patrick.net

porkchopexpress says

I like how people say prices won't drop because this time is different. It's the same shit every time. House-humpers can convince themselves of anything.

Why do bears always say housing is going to collapse? Every year for the last 5 years at least people have been posting that the big collapse is coming. 2008 was a once in a century event. The same conditions aren’t present.

In 2022, most likely prices will continue to climb as inflation picks up. If the Fed executes perfectly (it won’t) and gets inflation under control (it won’t) you might see a stall. But no way do you see price collapse across most markets this year.

Yeah, I joined the website as a "bear", and enjoyed the discussions and back and forths we used to have with the bulls (Iwog, etc).

But 2022 isn't 2009. There is no credit crisis, lots of people have high amounts of equity due to appreciation over the past 5 years, inventory is at 10-20 percent of historical levels (though it's rising), I'm really looking for the case of a crash coming and I can't see it.

Best bear case I can see is stagnating prices, with some small dips in less desirable markets (I'm thinking 5% tops). Don't see any 30 to 40 percent crashes coming, it would be beyond belief.

All it takes is a job-loss recession. The market forces at play are much larger than the impact on housing. Raising interest rates will contract the entire economy, which will cause companies to lay people off. It is then that you'll see a spike in inventory and prices drop.

richwicks says

Tesla has moved its headquarters to Texas.

Good. High paid jobs for elite office workers, let them price out Austin locals of their housing. Operations still here for the time being. (When it comes time for Tesla to downsize, we can all be sure the Fremont plant will be shuttered first.)

richwicks says

You've never seen a city that depended on a single industry when the industry goes away.

That's right, because I only lived in this region. I did not come here in Gold Rush fashion and then bemoan when the industry I came here for downsized.

We heard the Doom and Gloom expressed by Gold Rush folks in aerospace, computers, semiconductors, dot.com, networking, and maybe soon social media. Each flush of the toilet made life a bit more liveable for the locals whom the Gold Rushers left behind as they fled the region till the next big thing attracted the next wave Gold Rushers (many of them H-1's).

This focus of the Gold Rushers that their particular industry is the single most important industry upon which the whole economic fate of the region depends is an aspect of the Bay Area Smugness and Self-Importance. In a sense they are correct, as they elbow out locals (and one another) competing for and overpaying for housing. The crisis will not be downsizing in the latest Gold Rush industry. The crisis is already here, it is the overcrowding and high cost of living the current Gold Rush wave created.

I agree with many who comment here that SF has become a sh*thole. This is more a consequence of its politics, many communities around the Bay are more sensible, though miserable from the Gold Rush- overpricing.

DooDahMan says

https://fortune.com/2022/04/19/housing-prices-mortgage-rates-homeowners-dont-want-to-sell/?source=patrick.net

The worst advice you can get about anything is from a legacy "news" source.

B.A.C.A.H. says

richwicks says

You've never seen a city that depended on a single industry when the industry goes away.

That's right, because I only lived in this region. I did not come here in Gold Rush fashion and then bemoan when the industry I came here for downsized.

I'm not bemoaning it and I've lived in NY (upstate), Indiana, Boston, Boulder Colorado, and here. I've seen what happened to the Rust Belt.

I'll leave here.B.A.C.A.H. says

This focus of the Gold Rushers that their particular industry is the single most important industry upon which the whole economic fate of the region depends is an aspect of the Bay Area Smugness and Self-Importance. In a sense they are correct, as they elbow out locals (and one another) competing for and overpaying for housing. The crisis will not be downsizing in the latest Gold Rush industry. The crisis is already here, it is the overcrowding and high cost of living the current Gold Rush wave created.

What kept this place going was the reputation of the people in this area. The reputation is gone now that censorship has been embraced. Yahoo! destroyed itself by embracing censorship. That's going to happen with every company. The game that is being played now is "well, you have no where else to go!! You HAVE to use this service. You can ONLY use Twitter, Facebook, and Google" - that's FAR from true. People are falling for it a bit, but it's not even close to true.

