patrick.net

Misc says

California is forecast to exceed its budget this year. Do you think for an instant that the government will reduce its spending????

If not, that only leads to one thing...higher taxes.

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https://calmatters.org/commentary/2023/07/bond-money-cover-budget-deficits/

See the above article link dated in July 2023 as California can issues bonds to cover budget deficits

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Nope, California like 48 other States has a balanced budget amendment in its Constitution.

Although recently, Constitutions have become more or less ignored. I foresee Prop 13 folding before the balanced budget amendment. Don't ask how a State has hundreds of Billions of debt outstanding with a mandatory balanced budget. The Soviet Union had a pretty Constitution from what I've been told.

People who don't care about money or are in charge of other people's investments (and want to fuck them over for some kickback) buy these sort of bonds. See Puerto Rico.

ForcedTQ says

mell says

HeadSet says

I do not understand why California did not do what municipalities in other states did when property values shot up - just lower the tax rate across the board. For example, if the rate is 2.6% and house values double, lower the rate to 1.3%.

Yep

Because CA government thinks they should be getting even more revenue than statutorily prescribed. They are drunk on tax money, and will not give it up, ever. This is also the reason repealing Prop 13 would be one of the most disastrous things to do for Taxpayers…

You have to write the law with the provision that the money must be used to lower the property taxes, under threat of prison time if misappropriated. Of course the concern is understandable when you see governors and Presidents abolishing the rule of law. Still if there is no rule of law, CA will find and has found other ways to fuck their constituents over and extract the money otherwise. I'd rather have a few simple and just laws for everyone, without loopholes.

The housing Bears are also pushing the idea of reduced travel among the masses. There's over 2 million AirBnBs. The Bears think that when they stop cash flowing there will be a mass exodus thereby driving down prices. Thing is most of these BnBs are in vacation hot spots and a good size chunk of our economy has plenty of financial assets to draw on, so it would take another lock down scenario to deplete demand. Even though Bidenomics has caused real wages to decline for 3 straight years, homeowners that refied for under 3% still end up ahead because of a reduced housing expense. It's generation Z that really got fucked over.

Misc says

Thing is most of these BnBs are in vacation hot spots and a good size chunk of our economy has plenty of financial assets to draw on, so it would take another lock down scenario to deplete demand.

They are also in areas where people don't want to live full time. I don't know if people in the 80's and 90's didn't travel, but there were these things called management companies and real estate offices. Weekly and short time rentals have been going on forever. My parents had a vacation rental in the panhandle of FL in the 90's to early 2000's. We'd use it 2-4 weeks a year and it was generally rented out year round by a local RE brokerage.

So Airbnb concept isn't new. Another thing I'd ask is do most people want to live full time in an area where most of the properties are turned over weekly? Tourist there come to have a good time, some take it too far. No sense of community. I'd rather live 1-3 hours from the hot spots and pick and choose my weekends or weeks to visit. If you can fly for cheap it can be 1,000 miles away. Either way if you think you've found a hidden gem in a region, it will eventually be exploited. St. George Island in the panhandle comes to mind. People used to live there full time. I think 80% of the homes there are rental. Great, seemingly quite area, but it's a tourist trap now.

Also we're a service economy. Take the vacation rentals off the market, sell them and see what happens to the local economy... Those people making $35-100k. Your cleaning people, your tour guides, your servers and bartenders, etc. and all those people that solely have their job because of tourism. Fact is these vacation rentals have always existed and always will. 7 out of 10 times we travel that's what we're using. I'm not paying $40pp for a shitty hotel lobby restaurant and share a room with my kids. I don't mind cooking on vacation and you can save a ton of money on food having a full kitchen and grill. Oh and your own master suite so you can have sex not worrying about the kids hearing it.

