patrick.net

(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.

HunterTits says

joshuatrio says

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.

Toilets still clog up.

During recessions, people are less full of shit.

Rates hit a fresh high of 5.64% yesterday.

joshuatrio says

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.

Dramatic change in workload, and pretty dramatic to go from self employment for 5 years to working for the man in the space of 2 weeks.

joshuatrio says

Spoke with him today and he said it all stopped about 2 weeks ago

If I don't want to fix plumbing at my home (which is all the time) AND if I can afford to pay one, I call a plumber.

But if I must, I can do it myself. Hate every minute of it, but I can do it. I've done it.

I suppose if inflation has made everything else more expensive I can fix my own plumbing, even though I hate doing it.

The Redfin map of Seattle homes for sale is lit up lke a Christmas tree. Never have seen that before. And here comes the fat lady...

joshuatrio says

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.

I wonder if there was pent up plumbing work that people deferred during covid, causing such a burst in work for him. Not saying rates didnt contribute to the cooling tho.

Look at the entire price history of this rental. The owners purchased it for $1.4M in March and turned it around as a rental for $8,000/month listing. It's now down to $6,500 and still no takers.

https://www.zillow.com/homedetails/2468-Santa-Barbara-Ln-Franklin-TN-37069/332944429_zpid/?source=patrick.net

People are fucked.

Al_Sharpton_for_President says

And here comes the fat lady...

Well if rates are causing plumbers to lose their jobs, seems likely that more pain is in the future, for a lot of people.

I did notice that Cabelas/Bass Pro Shop parking lot was nearly empty today, which is unheard of for a normal Saturday. Was is the economy cooling/freezing up or is it just that everyone stayed home to watch the derby?

joshuatrio says

Rates hit a fresh high of 5.64% yesterday.

Boom bust cycle economy (or casino style economy)

I wonder how much housing and the S&P 500 will bust this time ... housing dropped about 28% for the US National Home Price Index from 2006 to 2012 .... whereas the S&P 500 dropped about 58% from 2007 to 2009....

I had a townhome I bought for $270k in Alexandria, VA back in 2004 ...sold it for $300k in 2008 ... after selling costs like 5% broker fee, I walked out with $5k in my pocket.... at one time identical townhomes in my community were selling for $410,000 in 2006....

https://fred.stlouisfed.org/series/CSUSHPINSA?source=patrick.net

.

The trend be your friend.




https://www.calculatedriskblog.com/2022/05/1st-look-at-local-housing-markets-in.html?source=patrick.net

The houses in our rural county and hood just made a fresh high in appreciation. Inventory increased but that's totally normal considering nobody was putting their house on the market during covid. I see no evidence whatsoever of a crash, more like a slowdown in appreciation. Also the flight away from big cities continues, so big metro areas are not a good indicator (anymore). Btw. Austin is reaching new peaks by the day as well, that market has gone completely bonkers.

Counterpoint: I lived on the eastide of Seattle during the financial fraud crash. While we were watching prices plummet in the Bay Area and elsewhere, prices continued ro rise in our hood and Seatte proper, as well. Everyone thought we were immune from the growing RE crash, that things were somehow different in the Northwest.

Let's see where this may all be going longer term.

mell says

The houses in our rural county and hood just made a fresh high in appreciation.

Prices of actual sold homes is trying to predict the future looking through the rear-view mirror. Wait until all of the buyers with lower locked-in rates filter through the system. I believe we'll start seeing a real shift starting in July.

mell says

houses in our rural county and hood

Where is your rural county / neighborhood?

It all comes down to affordability versus profitability. It's a balance between both. And we saw it play out from 2005 to 2012.

As far as profitability, can a landlord earn at least a 7% return on investment annually while the tenants do not spend more than 38% of their household income on rent. The return on investment accounts also for appreciation of the rental property's value.

.

Also, I read on Business Insider the start of layoffs like at Better.com, Robinhood, Peloton and Wells Fargo (mortgage division?)

https://www.businessinsider.com/layoffs-sweeping-the-us-these-are-the-companies-making-cuts-2022-5?source=patrick.net

So the labor market may be tightening also, which will be problematic for housing especially tenants able to pay rent.

.

In the for what its worth category, in southwest Utah (Washington County), for residential units, inventory is up 49.3% since the beginning of the year and up 71.4% since the inventory low, which occurred on February 14, 2022. Sold price declined for the first time in quite some time last month. This market has definitely started the shift.

another anecdotal .. around my hood, came to know that there are only 3 applicants for a rental shack that I know used to be much higher number before. Also its not recent but I visited someone few months back is a rental place across HS in Sunnyvale, quite (1/3?) a number of apt were vacant which is not normal unless bought over by investor for renovation.

