housing prices peak 2
invite response
2022 Apr 29, 9:29pm 462,406 views 4,804 comments
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103
AD
2022 May 8, 12:40pm
AD
2022 May 8, 12:40pm
It all comes down to affordability versus profitability. It's a balance between both. And we saw it play out from 2005 to 2012.
As far as profitability, can a landlord earn at least a 7% return on investment annually while the tenants do not spend more than 38% of their household income on rent. The return on investment accounts also for appreciation of the rental property's value.
.
As far as profitability, can a landlord earn at least a 7% return on investment annually while the tenants do not spend more than 38% of their household income on rent. The return on investment accounts also for appreciation of the rental property's value.
.
104
AD
2022 May 8, 1:03pm
AD
2022 May 8, 1:03pm
Also, I read on Business Insider the start of layoffs like at Better.com, Robinhood, Peloton and Wells Fargo (mortgage division?)
https://www.businessinsider.com/layoffs-sweeping-the-us-these-are-the-companies-making-cuts-2022-5?source=patrick.net
So the labor market may be tightening also, which will be problematic for housing especially tenants able to pay rent.
.
https://www.businessinsider.com/layoffs-sweeping-the-us-these-are-the-companies-making-cuts-2022-5?source=patrick.net
So the labor market may be tightening also, which will be problematic for housing especially tenants able to pay rent.
.
105
desertguy
2022 May 8, 1:59pm
In the for what its worth category, in southwest Utah (Washington County), for residential units, inventory is up 49.3% since the beginning of the year and up 71.4% since the inventory low, which occurred on February 14, 2022. Sold price declined for the first time in quite some time last month. This market has definitely started the shift.
106
Blue
2022 May 8, 2:21pm
another anecdotal .. around my hood, came to know that there are only 3 applicants for a rental shack that I know used to be much higher number before. Also its not recent but I visited someone few months back is a rental place across HS in Sunnyvale, quite (1/3?) a number of apt were vacant which is not normal unless bought over by investor for renovation.
107
mell
2022 May 8, 5:04pm
B.A.C.A.H. says
Napa/Sonoma
mell sayshouses in our rural county and hood
Where is your rural county / neighborhood?
Napa/Sonoma
108
mell
2022 May 8, 5:05pm
porkchopexpress says
Agreed, without mass layoffs no crash though, just a slowdown. Most people have their rates locked in
mell saysThe houses in our rural county and hood just made a fresh high in appreciation.Prices of actual sold homes is trying to predict the future looking through the rear-view mirror. Wait until all of the buyers with lower locked-in rates filter through the system. I believe we'll start seeing a real shift starting in July.
Agreed, without mass layoffs no crash though, just a slowdown. Most people have their rates locked in
110
joshuatrio
2022 May 10, 8:17am
joshuatrio
2022 May 10, 8:17am
Anecdotal again.. But we're vacationing down in Florida right now and I've been spending time at the local rec center with some of the seniors.
One of the ladies I spoke with today is a loan officer. She said her volume is half of what it was last year and is slowly dwindling. She said the rate hikes neutered business.
She's done well, so I don't think she was too worried - but it's trickling down.
Another family we know has been looking for a home in Charleston, SC for the last 5 months. They have had their million + dollar home for sale in Seattle for 3 months. Two offers of in and they both fell through. Regarding Charleston, they made a lowball offer on a place that they thought wouldn't go through and the seller took it.
One of the ladies I spoke with today is a loan officer. She said her volume is half of what it was last year and is slowly dwindling. She said the rate hikes neutered business.
She's done well, so I don't think she was too worried - but it's trickling down.
Another family we know has been looking for a home in Charleston, SC for the last 5 months. They have had their million + dollar home for sale in Seattle for 3 months. Two offers of in and they both fell through. Regarding Charleston, they made a lowball offer on a place that they thought wouldn't go through and the seller took it.
111
zzyzzx
2022 May 10, 8:43am
zzyzzx
2022 May 10, 8:43am
DooDahMan says
Fixed:
Those places have all seen an influx of new investors.
