patrick.net

"My favorite Central Banker was Paul Volcker. He was not worried about nailing the soft landing. He put us into a terrible recession and we got 20 years of prosperity because of the pain we took for 18 months. And I’d like to remind those who think this has been in their political interests, Reagan won 49 states in 1984 after the economy was absolutely in the tank in 1982 because he did the right thing."

porkchopXpress says

What do you do to stay productive and live a fulfilling life?

Hey @porkchopXpress I was watching my usual Sunday night, "Viva and Barnes", and I saw a guy named porkchopexpre55 post a question in the super chat. Was that you?!

AmericanKulak says

"My favorite Central Banker was Paul Volcker. He was not worried about nailing the soft landing. He put us into a terrible recession and we got 20 years of prosperity because of the pain we took for 18 months. And I’d like to remind those who think this has been in their political interests, Reagan won 49 states in 1984 after the economy was absolutely in the tank in 1982 because he did the right thing."

To get to the "right spot" , do housing prices have to drop at least 20% from their peak values set in early 2022 ?

I'm seeing 3 bedroom townhomes in east Panama City Beach priced around $295,000 that were selling for $235,000 in February 2020 and peaked around $330,000 in February 2022.

I would expect they could sell for (1.04^4.5) x $235,000, or 1.193 x $235,000 based on 4% annual appreciation over last 4.5 years (February 2020 to July 2024). This is $280.361, but this would only be a drop of around 15% from peak.

However, household wages and/or income for the demographic that would buy this townhome has gone up about 25% since February 2020.

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AD says

However, household wages and/or income for the demographic that would buy this townhome has gone up about 25% since February 2020.

With a 30% rise in the cost of groceries, insurance, etc. So that wage increase was more than soaked up by other things, most of them "iron costs" or essentials, not just jetskis and vacation jaunts.

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses.

That includes prop taxes and insurance?

SoTex says

porkchopXpress says

What do you do to stay productive and live a fulfilling life?

Hey porkchopXpress I was watching my usual Sunday night, "Viva and Barnes", and I saw a guy named porkchopexpre55 post a question in the super chat. Was that you?!

Nah, it wasn't me

"Fedprinting is ruining our economy creating unsustainable inflation across the board. Except in home prices. Everything there is 100% real and don't you dare interfere with the valuation of my paper wealth. "

AD says

However, household wages and/or income for the demographic that would buy this townhome has gone up about 25% since February 2020.

Do you really believe that number?

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

Lot of it to do with "keeping up with Joneses" .. The pressure especially from women/children is forcing the families to live on financial edge.
Responsible men are worse off in this society as they shoulder most responsibility but little say and still get blamed as cheapstakes.

If people live 1990s lifestyles they will live much better.

A new law will make it easier for Americans to use their 401(k)s and other retirement funds as an emergency ATM.

Under new IRS rules, Americans can now withdraw up to $1,000 from their 401(k)s without any penalties if the money is needed to cover a financial emergency. Acceptable reasons for a withdrawal include medical care, funeral expenses, auto repairs or "any other necessary emergency personal expenses."

https://www.foxbusiness.com/personal-finance/new-401k-rule-makes-easier-tap-savings-emergencies

The Economy is fine.

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

That is why it take two income earners to own a home and support a family. Back in 1993, it was more possible to raise a family with just one income earner.

I see it in Panama City Beach with essentially 3 bedroom townhomes being rented as a boarding house among 3 people each contributing to the rent.

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Probably the least bad area in Florida.


Rents in Jax are down 12%, and Naples inventory... WHEW, more than double since last year.

Looks like the inevitable, never ending 10-15 year Florida R/E bust-boom cycle remains undefeated.

FarmersWon says

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

Lot of it to do with "keeping up with Joneses" .. The pressure especially from women/children is forcing the families to live on financial edge.
Responsible men are worse off in this society as they shoulder most responsibility but little say and still get blamed as cheapstakes.

