Heineken-Ashi said:

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Furlock Bones said:

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Heineken-Ashi said:

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Furlock Bones said:

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Pizza said:

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Heineken-Ashi said:

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Pizza said:

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Tex117 said:

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Because residential real estate people are re- and tarded

(A precious…. Precious. Few aren't)

(I'm joking around…. But there always seems to be a certain slowness to accept reality with residential real estate)

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Residential is an emotional market.

...and it really, really sucks sometimes when people just can't accept the writing on the wall.

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Current sentiment is denial.

Acceptance is a couple steps down the road.

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Where I'm at, I see some acknowledgement from property owners that Single Family Residential may be over valued....but realtors & loan officers refuse to accept that. I'm sitting down right now looking at a subdivision full of terminated listings, where people bought in the low to mid 400's 2 years ago, and now can't sell for much higher than 375k. This particular Subdivision is atypical for the Market Area; however what I've discovered is that many homeowners received Appraisal Waivers after putting down around 20-25% on the original purchase around 2023.

Appraisers have gotten screwed by AMC's, and are largely disregarded by Realtor's & LO's. Mortgage Banks will threaten AMC's by witholding work when Appraisers come in low as well.

I honestly can't make heads or tails of some Market Areas anymore, and I just want to beat my head against the desk. It feels like allot like a 2007/2008 scenario with different forces in play, but tbh I have no idea. Maybe it isn't.

My gut is telling me that things are very much over valued where I'm at, but it is incredibly difficult to tell.

I think if interest rates were lowered significantly, spurring Market Activity, there would be a short & sharp decline in Sales Prices.

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It's not. 2008 wasn't just falling home prices and foreclosures. It was a structurally unsound financial system. We are long, long way from that time period. Now, serious price corrections are happening. There's no doubt. But, foreclosure levels are historic norms.

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I think you are completely backward here. 2008 was a real estate bubble and financial system that was unsound completely because of that one factor. That's why a bank bailout and currency devalution was able to eventually provide a floor for the economy.

Our current financial system is at greater risk than it was then with bubbles in literally everything. And the dollar can't be further devalued without risking complete structural collapse. The lower and middle classes have been in recession since 2022. That wasn't the case in 2008. The rubber band is stretched tight. If it snaps, you might not get a 2008 style collapse. More likely, you will get the first true deleveraging event in nearly 100 years.

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no i don't have it backwards at all. you basically made my point then argued a different one.

in the context of real estate and its relative influence on the financial system, we are nowhere near where we were in 2007-2008. That's just fact.

now, is the greater financial system teetering on the edge of another wholesale change? yea, i would agree with that.

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We mostly agree. The ting is, while residential is mostly fine from a large % of owners having low rates and not needing to sell, the boomer class is expiring. The majority of their wealth is in their home that they think is worth $750k but wont actually sell for north of $500k. But it isn't even residential that is the risk here. It's commercial. And commercial has entered the 2 year period where it has to refinance or sell. And values are not going back to 2023 levels. When this distress hits the books and banks have to realize the losses they have been ignoring or hiding for the last 2 years, it's absolutely going to cause calamity in the financial markets.

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Ignoring or hiding? What are portfolio managers doing these days, if not monitoring these and downgrading them appropriately? What's their loan review and risk function doing to hide them? Where are the regulators that come every year? Or are these smaller banks that don't have such things?

Aging Boomers own the vast majority of existing homes. About 70% of homes are sold when they are inherited. That even assumes Boomers won't have to dump their houses before they die to pay for their own long-term care as they age. Simple supply and demand shows that future supply of homes will outstrip demand. I could see a 30-40% price drop overall.

Banks will do whatever they can to prevent their unrealized losses from becoming realized losses. When that bubble bursts it won't be pretty.

Some precipitous percentage drops being projected here. Very interested in how some of these comments age! In the meantime, I'll continue developing real estate.

MAS444 said:

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Just feels like lots of exagerration and unsusbtantiated "facts" in here.

Just an example:

Quote:

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Aging Boomers own the vast majority of existing homes.

