patrick.net

Eman says

RC2006 says

Misc says

Builders have decreased the size of the houses they build, have less upgrades than existing homes and are generally further away from attractions.

My biggest issue with new houses is the lot size and they go for the minimum space requirements between houses.

I agree. It’s the location, and the value is in the land. Land value in Palo Alto goes for $600/sqft.

I definitely don't like being close enough to piss on the neighbors house out of my master bedroom window. We'll have 3/4's of an acre and our one neighbor bought another lot and won't build. It will feel like we have about in acre in a small town with sewer and water. We might buy the last corner lot and basically our friend/neighbor and us will own the South side of the block. It will be expensive for IL standards where I'm at, but not for CA peeps. $600-800k. Forever house. We'll probably never get rid of it. It's just a bitch of a process, building custom.

Eman says

Look at the chart. Being a renter sucks. Rent goes up practically every year except 2008 and 2009, where it went down at most 2-6% while it went up as high as 6-14% in the remaining 16 years, and the rate of rent increase compounds each year.

Riddle me this, what's your maintenance costs over the same period? My friend in the Bay Area tells me his costs have gone up 50%. I don't see a 50% rise on that chart.

Further if you look at the increase just before the last crash(housing, economic, don't care what you want to call the crash), and the subsequent plunge(but rents NEVER go down!!), it's about a third greater than the rise. So looks like we should expect a 24% decline in rents sometime soon.

Beyond that during that period I've paid as little as $1,350 for a 3/1 house with a yard in SoCal. I've paid as little as $1,550 for a 3/2 house with a pool in Phoenix. I've only had the rent raised on me three times, and two of those were at the current place. I've had multiple roof leaks fixed, electrical work, two water heaters replaced, and had countless other small repairs made without lifting a finger, spending one minute of my own time, or one dime of my own money. My wife has never had to work, we've sent our daughter to private school, always lived in good family neighborhoods, taken many trips and vacations. And have had no interest bearing debt for at least half of those years, no debt at all for five.

I might be an exception, but only because more people don't take the path less traveled when it comes to debt and investing.

NuttBoxer,

Would you please share how you derived 24% decline in rents from the chart you shared above? I would love to learn how to read it correctly.

This year isn’t over so I don’t have the numbers to compare to last year to know the maintenance costs. I doubt it’s anywhere close to 50%, but I don’t have to numbers to share at the moment.

Do what works for you and your family. Your chart suggests being a renter sucks, but I might have interpreted it wrong. Hopefully, you can share how to interpret it correctly.

I don’t share the same sentiment about private schools. We send our daughter to public schools. Do what works for you and your family. That’s all there is to it.

Eman says

I don’t share the same sentiment about private schools. We send our daughter to public schools.

Good on you (and her).

For decades in the trenches of tech I heard too many parents (colleagues) say too much awful stuff about the public K-12 without ever setting foot in one to observe, volunteer or whatever. Phase II of that snobbish behavior was for moms to have a pecking order based on how they perceived which private K-12 were superior to which other. Money from RSU's or whatever that could have been used for college pissed away on private K-12 tuition while paying extremely high property taxes to fund the public schools.

Silly valley techies.

Rubicon says

Over 50% of houses sell above asking

CA isn't even representative nationally. There's no crash coming. Stagnation maybe with minor drops in hipster cities. Small towns will gain for sure. Neighbor sold his house in 3 days in a bidding war. There's like 2 homes for sale out of 800 with water meters. My market is under 1 month. There are no rentals.

I don't look at East coast, but flyover country is a joke inventory wise. I see no for sale signs. Everyone is buying $20k UTV's and golf carts. And their main car is a $50k Tahoe. No one around me is hurting for money. We're losing population here in IL, but warehouses are showing up like weeds. The market doesn't make sense, but housing seems to be fine. People are buying shit a lot. My wife's work is booming. I like being cautious of markets, but I'm not seeing anything negative. I'm not overly positive either. This is an Obama economy. Not good, not awful for 80% of people. I wouldn't want 4 more years of it though.

Rubicon says

Yeah, this economy isn’t that bad for people with assets. Terrible for renters who are trying to buy though. But what else is new.

What industry is your wife in?

Sales for infrastructure. Government contracts basically at a municipal and county level in IL and WI.

We've gotten $1.7M federally for the board I'm on which is insane. The money is flowing big time. Good or bad, take advantage of it if you're in the position. The $1.7 is for a community project that is worth it in my opinion and I dislike government. Minds can be changed I suppose. I make $0 off it outside of my town looking less shitty. Even though I love it as shitty looking as it is. We frankly need a few people to die that own properties downtown. And yes they're old, but it's still at 10+ year window. Small towns are weird.

