patrick.net

Misc says

Right now the 10 yr treasury is at about 4.25%.

This is a good post on the 30 year mortgage rate's historic correlation with the 10 Year Treasury.

I hope the spread between 30 year mortgage rate and 10 Year Treasury returns to between 1.5% and 2%.

I read that economists desire the 10 Year Treasury rate to be about 1.5% above annual inflation.

So achieving a 2.5% annual inflation may result in a 4% rate for the 10 Year Treasury rate and a 5.5% rate for the 30 year mortgage.
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PumpingRedheads says

Mr. I've Been On PatNet Since '06 during all this?

Ah... the Snark. Sounds like you're an SF Bay Arean, ground zero for Snarkiness.

PumpingRedheads says

God fucking damnit. I am not cherry picking shit. Patrick did in clipping and pasting that part about San Fran from that article. And so my comments was IN FUCKING CINTEXT with that....as logic ditctates.

Chill out, bro. A blog is for entertainment and fun. Maybe you should take your anger elsewhere.

Patrick began his blog a long time ago in skepticism about SF Bay Area ®eal Estate Hokum. That's been the major theme on threads about house prices in the Bay Area.

I was reading back on your remarks about "housing experts" pooh-poohing the skepticism. I didn't see any quotes of those posts you mentioned nor any blog-handles of the posters or anything like that. Is it a hallucination?

Chill out, bro.

Eman says

You won’t believe what the seller has in mind. Offer $650k cash and he “might” accept it. Otherwise, he’ll tear it down. Who’s the shark here?

This is the derangement of Prop 13. The guy pays less than $300 a month in taxes on a property valued at $38k. He can probably hold out forever; meanwhile, the city is deprived of much needed housing...

EBGuy says

Eman says

You won’t believe what the seller has in mind. Offer $650k cash and he “might” accept it. Otherwise, he’ll tear it down. Who’s the shark here?

This is the derangement of Prop 13. The guy pays less than $300 a month in taxes on a property valued at $38k. He can probably hold out forever; meanwhile, the city is deprived of much needed housing...

Real estate investment and flipping is very competitive. It’s not easy to “win” a deal, and it’s not easy to make money after we get the deal. It’s just the reality of Bay Area real estate.

We offered $620k for it 5 months ago. The listing agent told us we had to come in the high $600’s to get a chance. We said no thank you.

For people who think flippers are stealing other people’s housing, feel free to buy this house and fix it up to their taste. They get to keep the lower $650k property tax basis too rather than $1.1-$1.2M valuation.

What happens to the property tax in CA if the structure is torn down and the land sits vacant? Does the tax go down because there is no improvements anymore or does it go up because the demolition would trigger a reassesment and the land alone is way more than what it was 40-50 years ago?

WookieMan says

2006 was a once in a life time thing.

2nd in a lifetime.

The Venture Capital/REIT SFH ownership is grossly exaggerated, single digit % and that concentrated in and around the most desireable metropolitan areas, mostly new developments, and if they took variable loans to get the "Cash" they paid in, as most of them did, boy are they gonna unload. All the "Cash buyers" borrowed that cash when the interest rates are low. Hope the rate they borrowed was fixed and not a variable loan against a money market account.

Like amateur Mutual Fund pickers, they all selected based on previous run-ups, thinking the price/rent appreciation was only going north.

Foreigners are not buying SFHs in suburbs of Sandusky, OH or Cairo, IL. They are buying in Hoboken and San Jose, outer city but no further.

Builders are dumping for a reason, with teaser rates and cutting way back on builds, trying to only finish what must be finished. The last few houses in a development to close it all up.

Unlike Realtors and Flippers, Developers have no reason to lie about the next few years. Realtors and Flippers have an interest in permanent plateau propaganda.

The Boomers aging OUT of SFH in the midst of interest rates not seen in decades is going to be the shock of a century. There is no demographic large enough to fully replace them, it is demographic fact. Nothing about it is arguable.

70 year olds get sick or infirm and can't keep up the 1800 sq ft, esp. multilevel. It will happen, the only question is when the drop down is next year or a few years from now. Demographic, inescapable fact.

"But their kids will inherit". You mean the kids that live 3 states away? And looking at the demos, all those heirs will be selling or trying to rent at about the same time. Hey, hey momma, rents & values goin' down, they're going down.

