patrick.net

BayArea says

What’s the alternative on a <$2M budget?

Move.

BayArea says

Richmond

Richmond is serious shit. Or it was in the 80s anyway.

ad says

You can snorkel right off the white sand beach.

I made it to gulf shores MS while staying in New Orleans one day, night, next morning but that was it. It was quite nice actually but clearly I should have gone further.

BayArea says

So your point is that the tri valley has many kids here with parents that need to both work full time to afford life here?

I didn't say that. You said it.


FJB says

Move.

Word.

If recession comes in 22 or 23, someone I watched on youtube says, housing foreclosure went up already in LA-CA, Florida etc. predicts can go down 10-20% at most. He says going down to 50% is hard to imagine.

ad says

You can snorkel right off the white sand beach.

My favorite in the lower 48. I'd say Orange Beach, AL to about Panama City Beach, FL is the best sand I've experienced. I've usually gone during spring break though and it tends to be rougher waters that time of year for some reason. I've been in May in my college years and I think that's the best time. Besides August to October, I think I've been down there every month at some point.

The water can get blue, but nothing beats St. John or some of the BVI's. The beaches/sand are just average, water is amazing. Lake Michigan could compete sand wise.

Blue says

If recession comes in 22 or 23, someone I watched on youtube says, housing foreclosure went up already in LA-CA, Florida etc. predicts can go down 10-20% at most. He says going down to 50% is hard to imagine.

We bought for $187,000 a new 3 bedrm, 2.5 bath, 2 car garage townhome in 2016 about 2 miles from the beach in the Florida panhandle. I figure the fair value is about 4.5% annual appreciation of the purchase price in 2016 to 2022.

(1.045)^6 x $187,000 = $243, 523

The same townhome in my community is selling for around $300,000. I figure prices will crash and bottom to $235,000.

.

There were the same townhomes in my community (development started in 2005) that sold for $280,000 in 2007 and then crashed and sold for $130,000 in 2009.

.

Yeah, I think we peaked out about 2-3 months ago. I'm starting to now see inventory hit with no offers.

Saw an open house sign yesterday on a nice mcmansion. Went in just for fun and not a single person showed up. This was in a really nice subdivision in ATL where a lot of people want to live.

Reatlor literally followed my wife and I around the place and kept talking about how it was all negotiable.

No one else showed up, except for a few neighbors who were nosy. It was dead.

A few months ago it would have sold overnight.

Interest rates have gone up, this reduces people's borrowing abilities - it also places pressure on people already in debt especially if they have an ARM which Bernanke recommended people to get.

Increasing the interest rates also reduces the money supply, because money is actually the amount of debt that can be carried in our fucked up world. If you can borrow 10 million dollars today at 3% interest, but can only borrow 5 million next week at 6% interest, the result is $5 million dollars being removed from circulation - because it's not CASH, it's a bunch of digits in a computer.

Anything that is a debt based asset, margin calls, car loans, credit cards - they're going to contract and we've not even seen real interest rates hikes yet.

There will be QE of course, but that's not going to be extended to retail investors, BLACKROCK and other companies like it will get that. They will use the FREE money they are getting to buy up whatever they damned well please.

We're a communist nation really at this point using proxy bullshit companies to achieve it.

richwicks says

Interest rates have gone up, this reduces people's borrowing abilities - it also places pressure on people already in debt especially if they have an ARM which Bernanke recommended people to get.

Increasing the interest rates also reduces the money supply, because money is actually the amount of debt that can be carried in our fucked up world. If you can borrow 10 million dollars today at 3% interest, but can only borrow 5 million next week at 6% interest, the result is $5 million dollars being removed from circulation - because it's not CASH, it's a bunch of digits in a computer.

Yeah, pretty much. End of last week the avg. rate was 5.41%.

Brother in law who is a realtor said when it hit 5%, things slowed down big and I can only imagine what the next few weeks hold.

The difference between now and a few months ago, was another $1,000/mo in interest payments, for most families using mortgages on a $500-600k place.