Anyhow, it will be interesting.

B.A.C.A.H. says

I agree with many who comment here that SF has become a sh*thole. This is more a consequence of its politics, many communities around the Bay are more sensible, though miserable from the Gold Rush- overpricing.

I can appreciate your frustration with this, however, it is what it is. I think a lot of people are going to be holding a bag, and frankly, they kind of deserve it.

But maybe not.

Our economy has been run by running up home prices for the last 20 years, it's federal policy. They lie about it of course, but that's what it really is. Drive up home prices, people take out loans on their home, and live off from that. It works until it doesn't.

It is different this time.

Our governments are so far in debt that printing a couple trillion dollars for a "pandemic" is no big deal. They gambled that they could lock down the world and have a great reset.

You will own nothing and be happy.

It's different this time.

porkchopexpress says

All it takes is a job-loss recession. The market forces at play are much larger than the impact on housing. Raising interest rates will contract the entire economy, which will cause companies to lay people off. It is then that you'll see a spike in inventory and prices drop.

Companies lately are having trouble finding workers. In fact shortages of workers, and certain parts and materials seem to be the biggest limitations on growth. So yes, it’s possible that companies will start layoffs, but right now most places are just struggling to hire people they need.

dude we are in inflation thats close to 10% and probably higher. few years of this will make housing much more expensive

Fortwaynemobile says

dude we are in inflation thats close to 10% and probably higher. few years of this will make housing much more expensive

So, no downside to high inflation?

Anecdotal. But....

My subdivision of about 80 homes had ZERO homes go up for sale in the last 2.5 years. Pre-covid, our neighborhood averaged 2-3 home sales per year.

My friend who run the HOA board indicated we have three homes going up for sale next week, with a potential 4th in the next 2-3 weeks. That's what we know about so far.

That alone is back to the pre covid rate in the next week.

There could be a mass increase in inventory over the next 2-3 months as people try to cash in as rates are going up.

WineHorror1 says

So, no downside to high inflation?

No, because as folks incomes get drained by the increasing prices of goods and services, as wages do not keep up with inflation, and as mortgage payments increase due to increasing interest rates, home prices will continue to rise.

Al_Sharpton_for_President says

WineHorror1 says

So, no downside to high inflation?

No, because as folks incomes get drained by the increasing prices of goods and services, as wages do not keep up with inflation, and as mortgage payments increase due to increasing interest rates, home prices will continue to rise.

Makes total sense.

Looked at MLS in our area and various parts of Florida we're interested. I've seen a ton of new listings overnight. Surprised to see the insane jump.

Bet this has something to do with it. Fresh high as of this morning for the 30 yr.

Al_Sharpton_for_President says

WineHorror1 says

So, no downside to high inflation?

No, because as folks incomes get drained by the increasing prices of goods and services, as wages do not keep up with inflation, and as mortgage payments increase due to increasing interest rates, home prices will continue to rise.

This HAS to be sarcasm or my mind doesn't work anything like yours does.

I think we're headed for Mises "crack up boom" - and that just might result in revolution. Certainly a reordering of society of some sort and it might not be good at all.

joshuatrio says

My subdivision

Gwinnett County?

The theory that existing low interest mortgage in a high interest environment would lock people in and prevent selling to buy another house therefore help hold house price up doesn't make much sense: most people selling existing home to buy another in the same market are upgraders, therefore they are net buyers in the market, not net sellers. High interest rate would keep them out of the market thereby removing a major component of net-demand. They would build additions to the existing homes instead of upgrading to a larger home . . . that is bad for realtors (who live off transactions/commissions), who as a group are likely to have higher portfolio exposure to the real estate market.

There are inflexible reasons on the sell side: death, divorce, job change/retirement/moving out of state, and business/job decline/collapse (e.g. the realtor case mentioned above).

