patrick.net

HeadSet says

Another example of blaming the "market" for a government caused event. That "unlimited capital" comes from low down government loans and other subsidies. Take away government backed loans and houses would return to being bought as shelters. If people had to save up a 20% down payment, then houses would be more modest and practical. Also, would not need an inflation hedge if the government did not overspend and print every year.

Also they lend money easily to real estate investors. Local governments should increase the property tax on short term rentals if they don't already have a bed or tourism tax.

VA mortgages require the buyer to live in the home and not be a landlord (for a certain period of time such as at least 2 years after purchase).

Yes VA mortgages allow closing costs to be included within the mortgage and does not require a down payment.

I am not sure what percentage of housing units which are tracked in St Louis Fed's website are short term or vacation rentals. Call it the AirBnB effect.
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B.A.C.A.H. says

For those who can afford to live here, we're a few hours drive away from every kind of recreation you can imagine except perhaps ice fishing. No flights required. From Bay Area, alpine snowboarding "day trips" are practical and doable and relatively affordable. My adult kids have season passes and do it a lot.

You're right and semi wrong if I'm being honest. To be quick, at what cost? Massive taxes if you have the income? Congrats I guess?

I can fly round trip to Montana, California, Florida, Texas, Idaho, Washington, etc for $11.40 and snowboard (most those state) at the largest resort in the country and stay with buddies for free in 3 hours in MT. I pay half the taxes, which are still high(ish) and own a property that is 5x's less than what it would cost in CA. I can drive 2-3 hours to places with quality snowboarding and don't have to rely on natural snow. Sure it's shittier, but I can board November to April no problem. Huge snowmobile network. If I'm gonna have winter IL and WI are not bad places to be.

When it's dark it's dark in the winter. So a temperate climate is of no importance. I want warmth in the tropics. Mexico, USVI, BVI, Dominican, Jamaica, Aruba, Bahamas, Turks and Caicos, Puerto Rico, Florida, etc. Even if IL was California(ish) scenery and weather wise, I'd get the hell out of there. This time of year. 28 days till I get to Florida.

No interest in being in the same place 365 24/7. I've been. I know it. I've got plenty to do around here and it's easy enough for me to go somewhere else for cheap.

I don't care for mountains really. If one hasn't seen them, sure they look cool. I'm over that stage. I like car

just_passing_through says

He told them to eat $shit and they quit bothering him.

I don't think people get the effectiveness of this strategy. Especially if you know you're in the right and legally. They're trying to get the suckers that fall for it. Ah shit the government is coming after me..... but they can't. The weak will pay. That's the lure they're putting out there, fishing. Unfortunately it works and you can't call out the idiots this. They get upset.

WookieMan says

You're right and semi wrong

Which one that I wrote is wrong?
B.A.C.A.H. says

For those who can afford to live here, we're a few hours drive away from every kind of recreation you can imagine except perhaps ice fishing. No flights required

Is it because forgot to mention snorkeling in the tropics is not within a car drive? Ooops. My bad. Yes, we had to go in an airplane for those, in Caribbean and Pacific.

For those working blokes who might only take one spectacular vacation trip in their lives (yes, there are many, including some relatives of mine in Flyover Country), well, if they choose California or Southern California, snorkeling kelp beds at Catalina is not a bad consolation prize. Done that once with my kids. Nothing like the tropics of course.
WookieMan says

Massive taxes if you have the income?

Look, I am not sharing this to boast like our favorite Land-Lord does, - an economy with 90 struggling for every 10 who are thriving is a shithole economy, - but for those ten folks in the right gigs, the pay scales with the cost of living. This is very much third world economy shthole stuff.
The high taxes here are part of the cost of living. It scales.

WookieMan says

I can drive 2-3 hours to places with quality snowboarding and don't have to rely on natural snow.

Good for you. That's great. How does it make my comment about my kids wrong?

Certainly you're not calling me out as wrong for writing that our state is a shthole. I only mentioned about our economy approaching third world type, with a few winners (some of whom exploit the losers) and a huge majority of losers, and I mentioned about streets and rivers lined with homeless.

