patrick.net

I forget to mention the US Govn.
US$30 Trillion in debt and needing at least US$1 Trillion extra every year to make up the budget deficit.
Where's that money going to come from? The printing press? Who else is going to want to hold the debt? China?
How is the US Govn going to pay the interest on US$30 Trillion? Is that why they are arming IRS agents?
Who's going to pay for all the welfare? Food, shelter, medicine, etc?
How are public sector workers like the police for example, going to feel when their pensions evaporate into nothing?
What will happen when the US Govn goes bankrupt?

Very interesting times indeed.

.

zzyzzx says

charlie303 says

This time the banksters won't be bailed out and so will go under.

Are you sure about that???

Yes, I am very sure. At least 90% sure.

How will they bail them out?
Where will the money come from?
The bailout will be in the trillions of $$$'s not the billions, if you include the property, bond, equity and derivatives markets.
They can't really lower interest rates to zero, that's not going to make much difference.

When the GFC happened they rushed through the Troubled Asset Relief Program, in record time with bipartisan support and no oversight I might add.
Then they followed that up with a decade of 0% interest rates and QE to the trillions.
And then they printed a few more trillion during covid so everyone could stay at home and binge Netflix.

How are they going to cover all of that?
How are they going to restore confidence, full faith and credit in the institution known as the Government of the United States of America?
A money not backed up by gold, silver or platinum or land or anything.

The end of an empire is close to hand.

.

1337irr says

My ARM @ 5.5%/5 for 25 years is looking REAL good right now.

I'm confused here: is it 5 or 25?

RWSGFY says

I'm confused here: is it 5 or 25?

I think that means a 25 year variable mortgage currently at 5.5% that adjusts every 5 years.

https://www.breitbart.com/economy/2022/09/27/case-shiller-july-2022/

Home prices fell in July compared with the previous month, according to the S&P CoreLogic Case-Shiller Index. This is the first national decline since 2012.

charlie303 says

THIS is the worst housing crisis ever in history

I dunno, bro.

There was a huge housing crisis (shortage of housing) during WW2, - biggest public spending stimulus in history on the heels of a decade of no investment in housing stock due to the Great Depression.

Biggest housing crisis since then has been affordability crisis from high prices from insanely low borrowing rates. What you are calling a crisis I'd call a welcome relief on the prices.

Are you a house flipper or serial HELOC'er? Just asking.

30 year rate today is around 6.2%. The rate bottomed around 2.9% in August 2021.

I think we need to see rates stabilize between 4.5 and 5% which means about a 20% drop in home price levels set in late 2021.

If that 20% drop would occur today, I estimate it would equate to about a 4% annual increase in home value for my townhome since I bought it new back in late 2016. I just hope home prices do not over correct so that sharks with cash will make excessive ROI's again like they did in 2011-2013.
.



.

ad says

I just hope home prices do not over correct so that sharks with cash will make excessive ROI's again like they did in 2011-2013.

Sharks with cash? You mean savers? The same savers that have been priced out of the car and housing market by reckless borrowers? This may be the only chance for savers to buy before all the Joe Monthly Payments are able to borrow again and run up the prices.

https://sfstandard.com/housing-development/sfs-downtown-condos-are-piling-up-and-pricing-down-as-housing-market-cools/

High-rise condos near San Francisco’s downtown—which account for the bulk of San Francisco’s newer housing stock—are piling up amid rising interest rates and a shift in the city’s housing market.

The luxury condos are another casualty of San Francisco’s slow return to offices, with a once-thriving social and retail scene in SoMa and Mission Bay now gasping for air. Home buyers are looking to other neighborhoods for less cookie-cutter units, more outdoor space and—frankly—more life.

“The amenities you can take advantage of living downtown now versus before the pandemic are much smaller,” said Laila Salma, a broker with Salma & Company. “Right now it’s just not a space that’s vibrant.”

Take the $4 million July sale of a unit in 181 Fremont, one of the city’s premier condo towers, as a recent example. The unit sold for some 30% lower than the $5.77 million paid by the seller in 2018, according to real estate blog Socketsite.

A letter about the sale from real estate brokerage The Krishnan Team said while the discount they were seeking initially “didn’t seem possible,” the offer was eventually accepted at $1.4 million below the list price.

“The market is the softest it’s been since 2008. This is especially true for high-rise developments in San Francisco,” the brokerage wrote.

The same trends hold true for condos in the lower-tier mid-Market area: A unit at 1075 Market that was purchased for $882,000 in 2018 is currently on the market for $670,000. ...

