Obviously most of here thought the market would correct with the jump in interest rates...

THAT has not been the case, seems like all the covid and PPP money is being thrown into real estate now.

I PERSONALLY do not see things slowing down at all, the big money wants things high. Lot of blood in the streets right now for the working man is what my realtor and title company are relaying

WILL be interesting to see what happens in the 4th quarter of 2024

https://www.cnn.com/2023/07/08/business/mortgage-rates-home-prices/index.html

Rents on new purchases are cash flow negative. I think the sale prices have to come down.

Purchases now are people who want to live there, or just parking money.

For those parking money, there is a holding cost because the rents haven't risen to the point where it will cover the mortgage cost.

Maybe some people parking money are paying cash, but that seems like a pretty low yielding, non- passive investment. I can't imagine a lot of investors doing that.

In places like Texas, it's inventory. If you paid 700k for a home that was 350k in 2019, and you locked in at 3%, you're not moving. And a ton of people did, or refinanced, at those rates. Those who bought can't afford to sell.

C@LAg said:

---

2. someone got banned and created a new sock account. guesses?

---

hedge?

New house prices are going WAY up in Frisco.

Brookside is a new large neighborhood at the tollway and Panthercreek with prices at 500 per sq. Ft.

Insanity.

I think it's regional. Lots of folks are moving to Texas. Thus, lots of demand.

See the thread about the South becoming the epicenter of business now, taking the place of the northeast.

C@LAg said:

---

txaggie_08 said:

---

C@LAg said:

---

2. someone got banned and created a new sock account. guesses?

---

hedge?

---

that is always the default assumption.

---

I'll await the boomer bashing to confirm

Im up in Frisco, locked in here with a refi a year before everything happened. Extremely lucky, the wife wanted to move but Im not budging.

Saw an article the other day about how the average Californian can save around 400-500k just by moving to Texas due to home prices and cost of living.

DrEvazanPhD said:

---

In places like Texas, it's inventory. If you paid 700k for a home that was 350k in 2019, and you locked in at 3%, you're not moving. And a ton of people did, or refinanced, at those rates. Those who bought can't afford to sell.

---

And people like me who have made equity but refinanced in 2021 (like you mentioned) but probably want to move are not selling. Current rents compared to our mortgage are crazy and someone else more than paying an 2% mortgage just makes too much sense.

Us + the people happy with what they are paying for what they have + the people that can't/don't want to sell and buy something else with todays interest rates + new migrants (both foreign and domestic) are keeping inventory down and rents high despite lower sales volumes.

I think it does crash at some point, just don't know what the trigger will be to pull us out of the current cycle.

chicken joe said:

---

Obviously most of here thought the market would correct with the jump in interest rates...

THAT has not been the case, seems like all the covid and PPP money is being thrown into real estate now.

I PERSONALLY do not see things slowing down at all, the big money wants things high. Lot of blood in the streets right now for the working man is what my realtor and title company are relaying

WILL be interesting to see what happens in the 4th quarter of 2024

https://www.cnn.com/2023/07/08/business/mortgage-rates-home-prices/index.html

---

I don't know about you, but I am curious to see what's going to happen in the 4th quarter of 2023. I'm not a fan of getting ahead of myself!

Us too.

Locked in at 2.6%.

Unfortunately, we want to move and can't figure out how to make it make sense. 7% interest rates and rising house prices are a bad combination

bmks270 said:

---

Rents on new purchases are cash flow negative. I think the sale prices have to come down.

Purchases now are people who want to live there, or just parking money.

For those parking money, there is a holding cost because the rents haven't risen to the point where it will cover the mortgage cost.

Maybe some people parking money are paying cash, but that seems like a pretty low yielding, non- passive investment. I can't imagine a lot of investors doing that.

---

Just bought a rental in Fort Worth that will yield 30% over mortgage. Paid cash but at 6.25 interest rate it would be 30%. Just my personal experience. Can't speak for the market as a whole but DFW is still hot.

If you don't mind me asking, What did you pay for the rental?

We want to get into single family rentals.

We own several apt complexes as LPs.

If anyone would like to buy a nice house in north Dallas I'm selling. Not listed but let me know.

C@LAg said:

---

txaggie_08 said:

---

C@LAg said:

---

2. someone got banned and created a new sock account. guesses?

---

hedge?

---

that is always the default assumption.

---

Especially when it's a stupid thread/post.

GenericAggie said:

---

If you don't mind me asking, What did you pay for the rental?

We want to get into single family rentals.

We own several apt complexes as LPs.

---

$170 + $8200 to renovate. Should bring $1700 comparing comps. Of course now it'll sit vacant until I settle at $1300 to someone who will turn it into a meth lab.

Whats going to end up happening is that people with out a legit reason to move, aren't gonna be moving.

How many people you know have moved when they had no real reason to move other to improve their situation.

Upgrade their house or go to a nicer area or whatever.

So I think we see less of that general behavior.

If you sitting on a mortgage in the 2s. You might not be moving unless you absolutely have to.