I did not mention about the falling apart infrastructure as the state's pension liabilities soar. Nor about public K-12 becoming a train wreck.

Which part of my earlier comment is wrong?

B.A.C.A.H. says

an economy with 90 struggling for every 10 who are thriving is a shithole economy, - but for those ten folks in the right gigs, the pay scales with the cost of living. This is very much third world economy shthole stuff.

I did not mention about the falling apart infrastructure as the state's pension liabilities soar. Nor about public K-12 becoming a train wreck.

Why did you not elaborate more about this in regards to Mexifornia (alias California) ? tell us about the solvency such as for CALPERS

And that is what Mister Eman is trying to avoid when discussing the California economy which is a shithole with "90 struggling for every 10 (Eman's and liberal douchebag tech execs)".

That is what I was stating to Eman that yeah its great for him and the grossly overachieving (and exploiting???) Asian immigrant landlord class as well as the isolated gated enclaves of white liberal, but overall its a two-tier economy (rich/very well off and the rest who struggle).

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AD says

but overall its a two-tier economy (rich/very well off and the rest who struggle).

I think it's inevitable for the whole country at some point. This will bring more problems for everyone.

AD says

Why did you not elaborate more about this

Have at it, bro

GNL says

I think it's inevitable for the whole country at some point

Yeah. So many trends start here. Like counterculture, world wide web, acceptance of same sex marriage, blah blah blah.....

AD says

That is what I was stating to Eman that yeah its great for him and the grossly overachieving (and exploiting???) Asian immigrant landlord class

Asian immigrants don't have a monopoly on that exploitation.

GNL says

Isn't it also tough to leave California because they find ways to tax you even after you've left? Fuck that.

I know a guy who quit his job in CA and moved to TX to exercise and cash out his stock options at a tech company. He avoided all CA income tax on that, because he did it right, not having even one day of overlap in California earned income while living in Texas. You just have to be careful.

B.A.C.A.H. says

AD says

That is what I was stating to Eman that yeah its great for him and the grossly overachieving (and exploiting???) Asian immigrant landlord class

Asian immigrants don't have a monopoly on that exploitation.

Sarcasm?

Patrick says

GNL says

Isn't it also tough to leave California because they find ways to tax you even after you've left? Fuck that.

I know a guy who quit his job in CA and moved to TX to exercise and cash out his stock options at a tech company. He avoided all CA income tax on that, because he did it right, not having even one day of overlap in California earned income while living in Texas. You just have to be careful.

California is trying to tax the pensions that were "earned" working in California, not everyday earnings. They tried this on military pensions long ago, but the DoD would not cooperate. Actually, I would not mind seeing Cailfornia state and local government pensioners taxed by California no matter where those pensioners flee to. Since California must send out the payments, make the deductions first.

HeadSet says

I would not mind seeing Cailfornia state and local government pensioners taxed by California no matter where those pensioners flee to.

I know so many of those.

Let’s look at some statistics. Home ownership in CA went up slightly in the last 40 years from 53.7% to 55.3%. Data for Santa Clara County, I believe it’s the biggest county in the Bay Area, only goes back to right before the housing collapse, and has remained stable around 58% for the last decade or so.

If 90% of Californians live in shitholes, does this mean 45-48% of California homeowners live in shitholes? Does this mean 45-48% of California homeowners are struggling as suggested?

Based on all the apartment transactions I’ve been involved and personally known, guess which race is the biggest owner of this asset class? White.

If we believe we live in a shithole, we have the choice of staying in the shithole, or we can be the pioneer and take our family get out of it, and potentially our relatives too. There are 4 individuals on Patnet, who lived in CA, not happy here and relocated. They all seem quite happy with their decision. Just passing through, porkchop express, FortWayne, and NuttBoxer. Mell used to live in SF I believe. He relocated to a wine county/country and seems to be very happy with his decision. We all have a choice.