Too many positives for vacation rentals as an investor and as a user/renter. So I don't ever see an exodus from that market and if there was I don't see it effecting housing except at the low end when the service jobs dry up and they stop paying their mortgage. Tax revenue drops and people start leaving. I do think you're going to see more municipalities with the wealthy only allow 1 month vacation rentals and not weekly. Forget the island on the gulf side further south (Marco Island?) that only allows monthly.

Big_Johnson says

The big driver of inventory in 2008-2013 was forced selling which doesn’t exist in todays housing market.

Yes as there are no fire sales and REOs like 2008 to 2012. I think back then about 7% of homes were in foreclosure.

So the housing ownership condition is healthy based on owners being able to make mortgage payments or having 100% equity.

I guess the vacation rentals at these places which are not AirBnB associated units have enough cash flow to keep them running as short term units (or perhaps there is not enough demand for them to become full time residence) :

https://www.30aseascapes.com/

https://www.dawnsrentals.com/

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Another mental trick to look at the situation:

There's a dearth of buyers at the current ludicrous prices/financing available.

Sellers are facing a shortage of buyers. Eventually sellers will REALLY need (or want) to sell.

The 2000s were great until the owners had no buyers.

There is not as much a sense of urgency to sell and people may list their homes and decide not to sell because they cannot get their desired price.

There are no forcing functions like a significant amount of owners have to sell because they have to move back to the town or city where their home office is located due to the end of a work from home policy.

And I'm not sure if unemployment increases from around 3.5% to 5.5% will lead to panic selling of homes.

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ad says

There is not as much a sense of urgency to sell and people may list their homes and decide not to sell because they cannot get their desired price.

IF they are healthy and alive.

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https://www.zillow.com/homedetails/113-Sea-Oats-Dr-Panama-City-Beach-FL-32413/42796444_zpid/

Sold in 2000 for $134,500
Sold in Feb 2021 for $360,000

now listed for $615,000 :-/

At even $425,000 (assume ~5% annual appreciation since 2000) it would not be that lucrative of an investment for long term or vacation rental

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ad says

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https://www.zillow.com/homedetails/113-Sea-Oats-Dr-Panama-City-Beach-FL-32413/42796444_zpid/

Sold in 2000 for $134,500
Sold in Feb 2021 for $360,000

now listed for $615,000 :-/

At even $425,000 (assume ~5% annual appreciation since 2000) it would not be that lucrative of an investment for long term or vacation rental

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Big_Pretender told me I should buy any house I see. Price and rates don't matter. He's very successful.

Big_Johnson says

GNL says

ad says

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https://www.zillow.com/homedetails/113-Sea-Oats-Dr-Panama-City-Beach-FL-32413/42796444_zpid/

Sold in 2000 for $134,500
Sold in Feb 2021 for $360,000

now listed for $615,000 :-/

At even $425,000 (assume ~5% annual appreciation since 2000) it would not be that lucrative of an investment for long term or vacation rental

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Big_Pretender told me I should buy any house I see. Price and rates don't matter. He's very successful.

Show when I ever said this. Fu* liar

Big_Pretender also told me to buy as much bitcoin as possible when it was $60k because it was going to $100K. He should know since he is very successful. And he laughed at me when I doubted him. I really should listen to Big_Pretender more often.

Patrick says

You left off "retire" and the idea of an enjoyable meaningful job. I prefer modern society over precivilized living like at camp with daily food struggles, vermin, and disease. How about the long days and subsistence living of the 1800s style agricultural lifestyle?

If one tires of the 40-hour work week with the myriad of entertainment options, I suppose. one could drop out of the "rat race" and life the life of the homeless on SF streets. A less extreme example would be to live frugally, then at age 35 or so take one's equity and savings and move to fly-over-country where one could buy an acre lot in the country and put up a modular 3 bedrooms home with garage. Then you can live like a retiree, fishing and going to PTA meetings while working a couple days a month at the feed store for some extra money and something to do. Garden you own veggies.

B.A.C.A.H. says

ForcedTQ says

This is also the reason repealing Prop 13

Are you a landlord?

Many homeowners are OK with reforming Proposition 13.

