better than the 50% loss they would take back home. I imagine a lot of the foreign investors are Chinese. They are looking to do the same as the Japanese did 3 decades ago. The US has always allowed investment from everywhere in the world. Its what makes American different and attractive. And while putting taxes or restrictions may address some small issues, I think the long term harm to investing would be worse than the current issue. High prices always fix themselves.
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  316.  @vids595  really? Wow! I never knew that. But people who are investing demand certain rates of return. And that's why you are going to see a sudden push and final push into real estate from these investment funds.
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  317. It is really that simple.
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  318. the problem comes when they sell. Someone has to buy. And as banks tighten lending standards prices will drop. The same thing is happening in commercial real estate. Over the next two years there is 1.5 trillion in commercial real estate debt that needs to rolled over. And due to the current market rates and the valuation of those assets, they will have to sell. Banks will have to tighten lending even more and it will spread to residential lending as well, even more so than what has already happened. All of these RIETs are going to get slaughtered. Its why they arent letting anyone pull out money.
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  319. @Marty McSuperFly! I was half hoping for someone to call me insane. I have never seen data this bad.
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  320. I would like to point out that the median home price of $187,200.00 in 2022 would be, adjusted for inflation, $286,622.98. The current median home price for a home in the US is about $454,900.00 for Q3 in 2022. Current prices would need to drop 37%, or $168,277.02, to reach those levels. For the 1990 price of $121,500, in 2022 inflation adjusted value that would be $265,794.67, So a little less than 2002. To get prices to that level you would need about a 42% price drop, or $189,105.33. But with that data, and with current demographic trends, do you think there is more or less housing demand in 1990 or 2002, than there is today? If you look at that data, you can clearly see demand is falling by volume of people needing homes vs available homes. Which means if interest rates hits double digits, prices will more than likely have to drop more than 42%.
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  321.  @realestatemindset  The demand I am talking about is a bit different than you are. I am talking about the total people who need shelter, best way to put it is gross demand. We are at the high point right now. Going forward for every person that dies only .7 will be born. And that will gradually decrease every year. This is just speaking about the US. In other nations its already far worse. I am probably being conservative in the economic dumpster fire in front of us, purely from a real demand standpoint. We have always assumed demand increase that there but now its going to be a negative.
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  322. Goldman Sachs came out and said 25% decrease in 2023 in 4 cities. If that isnt a crash I dont know what is. Do people think everywhere else will be fine? They are in the business of making profit. I think they know the wheels have come off. Even one of those goons at the WEF meeting said the same thing. Globalism is over. Thats going to murder a lot of people financially.
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  323.  @Mercedes1995  Well my grandmother is dead. So that doesnt really matter. But you totally missed my point. But I did enjoy your straw man. Zillow and core logic push prices higher based off nothing more than the original asking price. Its why prices kept going up. Look at the graphs. A huge spike in the value the same month the house is put on the market... shocking. But yea, my grandma's house. lol I am not even talking about the seller. Maybe you should learn to read a little, dude.
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  324. You will notice the data only goes back to the 60s. Why? Because prior to the 1960s housing was deflationary. Only the massive demand spike by the baby boomer generation caused prices to increase. Even after WWII with the insane spike in home construction and the creation of the suburb we did not see price spikes, why, lack of demand. Another issue is his graph on Xer demand vs Millennial demand. Millennial demand, even per his graph has peaked. And what no one seems to account for is that largest group of homeowners, boomers, are starting to die off. Those boomers currently hold 44% of all real estate. The upcoming generation, Gen Z, is Xer in size. They lack the numbers to replace the boomer demand. So prices will fall and they will continue to fall until we have a demand spike. Millennial family creation is far below where estimates expected to be, so when they come up, demand will drop lower.
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  325. Things are only worth what others are willing to pay for them. Value is always subjective.