Those places have all seen an influx of new residents
Fixed:
Those places have all seen an influx of new investors.
112
AD
2022 May 10, 5:35pm
AD
2022 May 10, 5:35pm
DooDahMan says
Overpriced based on comparison of median home price to median household income ?
Yep, that is what has happened to mountain communities in Colorado with cash-flush Californians buying up properties. It is driving out the middle and working class since housing is unaffordable, including rental properties.
Boise (overpriced by 75%)
Overpriced based on comparison of median home price to median household income ?
Yep, that is what has happened to mountain communities in Colorado with cash-flush Californians buying up properties. It is driving out the middle and working class since housing is unaffordable, including rental properties.
113
Patrick
2022 May 10, 5:56pm
Patrick
2022 May 10, 5:56pm
Lol, I worked for Zillow in 2016-2017. I don't have much love for them.
114
GNL
2022 May 10, 5:57pm
GNL
2022 May 10, 5:57pm
Patrick says
Why? Also, do you still have connections?
Lol, I worked for Zillow in 2016-2017. I don't have much love for them.
Why? Also, do you still have connections?
115
AD
2022 May 10, 6:10pm
AD
2022 May 10, 6:10pm
DooDahMan says
Like zzyzzx wrote in comment #119, how many of those homes were bought by investors ? Look at towns like Buena Vista, CO and the rise of AirBnB and vacation homes. What percentage of homes purchased will be second homes for rich people and/or vacation/short term rentals instead of long term housing (., 12 month leases, etc.) ?
,
Those places have all seen an influx of new residents amid the pandemic's "work from anywhere" boom.
Like zzyzzx wrote in comment #119, how many of those homes were bought by investors ? Look at towns like Buena Vista, CO and the rise of AirBnB and vacation homes. What percentage of homes purchased will be second homes for rich people and/or vacation/short term rentals instead of long term housing (., 12 month leases, etc.) ?
,
116
Patrick
2022 May 10, 6:56pm
Patrick
2022 May 10, 6:56pm
Zillow and its Trulia subsidiary make money by selling sheep to wolves, which is not a very nice thing to do.
That is, they make money by selling buyers to realtors.
That is, they make money by selling buyers to realtors.
117
GNL
2022 May 10, 9:42pm
GNL
2022 May 10, 9:42pm
Patrick says
One aspect of their business is lead generation, yes. Is Zillow a nationwide broker?
Zillow and its Trulia subsidiary make money by selling sheep to wolves, which is not a very nice thing to do.
That is, they make money by selling buyers to realtors.
One aspect of their business is lead generation, yes. Is Zillow a nationwide broker?
118
just_passing_through
2022 May 10, 9:58pm
just_passing_through
2022 May 10, 9:58pm
I've gotta say I do LOVE the fact that we have house bubble posts again! Sheeit's gonna get real here soon me thinks!
119
B.A.C.A.H.
2022 May 11, 7:16am
B.A.C.A.H.
2022 May 11, 7:16am
BayArea says
It's only real wealth if you do something with it. The "wealth effect".
Redfin raised my home price estimate by $50k this past week.
It's only real wealth if you do something with it. The "wealth effect".
120
WookieMan
2022 May 11, 9:32am
WookieMan
2022 May 11, 9:32am
BayArea says
Not one of these estimation services is remotely accurate. They're worse than political pollsters by a long shot. Your house, outside of a HELOC is technically worth nothing until someone writes a contract to purchase it and you get the cash or pay off the mortgage. Until then, the value is a roof over your head and running water and sewer/septic.
The estimation game from the likes of Zillow, Redfin, etc. is all a game to get leads for brokers. It's what I did for 15 years. They give zero shits if they're accurate. None. Estimating even a rough value on every residential property is not realistic. Commercial RE is different as it's math and not emotional. Residential will never be predicted well. The exact same houses next to each other in a tract subdivision could sell for 10's or even 100's of thousands different just based on landscaping and how the home was maintained, looked or was decorated by stuff the new owner doesn't get to have.
