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housing prices peak 2


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2022 Apr 29, 9:29pm   435,021 views  4,666 comments

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https://finance.yahoo.com/news/pimco-kiesel-called-housing-top-160339396.html?source=patrick.net

Bond manager Mark Kiesel sold his California home in 2006, when he presciently predicted the housing bubble would pop. He bought again in 2012, after U.S. prices fell more than 30% and found a floor.

Now, after a record surge in prices, Kiesel says the time to sell is once again at hand.

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1756   WookieMan   2023 Feb 17, 6:57pm  

B.A.C.A.H. says

Ahem, Patrick is a long-time resident of the SF Bay Area, his blog has a focus on his back yard. Wolf Richter, the author of the piece, is a resident of SF who sometimes writes about housing in the region. How does this make California dictator of the country? If you're sick of it maybe you will feel better if you don't read a Bay Arean's blog that has a linked article by a different Bay Arean.

Got people form all over the country on this forum. Patrick is also from my region originally. Yes it's a CA centric site, won't disagree. We have users from Virgina, Maryland, multiple from Florida, Tennessee, Georgia, Idaho, Nevada, New York, etc.

It's not about the article. CA has the most House representatives in the country. They try to run the country. How has that worked out for you guys? Sure some have made bank, but it ain't looking good right now. Rest of the country in most places is stable and fine. I agree with you lower housing prices is the only thing that will pull CA out of a potential death spiral. CA is really the only state it's happening in.

NY is stabilized. So has IL. CA is in for a rough go of it. Which could be a good thing on the back end. I'm not certain though with the climate. Until y'all get rid of the homeless, people will have minimal interest in living there. City and large suburbs are going the way of the horse and carriage.
1757   Patrick   2023 Feb 17, 10:27pm  

Al_Sharpton_for_President says

You can buy them through your broker. You can also buy them direct from the gubberment. (https://www.treasurydirect.gov). I've only purchased through a broker, like Schwab, so I have no experience with buying direct.


I've done both. The https://www.treasurydirect.gov/ is kind of annoying to use, but works well enough.

I am slightly worried about a US default though. Could happen. All Treasury holders could get a "haircut" as they say.
1758   AD   2023 Feb 17, 10:54pm  

Patrick says

I am slightly worried about a US default though. Could happen. All Treasury holders could get a "haircut" as they say.


I do not know if default has ever happened before in the USA. I don't think it will happen in the present form of conditions and government, unless there is a "fundamental change" with our government and society.

They'll inflate themselves out of the crisis first, if not they may make small cuts like to entitlements and also small tax increases.

.
1759   GNL   2023 Feb 17, 11:10pm  

Closing the gold window was a default.
1760   Blue   2023 Feb 17, 11:42pm  

WookieMan says

Rest of the country in most places is stable and fine.

Good that no state other than CA has passed ponzy scheme 1978 Prop 13 to deal with its ill effects.
1761   Misc   2023 Feb 18, 3:34am  

GNL says

Closing the gold window was a default.


When FDR revalued gold from $20.67 per ounce to $35 per ounce, that was a default as well.

The inflation from 1974 through 1982 should've been classified as a default too.
1762   Misc   2023 Feb 18, 4:07am  

Then there is the Biden default of 2022.

That's when the Fed went from having a balance sheet of about $8.5 trillion to having a marked to market balance of about a negative $3 trillion.

Nobody in the mainstream media talks about this. You ain't supposed to know.

Shhhhhhhhh, Patrick.net users only please.
1764   B.A.C.A.H.   2023 Feb 18, 9:00am  

Patrick says

I am slightly worried about a US default though. Could happen. All Treasury holders could get a "haircut" as they say.

I've thought about this. Candidate Trump, a Serial Bankrupcty Filer, suggested haircuts as a remedy for the federal debt in 2016. So where before it was an un-mentionable concept, like Valdemort in the Harry Potter stories, he let the cat out of the bag.

I followed the goings on during the Financial Crises in Europe. Small depositors were made whole. There were some withdrawal limits like 50 Euro per day in Greece or whatever, but nobody's deposits were taken or cancelled or wiped out, not even the accrued interest. Haircuts for sovereign debt and large depositors (like Russian oligarch deposits in Cypriot banks) were fair game. I think authorities feared the pitchforks more than anything else. Remember, the military, police departments, private security goons, etc are mostly in the pitchfork crowd.

