patrick.net

My standard meme response to 'housing experts' who try to lecture me on X:

Blackstone (though their subsidiary Home Partners of America) is selling off some of its portfolio in Florida. Home Partners of America had a rent to own model that is evidently not working out. Will be interesting to see if this moves the market...
Blackstone is liquidating properties in Florida

EBGuy says

Blackstone (though their subsidiary Home Partners of America) is selling off some of its portfolio in Florida. Home Partners of America had a rent to own model that is evidently not working out. Will be interesting to see if this moves the market...
Blackstone is liquidating properties in Florida

Tricon (owned by Blackstone since January 2024) has some decent priced rentals in Las Vegas: https://triconresidential.com/find/vegas/

The California rentals such as in Sacramento and Inland Empire are outrageous at ~$3100 a month for 1500 square foot homes (3 bedroom/2.5 bath with garage).

It all comes down to housing not being more than 35% of household income, and living conditions (i.e.,quality of home and neighborhood, not putting 2 families under the roof of a 1 family home, etc).

Maybe Powell and Federal Reserve keeping rates still high will help with making housing prices and rents more affordable.

Notice how 10 Year Treasury has dropped from recent high of 5% (set in Oct 2023) to now around 4%. 1 Year Treasury has called some, though the yield curve is still inverted.
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The house of cards is beginning to shake. But it is not so simple as a market correction to “solve the problem.” There is a housing shortage in many areas due to lack of building to meet demand, rich people holding vacation and/or investment properties, and unrestrained illegal immigration.

In general for prices to correct we need more supply and/or less demand. More supply is not coming very quickly (unless you want to count the apartment housing that continues to sprout up like weeds), and aside from mass death or mass deportations or massive job losses we are not seeing a decrease in demand for housing.

Lower interest rates could cause prices to correct a bit, but lower prices increase demand so any price decreases are likely to be marginal except in coastal areas where prices are out of line with incomes.

A major housing correction is something that central banks will work to avoid like the plague because it could cause bank collapses and even a full financial system meltdown as the derivatives market built on selling mortgage backed investment trading is still largely lurking underneath the surface like an iceberg. People see the iceberg of high housing prices and think that is the problem, but what lies below the surface is the real problem. The financial system is a house of cards.

PeopleUnited says

In general for prices to correct we need more supply and/or less demand. More supply is not coming very quickly (unless you want to count the apartment housing that continues to sprout up like weeds), and aside from mass death or mass deportations or massive job losses we are not seeing a decrease in demand for housing.

Need LESS financialization aa well.

PeopleUnited says

In general for prices to correct we need more supply and/or less demand. More supply is not coming very quickly (unless you want to count the apartment housing that continues to sprout up like weeds), and aside from mass death or mass deportations or massive job losses we are not seeing a decrease in demand for housing.

That is the ruling class and establishment solution, put everyone in apartments like they are living in New York City. Similar to living in a "15 minute city".

Only the rich get the "brownstone townhomes". I see a lot of apartments going up in Florida panhandle, which seems to be the service worker (waiters, cooks, hotel room cleaners, etc) housing.

Townhomes are the next step up for "middle class", but its no different then living in the Washington DC metro area.

That's because all the factors where the "starter homes" or "lowest price homes" start at $450,000 versus household income of $75,000 with a 30 yr mortgage rate well north of 6%.

A GS-13 (step 1 to step 5) at least going back to early 2000's could only afford a townhome in DC metro area. A colonel or captain (O-6) or a GS-15 had enough to buy a nice home in the DC area.

Housing has been treated like stocks since at least 2002, as a post alluded to the financializing of housing "assets".

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PeopleUnited says

More supply is not coming very quickly (unless you want to count the apartment housing that continues to sprout up like weeds)

Eh? I'm watching a whole fucking side of a pretty big hill being rapidly covered with new SFHs right from my office window. Looks exactly like weeds sprouting up.

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

PeopleUnited says

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

They were not only building like mad in 2008, but had above trendline building until 2010.