B.A.C.A.H. says

mell says

houses in our rural county and hood

Where is your rural county / neighborhood?

Napa/Sonoma

porkchopexpress says

mell says

The houses in our rural county and hood just made a fresh high in appreciation.

Prices of actual sold homes is trying to predict the future looking through the rear-view mirror. Wait until all of the buyers with lower locked-in rates filter through the system. I believe we'll start seeing a real shift starting in July.

Agreed, without mass layoffs no crash though, just a slowdown. Most people have their rates locked in

Redfin raised my home price estimate by $50k this past week. Huh?

Anecdotal again.. But we're vacationing down in Florida right now and I've been spending time at the local rec center with some of the seniors.

One of the ladies I spoke with today is a loan officer. She said her volume is half of what it was last year and is slowly dwindling. She said the rate hikes neutered business.

She's done well, so I don't think she was too worried - but it's trickling down.

Another family we know has been looking for a home in Charleston, SC for the last 5 months. They have had their million + dollar home for sale in Seattle for 3 months. Two offers of in and they both fell through. Regarding Charleston, they made a lowball offer on a place that they thought wouldn't go through and the seller took it.

DooDahMan says

Those places have all seen an influx of new residents

Fixed:
Those places have all seen an influx of new investors.

DooDahMan says

Boise (overpriced by 75%)

Overpriced based on comparison of median home price to median household income ?

Yep, that is what has happened to mountain communities in Colorado with cash-flush Californians buying up properties. It is driving out the middle and working class since housing is unaffordable, including rental properties.

Lol, I worked for Zillow in 2016-2017. I don't have much love for them.

Patrick says

Lol, I worked for Zillow in 2016-2017. I don't have much love for them.

Why? Also, do you still have connections?

DooDahMan says

Those places have all seen an influx of new residents amid the pandemic's "work from anywhere" boom.

Like zzyzzx wrote in comment #119, how many of those homes were bought by investors ? Look at towns like Buena Vista, CO and the rise of AirBnB and vacation homes. What percentage of homes purchased will be second homes for rich people and/or vacation/short term rentals instead of long term housing (., 12 month leases, etc.) ?

,

Zillow and its Trulia subsidiary make money by selling sheep to wolves, which is not a very nice thing to do.

That is, they make money by selling buyers to realtors.

Patrick says

Zillow and its Trulia subsidiary make money by selling sheep to wolves, which is not a very nice thing to do.

That is, they make money by selling buyers to realtors.

One aspect of their business is lead generation, yes. Is Zillow a nationwide broker?

I've gotta say I do LOVE the fact that we have house bubble posts again! Sheeit's gonna get real here soon me thinks!

BayArea says

Redfin raised my home price estimate by $50k this past week.

It's only real wealth if you do something with it. The "wealth effect".

BayArea says

Redfin raised my home price estimate by $50k this past week. Huh?

Not one of these estimation services is remotely accurate. They're worse than political pollsters by a long shot. Your house, outside of a HELOC is technically worth nothing until someone writes a contract to purchase it and you get the cash or pay off the mortgage. Until then, the value is a roof over your head and running water and sewer/septic.

The estimation game from the likes of Zillow, Redfin, etc. is all a game to get leads for brokers. It's what I did for 15 years. They give zero shits if they're accurate. None. Estimating even a rough value on every residential property is not realistic. Commercial RE is different as it's math and not emotional. Residential will never be predicted well. The exact same houses next to each other in a tract subdivision could sell for 10's or even 100's of thousands different just based on landscaping and how the home was maintained, looked or was decorated by stuff the new owner doesn't get to have.

And not a knock on you BayArea, but RE agents hate estimated values based on an algorithm. Someone like you suggests that my house is worth X because I saw it on Y. It's much more nuanced. My buddy sold for less than he should have because he has a Hawaii/Tiki theme in his house. It totally clashed with suburban Chicago area style. He probably lost $20-30k (small by CA standards) but $30k is $30k tax free. He was too stubborn to pull down all his shit and it cost him. And sure you might get the random that liked the style, but that's rare.

Here in IL something like a pool reduces the buyer's that might light your place by 50%. They won't even look at it because it's time and money to maintain a pool. You can always buy a house and add a pool if that's a need. You don't buy a house with a pool if you don't want it. Zillow and the likes don't and likely never will have an algorithm to figure that out.