patrick.net

https://finance.yahoo.com/news/market-morning-brief-july-12-100031449.html

Rising interest rates are crushing the US housing market

We anticipate continued challenging market conditions, with mortgage originations projected to decline by roughly half in 2022 from 2021, including an accelerated decline in the second half of 2022, followed by a further decline in 2023 - Loan Depot Chief Financial Officer Patrick Flanagan, July 2022

https://www.marketwatch.com/story/scary-times-builders-cut-home-prices-and-slow-construction-as-buyers-pull-back-survey-shows-11657567086

Builders are slashing home prices and slowing construction as buyers pull back, survey shows

Home builders are feeling jittery.

That’s according to a June survey of home builder sentiment by John Burns Real Estate Consulting. Demand for new homes is cooling as buyers cancel orders, and builders are slashing prices to offload homes, the survey found.

“Scary times,” a home builder in Nashville, Tenn. told the company. “Hoard cash and hang on for the ride!”

Sales of new homes fell 31% this June as compared to last year. Cancelation rates jumped in June to 14.5% nationally, up from 6.5% a year ago, as seen in the tweet below.

The monthly survey was based on 320 participants in 84 metro areas.

Texas saw the highest rate of cancelations (when buyers terminate a contract for a new home), followed by the broader Southwest, and Northern California.

A quarter of home builders are reducing their prices, according to the John Burns Real Estate Consulting survey.

There are couple of reasons that homebuyers are pulling back: Mortgage rates have risen considerably since last year, which has made borrowing expensive, on top of rising inventory levels.

Other surveys have suggested that home builder morale is sinking. Builder confidence fell for the sixth straight month in June, according to the NAHB/Wells Fargo U.S. Housing Market Index. This month’s numbers will be released on Monday.

Home builders surveyed by John Burns expressed frustration over the slowdown.

“Someone turned out the lights on our sales in June!” one builder in Atlanta, Ga. told the company.

“Sales have fallen off a cliff,” an Austin, Texas builder said. “We’re selling 1/3 of what we sold in March and April.”

A Boise, Idaho builder said that builders are slashing new home prices by 15% to 20%.

https://www.reddit.com/r/REBubble/comments/vx904z/waited_too_long_feel_weve_ruined_our_lives_after/

I bought this house 5 years ago and renovated it. We have 450K in the house. We are not rich. We saved for 15 years for our down payment. We moved here away from our family on the east coast because jobs in Texas were booming.

With the political upheaval in Texas we decided it was time to leave. Houses were selling for 750-800K in January-March like crazy and we thought fantastic - we will leave sometime this summer. We spent two months fixing up little things and getting it ready for sale. We wanted the new owners to be happy.

We accepted an offer around 700K in May. Delays pushed it back. We are not unreasonable sellers - we had multiple offers, we accepted one that seemed reasonable. Each week we got more and more nervous as we saw news about whether the market was shifting.

To avoid doxxing myself I'll just say the sale fell through. We have been on the market now at 550K for a few weeks and nothing. I feel we have tried to be realistic in this whole process and not be overly greedy.

I know the house is not the prettiest house or the biggest house, but it's a reasonable 3/1.5 home that we've maintained. I think buyers just have more options and are pickier now. I know the advice will be, lower the price, but I don't feel that is the main issue. Everything is sitting. Each week there are more homes for sale in my town that the week before. If you have 10 homes for sale and only 5 people buying, 5 of those homes are not going to sell. We bought an ok home in an ok neighborhood, and folks can go down the road to get a much nicer home for a little more or a much nicer neighborhood for a little more

Even if I'm not underwater on my mortgage it sucks that after 5 years I will sell and after all the fees when I bought, and the fees when i sell (and now my realtor is suggesting we credit about 5-10K for buyer closing costs too?) I feel like I have wasted the past 5 years of my life in this house.