Eman says

55.3%

Okay Mister Eman, California's home ownership rate is 55.3%.

Florida's is 67.3%
https://fred.stlouisfed.org/series/FLHOWN

The USA's is 65.7%
https://fred.stlouisfed.org/series/RHORUSQ156N

How much more do you want to defend your shithole, two class-system state ?

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B.A.C.A.H. says

For those who can afford to live here, we're a few hours drive away from every kind of recreation you can imagine except perhaps ice fishing. No flights required. From Bay Area, alpine snowboarding "day trips" are practical and doable and relatively affordable. My adult kids have season passes and do it a lot.

You are kind of making my point in response in the other comment. I have the same. I can fly 4 hours all time included to Florida and not drive 4 hours into the Sierras and put chains on my tires. I can fly 4 hours total and be at the biggest skiing/boarding in America. This for $11.40 round trip. Hate the game, not the player.

Not a knock on Eman, he knows the game. I know the travel game. I know the points game. Anyone can do it. I'd love CA, but I couldn't be there 365 24/7. I like experiences. Not just doing the same thing over and over and over. Ever go to the Smokies in TN or NC? Sure it's not the Sierras or Rockies, but it's beautiful. Go to @AD land in Panhandle, FL. Some of the best beaches/sand on the planet.

I'm not trying to be a dick. I think travel and seeing different things and even cultures within even the US is important. Alabama and Mississippi are some of my favorite states I have hit with all lower 48 in the bag. Lots of lakes. Pure culture. It's why I like St. Thomas and John. Rough around the edges. But I trust them. i don't trust most Californians if I'm being honest. Over priced and not fun for my life style. San Diego and Palm Springs is about all you guys get. We ain't going to LA or the Bay area.

WookieMan says

You're right and semi wrong

What did I write that was wrong?

I understand that what I like is not your cup of tea.

But how does that make it wrong?

AD says

Eman says

55.3%

Okay Mister Eman, California's home ownership rate is 55.3%.

Florida's is 67.3%
https://fred.stlouisfed.org/series/FLHOWN

The USA's is 65.7%
https://fred.stlouisfed.org/series/RHORUSQ156N

How much more do you want to defend your shithole, two class-system state ?

Slowly, bit by bit, The California Republic is becoming a nation of landless peasants renters, working poor of them exploited by The Rentier Class.

Some of the 55% homeowners bought recently and are on the losing end of Proposition 13.

Some of the 55% of homeowners are wealthy immigrant non-citizens who cannot vote.

Some of the 55% of homeowners who benefit from Proposition-13 AND are voters, want to see the law reformed for one of a number of different reasons.

It is only a matter of time, as the Rentier Class exploits Californians down, grinds them down, and through their exploitive behavior adds to other dysfunction to create more renters, - only a matter of time before Prop-13 is reformed or repealed. It came very close to happening in recent years.

The Rentier Class has used a Scare Tactic argument against reform, that if their rental properties are reassessed, the rents will go up. That is a whole lot of Scare Tactic Bullsht. They already charge the most rent that the market will bear ("bare" is probably more appropriate). Any higher cost for market assessment taxes will have to come from the margins they extract from their tenants.

Crumbling infrastructure amidst high "wealth" transfer taxes to civil service pensions, a train wreck of public K-12, streets in our cities, and riverbanks of our cities lined with homeless living under tarps, low and declining homeownership, horrible crime in some neighborhoods in OakTown, SF, LA, "landed gentry" extracting ever higher rents from folks who double-triple-quadrupule shoehorn in to afford rent while they enjoy the margin their Prop-13 ownership provides, this describes a Third World State, - a shithole. It describes California.

Yes, we have world class recreation for the shrinking few who can afford to enjoy it. You could say that about other shthole countries in the world that have fabulous recreation stuff for the affluent.

And no, I am not miserable here. It's my home, I love it here, so far anyway I've been able to afford to live here among friends and family and enjoy what it has to offer, as some other locals like Patrick himself have expressed on threads. We won't be miserable here, because we know we can leave any time. I've got relatives who have the resources to leave their shthole home region in Mindanao. It's their home. They love it. They can leave if they must, but until they must, they stay put.

