patrick.net

AD says

However, household wages and/or income for the demographic that would buy this townhome has gone up about 25% since February 2020.

Do you really believe that number?

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

Lot of it to do with "keeping up with Joneses" .. The pressure especially from women/children is forcing the families to live on financial edge.
Responsible men are worse off in this society as they shoulder most responsibility but little say and still get blamed as cheapstakes.

If people live 1990s lifestyles they will live much better.

A new law will make it easier for Americans to use their 401(k)s and other retirement funds as an emergency ATM.

Under new IRS rules, Americans can now withdraw up to $1,000 from their 401(k)s without any penalties if the money is needed to cover a financial emergency. Acceptable reasons for a withdrawal include medical care, funeral expenses, auto repairs or "any other necessary emergency personal expenses."

https://www.foxbusiness.com/personal-finance/new-401k-rule-makes-easier-tap-savings-emergencies

The Economy is fine.

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

That is why it take two income earners to own a home and support a family. Back in 1993, it was more possible to raise a family with just one income earner.

I see it in Panama City Beach with essentially 3 bedroom townhomes being rented as a boarding house among 3 people each contributing to the rent.

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Probably the least bad area in Florida.


Rents in Jax are down 12%, and Naples inventory... WHEW, more than double since last year.

Looks like the inevitable, never ending 10-15 year Florida R/E bust-boom cycle remains undefeated.

FarmersWon says

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

Lot of it to do with "keeping up with Joneses" .. The pressure especially from women/children is forcing the families to live on financial edge.
Responsible men are worse off in this society as they shoulder most responsibility but little say and still get blamed as cheapstakes.

If people live 1990s lifestyles they will live much better.

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

ForcedTQ says

if people lived a 1980s lifestyle

Not possible with $420k homes and $75k incomes at 7%.

The solution to the dark funk is an interest rate shock. Don't just take away the punch bowl, replace it with mung bean gruel and get some TP to get that economic enema.

AmericanKulak says

Not possible with $420k homes and $75k incomes at 7%.

You can't buy a $420k home on $75k unless it's weed (sorry 420). Ours will be $680k as of now. That's on $300-400k income though. 3x income rule. Problem is if banks lend it, people will buy it.

Most people we know ask us how the fuck we travel so much. We didn't over extend ourselves on our current home. We're still within the safe margin with the build, but there will be less trips. We make good money so it's time for a nice house. We'll still travel, but 50% less. You spend a lot of time in your house generally, especially with school aged kids. I want to come home from a baseball game to a nice house.

ForcedTQ says

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

Most of the world outside our country follows this philosophy today, I reckon.

gabbar says

ForcedTQ says

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

Most of the world outside our country follows this philosophy today, I reckon.

In 1980s there were mostly single earners and the womyn cooked at home from scratch = no daycare and no inflated food costs to Uber over some shit sandwiches to their place. That alone freed up most of the cash to buy a home they don't have today, it's not just expectations, add in house price inflation and they surely aren't better off today, but I somewhat agree that they could do better with an attitude and strategy shift.

mell says

In 1980s there were mostly single earners and the womyn cooked at home from scratch = no daycare and no inflated food costs to Uber over some shit sandwiches to their place. That alone freed up most of the cash to buy a home they don't have today,

I was thinking about my childhood, which was working middle class. We had a 18 inch color TV with rabbit ears, and no cable, but still received about 8 TV channel signals.

We had only a Dodge Aries 4 door car that my family paid for in cash and brand new.

We rarely ate at a restaurant and maybe once every 3 months, and we never went on a vacation, and had family visit us and sleep in the living room.

The rent for our two bedroom, 2 bathroom townhome was $300 a month, and it was in a good neighborhood, a brand new townhome, and it had many amenities like clubhouse, pool, etc. It was enough space for my brother, parents, and myself.

Back in mid-to-late 1980s while a junior in high school, I was making $5 an hour (no tips) at a restaurant in south Florida as a greeter, busboy, etc. That is how I started to invest and eventually rolled that saved money into a healthcare mutual fund in 1993.

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Watch Months-of-Supply!

Both inventory and sales are well below normal levels, and I think we need to keep an eye on months-of-supply to forecast price changes. Historically nominal prices declined when months-of-supply approached 6 months - and that is unlikely this year - but we could see months-of-supply back to 2019 levels in the next month or two.

As I mentioned in a recent interview with Lance Lambert at ResiClub:

"I expect this measure to continue to increase, and be over 4 months soon – and to be above 2019 levels in a few months. This doesn’t mean national price declines, but it suggests price growth will slow significantly later this year. We might see national price decline with months-of-supply above 5 (as opposed to 6) since most potential sellers have substantial equity and might be willing to sell for a little less."

Months-of-supply was at 4.1 months in June compared to 4.3 months in June 2019. Note that months-of-supply peaked at 4.3 months in May and June 2019 and then declined to 4.2 months in July 2019.