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  326. New homes need to be sold because the builder has leveraged debt that needs to be pay off. So generally you will see a price correction in them first. Homeowners who actually own, often have an unrealistic emotionally based reason for their house being worth the price that they listed it for. Their house is good after all. So they tend to lower prices last, but often by then they have to really cut it deep. This was my experience in California, but I am in Tn now and I am seeing it here as well. New homes are starting to sit. That means price cuts will follow.
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  327.  @ahistoryperson9983  No problem. Now mind you this is a possibility. Some people may do this, others may not. The Fed might chicken out and not continue to raise rates. But you make your bets and you take your winnings or losses.
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  328. Just a point on percentages, if homes are up 43% since 2018, that would mean those homes would only need a decline of 29-30% to come back to that same baseline. That will happen, easily.
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  329.  @kylegross1081  I mean you can only go by official numbers that way everyone is on the same boat math wise. but you are right on the inflation stats. They are crap. If they are honest, world wide everything would implode overnight. regardless, my point was is most people dont know how percentages work. Its funny reading the comments.
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  330. Except inflation projections 6 months out are at a conservative 11%. 50 and 25 pt increases aint going to fix that. The fed waited to long and everyone got use to cheap money. The idea that this can be resolved with a "soft landing" or avoiding even a mild or moderate recession is delusional. Its not just the Feds stimulus effecting our markets its the whole world. Most nations printed more than the US did.
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  331.  @krassimirpetrov7131  Yea but this is only 4 months into interest rate tightening. There wll be easily 50% price reductions here. Its the only way the income to debt ratio makes economic sense. It will take time. But I bring it up because the economy here is still very healthy. But so many of the homes listed are just empty. They will have to drop more faster if they want out of the market. Things do take time
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  332.  @videogarage9221  I dont disagree with you on that. I dont think that the markets fully believe powell is serious year about raising rates. I dont know if Powell is either. But he needs to. If they dont keep raising housing will stay high, but stable. They have to squeeze all this excess liquidity out of every market, including housing. Otherwise its all kabuki theater.
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  333.  @brz757  The Fed doesnt set the mortgage rate. Banks that lend set their own mortgage rates based on a number of criteria. If mortgage rates were the Fed rate they would still be at .5% instead of the 5% they are now.
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  334. interest rates wont fall. By the end of the year inflation will be in double digits. The Fed is so late to this party it should be criminal. And the longer inflation sticks around, the less money people will have saved and the more they will spend on needed items which even if rates remain unchanged, they wont be able to afford houses at these prices. Interests rates will be back to the real neutral rate at about 8% before this is done at the very least.
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  335. The CPI only plateaued. If you look at it everything is still going up except oil and energy. Both of those will spike soon. Energy because winter is coming and oil because after the election the federal strat oil reserve will stop discharging an additional million barrels a day and Russian production hitting the market out of the Baltic will stop. Thats anywhere from 2- 4 million barrels a day. Then add to that Freeport LNG coming back on line and exporting LNG to Europe, up goes nat gas prices again. People havent seen high energy and oil prices yet.
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  336. It certainly is a barometer to know when all the normies have finally tapped out. Then thats the bottom. You think its just going to take a year?
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  337. near the end of the year these builders will have firesales. This is the same thing that happened in 2005-2006. They kept building and by the end of 2007 their debt could no longer be rolled over so they had to sell any homes they had. Didnt matter the hair cut they took. It will happen again at the end of this year. That will be two years from the ramp up in building and with rates the way they are, they just cant afford it. Wait until the end of the year. There will be blood. Its already happening in the commercial markets. When current homeowners understand this, they will try to dump their properties as well, making things worse. And if we have massive layoffs between now and then, well, if you have cash or credit you will clean up.
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  338.  @realestatemindset  Keep up the good work on your channel.