And not a knock on you BayArea, but RE agents hate estimated values based on an algorithm. Someone like you suggests that my house is worth X because I saw it on Y. It's much more nuanced. My buddy sold for less than he should have because he has a Hawaii/Tiki theme in his house. It totally clashed with suburban Chicago area style. He probably lost $20-30k (small by CA standards) but $30k is $30k tax free. He was too stubborn to pull down all his shit and it cost him. And sure you might get the random that liked the style, but that's rare.
Here in IL something like a pool reduces the buyer's that might light your place by 50%. They won't even look at it because it's time and money to maintain a pool. You can always buy a house and add a pool if that's a need. You don't buy a house with a pool if you don't want it. Zillow and the likes don't and likely never will have an algorithm to figure that out.
Redfin raised my home price estimate by $50k this past week. Huh?
Not one of these estimation services is remotely accurate. They're worse than political pollsters by a long shot. Your house, outside of a HELOC is technically worth nothing until someone writes a contract to purchase it and you get the cash or pay off the mortgage. Until then, the value is a roof over your head and running water and sewer/septic.
The estimation game from the likes of Zillow, Redfin, etc. is all a game to get leads for brokers. It's what I did for 15 years. They give zero shits if they're accurate. None. Estimating even a rough value on every residential property is not realistic. Commercial RE is different as it's math and not emotional. Residential will never be predicted well. The exact same houses next to each other in a tract subdivision could sell for 10's or even 100's of thousands different just based on landscaping and how the home was maintained, looked or was decorated by stuff the new owner doesn't get to have.
And not a knock on you BayArea, but RE agents hate estimated values based on an algorithm. Someone like you suggests that my house is worth X because I saw it on Y. It's much more nuanced. My buddy sold for less than he should have because he has a Hawaii/Tiki theme in his house. It totally clashed with suburban Chicago area style. He probably lost $20-30k (small by CA standards) but $30k is $30k tax free. He was too stubborn to pull down all his shit and it cost him. And sure you might get the random that liked the style, but that's rare.
Here in IL something like a pool reduces the buyer's that might light your place by 50%. They won't even look at it because it's time and money to maintain a pool. You can always buy a house and add a pool if that's a need. You don't buy a house with a pool if you don't want it. Zillow and the likes don't and likely never will have an algorithm to figure that out.
121
Hircus
2022 May 11, 11:47am
Hircus
2022 May 11, 11:47am
WookieMan says
I agree the estimations are sometimes wildly inaccurate (but usually they are actually pretty close) and biased a bit high to create selling excitement and get leads. They are far more accurate for homes that are actually for sale, or were recently sold, because a real listing has much more data input for them to use to predict with than a home off the market for decades. I disagree about the pool affect on price not being accountable by an algo. It should be relatively straight forward to do it, as this is right up modern machine learning's alley. It's exactly the type of thing it can usually do well.
They have structured data and can usually tell if a listing has a pool (assuming correct data entry, which often is the case).
When they do analytics and machine learning, what's really going on is they look at each independent variable and look to see how that variable affects other variables. If a pool results in less interest, and
1) they have a variable for if the home has a pool (they usually do)
2) they have a variable that lists how many people are interested in a given house (they usually do, via web interactions)
Then they can crunch that data and find how those variables are related and what predictive abilities, if any, each relation has. They will not stop there, and they will likely analyze the interaction between ALL other variables, and then between incredible numbers of combinations of variables to find predictive opportunities. Since real estate is very local, and a pool might be a plus or a minus in different parts of the country, they would likely find that including a variable for location into the relation gives them better predictive ability, and likely home style, price range, and other features of the home would be other useful variables. And then poof: you can make a decent guess as to how a pool will affect the sale. You wont be right in any particular case, but you will tend to be right over thousands of cases.
I'm not saying they currently do predict based on pool, as I dont work for any of them. But they easily could, and likely do, and have probably done so for many years by now. It's possible the pool variable doesn't often provide useful predictive abilities though.
