patrick.net

GNL says

But will it pop?

Everything seems to point as far as the Federal Reserve letting the air out slowly of the asset/housing balloon, while household income/wages catch up with housing prices, and the 30 year mortgage rate slowly gravitates to and steadies around 5.5%.

And all of this helps reduction in interest rates (10 Year Treasury well below its recent high of 5%) helps the federal guvmint borrow at lower rates, while it steadily inflates out of a debt crisis with inflation between 2 and 3%.

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

RC2006 says

I know inflation is propping up prices but how much longer can it last for places like CA. After reading about insurance increases in CA I got a few quotes for my old house I sold. In 2020 my last insurance payment was 1150 now it's around 3k that and property tax the couple that bought my house are paying almost a thousand a month in tax and insurance. Add in car insurance and other cost of living increases and I don't see how everything is still going. Is everyone still there seeing these increases?

There was a headline in the local paper (SJ Mercury) that an income of at least $300k is needed for the cheapest "starter" home in SJ. I did not read article as it's behind a paywall.

I think what has happened is that we've become a third world country, where housing is "affordable" for only the wealthy. Maybe this is why prices haven't fallen much even with the increased insurance, local tax, mortgage rates. Because we've gone past the transition to third-world status.

This is how Socialism/Communism is born. Make most of the population unable to live or own anything, and they become dependent on government and vote accordingly for the most free shit they can get their hands on.

porkchopXpress says

This is how Socialism/Communism is born. Make most of the population unable to live or own anything, and they become dependent on government and vote accordingly for the most free shit they can get their hands on.

Except none of Commie regimes were installed via elections: it was always through the barrel of a gun.

porkchopXpress says

This is how Socialism/Communism is born. Make most of the population unable to live or own anything, and they become dependent on government and vote accordingly for the most free shit they can get their hands on.

I wonder how much of the conditions are intentional in the current making of a Dollar General versus Ferrari economy , but I do hope at least the economy is not hampered on the supply side as far as provide more affordable housing

I see more multifamily housing going up in Panama City Beach and Bay County, Florida despite current interest rates and hoping housing costs stay flat at least over the next 5 years and then after local household income keeps up with housing costs

https://www.zerohedge.com/personal-finance/clash-dollar-general-versus-ferrari-economies

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But I'm seeing over the last 30 years the gentrification of Panama City Beach as far as Roll Tide crowd versus Uppity, OverEducated crowd (Walmart / Dollar Tree crowd versus Whole Foods / North Face crowd)

Less and less trailer parks on Panama City Beach with most the concentration on Joan Avenue leading to local fixture and bike week headquarters (Newbys)

As South Walton (Watercolor to Rosemary Beach) overfills with the deep-pocketed tourists all the way from Naperville, Illinois and Red Bank, New Jersey, that just results in an overflow to next door Bay County, Florida (Panama City Beach) which creates more gentrification pressure

Roll Tide.
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The_Deplorable says

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

Most of the conditions were intentional like the Asian Tiger Moms and Smug White Liberal districts and zip codes stopping affordable housing developments in order to protect their turf especially in regards to local public school demographics and test scores.

Then there was the finanacialization of housing , treating it as a commodity or cash box such as with reverse mortgages and HELOCs which allows senior citizens to remain in housing starting at age 62 and with no motivation to sell and downgrade to a Jerry Seinfeld-style condo in Boca Raton.

Combine with developers having no incentive to build 1500 square foot, single family detached homes.

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AD says

Combine with developers having no incentive to build 1500 square foot, single family detached homes.

Why don't developers this size home any more? Are they not profitable?

gabbar says

AD says

Combine with developers having no incentive to build 1500 square foot, single family detached homes.

Why don't developers this size home any more? Are they not profitable?

I guess the county sets restrictions on minimum square footage per lot, and because of the building code requirements and various fixed costs like developer permit fees, impact fees, etc., it is not economically beneficial to build less than 2300 square feet.

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Interesting story heard today about two dumbasses who brought STRs in Maui. One a local who brought 3-4 STRs, marketed as STRs, who is complaining that he never knew, and neither the Realtors nor Local Gov officials he questioned ever informed him, that most of them were in proposed STR ban area.

So the dumbass never considered "Can I make money or at least have the properties break even if I have to convert these to year-lease rentals?" and now that Maui has gone ahead with the proposal, he will probably lose all his properties.

The next one is just another "Fake Rich" story. Apparently some guy in Arizona brought an STR in Maui that he could ONLY afford to use if he rented it Short term 9 months of the year. And he again fell into this proposed area. This one also made me laugh because if you have to depend on AirBNB short terms to make owning a "2nd Home/Vacation Property" do-able, that is, you NEED that 9 months of Short Term constant turnover just to pay for the property, you're not really an investor and quite a dumbass: Wouldn't it be better to simply rent yourself than be utterly dependent on renting it out 9 months of the year just to keep above water on it?

Florida Inventory is now well above pre-pandemic levels. I stand my prediction that 2 quarters after the Fed Rate cut this month, prices will have started to drop substantially.