But even though it's home for me (at least for the time being), The California Republic is a shthole.

AD says

Eman says

55.3%

Okay Mister Eman, California's home ownership rate is 55.3%.

Florida's is 67.3%
https://fred.stlouisfed.org/series/FLHOWN

The USA's is 65.7%
https://fred.stlouisfed.org/series/RHORUSQ156N

How much more do you want to defend your shithole, two class-system state ?

.

Based on what you said, does this mean CA has been a shithole since the data started to be tracked in the last 4 decades?

Seems like CA tracks the national average pretty well. It went from 53.7% to 55.3% homeownership while the national average went from 64.6 to 65.7%.

zzyzzx says

To be expected and should continue to trend down this year based on the macro IMO.

Investors are looking at yields. When they can safely get 4.5-5% risk free, more money will flow there vs. real estate. This is why the big metros can still command 4.5-5 cap while the flyover states are trading at 6.5-8 cap. Perceived risk/reward.

Eman says

Based on what you said, does this mean CA has been a shithole since the data started to be tracked in the last 4 decades?

Shithole is more than just some Cool-And-Hip Spreadsheet math.

Hyman Roth was probably cumming in his pants at his spreadsheet numbers when the campesinos took over.

I see. Using data to prove the point, but when the same data is being presented, it’s irrelevant as it doesn’t fit the narrative. No double standard at all. 👏👏👏

Eman says

Seems like CA tracks the national average pretty well. It went from 53.7% to 55.3% homeownership while the national average went from 64.6 to 65.7%.

California home ownership rate is a lot worse than Florida and the national rate for at least the last 30 years, which coincides when the Democrat party started to take over that sanctuary state.

Your own data confirms this and that California is a shithole with its 2 class (the have's and have's not) system.

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Eman says

the big metros can still command 4.5-5 cap while the flyover states are trading at 6.5-8 cap

in the city of panama city beach, the cap rate is around 5% for a typical 3 bedroom townhome within 2 miles of the beach (if you have a property management company run your rental property)... combine that with an average annual appreciation of around 3% as we have boom and bust here as well

that is true Eman as far as risk/reward, as an investor can earn 7.5% easily in a 60 bond/40 stock fund especially when 1 year CD's return to a 3% rate

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Eman says

Using data to prove the point

Eman, The Mish brings up exactly a two class system dilemma which applies to California: https://mishtalk.com/economics/the-feds-big-problem-there-are-two-economies-but-only-one-interest-rate/

As usual, The Mish is right on point: "There are two economies (the homeowners/asset holders and everyone else)."

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AD says

that is true Eman as far as risk/reward, as an investor can earn 7.5% easily in a 60 bond/40 stock fund especially when 1 year CD's return to a 3% rate

How does one do this? I have an account with Charles Schwab

gabbar says

AD says

that is true Eman as far as risk/reward, as an investor can earn 7.5% easily in a 60 bond/40 stock fund especially when 1 year CD's return to a 3% rate

How does one do this? I have an account with Charles Schwab

why not just buy an ETF on Schwab like ticker "XCNS" ?

check out iShares Balanced ETFs , also Schwab has a Schwab Balanced Fund (ticker: "SWOBX") as well as Target Date Funds

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Wow! I called it again! (The rate cut gaslighting in late last year was just that...gaslighting)

The average conforming 30-year fixed mortgage rate rose to 7.0% in the latest week, according to the Mortgage Bankers Association today. The daily measure by Mortgage News Daily has been over 7% for days. These are the highest rates since mid-December, when they were on their way down.