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Google says they own 38 - 42%. That's certainly high, but not "the vast majority" of homes.

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You are right, (according to Google) between the Silent Generation and Boomers they own almost exactly 50% of all homes.

The number for the 70% is found below.

https://grandviewhomes.com/blog/selling-an-inherited-house/

CS78 said:

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I'm surprised some of you are still sitting around waiting on house prices to crash. Prices have been flat for a couple years now. All while inflation in other areas has continued on. Home prices havent fallen but home values have. That was the correction! There's been a huge amount of money made in the broad stock market during the same time that housing hasn't moved. And its not like there's been a rush of new homes being built. Without a broader financial crash, my opinion, the correction in housing has already happened.

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It's definitely dependent on what area you are in (see housing data reports on this forum). Home prices may not be falling but some of that can be attributed to unrealistic expectations from sellers and their real estate agents who are happy to oblige. Hence why the amount of time a home is listed before going under contract has shot up a great deal.

CFTXAG10 said:

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Home prices may not be falling but some of that can be attributed to unrealistic expectations from sellers.

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I've always kinda found that sentiment amusing. It gets thrown around as if the sellers are THE PROBLEM. They're only unrealistic if they're expectations don't align with the results THEY actually end up getting. I suspect many of them are perfectly fine with it taking a little longer to sell. If the buyer EXPECTS to get a house cheap right now, then maybe they are the ones with unrealistic expectations? It's a market, and the process pushes and pulls in both directions to maintain equilibrium. We don't get to just blame those evil sellers.

I'm literally in a presentation in Washington DC right now talking about this.

The fact that home prices haven't come down in proportion to the interest rates poses a systemic issue. The chickens will come home to roost with the debt… including real estate prices. But all asset classes.

Why would we expect home prices to come down with mortgage rates, unless we're in a recession?

I guess you could think of it as, as interest rates go down it should get more people looking which may bring on more inventory and lower prices, but there's still the issue of people not having to sell.

txaggie_08 said:

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Why would we expect home prices to come down with mortgage rates, unless we're in a recession?

I guess you could think of it as, as interest rates go down it should get more people looking which may bring on more inventory and lower prices, but there's still the issue of people not having to sell.

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I promise you…. With 100 percent certainty that a recession will happen. I can also, with 100 percent certainty NOT tell you when that's going to happen. No idea

When one looks generally at the fundamentals, one could argue that the middle class is already in a recession (or it feels like it). The top percent (around the top 10) of earners are accounting for a substantial amount of spending. What happens when the top stops spending? We all know equities is very high right now. When that takes a hit…. Do they stop spending? Then what?

As Henekin (sp) keeps preaching, and one day, he will be right, that there will be a massive, effing massive, deleveraging event. It will happen across all asset classes.

Whether it's 07/08, don't know..

The residential market is always slow and stupid. There will be houses that sell. Some have to. You can already see it with new builds that are cheaper than existing homes. That will bring down comps. And this is without a crazy event to really get things moving.

I don't know the order of magnitude this occurs. Maybe it is just years of process staying the same while everything else catches up.

But mortgage rates alone aren't enough.

Where are rates sitting today? Around 6?

What are refinancing rates looking like these days?

There are a lot of factors that go into a rate including how much you want to pay for said rate upfront. (Your neighbor that brangs about how low his rate is likely paid a lot to buy it down. whcih CAN make sense but not in every case.) But, assuming 80% or lower LYV and very good credit you can use 5.999% as a plug rate.

Keep them high - I make more off my money market cash

fullback44 said:

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Keep them high - I make more off my money market cash

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You should try this thing called the stock market!

Agman said:

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fullback44 said:

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Keep them high - I make more off my money market cash

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You should try this thing called the stock market!

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I have money in the stock market as well- i mostly invest in high dividend markets that are safe - i really don't need the money my company does WAY WAY better than pissing around in the stock market .. with a lot less stress

I just closed on 5.625% at Amegy refinance. Zero points. 5/1 ARM

About right for that ARM. It always depends on your risk tolerance and expected time in the home. Plus mortar banks love those term loans. They are within their federal limits on terms