patrick.net

housing prices primarily peaked in early 2022... income increased in 2022 and 2023...hopefully hope prices stay the same and income increases in 2024...

three years of income increases (2022-2024) and a 30 year mortgage rate of 5.5% will mean home prices will not need to decrease as much as far as mortgage affordability standards...

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Eman says

The cost of designing, engineering, city permits and fees is easily $100k before we break ground to build a house.

Basically, all the requirements make the cost to build extremely expensive.

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yes, due to California building code and zoning

in Florida, the builders leverage economies of scale as far as fixed costs and the state is a lot more pro residential development

,,,

All of this is why you won’t see Actual affordable housing built in CA ever again….

California’s largest home insurer will raise rates by an average of 20% this year.

https://www.msn.com/en-us/money/insurance/california-s-largest-home-insurer-to-hike-rates-this-year/ar-AA1mnqi3

https://ottawa.ctvnews.ca/home-prices-in-carleton-place-drop-significantly-1.6718571

Carleton Place homes sold for $400,000 under original selling price

https://www.reddit.com/r/RealEstate/comments/192s3xt/appraisal_came_in_47k_lower_than_contract_price/

Appraisal came in 47K lower than contract price. How does this happen??

zzyzzx says

https://ottawa.ctvnews.ca/home-prices-in-carleton-place-drop-significantly-1.6718571

Carleton Place homes sold for $400,000 under original selling price

Jan of last year a new law in Canada came into effect that restricts real estate foreigners can buy.

This is the result.

30-year fixed mortgage rate is below 6% for the Bay Area now. I guess lenders anticipate the Fed is done with the rate hikes and will cut rate soon.

Marco Cooper, 3154198

Coastal Sun Realty LLCEman says

30-year fixed mortgage rate is below 6% for the Bay Area now. I guess lenders anticipate the Fed is done with the rate hikes and will cut rate soon.

My forecast still is that the 30 year rate will settle around 5.5% for 2024, and about 1.5% above the 10 Yr Treasury.

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Eman says

30-year fixed mortgage rate is below 6% for the Bay Area now.

To be fair, that 5.875% rate requires you pay 0.25 points up front. An APR "as low as" 5.992% is breaking the 6.0 barrier by the barest of margins.

SunnyvaleCA says

Eman says

30-year fixed mortgage rate is below 6% for the Bay Area now.

To be fair, that 5.875% rate requires you pay 0.25 points up front. An APR "as low as" 5.992% is breaking the 6.0 barrier by the barest of margins.

What I would do is get 2 discount points costs along with other closing costs rolled into my VA mortgage. If we buy this year and the 30 yr rate is 5.5%, then we'll buy 4 discount points to get to a 4.5% rate.
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In the current environment, I’m not sure it’s prudent to buy down rate as history suggests there’s a higher chance of interest rate dropping in the coming years rather than rising. Paying 4 points is a lot of money to buy down 1%

SunnyvaleCA says

Eman says

30-year fixed mortgage rate is below 6% for the Bay Area now.

To be fair, that 5.875% rate requires you pay 0.25 points up front. An APR "as low as" 5.992% is breaking the 6.0 barrier by the barest of margins.

Rates were floating around 7.5% and higher just a couple months ago. The Fed hasn’t done anything, and rates fell 150 bps since. I just want to share the dynamic of interest rates. This should provide some tailwind to hold up the housing prices.

A recession is likely needed to see significant housing price drop at this point.

“San Jose rent growth in 2023 pacing below last year. Twelve months into the year, rents in San Jose have fallen 0.7%. From January to December 2022 rents had increased 6.1%.”

“Santa Clara County rent growth in 2023 pacing below last year. Twelve months into the year, rents in Santa Clara County have fallen 1.0%. From January to December 2022 rents had increased 8.7%.”

Eman says

In the current environment, I’m not sure it’s prudent to buy down rate as history suggests there’s a higher chance of interest rate dropping in the coming years rather than rising. Paying 4 points is a lot of money to buy down 1%

Eman, the cost is 4% of the mortgage when you buy down 4 points. It is equivalent to dropping the price 10% (assuming no down payment) and the payback period is around 6 years. If I could buy down to 5% from 6% rate for the 30 year mortgage, then I would refinance likely when the rate drops below 3.75%.

I posit that it is much more profitable to increase prices based on scarcity. With scarcity, there's no effort and prices can go to infinity.

Eman says

“San Jose rent growth in 2023 pacing below last year. Twelve months into the year, rents in San Jose have fallen 0.7%. From January to December 2022 rents had increased 6.1%.”

“Santa Clara County rent growth in 2023 pacing below last year. Twelve months into the year, rents in Santa Clara County have fallen 1.0%. From January to December 2022 rents had increased 8.7%.”

