Comments by "Jeffrey Deuitch" (@jeffreydeuitch2146) on "Reventure Consulting" channel.

  1. In most larger modern developments, the properties are available well before completion. They go under contract way earlier. Some are contracted prior to ground breaking.. builders are not going to carry 10s of millions of dollars of finished inventory prior to marketing efforts.
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  2. Not quite sure how lowered appreciation is a good sign for priced out buyers. If they are already priced out then they will still be priced out at 3% higher. This is exact carbon copy of the logic and rhetoric of 2005. Things have to depreciate for housing to be more affordable. Been professionally involved in real estate services since the S&L crisis days of the late 1980s. Therefore seen 2 down cycles in past. The language and sentiment shifts have been the safe. Beware the "it's different this time" narrative.
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  3. Expect some inventory increase and reduction in demand when speculators do not see appreciation growth ahead.
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  4. The big reason here in Florida we have so much in migration is personal freedoms. No lockdowns, mask or vax mandates and a gov who fights to keep it that way. Dont have to talk to very many folks to see this. Wont prevent a RE downturn if a big trend gets rolling, but certainly buffers. Certainly housing bubble taking hold, but sales and prices holding steady at moment. Future uncertain.
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  5. Only time will tell. Bubbles can be amazingly resilient. Remembering thinking the same thing and having discussions with RE investor friends in 2004, then 2005 happened. They thought I was nuts. Then 2006 saw changing weather, figuratively speaking, and by early 07, writing was on the law. Funny thing, in those 04 discussions, my more optimistic investor friends had every logical argument on why things would keep going and saw no real reason why things could slow and definitely no way they could retreat. Sound familiar?
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  6. Been there for last 2 downturns. Bingo! As soon as prices drop, those with investment properties sell. It is time to take profits. More inventory, less demand and will to drop prices to get out before the others. Not rocket science and anchored in historical trends.
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  7. Have you done similar analyses on other materials such as steel, concrete, roofing etc? Would be interested in seeing if other materials are following suit?
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  8. Will be interesting to see if listing loads start to rise. If so, investors will pull back.
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  9. Never know, but not sure I would be betting on that logic. There is a natural recency bias in human nature. By that, I mean that what has happened recently is expected to continue. Very often because one may not want to consider the possibility that a change may occur. Have been through 2 downcycles. They do not announce themselves in advance and happen against broader logic and belief. Last time, it was "I think appreciation will moderate but wont see prices go down" or "retiring baby boomers will support continued growth in pricing (here in Floria). Many other logical explanations on why prices wont go down. We all know what did indeed happen. Future? Uncertain. However cycles have been happening for a long time and there is no reason to believe that we are not in a cycle at present. One common feature of the last 2 is the most rapid price increase rate occurred immediately before the downturn. In our area is 20% and 25%in 2004 and 2005. Then curve started to flatten then turn down. Will see what happens this time. No crystal ball, just a bunch of familiar smelling ingredients in the stew.
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  10. Banks make their money on loan origination fees typically. There typically is a larger buyer for the loan. The money gets recycled over and over for more fees from the same dollar.
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  11. Anyone should watch the documentary "Meltdown" on youtube to see how complex and international the GFC was. Yes, ill advised lending was part, but so much more to it including what happened in Greece, Iceland, Britian and other places especially with the collapse of the many types of derivatives that were traded in financial markets by the big banks. Included, but much more complex, than what was portrayed in The Big Short.
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  12. Finally someone speaking sense. I have been in RE services for over 25 years and the facts in this video are correct. Saw same in the GFC but also the S&L crisis years. Was same story then. About 1987 to 1992. Many banks and S&Ls failed and were liquidated. Younger folks not generally aware of this. GFC was a carbon copy but larger in wreakage. To say different this time is naive. They were saying same in 2004 to 2005 that repeat of S&L scenario would not happen again since "this time is different" also the theory of "things might level but not drop" was widespread in the 04 to 05 period. Heard that recently? I have from many folks. No telling what will happen again, but history seems to be lining up again.
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  13. Back in last similar point in cycle, approx late 2005, many here in SW Florida were in denial about the potential for a downturn. The most often heard reason was "retiring baby boomers will keep prices up" within 2 years, our area was amongst the hardest hit nationwide. Tread carefully.