Hope not to offend Boomers, but most give no shit about any of the younger generations. Never have. They're too lazy to rent out a basic store front (where I'm at) for $600/mo. They're idiots. I don't mind religion, but the biggest issue in my area is a cultish type church that fucking brainwashes the people that financially are set. They're fucked up. Us 30-50 year olds are trying to break their shit up though. It's what I like and hate about small towns. We can make change and we are.

https://finance.yahoo.com/news/loan-officer-m-seeing-middle-000641114.html

Loan officer: I’m seeing middle class homebuyers take on $7,000 mortgages thinking they can ‘always refinance when rates come down in the future’

Patrick says

https://finance.yahoo.com/news/loan-officer-m-seeing-middle-000641114.html

Loan officer: I’m seeing middle class homebuyers take on $7,000 mortgages thinking they can ‘always refinance when rates come down in the future’

$270k income is considered middle class? 😅

Eman says

Would you please share how you derived 24% decline in rents from the chart you shared above? I would love to learn how to read it correctly.

This year isn’t over so I don’t have the numbers to compare to last year to know the maintenance costs. I doubt it’s anywhere close to 50%, but I don’t have to numbers to share at the moment.

I believe I stated it pretty clearly. Look at the peak and decline percentage ratio in '08 and adjust for that monstrous peak we just passed to forecast likely bottom. I would say that's the highest the bottom could be, likely will go lower. As to the why of that, please familiarize yourself with Rothbard.

My friend has the numbers, I think specifically because the 10% rule is preventing him from raising to what he'd like in order to keep his profit margin. He's historically been well under market.

Eman says

I don’t share the same sentiment about private schools. We send our daughter to public schools.

B.A.C.A.H. says

I heard too many parents (colleagues) say too much awful stuff about the public K-12 without ever setting foot in one to observe, volunteer or whatever.

Not sure where you guys live, but if your schools have met expectation, they are the exception. Let me share some reality for the rest of us. My oldest and middle daughter were not taught math in PUBLIC Elementary school. Specifically the oldest was taught some finger trick for addition/multiplication over memorizing. The middle one was sent home with a "solve for x" problem in Kindergarten. Since I took an education class, I know before Junior High, children are incapable of abstract thought. At one point we tested the middle one for transfer to a Catholic, she was two grade levels behind. She only caught up because she attended a public school in the small town we live in with a 1/5 student teacher ratio, and because we put her in tutoring the year before when her public school teacher refused to help her in any way.

Further, oldest daughter got an 1100 on her SAT despite having a 4.0 GPA, so no scholarships(we don't quality for income based stuff). And because the people who ill educated her pushed the UC track so hard, she still hasn't finished college(refused the shot).

I had the contact the head of the lunch program for the district my daughter attends to get them to stop giving her lunch at school, then charging us, because they have some rule about having to feed kids. I explained very clearly we are responsible for her nutrition not the school. To the guys credit, he was onboard with me, but this kind of over-reach has been a constant problem at every public school they've attended. I refuse to disclose reason for absence, because it's none of their fucking business what we do as a family when not at school. I've had to explicitly put in writing that they not allowed to give my kids any medication or shots. I've told a teacher that I've taught my daughter to fight back, and if there's an issue, I won't blame her, I will blame them. I've had to insist they allow them to call us if they aren't feeling well, or need anything, that the teacher is not allowed to decide what action to take. My wife says the offices are scared of me, apparently just because I assert my rights as a parent.

You guys are way out of touch with reality when it comes to our(almost everyone else's) experience.

NuttBoxer says

You guys are way out of touch with reality when it comes to our(almost everyone else's) experience.

We live in Silicon Valley, not Flyover Country.

What I recounted is all SoCal, but last time I checked, California has one of the worst public school systems, so "flyover" is probably kicking your ass. In fact, I went to school in Indiana and Michigan, and my education and quality of instructors was vastly superior to what I've seen on the coast.

Are you aware California mandated curriculum change in 2013 to push perverted authors, and expend sex-ed to include un-natural acts? That currently they are attempting to usurp school boards and control all curriculum decisions from Sacramento(likely to due to pushback over same perverted, and hatred spewing indoctrination attempts). That a Riverside county school board expelled a high ranking state rep when he went over his time fighting to prevent parents from being informed when their kids express a desire to perform self-mutilation via evil plastic surgeons?

Your good public school is a unicorn, and one that will soon be shot if the state gets their way.

NuttBoxer says

What I recounted is all SoCal, but last time I checked, California has one of the worst public school systems, so "flyover" is probably kicking your ass. In fact, I went to school in Indiana and Michigan, and my education and quality of instructors was vastly superior to what I've seen on the coast.