Landlords are so not OK with reform that they don't even discuss the concept. Only all-or-nothing repeal.

doubt it. when i lived in CA homeowners were deeply afraid of rising taxes which they knew would come if prop 13 got axed. and they are right, taxes will skyrocket. landlord will pass cost to renter, but homeowner fucked.

https://www.reddit.com/r/realtors/comments/16rffwj/i_have_lots_of_listings_most_dont_move_interest/

I have Lots of listings, most don’t move

FortwayeAsFuckJoeBiden says

homeowners were deeply afraid of rising taxes which they knew would come if prop 13 got axed

Yes.

That's why landlords try to steer the discussion from reforming or revising prop 13 to all-or-nothing axing prop 13.

Because the landlords are, to use your words, deeply afraid of a reform that will reassess their Real Estate Empire holdings, but not reassess the individual home of the individual homeowners.

You spoke it like a landlord, homie.

i have to tell you, i don’t understand why some of you guys want to pay more taxes? you all seen where it goes. anti prop 13 comes from unions. if people steered conversation into let’s reduce everyone’s taxes down to lowest year assessed in the neighborhood you’d lower it for everyone. i don’t live in CA anymore, but some of you guys are like a tree voting for the axe.

Big_Johnson says

People had decades of opportunities to purchase RE but some people rather waited

I agree. All those stupid 30-40 year olds should have bought decades ago. What losers.

FortwayeAsFuckJoeBiden says

anti prop 13 comes from unions

There you go again. "All or nothing, keep or repeal". The landlord scare tactic. They don't wanna speak of reform (ie, only one prop 13 assessment for a resident's primary residence) because they're, to use your phrase, deeply afraid, of rental properties being reassessed.

FortwayeAsFuckJoeBiden says

taxes will skyrocket. landlord will pass cost to renter, but homeowner fucked.

Nope. Under reform that almost passed in a recent ballot initiative, landlord taxes would skyrocket, homeowner taxes still under prop 13. Landlord fucked, homeowner not. As the region becomes a state of renters, it's only a matter of time. What do you care anyway? You left.

FortwayeAsFuckJoeBiden says

landlord will pass cost to renter

Silly. They already charge the maximum that the market will bear (or rent controls will allow). Their increased cost will come from their profit because they already collect the maximum the market can bear on the rents. Same with the escalating insurance costs.

No wonder they're deeply afraid, and turning all discussion of reform to all-or-nothing repeal. It's their scare tactic. But they're the ones who are scared.

BTW I am not a renter.

Big_Johnson says

So please don’t be mad at people who bought and enjoy the benefits of ownership (like prop13).

Hey Big Man, is that you trying to turn a discussion from reforming Prop-13 to protect primary residence only, to all out repeal? The landlord scare tactic.

And I am not a renter, just saying.

Big_Johnson says

I am specifically talking about people who could have bought but waited for a crash.

And just who do you think the majority are, 30-40 year olds or people who are waiting for a crash? Or maybe their the same group because America is experiencing a housing crisis?

Ah yes Propaganda. Let's get rid of Prop13 because it is not fair.
Never mind that CA is the #7 highest tax state per capita.
Eliminating prop13 would facilitate the state reaching into your pocket further. But - hey - it isn't fair.

Fairness is for children and idiots.

Removing prop13 on rental property - maybe that could fly but not likely. Once that happens there really is no reason to keep the exemption at all.
The slicing and dicing of the commercial/residential/rental real estate is the first goal. Once that is done, the left can pick off the different groups one by one.

LOL

krc says

Fairness is for children and idiots.

Really? The constitution and bill of rights are what, what are they for? They are for fairness. Maybe taxes could be spread out fairly and not just based on when you were born or dumb luck? I'll admit I don't know the whole issue though. How are rentals taxed lower than owner occupied? I thought you had to live in the home to keep the low tax rate.