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  14. If you are aware, the last downturn was not US centric as many believe. It does spread. Recommend watching the PBS documentary MELTDOWN. Lots of the problems were occurring in Iceland and the UK before it got here. We are not an island here. Future uncertain, but contagion certainly not impossible. Canada and Australia worse bubble than here. Especially big cities.
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  15. Can only speak for markets I am active in for my service, almost exclusively in new construction, but most builders here do NOT build inventory. A new start is initiated after a buyer is in contract for sale. Probably are some builders who build for investors but in my market area it is not the norm. These builders will start some but actively market them during construction. Too risky to incur the debt to complete first, then market.
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  16. No one know for sure. But previous peaks had similar logical points on thier side. These were accompanied by downturns to the extent that major fin institution failed. Not only the most recent in 2007 to 11, but the previous on in 87 to 92 which took out most of the S&Ls. If not familiar with that one, might Google it. I was there first hand in an asset disposition capacity. History different this time? Who knows, time will tell, but many striking similarities at peak highs on the curve.
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  17. Good stuff but way to many jump cuts. Just play whole sections of the interview without editing. It will make much easier to watch.
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  18. See what silver prices did today. All assets tied together. Normally lower interest promotes PM prices, however at some point PMs become the safe haven. Silver topped out in 2011, the peak of the recession. Silver up .47 today after languishing for many months. Watch construction starts and new permits trends.
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  19. Just checked. He is right. Probably taper concerns. Worth keeping track. Interest rate hikes can rapidly affect new construction activity and possibly also resales.
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  20. All pertinent considerations. The one thing that has happened but is nearly never considered or mentioned is a crash in rental rates. My dad was a real estate broker for 30 years in SW Florida and he used to share stories from the day. One phenomenon he discussed was when the apartment complex market crashed. Some enterprising folks bought up complexes for 10 to 15k per unit and profited mightily after a few years. Point is: rents can go down. When this happens, values and sales prices will be dramatically. His slogan for real estate after 30 years in the business was "no such thing as too high or too low". Unimaginable today? Well, in 2005, prices we saw in 09 to 10 would be unimaginable. In 2010, todays prices would have been unimaginable. Today, what is unimaginable in the future? I dont know, but personally I am not betting against historical cycles repeating.
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  21. Because its land value. The structure has nominal value and may be a tear down. If you see really big housing around it, then that's the deal. Properties are defined by their site value, structure value, and value of site improvements.
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  22. "Investors" above was supposed to say "inventory". Damn autocorrect. Sorry.
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  23. Because when prices go down rents do to and maintain same CAP rate. Has happened before and can easily happen again. Rents will be the last support. This, you are correct about. Speculators will be out once prices drop. Those who buy for rental income will still be around. Do you think rent is the primary reason for currect pricing? If so then materials shortages would not have boosted prices to same extent. The way up is a collection of reasons as is the way down, including just plain sentiment.
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  24. Inventory in new construction is grossly misunderstood. I am professionally involved 90% in new construction. They look at completely built housing as inventory. This is not correct, atleast in my area. A new home development has, say, 300 vacant lots. The way they sell is that the prospect goes through the models of which there is typically 4 to 6, signs the contract with the builder for the purchase, and the builder then builds it and it closes within a couple days after completion. The inventory is the vacant lots ready for contract, not finished houses. These builders will start a handful of new builds and market them throughout the construction process. In our area, they are seldom finished prior to getting under purchase contract. Thus the inventory data published is understated since those pertain to either finished houses or issued permits. Think about it.
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  25. You hit it on the head. Once prices start going down, there is a rush for the exits to cash out while they still have a profit. Only to find out a bunch of others got there first. On the buying end, all investors are out of the game and everyone else has falling knife syndrome. The more desperate take what they can get and the snowball starts rolling down the hill. Been through the last 2 of these periods and was the same. Will receive hate comments of the same nature that I did in late 2005. The last peak. Just history repeating.
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  26. A very successful gentleman I follow in the commodities market has an expression. He says: "the cure for low prices is low prices and the cure for high prices is high prices" simplistic but has bore out through history. Perhaps RE and rental prices are that simple.
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  27. Same as 2005 area. Many young people had the FOMO of get in now or wont be able to afford. It is scarry. Unfortunately within 2 years they had a much different fear after buying. If you have MLS you can search properties in given hoods. Ours goes back 20 or so years. Looking at 2005 prices followed by 2008 in same goods is quite amazing. Language in those 05 MLS records is stunningly similar to now. Language in 08 to 10 MLS entries is quite the contrast. Is that the next step moving forward? You learn the hard way in the RE game.