Divorced single moms with one kid, or single men, don't need 4 or 5 bed, 1800 sq ft, 2 car garage multilevels at mortgages exceeding $2500k/month or more before insurance and tax. Amber doesn't mow lawns or clean gutters. Dylan can barely open a pickle jar or change a tire.

Even if Trump is elected and the economy starts booming and industry comes back to the point where Zoomer HS grads can get a $25/hr job with benefits manufacturing chotskies here in the USA, it's coming.

It doesn't matter in Hispanic and Indian immigrants living 7 to a 4 or 5 bed, 2.5 McMansion start Americanizing and pairing off into SFHs of their own. Not enough of them to fully replace the boomers. Successive generations have almost one child less and far less likely to be married. They are far less affulent. They have far more debt since jobs like Loan Officer boomers could get without degrees, have required degrees for 3 decades now. Fewer, smaller households, less affulence. There is nobody coming to keep pumping the prices or so much as maintain them.

No matter how much Mr. Boomer likes to play air guitar to Santana while putzing around his Harley in the garage, his joints are hurting more, his bones are getting weaker, and the arteries they are a cloggin'

We actually have a SFH glut, it's just not apparent.... yet.

We're going to go from begging empty nest boomers to sell, to begging them to stay put and out of Long Term care and Assisted Living, another thing we're utterly unprepared for.

If you are long SFH or are considering downsizing, do it right now before it's too late.

RWSGFY says

What happens to the property tax in CA if the structure is torn down and the land sits vacant? Does the tax go down because there is no improvements anymore or does it go up because the demolition would trigger a reassesment and the land alone is way more than what it was 40-50 years ago?

i believe improvement part just drops off on taxes. my tax bill listed land value and improvements on it when i had property there.

but if you build new, new improvements are assessed at market rates.

AmericanKulak says

You mean the kids that live 3 states away?

Good point, but those kids three states away will buy homes in that area, plus other kids in your area who have parents 3 states away will buy in your area. Also consider printing press inflation that may leave housing as one of the few hedges left.

https://www.newsweek.com/housing-market-drop-new-homeowners-loss-equity-freefall-1850573

New Homeowners Lose $122,000 as Housing Prices Drop

New homeowners across the U.S. are confronting a rapid depreciation in their home values.

zzyzzx says

https://www.newsweek.com/housing-market-drop-new-homeowners-loss-equity-freefall-1850573

New Homeowners Lose $122,000 as Housing Prices Drop

New homeowners across the U.S. are confronting a rapid depreciation in their home values.

Ha! I'm not even a new homeowner and I've "lost" almost $600K! 🤡

AmericanKulak says

If you are long SFH or are considering downsizing, do it right now before it's too late.

They're not building them, so not sure what they'd downsize to. The values can't go down in most locations. You have a bigger generation with buying power regardless of interest rates and an aging demo that doesn't want to move OR still has the kids living with them.

I'm a geezer millennial. All my closest friends own their homes. 90%. Most of their parents, Boomers have already downsized. Many in my circle are wealthy and their parents just keep their family home. No one is selling. With low interest rates locked in, it's cheaper to keep the house and get hired help for the Boomers.

If you have a daughter that's lost with no career ambition, have them get in the home healthcare business. Boomers aren't moving. They'll stay home. They're stubborn as fuck. That's something people overlook. Between commissions, cost of moving, hassle Boomers simply aren't moving into assisted living and probably won't. Maybe in 10-15 years once they approach 80-90, but it's not happening any time soon. Just wait for the reverse mortgage wave. That's coming in a big way.

My 78 year old mother in law is selling and purchasing another SFH. We're trying to convince her to purchase a condo but, nope.

https://www.forbes.com/advisor/mortgages/rent-or-buy-home-mortgage/

EBGuy says

https://www.forbes.com/advisor/mortgages/rent-or-buy-home-mortgage/

Noooooooo!

EBGuy says

https://www.forbes.com/advisor/mortgages/rent-or-buy-home-mortgage/

That's mainly because the 30 yr mortgage rate is at least 7.25%.

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GNL says

My 78 year old mother in law is selling and purchasing another SFH. We're trying to convince her to purchase a condo but, nope.

Why? If you are worried about upkeep, lawn service is cheap.

HeadSet says

GNL says

My 78 year old mother in law is selling and purchasing another SFH. We're trying to convince her to purchase a condo but, nope.