Reality says

The theory that existing low interest mortgage in a high interest environment would lock people in and prevent selling to buy another house therefore help hold house price up doesn't make much sense

Since we have been in this situation before, why are people even speculating? What happened last time when interest rates rose?

zzyzzx says

Reality says

The theory that existing low interest mortgage in a high interest environment would lock people in and prevent selling to buy another house therefore help hold house price up doesn't make much sense

Since we have been in this situation before, why are people even speculating? What happened last time when interest rates rose?

What happened the last time interest rates rose AND we had ridiculous inflation? That happened in the 1970s, but there wasn't a housing bubble then and our nation wasn't 30 trillion dollars in debt, it was a net lender not borrower.

zzyzzx says

joshuatrio says

My subdivision

Gwinnett County?

Cobb

I think the inflation is going to stop here soon. When Netflix loses as many subscribers as they did, it's not just because of SJW antics and people cancelling over that. It's because a $65 gas refuel is now $105. I don't actively watch the market that closely, but that $12-15/mo is getting to work for some people. But with no more stimulus inflation should pause in the near future. Plus the Democrats need it to, or they're going to lose their asses big time in November.

They'll blame Trump for the inflation and they stopped it. They'll say they stopped Covid. They protected you with masks and take ownership of the vaccine and how it saved millions of lives. Memories are short, they'll claim victory in Afghanistan. They'll blame Russia and say we need to be united against them in this moment with Ukraine. The script is as obvious as the sun rising. They're already doing it.

WookieMan says

I think the inflation is going to stop here soon.

That would be nice, but even if it does, the genie is out of the bottle. Prices are not going back down, all that stimulus money is still out there and there are no way to soak that excess up without keeping prices high, plus with all the shutdowns demand is outpacing the ability to produce/deliver supply of goods (I’m referring to food, energy, raw materials, though it will keep construction costs high which will also put a floor under housing costs). Add to that the fact that it seems every business is STILL struggling to hire enough workers and so prices are likely going up as employers are forced to raise wages to attract employees and pass those costs on to the consumer.

PeopleUnited says

porkchopexpress says

All it takes is a job-loss recession. The market forces at play are much larger than the impact on housing. Raising interest rates will contract the entire economy, which will cause companies to lay people off. It is then that you'll see a spike in inventory and prices drop.

right now most places are just struggling to hire people they need.

True but I don’t care about right now. I care about six months from now.

WookieMan says

They'll blame Trump for the inflation and they stopped it. They'll say they stopped Covid. They protected you with masks and take ownership of the vaccine and how it saved millions of lives. Memories are short, they'll claim victory in Afghanistan. They'll blame Russia and say we need to be united against them in this moment with Ukraine. The script is as obvious as the sun rising. They're already doing it.

They don't have any credibility, but all that matters is that people BELIEVE they do. They can steal the election again with that. As long as people believe "goddamned, my fellow countrymen are F'ing stupid! I can't believe they voted for the Democrats again!" - that's all they need. They just need enough people to believe their neighbors are stupid.

richwicks says

Al_Sharpton_for_President says

WineHorror1 says

So, no downside to high inflation?

No, because as folks incomes get drained by the increasing prices of goods and services, as wages do not keep up with inflation, and as mortgage payments increase due to increasing interest rates, home prices will continue to rise.

This HAS to be sarcasm or my mind doesn't work anything like yours does.

I think we're headed for Mises "crack up boom" - and that just might result in revolution. Certainly a reordering of society of some sort and it might not be good at all.

My comment certainly was sarcasm. I once had a Realtor tell me that high interest rates cause inflation. I asked him why Volcker raised rates to almost 20% then.

WookieMan says

When Netflix loses as many subscribers as they did, it's not just because of SJW antics and people cancelling over that. It's because a $65 gas refuel is now $105.

Yes. I thought so too when I saw the WSJ article this morning that the company will be spending less money on employee/management perks and less money on new content.

This is how Inflation of important stuff like gasoline to drive to work, food at home (not dining out), and medical expense, becomes Deflationary for discretionary stuff like Netflix, dining out, and even (as we learned in 2009-2009) mortgages on McMansions.

