Fightin_Aggie said:

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AggieDruggist89 said:

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Because I am so ready!

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Interest rates have to rise to get a crash and the fed won't let them rise.

Once the fed loses control of interest rates is when the **** hits the fan

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Well....

I'm still looking for evidence of a 'bubble' in Texas.

I can't say there is or not.

agsalaska said:

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I'm still looking for evidence of a 'bubble' in Texas.

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A couple notes in the following thread from homebuilders in Texas

April homebuilder survey results are here. Top themes: 1) Demand is slowing, namely entry-level due to payment shock. 2) Investors are pulling back. 3) Ripple effect of rising rates starting to hit move-up market. Market commentary to follow…

— Rick Palacios Jr. (@RickPalaciosJr) May 9, 2022

https://www.gopenske.com/blog/rental/penske-top-ten-moving-destinations

TxAG#2011 said:

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agsalaska said:

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I'm still looking for evidence of a 'bubble' in Texas.

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A couple notes in the following thread from homebuilders in Texas

April homebuilder survey results are here. Top themes: 1) Demand is slowing, namely entry-level due to payment shock. 2) Investors are pulling back. 3) Ripple effect of rising rates starting to hit move-up market. Market commentary to follow…

— Rick Palacios Jr. (@RickPalaciosJr) May 9, 2022

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I didn't read all of them, but many of them point to a drop in demand, but is that what we mean by "bubble"? In fact, the ones talking about a loss in demand DUE to people being declined for loans seems to indicate that this isn't the same as 2007/2008.

I don't really know, so perhaps the loss of demand can be a precursor, just not sure it points to a bubble automatically.

TxAG#2011 said:

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agsalaska said:

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I'm still looking for evidence of a 'bubble' in Texas.

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A couple notes in the following thread from homebuilders in Texas

April homebuilder survey results are here. Top themes: 1) Demand is slowing, namely entry-level due to payment shock. 2) Investors are pulling back. 3) Ripple effect of rising rates starting to hit move-up market. Market commentary to follow…

— Rick Palacios Jr. (@RickPalaciosJr) May 9, 2022

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Demand has been off the charts so unless there is a massive collapse you move from multiple offers and a 2 week sales timeline to a more historical timeline of a few months (3) on the market and a more reasonable bid process.

I can see a situation where it becomes a bit less of a sellers market in the near term but until population and job growth slows in hot markets it will still be a seller's market.

kag00 said:

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TxAG#2011 said:

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agsalaska said:

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I'm still looking for evidence of a 'bubble' in Texas.

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A couple notes in the following thread from homebuilders in Texas

April homebuilder survey results are here. Top themes: 1) Demand is slowing, namely entry-level due to payment shock. 2) Investors are pulling back. 3) Ripple effect of rising rates starting to hit move-up market. Market commentary to follow…

— Rick Palacios Jr. (@RickPalaciosJr) May 9, 2022

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Demand has been off the charts so unless there is a massive collapse you move from multiple offers and a 2 week sales timeline to a more historical timeline of a few months (3) on the market and a more reasonable bid process.

I can see a situation where it becomes a bit less of a sellers market in the near term but until population and job growth slows in hot markets it will still be a seller's market.

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I don't think you're accounting for just how many buyers were stretching themselves to afford the inflated house prices due to supply shortages and rising input costs.

These are people that "should" be buying $250-300K homes but bumped up to $400K and could do so because of low rates.

Now you have those same inflated prices but a huge segment of buyers that simply can't qualify for these "starter" homes at 5-6%.

That will take the air out of the market fairly quickly.

Real Estate correction takes time. Or it may not happen this time. I have no objective data to base my opinion other than the price of housing is not affordable in many areas for the local residents.

That being said, the stock market moves more rapidly.

When will Dow hit bottom? And where's the bottom?

Looking at the 2008 crash, the market started the slide at the end of 2007 and hit bottom early 2009. A little over a year. The real estate market started to slide in 2008 and hit bottom in 2012 once all the short sales and foreclosures settled.

Real estate crash won't be felt any time soon. If it happens, it will be a while.

I think we agree there. I don't foresee a major drop in prices in major Texas metros because of the limited supply (and continued, albeit lower demand).

I do think we will see (and are already seeing) a major slowdown in buyer activity because of this rate shock. this was all by design.

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Real Estate correction takes time.

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One of the Texas A&M real estate economists said in a recent article that real estate takes about 4 quarters to fall off after interest rate hikes.

Hard to talk about these things on a national scale as real estate is local.

I can tell you that this really wasn't the case in Houston, as you can see below.



the majority of the pain was in late 2008/early 2009 and it was a bit choppy after that but definitely trending up.