And since then, many counties and cities have imposed much more requirements for contractors to finish what they started.

Eric Holder says

Eh? I'm watching a whole fucking side of a pretty big hill being rapidly covered with new SFHs right from my office window. Looks exactly like weeds sprouting up.

Just wait until you see how many multifamily housing units are underway. And the plethora of post-GFC laws to force builders of them to complete the work.

The trend was a friend, but now it ends.

Apartments Could Be the Next Real Estate Business to Struggle
Owners of some rental buildings are starting to struggle because of rising interest rates and waning demand in some once booming Sun Belt cities.
https://www.nytimes.com/2024/07/04/business/apartment-multifamily-loans-trouble.html

"They delved too greedily and too deeply, to the foundation of the demographic shift, and woke the Overexpansion Balrog"

According to the latest forecast from RealPage, a property management software company in the multifamily sector, 671,953 U.S. apartment units are projected to be completed in 2024. This would represent the highest level since 1974, the year of then-President Richard Nixon’s resignation.

Sunbelt boom markets, like Austin, where the most supply is coming online, are also the very places where multifamily rents are falling.

https://www.fastcompany.com/91124238/housing-market-fed-dilemma-inflation-rent-chart-zillow

AmericanKulak says

Apartments Could Be the Next Real Estate Business to Struggle

Yeah, Urban Blu in Panama City Beach is advertising on the top of its main page that it has new low rates. I never seen a leasing website in the Florida panhandle post info like this.

The 1 bedroom is renting for around $1400, and likely that may come with more deals like 1 month rent free for a 13 month lease, or free cable and internet, etc. The same type of place rented for $1000 back in 2015.

So that's only about a 4% annual increase in rent from $1000 to $1400.

Going back to 1993, I recall that the historic average for the area was 4% annual increase in rent.

https://www.urbanbluliving.com/floorplans

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AmericanKulak says

Sunbelt boom markets, like Austin, where the most supply is coming online, are also the very places where multifamily rents are falling.

Lower housing costs will attract people to move there like retirees and service workers.

Read this 2022 article that was reporting about Florida apartments and rentals.

https://www.realpage.com/analytics/florida-markets-revenue-loss/

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Condo sales plummet despite falling prices and rapidly growing inventory.
https://www.floridatrend.com/article/39413/florida-condo-sales-plummet-despite-falling-prices-and-rise-in-motivated-sellers

https://finance.yahoo.com/news/unsold-new-homes-just-hit-an-all-time-high-in-the-us-south-heres-why-080014698.html

In just half a decade, the median price of a single-family house in Florida rose $150,000, or 60%. According to Redfin, the average cost of a home in March 2018 was approximately $250,000. In March 2023, it was roughly $400,000.

But expensive housing isn’t the only thing repelling retirees from the state. Inflation and stock market dips have also negatively impacted their financial situation.

In response, seniors are seeking more affordable places to call home. For example, many are moving to Limestone County, Alabama, the fastest-growing county in the state. The area boasts lakefront property, warm weather and low property taxes, so it only makes sense that it’s considered a substitute for The Sunshine State.

https://finance.yahoo.com/news/florida-retirees-fleeing-where-going-113047260.html

I'm so excited. I was happy to make $600 after fees on this place, and thought it was insane when I got $1200/month, also super excited about the housing collapse. BLOOD ON THE STREETS!!!! All Hail the Buyer's market. I want a garden and a walk-in closet to hold my lawyers, guns, and money. (Remember, Florida has no basement, so you really want that two-car garage and walk-in closet)

And this time, there is recent memory of the last "It's a permanent plateau and nothing can happen" which will make sellers properly panic like they should.

Where is Logan? hahaha

AirBNB Hosts and 2018-2022 buyers

https://www.youtube.com/watch?v=ES0H4r2i_9I

AmericanKulak says

In just half a decade, the median price of a single-family house in Florida rose $150,000, or 60%. According to Redfin, the average cost of a home in March 2018 was approximately $250,000. In March 2023, it was roughly $400,000.