At 2238 Market St. for example, a 44-unit condo building that wrapped up construction in May with units starting at $800,000. Just a few months later, the base price has already dropped by $50,000.

But price drops in the area that includes SoMa and South Beach have been especially stark in the ultra luxury segment, defined as condos over $3 million, which saw a nearly 23% year-over-year drop in average price per square foot for the second quarter, according to Compass.

“If you’re an investor you’re not going to want to sit and keep a unit empty for three years. You’re going to want to sell,” Minkoff said, noting that the supply glut has made that more difficult. She’s currently working with a client to sell a condo in Mission Bay and recommended they drop the asking price by $100,000.

https://sfstandard.com/housing-development/why-san-francisco-nations-richest-renters-u-s-census/

San Francisco is home to some of the highest rents in the country. But SF renters pay relatively less out of their paychecks to live in the priciest market in the U.S.

More San Franciscans pay below 20% of their household income on rent than any other major city in the nation, according to a new analysis of census data by The Standard.

This counterintuitive finding speaks to how extreme the city’s high property values have become, keeping home ownership out of reach for even high-earning residents, who would undoubtedly buy property in almost any other market in the country. The result: San Francisco has the nation’s richest renters. ...

Housing researchers commonly look at a city’s ratio of median house price to median household income as an indicator of housing affordability, Professor Ayse Pamuk, director of San Francisco State University’s Applied Housing Research Initiative, explained in an email. Any value over three means the city’s housing stock is not affordable to the average worker.

San Francisco’s value is 10.7.

Even if someone is able to scrape together enough money to put down money on one of these premium properties, they’ll be shelling out staggering sums for decades. The median monthly cost for housing unit owners who still owe on their mortgage is $3,964, which is the highest in the nation.

B.A.C.A.H. says

charlie303 says

THIS is the worst housing crisis ever in history

I dunno, bro.

There was a huge housing crisis (shortage of housing) during WW2, - biggest public spending stimulus in history on the heels of a decade of no investment in housing stock due to the Great Depression.

Biggest housing crisis since then has been affordability crisis from high prices from insanely low borrowing rates. What you are calling a crisis I'd call a welcome relief on the prices.

Are you a house flipper or serial HELOC'er? Just asking.

Ask away. That's fine. There is free speech on Patrick.net.

No, I have no conflict of interest nor am I invested in the property market.
I appreciate how my comments may seem a little out of perspective when compared to The Great Depression or WW2 but please bear in mind I am referring to the next 12 to 18 months.

This crisis is just getting started.

Now that the gas pipelines in Europe have been bombed the Russia Ukraine war will intensify, escalate. The spill over will affect the US and not just the housing market.

This is the collapse of the 'Everything bubble' and the end of US hegemony but it's going to take a year or so to play out.

Or I'm wrong.

.

I know from the past my agent said in a down market to set a high price and then adjust it down every two weeks with the goal of trying to sell it within 7 to 9 months.

In an average market, my agent said it takes about 3 to 4 months to sell, and a hot market it takes less than 1 to 2 months to sell. A super hot market means homes can sell within 1 to 2 weeks.

So we have to wait at least 9 months to see at least a 10% drop in prices.

I suspect the Fed wants to see prices drop at least 20%, which may take at least 2 years to occur.

I know for my HOA and neighborhood, a drop from $300,000 (early 2022 sales prices) to $240,000 would bring the price to early 2020 price levels.

,

ad says

I know for my HOA and neighborhood, a drop from $300,000 (early 2022 sales prices) to $240,000 would bring the price to early 2020 price levels.

I believe you're in the panhandle FL? First stay safe unless you're far enough west from the hurricane. Weather junkie as a side hobby.

Here in fly over country, rural living, a 20% drop really doesn't move the needle for most people. Panhandle (off water) can be pretty cheap. My folks owned a bunch down there. I think upwards of 6-7 properties at one point. A lot for an out of state owner.

I'm game for price drops anywhere as I've been tempted to get back in the game in my area. No one is building here in IL (generally) so rents are coming up. I like projects, have the time and tools. We'll see. I don't have my MLS access here in IL anymore, but we're not seeing decreases locally. I'm still super interested in industrial/warehouse type buildings. I need to research more, but it's an emotionless transaction with tenants. It's business. Not a roof over your head. Just had a family get evicted in town. Landlord piled ALL of their shit in the front lawn. Total dick, but maybe the tenants were too.

charlie303 says

This is the collapse of the 'Everything bubble' and the end of US hegemony but it's going to take a year or so to play out.