More houses are coming up, here is one just listed around.
https://www.redfin.com/CA/Cupertino/10481-N-Stelling-Rd-95014/home/1752807?source=patrick.net

List Price $2,388,000
Est. Mo. Payment $13,264
Redfin Estimate $2,595,765
Price/Sq.Ft. $2,005
Year Built 1950
2Beds,1Bath,1,191Sq Ft
Privilege area prices (not immune from theft and vandalism)

HunterTits says

Eman says

Buyers, who used to qualify for $1.8-$2.2M, are getting bumped down to $1.5-$1.8M due to higher interest rate.

But how can this be? There are PatNetters who proclaimed a) interest rates wouldn't hit 4% let alone 5% or more and b) it wouldn't matter anyway, because 'interest rates don't really impact housing prices' or some shit like that.

The only one that claims interest rates dont matter much was WookieMan as far as I remember.
Obviously, rates have a huge impact to the housing market. I think 99% know this.

What many fail to understand is that a major slowdown doesnt mean crash. You can have a major slowdown from a super hot running housing market and still show YoY price growth. We were running WAAAY to hot. 100-200k over asking price-bidding wars are stupid and not sustainable.
Increased rates calms the demand down, increases inventory and slows down the overall economy.

There is no crash in sight for house prices. Some people call for 40-60% house prices crashes which is just laughable.
We are still negative with YoY inventory.

People who bring 2008 into the discussion dont understand that this all started in 2005. Prices were already declining, inventory rising, rates were higher and the credit profile of owners was significantly different than today.

What we are seeing today is: credit is good, homeowners have tons of equity, jobs are good. House prices are sky high and rates finally went up. And finally bidding wars disappear and inventory rises. all good things..... Remember, a REDUCTION in ASKING prices doesnt mean YoY price reductions.....

Avg. mortgage rate up .14% today alone. Now at 5.55% for the avg. 30 yr fixed.



Damn. I thought it was going to take a full year to get to this point. And it's only been a couple months.

BayArea says

I don’t see any new ones going up

Be the change and erect one in your back yard as is your right (bestowed by the CA legislature under SB-9).

HunterTits says

b) it wouldn't matter anyway, because 'interest rates don't really impact housing prices' or some shit like that.

Hahahaha. I can't imagine anyone on Pat.net said it like that but, yeah, if so, that's about the dumbest shit ever. If rising rates don't effect price, why does lowering rates effect price?

BayArea says

SFH is king.

I don’t see any new ones going up

San Francisco Housing?

First, SF is losing residents, and I'm in the Bay Area, I see a TON of new developments and we're losing residents as well. Also a large number of commercial zones are empty. At my job - which I just left - I still diligently went to work to work on a floor where maybe 10 people showed up that normally housed 200.

“Single family home”

Detached with a yard

Redfin raised my week to week home estimate by $120k this week… wtf

Ad says

You can snorkel right off the white sand beach

I'll stay in my room and order in room service, thank you!

BayArea says

“Single family home”

Detached with a yard

Redfin raised my week to week home estimate by $120k this week… wtf

May be a blowoff top. Create panic "to buy now!!!".

I am 50 and talked quite a bit to my grandparent's generation who went through the Depression. Taxable property isn't an asset, it's a liability - it wasn't an asset for them anyhow, and I'm expecting Depression 2.0. Time will tell.

Raise interest rates to 10%, use QE to keep the country "solvent", raise it to 15%, 20%. People with an ARM are complete slaves.

Maybe it's "different this time" - time will tell.

BayArea says

Single family home

Detached with a yard

Redfin raised my week to week home estimate by $120k this week… wtf

I got a nice $350k Zestimate increase a few months back. I'm wondering what caused such a discontinuous jump. Maybe change to algorithm or maybe a bunch of similar properties just sold?

The construction I see in my area is super-expensive townhouses. I think SFSs (single family shacks) are going to hold value better in the long run. Bulldoze and build what you want (if you can get through all the California red tape). With a condo or townhouse, you are pretty much stuck with the structure you buy, which will com into play 20 years from now when they don't seem all that new anymore.

