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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