Does anyone here not agree that the current high house prices are due to inflation?

This is a very different beast then 2008. Then house prices were high because everyone was leveraged out the ass investing in house flips. Remember all the hgtv shows? Now it’s just people needing a place to live, and it’s expensive because inventory is way too low because new construction costs a fortune due to the pandemic.

In 2008, all it took was for the bad assumptions about MBS that investors had made to be revealed and everyone was forced to sell in a panic. That’s not going to happen today, because as far as I’m aware lending standards are strong.

Fed is raising interest rates to stop inflation. Great. They are going to stop raising them once inflation is under 3% again. They will never allow deflation.

The only way house prices can go down is a disaster scenario with widespread massive layoffs. The fed is going to stop well before this, and even if we find ourself in this position, expect massive intervention (forbearance, mortgage purchases, etc).

pudil says

Does anyone here not agree that the current high house prices are due to inflation?

I do.

High prices is because it's Fed policy to drive up prices. This increases local tax revenue, expands the money supply, and allows people to borrow money against their home to have "the good life".

Raise interest rates to 10%, and the Fed will just use QE to cover the interest rate payments, but people who actually have to earn the money, will lose their home on an ARM.

pudil says

They will never allow deflation.

Maybe - but what hurts the most number of people? First have massive inflation - this kills the poor non borrowers, then have deflation, this kills borrowers. How are they going to ensure you'll own nothing and be happy?

richwicks says

First have massive inflation - this kills the poor non borrowers, then have deflation, this kills borrowers.

Didn't Thomas Jefferson warn about this?

PeopleUnited says

Add to that the fact that it seems every business is STILL struggling to hire enough workers

The population is millions larger than in the year 2000 but the workforce is millions smaller. Lots of useless consumers out there.

Possibly the plan behind Covid is to eliminate some of these people?


The percent was lower when women generally stayed at home to raise the Boomer's.

WineHorror1 says

Didn't Thomas Jefferson warn about this?

End the Fed!

WineHorror1 says

richwicks says

First have massive inflation - this kills the poor non borrowers, then have deflation, this kills borrowers.

Didn't Thomas Jefferson warn about this?

Our enemies are domestic.

pudil says

The only way house prices can go down is a disaster scenario with widespread massive layoffs.

What makes you think that Biden can't accomplish this?

pudil says

Does anyone here not agree that the current high house prices are due to inflation?

Extremely low interest rates and eviction / foreclosure moratoriums.

People seem to forget that for now expired foreclosure moratoriums are meaningless because people still have equity in their houses, which may or may not last (probably not). But what about all those deadbeats getting thrown out of their rentals? This has to put downward pressure on rents (not just apartments, some do rent SFH's, etc.) since this will free up a lot of real estate. When renting gets cheaper it will reduce pressure on owning as well (think if it as a cascading effect).

So regarding the house up the street that just went up for sale.

The house was nothing special. They boasted "remodeled kitchen" and all that jazz. They painted 20+ y/o builder cabinets and had multiple types of wood flooring through the place. Not worth double what they paid a few years back.

This morning was a circus, with realtors and showings and they jammed up the street.

After lunch. Completely dead. Have gone by 2 times since.

I'm wondering how large this pool of buyers actually is. It was like 30 families descended like a vulture on the place, and then bailed. We'll see if it sells.

I thought covid was a disaster. No? See, they can make anything "happen"" they want. We are living in an increasingly controlled environment.

There are over a billion people who, given the chance, would move to California for all the free stuff. So, supply of housing will never outstrip demand. Demand will slow when living here is worse than living in other parts of the world from which people are coming. That basically means the quality of life in California has to fall a very very very long way to make supply and demand balance. Open borders have consequences.

SunnyvaleCA says

That basically means the quality of life in California has to fall a very very very long way to make supply and demand balance.

It is doing so right now.

good luck with the housing crash theory .....inventory is historic low....

Bitcoin says

...inventory is historic low....

Not for long...