If people live 1990s lifestyles they will live much better.

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

ForcedTQ says

if people lived a 1980s lifestyle

Not possible with $420k homes and $75k incomes at 7%.

The solution to the dark funk is an interest rate shock. Don't just take away the punch bowl, replace it with mung bean gruel and get some TP to get that economic enema.

AmericanKulak says

Not possible with $420k homes and $75k incomes at 7%.

You can't buy a $420k home on $75k unless it's weed (sorry 420). Ours will be $680k as of now. That's on $300-400k income though. 3x income rule. Problem is if banks lend it, people will buy it.

Most people we know ask us how the fuck we travel so much. We didn't over extend ourselves on our current home. We're still within the safe margin with the build, but there will be less trips. We make good money so it's time for a nice house. We'll still travel, but 50% less. You spend a lot of time in your house generally, especially with school aged kids. I want to come home from a baseball game to a nice house.

ForcedTQ says

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

Most of the world outside our country follows this philosophy today, I reckon.

gabbar says

ForcedTQ says

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

Most of the world outside our country follows this philosophy today, I reckon.

In 1980s there were mostly single earners and the womyn cooked at home from scratch = no daycare and no inflated food costs to Uber over some shit sandwiches to their place. That alone freed up most of the cash to buy a home they don't have today, it's not just expectations, add in house price inflation and they surely aren't better off today, but I somewhat agree that they could do better with an attitude and strategy shift.

mell says

In 1980s there were mostly single earners and the womyn cooked at home from scratch = no daycare and no inflated food costs to Uber over some shit sandwiches to their place. That alone freed up most of the cash to buy a home they don't have today,

I was thinking about my childhood, which was working middle class. We had a 18 inch color TV with rabbit ears, and no cable, but still received about 8 TV channel signals.

We had only a Dodge Aries 4 door car that my family paid for in cash and brand new.

We rarely ate at a restaurant and maybe once every 3 months, and we never went on a vacation, and had family visit us and sleep in the living room.

The rent for our two bedroom, 2 bathroom townhome was $300 a month, and it was in a good neighborhood, a brand new townhome, and it had many amenities like clubhouse, pool, etc. It was enough space for my brother, parents, and myself.

Back in mid-to-late 1980s while a junior in high school, I was making $5 an hour (no tips) at a restaurant in south Florida as a greeter, busboy, etc. That is how I started to invest and eventually rolled that saved money into a healthcare mutual fund in 1993.

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Watch Months-of-Supply!

Both inventory and sales are well below normal levels, and I think we need to keep an eye on months-of-supply to forecast price changes. Historically nominal prices declined when months-of-supply approached 6 months - and that is unlikely this year - but we could see months-of-supply back to 2019 levels in the next month or two.

As I mentioned in a recent interview with Lance Lambert at ResiClub:

"I expect this measure to continue to increase, and be over 4 months soon – and to be above 2019 levels in a few months. This doesn’t mean national price declines, but it suggests price growth will slow significantly later this year. We might see national price decline with months-of-supply above 5 (as opposed to 6) since most potential sellers have substantial equity and might be willing to sell for a little less."

Months-of-supply was at 4.1 months in June compared to 4.3 months in June 2019. Note that months-of-supply peaked at 4.3 months in May and June 2019 and then declined to 4.2 months in July 2019.

What would it take to get months-of-supply back to 2019 levels in July? And what would it take to get months-of-supply above 5 months? The following table is a simple exercise. If sales stay depressed at 2023 levels, how much would inventory have to increase to put months-of-supply at 2019 levels in July?

https://calculatedrisk.substack.com/p/watch-months-of-supply-b38

Al_Sharpton_for_President says

Watch Months-of-Supply!

Yes, if it continues to increase then it may put pressure on sellers (even those who have below 3.5% rate mortgages) to lower their prices more.