Applying those observations to our situation, I made a political calculation (not a financial calculation), that insured (FDIC) deposits for small depositors are safer than Treasury Debt, for parking cash. Yes, snarksters, I know: the FDIC could go insolvent. In that case, because of the fear of pitchforks, the Treasury will print the money to cover it. (Yes, yes, I know: debt monetization and inflation).
1765   NDrLoR   2023 Feb 18, 9:05am  

gabbar says

https://www.wxyz.com/news/us-foreclosure-filings-are-up-36-michigan-is-in-the-top-3
And that's not including all the auto loans that are so upside down they defy gravity. As long as some people can afford the payment, it doesn't matter if the loan extends into the next millennium.
1766   Eman   2023 Feb 20, 7:08pm  

From the Redfin article:

“Investor home purchases in the fourth quarter of 2021 were near their record high, which is another reason the year-over-year decline in 2022 was so dramatic.

The typical home investors purchased cost $425,926, little changed from one year earlier but down 5.8% from one quarter earlier.

U.S. home prices are up less than 1% year over year—compared with 15% growth one year ago—and have fallen 11% from their spring 2022 peak.”



I’m shocked that investors bought 18% of the real estate inventory in the current market environment. It made sense when they couldn’t earn much yield in treasury and had to settle for real estate at 4-5 cap with borrowing cost around 3%. Given today’s borrowing cost and the cap rates, it’s negative leverage. 🤔
1767   WookieMan   2023 Feb 20, 7:20pm  

Eman says

I’m shocked that investors bought 18% of the real estate inventory in the current market environment. It made sense when they couldn’t earn much yield in treasury and had to settle for real estate at 4-5 cap with borrowing cost around 3%. Given today’s borrowing cost and the cap rates, it’s negative leverage. 🤔

If you have cash flow, can earn income on a property you want to buy, there's not much out there. Result, prices go higher.

High interest rates are meant to make people NOT want to sell to control inflation. So they don't. Most are locked in at low interest rates outside of the last 18 months, but with qualified and solid underwriting. I can piss in a 360º circle in my backyard and get a $50k+ a year job. Coastal cities are going to drag it down as the exodus continues. Move from the $1M condo to the rural/suburban home on 1/2 acre for $500k. Median price nationally will drop. Doesn't mean it's bad. Just means people are getting smart.
1768   Eman   2023 Feb 20, 7:56pm  

WookieMan says

Eman says


I’m shocked that investors bought 18% of the real estate inventory in the current market environment. It made sense when they couldn’t earn much yield in treasury and had to settle for real estate at 4-5 cap with borrowing cost around 3%. Given today’s borrowing cost and the cap rates, it’s negative leverage. 🤔

If you have cash flow, can earn income on a property you want to buy, there's not much out there. Result, prices go higher.

High interest rates are meant to make people NOT want to sell to control inflation. So they don't. Most are locked in at low interest rates outside of the last 18 months, but with qualified and solid underwriting. I can piss in a 360º circle in my backyard and get a $50k+ a year job. Coastal cities are going to drag it down as the exodus continues. Move from the $1M condo to the rural/suburban home on 1/2 acre for $500k. Median ...

Interestingly, markets experiencing the most drawdown in investors activity are the cheaper markets where people likely moved to after the pandemic due to work from home.

1769   AD   2023 Feb 21, 12:54am  

Wookie says


Interestingly, markets experiencing the most drawdown in investors activity are the cheaper markets w


Yeah, Phoenix and Las Vegas are going to crash hard like they did in 2008-2013 (est.). Some of the run up in prices were work from home refugees leaving California and buying in Phoenix, Boise, etc..

Been reading the major tech companies are requiring their workers to return to the office, at least 3 days a week.

,
1770   AD   2023 Feb 21, 10:13pm  

Wolf Street website is reporting a 13.2% drop from peak in median home sales price of $408,000.

Its now at $360,000.

Late 2019 the price level was around $290,000.

Figure about 20% inflation since late 2019, and the total real gain of housing is no more than 3%.
1772   Eman   2023 Feb 22, 4:30am  

As I mentioned, the mortgage rates right after the pandemic really distorted real estate prices up to spring 2022. Let’s see how this will unwind itself in the coming years.
1773   Booger   2023 Feb 22, 5:36am  

Eman says

Let’s see how this will unwind itself in the coming years.


And if will take years,!
1774   rocketjoe79   2023 Feb 22, 10:05am  

Many large companies are mandating a return to the workplace. But, there have been tens of thousands of layoffs. Hard to figure out what this is doing to the housing market, except driving up big city rental prices.
1775   Blue   2023 Feb 22, 10:20am  

rocketjoe79 says

Many large companies are mandating a return to the workplace. But, there have been tens of thousands of layoffs. Hard to figure out what this is doing to the housing market, except driving up big city rental prices.

Or is that employees are mandating themselves to return!
1776   Eman   2023 Feb 22, 10:54am  

rocketjoe79 says

Many large companies are mandating a return to the workplace. But, there have been tens of thousands of layoffs. Hard to figure out what this is doing to the housing market, except driving up big city rental prices.

