16
3

housing prices peak 2


 invite response                
2022 Apr 29, 9:29pm   434,617 views  4,666 comments

by AD   ➕follow (1)   💰tip   ignore  

.

https://finance.yahoo.com/news/pimco-kiesel-called-housing-top-160339396.html?source=patrick.net

Bond manager Mark Kiesel sold his California home in 2006, when he presciently predicted the housing bubble would pop. He bought again in 2012, after U.S. prices fell more than 30% and found a floor.

Now, after a record surge in prices, Kiesel says the time to sell is once again at hand.

« First        Comments 203 - 242 of 4,666       Last »     Search these comments

203   Onvacation   2022 Jun 27, 10:10am  

ad says

I calculated on a previous post that an approximately 30% price drop is needed based on a the 30 year mortgage rate increasing from around 2.75% to 6%. That means the COVID pandemic price increase will be wiped out and we return to early 2020 price levels for housing.

Did your calculations include the massive increase in the money supply?

It's different this time.
204   mostly reader   2022 Jun 27, 10:16am  

Eman says

Once layoffs pick up steam, we’ll see a bigger price drop.

That. In addition, I don't see any IPOs in the pipeline. It may be relevant because IPOs produce new millionaires who feed the demand in Bay Area.

To be frank, I keep hearing about layoffs in high-tech but anekdotaly I don't see it (yet?).
205   mostly reader   2022 Jun 27, 10:17am  

Onvacation says

Did your calculations include the massive increase in the money supply?


How much of it is already spent by the "do nothing and get paid because pandemic" folks? Does anyone know how to estimate that?
207   1337irr   2022 Jun 27, 10:36am  

Meanwhile, serious delinquencies — mortgages that are 90 or more days past due but not yet in foreclosure — saw strong improvement, falling another 7% from April. But even after 21 consecutive months of improvement, the population of seriously delinquent homeowners is still 45% higher than it was prior to the pandemic, Black Knight said.

https://nationalmortgageprofessional.com/news/black-knight-past-due-mortgages-fall-3rd-straight-record-low-may#:~:text=According%20to%20Black%20Knight's%20%22first,from%20this%20time%20last%20year.

*We did have a ban on foreclosures during the pandemic.
208   AD   2022 Jun 27, 12:13pm  

HunterTits says

Housing prices are not the same as housing payments...and the role interest rates plays in that.


I agree. A large majority of homes are bought with a mortgage. When you buy a home, you are really buying a monthly payment (mortgage, property tax, property insurance, and HOA fee).

I posted before on Patnet that house prices need to drop 30% based on 30 year mortgage rate increasing from 2.8% to 6%. The Federal Reserve wants to wipe out housing price gains accrued from mid 2020 to early 2022. They already wiped out most of the gains for the stock market.

.
209   Eman   2022 Jun 27, 2:29pm  

HunterTits says

Eman says



1) This is a point some people can’t grasp.


Housing prices are not the same as housing payments...and the role interest rates plays in that.


From a monthly payment POV, you’re correct. However, history suggests otherwise. Let’s see how it will play out this time.
210   Eman   2022 Jun 27, 2:31pm  

mostly reader says

Eman says


Once layoffs pick up steam, we’ll see a bigger price drop.

That. In addition, I don't see any IPOs in the pipeline. It may be relevant because IPOs produce new millionaires who feed the demand in Bay Area.

To be frank, I keep hearing about layoffs in high-tech but anekdotaly I don't see it (yet?).


You’re right. No massive layoffs…..yet. If no massive layoffs, no big drop in real estate prices. This is what history suggests.
211   Eman   2022 Jun 27, 2:32pm  

ad says

HunterTits says


Housing prices are not the same as housing payments...and the role interest rates plays in that.


I agree. A large majority of homes are bought with a mortgage. When you buy a home, you are really buying a monthly payment (mortgage, property tax, property insurance, and HOA fee).

I posted before on Patnet that house prices need to drop 30% based on 30 year mortgage rate increasing from 2.8% to 6%. The Federal Reserve wants to wipe out housing price gains accrued from mid 2020 to early 2022. They already wiped out most of the gains for the stock market.

.


Can you share with us some data on when this actually happened? I’d love to learn. Common sense is one thing, but reality is another.
212   AD   2022 Jun 27, 4:58pm  

Eman says

some data


If I want to buy a starter home for $500,000 at a 30 year mortgage rate of 3%, then my monthly payment is $2108. The bank determined I can afford that monthly payment.

Now with the rate at 6%, my monthly mortgage is $2998. Right now the rate is 5.81% (source: https://www.freddiemac.com/pmms)

The home price would have to come down to $360,000 in order for the monthly payment to be near $2108 (for the 6% rate).

That means a drop of $140,000 (from $500,000 to $360,000 or 28%).

That is why I am figuring housing prices need to come down about 30%.

I think in a way the Fed is doing this to bring housing prices back to just above 2020 levels. They’ll keep rates steady for a while and then make adjustments as necessary.

For the ones who bought at 3% interest rate for a mortgage in 2020 to 2021, I don’t think this matters much if they plan on staying in their homes for at least 7 years.
/
213   AD   2022 Jun 27, 5:02pm  

Eman says

actually happened


S&P 500 peaked to 3381 in February 2020.

It is now at 3900 after dropping from 4818.

It recently bottomed to 3636 (a 24.5% drop) and this bottom is within 10% of the February 2020 peak. That drop to 3636 wiped out a majority of the COVID pandemic gains.

.
214   Booger   2022 Jun 27, 5:38pm  

ad says

That is why I am figuring housing prices need to come down about 30%.