But other factors are going to determine how motivated the sellers are to sell at a lower price such as unemployment, the stock market, mortgage rates, demographics, work from home ending for corporate America, etc.

Right now a lot of sellers are counting on the 30 Year mortgage rate to drop to 5.5% by next spring.

If I was selling and I was motivated to sell, I'd offer to buy up to 4 discount points for the buyer's mortgage to lower the rate from 5.5% to 4.5%.

AD says

I was thinking about my childhood, which was working middle class. We had a 18 inch color TV with rabbit ears, and no cable, but still received about 8 TV channel signals.

We had only a Dodge Aries 4 door car that my family paid for in cash and brand new.

We rarely ate at a restaurant and maybe once every 3 months, and we never went on a vacation, and had family visit us and sleep in the living room.

Yeah. Pretty much the only wares that got cheaper are electronics. Everything else is more expensive today, incl. all services. If you want to become financially independent you have to start investing and side hustling early, it's def possible, and avoid unnecessary expenses such as new cars, food delivery, eating out too much, medical expenses etc. Many aren't financially educated though or listen to msm propaganda

mell says

Many aren't financially educated though or listen to msm propaganda

True, as the mainstream media are just shills for their advertisers and its all about promoting endless consumerism

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DemocratsAreTotallyFucked says

There was never any cash on the sidelines. There was borrowing cash at near zero rates that was used to buy houses.

Now there is no opportunity to borrow cash at near zero rates.

AmericanKulak says

There was never any cash. There was borrowing cash at near zero rates that was used to buy houses.

Where I live it is cash, cash cash! Mostly Indian and Chinese. That's why I gave up looking or a home years ago. Buyers wouldn't even entertain looking at my offers because I got pre-approved with FHA but closing with all cash offers I was competing against was what they wanted instead.

mell says

gabbar says

ForcedTQ says

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

Most of the world outside our country follows this philosophy today, I reckon.

In 1980s there were mostly single earners and the womyn cooked at home from scratch = no daycare and no inflated food costs to Uber over some shit sandwiches to their place. That alone freed up most of the cash to buy a home they don't have today, it's not just expectations, add in house price inflation and they surely aren't better off today, but I somewhat agree that they could do better with an attitude and strategy shift.

Yep. Late 70s Ford Econoline my dad had since from about when I was born that was his car right up until my Senior Year, then he brought himself a Big White Lincoln to celebrate his retirement and gave me the old Van for my first summer as a College Student.

No vacations, we did go out to eat once every two weeks.

The Lincoln I sold off about 20 years later when when I flew back to take care of things as my father was in the hospital.

Brought them a 2014 Nissan Rogue which my mother still has, my father passing away a few years ago.

mell says

In 1980s there were mostly single earners and the womyn cooked at home from scratch

Are you sure that was the 80s and not the 60s? By the time of the 80s. women were fully "liberated" and out in the labor market, including flying combat aircraft. The economy had already adjusted to the dual income household.

A lot of women were still the secondary income earners in the 80s.

But being sick a few times, I noticed being a housewife wasn't all that hard. I'd say about 5-6 hours soap opera/phone/coffee klatching and maybe 2 hours cooking and clearning once the kids were school age.

People are also retconning gyms and so forth; in the 80s everybody drove everywhere, joggers were regarded as cultists, racquetball was a Yuppie thing, and the only people who really lifted weights were football players and boxers, maybe some wrestlers, and private gyms were pretty rare in the burbs. Exercise was mostly limited to walking around the mall or beach, maybe a pickup basketball game once a week, or perhaps a 2-3 sessions of Buns of Steel Yoga stuff on VHS. Instead of 5 hours on the internet, people just watched 5 hours of TV

The real obesity crisis is the shit in the food.

By the way, Susan Powter is even more completely batshit insane these days, but she was a 90s phenomenon.

AmericanKulak says

A lot of women were still the secondary income earners in the 80s.

