patrick.net

What's keeping rental prices high?

*Whistles Cucharacha*

Millions of illegals annually ensure no reasonable rental surplus can ever develop.

Even at minimum wage they can cram 10+ working age in a small house.

If 1978 prop 13 goes away, it will have sizable effect in places like bay area’s housing which is unlikely, other wise historically still low interest rates and inflation eventually push all shack and stock prices higher even if there is crash in the short term. Isn’t it all countries going in lock step in printing and devaluing they currency. Cash is a king for poor people but it’s trash for the rest.

RC2006 says

Even at minimum wage they can cram 10+ working age in a small house.

Prince William County in Virginia tried to solve this issue by passing a law preventing too many unrelated individuals living in a home designed for a single family. A judge struck it down. So now Prince William County has arrangements like 3 bedroom condos shared by a dozen illegals.

https://www.zillow.com/homedetails/6243-S-Teak-Ave-Boise-ID-83716/79703656_zpid/?source=patrick.net
On zillow 5hrs, veiws going off the chart 612 to 617 in the last 2 minutes and 36 people have save the listing.
Any bets that they don't get the top market price for this home?

If people expect interest rates to rise, there may be a spike in housing prices before that happens, as people try to grab the lower rate. It's a toss up: overbid and buy now at inflated price for good interest rate, or wait for prices to crash after the rates have gone up.

Ideally, you buy at lower price when interest rates are high, hang on with big interest payments for a few years, and refinance when rates go back down. Now you have the lower house price and lower interest rate. Easier said than done!

That said, it's important to consider buyers who can pay outright. Those people will prop up prices somewhat because they don't care about high mortgage rates. The house is a shield against inflation, and inflation is the reason for the high interest rates in the first place. Also, with millions of people streaming over the borders yearly, buying a crap-shack as a rental is likely to be profitable as long as you can handle the quick destruction of the property. Yeah, too bad for the neighbors and the neighborhood.

https://www.zillow.com/homes/4488-S-Eaglecrest-Ave-Boise,-ID-83716_rb/79612810_zpid/?source=patrick.net
4hrs, 666 veiws 59 saved

HunterTits says

Fed’s Bullard Backs Supersized Hike, Seeks Full Point by July 1
https://www.bloomberg.com/news/articles/2022-02-10/fed-s-james-bullard-backs-one-point-rate-hike-by-july-1?source=patrick.net

ERECTION INTENSIFYING!!!

Naw, Bullard is talking increasing short term rates, which should lower the long term rates.

If the Fed wanted to hammer home values, they would start selling massive portions of the long end of their balance sheet.

The Impact on Housing of Higher Mortgage Rates
History suggests sales and house price growth will slow

With the ten-year Treasury yield above 2.0% this morning, and mortgage rates nearing 4%, a key economic question is: What will be the impact on housing of higher mortgage rates?

First, housing is a key transmission channel of Federal Reserve policy. I discussed this back in 2012: Analysis: I expect QE3 on Sept 13th [2012]

[O]ne of the key transmission channels for monetary policy is through residential investment and mortgages.

Of course, in 2012, we were discussing how Fed policy would boost housing. Now, Fed policy - higher rates, halting asset purchases, allowing runoff of assets (not reinvesting), and even selling assets - will slow housing.
.......
We will probably see house price growth slow in the coming months (perhaps significantly). House price data is released with a lag, so it might take several months before we see the impact on prices.

Conclusions

With 4% 30-year mortgage rates, we will likely see a slowdown in both new and existing home sales (based on previous periods of rising rates). It also seems likely house price growth will slow. However, the impact on inventory is unclear.

An interesting question: Will higher mortgage rates slow investor buying? Higher rates will make buy-to-rent less attractive. Investor buying - and build-to-rent - will be areas to watch.

There is further downside risk if mortgage rates continue to increase, or if we see a significant increase in inventory (something we didn’t see in previous periods of rising mortgage rates).

https://calculatedrisk.substack.com/p/the-impact-on-housing-of-higher-mortgage?source=patrick.net

HunterTits says

They want to deliberately fuck over the middle class' home values.

The true value of a house is what you can rent it for, not how far into debt you can get to buy it.

The value of a house remains pretty much constant in a constant job market.

HunterTits says

Misc says

If the Fed wanted to hammer home values, they would start selling massive portions of their balance sheet.

Selling the balance sheet reduces the money supply, which raises the value of the dollar, which will reduce interest rates.

I will bet as much as you want to lose that if the Fed Sold $300 billion of MBS tomorrow mortgage rates would spike.

I was talking that to hammer home values they would sell the long end of their balance sheet.

Re-read what I said in #26

I put in the clarifier for my remark in #26. I thought it would have been obvious,

You are the one that brought up the Fed raising short term rates 1% would fuck up home values when all being equal it would decrease mortgage rates.