Zillow and the likes don't and likely never will have an algorithm to figure that out.
I agree the estimations are sometimes wildly inaccurate (but usually they are actually pretty close) and biased a bit high to create selling excitement and get leads. They are far more accurate for homes that are actually for sale, or were recently sold, because a real listing has much more data input for them to use to predict with than a home off the market for decades. I disagree about the pool affect on price not being accountable by an algo. It should be relatively straight forward to do it, as this is right up modern machine learning's alley. It's exactly the type of thing it can usually do well.
They have structured data and can usually tell if a listing has a pool (assuming correct data entry, which often is the case).
When they do analytics and machine learning, what's really going on is they look at each independent variable and look to see how that variable affects other variables. If a pool results in less interest, and
1) they have a variable for if the home has a pool (they usually do)
2) they have a variable that lists how many people are interested in a given house (they usually do, via web interactions)
Then they can crunch that data and find how those variables are related and what predictive abilities, if any, each relation has. They will not stop there, and they will likely analyze the interaction between ALL other variables, and then between incredible numbers of combinations of variables to find predictive opportunities. Since real estate is very local, and a pool might be a plus or a minus in different parts of the country, they would likely find that including a variable for location into the relation gives them better predictive ability, and likely home style, price range, and other features of the home would be other useful variables. And then poof: you can make a decent guess as to how a pool will affect the sale. You wont be right in any particular case, but you will tend to be right over thousands of cases.
I'm not saying they currently do predict based on pool, as I dont work for any of them. But they easily could, and likely do, and have probably done so for many years by now. It's possible the pool variable doesn't often provide useful predictive abilities though.
122
mell
2022 May 11, 2:22pm
WookieMan says
I have been following the home sales for homes that were on zillow and the estimate usually turns out to be fairly accurate.
BayArea says
Redfin raised my home price estimate by $50k this past week. Huh?
Not one of these estimation services is remotely accurate. They're worse than political pollsters by a long shot. Your house, outside of a HELOC is technically worth nothing until someone writes a contract to purchase it and you get the cash or pay off the mortgage. Until then, the value is a roof over your head and running water and sewer/septic.
The estimation game from the likes of Zillow, Redfin, etc. is all a game to get leads for brokers. It's what I did for 15 years. They give zero shits if they're accurate. None. Estimating even a rough value on every residential property is not realistic. Commercial RE is different as it's math and not emotional. Residential will never be predicted well. The exact same houses next to each other in a tract subdivision could sell for 10...
I have been following the home sales for homes that were on zillow and the estimate usually turns out to be fairly accurate.
123
Patrick
2022 May 11, 2:28pm
Patrick
2022 May 11, 2:28pm
WineHorror1 says
When I was there, almost all of their revenue was payments from realtors for betraying innocent buyers.
One aspect of their business is lead generation, yes. Is Zillow a nationwide broker?
When I was there, almost all of their revenue was payments from realtors for betraying innocent buyers.
125
mostly reader
2022 Jun 19, 11:39am
ad says
I just don't understand it when the wealthy do this. Selling primary residence and moving into a rental is a HUGE headache. Not to mention transaction losses and tax implications, which there are if you don't buy within what, a year? (he waited 6 years) You may save/make money in the end with accurate timing, but you still pay with time, labor, and (temporary) reduction of quality of life. If you have a family then it all gets multiplied many fold. It probably makes sense in a situation with no kids and limited resources, but a bond manager should be reasonably wealthy and probably have a family. It just doesn't sound worth it to someone who's time is valuable. If life gives you bunch of crap and you are forced to move out that's a different story, but voluntarily? I just don't see it. Yet it's apparently exactly what happened. Go figure.
Edit: I can see it in a corner case that it's time to upgrade anyways, but market analysis screams that it's a wrong time to buy. So the "upgrade" may include that intermediate rental state, in which you rent something that's bigger/better than the house that you sold.