Everything "returns to the mean" as I noticed Urban Blu in Panama City Beach is listing apartment rents which return to the mean as far as 4% annual increase in rent since 2015.

Check this 3 bedroom, 2.5 bath with 1 car garage townhome out:

https://www.zillow.com/homedetails/1603-Annabellas-Way-Panama-City-Beach-FL-32407/70734247_zpid/

It rented for $1500 in 2018, and now is going for $1900; only gone up 4% a year in rent.

At $1900 a month, this 3 bedroom townhome is a lot better deal than a $1700 a month 2 bedroom apartment at the new hipster apartment complex next door ( https://www.urbanbluliving.com/floorplans ).

The bottomfeeder landlord bought this townhome near bottom in 2009 at ~ $139,000 for this townhome, as the same townhome was selling +$240,000 in 2006.

These higher interest rates are keeping the speculators away from buying homes and trying to flip them.

Now the landlord / investor bottomfeeders are coming out soon to try to get a great deal, and then turn around and rent them.

Logan Mohtashami seems to have a new anonymous account on Patnet. That account seemed to be pumping real estate recently. That anonymous poster got called out as Logan by a few of the seasoned Patnet members.

And I don't see Logan posting at MishTalk. Seems like a tougher crowd at MishTalk.

As far as that townhome rental listing I mentioned above, its not hard for 3 service workers in restaurant, hotel, tourist related industry making $16 an hour for 32 hours a week to share that townhome.

But that is what the default living conditions are as these townhomes become shared homes, almost like boarding houses and/or community houses.

One piece of good news, the FL State Republicans just slapped the shit out of HOAs by preventing them by law from banning work vehicles, pickup trucks, etc. parked in driveways.

Watch the Male Karen (Ken?) moan and groan that regular people in his modest neighborhood can park their trucks on their own property.
https://www.youtube.com/watch?v=ypoPjsUhT0Q

Sorry Karen Snoberina, Pedro the Plumber can park his big fat pickup truck with "Toilet Stuck? Call Pedro 1-800-LES-CACA" in his own driveway. He makes twice as much as your ass, anyway.

Oh wow, more HOA smackdowns:

* Pickup Trucks and Van freedom
* 24 hours before AND after trash collection to take the trash in before they can fine you, must document with timestamp and photo
* Exception for employer provided vehicles, including branded ones (again the trades and police/fire/ranger/etc.) from all HOA Karen rules
* Tighter restrictions on HOA rules for Garage Use
* Requiring generous advance notice before fines can be applied by the HOA Gestapo

https://www.youtube.com/watch?v=0QmTf2LR33k

A gathering of crows is called a murder. A gathering of lions is called a pride. A gathering of Karens is called an HOA!

Charleston, W. Virginia

State Capital, metro pop 250,000

You can.work at Dollar Store and still afford a 2 - 3 bedroom house.

Typical mortgage payment is less than $1k/month.

Typical annual property taxes: $1k

One of the cheapest places in America to rent. Rent on a two bedroom is ~$10k/yr. That's less than 20% of median income.

6,700 sq ft 6 bed mansion for $650k. Last sold in late 1990 for $500k. So, not much appreciation. O.8% per year. Inflation adjusted value, it's actually 90% cheaper now than in 1990.

It's poor. Lot of homeless despite cheap cost of living. But lean streets and no tent cities.

Dead mall. But everyone has those.

Lot of closed stores.

WV is the number one state in drug ODs pet capita. 1 in a 1,000 West Virginians die per year via OD.

What's the upside? Good opportunities for remote workers and retirees. But then again, so is Panama, Costa Rica and Belize south of the border.

https://youtu.be/VLlXwDQpW1U?si=L4QuneWBw5LuhX5n

DemocratsAreTotallyFucked says

You can.work at Dollar Store and still afford a 2 - 3 bedroom house.