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  339. GDP came in at a healthy 2.6%, that includes the adjustment for inflation. That means the economy can endure more rate increases. I put even odds that the Feds will increase by 50pts at the next meeting. People still keep spending. I personally see fuel prices increasing due to the decrease in ethenol production we will be seeing this year. That roughly counts for 10-15 percent of content in fuel. Then there is the whole needing to refuel the whole SPR after Biden damn near emptied it. That additional demand will push oil to 110 to 120 a barrel easily. And once Freeport re opens, which has been delayed 4 times since its explosion and shut down last may, Natural gas prices will spike again. Thankfully the US has had a relatively warm winter so far. The real question is how much falling rents, home prices, and auto costs will impact the CPI. They could very well cancel each other out.
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  340.  @goobertgoobert  The Fed cant. The Fed was negative equity in October. They have nothing to buy with. They Fed is already bankrupted. Technically they have two options, raise rates or let Congress bail them out. The Feds need rates at least at inflation levels, if not higher. But Congress cannot bear that high of levels without massive cuts to social spending. And Congress cannot afford to do that for political reasons. What they might do is nationalize the debt the Fed has, remove its charter and rename a new Federal bank, but that would require political unison. We dont have that. Chaos is coming friend, make sure you and yours are prepared.
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  341. People are still praying that the Fed will save everyone like they did last time. They wont. They wont because they cant. If they lower interest rates inflation will explode. So the Fed will keep rates higher. And the those who are over leveraged will suffer greatly. People were warned about this a year ago. Anyone who is still in such a position deserves what they get.
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  342.  @ilikebudlite  But each mortgage they give adds liquidity to the market. That money is given to someone or some entity. So they need to keep doing it. But there is no longer any demand for the mortgages. So liquidity drys up, which is what the fed wants. But the Fed is being to cautious.
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  343. Name the large investment companies that are buying up all the houses. Last year Blackrock only bought 2000 homes. Now they are hemorrhaging money. It wont be long before they start liquidating assets for capital.
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  344.  @Kurplode  Blackrock is saying that but they are having so many pull out of their investment funds its not even funny. Not to mention their exposure in China is getting them utterly wrecked since they are a foreign company and back of the bus for any compensation.
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  345.  @AA-Crow  you mean in the areas with the highest real estate cost increase, Charlotte, Atlanta and Dallas... let's see how it works for them. They are going to be taking a hair cut just like everyone else. If you don't think so you should invest in them. You probably don't know how many homes those companies own each. Just parroting other people.
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  346. I am not sure why people think there is a lot of demand for homes. By every metric home ownership is near all time highs. Currently almost 66% of Americans own homes. Anytime the American home market has gone over 62-63% of Americans owning homes we have a correction in prices. Do a higher percentage of Americans than that want to own homes, maybe. But they are not financially stable enough to make that happen and should NOT under any circumstances buy a home. Its not good for them, its not good for the market and its not good for the tax payers. Throw in inflation, realistic interest rates (which are still near historic lows) and changes in demographics there really isnt much real actual demand. Just a lot of people looking to pick some meat off the bones of others.
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  347. ​ @Ketobodybuilderajb  Yeah, it has been. Nike's overseas earnings was hurt by 15% due to the strong dollar. But they are still slightly profitable. Even though overall profits are down 22%. And you have to remember, these are all trailing numbers from the last quarter. But after the holidays you just wont be able to hide it. A good but very entertaining channel is the maverick of wallstreet. He doesnt do anything about housing, except the occasional Michael Burry tweet, just the market. (only reason i would mention it on another's channel)
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  348. Its just going to make it that much worse there when it happens.
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  349.  @realestatemindset  And to you as well. Always appreciate the content. You would think they teach this stuff in high school.
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  350. This assumes they wont get margin called, which they will. This also assumes that the ROI when rents crash will be above 5%, which it wont. Why would you buy a real estate asset when you can get more ROI from corporate and government bonds? Makes no sense. But lets say they do do it. All a state has to do is put a special corporate rental tax of x percent per rental and poof, ROI is wrecked and its not profitable to own a rental home. To me this is a blatant fear tactic. They are telling you dont wait, you have to buy NOW. IF YOU DONT BUY NOW THE BIG SCARY CORPORATE OVERLORDS WILL BUY ALL THE HOUSES!!!!!!! Dont believe the hype. Just FOMO 2.0.