Redfin gave me a nice theoretical bump, too, but undervalued it by 100k from identical models in less desirable lots. Should I hug them or curse them? It's all vapor until you sell, and I always value the crap shack at 90 percent in the portfolio to take into account fix ups, moving expenses and sales commissions (not to even mention potential acquisition costs of a new crap shack somewhere else).

Moody's is a criminal enterprise.

SunnyvaleCA says

I'm wondering what caused such a discontinuous jump. Maybe change to algorithm or maybe a bunch of similar properties just sold?

Joe Biden is the most popular presidential candidate in all of US history having won the largest percentage of the eligible vote by sheer numbers and percentage of the eligible voting electorate.

I'm rather amazed that people can see an election can be fraudulent, but they can't believe statistics are as well. We're in total clown world. Every statistic is a lie at this point.

Moody's to pay $864 million for pre-2008 ratings deception

Ratings agency Moody's has agreed to a settlement payout with US authorities over mortgage securities fraud that contributed to the 2008 financial crisis. The agreement follows an investigation lasting several years.

Moody's ratings was "directly influenced by the demands of the powerful investment banking clients who issued the securities and paid Moody's to rate them," Connecticut Attorney General George Jepsen said in a statement on Friday.

Twenty-one US states and the Justice Department accused Moody's Investors Services, Moody's Analytics and parent company Moody's Corporation of overvaluing the ratings of securities backed by subprime mortgages and at-risk loans.

Some $437.5 million will go to the Justice Department and $426.3 million to be divided among the states and the District of Columbia.

In March, Moody's agreed to pay $130 million to settle claims by the California Public Employees' Retirement System over allegedly inflated ratings on residential-mortgage bond deals.

In the settlement, the world's second-largest credit ratings agency acknowledged that it hadn't followed its own standards, stating that it had used a more lenient standard for certain financial products and had not made public the differences from its published standards.

"Moody's failed to adhere to its own credit rating standards and fell short on its pledge of transparency in the run-up to the Great Recession," Principal Deputy Associate Attorney General Bill Baer said in a statement.

The long con
The credit rating agencies - whose role is to rate debt securities on the basis of a debtor's ability to pay back lenders - played a key role both in fuelling and then not reining in the US subprime mortgage crisis of 2007-2008, which precipitated the global downturn and long subsequent period of austerity.

Banks made loans to homeowners and then bundled them into securities whose interest payments were guaranteed by those homes.

The banks and other lenders then paid S&P and Moody's to rate the bonds, often being given the highest grade even though many mortgages were granted to people knowingly highly likely to default.

The markets continue to rely on credit ratings

The Financial Crisis Inquiry Commission concluded in 2011 that "this crisis could not have happened without the 'Big Three' agencies - Moody's Investors Service, Standard & Poor's and Fitch Ratings," which allowed the ongoing trading of bad debt.

The pools of debt the agencies gave their highest ratings to included over three trillion dollars of loans to homebuyers with bad credit and undocumented incomes up to 2007.

Hundreds of billions of dollars' worth of these triple-A securities were downgraded to 'junk' status by 2010 and the writedowns and losses came to over half a trillion dollars, leading to the collapse or disappearance in 2008-9 of three major investment banks: Bear Stearns, Lehman Brothers and Merrill Lynch.

The US federal government meanwhile was obliged to buy up $700 billion of bad debt from distressed financial institutions.

Standard and Poor's paid a $1.37 billion fine in 2015 for deceiving investors about the quality of subprime mortgages. S&P said at the time it settled to avoid the "delay, uncertainty, inconvenience, and expense” of litigation.

With a third major agency, Fitch, the three ratings firms dominate the bond-rating market with a more than 96 percent share, compared to 98.8 percent in 2007 before the crisis, Bloomberg News reported.