Same in the Pittsburg, PA suburbs like Tarentum. Here is a rather upscale home for about $200k. 3 car garage and 2 full kitchens.
https://www.zillow.com/homedetails/116-118-W-9th-Ave-Tarentum-PA-15084/11279733_zpid/

National House Prices decline in July for the first time in History

Home Prices Fell in July for the First Time—This Is Good News for Buyers as the ‘Market Is Healing’ By Julie Taylor
Aug 1, 2024
Median home prices fell in July, marking the first-ever seasonal decline in a month that’s typically a peak time for home sales.

The national median list price dipped from $445,000 in June to $439,950 in July, according to a new monthly housing report by Realtor.com®.

This downturn can be attributed to a sluggish summer housing market, with buyers and sellers looking for more economic breaks before making a move.

https://www.realtor.com/news/real-estate-news/inventory-report-monthly-housing-market-trends-july-2024-home-prices-fall/

3.5% rate used house costs will mostly stay high even with 8% mortgages, keep hope alive!

"Inventory is still low" (and this chart is out of date)


"Nobody is going to lose those 3.5% mortgages"

AmericanKulak says

"Nobody is going to lose those 3.5% mortgages"

Credit card debt is the harbinger, and we shall see how worse it gets prior to the election.

The Biden-Harris regime are lucky this is happening now and not 6 months earlier, as they may get to the November election finish line right before the economy goes to complete shit.

People borrowing from credit card to make payments for housing, utilities and food.

https://www.nbcnews.com/business/consumer/credit-card-delinquency-rates-hit-nearly-12-year-high-rcna163466

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Tech billionaire's Bay Area mansion finally sells after $62 million price cut
https://www.sfgate.com/tech/article/portola-valley-mansion-finally-sells-19613856.php

What is he going to do with $35 million where the average ~100y old shack selling around $4m around! There is something wrong with selling the 13-acre, 20-room property for relatively almost nothing, given he has 4 sons!
I guess, this is a bad time to sell, in some of the prime areas around, I see completely empty office buildings including newly built ones.

https://www.businessinsider.com/home-prices-falling-housing-market-inventory-mortgage-rates-affordability-outlook-2024-8

Home prices just fell the most in 2 years

I just don’t see affordability improving much at all.

GNL says

I just don’t see affordability improving much at all.

The real drop is just barely getting started.

Rates have dropped what now 80 basis points? From 7.5% to 6.6%?

Housing Experts on PatNet, wtf happened? Where's the surge in homebuying?

What happened? Overall demand did not pick up! In fact, mortgage applications have declined 50%, right?

Experts! WTF happened then?

So even if the Fed does a cut, you experts still will spin the bullshit that that will stimulate homebuying?

Hahaha. Just admit you're paid by NAR for shitposting on PatNet. The truth shall set yo asses free!

Inventory is skyrocketing.

Before 2008 average - 980k new builds/year. After 2008 average - 960k new builds/year. Indians and Mexicans live 6 to a 4 bedroom. There is no shortgage. What is coming is a boomer sell off glut.

Just wait until they have to finance a big medical crisis and millions are taking 5 figures from their retirement accounts. There are no Boomers outside Soc Sec age now. Not by the end of the decade, that long talked about date is right here right now, selling off their stocks for CHF history.

What was driven way up on the buy side, will flop way down on the sell side.

I was alive and I waited, waited
I was alive and I waited for this
Right here, right now
It really is not a crime
Right here, right now
To Watch the asset bubble pop in real time

It's not a decade ahead
Once it seemed outrageous appreciation forever
72-year old Boomer Can't climb stairs to bed
Gotta sell, so Never say never

I was alive and I waited, waited
I was alive and I waited for this
Right here, right now
Demographics ain't a big mystery
Right here, right now
Watching markets wake up from inflated history

Eh, not great

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

our asset bubble is artificial economy ponzi scheme. took me many years to understand how our economy is artificial. which is why any sound analysis always fails, because it’s not real economy.

While there may be some price decreases in certain areas (Florida because of the insurance & condo assessment whammy) and some overbuilding like Austin and Phoenix, nationally sustained price decreases are rare except for the housing bubble.