Bacah i care because i got many friends and yes family out there still. many won’t be able to afford tax increases. that’s why i care, seen that state fuck too many people, and itll fuck even more if they can do whatever tax increases. too many people on government tit profiting from tax collection for taxes to ever go down.

FortwayeAsFuckJoeBiden says

i have to tell you, i don’t understand why some of you guys want to pay more taxes? you all seen where it goes. anti prop 13 comes from unions. if people steered conversation into let’s reduce everyone’s taxes down to lowest year assessed in the neighborhood you’d lower it for everyone. i don’t live in CA anymore, but some of you guys are like a tree voting for the axe.

That's not their argument. And the propaganda comes at least equally from the proponents. You write the law so that property taxes have to be reduced for everyone proportionally to the money that would be gained. Limit reassessment maybe to every x years to limit bureaucracy. Really not that hard, there are.good arguments on either side.

FortwayeAsFuckJoeBiden says

Bacah i care because i got many friends and yes family out there still. many won’t be able to afford tax increases.

Me too. Lots of family, colleagues, friends who are renters, paying the most the market will bear in rent while landlords of all stripes, from mom and pop to REIT, pay taxes on below market assessments. How can they raise rent when they already charge the most they can get? The amount the market will bear is determined by the renters, not the landlords. Increased cost for landlords for taxes (and insurance) will not be passed to renters. It can't.

Some of these folks I care about will eventually purchase a home. They can enjoy the predictability of a prop-13 assessment on the primary residence they'd own under a reformed prop 13 that has been discussed over and over and nearly passed in a recent ballot initiative. Landlords big and small keep using scare tactics about the Slippery Slope, etc to turn the discussion away from reform.

Also it's kind of hilarious that folks who don't live here wanna use the scare tactic that reforming prop-13 would be slippery slope. Even more hilarious if they don't have skin in the game. Reminds me of the out of state carpetbaggers who pushed Prop 8 on us.

GNL says

The constitution and bill of rights are what, what are they for? They are for fairness.

No. If fairness was important, the constitution would have mentioned it as an overriding principle. It does not. Certainly though, courts do lean toward using "fairness" vs logic/law tin their decisions these days. What the constitution does is guarantee specific rights against government/judicial overreach - right to due process, equal protection, etc... Basically, individuals must be treated according to rules and procedures. We as a state agreed on prop 13, etc...

If "fairness" was a constitutional requirement, why do we have progressive taxes? Why must men support unmarried women who get pregnant? Why does someone who buys an expensive car have to pay more tax vs a flat fee? Why should senior citizens be allowed discounts on items? None of this is "fair."

Obviously, fairness, like beauty, is in the eye of the beholder. Hence calls for "fairness" are dangerous unless they can be harnessed to specific rights guaranteed to all. Certainly, the state of CA can overturn prop13 - and likely will. But I think that would be a poor decision as the total tax burden would likely surpass NY per capita.

I get the point, but arguments of "fairness" can used to justify so many bad policies: affirmative action, racial discrimination, free stuff to those who don't work, etc...

HeadSet says

A less extreme example would be to live frugally,

Yes, also lots of opportunities as far as work from home jobs and gigs at the website Rat Race Rebellion

If you all may have heard of Bob Brinker, he talked about critical mass as far as attaining retirement savings

One way is to use a SEPP for your IRAs if you are not 59.5 years old yet as a way to generate an annuity

Don't get caught up in rat race. Everyday away from it where you can still live a decent standard of living is worth it.
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B.A.C.A.H. says

The amount the market will bear is determined by the renters, not the landlords. Increased cost for landlords for taxes (and insurance) will not be passed to renters. It can't.

If the costs rise to where it is no longer profitable to rent out property, then the landlords en mass will stop renting out and sell. The shortage of available rentals will drive the price back up to profitability. Unprofitable businesses always close, rentals are no exception.

HeadSet says

landlords en mass will stop renting out and sell.

Good. Flood the market with homes for sale. Including, maybe, condo conversions.

