patrick.net

WookieMan says

Fact is CA is its own animal. It would be the 5th largest nation by itself.

It is losing population.
Canada has slightly more ppl than California does and it is only 37th in population size.

And don't say you were referring to GDP instead. Because if CA were to be separate, that value both in absolute and relative terms would fall like a rock within a year.

WookieMan says

Also as much as people don't like it, these interest rates are historically normal, just not for people 50 and under. We were spoiled for almost 2 decades

Yeaahhh(true)....so why write all the other things you stated that is contradicted by this then?

WookieMan says

Cities will be where the blood bath happens. That's where any "crash" is gonna happen.

Yeah. That is the bulk of California, right there.

Yet you claimed that CA is special and not effected.

What a load of bullshit.

PumpingRedheads says

Yet you claimed that CA is special and not effected.

Huh??? I'm saying CA IS the problem with national metrics for housing data. They are losing property value. BUT, that doesn't mean the housing market is crashing nation wide. Is it going to the moon, nope. But get out of a city and you'll be doing just fine is my point. Those that move are dragging down the national median. Interest rates don't matter when you're moving from say a $500k market to a $250k market. Payment is lower even at 8%. Guess what? That bring the national median down.

Cities are crashing. Not the overall housing market. I have no stake in CA. I'm not a huge fan to be honest having hit all the lower 48 multiple times. Housing is doing just fine in most of the country though. Not really debatable. I really don't care about the CA market, but get frustrated when people say the housing market is bad because one state has overpriced housing and dumb ass laws that create fake value. IL is a shit hole and you can't find a house right now. Prices are going up in a high(er) interest rate market. That's the opposite of a bad housing market.

Really not sure the point of your comment. I've been clear on mine.

WookieMan says

BUT, that doesn't mean the housing market is crashing nation wide

Did you read the story Patrick posted? That is the context we are discussing all this in. Or should be.

WookieMan says

Really not sure the point of your comment. I've been clear on mine.

No, you haven't. See above.

PumpingRedheads says

Did you read the story Patrick posted? That is the context we are discussing all this in. Or should be.

I'm not going off comments. I'm going off the OP. I skimmed the article Patrick posted. My comment stands and is 100% valid after reading. The OP is about the housing market as a whole nationwide.

I replied to a CA centric comment. That's not the rest of the country. Again, I'm not sure how much clearer I can be. SFBA is eating shit. I don't disagree. That is not the overall housing market. Can we at least agree on that??? We're not in a housing crash is my point. The CA market has needed to eat shit before the previous housing crash in 2006. There are other parts of the world besides CA....

WookieMan says

comment stands and is 100% valid after reading. The OP is about the housing market as a whole nationwide.

It was about San Francisco.

I think you might want to consider laying off the internet while on your present meds.

PumpingRedheads says

Patrick says

San Francisco has experienced outsize declines in home prices as higher interest rates have hit home values nationwide.

BUT the Housing Experts of PatNet (which I note haven't commented on this for at least 18 mos) insisted this would never happen!

Which housing experts of Patnet insisted this would never happen? Can you share names and back it up with some data points?

I see you keep repeating this many times so I’d love to know.

Eman says

PumpingRedheads says

Patrick says

San Francisco has experienced outsize declines in home prices as higher interest rates have hit home values nationwide.

BUT the Housing Experts of PatNet (which I note haven't commented on this for at least 18 mos) insisted this would never happen!

Which housing experts of Patnet insisted this would never happen? Can you share names and back it up with some data points?

I see you keep repeating this many times so I’d love to know.

I also witnessed people saying things to this affect but, no, I cannot back it up with links to the comments. That doesn't mean I think housing will "crash" all over the country. I think inventory will have a say in all of this. Personally, I believe "You will own nothing and be happy" (except the happy part) is well on its way to becoming true.

PumpingRedheads says

It was about San Francisco.

I think you might want to consider laying off the internet while on your present meds.

I'm fully aware. I'll be more blunt. No one cares about San Francisco. It's a rotting/dying city. That's my point. The housing market isn't CA. Again my point. I don't know how to be clearer. SFBA is NOT the housing market. No one actually cares besides those locked into prop 13 properties. Otherwise it's a sinking ship outside of a few places. Dickhole Kansas will do better than CA. No one cares about CA in the housing market.