You could argue that Houston was more resistant to the "Great Recession" because our appreciation prior to that was less speculative than other markets.

One thing that is clear this time around is buyers have a lot more equity in their homes than they did last time, so that should help with downside risk.

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I'm still looking for evidence of a 'bubble' in Texas.

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The exponential (almost step function) post 2020 in the graph below sure looks like a bubble to me. And, seeing Austin $/sqft at $350 also seems like a bubble. Maybe I am missing something.

https://fred.stlouisfed.org/series/TXSTHPI

Bonfire97 said:

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I'm still looking for evidence of a 'bubble' in Texas.

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The exponential (almost step function) post 2020 in the graph below sure looks like a bubble to me. And, seeing Austin $/sqft at $350 also seems like a bubble. Maybe I am missing something.

https://fred.stlouisfed.org/series/TXSTHPI

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I don't think there is any question that prices have gone insane, but it seems more like Texas is catching up to other parts of the country. Unless there is a huge chunk of people that start to default on loans, I think it will be more like others have said - prices stabilize and selling a house goes back to being a 3+ month game of showings rather than 1 day with 10 offers. While I'm sure there are exceptions, it doesn't seem like lending standards are anywhere near what lead to bubble in the late 2000s. That was due to insane house prices combined with loans that people should never have qualified for in the first place. Once the demand left, people were sitting on properties they couldn't afford to hold (and hadn't planned to).

I don't think insane pricing increases by themselves represent a "bubble" though. Especially given how cheap property has been in Texas compared to other "hot" areas around the country for years and years.

I do agree, however, that if a bubble were forming, that chart would definitely be supportive of that idea - I just don't think it is the only thing to look for.

That said, I'm no expert and it's a fun conversation. I could be 100% wrong.

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https://fred.stlouisfed.org/series/TXSTHPI

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I worked at Hines from 2013 to 2021, and from the beginning, one of my first market areas to cover was the Seattle/Bellevue/Redmond/Puget Sound MSA, and one of our biggest challenges to buying commercial/office/multifamily assets in those markets during that time was that our internal research department consistently showed the area as "over trend" and wasn't super supportive of buying there. Any guesses as to what could have made those markets "over trend" during that time? Any guesses as to what could have caused the Texas housing market to make a drastic upward trend change in Q2 of 2020? Y'all see the 300,000+ people from CA, NY, etc. that moved to Texas last year moving back any time soon?

Honestly, I would love a market correction in Texas. A really fast, drastic, scary one. But I don't think it will happen that way. I'm afraid affordable housing in Texas may be a thing of the past. Selfishly, I'm also tired of writing half a dozen offers for my buyers before we can finally win a deal.

Diggity said:

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Hard to talk about these things on a national scale as real estate is local.

I can tell you that this really wasn't the case in Houston, as you can see below.



the majority of the pain was in late 2008/early 2009 and it was a bit choppy after that but definitely trending up.

You could argue that Houston was more resistant to the "Great Recession" because our appreciation prior to that was less speculative than other markets.

One thing that is clear this time around is buyers have a lot more equity in their homes than they did last time, so that should help with downside risk.

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That is correct. As I was living in DFW and sold my house in 2012. But we never saw the bubble either. Didn't go up but didn't crash either like Las Vegas.

I would like to see a correction to get house prices back to reality, maybe not a crash. $175/sqft is manageable, not $300+. I hope that yall aren't right that we are the new California and this is here to stay, but I am also afraid that may be the case. I really feel bad for kids just getting out of college now and facing the prospect of paying $600,000 for an 1800 square foot house. That sucks.

Bonfire97 said:

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I would like to see a correction to get house prices back to reality, maybe not a crash. $175/sqft is manageable, not $300+. I hope that yall aren't right that we are the new California and this is here to stay, but I am also afraid that may be the case. I really feel bad for kids just getting out of college now and facing the prospect of paying $600,000 for an 1800 square foot house. That sucks.

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What I highlighted is a crash.

Agree on first time homebuyers. That sucks for them and is probably not sustainable.

AggieDruggist89 said:

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Diggity said:

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Hard to talk about these things on a national scale as real estate is local.

I can tell you that this really wasn't the case in Houston, as you can see below.



the majority of the pain was in late 2008/early 2009 and it was a bit choppy after that but definitely trending up.

You could argue that Houston was more resistant to the "Great Recession" because our appreciation prior to that was less speculative than other markets.

One thing that is clear this time around is buyers have a lot more equity in their homes than they did last time, so that should help with downside risk.

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That is correct. As I was living in DFW and sold my house in 2012. But we never saw the bubble either. Didn't go up but didn't crash either like Las Vegas.