.
https://finance.yahoo.com/news/pimco-kiesel-called-housing-top-160339396.html?source=patrick.net
Bond manager Mark Kiesel sold his California home in 2006, when he presciently predicted the housing bubble would pop. He bought again in 2012, after U.S. prices fell more than 30% and found a floor.
Now, after a record surge in prices, Kiesel says the time to sell is once again at hand.
.
I just don't understand it when the wealthy do this. Selling primary residence and moving into a rental is a HUGE headache. Not to mention transaction losses and tax implications, which there are if you don't buy within what, a year? (he waited 6 years) You may save/make money in the end with accurate timing, but you still pay with time, labor, and (temporary) reduction of quality of life. If you have a family then it all gets multiplied many fold. It probably makes sense in a situation with no kids and limited resources, but a bond manager should be reasonably wealthy and probably have a family. It just doesn't sound worth it to someone who's time is valuable. If life gives you bunch of crap and you are forced to move out that's a different story, but voluntarily? I just don't see it. Yet it's apparently exactly what happened. Go figure.
Edit: I can see it in a corner case that it's time to upgrade anyways, but market analysis screams that it's a wrong time to buy. So the "upgrade" may include that intermediate rental state, in which you rent something that's bigger/better than the house that you sold.
126
GNL
2022 Jun 19, 12:31pm
GNL
2022 Jun 19, 12:31pm
Patrick says
If they aren't a nationwide broker, why not? Wouldn't it make sense? They could compete directly with the NAR.
WineHorror1 says
One aspect of their business is lead generation, yes. Is Zillow a nationwide broker?
When I was there, almost all of their revenue was payments from realtors for betraying innocent buyers.
If they aren't a nationwide broker, why not? Wouldn't it make sense? They could compete directly with the NAR.
127
gabbar
2022 Jun 19, 3:44pm
gabbar
2022 Jun 19, 3:44pm
Patrick says
Patrick, please elaborate on this. I want to learn. Also, I did order your book today.
When I was there, almost all of their revenue was payments from realtors for betraying innocent buyers.
Patrick, please elaborate on this. I want to learn. Also, I did order your book today.
128
porkchopXpress
2022 Jun 19, 8:34pm
porkchopXpress
2022 Jun 19, 8:34pm
mostly reader says
This 100%. Makes no sense to go through all that work and headache.
ad says
.
https://finance.yahoo.com/news/pimco-kiesel-called-housing-top-160339396.html?source=patrick.net
Bond manager Mark Kiesel sold his California home in 2006, when he presciently predicted the housing bubble would pop. He bought again in 2012, after U.S. prices fell more than 30% and found a floor.
Now, after a record surge in prices, Kiesel says the time to sell is once again at hand.
.
I just don't understand it when the wealthy do this. Selling primary residence and moving into a rental is a HUGE headache. Not to mention transaction losses and tax implications, which there are if you don't buy within what, a year? (he waited 6 years) You may save/make money in the end with accurate timing,...
129
clambo
2022 Jun 20, 10:35am
The ups and downs are fleeting, but the trend is up because people want to buy houses.
They can’t help it.
Look at Lowes and Home Depot, they’re huge businesses.
Look at the numerous TV shows about selling, buying, fixing, flipping houses.
I’m stuck seeing them sometimes in a doctor’s waiting room.
Today things are slowing down a little bit, which is expected.
Interest rates rising and consumer confidence falling have a downward effect on houses.
They can’t help it.
Look at Lowes and Home Depot, they’re huge businesses.
Look at the numerous TV shows about selling, buying, fixing, flipping houses.
I’m stuck seeing them sometimes in a doctor’s waiting room.
Today things are slowing down a little bit, which is expected.
Interest rates rising and consumer confidence falling have a downward effect on houses.
130
Booger
2022 Jun 20, 12:21pm
Booger
2022 Jun 20, 12:21pm
Using possible rental income on loans is the same as stated income loans back then.
Mortgage delinquencies have not played out yet as many states still in forebarences. Add student debt moratoriums in that and it could be a lot worse than the last bubble.