I also don't take meds. I haven't swallowed a pill in close to 20 years. Dramamine for boat trips is it. So yeah, you missed that dig bigly.

Eman says

Which housing experts of Patnet insisted this would never happen? Can you share names and back it up with some data points?

I see you keep repeating this many times so I’d love to know.

I don't get this take. Anyone can make a boat load of money or lose their ass. I don't get the perma bears. No one here that I've seen has said RE is going to the moon. I could make $1M in Bemidji, MN and lose $1M in Palm Desert, CA. That's the point I'm trying to make with the bears.

YES, we know the market can go down. I'm mentioning that it's not in most of fly over country. Many investors give no shits about CA. But "nah" the CA market is down and we're all doomed.... lol. That's the hot take. Whatever. Not sure why I even give it time.

According to Kolanovic, inflation-adjusted liquid assets such as deposits and money market funds of nearly all US consumers will be below 2019 levels by mid-2024.

“It is likely that only the top 1% of consumers by income will be better off than before the pandemic,” he warned, noting the recent surge of credit card and auto loan delinquencies and a growing number of bankruptcy protection filings.”

https://www.rt.com/business/588783-us-consumers-drain-savings/

Only the top 1%.

All intentional and by design, the greatest wealth transfer in history from the middle class and working class to billionaires and multi-millionaires, 40% of all dollars in existence printed in the last 3-1/2 years.

Must be another one of those “we’re all in this together” kind of things.

It's blatantly false to claim that the housing market in CA is "bad". I'm surprised houses in SF still fetch that much considering the dilapidated state the city is in, but you cannot take SF stats and apply it to the whole large state. Wine country properties still sell within a few days or weeks for asking price or.above, with valuations maybe 5%-10% max off the covid craze peak, and they are rising again.

GNL says

40% of all dollars in existence printed in the last 3-1/2 years.

This is what I have been suspecting all the time. Never trust the gov "help" crap. Every action of their "help" to poor and middle class, eventually comeback and bite both of them in the form of delayed stealth tax aka inflation on average in 18 months depends on how it was structured. Only rich, upper middle can dodge by keeping wealth in non cash forms like stocks, RE, particularly cheap loans to leverage etc.
Also like @WookieMan says, CA is beyond the repair with 1978 Prop 13 and its so many derivatives in place over the period for rich commies along with so many CA commie craps particularly in major urban areas.
Rest of the state and country is on a different side and can go down as well but hard to think that it can crash with the given nn% inflation!

PumpingRedheads says

BUT the Housing Experts of PatNet (which I note haven't commented on this for at least 18 mos) insisted this would never happen!

I dunno Who The Heck you're referring to.

I've been following Patrick's site since 2006. At the time I was in a cubicle warren in the Trenches of (Silicon Valley) Tech with like-minded local housing skeptics like me (and Patrick).

Patrick began his SFBA-focused, SFBA-centric blog with a (healthy) skepticism about the SFBA Housing B*llshit. Yes, it is true, if Patrick and my office mates had paid (or borrowed for) peak prices in 2006, they'd have a lot of equity now (unless they used the equity as an ATM like so many of my Bay Area homies have done). They also would have pissed away massive amounts of their income on Super-High Property Taxes, which are now (2023) insane for new buyers.

There's a whole lot of us with deep roots in the SFBA (I grew up here) who just endure the high rents or house prices as the trade off we accept for living among our relatives, friends, etc. It's not a Left-Wing political stance, - some of us dislike those folks as much as you do. It's personal, - ;like the Jews who stayed in early 1930's Germany in spite of everything. Call us names, belittle us, etc, - whatever. Sticks and Stones. But please don't hate us.

Eman says

Wookieman,

It’s great that you’re okay. Do you know what caused you to have a seizure?

In my market, agents/brokers get all these sources and reach out to the trustees/executors/owners on a daily basis. I can see rural areas are less targeted by agents/brokers compared to the metros and suburbs.

our area gone down, but we still get people escaping cities so keeps prices up unfortunately. was hoping they’d stop buying at inflated prices. locals can’t afford what equity people can.

B.A.C.A.H. says

I dunno Who The Heck you're referring to.

Funny. You missed the whole BS from the 'Housing Experts' about two-three years ago. I an others said that a) the era of low interest rates were ending and b) housing prices would drop as a result. In response, they responded patronizingly that we didn't know what we were talking about, that it would NEVER HAPPEN and they were the EXPERTS!. Normalcy Bias on steroids.