What would it take to get months-of-supply back to 2019 levels in July? And what would it take to get months-of-supply above 5 months? The following table is a simple exercise. If sales stay depressed at 2023 levels, how much would inventory have to increase to put months-of-supply at 2019 levels in July?

https://calculatedrisk.substack.com/p/watch-months-of-supply-b38

Al_Sharpton_for_President says

Watch Months-of-Supply!

Yes, if it continues to increase then it may put pressure on sellers (even those who have below 3.5% rate mortgages) to lower their prices more.

But other factors are going to determine how motivated the sellers are to sell at a lower price such as unemployment, the stock market, mortgage rates, demographics, work from home ending for corporate America, etc.

Right now a lot of sellers are counting on the 30 Year mortgage rate to drop to 5.5% by next spring.

If I was selling and I was motivated to sell, I'd offer to buy up to 4 discount points for the buyer's mortgage to lower the rate from 5.5% to 4.5%.

AD says

I was thinking about my childhood, which was working middle class. We had a 18 inch color TV with rabbit ears, and no cable, but still received about 8 TV channel signals.

We had only a Dodge Aries 4 door car that my family paid for in cash and brand new.

We rarely ate at a restaurant and maybe once every 3 months, and we never went on a vacation, and had family visit us and sleep in the living room.

Yeah. Pretty much the only wares that got cheaper are electronics. Everything else is more expensive today, incl. all services. If you want to become financially independent you have to start investing and side hustling early, it's def possible, and avoid unnecessary expenses such as new cars, food delivery, eating out too much, medical expenses etc. Many aren't financially educated though or listen to msm propaganda

mell says

Many aren't financially educated though or listen to msm propaganda

True, as the mainstream media are just shills for their advertisers and its all about promoting endless consumerism

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DemocratsAreTotallyFucked says

There was never any cash on the sidelines. There was borrowing cash at near zero rates that was used to buy houses.

Now there is no opportunity to borrow cash at near zero rates.

AmericanKulak says

There was never any cash. There was borrowing cash at near zero rates that was used to buy houses.

Where I live it is cash, cash cash! Mostly Indian and Chinese. That's why I gave up looking or a home years ago. Buyers wouldn't even entertain looking at my offers because I got pre-approved with FHA but closing with all cash offers I was competing against was what they wanted instead.

mell says

gabbar says

ForcedTQ says

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

Most of the world outside our country follows this philosophy today, I reckon.

In 1980s there were mostly single earners and the womyn cooked at home from scratch = no daycare and no inflated food costs to Uber over some shit sandwiches to their place. That alone freed up most of the cash to buy a home they don't have today, it's not just expectations, add in house price inflation and they surely aren't better off today, but I somewhat agree that they could do better with an attitude and strategy shift.

Yep. Late 70s Ford Econoline my dad had since from about when I was born that was his car right up until my Senior Year, then he brought himself a Big White Lincoln to celebrate his retirement and gave me the old Van for my first summer as a College Student.

No vacations, we did go out to eat once every two weeks.

The Lincoln I sold off about 20 years later when when I flew back to take care of things as my father was in the hospital.

Brought them a 2014 Nissan Rogue which my mother still has, my father passing away a few years ago.

mell says

In 1980s there were mostly single earners and the womyn cooked at home from scratch

Are you sure that was the 80s and not the 60s? By the time of the 80s. women were fully "liberated" and out in the labor market, including flying combat aircraft. The economy had already adjusted to the dual income household.

A lot of women were still the secondary income earners in the 80s.

But being sick a few times, I noticed being a housewife wasn't all that hard. I'd say about 5-6 hours soap opera/phone/coffee klatching and maybe 2 hours cooking and clearning once the kids were school age.

People are also retconning gyms and so forth; in the 80s everybody drove everywhere, joggers were regarded as cultists, racquetball was a Yuppie thing, and the only people who really lifted weights were football players and boxers, maybe some wrestlers, and private gyms were pretty rare in the burbs. Exercise was mostly limited to walking around the mall or beach, maybe a pickup basketball game once a week, or perhaps a 2-3 sessions of Buns of Steel Yoga stuff on VHS. Instead of 5 hours on the internet, people just watched 5 hours of TV

The real obesity crisis is the shit in the food.

By the way, Susan Powter is even more completely batshit insane these days, but she was a 90s phenomenon.

AmericanKulak says

A lot of women were still the secondary income earners in the 80s.

I relate this to the labor participation rate where it was 58% in 1965, and then steadily increased to 66% of population in late 1980s , and is now around 63%.

It plateaued from 1988 to 2008 around 66% to 67%. Its been trending downward since 2008.

https://fred.stlouisfed.org/series/CIVPART

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Only 63% of working aged women are in the workforce? What % of working age men are in the workforce? Looks like about 75%.