"The Sky Is Falling Down!"

https://finance.yahoo.com/news/housing-pending-home-sales-drop-140030400.html

Pending home sales drop for third straight month

B.A.C.A.H. says

charlie303 says

This is the collapse of the 'Everything bubble' and the end of US hegemony but it's going to take a year or so to play out.

"The Sky Is Falling Down!"

Yes. Chicken Little lives!

Massive intervention by the Central Bank of England intervention today to prop up the pension market which would have collapsed.
Panic and turmoil as people realise they might lose their property as well.
Asian Central Banks now also intervening as the carnage spreads.

Remember we are in a global economy that has been synchronised for at least 20 years so when one domino goes they all will.
US $ to rise before being the last to fail.

You heard it first here.

.

charlie303 says

B.A.C.A.H. says

charlie303 says

This is the collapse of the 'Everything bubble' and the end of US hegemony but it's going to take a year or so to play out.

"The Sky Is Falling Down!"

Yes. Chicken Little lives!

Massive intervention by the Central Bank of England intervention today to prop up the pension market which would have collapsed.
Panic and turmoil as people realise they might lose their property as well.
Asian Central Banks now also intervening as the carnage spreads.

Remember we are in a global economy that has been synchronised for at least 20 years so when one domino goes they all will.
US $ to rise before being the last to fail.

You heard it first here.

.

THE ONLY SAFE HEAVEN IS RUBBLE!!!

Many central banks, like the Fed, are still solely focused on pressure to quickly get core inflation back to 2% without fully acknowledging how much economic pain it will take in a world shaped by production constraints. We’re tactically underweight developed market stocks and prefer credit. Central banks can’t fix these constraints, in our view, hence a brutal trade-off: trigger a deep recession by hiking rates or live with more persistent inflation. The Fed’s forecasts don’t acknowledge this trade-off. - BlackRock, September 28, 2022

WookieMan says

I believe you're in the panhandle FL? First stay safe unless you're far enough west from the hurricane. Weather junkie as a side hobby.

Yes, my townhome (3 bedrm, 2.5 bath, 2 car garage, built in 2016) is in the Florida panhandle about 2 miles from the beach. We have HO-3 insurance ($1600 a month for $250,000 replacement value and $1000 deductible). HO-3 cost same as HO-6 insurance. Also we have HOA master insurance which comes out to around $1500 a month.

The HOA manages our structure (roof, exterior, etc) so they have to have insurance. Total insurance cost annually is $1600 plus $1500 (or $3100) for a $250,000 townhome.

Plus the HOA monthly fee is $380 a month (which includes the cost for HOA master insurance).

Between $380 a month plus $133 a month for HO-3 insurance and $145 a month for property tax, that is $658. Our mortgage is 3% for 30 years and is $800 a month (now is $450 principal and $350 interest).

All the "other housing costs" like HOA fee/property tax/insurance is almost equal to our mortgage payment after 6 years of buying the home.

All the "other housing costs" was around $400 back when we bought in summer 2016, and gone up 65% to currently $658. That is a 9% annual increase :-(

.

WookieMan says

I believe you're in the panhandle FL? First stay safe unless you're far enough west from the hurricane. Weather junkie as a side hobby.

I love watching the hurricanes (and himacanes). https://www.wunderground.com/hurricane was more fun when the guy who ran the hurricane section was more active, but he retired a few years ago. Do you have any favorite websites?

https://www.reddit.com/r/RealEstate/comments/xqtklj/our_new_build_no_longer_is_affordable_discussing/

Our New Build No Longer is Affordable - Discussing backing out

https://fortune.com/2022/09/28/housing-market-home-price-correction-2022/

These 2 maps show the U.S home price correction is sharper—and more widespread—than previously thought

For a $2,500/month payment and 20% down, one can afford a $476K house today. In early 2021, the figure was $759K.

Ergo, the $759K house is now worth $476K.

Al_Sharpton_for_President says

For a $2,500/month payment and 20% down, one can afford a $476K house today. In early 2021, the figure was $759K.

Ergo, the $759K house is now worth $476K.

Doesn’t work like that. Drop your price $100k and a hedge fund buys it to add to their real estate portfolio. Or a real estate investor grabs it to flip or whatever. People with MONEY put a floor under a market like this because they HAVE TO in order to keep their existing real estate investments propped up.