Yes, we have been hitting record after record on rent prices. Just have to remove ourselves from the equation and let the property management company do their job. We’re too emotional and don’t push rents like them.
1777   AD   2023 Feb 23, 12:03am  



1778   WookieMan   2023 Feb 23, 3:31am  

ad says





It's too easy to get a license and you then represent people with what will be the largest purchase of their lifetime most likely. Depending on state rules/laws, you can also just start a brokerage without a license and sign on a bunch of agents. Tell one of them to take one for the team and you're essentially a real estate broker without a license. All legal. You just have to hire a managing broker.

Most people fail the brokers exam 1-2 times before getting their license. That should scare you bigly because it's not difficult at all. The average broker is a high school graduate. That's fine if you're painting my house, but not my biggest purchase.

Headset can correct me, but I think most commercial pilots need 500+ hours of flight. I'm not saying flying is easy, but with modern avionics is not as difficult a task as most would think. I think ground school freaks people out the most and they bail. I have two friends that recently bailed on it and they were getting hours in the air which ain't cheap. I feel like real estate should be similar.

Real estate is a racket within the industry. Between the MLS and other fees it came out to close to $3k a year. Considering the industry average for most major brokerages is 70/30, you'd have to sell 2 house, factor in vehicle, time, gas, phone, etc. to break even unless you're in a high price market. It's why I dumped my license. And yes you're an IC so you can write it off, but it doesn't make sense unless you're selling $4M in real estate. That would net you about $60-70k/yr. Easy in a place like CA, but that income doesn't keep up with the cost of living out there. Success is $20M plus in sales. 95% of agents won't get there.

The weird thing is we have Airbnb, VRBO and other vacation rental services. I've never personally dealt with a person at the property to get in. They trust I'm not going to steal anything. Yet with RE you need a buyer agent with you to get it. Like working a lockbox is a fucking challenge?? And what is stopping agents from stealing shit as well? The system needs change for sure. Typing this out my business gears are turning.
1779   GNL   2023 Feb 23, 5:47am  

WookieMan says

The system needs change for sure. Typing this out my business gears are turning.

Big time people have and are working on changing the way real estate is sold. Any success yet? The NAR has the secret sauce, good luck with your turning gears.
1780   WookieMan   2023 Feb 23, 10:18am  

GNL says

Big time people have and are working on changing the way real estate is sold. Any success yet? The NAR has the secret sauce, good luck with your turning gears.

I don't think there will be much luck. I have ideas, but sinking time into them against probably a top 5 lobby is likely impossible. My dad tried as an attorney. It was actually a logical idea, but he didn't have the skill set in business to make it work. I don't want to say too much as I'd like to stay private here. The nut of it was basically to cut out the realtor completely, because as an attorney realtors are the most fucking annoying humans to deal with. They also get paid more than the attorney.

All you really need is someone to review legal documents, get a loan and that's basically it. Then 6 other (making that up) industries trying to get a piece of the pie. I could understand a single woman getting an inspection, but inspectors are useless humans. Marketing is marketing, you need it which I think you do professionally, but why couldn't an attorney just refer your services instead of an agent? They have real estate paralegals that manage showings and marketing and contracts. I did all that and accounting for 15 years. Took care of corperate filings. Fucking car registration. Ipass (tolls). My bosses weekly parking ticket. The list goes on.

Beside actually selling, which I occasionally did, I ran everything except making cold calls and talking to people because I'm a dick. Actually I'm nice if I want to interact or the other person genuinely wants to interact with me. A lot of buyers and sellers expect you to wipe their ass after they shit. I ain't doing that. Hence why I just managed the background stuff that kept the business going.
1781   HeadSet   2023 Feb 23, 2:34pm  

WookieMan says


Headset can correct me, but I think most commercial pilots need 500+ hours of flight.

Way back when I was flying, it took 250 hours flight time, a flight test, and a written test to get a civilian commercial pilot license. Air Force pilot training graduates had about 200 hours of small jet (T-37 and T-38) but were able to get a civilian commercial license if they wanted by passing a flight test in a civilian pane with a civilian flight instructor. However, "commercial" does not mean left seat airline qualified. That would be an Airline Transport Pilot (ATP) which required a minimum of 1500 hours. Then you need a type rating on top of that (Boeing 737, etc).
1782   WookieMan   2023 Feb 23, 4:35pm  

HeadSet says

WookieMan says

Headset can correct me, but I think most commercial pilots need 500+ hours of flight.

Way back when I was flying, it took 250 hours flight time, a flight test, and a written test to get a civilian commercial pilot license. Air Force pilot training graduates had about 200 hours of small jet (T-37 and T-38) but were able to get a civilian commercial license if they wanted by passing a flight test in a civilian pane with a civilian flight instructor. However, "commercial" does not mean left seat airline qualified. That would be an Airline Transport Pilot (ATP) which required a minimum of 1500 hours. Then you need a type rating on top of that (Boeing 737, etc).