With the District of Columbia, the states involved in the settlement announced Friday are Arizona, California, Connecticut, Delaware, Idaho, Illinois, Indiana, Iowa, Kansas, Maine, Maryland, Massachusetts, Mississippi, Missouri, New Hampshire, New Jersey, North Carolina, Oregon, Pennsylvania, South Carolina and Washington.

https://www.dw.com/en/moodys-to-pay-864-million-for-pre-2008-ratings-deception/a-37131484?source=patrick.net

BayArea says

Redfin raised my week to week home estimate by $120k this week… wtf

What will you do with your new-found wealth? Because, if you don't do something, then Ceffer has a point:

Ceffer says

It's all vapor until you sell

BayArea says

Redfin raised my week to week home estimate by $120k this week… wtf

What will you do with your new-found wealth? Because, if you don't do something, then Ceffer has a point:

Ceffer says

It's all vapor until you sell

SunnyvaleCA says

I got a nice $350k Zestimate increase a few months back

I know some folks, contemporaries of my parents, who decades ago stretched to make it all work (including, turning their kids into Latch-Key children), to relocate from our blue collar 'hood in East San Jose, to a pricey zip code on the Peninsula (Belmont).

It's always been expensive and over-priced to live here. Always. It was back then even before the Rich Kids of Billionaire families from India and China had their sites on our region, which has made it even more expensive and over-priced in recent years. Becoming like the London of the West Coast.

To make it all work they used credit card cash advances to pay the Property Tax Bill. When the prices (and equity vapor wealth) zoomed here like they do, they used HELOC to pay the Property Tax Bills. Were able to sustain that paradigm for decades till they retired, quit the Bay Area and moved to a state with no State Income Tax.

richwicks says

but they can't believe statistics are as well. We're in total clown world. Every statistic is a lie at this point.

Nah, of course thats totally exaggerated. I use many stats to track housing. Expected market time, active inventory listings, house price changes, pending homes sales, etc.
To say that every statistic is a lie is like saying everything is a conspiracy. We live in really cool times. We experience the crypto revolution, can buy houses, be landlords and have high paying jobs. Plus we are far away from Russia and China. And if some terrorist cell in the middle east grows to large we send a few drones to make the sand glow.

I love this life, and the icing on the cake is working from home! Thanks to covid!!!!!!!

there is no peak,

https://www.visualcapitalist.com/how-much-prime-real-estate-could-you-buy-for-1-million/?source=patrick.net

Just for fun.

richwicks says

Joe Biden is the most popular presidential candidate in all of US history having won the largest percentage of the eligible vote by sheer numbers and percentage of the eligible voting electorate.

More than 100% of registered voters in some counties!

(From graphic about 10 posts up)
DooDahMan says

The "interactive" map below is accessible in the link at the bottom.

Interesting that San Francisco and San Jose areas are, according to that (bogus) study, not overvalued. (Yellow color). Yes, your average dual-income high-tech couple earning $500k/year can afford an "average" single-family-shack here, but those are the tippy-top of the working class. In that financial position, they should be able to get a 5/3 3000 sq ft SFH in a new residential neighborhood. I'd love to see the map colored according to how many can afford that type of house.

B.A.C.A.H. says

What will you do with your new-found wealth?

I for one will be raising rents due to increased property taxes. However, I won't be raising it enough to cover those tax increases. Maybe I'll be able to catch up next year.

Anecdotal.... but....

Friend at the gym is a plumber who 6 months ago was trying to hire me as his apprentice because he had so much work (working 7-7) and couldn't keep up. He was making about $15k/week in service calls. He has been self employed about 5 years.

Spoke with him today and he said it all stopped about 2 weeks ago - around the time rates really started going up. He went from working 5-6 days a week, down to 1.

He went back to work for a local plumbing outfit today to float things over, but he has never had things get this slow.

Up again...

We'll be pushing 6% soon at this rate.

joshuatrio says

Spoke with him today and he said it all stopped about 2 weeks ago - around the time rates really started going up

good friend of mine does subcontract work for builders. He's def seeing a slowdown....but keep in mind we are coming from a crazy hot economy level....a slow down is healthy and doesnt equate to a severe crash.

Bitcoin says

a slow down is healthy and doesnt equate to a severe crash.

I guess time will tell

HunterTits says

It's going to be great to be GenX in their peak earnings years, stuffing money away into bonds/savings that earns a decent return for a change. Finally we get at least one fucking break. Most of us need the money for retirement.

It's about goddamn time.