Vast majority of those losers have not been active on here since their bullshit was exposed.

Where the hell were you Mr. I've Been On PatNet Since '06 during all this?

PumpingRedheads says

I an others said that a) the era of low interest rates were ending and b) housing prices would drop as a result.

At no point have I ever read here that interest rates wouldn't rise by a single user. You're flat out lying man.

And point B, higher interest rates have not resulted in price drops in most of America. Just some cities and hipster areas the Californians fled to. Notice a theme here?

No one has to be an expert in RE to understand basic data. CA will drag down national numbers and people will claim it's a crash. It's not. It's CA correcting itself and you make claims based off that. Prices have not gone down in fly over country. There's no inventory. Almost all listings are fixer uppers. This is why I hate when one giant state projects what they think is reality on the majority. It's no different than gays pretending their lifestyle is normal. It's not and no one thinks that. You're gay and weird.

I'm sure the Fortress will fall, but we've still had some listings going for over $1,400 /sq.ft. Crazy times. I guess that Albany fixer posted by eman is a sign of things to come (investors exit, stage right...)

WookieMan says

no point have I ever read here that interest rates wouldn't rise by a single user. You're flat out lying man.

That's funny.

You were one of them.

EBGuy says

I'm sure the Fortress will fall, but we've still had some listings going for over $1,400 /sq.ft. Crazy times. I guess that Albany fixer posted by eman is a sign of things to come (investors exit, stage right...)

@EBGuy,

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?

Folks love to blame things on “the flippers/investors” while being clueless about what’s happening behind the scene.

This one has great potential, but I decided to take a break.

https://redf.in/WoIKl9

EBGuy says

I'm sure the Fortress will fall, but we've still had some listings going for over $1,400 /sq.ft. Crazy times. I guess that Albany fixer posted by eman is a sign of things to come (investors exit, stage right...)

I’m surprised the market has held up so well. We had lunch with our lender last week. Apparently, banks are going through their borrowers’ portfolios and stress test them. He told us our portfolio is fine. We should be able to handle to shock of higher interest rates when it’s time to refinance aka the loans balloon.

If the portfolio is weak, they would prepare the borrowers to either “prepare for cash-in, or consider dispose/sell the asset before the loan comes due.”

This 12-unit building (two 6-unit buildings side by side) recently got taken back by the lender. It’s a syndication deal. All investors get wiped out. No idea what this syndicator was smoking paying $3M for it. https://redf.in/tvJEgy

There are a couple more buildings by the same syndicator, where the lender is forcing the sale. They’re on the market. Can’t disclose them.

PumpingRedheads says

WookieMan says

no point have I ever read here that interest rates wouldn't rise by a single user. You're flat out lying man.

That's funny.

You were one of them.

At no point did I say interest rates won't rise ever. That's fact. What I've always said is a rise won't matter if there's still no inventory. I'm not wrong. You're conflating the two ideas. Interest rates rose and it didn't matter. Cherry pick San Francisco, fine. I said cities would eat shit, I was 100% right. I don't and haven't deleted comments, prove me wrong...

Anyone with a working brain would never say interest rates wouldn't rise. I still think there's room on the top end to go up higher. If they do they do, if they don't they don't. Fact is I haven't been wrong. I've predicted for years that cities will eat shit for some time. I could see it being a decade. There is a massive demographic shift. Between crime and leftist policies, cities are going to lose value and lower cost locations (rural) are going to boom. On paper it will look like shit, but it's not because the lower priced areas will increase and high end properties in shit hole urban areas will drop. Take the time like I have, and posted here, to do a basic Uhaul search for pricing and the answer is staring you in the face with me being right. You don't even need to look at housing.

Again, you cherry pick data to prove what you think is a point. Housing is just fine currently. We've doubled the cost of borrowing from historic lows and prices in most places are level or continuing to increase. Cities will decrease. One area of housing doing poorly does not make a bust dude. The national median will go down and the media will goad you into fear mode which it seems you've taken hook, line and sinker style. Look outside CA and do serious research before spouting off. This isn't 2006.

I agree this is not 2006. The dynamic is different. With the exception of home buyers from summer 2022 to now, most people have locked in low fixed mortgage rates at 3.5% or lower.