GNL says

Only 63% of working aged women are in the workforce? What % of working age men are in the workforce? Looks like about 75%.

I updated my post with the link to the total labor participation rate.

I suspect as part of that increase in labor participation from 1965 to 2000 that a lot of that was because a great percentage of women entered the labor force.

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We moved out of CA two years ago to a beautiful area of TN and bought our first house, which was just over $1M. I explained it all here during the height of vaccine mandates and got so much support from you guys. My family did not want to move, especially my wife but I insisted. I was scared shitless because I knew it was the top of the market and interest rates were on the rise, so I thought our home value would crash. My wife put her foot down and said we are not renting again if we're leaving CA as a compromise, and I'm so glad she did. We locked in 4.25% ARM for 15 years and all that has happened is rates have skyrocketed and our home value is slightly more than what we paid. Granted, we live in the most in-demand area of TN.

The peace of mind knowing our landlord can't kick us out or continue to rape us with rent increases is pure gold. Granted, we had a lot of money saved up and we've done a TON to this house to make it our own, but that feeling of having your own castle for a fixed payment is priceless. I realize it's different for everyone but for me, I can't express how much happier I am although much of that is living in TN vs CA.

Good job. You and your wife sound like a great team and THAT RIGHT THERE, is the gold. My one hope is that neither one of you are government parasites or tech people helping to build the panopticon.

The Collapse in Florida is going to start as it always does, with Condos before hitting SFH.

$60k assessments going to condo owners, even those in realtively new buildings from the 90s - coastal condos over 3 floors must be inspected in the 25th Year. Not only is a complete structural inspection ordered at inflated post-COVID prices, plus the demand from the new law, but also there is a reserve requirement, all hitting by December 2025 at the latest, and for many (depending on age of building) December 2024.

When those Condo owners cut and dump (discounting the assessments off the price), SFH is gonna have a hard time competing with rock bottom condos.

Finally, it's not just big buildings. The Florida law also applies to gated communities and any with common areas like a clubhouse or community pool.

Rents are already collapsing across Florida, from Naples to Orlando to Jax.



Don't even THINK about buying a FL Condo unless the structural assessment and report of what needs to be done is already in the bag, with the Condo Board already given final approval to any and all assessments to the condo seller.

I think the red box is about where things should be, and that's with a generous ~2%/YoY appreciation



Only 1M net new entrants in the workforce every year. In 2008, it was 2-2.5M each year.

Too many boomers, too few people in financial shape to buy their inflated price houses.

"But GenZ". Yeah, I don't think $15-20/hr workers are in shape to buy a $400k 20+ year old house. If they added half again their wages/salary it would be a stretch for them. Then toss in the low marriage rate and the smaller household sizes which has been a multidecade trend with no signs of reversing.

"Don't worry, 50M Chinese millionaires are coming to buy in Ocala and Piscataway and Sacramento!" LOL

Back to life,
Back to reality.

There ain't no 50M Foreign Millionaires
Wanting to pay half a mil for US Suburbality

However you might want it,
However you might need it.

https://www.youtube.com/watch?v=TB54dZkzZOY



"Look at the beautiful Billard Green painted walls with the lived in, Grandpa holding himself up with dirty oily hand marks. And the musky smelling rose color carpet where you can see where the couch wasn't moved for a decade. WOW! Let's make an offer."

Florida is still a low income state. W=median worker. H=median household.


"$3000 a month is no problem for a household making $63k/year! Not including power and water... it's only half the pre-tax, income!"

The french tickler of fun is turning into a dildo of doom, US 1988-2023 demographics of homeloaners

For Bay County (Panama City) Florida, the starting salary for a public school teacher is around $48,000 and they get about 2.5 months off for summer, 1 week off spring break and 2 weeks off Christmas break.

And a 3 bedroom townhome with a garage within 2 miles of the beach rents for around $2000 a month (with electric $125 / month, internet $50 /month, water/sewer $50 / month).

These townhomes are not even selling at $290,000 now, whereas they were selling for $235,000 in February 2020 and $330,000 in February 2022. The HOA fee range between $350 and $450 per month for the owners and property tax is around $160 a month.

My theory for Panama City Beach townhomes, especially on east end, is they'll settle at a price based on a 4% annual appreciation applied to the February 2020 market price, which is around $286,000.

Still need two incomes (each making $20 an hour) to qualify for a 3 bedroom townhome with a 30 year mortgage rate between 5 and 7%.

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AmericanKulak says

American Kulak, figure 100 was the index value in 2000. Conservatively apply a 4% appreciation since its Florida (and Professor Shiller said the national historic annual appreciation rate is 4%),

1.04^24 x 100 = 256

Tampa prices should be just above the peak price set during the Great Financial Crisis (around 2007).