Mortgage rates had been flirting with 8% back in October last year when the rate-cut mongers fanned out in droves all over the media. Amid enormous hoopla about a gazillion rate cuts in 2024, starting in January, longer-term yields plunged. Mortgage rates plunged with them, with the average 30-year fixed mortgage rate, as tracked by the MBA, falling as low as 6.75% in mid-January. And it was going to be the next boom in the housing market. And then inflation data came in and called for order.



https://wolfstreet.com/2024/02/21/mortgage-rates-rise-back-to-7-housing-market-re-freezes-buyers-strike-continues-prices-are-just-too-high/

And who be the primary gaslighters? The RE Boondozzle Complex, that's who. The ones who depend upon getting Americans into mortgage debt slavery.





Didn't require Rocket Science to figure this out, kiddies.

So what is the excuse of the PatNet Rate Cut Gaslighting Fluffers on this thread, eh?

UkraineIsFucked says

Didn't require Rocket Science to figure this out, kiddies.

So what is the excuse of the PatNet Rate Cut Gaslighting Fluffers who pitched this here?

Median housing prices went up about 40% from January 2020 to present day ? It seems that housing prices were mostly steady from early 2022 to present day. So they peaked around February 2022 when the 30 year mortgage rate was about 3% (for a lot of zip codes like in the Florida panhandle).

So based on a hypothetical 30 year mortgage rate of 6% then prices need to go down 30% from the peak price set in 2022.

This is based on a 10% drop for a 1% increase in the mortgage rate.

However I would lower that adjustment from 30% to 20% since there were income and wage gains from February 2022 to present day.

Did not the median housing price drop almost 15% from the peak price ?

reference: https://fred.stlouisfed.org/series/MSPUS

So the Federal Reserve is observing a housing price correction. I suspect if the 30 yr rate steadies between 5.5% and 6% and housing prices drop another 5% that we'll see more sales volume.

Other assets which are more liquid like Bitcoin and stocks had their correction already. The S&P 500 went down about 34% in 2020 and 23% in October 2022.

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I'm not sure what the mortgage market is thinking by charging a 7% rate (along with an origination fee) when guvmint-reported annual inflation (i.e., PCE) is below 3% :-/

Maybe they hope housing will over-correct and drop another 20%, but its not liquid like stocks and Bitcoin so its likely going to drag out for at least 3 years.

I know someone who got an offer quickly on his 3 bedroom townhome for $310,000 because he has a balance of around $280,000 on a 2.5% rate, 30 year assumable mortgage... he listed it for $330,000... he bought it for around $290,000 in late 2022....

I wonder if assumable mortgages are common now that mortgage rates are over 6%, and what percentage of sales are with mortgages being assumed. It could allow for prices to not have to drop as much.

AD says

I'm not sure what the mortgage market is thinking by charging a 7% rate (along with an origination fee) when guvmint-reported annual inflation (i.e., PCE) is below 3% :-/

Maybe they hope housing will over-correct and drop another 20%, but its not liquid like stocks and Bitcoin so its likely going to drag out for at least 3 years.

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Because the government inflation stats are bullshit?

Also, rates are not set only by inflation. Boomers have left their peak pre-retirement saving/investing years (which kept rates low) and now are drawing down (which raises rates), for example. This was always baked into the cake demographically. Rates won't go down again like in the 2000s until Millennials enter their peak earning/saving pre-retirement years. That will be 2035 at the earliest.

UkraineIsFucked says

rates are not set only by inflation. Boomers have left their peak pre-retirement saving/investing years (which kept rates low) and now are drawing down (which raises rates), for example. This was always baked into the cake demographically. Rates won't go down again like in the 2000s until Millennials enter their peak earning/saving pre-retirement years. That will be 2035 at the earliest.

okay so it has to do with demand as there is little demand in the mortgage-backed securities market place for 30 yr mortgage rates at 5% to 6% ?

there is less money inflow for bonds and mortgage-backed securities such as for IRAs and 401k's ?

i understand there is less foreign buyers such as from China going back to the start of 2014

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.AD says

okay so it has to do with demand as there is little demand in the mortgage-backed securities market place for 30 yr mortgage rates at 5% to 6% ?

On the supply side, yes.

AD says

there is less money inflow for bonds and mortgage-backed securities such as for IRAs and 401k's ?