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I bought a home in Vegas for $205,000 in 2009 that sold brand new in 2005 for $483,000. I turned around and sold it in 2012 for $198,000.

Nothing even close to that happened in Texas.

I'm not suprised.

I had a bachelor party in Vegas around the time you bought.

We had a friend who owned a place in some random Vegas suburb. It looked like row after row of almost brand new Pulte singly family homes, all with a pool in the back. Very similar to the "AirBNB" ready neighborhoods you'll find in Orlando now.

It felt like a ghost town. Literally 80% of the homes had stickers covering the windows next to the front door with "No Trespassing" and "Home has been Winterized" signs. It was pretty depressing.

There is still a supply crunch in TX. Population i from is simply not being met by enough new supply to house them. Multi family rents have skyrocketed along with home price appreciation. The number of SFR units being delivered today is not close to the go go days of the mid 2000s. Home builders (and debt providers) got smart about inventory carry costs and simply don't build as much spec.

I think we see normalization in the market with reduced demand, especially from people selling existing homes. I don't see a 2000 level bust unless population growth slows greatly.

It absolutely sucks to be a first time buyer right now. I feel for them.

Yea our realtor, when we told him what we were looking for, gave us a list of like 3500 houses. He did it making a point that we could pretty much just pick and choose whatever we wanted. We ended up buying a home in a gated community in Henderson with a full view of the valley. I could sit on my back porch and admire the Strip. It was a really cool house.

Funny thing is I still do not think it is worth the 483k it sold for new in 2005, even today. Last I checked was a year ago or so and that neighborhood was comping out in the mid 350s. That's how crazy that market actually was.

I'm pretty sure we were in Paradise, so not terribly far

Bonfire97 said:

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I would like to see a correction to get house prices back to reality, maybe not a crash. $175/sqft is manageable, not $300+. I hope that yall aren't right that we are the new California and this is here to stay, but I am also afraid that may be the case. I really feel bad for kids just getting out of college now and facing the prospect of paying $600,000 for an 1800 square foot house. That sucks.

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At this point I think this just is reality. The prices are being driven by demand. Interest rates certainly were a factor, but the point about all of those people moving here is what is driving the market.

Good, bad, or indifferent that's just the facts on the ground these days. I'm in Dallas, and places like Princeton, Lavon, and Crandall are getting ready to really pop because developers could find cheaper acreage for a master planned community. Waxahachie and Sherman might as well be considered the metroplex at this point too. Those markets are where the lower priced homes can be found.

AggieDruggist89 said:

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Because I am so ready!

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I believe we are there, sir.

YouBet said:

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AggieDruggist89 said:

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Because I am so ready!

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I believe we are there, sir.

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Not yet....

My subjective non scientific pulling out of my ass intuition says the market will peak and trough slowly down through the recession before it turns around and it's still early??

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My subjective non scientific pulling out of my ass intuition says the market will peak and trough slowly down through the recession before it turns around and it's still early??

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I have been sitting waiting for the "big one" for quite some time, just like you. It's here. And, you are correct, it is still very early. We still have to go through the whole cycle of companies adjusting earnings downwards which is going to drive further lows in the market. Not to mention the real estate/housing collapse, which is going to lag all of this stock market stuff by probably 12 months.

We are facing a once in a lifetime opportunity in the next 18 months to invest in a market bottom or for that matter lock in some 5 year 3.5-4% CD rates. It's going to be a money maker for folks in certain positions.

I'm with you. Being 10 years from retirement and having disposable income is allowing me to buy at a discount.

However, inflation is starting to eat into that disposable income. Starting to question whether it's time to find a new job and tap into those new baseline salaries or hold strong where I am. I may just be thankful to have a job here in six months.

What a **** storm these idiots have created.

Ol_Ag_02 said:

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I'm with you. Being 10 years from retirement and having disposable income is allowing me to buy at a discount.

However, inflation is starting to eat into that disposable income. Starting to question whether it's time to find a new job and tap into those new baseline salaries or hold strong where I am. I may just be thankful to have a job here in six months.

What a **** storm these idiots have created.

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Having been thru 2 closure/layoffs in the .com crash and again in 2008....I'm holding

I have cash to invest and am holding everywhere else because its simply too late to react, but damn if I didn't wish I had gone cash to some degree in retirement accounts.

Definitely agree with your sentiment.

I'm almost afraid to say "holding cash" as this seems to receive a barrage of criticism of inflation eating away at cash and only idiots try to time the market. But I'd rather hold cash than stocks and funds today. I sold a house last year and I've also converted to cash/bond in my IRA accounts when Dow was 35,000 and I actually feel good about it. Kid's 529 is all in cash also.

Just watching it as my buddies looking at retirement in next 10 years are starting to freak out..