patrick.net

zzyzzx says

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/113sx2c/just_a_rant_wish_we_never_bought_a_house_and_just/

Just a rant — wish we never bought a house and just continued renting forever.

Should've bought a full-house warranty for a year. They are surprisingly affordable.

PS. We got one courtesy of the seller when we bought our shack. But that was in a verrrrrrry slooooooow market between two booms.

zzyzzx says

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/113sx2c/just_a_rant_wish_we_never_bought_a_house_and_just/

Just a rant — wish we never bought a house and just continued renting forever.

Sounds like everyone got their pound of flesh off of this home buyer. In my opinion, if it makes financial sense, home buyers should just stop paying their mortgages and do what is in their best interests.

zzyzzx says

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/113sx2c/just_a_rant_wish_we_never_bought_a_house_and_just/

Just a rant — wish we never bought a house and just continued renting forever.

This story sounds like a troll. It has obvious "continuity" errors. For example, the guy living in it for 10 years before selling never took a shower? Why wasn't the 40 gallon hot water tank just replaced with tankless rather than moving it and building a garage drain? How did a home inspection not catch any of this?

Wolf wrote this for his blog this morning:

There better be a halfway decent spring selling season, which is supposed to already have started in San Francisco and Silicon Valley, because this is getting pretty bad, pretty fast. But it’s hard to imagine just how good the spring selling season can be amid countless reports of layoffs, working from home somewhere else, with big numbers being thrown around about how many people have left Silicon Valley and San Francisco. The City of San Francisco alone lost about 56,000 residents, or about 6.3% of its population, in the period of 2020 through 2022, according to Census data, even as about 12,000 new housing units were completed over the same period.

The median price in the nine-county Bay Area plunged by another 8% in January from December, by 17% year-over-year, and by 35%, or by $540,000, in 10 months from the crazy peak in March 2022, from $1.54 million to $1.00 million, according to the California Association of Realtors.

https://wolfstreet.com/2023/02/17/san-francisco-bay-area-housing-market-crashes-prices-plunge-35-from-crazy-peak-where-is-demand-supposed-to-come-from/

Party On, Hipsters.

The Bay area is down 35%?

https://www.reddit.com/r/realestateinvesting/comments/1148yx8/im_in_the_red_every_month_in_a_hcol_city_do_i_sell/

I’m in the red every month in a HCOL city. Do I sell?

https://www.reddit.com/r/REBubble/comments/1143yr7/the_builder_i_offended_with_a_low_ball_offer_last/

The builder I offended with a "low ball" offer last month reached out today

cisTits says

If SFBA is your market, sorry. Most of the country is completely fine. A 10-30% drop in the midwest is maybe $60-80k on solid loans. Not $500k on $1.5M loans. Most are under 5% interest. People will just stay, so inventory doesn't rise, so the floor on prices is much higher than CA. 10-20% doesn't move the needle here. We don't care. I'm sorry people lost 10, 20, 30% on a $2M property, we simply don't give a shit. Wa wa.

Sick of CA being essentially the dictator of the country. It is NOT how the rest of the country works. I hope everyone loses 50% out there. Might be the awakening you all need.

cisTits says

Just falling back to get in-line with historical appreciation rates…

WookieMan says

I'm sorry people lost 10, 20, 30% on a $2M property, we simply don't give a shit. Wa wa

One reason the prices were too high is because inventory was too low. Said differently, very few, a miniscule portion, of homeowners in the region, "lost" anything more than "vapor equity".

The drop is not bad news for the region. More affordability is good for everyone, even ®ealtors. Hopefully we're just getting started on the trend Wolf wrote about.

WookieMan says

Sick of CA being essentially the dictator of the country. It is NOT how the rest of the country works.

Ahem, Patrick is a long-time resident of the SF Bay Area, his blog has a focus on his back yard. Wolf Richter, the author of the piece, is a resident of SF who sometimes writes about housing in the region. How does this make California dictator of the country? If you're sick of it maybe you will feel better if you don't read a Bay Arean's blog that has a linked article by a different Bay Arean.

cisTits says

WookieMan says

If SFBA is your market, sorry. Most of the country is completely fine.

Cut the 'Housing Expert' crap.

Nope. I know more than pretty much anyone here beside probably Eman. You know zilch about the market I KNOW. I don't give a shit about CA. It's fucked. The rest of the country outside of cities and hipster spots is totally fine if not appreciating. YOU don't know what you're talking about. CA is NOT the rest of the country. There are NO houses for sale in flyover country. What don't you get about inventory?

If one person has 2 AA batteries and 10 people need 2 AA batteries WTF happens to the price? CA is not the rest of the country. We don't give a fuck. No one want to move there anymore domestically. California dreaming is over. And so is their real estate. Other places, nope. Give me stats outside of CA. Otherwise you're just talking shit.

B.A.C.A.H. says

Ahem, Patrick is a long-time resident of the SF Bay Area, his blog has a focus on his back yard. Wolf Richter, the author of the piece, is a resident of SF who sometimes writes about housing in the region. How does this make California dictator of the country? If you're sick of it maybe you will feel better if you don't read a Bay Arean's blog that has a linked article by a different Bay Arean.