I think this 16% is the true inflation rate.

Raising the rate will slowdown the economy but doing it as part of the knee jerk reaction to slow inflation a little bit. Biden must stop the dangerous and fake vaccine show and make everyone get back to work and make the country productive immediately to control the inflation. The longer the it takes the damage will continue and eat up savings.

That's good advice, but I don't think Biden is actually in charge.

I think Biden and Trudeau have been ordered to impose the dangerous and fake vaccine show on behalf of the CCP, or maybe Klaus Schwab. People and groups who want universal surveillance and the ability to force arbitrary injections on the public at any time.

Misc says

You are the one that brought up the Fed raising short term rates 1% would fuck up home values when all being equal it would decrease mortgage rates.

I wouldn’t say it would screw up home value, but it would likely slow down the rate of price increase. The refinance market will likely see a huge drop.

What do you mean when all being equal, it would decrease mortgage rates?

Blue says

Raising the rate will slowdown the economy but doing it as part of the knee jerk reaction to slow inflation a little bit. Biden must stop the dangerous and fake vaccine show and make everyone get back to work and make the country productive immediately to control the inflation. The longer the it takes the damage will continue and eat up savings.

Raising interest rate won't "slow the economy", because this inflation has nothing to do with uncontrolled rising of economic output. Federal Reserve the only tool is useless in this case.

Current inflation is the effect of surplus of money (borrowed) given for NOTHING (not paid for economic afford) to people and businesses, plus shortage of goods and services as an effect of pandemic slow down (lockdown). Getting all back to business will indeed slow inflation.

Who the fuck is renting all these rental houses that these investors keep buying? I mean a rudimentary internet search tells me to stay the fuck away from invitation homes even if I were inclined to rent. They most likely wouldn't be in the rental business if they had no tenants.

Eman says

Misc says

You are the one that brought up the Fed raising short term rates 1% would fuck up home values when all being equal it would decrease mortgage rates.

I wouldn’t say it would screw up home value, but it would likely slow down the rate of price increase. The refinance market will likely see a huge drop.

What do you mean when all being equal, it would decrease mortgage rates?

All being equal, means keeping asset purchases on the long end of the rate curve the same and not selling long term obligations they have purchased along with keeping other economic measures the same.

Raising short term rates slows the economy reducing inflationary pressures, thus reducing long term mortgage rates.

Misc says

Eman says

Misc says

You are the one that brought up the Fed raising short term rates 1% would fuck up home values when all being equal it would decrease mortgage rates.

I wouldn’t say it would screw up home value, but it would likely slow down the rate of price increase. The refinance market will likely see a huge drop.

What do you mean when all being equal, it would decrease mortgage rates?

All being equal, means keeping asset purchases on the long end of the rate curve the same and not selling long term obligations they have purchased along with keeping other economic measures the same.

Raising short term rates slows the economy reducing inflationary pressures, thus reducing long term mortgage rates.

How does lowering mortgage rates help inflationary pressure? Housing is already a serious problem.

WineHorror1 says

Misc says

Eman says

Misc says

You are the one that brought up the Fed raising short term rates 1% would fuck up home values when all being equal it would decrease mortgage rates.

I wouldn’t say it would screw up home value, but it would likely slow down the rate of price increase. The refinance market will likely see a huge drop.

What do you mean when all being equal, it would decrease mortgage rates?

All being equal, means keeping asset purchases on the long end of the rate curve the same and not selling long term obligations they have purchased along with keeping other economic measures the same.

Raising short term rates slows the economy reducing inflationary pressures, thus reducing long term mortgage rates.

Mortgage rates went up to 4% for the 30 year fixed. That will help put an end to the bidding wars.

Booger says

Who the fuck is renting all these rental houses that these investors keep buying? I mean a rudimentary internet search tells me to stay the fuck away from invitation homes even if I were inclined to rent. They most likely wouldn't be in the rental business if they had no tenants.

Here in SF Bay Area there is a housing shortage, so landlords charge what the market can bear. People's willingness do double/triple/quadruple up with relatives or roommates is the elasticity in the demand to pay the high rents.

Cash says

Here is a test case: https://www.zillow.com/homedetails/6243-S-Teak-Ave-Boise-ID-83716/79703656_zpid/?source=patrick.net
This home goes on the market tomorrow morning $589k and the sellers say they will pick the winning offer Sunday...
Does anything in this short post seem odd?

Sold: 46k Over asking

Misc says

Mortgage rates went up to 4% for the 30 year fixed. That will help put an end to the bidding wars.