Are you aware California mandated curriculum change in 2013 to push perverted authors, and expend sex-ed to include un-natural acts? That currently they are attempting to usurp school boards and control all curriculum decisions from Sacramento(likely to due to pushback over same perverted, and hatred spewing indoctrination attempts). That a Riverside county school board expelled a high ranking state rep when he went over his time fighting to prevent parents from being informed when their kids express a desire to perform self-mutilation via evil plastic surgeons?

Your good public school is a unicorn, and one that will soon be shot if the state gets their way.

There are good public school systems in locations that are non-woke and not dependent on Fed $$. I live in one of them. They had to deal with state NAZI's but not federal. No kid had to get the clot shot, and there's no globohomo books in the school library.

I do agree, though, that the Fed education agency is an obvious malignancy that must be destroyed. They first offer the carrot of 80% funding, then they push globohomo. Only the most well-funded school systems can resist the siren call of Fed globohomo money. Coincidentally, these are mostly white/asian areas with a mutual respect for quality education and a complete intolerance for anything else.

Reagan was right. Eliminate federal funding of education, and let communities decide for themselves

stereotomy says

Reagan was right. Eliminate federal funding of education, and let communities decide for themselves

Yeah, something akin to what those radicals codified in 1791 - “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/158xaeu/natural_death_3_years_ago/

I’m in escrow, and I found out that the condo I’m purchasing, the seller’s father passed in it in 2020

https://www.reddit.com/r/legaladvice/comments/158hrt1/buying_a_house_with_an_extremely_weird_easement/

Buying a house with an extremely weird easement that lets a stranger use our bomb shelter.

https://www.reddit.com/r/RealEstate/comments/158p1fy/bought_a_house_unknowingly_next_door_to_public/

Bought a House Unknowingly Next Door to Public Housing

Patrick says

Good. It is about time that borrowers, and not savers, pay the price for all that irresponsible borrowing.

https://www.hipporeport.com/en/new-living-show-share-hunting

I saw a plot on PDW showing the median price of new houses dropped below the median price of used houses for the first time ever.

I can't find it now and am not sure if it was legit.

@just_passing_through Here it is:

https://wolfstreet.com/2023/07/26/prices-of-new-houses-drop-below-prices-of-used-houses-for-first-time-since-2005-sales-languish-inventories-sky-high/

Patrick says

Here it is:

Thanks! I guess it's 2005 then. I was too busy playing around with my new generator to bother looking for it.

From a friend:

The question would be why new houses sell for less than existing.

I read somewhere that buyers tend to be on the market because they are looking at a lot of properties. This was said be true both in rising and falling markets. In rising markets you see a ton of bids on a house which may indicate that the seller could have listed it for more. In falling markets you see a lot of sellers turning down offers or sitting on a property for months trying to get the price that the place down the street sold for a year or two ago.

The argument would be that the new home builder being a forced seller, if they are taking less than the home owner who is not a forced seller, is a leading indicator of a falling market.

THIS ^^. I've seen more than a few examples of existing home owners go from selling to renting because they couldn't get the inflated price they wanted. And even with the renting they've still over-estimating market value.

Hopefully most of those people will remember a house is primarily a dwelling, not an asset. Otherwise they will be very unhappy as things continue to settle back down to earth...

Patrick says

The question would be why new houses sell for less than existing.

Do not forget if the builder is selling in a development, he has one big advantage - the builder likely has an on-site realtor who is not paid the 6% commission. Another advantage is the builder does not have to recoup "improvements" a homeowner may have done such an updated kitchen or landscaping. If the seller of the existing house originally bought within the last 4 years, there may not be enough appreciation to cover the old loan origination fees and points.

AmericanKulak says

Again, in my East Coast FL area, the stubborn ass old home owners - and I'm talking 1200 sq ft early-mid 60s spacerace boom houses on 1/5th acre, carport (no garage), a 2 bedroom with the sunroom enclosed (badly), with HVAC often added later and poorly (ie enclosed sunroom only has one small vent, will be 5-10F hotter than the rest of house) - $280-299k.

VERSUS

Brand new DR Horton $281-306k for genuine 3 bedrooms with another 200 sq ft under air (1400-1600) a decent sized master suite with walk-in closets, new everything inc. built in USB ports, brand new and not undersized later added Central HVAC, roof, etc. AND the Builders unlike the homeloaners/inheritance kids are covering closing costs. Granted, they're zero lots, maybe 6000 sq ft total, but they come with 2-car garages.

I still just can't imagine paying north of $2000/month for a 3 bedroom/2 bath house or having to come up with ~$50-60k down.

Knew I wasn't crazy



EDIT: Oops, thanks Rubicon
Rubicon says

Here ya go

just_passing_through says

I saw a plot on PDW showing the median price of new houses dropped below the median price of used houses for the first time ever.

I can't find it now and am not sure if it was legit.