B.A.C.A.H. says

HeadSet says

landlords en mass will stop renting out and sell.

Good. Flood the market with homes for sale. Including, maybe, condo conversions.

that won’t happen. what will happen is more gentrification and middle class will get fucked.

dude you got weird obsession with landlords. and you don’t even understand that business. ask Eman.

What is interesting is the rent to home price ratio.

Back in 2006 when we bought our brand new townhome for around $185,000 with a 30 yr mortgage rate of 3%. The same model was renting for $1500 (or $18,000 per year). So the annual rent to price ratio is 10.3.

Now they are renting for $2100, yet the prices are around $300,000 having peaked about $330,000 back in early 2022.

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Schokolade says

I just visited Poland and learned most people there want to own and purchase as soon as they can.

This makes sense only IF you are going to stay thee for longer than the average homeowner does. ~7 years, probably longer now. But if you know for certain it will likely be 5 years or less I wouldn't buy. You're basically paying interest only and very little principle over 5 years. So you're reliant on appreciation to get out of the house/condo.

We're finally closing on our lot next week. We're building. We'll be there 20 years, so I don't care one bit about construction prices or house prices. We're building what we've wanted and have 3 boys that will be middle schoolers next year and our current house just isn't big enough. Not building a monster house either, 2,200 sf. I can now go 10 years without any major project or repair.

I used to mess around with a few stocks. I gave up. You either get lucky or it's at least a part time 20hr per week job/hobby doing research to pick individual stocks or use the other tools like shorting, etc. Same thing with house. Get in for the long term and if you want to mess around with investing in it understand it's at minimum a part time job if you still have a regular job.

Time is money any way you look at it.

https://www.housingwire.com/articles/home-inventory-is-climbing-even-faster-than-this-time-a-year-ago/

Home inventory is climbing even faster than this time a year ago

There are now 528,000 single-family homes on the market, an increase of 1.8% from last week: Altos Research

Available inventory of homes for sale is on the rise in late September, which is very unusual for this time of year. In fact, inventory is growing faster than this time a year ago.

This is a demand-driven slowdown, because new listings supply is still running 9% to 10% fewer homes for sale each week than this time last year. We’re seeing fewer new sellers each week, but inventory is building as homebuyers wait to see if mortgage rates will come down to make purchases more affordable.

Fewer new sellers also means that inventory can’t grow too much; the real trouble develops when demand drops and supply surges. There’s no supply surge, but there is a notable demand drop. Consumers are very sensitive to changes in mortgage rates, and rates are still rising.

We can see these slowing changes build up each week. It’s a pretty sharp change from what was a surprisingly strong first half of the year. There are now 528,000 single-family homes on the market. That’s an increase of 1.8% from last week.

Normally by this point in September, available inventory is declining slightly each week. It’s late in the summer, so normally new listing volume drops as the last few sales of the peak summer months are concluding.

The fact that inventory grew by nearly 2% this week and last week is telling of how homebuyers are reacting to the highest mortgage rates in over two decades.




In this chart of each year’s inventory curves, you can see that the number of homes on the market is climbing faster now than this time last year. This year is the dark red curve, and last year the light red. Mortgage rates continue to climb, so there is no immediate relief for homebuyers on the horizon either.

At this point, it looks like we may see inventory grow to the end of October like we did last year. Look at the divergence in the curves from this year and the tan line from two years ago when we were still in the middle of the pandemic housing boom and record-low mortgage rates.

New pending sales each week continue to run 10% to 15% below last year’s pace. If you follow the National Association of Realtors when they publish their existing-home sales report each month, you know that the latest report for August showed a sales pace of only 4 million seasonally adjusted annual home sales.

We can already see in the NAR data that there are no signs of improvement for the sales count through September and October. The home sales that are in contract now will close mostly in October. It’s not hard to imagine that next month’s seasonally adjusted home sales data from NAR will come in under 4 million.