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  351. Well I cant speak for anywhere else, but in East Tn and even in Nashville rice reductions are endemic and houses are starting to sell, sell for below the fake metrics. But since 90% of people who post never say where they are from, might as well be never never land.
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  352.  @AA-Crow  I am seeing them. I am seeing them declining all over the south. Day after day of price reductions. It was like someone turning a switch two weeks ago. Clearly you have blinders on in only certain areas you are looking at. Which is why I asked where you were located. And it could be in those areas you are right. Generalized statements, about real estate prices are pointless. Where you are matters. Its fine, I get it, you dont want to get lost in the minutia of market dynamics. Dont make generalized statements then.
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  353.  @AA-Crow  lol
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  354.  @quixomega  You dont need more inventory every year for that when your demographics are in decline. Look at a US demographic pyramid chart. We have already reached peak demand. And if you look at every age cohort going forward you are going to have decreasing demand. Every year, for at least 30 years, longer if people dont start having more kids. At the same time you are having more boomers who own a majority of homes, near 40%, dying. Those homes will either satiate demand via transfer to young family members, be sold increasing inventory or rented out reducing rent demand further reducing the attractiveness of buying. We are in a very new cycle. One that the US has never been in before.
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  355. It could very well be a case of putting your money in a place where it loses the least. If you put your money in investment A and it loses 20% or investment B and it loses 40%, but you know in the future every investment class is going down, you care going to shove money in any place that has the lowest percent downturn. Also a billion isnt what it use to be. Still a lot, but when this blows up Chase will be ok.
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  356.  @seanneiberger4199  The Fed rate isnt 5%. You are conflating numbers. The Fed rate is .5%. There is no way that the Fed rate will get to 10%. I doubt they will get it to 3% let alone 5% before we have a deflationary crash we havent seen since the the great depression. And it if actually deleverages all its MBS's it will be even worse. If we get to 5% the Federal Government will have to start cutting costs and all the welfare people (disabled vets, farmers, the corporate lobby, single moms, military industrial complex, Medicare/Medicaid, and SSI pensioners) will all take a cut. 10% is fantasy land. People would be killing each other in the streets.
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  357.  @theorigin1891  You would be shocked at some of the prices in Nashville. We got 1 acre lots in Brentwood, a Nashville suburb going for 1.3 mil. House not included. But incomes here arent half what are in California. But LA has always been stupid high. I use to live in Nor Cal, so I am aware of the California dream. lol
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  358.  @armchaireconomist8648  It doesnt matter if real estate is local when this recession is going to be global. Its going to murder everyone. And throwing the Fed on top of it raising interest rates its going to be doubly bad. 29% of boomers have already died. And at present pace, boomers arent going to live as long as statisticians predicted. So those 44% of houses will come onto the market. Even if it takes another decade or two. The next generation, Gen Z, is smaller then Gen Xers. They will not be able to pick up demand. Most households have tow incomes because they need to to make end s meet not because they want to. If any of them are over extended, and most Americans from the data are, zero savings and credit debt near max levels, well there is no where to go but down if your house are cut. But go on and keep thinking what you like.
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  359.  @realestatemindset  I dont disagree with you, on the need to find out what this data means. How far back does your data go? Does it show a drastic change of empty housing over the last 4 years or does this go back a decade?
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  360. To paraphrase Aristophanes, "Ah! the Economists! they are numerous, but not good for much." One of the issues is that every one of these economists has a dog in the fight. So you never know what they are being blinded by. All of these guys seem like they are just trying to keep the mortgage market moving. Thats all they talked about. Mortgages. Not one of them mentioned demographic demand trends or the effects of prolonged Fed tightening. They still think the Fed will let off the breaks. Its pure cope.
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  361. Thank you for finally doing this video. Its horrible seeing comments from people who dont understand how percentages work. We do a horrible job teaching math in this country.