I will try to dig up a Median LIST (not Sold) Price chart for Florida (whole state, not by city/region).

AmericanKulak says

So the dumbass never considered "Can I make money or at least have the properties break even if I have to convert these to year-lease rentals?" and now that Maui has gone ahead with the proposal, he will probably lose all his properties.

Sounds like my former boss. Only in Chicago. I told him is was a stupid idea. It's fucking Chicago. They were already regulating it at the time too. I told him do you trust these dip shits in charge? They will make it harder to do or tax your already low margins.

Everyone is always optimistic on paper. I'll have the place rented 350 days of the year. I'm pessimistic. I assume the worst. Hence why I got out of real estate, at least residential. I won't touch residential rentals ever again unless I live in it 6 months of the year. In IL if you rent 9 out of 10 times you're usually a deadbeat. Not saying all rentals nationwide. Just around me.

LOL, No sirree, buddy. I'm not paying a Federal Reserve tax of $140k

gabbar says

AD says

Combine with developers having no incentive to build 1500 square foot, single family detached homes.

Why don't developers this size home any more? Are they not profitable?

As long as they can sell more profitable luxury houses, they have no incentive to build affordable housing.

https://fortune.com/2024/09/16/housing-market-lower-mortgage-rates-no-buyers/

Lower mortgage rates aren’t igniting the housing market.

zzyzzx says

https://fortune.com/2024/09/16/housing-market-lower-mortgage-rates-no-buyers/

Lower mortgage rates aren’t igniting the housing market.

The locked-in 30 yr mortgage rate was around 3% when prices peaked in Florida panhandle around early 2022. For every 1% increase in the 30 yr mortgage rate, there should be a 10% drop in price.

So if the rate steadies to 5.5%, then prices should be 25% below peak level (WITHOUT accounting for gain in household income/wages since early 2022).

As far as your other post, maybe buyers (which about 50% of them are landlord investors for townhomes in Panama City Beach) are "staying on the sidelines" hoping rates drop to 3% AGAIN and hoping for a "deflationary spiral" in housing prices.

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AmericanKulak says

Wouldn't it be better to simply rent yourself than be utterly dependent on renting it out 9 months of the year just to keep above water on it?

But then you lose the bragging rights of "I control $XXX,XXX in properties". 🤡 Where's fun in that?

Lots of price reductions in Santa Cruz lately, more inventory on the market. Couple of places around my hood are going on five months with nibbles but no bites. That's nearly unheard of for the time we have had our place there.

zzyzzx says

As long as they can sell more profitable luxury houses, they have no incentive to build affordable housing.

That's true as they will build what they can sell for the maximum profit.

Need to figure out how to sell $250,000 3 bedroom/2 bath/1500 square foot single family detached starter homes at a profit without any subsidies.
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Second Home Mortgages collapse:
https://wtop.com/business-finance/2024/05/why-are-second-home-and-vacation-home-sales-declining/

The buyers homesellers think are out there, aren't out there. The inflated baloney can stay puffed for a long time.

AmericanKulak says

Second Home Mortgages collapse:
https://wtop.com/business-finance/2024/05/why-are-second-home-and-vacation-home-sales-declining/

yes, cause the landlord investors (short term / vacation and long term rental) are sitting on the sidelines

not much sales volume in the Florida panhandle right now

this just sold this month:
https://www.zillow.com/homedetails/1844-Annabellas-Dr-Panama-City-Beach-FL-32407/112794186_zpid/

sales price of $225K
sold for $105K in Feb 2012

about a 6.5% annual appreciation in value from 2012 to present day for 1844 Annabellas Dr

seems rather pricey at $225K (even if ~$20K in upgrades like new floor, paint, cabinets, etc) as peak price (spring 2022) the same style unit was selling $220K to $235K

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This one is more my speed. All I want is a cabin in the woods and high speed internet (Thanks, Elon!)
https://www.zillow.com/homedetails/32389-Palmetto-Ter-Bristol-FL-32321/440498816_zpid/

AmericanKulak says

This one is more my speed. All I want is a cabin in the woods and high speed internet (Thanks, Elon!)
https://www.zillow.com/homedetails/32389-Palmetto-Ter-Bristol-FL-32321/440498816_zpid/

not for me, but I can see where you can put solar on the roof if there is no electric utility and also run a generator to at least power Elon Musk's Starlink internet service (if no 4G or 5G service) and maybe a 5000 BTU air condition window unit

I rather be in Virginia like west of Front Royal or southwest of Winchester or even in eastern West Virginia if I am going to live like that

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AmericanKulak says

This one is more my speed. All I want is a cabin in the woods and high speed internet (Thanks, Elon!)

Can maybe use that roof to collect water?

AD says

I guess the county sets restrictions on minimum square footage per lot.

Damn counties.

AD says

Need to figure out how to sell $250,000 3 bedroom/2 bath/1500 square foot single family detached starter homes at a profit without any subsidies.