In this chart, each bar is the total number of home sales pending on any given week. The shorter the bar, the fewer sales that are in progress. The light portion of the bar is the count of new pendings each week.

There are now 344,000 single-family homes in contract to close in the next couple months. That’s 14% fewer than last year and almost 30% fewer than in September of 2021.

Home sales are limited by the decreased demand, of course, and they’re also limited by the very low supply of new listings. You can’t buy what’s not for sale.

We’ve been talking all year about the market being supply constrained. Right now, sales are limited by declining demand from still-climbing mortgage rates.

We can see the impact of weaker demand starting to creep into the pricing indicators. In the chart below, we look at the leading indicator of this trend: price reductions. This is the percent of homes on the market that have taken a price cut from their original list price.




For a while earlier this year, demand was exceeding supply in residential real estate, and you could measure that demand with the price-reductions curve improving each week. As mortgage rates lurched over 7% to their new highs, suddenly there are fewer offers.

And home-price reductions are climbing again, with 37% of the market taking a price cut. That’s more than any recent year except last year at this time. Price reductions are accelerating now, which bodes negatively for future sales prices.

A normal, balanced market will have 30% to 35% of the homes for sale that have reduced their asking price in recent months. As this dark red line approaches 40%, that’s a clear indicator that buyers are making fewer offers. Remember, the slope of this line captures how many properties are taking new price cuts each week. And this slope is increasing now.

These are transactions that will happen in the future, so it implies sales price weakness in the fourth quarter, which you’ll hear about in the headlines after the new year. But you can see it in the data now.




The median sales price of single-family homes in the U.S. right now is $440,000. That’s down 1% from last week and it’s just a tiny fraction higher than this time last year.

We can see the pressure on home prices in recent weeks. Home prices step downward in September for the seasonal change every year, and you can detect strength or weakness relative to changes in other years.

What we see now is that year-over-year price gains are just barely positive. And the comparison is getting weaker, not stronger, as our current mortgage markets deteriorate. There are fewer offers, and those that do happen are doing so at slight discounts each week.

Last year at this time, there were big price discounts being applied. So, our October comparisons may get slightly easier, but I sure haven’t seen any signals of price strength now.

So the question is will Q4 this year be a little better than Q4 2022? The median price of the new listings is fractionally higher than last year at $398,500. It will be fascinating to watch the light colored line here over the next couple weeks.

The new listings are where you see price weakness first. And last year, they were already headed lower.

The price of the new contracts this week came in at $370,000. These are the pending-home sales that went into contract in the last week. Prices of the homes going into contract are lower than last year by a fraction.

The next few weeks will be interesting to track this stat, too. Last year in mid-September is when mortgage rates jumped from 6% to 6.5% to 7.5%. By early October, any offers that were made for purchases came in at notably lower price points.

By September 2022, new pending-home sales prices fell by 3% per week. Will that happen again? Mortgage rates are even higher now than they were last year.




In this chart, you’ll notice the light-colored line started a big decline during this week in 2022. That’s when buyers reacted to newly increased mortgage rates. So, we’re watching to see where the new contracts come in over the next few weeks.

The macro trends impacting mortgage interest rates and the Fed have not given us any reprieve yet. The signals are that mortgage rates are still headed higher.

Consumer expectations for future mortgage rates have moved higher, too, so potential homebuyers are less optimistic than they were at the start of the year. And that’s what we’re seeing in the data each week now.

However, it’s important to point out that while buyer demand has backed off this fall, there is still no sign of any surge in new supply coming to the market. It can be very easy to focus on the negative momentum.

People on the fence should also know that while their competition is lessening, there’s no sign of an inventory flood. That may be an important factor in their home-buying decisions.

https://www.reddit.com/r/REBubble/comments/16t2uex/bought_a_house_last_yr_for_650k_and_it_now_only/

Bought a house last year for 650k and it now only worth 580k.

A whole lot of bullshit is being peddled. Prices have never been higher. Wanna know what's happening? Third worldization.