I remember an agent telling me that it would take 20 years for a lot of real estate markets to clear the peak price set in the Great Financial Crisis.

The townhome community I live in the east side of Panama City Beach had townhomes built in 2005 and sold for $275,000 in 2006. They are at those same prices now as far as asking prices.

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AmericanKulak says

I wonder as far as demographics especially for service workers and blue collar (from nursing home aids to dishwashers to construction helpers) that was one major reason for increasing immigration over the last 3 years, and eventually these workers will be home buyers.

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AD says

I wonder as far as demographics especially for service workers and blue collar (from nursing home aids to dishwashers to construction helpers) that was one major reason for increasing immigration over the last 3 years, and eventually these workers will be home buyers.

Yes, once the bubble bursts. Pedro and Anna and Tia Angelina and Abuelito Josito and the 5 ninos will get the Zero Lot 5/3 that sold for $500k in 2020 for $290k in 2027. Divorced Single Dad of 2 grown kids will buy the townhouse in Orlando that sold for $270k in 2020 for $180k in 2028

Even will mass migration, we now have half the net people entering the workforce as leaving it as we did a decade ago.

AmericanKulak says

Will wages skyrocket while the housing market plateaus, or will asset values plummet? I'm betting on the latter, which would be the best outcome, too.

Housing Affordability needs to be dragged out of it's luxury waterbed in the McMansion it lives in and given a beating worse than the printer in Office Space.

It's going to be the most stunning reminder of unsustainable asset inflation, and it can't be avoided because the huge demographics pressure will make any attempt to keep it afloat fail.

Really, the same reason for the Great Recession: Run out of buyers. At some point they ran out of people who could fog a mirror and get a NINJA loan, and Ftffffftttzzz the whole thing impoded.

As for the Panhandle region, the top employer will keep things from collapsing.AD says

For Bay County (Panama City) Florida, the starting salary for a public school teacher is around $48,000 and they get about 2.5 months off for summer, 1 week off spring break and 2 weeks off Christmas break.

Also requires a teaching certificate and almost always a college degree (=$80k worth of debt at 21, like being saddled with a high end car loan). There are rare exceptions, I've heard of them giving non-tenure 1-year contracts to those with most of the credits but currently enrolled in night school, and contract renewal is dependent on them finishing (and racking up big loans).

$38k/year is the median Florida worker salary.

AmericanKulak says

Even will mass migration, we now have half the net people entering the workforce as leaving it as we did a decade ago.

Civilian labor participation is still not that bad : https://fred.stlouisfed.org/series/CIVPART

I'd be concerned if it was below 57%.

We need to innovate more to realize productivity gains by technology if there are concerns with workforce size (due to demographic trends).

I was thinking about senior citizen care and nursing homes, where technology can help the nursing aide. This means more senior citizens can be watching and monitored by the nursing aide.

So if home prices are at 2007 levels in 2025, think about household income inflation since then and that household income and wages catching up with housing prices.

That is why I can agree with your forecast about asset values plummeting as far as housing affordability like we had around 2012 to 2015.

A family member built a 3 bedroom/2.5 bath (not including finished basement which has 2 bedrooms and a full bathroom) house (on 5 acres with a garage apartment that rents for $1300 a month ) out in mountain west for $250,000 in 2000.

Two appraisals came in recently for a reverse mortgage, $1 million and $1.3 million.

It should be $800,000 assuming a 5% annual appreciation rate, but I think a lot of people want to live there to escape the city and grow your own food (chickens, greenhouses, etc) as well as enjoy the outdoors. Hence it appreciated at least 6% each year, and not 5% since the year 2000.

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AD says

Civilian labor participation is still not that bad : https://fred.stlouisfed.org/series/CIVPART

AD says

I was thinking about senior citizen care and nursing homes, where technology can help the nursing aide. This means more senior citizens can be watching and monitored by the nursing aide.

Every nursing aide will tell you there is already Wayyyyy too much work. Massive shortage, because Florida is so far beinhd

Also the fake "Right to Work State" that requires NON-emergency health care workers like CNA to do 3 weekend shifts a month, as a grift grant to the private companies that run them. There's a free market solution to the "nobody wants to work Friday nights" problem, but the lobbyists bribed the state to be "Required by Law in every contract to work 3 undesirable shifts without shift differential pay".

The pay rate for nurses and CNAs is another unsustainable Florida problem, Florida has a massive nursing shortage but refuses to allow the market to set rates, intervening for corporate socialism on behalf of Big Hospital. Only state worse than Florida is California for nursing shortages. Many nurses turn around and go right back when they see the wages vs. cost of living. Again, Florida is no longer a "Low wage, but cheap cost of living state".

I just spoke to a 30-year old from Arkansas that told me her and her husband are going back, because the wages are almost the same there, but housing is far, far cheaper than Florida.