I relate this to the labor participation rate where it was 58% in 1965, and then steadily increased to 66% of population in late 1980s , and is now around 63%.

It plateaued from 1988 to 2008 around 66% to 67%. Its been trending downward since 2008.

https://fred.stlouisfed.org/series/CIVPART

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Only 63% of working aged women are in the workforce? What % of working age men are in the workforce? Looks like about 75%.

GNL says

Only 63% of working aged women are in the workforce? What % of working age men are in the workforce? Looks like about 75%.

I updated my post with the link to the total labor participation rate.

I suspect as part of that increase in labor participation from 1965 to 2000 that a lot of that was because a great percentage of women entered the labor force.

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We moved out of CA two years ago to a beautiful area of TN and bought our first house, which was just over $1M. I explained it all here during the height of vaccine mandates and got so much support from you guys. My family did not want to move, especially my wife but I insisted. I was scared shitless because I knew it was the top of the market and interest rates were on the rise, so I thought our home value would crash. My wife put her foot down and said we are not renting again if we're leaving CA as a compromise, and I'm so glad she did. We locked in 4.25% ARM for 15 years and all that has happened is rates have skyrocketed and our home value is slightly more than what we paid. Granted, we live in the most in-demand area of TN.

The peace of mind knowing our landlord can't kick us out or continue to rape us with rent increases is pure gold. Granted, we had a lot of money saved up and we've done a TON to this house to make it our own, but that feeling of having your own castle for a fixed payment is priceless. I realize it's different for everyone but for me, I can't express how much happier I am although much of that is living in TN vs CA.

Good job. You and your wife sound like a great team and THAT RIGHT THERE, is the gold. My one hope is that neither one of you are government parasites or tech people helping to build the panopticon.

The Collapse in Florida is going to start as it always does, with Condos before hitting SFH.

$60k assessments going to condo owners, even those in realtively new buildings from the 90s - coastal condos over 3 floors must be inspected in the 25th Year. Not only is a complete structural inspection ordered at inflated post-COVID prices, plus the demand from the new law, but also there is a reserve requirement, all hitting by December 2025 at the latest, and for many (depending on age of building) December 2024.

When those Condo owners cut and dump (discounting the assessments off the price), SFH is gonna have a hard time competing with rock bottom condos.

Finally, it's not just big buildings. The Florida law also applies to gated communities and any with common areas like a clubhouse or community pool.

Rents are already collapsing across Florida, from Naples to Orlando to Jax.



Don't even THINK about buying a FL Condo unless the structural assessment and report of what needs to be done is already in the bag, with the Condo Board already given final approval to any and all assessments to the condo seller.

I think the red box is about where things should be, and that's with a generous ~2%/YoY appreciation



Only 1M net new entrants in the workforce every year. In 2008, it was 2-2.5M each year.

Too many boomers, too few people in financial shape to buy their inflated price houses.

"But GenZ". Yeah, I don't think $15-20/hr workers are in shape to buy a $400k 20+ year old house. If they added half again their wages/salary it would be a stretch for them. Then toss in the low marriage rate and the smaller household sizes which has been a multidecade trend with no signs of reversing.

"Don't worry, 50M Chinese millionaires are coming to buy in Ocala and Piscataway and Sacramento!" LOL

Back to life,
Back to reality.

There ain't no 50M Foreign Millionaires
Wanting to pay half a mil for US Suburbality

However you might want it,
However you might need it.

https://www.youtube.com/watch?v=TB54dZkzZOY



"Look at the beautiful Billard Green painted walls with the lived in, Grandpa holding himself up with dirty oily hand marks. And the musky smelling rose color carpet where you can see where the couch wasn't moved for a decade. WOW! Let's make an offer."

Florida is still a low income state. W=median worker. H=median household.


"$3000 a month is no problem for a household making $63k/year! Not including power and water... it's only half the pre-tax, income!"

The french tickler of fun is turning into a dildo of doom, US 1988-2023 demographics of homeloaners