Mortgage delinquencies have not played out yet as many states still in forebarences. Add student debt moratoriums in that and it could be a lot worse than the last bubble.
131
1337irr
2022 Jun 20, 12:33pm
1337irr
2022 Jun 20, 12:33pm
Booger says
Interesting point...I think natural gas prices will have a minor impact as well in regards to electricity and heating for big houses that are overleverage by owners.
Using possible rental income on loans is the same as stated income loans back then.
Mortgage delinquencies have not played out yet as many states still in forebarences. Add student debt moratoriums in that and it could be a lot worse than the last bubble.
Interesting point...I think natural gas prices will have a minor impact as well in regards to electricity and heating for big houses that are overleverage by owners.
132
FortwayeAsFuckJoeBiden
2022 Jun 20, 12:46pm
Booger says
thats why they went on loan forgiveness, preventing collapse
Using possible rental income on loans is the same as stated income loans back then.
Mortgage delinquencies have not played out yet as many states still in forebarences. Add student debt moratoriums in that and it could be a lot worse than the last bubble.
thats why they went on loan forgiveness, preventing collapse
133
Patrick
2022 Jun 20, 12:51pm
Patrick
2022 Jun 20, 12:51pm
clambo says
Home Depot has been among my best stocks. Even now with the downturn I've averaged an annual 15% return on it with it over 11 years or so.
Home Depot
Home Depot has been among my best stocks. Even now with the downturn I've averaged an annual 15% return on it with it over 11 years or so.
134
gabbar
2022 Jun 20, 1:05pm
gabbar
2022 Jun 20, 1:05pm
FortwayeAsFuckJoeBiden says
Schemes like loan forgiveness come at a cost, the cost is printing money? Its a ponzi scheme.
thats why they went on loan forgiveness, preventing collapse
Schemes like loan forgiveness come at a cost, the cost is printing money? Its a ponzi scheme.
136
Onvacation
2022 Jun 20, 1:20pm
Onvacation
2022 Jun 20, 1:20pm
porkchopexpress says
What was the name of that Phoenix slumlord math teacher that used to post here? He did exactly that, sold his house at the peak, bought rentals after the crash, made bucks, retired and lived happily ever after.
Now I remember his name, ROBERTO!
This 100%. Makes no sense to go through all that work and headache.
What was the name of that Phoenix slumlord math teacher that used to post here? He did exactly that, sold his house at the peak, bought rentals after the crash, made bucks, retired and lived happily ever after.
Now I remember his name, ROBERTO!
137
1337irr
2022 Jun 20, 1:27pm
1337irr
2022 Jun 20, 1:27pm
gabbar says
They haven't caved on loan forgiveness, it's forbearance at this point. I'll sue for forgiveness on loans I paid.
FortwayeAsFuckJoeBiden says
thats why they went on loan forgiveness, preventing collapse
Schemes like loan forgiveness come at a cost, the cost is printing money? Its a ponzi scheme.
They haven't caved on loan forgiveness, it's forbearance at this point. I'll sue for forgiveness on loans I paid.
142
GNL
2022 Jun 20, 8:23pm
GNL
2022 Jun 20, 8:23pm
HunterTits says
How much will prices decline?
Booger says
https://nypost.com/2022/06/20/capital-economics-reports-us-home-prices-to-sink-by-2023-as-mortgage-rates-hit-6/
6%!
That's IMPOSSIBLE, @Booger
PatNet 'experts' earlier this year said so. And when I said (basically) "Hold my beer and just wait!", I got lectured how that wasn't going to happen based on their self-proffessed 'expertise' in the housing market which - their 'expertise' -had nothing to do with the Fed or macroeconomics.
But what do I know?
How much will prices decline?
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https://finance.yahoo.com/news/pimco-kiesel-called-housing-top-160339396.html?source=patrick.net
Bond manager Mark Kiesel sold his California home in 2006, when he presciently predicted the housing bubble would pop. He bought again in 2012, after U.S. prices fell more than 30% and found a floor.
Now, after a record surge in prices, Kiesel says the time to sell is once again at hand.