I know some folks are greedy and have been making life miserable for first time buyers, and corporations pricing people out. But with the 10% or so price appreciation you need to have just to break even on fees, and the high property taxes in Texas, I feel like we really got screwed by the sudden market turn in May and June. I wish I hadn't bothered fixing the house and just sold it like it was in February or March. I may regret this for the rest of my life. A 100-200K difference in sale price I know is life changing for buyers. It is also life changing for me. I feel so sad and anxious now, and like I worked so hard my entire life - and in 3 months it went from I'm finally getting ahead to maybe we are right back where we started 5 years ago.

https://www.reddit.com/r/RealEstate/comments/vwnqy9/opendoor_their_estimate_for_my_home_went_down_25/

Opendoor: Their estimate for my home went down 25% in one month. Boise ID area.

zzyzzx says

Huh, are there really people buying homes and relisting them days later for a quick buck in 2022!? Not to mention cost of making a sale?

https://finance.yahoo.com/news/chinese-homebuyers-across-22-cities-062113892.html

Chinese Homebuyers Across 22 Cities Refuse to Pay Mortgages

1337irr says

Don't waive the inspection, I did, but I barely knew what I was getting into.

I didn't do an inspection on any property I've bought. I've been on hundreds, maybe a thousand inspections as a former broker.

1- If you don't have the money to fix a problem, you shouldn't be buying a house.
2- Inspectors go in justifying their fee and WILL find something wrong even in the best built house
3- Many are referrals and in cahoots with the broker. They're looking to get the seller to fix things, so find problems
4- Houses break anyway. You're going to have to deal with shit. An inspector really doesn't matter.

I've rehabbed two primary homes. We're talking every trade except painting (fuck that). Gist of my comment is don't buy a home if you can't spot the problems yourself. Men should be able to know how to work on a home anyway and not have to call a contractor to fix something trivial. You may need a contractor if time is money for you, but inspectors are one of the worst parts of the RE industry. I'd put HOA's at the top to be honest. Attorneys are dicks and lenders are lazy, but inspections cause more problems then helping.

WookieMan says

1337irr says

Don't waive the inspection, I did, but I barely knew what I was getting into.

I didn't do an inspection on any property I've bought. I've been on hundreds, maybe a thousand inspections as a former broker.

1- If you don't have the money to fix a problem, you shouldn't be buying a house.
2- Inspectors go in justifying their fee and WILL find something wrong even in the best built house
3- Many are referrals and in cahoots with the broker. They're looking to get the seller to fix things, so find problems
4- Houses break anyway. You're going to have to deal with shit. An inspector really doesn't matter.

I've rehabbed two primary homes. We're talking every trade except painting (fuck that). Gist of my comment is don't buy a home if you can't spot the problems yourself. Men should be able to know how to work on a home anyway and not have to call...

Where have you bought real estate? I bought near Waco, TX, the soil is kind of bad for foundations.

https://digg.com/real-estate/link/american-cities-with-highest-year-over-year-median-asking-rent-pending-sales-falling-out-of-contract-Ji2NDMmDhc

Pending Home Sales That Fell Out Of Contract As A % Of All Pending Sales

Florida seems to be dominating this list.

https://www.marketwatch.com/story/scary-times-builders-cut-home-prices-and-slow-construction-as-buyers-pull-back-survey-shows-11657567086

Builders are slashing home prices and slowing construction as buyers pull back, survey shows

Home builders are feeling jittery.

That’s according to a June survey of home builder sentiment by John Burns Real Estate Consulting. Demand for new homes is cooling as buyers cancel orders, and builders are slashing prices to offload homes, the survey found.

“Scary times,” a home builder in Nashville, Tenn. told the company. “Hoard cash and hang on for the ride!”

Sales of new homes fell 31% this June as compared to last year. Cancelation rates jumped in June to 14.5% nationally, up from 6.5% a year ago, as seen in the tweet below.

The monthly survey was based on 320 participants in 84 metro areas.

Texas saw the highest rate of cancelations (when buyers terminate a contract for a new home), followed by the broader Southwest, and Northern California.

A quarter of home builders are reducing their prices, according to the John Burns Real Estate Consulting survey.

There are couple of reasons that homebuyers are pulling back: Mortgage rates have risen considerably since last year, which has made borrowing expensive, on top of rising inventory levels.

Other surveys have suggested that home builder morale is sinking. Builder confidence fell for the sixth straight month in June, according to the NAHB/Wells Fargo U.S. Housing Market Index. This month’s numbers will be released on Monday.

Home builders surveyed by John Burns expressed frustration over the slowdown.