Don't most things overcorrect?
215   B.A.C.A.H.   2022 Jun 27, 6:05pm  

Eman says


If we have the right products price, they’ll still sell in any market.
216   1337irr   2022 Jun 27, 6:34pm  

My friend is now refinancing to get out of his private money lender's terms after dropping the price of his house. So, that's good and bad.
217   1337irr   2022 Jun 27, 6:50pm  

Nuff said...
218   Eman   2022 Jun 27, 7:10pm  

ad says


Eman says


actually happened


S&P 500 peaked to 3381 in February 2020.

It is now at 3900 after dropping from 4818.

It recently bottomed to 3636 (a 24.5% drop) and this bottom is within 10% of the February 2020 peak. That drop to 3636 wiped out a majority of the COVID pandemic gains.


By these metrics, SPX dropped 52% during the dotcom year. Real estate prices dropped like 10% in the Bay Area. Elsewhere of the nation didn’t feel much of it.

During the global financial crisis 2008, SPX dropped 57% while real estate dropped 34%.

Is it reasonable to use the above metrics to extrapolate the potential drop in housing prices rather than simply using the monthly payments?
219   AD   2022 Jun 27, 8:42pm  

Eman says


Is it reasonable to use the above metrics to extrapolate the potential drop in housing prices


I am not sure about the correlation but housing was not inflated in the dotcom era. It was inflated in 2007 and is inflated now.

Housing just started to be treated more and more as a speculative asset and cash machine (i.e., home equity loans, etc) around 2003

........
220   AD   2022 Jun 27, 8:44pm  

B.A.C.A.H. says

If we have the right products price, they’ll still sell in any market.


exactly as far as supply and demand as well as price discovery

it comes down to good value and affordability

i guess for stocks that means price to earnings to growth ratio (PEG), etc.

for housing that means the housing costs is not more than 38% of monthly income or that the landlord buying it can make at least an annual ROI of 8%

..
221   AD   2022 Jun 27, 8:58pm  

Booger says

Don't most things overcorrect?


yes they do ... they always over correct and their is a slaughter with blood on the streets (or wall street) ...that is due to the herd mentality and panic selling ...
222   AD   2022 Jun 27, 9:01pm  

HunterTits says

Redfin Investor Purchases by zip code:

https://www.redfin.com/news/data-center/new-construction/


20% of home buyers were investors for 1st quarter 2022 according to the above redfin website

that does not surprise me ...we'll see how well those investors fare as long term and vacation/short term landlords
223   Eman   2022 Jun 27, 9:56pm  

HunterTits says

Redfin Investor Purchases by zip code:

https://www.redfin.com/news/data-center/new-construction/

Interesting investors didn’t slow down in buying properties through the housing bust, and they bought more through the 2010’s.
227   mostly reader   2022 Jun 28, 8:35am  

zzyzzx says



In the same area: https://www.zillow.com/homedetails/6803-E-Main-St-UNIT-3317-Scottsdale-AZ-85251/82387358_zpid/ - 2.4M for 1,497sq.f condo with >1K HOA
And there I was, thinking that Bay Area is expensive.
228   1337irr   2022 Jun 28, 8:59am  

mostly reader says

zzyzzx says




In the same area: https://www.zillow.com/homedetails/6803-E-Main-St-UNIT-3317-Scottsdale-AZ-85251/82387358_zpid/ - 2.4M for 1,497sq.f condo with >1K HOA
And there I was, thinking that Bay Area is expensive.

The Bay Area is becoming cheap...?
229   mostly reader   2022 Jun 28, 9:48am  

1337irr says


The Bay Area is becoming cheap...?

I noticed it few years back that it's not growing as fast as other parts of the country. Now those other parts are catching up apparently. To the point that "people moving out due to remote work" no longer explains it. Bay Area politics is another variable.
230   AD   2022 Jun 28, 10:38am  

Eman says

Interesting investors didn’t slow down in buying properties through the housing bust, and they bought more through the 2010’s.


a lot of the investors back in 2009 to 2013 were sharks or bottom feeders...buying for $110,000 a townhome that sold for $275,000 three or four years prior ....

this time around the investors likely used stock market and/or crypto gains, as well as the equity from their homes, to buy second homes to rent out on Air nB, or to rent out long term .... i wonder what percentage of homes bought by investors were made with equity in their other homes ....

...
232   1337irr   2022 Jun 29, 9:05am  

Hold my beer!
235   exfatguy   2022 Jun 30, 10:04am  

Take this place in pseudo-fortress 95138 in San Jose asking 1.7mil...

https://www.redfin.com/CA/San-Jose/7398-Basking-Ridge-Ave-95138/home/12178639

Looks like a nice place, but super tiny lot. This is also the house where there was a rotting orange in the driveway during the open house. The even more rotted orange has now oozed to the curb area. Apparently picking up rotting fruit from the property is not a modern realtor's job.
238   zzyzzx   2022 Jul 1, 9:37am  

https://www.cbsnews.com/news/home-listings-surge-ease-inventory-shortage

Home listings surge as rising mortgage rates push some buyers to sidelines

Homeowners thinking about listing their properties need to be aware of the new competition in the housing market, and keep tabs on local pricing trends. "They need to make sure the asking price doesn't get too high, or too high ahead of the market," Hale said.
240   mostly reader   2022 Jul 1, 10:06am  

Just looked up my house on Zillow, it dropped 5% in 1 month. Good (since it's not just my house but rather a reflection of market conditions). I look forward to correction.
242   GNL   2022 Jul 1, 2:07pm  

Booger says



Sounds like the squatters will win this one.

« First        Comments 203 - 242 of 4,666       Last »     Search these comments

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions