patrick.net

Many central banks, like the Fed, are still solely focused on pressure to quickly get core inflation back to 2% without fully acknowledging how much economic pain it will take in a world shaped by production constraints. We’re tactically underweight developed market stocks and prefer credit. Central banks can’t fix these constraints, in our view, hence a brutal trade-off: trigger a deep recession by hiking rates or live with more persistent inflation. The Fed’s forecasts don’t acknowledge this trade-off. - BlackRock, September 28, 2022

WookieMan says

I believe you're in the panhandle FL? First stay safe unless you're far enough west from the hurricane. Weather junkie as a side hobby.

Yes, my townhome (3 bedrm, 2.5 bath, 2 car garage, built in 2016) is in the Florida panhandle about 2 miles from the beach. We have HO-3 insurance ($1600 a month for $250,000 replacement value and $1000 deductible). HO-3 cost same as HO-6 insurance. Also we have HOA master insurance which comes out to around $1500 a month.

The HOA manages our structure (roof, exterior, etc) so they have to have insurance. Total insurance cost annually is $1600 plus $1500 (or $3100) for a $250,000 townhome.

Plus the HOA monthly fee is $380 a month (which includes the cost for HOA master insurance).

Between $380 a month plus $133 a month for HO-3 insurance and $145 a month for property tax, that is $658. Our mortgage is 3% for 30 years and is $800 a month (now is $450 principal and $350 interest).

All the "other housing costs" like HOA fee/property tax/insurance is almost equal to our mortgage payment after 6 years of buying the home.

All the "other housing costs" was around $400 back when we bought in summer 2016, and gone up 65% to currently $658. That is a 9% annual increase :-(

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WookieMan says

I believe you're in the panhandle FL? First stay safe unless you're far enough west from the hurricane. Weather junkie as a side hobby.

I love watching the hurricanes (and himacanes). https://www.wunderground.com/hurricane was more fun when the guy who ran the hurricane section was more active, but he retired a few years ago. Do you have any favorite websites?

https://www.reddit.com/r/RealEstate/comments/xqtklj/our_new_build_no_longer_is_affordable_discussing/

Our New Build No Longer is Affordable - Discussing backing out

https://fortune.com/2022/09/28/housing-market-home-price-correction-2022/

These 2 maps show the U.S home price correction is sharper—and more widespread—than previously thought

For a $2,500/month payment and 20% down, one can afford a $476K house today. In early 2021, the figure was $759K.

Ergo, the $759K house is now worth $476K.

Al_Sharpton_for_President says

For a $2,500/month payment and 20% down, one can afford a $476K house today. In early 2021, the figure was $759K.

Ergo, the $759K house is now worth $476K.

Doesn’t work like that. Drop your price $100k and a hedge fund buys it to add to their real estate portfolio. Or a real estate investor grabs it to flip or whatever. People with MONEY put a floor under a market like this because they HAVE TO in order to keep their existing real estate investments propped up.

This will continue until interest rates come down again. Until then, if you put your house on “sale,” it will sell.

ad says

Total insurance cost annually is $1600 plus $1500 (or $3100) for a $250,000 townhome.

This is fascinating. Well, it's a tradeoff for No State Income Tax.

charlie303 says

B.A.C.A.H. says

charlie303 says

This is the collapse of the 'Everything bubble' and the end of US hegemony but it's going to take a year or so to play out.

"The Sky Is Falling Down!"

Yes. Chicken Little lives!

Massive intervention by the Central Bank of England intervention today to prop up the pension market which would have collapsed.
Panic and turmoil as people realise they might lose their property as well.
Asian Central Banks now also intervening as the carnage spreads.

Remember we are in a global economy that has been synchronised for at least 20 years so when one domino goes they all will.
US $ to rise before being the last to fail.

You heard it first here.

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Your crisis can also be your opportunity. Opportunities don't come along all the time. We have to seize them when they come.

Shaman says

HAVE TO in order to keep their existing real estate investments propped up.

Why buy one today, when you can buy two tomorrow?

https://www.reddit.com/r/RealEstate/comments/xroxo0/buyers_financing_fell_through_what_are_our_best/

Buyers financing fell through. What are our best options?

My parents sold their house, and bought another house both with the closing date of today. Today at 4:30pm they received a call saying that our buyers financing fell through and asked for a 4 week extension in order to refinance and pay for the house. The problem is, we cannot pay for the other house until we receive the payment for our house, and we payed professional movers 10k this morning to move everything out of the house into the other, so our furniture is now sitting in a truck outside of the house waiting to be moved tomorrow morning. However, we cannot move the furniture in because we haven’t paid for the house due to the financing issue from our buyer.

Our realtor said he cannot legally ask for more time, and we can take the 80k deposit and re-list our house. This gets messy though because we still need the money to pay for the other house, so we still cannot move in until our house closes, so we can pay them.

We’re in talks of bridge financing right now, however that’s at 10%, so it gets expensive. What is the best course of action we should take. I feel we should be able to benefit from this situation as it’s the buyers fault we’re in this mess. Please feel free to ask questions, I’m sure I left out lots of details. I live in Canada by the way, if that changes the laws. Thank you

https://www.realpage.com/analytics/us-rental-housing-market-cooling-off-fast/

The U.S. Rental Housing Market is Cooling Off Fast

Prices are noticeably dropping around the San Diego county. Also, discounts are increasing. A month or so ago, $10k drop was common, now it's more like $40k drop in asking, plus a starting price about $100k under what it was six months ago.

zzyzzx says

Today at 4:30pm they received a call saying that our buyers financing fell through

Our realtor said he cannot legally ask for more time, and we can take the 80k deposit and re-list our house.

Usually, a real estate contract has a contingency that if the buyer's loan is declined, the deposit is refunded. Not sure how the seller can keep the $80k, unless Canadian laws are different.

https://wtop.com/business-finance/2022/09/sellers-no-longer-getting-list-price-dc-metro-tops-that-list/

Average home sales dip below list prices — DC metro area’s drop is the biggest

http://crashrank.com/

HeadSet says

Usually, a real estate contract has a contingency that if the buyer's loan is declined, the deposit is refunded. Not sure how the seller can keep the $80k, unless Canadian laws are different.

It's extremely difficult if not impossible for the seller to keep earnest money (deposit) using standardized modern contracts, at least residential. As you mention Canada may be different.

I participated in 1k+ deals managing an RE brokerage (not selling myself) for 15 years and it happened 1-2 times and was a trivial amount like $2-5k. Earnest money/deposits are all fluff basically. A "feel" good for the seller that the deal will close so the agent can get it under contract and get a commission. Generally has nothing to do with what the seller "could" get if the deal falls apart. Brokers use EM as leverage all the time knowing their buyer won't lose shit. Oh he put $10k down, he's serious says the listing broker. It's fucked up. It's flat out lying. The attorneys know it too and know they'll get paid either way via an actual closing or representing them to collect earnest money that will never/rarely happen.

Al_Sharpton_for_President says

For a $2,500/month payment and 20% down, one can afford a $476K house today. In early 2021, the figure was $759K.

Ergo, the $759K house is now worth $476K.

That's about right with the rule for every 1% increase in the 30 year rate, there is about a 10% drop in price. The 30 your rate bottomed around 3% in 2021 and now is 7%.

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And we'll see how popular the 5 year Adjustable Rate Mortgage is as a substitute for the 30 year mortgage if the 30 year rate remains for the long term above 6%.

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Even more inventory coming on in Live Oak, Capitola, Soquel. The hang times are increasing. Prices have dropped on some, but it looks like many are trying to hang on to their dream equity. Winter might be brutal if mortgage rates go up another point to point and a half.

Ceffer says

Even more inventory coming on in Live Oak, Capitola, Soquel. The hang times are increasing. Prices have dropped on some, but it looks like many are trying to hang on to their dream equity. Winter might be brutal if mortgage rates go up another point to point and a half.

Depends on how desperate people want to sell such as if they are in a rush to sell. Unemployment of white collar jobs is a major factor.

Another matter is that those who bought recently with assumable mortgages like VA or FHA, then have very low rates like 3.25%. These assumable mortgages can be assumed or taken on by the buyers of these homes.

But how many of those who recently bought with assumable mortgages are really going to be desperate to sell or just abandon their homes ? This is not like the subprime mortgage crisis in 2008.

Ceffer says

Even more inventory coming on in Live Oak, Capitola, Soquel. The hang times are increasing. Prices have dropped on some, but it looks like many are trying to hang on to their dream equity. Winter might be brutal if mortgage rates go up another point to point and a half.

I assume sales will remain slow until people accept the "New Normal" pricing. IF rates remain high for some time. Those who have to sell will sell.

GNL says

IF rates remain high for some time. Those who have to sell will sell.

My guess is that rates will stabilize around 5%. It will be interesting if a lot of owners will just wait until the rate stabilizes and then sell.

I am glad we got an assumable 30 year mortgage (Veteran Affairs) at 3% back in 2016. That will help us to buy more buyers at a better price if the buyers qualify to assume the mortgage.

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Who has to sell? This isn’t leveraged out the ass flipper owned properties like 2008. Everyone is working remote. Cost to build is sky high. Sorry you didn’t buy a house in the last 12 years, you missed your window.

Only way house prices decrease significantly is if there is a massive recession. In that case you won’t be able to get the financing to buy anyways.

pudil says

Sorry you didn’t buy a house in the last 12 years, you missed your window.

What do they say about making assumptions? I'm imagining lower sales volume and a higher % of sellers will be those that have to sell. I guess you forgot how often people in 2008 said "if you don't buy now you'll never be able to buy". Then after 2010ish we witnessed literally millions and millions of people do what? That's right...THEY BOUGHT HOMES!!

ad says

My guess is that rates will stabilize around 5%.

Can gov pay interest on its ever increasing debt beyond this point!

Blue says

Can gov pay interest on its ever increasing debt beyond this point!

Good point as I suspect the Fed Funds rate will stabilize around 4.25% from currently at 3.25%.

The 10 year Treasury is 3.8%. It averaged about 2% a year under Obama when he was borrowing $1 trillion annually.

Right now I think debt service is still sustainable for the federal government. Its only about 9% of the federal budget.

https://www.pewresearch.org/fact-tank/2019/07/24/facts-about-the-national-debt/ft_19-07-18_nationaldebt_2/

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This US Treasury site states interest payment is 5% of total federal budget : https://fiscaldata.treasury.gov/federal-spending/#deficit-by-year

The site accounts for all spending including entitlements including Social Security.

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cisTits says

And the Fed owns the largest sungle chunk of it.

Yes the Federal Reserve owns US debt and so does the Social Security Trust Fund. Any surplus of Social Security is used to buy US debt (Treasury bills, notes, and bonds).

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ad says

My guess is that rates will stabilize around 5%.

What makes you say that when at this moment mortgage rates are 7% and the fed say they will continue to raise?

https://www.marketwatch.com/picks/the-major-county-in-america-where-home-prices-just-dropped-the-most-is-01664637133

The major county in America where home prices just dropped the most is...

Alameda County (Oakland, Calif.), which is down 11%;
Travis County (Austin, Texas), which is down 9%;
Santa Clara County (San Jose, Calif., which is down 8%;
Contra Costa County (outside Oakland), which is down 7%; and
Fairfax County, Virginia (outside Washington, D.C.), which is down 7%.

pudil says

Cost to build is sky high.

For now, but building supplies are trending downward (like lumber). Garage door and windows, etc will become available if they aren't already.

pudil says

Who has to sell? This isn’t leveraged out the ass flipper owned properties like 2008. Everyone is working remote. Cost to build is sky high. Sorry you didn’t buy a house in the last 12 years, you missed your window.

Only way house prices decrease significantly is if there is a massive recession. In that case you won’t be able to get the financing to buy anyways.

I just bought a house a few months ago and I knew it was at the peak, but I had more important reasons to leave CA and start elsewhere. I think you underestimate the probabilities of a job-loss recession with the record pace of monetary contraction that the Fed is driving. Having said that, the most desirable areas will always have demand which is why location matters so much especially in times of recession.