You might not be able to move for a new job and you might be limited on where you could move for a job, period.

So I think we start to stagnate at some point.

Commercial real estate seems like another poison pill and you don't hear that much talk about it.

GenericAggie said:

---

Us too.

Locked in at 2.6%.

Unfortunately, we want to move and can't figure out how to make it make sense. 7% interest rates and rising house prices are a bad combination

---

Ditto….can't find a house in a good of location that makes sense to move into right now and even if we do the payment for something only 50k more is $200-$400 extra a month.

agracer said:

---

GenericAggie said:

---

Us too.

Locked in at 2.6%.

Unfortunately, we want to move and can't figure out how to make it make sense. 7% interest rates and rising house prices are a bad combination

---

Ditto….can't find a house in a good of location that makes sense to move into right now and even if we do the payment for something only 50k more is $200-$400 extra a month.

---

Same. Bought 5 years ago; locked in at 3% 2 years ago. Can't move because wouldn't be able to get something as nice. Housing market here in the Knoxville area is white hot. Our house value has gone up 125% from when we bought. Craziness.

Commercial real estate is a whole other can of worms.

Stat Monitor Repairman said:

---

Whats going to end up happening is that people with out a legit reason to move, aren't gonna be moving.

How many people you know have moved when they had no real reason to move other to improve their situation.

Upgrade their house or go to a nicer area or whatever.

So I think we see less of that general behavior.

If you sitting on a mortgage in the 2s. You might not be moving unless you absolutely have to.

You might not be able to move for a new job and you might be limited on where you could move for a job, period.

So I think we start to stagnate at some point.

Commercial real estate seems like another poison pill and you don't hear that much talk about it.

---

This. Plus Commercial is completely different than residential for a myriad of reasons. Government backed debt will continue to keep pricing high as mortgage rates for both commercial and residential is still greatly subsidized to the market plus inventory is still low.

Builders literally can't afford to build to the already inflated prices as a result.

Im not an expert, but many business park around here have been having difficulties filling their buildings with tenants. I was down in austin two weekends ago and its even worse down there. I think commercial real estate is in big trouble with work from home and the general laziness of the woke crowd.

Guess I'm just perplexed at all the talk about white hot markets in Texas or otherwise. No one is buying or selling a damn thing in my North Dallas hood which should be considered white hot. We have one story houses on the market for $1.5M that no one is sniffing and then the next level of home is $2M+ which are mostly spec homes at this point.

If you have a house below $1M it's sitting and not selling unless it's low enough (<$700K) to gut and flip.

Crazy to think a $600k house would be for flipping, 2000 was a long time ago...

For someone who's been renting since college, anyone have a guess at when those rates or prices will drop so I can get in on the fun?

chicken joe said:

---

Crazy to think a $600k house would be for flipping, 2000 was a long time ago...

---

The flip cut off we've seen in my area is $700k. The issue then is that if your house is between $700k and about $1M you are dead in the water if you want to sell. Your house either needs to be cheap enough to flip (<=$700k) or expensive enough to be desirable by the wealthy (>$1M).

jc100 said:

---

For someone who's been renting since college, anyone have a guess at when those rates or prices will drop so I can get in on the fun?

---

Rates? Looking like end of year or next year.

Pricing? Probably never in Texas minus a catastrophic implosion.

GenericAggie said:

---

Commercial real estate is a whole other can of worms.

---

This

I hope you're wrong. I have a second home I need to sell next summer.

Noticed a bed bath and beyond yesterday with liquidation sale signs up.

How many of the 360 bed bath and beyond locations are gonna be sitting vacant indefinitely?

My commercial property in SF (of all places) is worth over 3 times what I bought it for in 2011, locked in at 4% which makes refi to get a couple million accessible for other investments at the current rates a hard pill to swallow, and literally paying for my house in Boise with the monthly rent. Itl burn me eventually, but for now I'll let it keep paying for my expenses while my regular pay gets me toys.

To be honest, I'd love to sell it, but I don't want to pay 50-60% in taxes, since an exchange would be difficult in this environment.

WoMD said:

---

My commercial property in SF (of all places) is worth over 3 times what I bought it for in 2011, locked in at 4% which makes refi to get a couple million accessible for other investments at the current rates a hard pill to swallow, and literally paying for my house in Boise with the monthly rent. Itl burn me eventually, but for now I'll let it keep paying for my expenses while my regular pay gets me toys.

To be honest, I'd love to sell it, but I don't want to pay 50-60% in taxes, since an exchange would be difficult in this environment.

---

Good and annoying situation to be in. You could 1031 into some multi-family as an LP and get the capital losses on the MF properties when they sell. That will offset the gains. You could also look at a land conservation deal. Do 100K investment with a 5x multiplier (don't get into one that's higher - Congress and the IRS are messing with this particular mechanism) to offset your gains if after the MF investment sells if the capital gains are too big.

Since it's California, I'm not sure how income taxes apply with a 1031.