Why? If you are worried about upkeep, lawn service is cheap.

The problem is that the HOA fees may be very expensive making it not economically better to live in a condo or townhome.

Even if the HOA board and the management company are not corrupt, it may not be competent as far as gaining the best value for the community.

I rather live in a gated community with very little HOA fees. I would rather have a single detached home that I would maintain in a gated community and HOA.

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HeadSet says

GNL says

My 78 year old mother in law is selling and purchasing another SFH. We're trying to convince her to purchase a condo but, nope.

Why? If you are worried about upkeep, lawn service is cheap.

Snow. She's moving to PA. Most of her family is in NY. Condo seems safer?

GNL says

HeadSet says

GNL says

My 78 year old mother in law is selling and purchasing another SFH. We're trying to convince her to purchase a condo but, nope.

Why? If you are worried about upkeep, lawn service is cheap.

Snow. She's moving to PA. Most of her family is in NY. Condo seems safer?

I'll be blunt. Does it matter? Older people are stubborn. You and I will be stubborn when we get old. Once you hit 60 you know your time is limited and you say fuck it. You don't care what other people think. You don't want to have a adult sitter for yourself. You think you can still do it and just don't care anymore.

I wouldn't fight the battle. Unless worried about having to manage the home yourself and they don't have the money. Otherwise it's not difficult to make phone calls and have people manage the snow and lawn and other issues that come up. The alternative of pushing someone to live in a place they don't want to is likely worse. My 2¢.

I'm not putting up a fight at all. It's her decision for sure.

Best to live together in a multi generational house. Save money and be able to look out for each other.

The Asians are very adept at this.

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ad says

Best to live together in a multi generational house. Save money and be able to look out for each other.

The Asians are very adept at this.

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I suggested she do that with her oldest son. Nope. And she keeps talking about how she's going to leave a bunch of $$ to her kids. Nope, it will all be eaten up for medical expenses. Not complaining, just making observations.

ad says

Best to live together in a multi generational house. Save money and be able to look out for each other.

The Asians are very adept at this.

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Couldn't do it. Have done it. I can't live with other people that aren't my kids or wife. Stupid shit is picked up on. I've done it with my parents and my wife's parents for literally 3 months a piece and couldn't stand it during the housing crash. Everything is hyper analyzed about your lifestyle. How you raise kids. The food you make. How you treat your spouse. You have roomates that are more judgmental than a college roomate. The list goes on.

I get the idea, but it doesn't work if you want to be happy. Asians can do it all they want, but realistically, if they're being honest, they're not happy. You need your own home. I'll even go further and say it has to be a detached home that you don't share walls with anyone, HOA and all the bull shit that comes with that if you go the condo route. Maybe a family compound with separate structures on acreage, but you cannot and should not live within the same walls as family 100%. It's toxic. Anyone that says it isn't is lying and someone you shouldn't trust moving forward.

WookieMan says

Asians can do it all they want, but realistically, if they're being honest, they're not happy.

In old times, yes with compromises. But not now in most of the case.

Blue says

WookieMan says

Asians can do it all they want, but realistically, if they're being honest, they're not happy.

In old times, yes with compromises. But not now in most of the case.

There's certain things you cannot compromise is the problem. We aren't loud, but I'm going to have sex with my wife and not worry about it. I'm going to watch a movie with the sound cranked. My kid acts up I'm going to chew his ass out without Grandma trying to intervene. Don't do this anymore, but have 6 beers and yell at the TV during a sports event, get over it. Then you have to deal with their shit. It's 100% toxic.

You lose all freedom when you live with other people regardless of it being parents or siblings. It's tough enough with a spouse and kids. I ain't adding my parents or anyone else into the mix. People need freedom. That's also why cities suck ass. You're surrounded by fucking morons.

The_Deplorable says

90%? I guess so. I compared 7.77% 30 year fixed to 3.5% 30 year fixed and, yeah, almost double. Damn.

https://www.businessinsider.com/housing-market-home-prices-outlook-2024-mortgage-rates-inventory-zillow-2023-12

Home prices are getting slashed as inventory climbs and high mortgage rates push sellers to compete for buyers, Zillow says

Home prices are getting slashed at an unusual pace, thanks to a recent surge in inventory and still-high mortgage rates pushing sellers to compete for buyers, according to Zillow economists.