Got people form all over the country on this forum. Patrick is also from my region originally. Yes it's a CA centric site, won't disagree. We have users from Virgina, Maryland, multiple from Florida, Tennessee, Georgia, Idaho, Nevada, New York, etc.

It's not about the article. CA has the most House representatives in the country. They try to run the country. How has that worked out for you guys? Sure some have made bank, but it ain't looking good right now. Rest of the country in most places is stable and fine. I agree with you lower housing prices is the only thing that will pull CA out of a potential death spiral. CA is really the only state it's happening in.

NY is stabilized. So has IL. CA is in for a rough go of it. Which could be a good thing on the back end. I'm not certain though with the climate. Until y'all get rid of the homeless, people will have minimal interest in living there. City and large suburbs are going the way of the horse and carriage.

Al_Sharpton_for_President says

You can buy them through your broker. You can also buy them direct from the gubberment. (https://www.treasurydirect.gov). I've only purchased through a broker, like Schwab, so I have no experience with buying direct.

I've done both. The https://www.treasurydirect.gov/ is kind of annoying to use, but works well enough.

I am slightly worried about a US default though. Could happen. All Treasury holders could get a "haircut" as they say.

Patrick says

I am slightly worried about a US default though. Could happen. All Treasury holders could get a "haircut" as they say.

I do not know if default has ever happened before in the USA. I don't think it will happen in the present form of conditions and government, unless there is a "fundamental change" with our government and society.

They'll inflate themselves out of the crisis first, if not they may make small cuts like to entitlements and also small tax increases.

.

Closing the gold window was a default.

WookieMan says

Rest of the country in most places is stable and fine.

Good that no state other than CA has passed ponzy scheme 1978 Prop 13 to deal with its ill effects.

GNL says

Closing the gold window was a default.

When FDR revalued gold from $20.67 per ounce to $35 per ounce, that was a default as well.

The inflation from 1974 through 1982 should've been classified as a default too.

Then there is the Biden default of 2022.

That's when the Fed went from having a balance sheet of about $8.5 trillion to having a marked to market balance of about a negative $3 trillion.

Nobody in the mainstream media talks about this. You ain't supposed to know.

Shhhhhhhhh, Patrick.net users only please.

https://www.wxyz.com/news/us-foreclosure-filings-are-up-36-michigan-is-in-the-top-3

Patrick says

I am slightly worried about a US default though. Could happen. All Treasury holders could get a "haircut" as they say.

I've thought about this. Candidate Trump, a Serial Bankrupcty Filer, suggested haircuts as a remedy for the federal debt in 2016. So where before it was an un-mentionable concept, like Valdemort in the Harry Potter stories, he let the cat out of the bag.

I followed the goings on during the Financial Crises in Europe. Small depositors were made whole. There were some withdrawal limits like 50 Euro per day in Greece or whatever, but nobody's deposits were taken or cancelled or wiped out, not even the accrued interest. Haircuts for sovereign debt and large depositors (like Russian oligarch deposits in Cypriot banks) were fair game. I think authorities feared the pitchforks more than anything else. Remember, the military, police departments, private security goons, etc are mostly in the pitchfork crowd.

Applying those observations to our situation, I made a political calculation (not a financial calculation), that insured (FDIC) deposits for small depositors are safer than Treasury Debt, for parking cash. Yes, snarksters, I know: the FDIC could go insolvent. In that case, because of the fear of pitchforks, the Treasury will print the money to cover it. (Yes, yes, I know: debt monetization and inflation).

gabbar says

https://www.wxyz.com/news/us-foreclosure-filings-are-up-36-michigan-is-in-the-top-3

And that's not including all the auto loans that are so upside down they defy gravity. As long as some people can afford the payment, it doesn't matter if the loan extends into the next millennium.

From the Redfin article:

“Investor home purchases in the fourth quarter of 2021 were near their record high, which is another reason the year-over-year decline in 2022 was so dramatic.

The typical home investors purchased cost $425,926, little changed from one year earlier but down 5.8% from one quarter earlier.

U.S. home prices are up less than 1% year over year—compared with 15% growth one year ago—and have fallen 11% from their spring 2022 peak.”



I’m shocked that investors bought 18% of the real estate inventory in the current market environment. It made sense when they couldn’t earn much yield in treasury and had to settle for real estate at 4-5 cap with borrowing cost around 3%. Given today’s borrowing cost and the cap rates, it’s negative leverage. 🤔

Eman says

I’m shocked that investors bought 18% of the real estate inventory in the current market environment. It made sense when they couldn’t earn much yield in treasury and had to settle for real estate at 4-5 cap with borrowing cost around 3%. Given today’s borrowing cost and the cap rates, it’s negative leverage. 🤔

If you have cash flow, can earn income on a property you want to buy, there's not much out there. Result, prices go higher.

High interest rates are meant to make people NOT want to sell to control inflation. So they don't. Most are locked in at low interest rates outside of the last 18 months, but with qualified and solid underwriting. I can piss in a 360º circle in my backyard and get a $50k+ a year job. Coastal cities are going to drag it down as the exodus continues. Move from the $1M condo to the rural/suburban home on 1/2 acre for $500k. Median price nationally will drop. Doesn't mean it's bad. Just means people are getting smart.