Eman, Venture capital money is drying up more in Silicon Valley compared to 2019-2022. Layoffs are abound in Silicon Valley 😕

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Eman, Venture capital money is drying up more in Silicon Valley compared to 2019-2022. Layoffs are abound in Silicon Valley 😕

Yup. It's really bad. Almost dot.com bust nuclear winter bad.

And contributing to that is the AI scam. That the new 'thing' in SV.

We all know it, but worth repeating. A picture is worth a thousand words. The link is below too.



https://x.com/charliebilello/status/1747316842861838567?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

Eman says

We all know it, but worth repeating. A picture is worth a thousand words. The link is below too.



https://x.com/charliebilello/status/1747316842861838567?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

What would you, as an investor, do going forward? Reading the tea leaves (the totality of the economy and the political and financial atmosphere) I'm pretty sure this is the new normal. I believe the homeownership rate is going to fall for years to come.

It may tick up and down from time to time but, the trajectory = down for a long time. IMO, of course.

These analysts are hilarious. The housing market is bottoming. 😂

https://www.marketwatch.com/story/buy-home-depots-stock-because-the-housing-market-is-bottoming-analyst-says-732d5268?siteid=msnheadlines

Eman says

These analysts are hilarious. The housing market is bottoming. 😂

https://www.marketwatch.com/story/buy-home-depots-stock-because-the-housing-market-is-bottoming-analyst-says-732d5268?siteid=msnheadlines

Good candidate for the predictions thread.

GNL says

Eman says

We all know it, but worth repeating. A picture is worth a thousand words. The link is below too.



https://x.com/charliebilello/status/1747316842861838567?s=46&t=5lEEPaezr6Ic-W4Z6huZ5Q

What would you, as an investor, do going forward? Reading the tea leaves (the totality of the economy and the political and financial atmosphere) I'm pretty sure this is the new normal. I believe the homeownership rate is going to fall for years to come.

It may tick up and down from time to time but, the trajectory = down for a long time. IMO, of course.

Be patient and wait for opportunities. No reason to force any deals when there are no deals.

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Increase income by +3% annually while hold home prices and 30 yr mortgage rate constant to achieve more housing affordability
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There was a mainstream media headline that notes that poor Americans are benefiting from falling inflation !

gabbar says

There was a mainstream media headline that notes that poor Americans are benefiting from falling inflation !

Mainstream media is doing what it can for the Democrats going into this November elections.

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gabbar says

There was a mainstream media headline that notes that poor Americans are benefiting from falling inflation !

Noooooooooo!

gabbar says

There was a mainstream media headline that notes that poor Americans are benefiting from falling inflation !

Other than gasoline and used vehicles, too bad poor Americans aren't buying the (few) things whose prices are actually falling. Even those two categories are only falling from all-time highs to being merely near-all-time highs. As for food, clothing, and rents... up up and away!

If the median-income person is a house or apartment renter forever — as has been the case in much of Europe forever — does comparing median housing payment to median income make any sense? Maybe the comparison should be to median income of house owner. I also hear about the trend of investors buying up housing. This will make even more people renters for life and further reduce the predictive utility of the statistic.

https://nakedemperor.substack.com/p/has-the-american-dream-disappeared

gabbar says

There was a mainstream media headline that notes that poor Americans are benefiting from falling inflation !

Only the poor benefit from falling prices? LOL

Patrick says

Wow, this is really terrible. I guess Klauss is a genious. He was right. Well, except for the happy part.

SunnyvaleCA says

does comparing median housing payment to median income make any sense?

Of course it does: if renting is cheaper than buying, somebody must subsidize the whole thing, there is no other way around, and this somebody must be either the landlord or the government.

Every house for sale I follow in wine country still sells within a few days or weeks on the market, at asking or above.

mell says

Every house for sale I follow in wine country still sells within a few days or weeks on the market, at asking or above.

The drop in mortgage rates gave it a nice little tailwind.

This thread started about 2 years ago, right about the time that housing stopped going down on that little blip on the chart, Since then, prices have simply gone up confounding the housing bears who expected prices to crater like they did in 2008.

It is not just housing assets that are at a new all time peak vs income, but if someone were to graph outstanding financial assets vs income, the chart there would show a new peak as well.

The US GDP is about $23 trillion dollars. America's savings rate is right about 4%. That means we have to find a place to put about $920 billion per year. That 25% of houses are bought all cash should be no surprise. That the average amount of the down payments are at a new high should also be no surprise. That most states have new buyer assistance programs (giving the buyer about $10k in additional down payment assistance) and with 25% of new buyers also getting down payment assistance from their parents adds pure fuel to the prices that people can pay.

Prices could also shoot up more if Biden's plan for a Federal first time buyers program passes too.

Millions and millions of illegals with limited construction of housing adds to the dynamic.

https://homebuyer.com/learn/15000-first-time-home-buyer-tax-credit