HeadSet says

Patrick says

Good. It is about time that borrowers, and not savers, pay the price for all that irresponsible borrowing.

It’s sad that our Fed is reactive rather than proactive. The next time we hit recession, they’ll cut Fed fund rate down to 1% again, and the cycle continues. That’s my bet.

https://www.reddit.com/r/wallstreetbets/comments/15b8lwk/tales_from_a_401k_administrator/
TL;DR- Hardship withdrawals are up to pay mortgages.

1337irr says

https://www.reddit.com/r/wallstreetbets/comments/15b8lwk/tales_from_a_401k_administrator/
TL;DR- Hardship withdrawals are up to pay mortgages.

What makes you think these people don’t use hardship as an excuse to take money out of their 401k and gamble on the stock market options?

Eman says

1337irr says

https://www.reddit.com/r/wallstreetbets/comments/15b8lwk/tales_from_a_401k_administrator/
TL;DR- Hardship withdrawals are up to pay mortgages.

What makes you think these people don’t use hardship as an excuse to take money out of their 401k and gamble on the stock market options?

https://finance.yahoo.com/news/foreclosures-rising-experts-means-housing-180030618.html

1337irr says

Eman says

1337irr says

https://www.reddit.com/r/wallstreetbets/comments/15b8lwk/tales_from_a_401k_administrator/
TL;DR- Hardship withdrawals are up to pay mortgages.

What makes you think these people don’t use hardship as an excuse to take money out of their 401k and gamble on the stock market options?

https://finance.yahoo.com/news/foreclosures-rising-experts-means-housing-180030618.html

From your article:

“Even though foreclosures are spiking, it’s not the big deal everyone is making it out to be. We are just reaching a more normal level of foreclosure filings,” said Brian Wittman, owner/CEO at SILT Real Estate and Investments.

“According to ATTOM, there were approximately 150,000 foreclosure filings in Q1 of 2019,” Wittman said. “There are still only roughly around 100,000 in Q1 of 2023. It is a rise year over year of approximately 10%. It still doesn’t appear to be the issue everyone thinks it will be.

Just putting things in perspective.

- The rate for early-stage delinquencies – defined as 30 to 59 days past due – was 1.4% in April 2023, up from April 2022. The share of mortgages 60 to 89 days past due was 0.4%, up from April 2022.

- Over the 2005 to 2008 period, delinquency rates rose from around 5 to over 22 percent for subprime mortgages on investor - owned properties, compared with a rise from 5 to around 18 percent for owner-occupied properties.

We’re not quite there…yet compared to the last housing bubble.

Eman says

It’s sad that our Fed is reactive rather than proactive. The next time we hit recession, they’ll cut Fed fund rate down to 1% again, and the cycle continues. That’s my bet.

Fixed:
The next time we hit recession, they’ll cut Fed fund rate down to 0% again

https://apnews.com/article/personal-finance-off-the-charts-transunion-los-angeles-business-223a7be57d988912ee2cbb9b46096e34

More homeowners tap equity juiced by soaring prices

https://fortune.com/2023/07/27/housing-market-institutional-freeze-invitation-homes-net-seller-wall-street-real-estate/

Housing market institutional freeze: Invitation Homes—the largest owner of U.S. homes—was a net seller for the third straight quarter

Eman says

It’s sad that our Fed is reactive rather than proactive. The next time we hit recession, they’ll cut Fed fund rate down to 1% again, and the cycle continues. That’s my bet.

You assume they're being reactive because you see their role as preserving the economy. But if you see examine the outcome of every Fed action without this assumption, you will quickly realize their role is very different.

AmericanKulak says

Knew I wasn't crazy

Looking at the last crash, used is what had a significant drop, and new really didn't move down that much at all. If that trend follows this time around, used has a LONG way to go, as new is dropping precipitously already.

Cardboard box sales have dropped 20% in the first two quarters, most since 2009. But I'm sure those house prices are fine...

NuttBoxer says

Cardboard box sales have dropped 20% in the first two quarters, most since 2009. But I'm sure those house prices are fine...

Could you please expand on that? What kind of cardboard boxes sales have dropped? CPG? Moving? Industrial? Budweiser?

Anecdotal, but I have using Zillow for a while to look at single family homes in Va and NE and have notice plenty of price drops during the last two weeks of July. Also, I see developers are selling off their lots to the public because apparently builders are not buying those lots. The prices have not fallen enough to make up for the rapid rise of the last few years, at least not yet.

1337irr says

Could you please expand on that? What kind of cardboard boxes sales have dropped? CPG? Moving? Industrial? Budweiser?

The number is from companies who make boxes for everything and anything. Boxes are used to ship products. Less products ordered, less boxes. If you want more than that:
https://www.zerohedge.com/economics/big-drop-cardboard-box-sales-scream-recession