For each seller who wants to sell and trade up or down, he’s also a buyer. People don’t want to give up their current 3% mortgage and pay 7-8% on the new house. Thus, the market is kind at an impasse. That’s why inventory remains low. Houses in desirable neighborhoods are still fetching for top dollars. It’s madness. Houses in meh neighborhoods are not selling very well; thus, lower prices.

WookieMan says

At no point did I say interest rates won't rise ever. That's fact. What I've always said is a rise won't matter if there's still no inventory. I'm not wrong. You're conflating the two ideas. Interest rates rose and it didn't matter. Cherry pick San Francisco, fine. I said cities would eat shit, I was 100% right. I don't and haven't deleted comments, prove me wrong...

We had a big fight over it. You kept insisting just that and that I didn't know shit because you arrogantly thought of yourself as some sort of Lord of Real Estate Experience. You were probably more nuanced vs the yahoos that just said it couldn't happen. But you came to their defense.

WookieMan says

Again, you cherry pick data to prove what you think is a point...pick San Francisco, fine.

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.

You're the one that doesn't have fucking shit for reading comprehension skills that causes you to shit all over yourself and then having a hissy shit when someone points that out. Not for the first time, too.

I am going back through posts to find the smoking gun on the 'Housing Experts' bullshit. But w/o search working well here it is a slog.

2024 will be interesting with WallStreet expects the Fed to cut rates at least a couple times. It can be the year of housing stabilization if the Fed can achieve “the soft landing” while the employment market remains strong.

From a number’s perspective for the Bay Area housing market, the gap between buy/rent ratio is still too big IMO.

PumpingRedheads says

We had a big fight over it. You kept insisting just that and that I didn't know shit because you arrogantly thought of yourself as some sort of Lord of Real Estate Experience. You were probably more nuanced vs the yahoos that just said it couldn't happen. But you came to their defense.

First off, you got one thing right for once, I am the lord of real estate experience. NAR gave me that title in 2015.

I didn't come to anyone's defense. Other people's opinions are theirs. I may agree, but I'm not defending anyone here. You're right that San Fransisco is eating shit literally and figuratively. That's one overpriced market that will make the overall market look bad when $2M properties go for $1.2M. It doesn't mean it's bad elsewhere. It doesn't mean it was because of rising interest rates either.

Cities are shit holes and are going to take a beating over the next decade. This has been my statement. I'm not overly concerned with interest rates in the overall market. There's 2 houses for sale in my town and in a balanced market it would be 15-20. A friend of my kid has been looking for over a year to find a place.... there's nothing. People know we bought lots and randoms come up to me asking to buy my current house. This is how it is in most of America not called CA or NY.

Fact is there are real estate experts here on Patnet. It might behoove you to listen to some of them. Maybe not be a perpetual bear. 2006 was a once in a life time thing. You've missed out and just ragged on people that did well with RE. Jealousy is not a good look dude. If you're in CA, maybe move and join in on the gains like everyone from that state is doing and destroying other states in the process....

Eman says

2024 will be interesting with WallStreet expects the Fed to cut rates at least a couple times. It can be the year of housing stabilization if the Fed can achieve “the soft landing” while the employment market remains strong.

The 30 yr rate is at 7%. I see it at between 5.5% and 6% by next summer.

https://www.freddiemac.com/pmms

If you are looking to sell, one option is to offer to buy up to 4 discount points so that the buyer's rate can be reduced from 6% to 5%. It will cost you 4% of the buyer's mortgage but it will increase the marketability of your home.

A mortgage rate of 5% is a lot closer to the rate when housing prices peaked, which was around 3.75%.

Another option is to allow them to assume your mortgage if it is FHA or VA.

.

Right now the 10 yr treasury is at about 4.25%. Prior to Biden taking office investors were willing to purchase them at a negative return, after inflation of about a negative .5%. Now under Biden investors are looking at getting 2% above the rate of inflation.

Historically the 30 yr fixed rate mortgage was about 1.5% over the rate of the 10 yr treasury. Now it is 2.75% above the rate of the 10 yr treasury.

That is a crap load of extra yield investors are getting under Biden. If spreads simply reverted to where they were under Trump the 30 yr fixed rate mortgage would be at 3.75% TODAY.

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.
.



.

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/