Hell yeah, HODL

No idea how Redfin segmented their data, but I'm surprised that a Texas market didn't warrant a callout in the table at the bottom of the page if there were sufficient cash sales to put the area at a rate significantly above the average.

Also, another interpretation for that chart is "around 30% +/- of houses ex the run up to the GFC have been purchased with cash in since the turn of the century."

Even if Austin RE gets hit hard due to recession, is there any reason it wont come back just as strong on the other end? Still a lot of corporate relocations and population growth that will continue to fuel demand that outpaces supply. This seems true of all the major Texas markets to one degree or another.

I really really hope it crashes. I'll be buying a lot. But I'm sure thousands of others are thinking the same...and thus...

Diggity said:

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Red Pear Realty said:

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Ok y'all got me. The sky is falling and real estate will never recover (even though it hasn't fallen yet).

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glad you see it our way

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Blue starred

tlepoC said:

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I really really hope it crashes. I'll be buying a lot. But I'm sure thousands of others are thinking the same...and thus...

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I would also love to see a fire sale type event.

Price crash so I can rationalize spending the amount it costs vs value. And then just pay all cash. Easy peasy

Red Pear DFW Luke said:

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I'm just a simple man and a simple Ag…

But can someone tell me - how the heck can there be a dip if everyone is waiting to buy? Are all of you sitting on the sidelines ready to buy these deals at 7% interest rates? Because that's where they are or close to it today.

But conversely - if interest rates keep pushing upwards, it limits the pool of buyers because only so many can afford $X amount of debt at Y% interest rate levels. So that pushes more people to rent and then….

Long story short - I have popcorn popped and I'm just watching for things. And I think anyone who is going to willing give up a sub-4% note rate is a goober unless you can pocket mad cash and downgrade on the home and be happier.

But I don't see how the current housing shortage can be relieved with high interest rates

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Are the REIT's that bought up all of this real estate over the past years public companies or private? I suppose they could be both. However, if they are public, and the value of home prices start to dip, they are required to adjust those assets on every 10Q, correct? Even a small write down could trigger a sell of REIT stocks, stock value plummets, the REIT's are forced to sell, it becomes a buyer's market.

This is more me just thinking out loud with respect to investing in the bear RE ETF's. It could happen with only a small drop in home value. Investors will leave that sector and head over to Tech once we find bottom. Not sure how likely the above scenario is - - it relies on a chain of events.

I also find it hard to believe that missed payments and foreclosure rates will increase to a level where real estate drops 20%+, but it's happened before. Unless layoffs occur nationwide, it seems the risk lies with the companies, not individual homeowners.

I agree with you here. Something I know has been discussed before on this RE board is that boomers are not as a group selling out/moving on from the big empty nests they have. This is one factor contributing to the supply squeeze.

Another part of that same side of the coin that I don't remember being brought up much, or at least not recently, here, is how peoples' extended lives nowadays are also squeezing the supply side of the equation.

It did in 2000-2002

Interesting data

30% not much higher than the 27.2% in 2000-2002

I wonder what the breakdown is over price range ?

I personally know a few people who paid all cash and the refinanced after closing to prevent missing out on a house or to avoid appraisal issues and to then free up cash for other investments. But I'd venture to guess that a lot of the cash buyers are people downsizing or ones from out of state where RE was much higher psf.




Do you have any data on how much institutional investment buying was going on in Texas and Austin SFH 20 years ago ?

I saw recently that some North Texas counties were currently reaching 40-45%.

I think that will be the wildcard here if things turn and if any funds have to unwind there positions.

It always comes back over time.
The 200k house that fell to 150k in 2000-2002 is now around 475k. But also historically austin real estate and Texas in general has offered value at lower pricing. The current run up of existing at $300-$500 psf is outside of the historic range of pricing metrics.

The way inflation keeps ramping up, I expect the Feds to make a few more rate hikes so higher interest rates will be here for the next few yrs.

Austin avg home price last month was about 675K. For a 400K loan @7%, P&I is 2600 vs 1600 when rate was 3%. That is a huge difference for many people given the higher cost of living.

So in the next few yrs when rates will be 7+%, I can see two scenarios happening.

#1 - Jobs continue to be plentiful, people will be gainfully employed, and there will be very little inventory/selling. In Austin, if someone sells their 675K home and moves into similar 675K home is looking at a much larger prop tax bills. It just makes little sense to sell a home if you are moving to a similar or bigger home. This will restrict inventory, less homes will be sold, and prices will not drop much; maybe even continue to inch up nominally.

#2 - Economy tanks, recession hits, businesses will cut jobs, and people are forced to sell their homes. If inventory increases, supply will outstrip demand, and this will drop home prices. Austin may not be as greatly affected but will affect less desirable cities similar to 2008.

Either way I am going to load up on cash and wait. If its scenario #1, I am going to buy cash then once rate goes down refinance the property. If #2, buy multiple with higher rates, wait for rate recover/refinance.

Over the next few yrs, I believe its a buying opportunity with #2 being more profitable unless rates miraculously drops.

I think we see another 1.75- 2 bp increase the rest of 2022. Then some .25 cuts starting in 2023. The problem is historically going into every other economic downturn, rates we're much higher and they had the ability to cut. If they don't keep raising to try to check inflation then they won't have to ammo to cut once this cycle turns down.

The biggest mistake would be to sell and wait things out IMO esp if you are buying a similar priced home b/c of prop tax. I think I have about 20 yrs of homestead exemptions that would be gone if I traded into a similar home

Red Pear DFW Luke said:

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I'm just a simple man and a simple Ag…

But can someone tell me - how the heck can there be a dip if everyone is waiting to buy? Are all of you sitting on the sidelines ready to buy these deals at 7% interest rates? Because that's where they are or close to it today.

But conversely - if interest rates keep pushing upwards, it limits the pool of buyers because only so many can afford $X amount of debt at Y% interest rate levels. So that pushes more people to rent and then….

Long story short - I have popcorn popped and I'm just watching for things. And I think anyone who is going to willing give up a sub-4% note rate is a goober unless you can pocket mad cash and downgrade on the home and be happier.

But I don't see how the current housing shortage can be relieved with high interest rates

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Well, my company is paying for relocation and paying the difference in interest rates is part of my package. I just need a ******* buyer to take my own house off my hands. Thinking we'll offer to pay down some points for them at close to get them off their duff.

Medaggie said:

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The biggest mistake would be to sell and wait things out IMO esp if you are buying a similar priced home b/c of prop tax. I think I have about 20 yrs of homestead exemptions that would be gone if I traded into a similar home

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Do you mean the "cap loss"? I'm guessing most homes have been under the 10% cap nearly every year except this year. Yes, moving to a similar priced home will increase your property taxes, but you might be significanty overestimating the impact…..unless these "crazy" valuations persist. Historically, I would have been more concerned about the hassle and transaction costs.

Just a data point from outside of TX (Charleston, SC / adjacent to downtown), but it seems that things are softening in my immediate area a tiny bit. Right now places aren't getting offers because of the fact that they merely exist. In other words the ones where in the pictures you can see things like a really screwy kitchen layout or can't tell which bathroom is the master because none of them are done up a bit nicer / larger than the others are taking price drops.

Things that are contingent are still sky high though. Like $600K for 2,800 sq ft on a house where the 1st floor has no flooring because a water heater leak went unchecked, and it still has the original 1966 kitchen cabinets.