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  28. Last shoe to drop will be if rental rates reduce. No other big supports if investor interest wanes.
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  29. If that were the case, the damage would have been restricted to the US. It was actually worldwide and much caused by derivatives being package and sold. Epicenter was London traders and firms. Iceland went bankrupt. Domestically, only a small proportion of foreclosures were subprime. For sure easy lending was a problem. This included adjustable, loans, no doc, negative amortizing, interest only etc. However many more factor. once prices start to fall for whatever reason, a whole new set of fears set in and selloffs occur. Same in 1987 where events took place that culminated in massive failures of savings and loan companies and massive real estate downturn. Subprime was not a word even used in those days. Certainly can happen for different reasons. Fastest growing loan type today? Adjustable rate. Will see what happens.
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  30. Thanks for the tick on MBS. I do not follow that market but will take a look. Changes in markets usually announce in subtle ways. Good to keep up. Not a bond or derivatives guy , but interested in checking this.
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  31. There will be a rebound as this happened. Unfortunately, those buys became falling knives as part of a dead cat bounce. Exactly what happened in 2006. Will this repeat? Time will tell.
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  32. Very few of the same models of house sell for same price. In new home construction, there can be an extreme difference in upgrades and options as well as the site orientation on ponds, preserves etc. I have seen new construction contracts on a home with a $450k base price and the purchasers has contracted for an additional 250k in options. Nearly impossible to make apples for apples comparison. I work extensively in new home developments and see every contract for these houses.
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  33. I have no doubt that downward pressure on a housing types will evolve, but new construction pricing is very convoluted. Would recommend you visit some new home developments and talk to some agents. It is soooooo much different than resales. Would anticipate that incentives consisting of reduced site premiums and upgrades would be first implemented, increased closing cost assistance, waivers to HOA fees etc would predominate. Some reduced prices may be the result of lowered specs as well. If the dam collapses, it will be obvious but would not make assumptions until that time. Some assume that lower starts would mean lower inventory when it really means lowered sales. In our area in many developments, all vacant sites are inventory ready to be sold. A contract for construction is consummated after which construction begins. Spec homes are not the norm in these developments.
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  34. Way too early projecting an annualized drop based on 1 month. Certainly there are forces which might lead to slowing condition and possibly downward pressure but to annualize in either direction based on one months data is not realistic or precise.
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  35. Late 80s to early 90s was the Savings and Loan crisis. Was with a disposition contractor who did a lot of work for the Resolution Trust Corp, a subsidiary of the FDIC. It was assigned to work out assets from failed financial institutions. Was very very large. Consisted of both real estate, personal property from offices as well as debt packages. You should look it up. The impact was certainly as large, in inflation adjusted as well as social terms, as the 2007 to 2010 period. The FIRREA acts was implement to prevent a repeat. This repeat, of course, occurred starting in 2007. No crystal ball, but we are due.
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  36.  @sterlingmarshel6299  unless you believe that history repeats, which it does have a habit of doing. Was clarifying the late 80s that reventure was referencing. Yes, it is pertinent.
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  37. Some places so, others not sp much. However, given that many assets, and real estate historically, moves in cycles, then increased listings would be a logical and expected next step in the cycle.
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  38. The only thing predictable it the repeating nature of human behaviours, especially economic. The rest is noise. Same game, different era, same result. Only question is when?
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  39. Just history (read, human behavior) repeating. Different characters, same game. Big Short 2.0
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  40. Look what happened in after hours trading tonight.
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  41. It's also quite possible inventory is higher yet. I am substantially involved in new construction real estate services. Not sure if the inventory comes from cumulative MLS data, but many new construction properties are not listed on MLS. One of my clients list a very small amount of properties on MLS. They do put post closing MLS records simply for record purposes. Other of my clients do similar. A better gauge of activity is permit applications. Of course, this does not distinguish homes built for inventory vs those being built to perform on a buyer contract. Both exist in my area. There is really no individual data points that can accurately show closed sales, pending sales, and properties, either available sites available or builds, or finished inventory. Materials are an issue and one builder I work with does not market or contract properties until about 60% completion of construction. It works all different ways depending upon the builder.
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  42. There are striking data similarities now to 2005. Human nature following.
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  43. Will really tell when it shows up that they are selling inventories if they have been holding. Probably will do so under fictitious seller name after technical title transfers.
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  44. Beware catching the falling knife.
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