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

Housing inventory has been creeping up, but is still less than pre-covid, and probably much of that is related to Florida.

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

Even though rates have gone down from about 7.5% to 6.5%, housing affordability is stretched. Much of the country is now under similar pricing pressures that existed in California pre-covid (California housing prices did not go down even with this constrained affordability pre-covid).

Since this thread started, the Case/Shiller index has gone from about 300.57 to 323.98. This is an increase of about 7.6%. If someone were to have tried to save up money for a purchase, well good luck with that. During inflationary periods, real assets generally don't decrease in value. Wage inflation over the last 12 months, as of June, was 4.1%.

Also, for those couple million people who bought with a mortgage over the last couple of years, this recent interest rate drop has let them refinance. So, while purchases haven't gone up the number of refinancings has skyrocketed over the last couple weeks. So, their cost of housing decreased and/or they got "Free" money by doing a cash-out re-fi and keeping the same payment. Also, when borrowers re-fi, the payment gets pushed out a month. Therefore, they have a month with no housing payment. The government reports GDP numbers, but omits cash flow numbers. I will ballpark the short term cash into these peoples hands at about $55 billion between the no-payment and cash-out with an ongoing decrease in payments of about $6 billion per month.

Quite a bit of stimulus in a short period of time. This will percolate through the economy, increasing hirings and probably some price pressures.

There may be a small, very small increase in purchases from the lower interest rates.

Misc says

Since this thread started, the Case/Shiller index has gone from about 300.57 to 323.98. This is an increase of about 7.6%. If someone were to have tried to save up money for a purchase, well good luck with that. During inflationary periods, real assets generally don't decrease in value. Wage inflation over the last 12 months, as of June, was 4.1%.

Yes as far as household income/wages not keeping up with housing costs.

Home prices increased about 5% annually from January 2000 to present day.

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

It looks like wages increased by about 3% annually from January 2000 to present day :-/

https://www.atlantafed.org/chcs/wage-growth-tracker

Perhaps low mortgage rates (and the mortgage market during 2002 to 2007) has caused housing prices to increase greater than household income.

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Misc says

nationally sustained price decreases are rare except for the housing bubble.

That's what was said way back in... 2008.

"There's never been a national housing decline. All markets are local."

AmericanKulak says

Misc says

nationally sustained price decreases are rare except for the housing bubble.

That's what was said way back in... 2008.

"There's never been a national housing decline. All markets are local."

True, as some zip codes and metro areas did not see much of a decline from 2006 to 2012 whereas the national price index decreased 28% from an all time peak of 185 (July 2006) to 134 (February 2012).

I think Denver suffered a very small drop during that period and did not have as much of a bubble as Miami and other metro areas.

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Pretty much all mortgages are 30 year fixed rate. We are the only country in the world giving such a blessing to its citizens.

It's like your grandfather giving you a solid gold pocket watch, but you want to use a Seiko because it is less expensive.

Also, housing inflation is higher than what just the pricing implies. With the increase in immigrants (who tend towards a higher occupancy rate per dwelling) and young adults left living with their parents because of the higher rents caused by the immigrants, living standards have decreased because there are simply more people living in the same, now older dwellings.

Misc says

Also, housing inflation is higher than what just the pricing implies. With the increase in immigrants (who tend towards a higher occupancy rate per dwelling) and young adults left living with their parents because of the higher rents caused by the immigrants, living standards have decreased because there are simply more people living in the same, now older dwellings.

While I think a lot of new building in the past decades was still obsessed with the 4-person nuclear family, I also think that alot of the prices are contingent on demographics that are about to shift dramatically. GenX is going to have a lot less in retirement AND be smaller than boomers. They also won't get the next 15-20 years of rapidly growing stock prices for sure, since that will have to beat against headwinds of Pension Funds SELLING to pay obligations to Boomers.

All GenX is about equal to the number of Boomer homeowners.

I maintain that about 10% of households can swing a $400k house at normal rates (5-7%). The problem is about 2/3 of these households already own.