This will continue until interest rates come down again. Until then, if you put your house on “sale,” it will sell.

ad says

Total insurance cost annually is $1600 plus $1500 (or $3100) for a $250,000 townhome.

This is fascinating. Well, it's a tradeoff for No State Income Tax.

charlie303 says

B.A.C.A.H. says

charlie303 says

This is the collapse of the 'Everything bubble' and the end of US hegemony but it's going to take a year or so to play out.

"The Sky Is Falling Down!"

Yes. Chicken Little lives!

Massive intervention by the Central Bank of England intervention today to prop up the pension market which would have collapsed.
Panic and turmoil as people realise they might lose their property as well.
Asian Central Banks now also intervening as the carnage spreads.

Remember we are in a global economy that has been synchronised for at least 20 years so when one domino goes they all will.
US $ to rise before being the last to fail.

You heard it first here.

.

Your crisis can also be your opportunity. Opportunities don't come along all the time. We have to seize them when they come.

Shaman says

HAVE TO in order to keep their existing real estate investments propped up.

Why buy one today, when you can buy two tomorrow?

https://www.reddit.com/r/RealEstate/comments/xroxo0/buyers_financing_fell_through_what_are_our_best/

Buyers financing fell through. What are our best options?

My parents sold their house, and bought another house both with the closing date of today. Today at 4:30pm they received a call saying that our buyers financing fell through and asked for a 4 week extension in order to refinance and pay for the house. The problem is, we cannot pay for the other house until we receive the payment for our house, and we payed professional movers 10k this morning to move everything out of the house into the other, so our furniture is now sitting in a truck outside of the house waiting to be moved tomorrow morning. However, we cannot move the furniture in because we haven’t paid for the house due to the financing issue from our buyer.

Our realtor said he cannot legally ask for more time, and we can take the 80k deposit and re-list our house. This gets messy though because we still need the money to pay for the other house, so we still cannot move in until our house closes, so we can pay them.

We’re in talks of bridge financing right now, however that’s at 10%, so it gets expensive. What is the best course of action we should take. I feel we should be able to benefit from this situation as it’s the buyers fault we’re in this mess. Please feel free to ask questions, I’m sure I left out lots of details. I live in Canada by the way, if that changes the laws. Thank you

https://www.realpage.com/analytics/us-rental-housing-market-cooling-off-fast/

The U.S. Rental Housing Market is Cooling Off Fast

Prices are noticeably dropping around the San Diego county. Also, discounts are increasing. A month or so ago, $10k drop was common, now it's more like $40k drop in asking, plus a starting price about $100k under what it was six months ago.

zzyzzx says

Today at 4:30pm they received a call saying that our buyers financing fell through

Our realtor said he cannot legally ask for more time, and we can take the 80k deposit and re-list our house.

Usually, a real estate contract has a contingency that if the buyer's loan is declined, the deposit is refunded. Not sure how the seller can keep the $80k, unless Canadian laws are different.

https://wtop.com/business-finance/2022/09/sellers-no-longer-getting-list-price-dc-metro-tops-that-list/

Average home sales dip below list prices — DC metro area’s drop is the biggest

http://crashrank.com/

HeadSet says

Usually, a real estate contract has a contingency that if the buyer's loan is declined, the deposit is refunded. Not sure how the seller can keep the $80k, unless Canadian laws are different.

It's extremely difficult if not impossible for the seller to keep earnest money (deposit) using standardized modern contracts, at least residential. As you mention Canada may be different.

I participated in 1k+ deals managing an RE brokerage (not selling myself) for 15 years and it happened 1-2 times and was a trivial amount like $2-5k. Earnest money/deposits are all fluff basically. A "feel" good for the seller that the deal will close so the agent can get it under contract and get a commission. Generally has nothing to do with what the seller "could" get if the deal falls apart. Brokers use EM as leverage all the time knowing their buyer won't lose shit. Oh he put $10k down, he's serious says the listing broker. It's fucked up. It's flat out lying. The attorneys know it too and know they'll get paid either way via an actual closing or representing them to collect earnest money that will never/rarely happen.

Al_Sharpton_for_President says

For a $2,500/month payment and 20% down, one can afford a $476K house today. In early 2021, the figure was $759K.

Ergo, the $759K house is now worth $476K.

That's about right with the rule for every 1% increase in the 30 year rate, there is about a 10% drop in price. The 30 your rate bottomed around 3% in 2021 and now is 7%.

.