The share of listings on the market that saw a price cut in November was 22.6%, down slightly from October's 25% rate but still abnormally high for this time of year, the real estate listings site said in its monthly housing market update on Monday.

"Price cuts are more common than normal – chances are good that prices are negotiable," Zillow said.

The trend likely reflects sellers trying to attract buyers, who had largely been shut out of the housing market as mortgage rates soared.

ad says

The trend likely reflects sellers trying to attract buyers, who had largely been shut out of the housing market as mortgage rates soared.

The price cuts are on shit houses likely owned by losers that didn't maintain them. The housing inventory is shit. It's no surprise people are cutting prices. Anyone that bought in the past 15 years at this point is locked into a low interest rate. McMansions are no longer a trend and they aren't building new houses anyway. The stuff for sale is shit where I've looked and that's multiple states and territories.

Zillow is in the business of getting listing leads for people to sell houses. And also buy houses based on their leads. I can't think of a more biased, bull shit source. Anecdotal data matters. The housing bust hype won't materialize. It's click bait. Rates will drop and prices will go sideways in almost all markets. We're not in a boom or bust cycle. I think it will be 5 years before it moves one way or another substantially in the macro. Micro like SF, LA, NYC maybe ATL I could see losses.

i’m looking for another rental or investment opportunity if anyone here is looking for partnership. $500k to invest here.

FortwayeAsFuckJoeBiden says

i’m looking for another rental or investment opportunity if anyone here is looking for partnership. $500k to invest here.

Put the money in Fidelity or one of the banks and collect 4.5-5% yield/interest while you’re looking for the opportunity. That’s what I would do. I would say more opportunities will likely arise sometime next year. If not, I would wait for the next recession. Don’t rush if there’s no good deal.

https://babylonbee.com/cleanArticle/its-a-great-time-to-buy-a-house-says-realtor-who-gets-paid-if-you-buy-a-house

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https://www.bloomberg.com/news/videos/2023-12-19/us-new-housing-starts-hit-six-month-high-video

US New Housing Starts Hit Six-Month High
Bloomberg MarketsTV Shows
December 19th, 2023, 10:05 AM CST
US new-home construction unexpectedly surged in November to a six-month high, benefiting from a dearth of existing houses on the market and suggesting the crunch in residential real estate is easing. Mark Rayfield, Saint-Gobain North America CEO, says they are still optimistic about the market. (Source: Bloomberg)

i don’t know how it’ll be in california, probably will go up forever. but out here in ID it’ll collapse like a brick once blue state exodus stops. nothing happens here, just construction and farming.

FortwayeAsFuckJoeBiden says

i don’t know how it’ll be in california, probably will go up forever.

Depends on demographics in California such as number of qualified white collar and skilled blue collar versus the supply of homes.

Are Hollywood and Silicon Valley employment rolls increasing and are they compensating a lot to sustain the trends in California home prices ?

Another factor is if foreign buyers with cash are still interested in buying a home in California.

https://www.newsweek.com/california-home-sales-crash-lowest-level-16-years-1853707
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https://wolfstreet.com/2023/12/19/residential-construction-gains-steam-single-family-starts-jump-to-highest-since-spring-2022-multi-family-rises-from-the-ashes/

ad says

Depends on demographics in California such as number of qualified white collar and skilled blue collar versus the supply of homes.

Are Hollywood and Silicon Valley employment rolls increasing and are they compensating a lot to sustain the trends in California home prices ?

Another factor is if foreign buyers with cash are still interested in buying a home in California.

Indians have replaced the Chinese now as those with cash from Corrupt Mommy & Daddy* Back Home driving up prices here.

* Indian co-worker bragged to me about all the bribes paid for gold his judge daddy had stashed in the house. Then it got ripped off (obviously an inside job with the servants) and so dad told him he'll have to wait a few more years to buy a house in SV.

I've been seeing a lot of this in LV lately. Esp with the high end properties. This one is the most extreme, tho. $10 mill drop.

PumpingRedheads says

I've been seeing a lot of this in LV lately. Esp with the high end properties. This one is the most extreme, tho. $10 mill drop.

Might be a long shot. Money laundering? That makes no sense to list it that high and cut it that much.

PumpingRedheads says

Indians have replaced the Chinese now as those with cash from Corrupt Mommy & Daddy* Back Home driving up prices here.

The poor tech Indians live in these units.
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