House in our neighborhood went on the market. This one is in the low 1M range. First day, 6 showings, second day already 5 offers. 3 of them are all cash. For the square footage, this one will break a record for the neighborhood. People trying to rush in before interest rates go up further or will this year just be a continuation of last years craziness?

Bitcoin says

People trying to rush in before interest rates go up further

This.

House a couple of doors down from the GF's house. 1/4 acre lot 4BR built in 2019, sold for 450K, now for sale asking 575K, and LOTS of people looking at it on Friday and Saturday. OK area but nothing special, in Anne Arundel County, MD (think Glen Burnie type of area). The people are leaving the area. He works on the Delmarva Peninsula (which makes him a super commuter) and her job in the DC are just went remote, so they are moving to the other side of the bridge. Presumably they will be paying too much there too, but at least they won't be in the DC area any more.

Cash says

Cash says

Here is a test case: https://www.zillow.com/homedetails/6243-S-Teak-Ave-Boise-ID-83716/79703656_zpid/?source=patrick.net
This home goes on the market tomorrow morning $589k and the sellers say they will pick the winning offer Sunday...
Does anything in this short post seem odd?

Sold: 46k Over asking

Boise is probably more of a bubble than anywhere else in the country.

RedStar says

Cash says

Cash says

Here is a test case: https://www.zillow.com/homedetails/6243-S-Teak-Ave-Boise-ID-83716/79703656_zpid/?source=patrick.net
This home goes on the market tomorrow morning $589k and the sellers say they will pick the winning offer Sunday...
Does anything in this short post seem odd?

Sold: 46k Over asking

Boise is probably more of a bubble than anywhere else in the country.

My house in LA has increased the same amount as Boise. Only difference id say between LA and Boise is that the people in boise are putting large downs or cash so bubble doesnt matter. It's litteraly escape from CA here.

RedStar says

Boise is probably more of a bubble than anywhere else in the country.

Will see ;) All I see here is stagnation for a time here and there then continue heading higher in 2022. Rich and their cash Loves them some RE...

RedStar says

Boise is probably more of a bubble than anywhere else in the country.

Because of The Californians. Californians can run, but we can't hide.

RC2006 says

It's litteraly escape from CA here.

It absolutely is... Dont they know how much Idaho sucks? Freeze your brass balls off and such, ugly women and getting uglier..

Cash says

RC2006 says

It's litteraly escape from CA here.

It absolutely is... Dont they know how much Idaho sucks? Freeze your brass balls off and such, ugly women and getting uglier..

Idaho in the summer is paradise

RedStar says

Cash says

RC2006 says

It's litteraly escape from CA here.

It absolutely is... Dont they know how much Idaho sucks? Freeze your brass balls off and such, ugly women and getting uglier..

Idaho in the summer is paradise

Nothing a few more million illegals can't cure.

RC2006 says

Only difference id say between LA and Boise is that the people in boise are putting large downs or cash so bubble doesnt matter. It's litteraly escape from CA here.

Why Boise?

WineHorror1 says

RC2006 says

Only difference id say between LA and Boise is that the people in boise are putting large downs or cash so bubble doesnt matter. It's litteraly escape from CA here.

Why Boise?

Racial demographics. 91% white. 3% African AMerican.

Low crime rate because of it.

https://www.google.com/search?q=racial+demographics+boise+idaho&sxsrf=APq-WBv_ZM1rwLBYHOZXaFdEUJ1qPqlczQ%3A1644729739532&source=patrick.net&ei=i5UIYv3yGuPGkPIPwf-v-AI&iflsig=AHkkrS4AAAAAYgijm6XmRiSD-zLldoj0Dl_Ee-lfB0fD&oq=racial+breakdown+for+boise&gs_lcp=Cgdnd3Mtd2l6EAEYADIGCAAQFhAeOggILhCABBCxAzoICAAQgAQQsQM6CAguELEDEIMBOggIABCxAxCDAToFCC4QgAQ6BQgAEIAEOgsIABCABBCxAxCDAToHCC4Q1AIQQzoKCC4QsQMQgwEQQzoHCC4QsQMQQzoLCC4QgAQQsQMQ1AI6CggAELEDEIMBEEM6BAgAEEM6CgguEMcBEK8BEEM6DgguEIAEELEDEIMBENQCOgcIABCxAxBDOgUIABCxAzoKCAAQgAQQhwIQFDoFCAAQhgM6CQgAEMkDEBYQHlAAWJQ_YK9eaABwAHgBgAHqA4gByyGSAQowLjIzLjEuMS4xmAEAoAEB&sclient=gws-wiz

I dont even know if they sell bike locks here, still haven't seen one lock at k-12 school. Could walk 100 miles in any direction and never have to worry about a criminal or gang bangers.

Tri valley, buckle up and see you at +10-15% in Dec ‘22