“Someone turned out the lights on our sales in June!” one builder in Atlanta, Ga. told the company.

“Sales have fallen off a cliff,” an Austin, Texas builder said. “We’re selling 1/3 of what we sold in March and April.”

A Boise, Idaho builder said that builders are slashing new home prices by 15% to 20%.

Here in SJ, selling at the bestest most peakest price is not a priority to folks with $1 M equity who want to cash out and retire to a cheaper place.

Of course they will take the most they can get. But bidding wars etc are not their fault: it's the buyers' fault for overpaying.

A subset of sellers are flippers and recent buyer house-poor Greater Fools who over committed to the high monthly cost with the high property tax commitment.

This subset of sellers may be relatively in larger number than the long-time owners I mention above, but they are not everyone. This subset, many stressed out, will react with anxiety to and curse at the long-time owner who will still be pleased to settle for a 100K or more reduction in the asking price.

zzyzzx says

Chinese Homebuyers Across 22 Cities Refuse to Pay Mortgages

What would happen if American homebuyers do this too? There was a fellow in New York who didn't pay his mortgage and used a loophole in bankruptcy laws to live in his home for 20 years.

Opendoor house:

gabbar says

What would happen if American homebuyers do this too?

Bro, can you say Financial Crisis of 2008?

Open door is doing this:

Zillow
$642,798 TYPICAL HOME VALUE
$554,866 TYPICAL VALUE ONE YEAR AGO
-14.4% 1-YEAR FORECASTED VALUE DECREASE
54 HOMES FOR SALE
22 HOMES RECENTLY SOLD

zzyzzx says

“Sales have fallen off a cliff,” an Austin, Texas builder said. “We’re selling 1/3 of what we sold in March and April.”

A Boise, Idaho builder said that builders are slashing new home prices by 15% to 20%.

For every 1% increase in the 30 year mortgage rate, there needs to be a 10% drop in home prices. I expect a 15% to 25% drop overall for housing prices.

.

1337irr says

Where have you bought real estate? I bought near Waco, TX, the soil is kind of bad for foundations.

I've bought two for myself in Chicago and my current one out in the cornfields about 90 minutes outside Chicago. Was partner with my boss in about 10 multiunit properties in Chicago.

I managed a real estate brokerage for 15 years. 90% of non-investment purchases, primary home buyers basically, almost always looked like a ghost by the end of the inspection. And 90% of the time the inspector just brought up shit that didn't matter.

Foundations are always a concern anywhere, even basic slab builds, but 9 out of 10 times something wrong is curable. That goes back to point one. Always assume the worst with a home and hope for the best. Remember that inspectors likely may have only worked in one or two trades or work basic handymen before getting their inspectors license. It's basically the business of networking with Realtors and then justifying fees by find total BS stuff.

People buy cars all the time and ALWAYS have to make repairs generally. But home buyers for some reason don't think they're going to have to fix shit on a house. It's rather bizarre thinking about now.

WookieMan says

I've bought two for myself in Chicago and my current one out in the cornfields about 90 minutes outside Chicago. Was partner with my boss in about 10 multiunit properties in Chicago.

I managed a real estate brokerage for 15 years. 90% of non-investment purchases, primary home buyers basically, almost always looked like a ghost by the end of the inspection. And 90% of the time the inspector just brought up shit that didn't matter.

Foundations are always a concern anywhere, even basic slab builds, but 9 out of 10 times something wrong is curable. That goes back to point one. Always assume the worst with a home and hope for the best. Remember that inspectors likely may have only worked in one or two trades or work basic handymen before getting their inspectors license. It's basically the business of networking with Realtors and then justifying fees by find total BS stuff.

People buy cars all the time and ALWAYS have to make repairs generally. But home buyers for some reason don't think...

I am in the market to purchase a first home in the next few years in Columbus, Ohio. I am considering a small ranch style single family home or a single floor condo. What would be your advice/recommendation? Will finance it and it won't be an issue. I did purchase Patrick's book on housing.

gabbar says

I am in the market to purchase a first home in the next few years in Columbus, Ohio. I am considering a small ranch style single family home or a single floor condo. What would be your advice/recommendation? Will finance it and it won't be an issue. I did purchase Patrick's book on housing.