Do the following and build a separate garage.

AD says

I rather be in Virginia like west of Front Royal or southwest of Winchester or even in eastern West Virginia if I am going to live like that

Me too, Blue Ridge or Ozarks... but not possible with currrent situation.

I'm thinking the turn of the panhandle would be doable though. Deals are starting to open up for fixer uppers on several acres with spring or lake side.

Not doing shit for at least a year, in any case, I ain't paying a lot for that muffler Ticky Tack Shack.

AmericanKulak says

Blue Ridge or Ozarks

Same here! Ozarks are like the Blue Ridge without the drawl. I am searching waterfront property on Table Rock Lake.

HeadSet says

AD says

Need to figure out how to sell $250,000 3 bedroom/2 bath/1500 square foot single family detached starter homes at a profit without any subsidies.

Do the following and build a separate garage.

That bad boy is a trailer my friend. Even with land that costs the builder $100k all in. Basically if you have dignity, you'd never live in that thing.

WookieMan says

HeadSet says

AD says

Need to figure out how to sell $250,000 3 bedroom/2 bath/1500 square foot single family detached starter homes at a profit without any subsidies.

Do the following and build a separate garage.

That bad boy is a trailer my friend. Even with land that costs the builder $100k all in. Basically if you have dignity, you'd never live in that thing.

Yep, there are fixed costs for the developer like land acquisition, impact fees (electric utility line, storm water, etc), and permit fees.

A builder friend told me it likely cost $85,000 for the developer to build our 3 bedroom, 2.5 bath, 2 car garage townhome about 2 miles from the white sands and emerald water beaches; we paid $187,000 in summer 2016. So they doubled their investment likely over 5 years (bought land in 2011, etc).

I rather live with my people (in a trailer on Joan Avenue or anywhere else on the barrier island of Panama City Beach) then in some uppity white liberal village (with an optimized amount or mix of Asian tiger moms).

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WookieMan says

That bad boy is a trailer my friend.

Oh, I know, and I am very familiar with trailers. My dad is from an Appalachian style background so I have many cousins that are or have lived in trailers. I also had a friend in Wyoming who had a trailer and even one Air Force captain that chose to live that way. I would never prefer a trailer to a built house, but these trailers I have been in are quite nice. They look the same inside as other modest single-story homes, with a similar layout kitchen, bath and bedrooms. You just do not get an attic or basement. The people that get these trailers do so because they do not want to overspend on a house. One of my cousin's daughter works as a manager at a rural small town Dollar Store. She was able to buy an acre of land and put a trailer on it. Not sure how long her mortgage is, but the others with trailers own them outright. They live where they want to live and are able to afford boats and have the free time to go fishing. They also have nice decks and outbuildings.

AD says

I rather live with my people (in a trailer on Joan Avenue or anywhere else on the barrier island of Panama City Beach) then in some uppity white liberal village (with an optimized amount or mix of Asian tiger moms).

Yes.

The attitude towards trailers is yet another thing that keeps prices elevated. How are people supposed to combat high home prices? Through government? Keep bitching about high property taxes. LOL.

GNL says

The attitude towards trailers is yet another thing that keeps prices elevated.

I think there is a manufactured homes facility in Panama City along with other major factories and manufacturing job sites like Trane HVAC, Eastern Shipyard, Berg Pipe, Oceaneering, a new electrical transformer and electrical equipment manufacturer at the local airport industrial district, an industrial washing machine and dryer manufacturing facility at the beach industrial district, etc

Its not just about Tyndall AFB, Navsta Panama City, and tourism in Panama City metro area.

And the city is allowing them as these homes look a lot better : https://www.mypanhandle.com/news/manufactured-homes-allowed-in-panama-city/

ROLL TIDE

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zzyzzx says

As long as they can sell more profitable luxury houses, they have no incentive to build affordable housing.

The desire in a big home is real estate brainwashing and might be mostly an American phenomenba.

When rates actually went up the following day to 6.15% after the Fed’s announcement, there was lots of splainin’ to do. Although rates would settle at 6.06% on Friday night, the cracks in the narrative had been widening since late May when mortgage rates started their move down. Every realtor, broker, housing industry publication has made the innuendo or explicit case that when “rates” go down everyone was going to be fine, and the housing engine would restart. Additionally, if you ask one of these industry insiders about mortgage rates, they refer to the latest news from the Fed. No matter how many times I have pounded the table that the Fed does not control mortgage rates, the bond market does, those in the industry failed either to grasp or overtly acknowledge this fact. Do the Fed’s actions have an impact? Sure, but the bond market had already front-run the move with large drops in August when the Yen Carry Trade started to unwind. The confusion out there has gotten so bad that Jerome Powell himself had to state explicitly from the podium that “he can’t really speak to mortgage rates.”

https://open.substack.com/pub/m3melody/p/wait-what

He could control mortgage rates if he wanted to by simply buying a trillion or so MBS.

He's not desperate yet because the Federal government and corporations are expanding the amount of bonds at a reasonable rate.