Ok so 250 hours to get paid shit. With a RE brokers it's 60-90 hours and that's not ACTUAL time of learning. You then get to sell a $1m home and make ~$25k on one transaction. A pilot would work all year to get that much with 250 hours. I get you cannot crash a house and kill people, but substantially more people get burned by shitty real estate brokers than pilots.

Planes don't have basements that can flood and you can lie about it. You can't cover a defect on a plane with annual inspections. Yet people just trust high school drop outs with the biggest purchase of their life. I was one and wouldn't trust one. Realtor, not high school drop out. History major with poly sci minor. Attorney path. Looked miserable so bailed into real estate. Good/bad decision. Made good money, wife's career took off and I realized people are not for me and there's too many in RE.
1783   gabbar   2023 Feb 25, 7:17pm  

WookieMan says

there's too many in RE.

There are 9k real estate agents in Columbus, Ohio!
1784   GNL   2023 Feb 26, 4:12pm  

LMAO


1785   GNL   2023 Feb 26, 4:16pm  



1786   AD   2023 Feb 26, 10:49pm  

As far as GNL's post above (post number 1933), the rich don't get mortgages for homes. They buy with cash such as from stock sale.

So price drops of that percentage are due to poor economy and stock market.

Just like fine art and jewelry sales much be down. Rolex watches should relatively be discount now.

How are yacht sales doing compared to high end luxury housing ?
.
1787   WookieMan   2023 Feb 27, 12:12am  

ad says

As far as GNL's post above (post number 1933), the rich don't get mortgages for homes. They buy with cash such as from stock sale.

So price drops of that percentage are due to poor economy and stock market.

Just like fine art and jewelry sales much be down. Rolex watches should relatively be discount now.

How are yacht sales doing compared to high end luxury housing ?

This comment makes sense. I just think the urban areas are going to take a beating and that's what we're going to see. We only told friends and family we were going to build a house. We had and have 5+ people willing to buy our house at generally whatever price we want within reason and no brokers.

Everyone has a different reality. Our current house was one of the best investments we made and was super frugal. I actually think building right now HERE, is a smart decision. Builders are desperate for work. Demand has dropped and so have prices HERE. Sorry for the all caps, but some here think the country is CA so I want to be clear this is IL.

Not all areas are over priced and run like shit. And that's saying a lot as an Illinoisan.
1788   zzyzzx   2023 Feb 27, 8:25am  

https://www.reddit.com/r/RealEstate/comments/11cycta/when_youre_stuck/

What do you do when you hate the house you bought, the things you hate about it you can’t change (constant traffic noise), and you can’t afford to sell?

We bought it because we owned a 2 bedroom apartment and have 2 kids. I wanted to move before my older daughter started kindergarten so we felt we were in a time crunch even though the market was not ideal for buyers. Basically we needed a house, looked at and made offers on many, and this is the one we got. It checked enough of the boxes but the busyness of the road was something I failed to prioritize or fully realize.
1790   zzyzzx   2023 Feb 27, 10:00am  

https://www.reddit.com/r/REBubble/comments/11d11fg/yikes/



Honestly it's not too early to start lowballing people. I'm considering sending a 60% of list offer on a large commercial property. The fact is rising taxes and interest rates don't justify anything near the asking price. If they don't want to be reasonable then I'll simply wait until things get worse and the offer will not be improving when they come back to me later.
1791   zzyzzx   2023 Feb 27, 12:02pm  

https://finance.yahoo.com/news/landlords-face-crisis-mortgage-costs-171034546.html

Landlords face crisis as mortgage costs surge higher than rents
1792   HeadSet   2023 Feb 27, 12:37pm  

zzyzzx says

Landlords face crisis as mortgage costs surge higher than rents

This is more the case in Britain where all mortgages are variable rate.
1793   GNL   2023 Feb 27, 1:02pm  

GNL says

LMAO




Obviously you don't understand how to invest in RE. Cash flow doesn't matter. No, you invest for future equity but first make sure interest rates are rising.
1794   Eman   2023 Feb 27, 5:19pm  

zzyzzx says

https://www.reddit.com/r/RealEstate/comments/11cycta/when_youre_stuck/

What do you do when you hate the house you bought, the things you hate about it you can’t change (constant traffic noise), and you can’t afford to sell?

We bought it because we owned a 2 bedroom apartment and have 2 kids. I wanted to move before my older daughter started kindergarten so we felt we were in a time crunch even though the market was not ideal for buyers. Basically we needed a house, looked at and made offers on many, and this is the one we got. It checked enough of the boxes but the busyness of the road was something I failed to prioritize or fully realize.


Buyer’s remorse. It’s that simple. No one forced them to buy the house.
1795   Eman   2023 Feb 27, 5:20pm  

GNL says

LMAO




Numbers don’t pencil out. Next.

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