Depending on your age, I'd avoid the condo. If you're older though and don't want to deal with maintenance, a condo might be better. Depends on any trades you might be handy in.

HOA's were one of the worst parts of a transaction and then you have no control unless you get on the board. Even then it's just one vote. If 4 people agree all the siding for example needs to be replaced, which they're likely unqualified to decide, you're likely to get a monthly increase in assessment that is out of your control.

I'd go the ranch route. More work if you're handy, but idle time is just as bad not doing anything yourself with a condo. Age is a factor in this though and where you're at in life. You also have more freedom. Depending on municipality, you have more freedom to add things to the property, etc. Also you're not sharing walls or floors with a neighbor that can change at any time. Are rentals allowed? Condos get complicated.

Basically I'd only do it if I was retired (60+) or if I was doing a 2nd vacation/rental home that I plan to retire in for the condo route. HOA's are mini governments. Some good, some awful. Do your due diligence if going the condo route. Try to contact the President and other board members directly and chat with them. Don't just assume meeting minutes and documents tell the full picture of the property. Make sure they have reserves as well and not broke, as you'll end up with a special assessment down the road. Take note of common spaces whether it's the lawns, lobby, whatever. If it looks like shit I'd avoid it.

WookieMan says

Depending on your age, I'd avoid the condo. If you're older though and don't want to deal with maintenance, a condo might be better. Depends on any trades you might be handy in.

HOA's were one of the worst parts of a transaction and then you have no control unless you get on the board. Even then it's just one vote. If 4 people agree all the siding for example needs to be replaced, which they're likely unqualified to decide, you're likely to get a monthly increase in assessment that is out of your control.

I'd go the ranch route. More work if you're handy, but idle time is just as bad not doing anything yourself with a condo. Age is a factor in this though and where you're at in life. You also have more freedom. Depending on municipality, you have more freedom to add things to the property, etc. Also you're not sharing walls or floors with a neighbor that can change at any time. Are rentals allowed? Condos get complicated.

Basically I'd only do it if I was retired (60+) or if I was d...

Thank you. You are right, condos do have their disadvantages.

My experience… in general

Don’t buy condo

Don’t buy into HOA

Idea:

Buy 2 properties. 1 in a winter vacation location and another in a summer vacation location. Airbnb the properties when you can get the most rent and live in the other. This coud be a great retirement solution for low living expenses.

BayArea says

My experience… in general

Don’t buy condo

Don’t buy into HOA

That is some wise advise. If you have to buy into a HOA, be on the board.

HOAs eat shit. And most new developments have HOAs. Why?

My first home at age 26 was a condo in the Oakland hills

In the 10yrs I owned the unit, there were 4 and 5 figure surprise HOA costs I could never imagine

There were annoying letters about someone spotting my car hood up briefly in the parking lot.

There were emergency assessments

There were years with 20% annual HOA hikes, maximum allowed by law at the time

Just don’t do it.

BayArea says

n the 10yrs I owned the unit, there were 4 and 5 figure surprise HOA costs I could never imagine

There were emergency assessments

There were years with 20% annual HOA hikes, maximum allowed by law at the time

Sounds like it's a poorly run condo association.

WineHorror1 says

HOAs eat shit. And most new developments have HOAs. Why?

I don't get single family HOA's. We'll have a small $40/mo for our single family but that's for parks and mowing. I have a zero turn and will do it for free. I'm in talks with our neighbor we know and might just build the park on our own on the corner lot no one wants (expensive, but whatever). Plus it would increase values in the long term and my lot then feels like 1.2 acres with a park 50-70' from my house. It's been a ghost subdivision (no houses) for over a decade.

Volunteer time goes a long way in a neighborhood. It would eliminate the fee aspect of it as the village would take care of streets and snow plowing. So hopefully could just dump the HOA outside of covenants and restrictions on building, which is generally in line with muni code.

I know someone who lives in a condo in California. He says that (((people))) think that if the roof doesn't leak while they are living there, that they don't have to pay anything towards eventual replacement of the roof. I had no idea that San Jose had so many Jews.

WineHorror1 says

most new developments have HOAs. Why?

Because FUCK YOU!!!

Might only be worth it if cheap and keeps out Airbnb.