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  362.  @steverogers9453  In California, IF everything runs perfectly it takes a full 180 days to remove someone from property. Its literally insane and people think its protecting renters. But they dont understand that to make up for the non renter payment they have to jack up rates on others. You tell them this and they just look at you slack jaws and say, "No that cant be right, they are just greedy." Yeah greedy for a mere 4% return. lol Most rational land lords sold any property they could. It is a dumpster fire there and gets worse every day
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  363. You make an assumption that it is greed. Most rentals are mortgaged with short term ARMs that adjust, it creates a better ROI, which in most homes is about 4.5%. In the environment that we are in with fed rates, those rates are going to skyrocket. What is better a higher rental rate or a rental that goes into foreclosure and becomes bank owned and the renters are out on the street? Its not a moral question at this point. Its what kind and how much financial damage do we want to endure.
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  364.  @lesabri  you completely missed the point of my post.
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  365. Why do you have mayor Lightfoot on your thumbnail?
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  366. Blackrock has been buying homes since 1988. They only own like 60k of them. Thats a rounding error in the housing market.
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  367.  @user-zk6fc3dw9e  I dont get it myself. There are people who think they can just buy and resell and make profit. And for about a year they could. But most of those people are going to end up burning through all their profits. I knew several guys like that in California in 06.
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  368.  @realestatemindset  It will be more than just the small business. 40% of the stock market doesnt even turn a profit, they have just existed of the endless cheap/free money. Companies like Bed Bath and Beyond, Cravana, and most media companies are going to die over the next decade. I still think either Target or Walmart arent going to last through this downturn. But in the end it will most likely be the small investor who ends up holding the bag. It always is.
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  369. This article is cope. None of these groups that say housing is going strong and is not in a bubble ever show their demand data. There is no demand. Its fake, its a lie. The demography is known. What we are dealing with now is psychology. Which is a very different thing. Its difficult to change psychology, but when it finally changes it changes, and is again, difficult the change back. For the last 50 years housing has been an inflating asset because of the massive demand increase from the first the boomers and then the millennials. The boomers are near their end most of the millennials who want to buy have. There are not enough coming after to make up the difference. Housing, along with many other asset classes will have no choice but to deflate. They will never show you the important data, because they make it up.
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  370. If interest rates go much higher, these investors will get a higher roi on bonds than on rentals. So that begs the question, why would you buy a home for rental reasons when from a demographic standpoint, demand is declining, which long terms means decreasing prices? Short answer is only a fool.
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  371. This is only if housing is in a vacuum, it is not. Housing is an asset in a larger economy. With inflation eating away at purchasing power you will reach a point where other parts of the economy fail, people lose jobs, homes get foreclosed on. At the same time other industries, trying to stay afloat, will cut wages or more jobs, meaning more people either must sell homes or get foreclosed on. Home and rental prices being so high only make this happen faster. High prices fix the very problem it causes. Though along the way many people are hurt. The question as always is how much of a change will occur.
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  372.  @888ssss  Yea whats the point of knowing what your single largest annual expenditure is until the day you die. Utterly pointless.
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  373.  @eggsinsideme  lol
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  374.  @Widdom1  To see 80% drops you will be looking at the median house that costs 448k dropping to 92k. If something like that happens housing will be the least of peoples worries.
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  375. I sold a property in June of 2021 in Northern California. I sold it for 460k, it was way north of Sacramento. In June of 2022 it was worth, according to Zillow, 580k. Now according to Zillow its worth $489,400. Real estate is local, but in many places they are getting absolutely crushed. That right there is about a 17% drop from peak. But be feel free to check my math. "Its just a gully that's all. Just nerves."
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  376.  @HRCISASKNK  You do know a 20% negative correction is almost half the total increase right?
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  377. I certainly hope its none. A home that hasnt been lived in for a decade is going to be a tear down.
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  378. So its straight up fraud out there now. Nice.
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  379. So they are buying homes that they cant rent out at a rate of return that is positive and there is no demand for and that is decreasing in value? Doesnt seem like a smart investment, even with right offs.