There is a net reduction. When retirees are drawing down from IRAs/401ks they aren't putting money into them either. Esp since they are no longer employed

Boomers are demographicly outsized in everything they effect economically. Including retirement and death.

When they were born, we couldn't build diaper factories fast enough. Then we had to build and staff a shitload of schools. Then we had high unemployment, interest rates and price inflation in their early to mid adult years as they flooded labor and credit markets. At least we were still building houses back then.

So it was always baked into the cake.

We were always going to get here, at this time. As they retire: tighter labor markets, less savings supply, higher interest rates, exploding entitlement spending, more nursing & funeral homes.

And more diapers again. I think the industry sells more of the adult diapers than baby diapers already.

And when the Boomers hit peak die-off starting in the middle to late parts of this decade, the greatest transfer of generational wealth will occur, too.

Rates WILL come down if Biden 100% runs for office. Even if it's Kamala or Newsom they're coming down. They need economic positives. Kills my plans but overall I think they still need to be hiking them. Election year. Whatever. They will come down. Give it time.

The Democrats are losing young voters that cannot buy a home. 20-30 because of rates. He's gonna lose a lot of votes.

During the last great inflation, the fixed rate 30-year topped out around 17% in 1981. Gold also spiked at over $900 (how quaint) around that time.

We'll see how the weaponization of the SWIFT system goes for the PRUSA. Just a hint - when you weaponize the "world reserve currency" in order to further neocon/globohomo goals, things don't end well at all.

Inventory is building up fast in both Florida.

Here comes the Florida housing crash!



Property Insurance and Taxes have skyrocketed (Insurance is up 68% during the Scamdemic, most insurers left the state, and the 2 statewide companies remaining want another 53% increase); meanwhile rents are dropping as all the Northerners got called back to their home offices back North and listing their new property for rent simultaneously and their equity is limited. Investors are getting burned because the carrying costs rose by double digit percentages while rents aren't keeping pace.

All the peak 2020-2022 buyers are getting squeezed. Then will come the older boomers born in the 40s and early 50s now unable to perform ADLs or handle a 1600 sq ft home alone.

Prices have already returned to the first quarter of 2023. There's plenty of room to drop. I'm calling 30% drops.

Winter is the buying season in Florida, and while the inventory is returning to normal levels, the buying isn't.

Anecdotal: The number of homes for sale in Central Florida by eyeball have doubled in the last 6 months according to my eyeballs.

WookieMan says

Rates WILL come down if Biden 100% runs for office. Even if it's Kamala or Newsom they're coming down. They need economic positives. Kills my plans but overall I think they still need to be hiking them. Election year. Whatever. They will come down. Give it time.

Government can influence rates but market funfamemtals ultimately sets them. Esp.if they don't trust the government's inflation story. Or debt issuance story.

At the beginning of the Clinton administration in the early 1990s, adviser James Carville was stunned at the power the bond market had over the government. If he came back, Carville said: I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.

Wall Street Journal (February 25, 1993, p. A1)

So from a government influence POV: mortgage rates will only go down if the Fed once again purchase on net vast amounts of MBSs and does so via monetization, like they did before.

That's not likely to happen.

Oh, and Congress will have to drastically cut back on debt spending, too. The deficits are so damn large they now effect interest rates accordingly.

So basically, Treasury Dept would have to cut back on T-bill auctions (which determine what rates most other debt instruments - like mortgages - also have) while the Fed would have to simultaneously stop reversing QE and resume MBS mass purchases.

If they don't do both, the market won't react well. Rates will rise or at least won't drop.

Hint: they won't cut down on the spending. Not in an election year

And even if they do pull this off, the desired effects of that will take some time to pan out. Election is just over 6 months from now.

Fun fact: Mainland Monroe County, if it was a county itself, would be the least densely inhabited county in the United States, despite being an hour drive from Miami.

99.98% of Monroe County residents live in the Keys; the rest is the Everglades and Big Cyprus park.