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  380. Zillow is more than likely over leveraged. And like banks who, post 2008, did not want to sell assets as they were worth less than they were on the books because if they did sell them, they then had to record that loss. Zillow is more than likely already bankrupt.
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  381. That house that is price at $184k in 2023 dollars would be worth $68K in 1985 dollars. My parents bought their first home when I was 10 in 1985 in California for $89k. It was 200 sq feet bigger though. That price seems decent, though considering Texas real estate taxes, that tax burden has got to be very large indeed.
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  382.  @breannahorton  what year?
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  383.  @breannahorton  The time period you said all this happened.
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  384.  @breannahorton  I dont assume. Which is why I asked. So they started selling them in groups after prices collapsed and after interest rates dropped and after most people had left the housing market either due to foreclosure or job loss (Unemployment rate was 10% nationally in that time period). Thats not a shock. The ROI was very high then. It is not now. You can get a 2 year treasury bond with a higher interest rate of return than you can purchasing real estate and renting it now minus the hassle. So the question is, why would people do it going forward. The answer is, they wont. Which is why most of the smart corporations have stopped buying real estate. And a few are even selling now. Real estate going forward, due to real demand, will be a deflating asset.
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  385.  @breannahorton  Why would you not want anyone to buy rentals? People need rentals. Not everyone is in a need or position to buy a house. Rentals are an important part of the real estate market. Yes I lived in Japan for near a decade. They give away property outside major metro areas. Its literally free. But you seem to be arguing both sides. So I am not really sure what your point is. Who would buy something as an investment if it is free or even declining in value with a negative ROI? That seems, to put it politely, stupid. Maybe as a tax right off? But that only works if you have profits. There will always be small time land lords. There will always be some moderate sized land lords. But in the coming years, hedge fund types with huge housing portfolios will go the way of the tulip bulb merchant.
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  386. Lets not pretend that most of these people are even putting 20% down. Do you have a way to find out how many of these people have 2nd mortgages? Does the average mortgage payment that is talked about just the primary mortgage or does it include the 2ndary mortgage as well? That could greatly increase ones total mortgage payment. Do they even keep data on that? That would be a good topic for a video or a discussion with one of your fellow youtubers. I have a feeling that there is a huge way of 2nd mortgage defaults. Best cartoon of the 80s was Robotech, sorry. Thundercats was pretty good though.
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  387. that 3-5 years is back from the early 2000's today the median time an American lives in a home is around 13 years (2021). Even the average is at 8 years.
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  388. The banks have a vested interest in it not crashing. The Fed isnt buying MBS's anymore. And no one else buys them. So banks actually have to service their own mortgages now.
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  389. Many of these master planned communities require builders to put in many amenities and complete a build out before they are ok'ed from a legal standpoint. Communities learned after 2007 and 2008 that not forcing builders to do that leaves those communities half finished with little to know long term viability. I am wondering, did they have that requirement in this subdivision?
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  390. A lot of people are thinking that now. And if you all do it what do you think the effect on housing prices will be.
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  391. Most people will cut their nose off to spite their face.
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  392. Respectfully, the last real estate crash during the GFC was totally caused by the Federal government. How many home buyer programs did George Bush push? There as the American Dream Downpayment Fund, the "Americans Homeownership Challenge" directed at mortgage and reat estate industries (this primarily was directed at minority home purchasers and the total costs were estimated at 1.1 trillion in 2003 numbers), the Real Estate Settlement Procedures Act. Those are just ones I can name off the top of my head. The median percentage of Americans who owned homes post WWII is roughly 62%, up from 47% pre WWI, probably an effect of the creation of the suburbs. Regardless, anytime we get above 64% the market is over sold and price become unaffordable. In 2007 we reached into the 69% range. Today, depending on ones data you can say we are between 66 and 67% of Americans own a home, with or without a mortgage. Every trend always regresses to the mean. And that is 62%. And dude you are a mad man for taking this trip. Its nice to see someone who cares enough to actually do. Dont forget to manage your wellness brother.
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