WookieMan says

Eman says

I’m shocked that investors bought 18% of the real estate inventory in the current market environment. It made sense when they couldn’t earn much yield in treasury and had to settle for real estate at 4-5 cap with borrowing cost around 3%. Given today’s borrowing cost and the cap rates, it’s negative leverage. 🤔

If you have cash flow, can earn income on a property you want to buy, there's not much out there. Result, prices go higher.

High interest rates are meant to make people NOT want to sell to control inflation. So they don't. Most are locked in at low interest rates outside of the last 18 months, but with qualified and solid underwriting. I can piss in a 360º circle in my backyard and get a $50k+ a year job. Coastal cities are going to drag it down as the exodus continues. Move from the $1M condo to the rural/suburban home on 1/2 acre for $500k. Median ...

Interestingly, markets experiencing the most drawdown in investors activity are the cheaper markets where people likely moved to after the pandemic due to work from home.

Wookie says

Interestingly, markets experiencing the most drawdown in investors activity are the cheaper markets w

Yeah, Phoenix and Las Vegas are going to crash hard like they did in 2008-2013 (est.). Some of the run up in prices were work from home refugees leaving California and buying in Phoenix, Boise, etc..

Been reading the major tech companies are requiring their workers to return to the office, at least 3 days a week.

,

Wolf Street website is reporting a 13.2% drop from peak in median home sales price of $408,000.

Its now at $360,000.

Late 2019 the price level was around $290,000.

Figure about 20% inflation since late 2019, and the total real gain of housing is no more than 3%.

https://twitter.com/charliebilello/status/1628055670074314754?t=VyMuqFoevyG1wyzTRdCh4g&ref_src=patrick.net

As I mentioned, the mortgage rates right after the pandemic really distorted real estate prices up to spring 2022. Let’s see how this will unwind itself in the coming years.

Eman says

Let’s see how this will unwind itself in the coming years.

And if will take years,!

Many large companies are mandating a return to the workplace. But, there have been tens of thousands of layoffs. Hard to figure out what this is doing to the housing market, except driving up big city rental prices.

rocketjoe79 says

Many large companies are mandating a return to the workplace. But, there have been tens of thousands of layoffs. Hard to figure out what this is doing to the housing market, except driving up big city rental prices.

Or is that employees are mandating themselves to return!

rocketjoe79 says

Many large companies are mandating a return to the workplace. But, there have been tens of thousands of layoffs. Hard to figure out what this is doing to the housing market, except driving up big city rental prices.

Yes, we have been hitting record after record on rent prices. Just have to remove ourselves from the equation and let the property management company do their job. We’re too emotional and don’t push rents like them.

ad says

It's too easy to get a license and you then represent people with what will be the largest purchase of their lifetime most likely. Depending on state rules/laws, you can also just start a brokerage without a license and sign on a bunch of agents. Tell one of them to take one for the team and you're essentially a real estate broker without a license. All legal. You just have to hire a managing broker.

Most people fail the brokers exam 1-2 times before getting their license. That should scare you bigly because it's not difficult at all. The average broker is a high school graduate. That's fine if you're painting my house, but not my biggest purchase.

Headset can correct me, but I think most commercial pilots need 500+ hours of flight. I'm not saying flying is easy, but with modern avionics is not as difficult a task as most would think. I think ground school freaks people out the most and they bail. I have two friends that recently bailed on it and they were getting hours in the air which ain't cheap. I feel like real estate should be similar.

Real estate is a racket within the industry. Between the MLS and other fees it came out to close to $3k a year. Considering the industry average for most major brokerages is 70/30, you'd have to sell 2 house, factor in vehicle, time, gas, phone, etc. to break even unless you're in a high price market. It's why I dumped my license. And yes you're an IC so you can write it off, but it doesn't make sense unless you're selling $4M in real estate. That would net you about $60-70k/yr. Easy in a place like CA, but that income doesn't keep up with the cost of living out there. Success is $20M plus in sales. 95% of agents won't get there.

The weird thing is we have Airbnb, VRBO and other vacation rental services. I've never personally dealt with a person at the property to get in. They trust I'm not going to steal anything. Yet with RE you need a buyer agent with you to get it. Like working a lockbox is a fucking challenge?? And what is stopping agents from stealing shit as well? The system needs change for sure. Typing this out my business gears are turning.

WookieMan says

The system needs change for sure. Typing this out my business gears are turning.

Big time people have and are working on changing the way real estate is sold. Any success yet? The NAR has the secret sauce, good luck with your turning gears.

GNL says

Big time people have and are working on changing the way real estate is sold. Any success yet? The NAR has the secret sauce, good luck with your turning gears.

I don't think there will be much luck. I have ideas, but sinking time into them against probably a top 5 lobby is likely impossible. My dad tried as an attorney. It was actually a logical idea, but he didn't have the skill set in business to make it work. I don't want to say too much as I'd like to stay private here. The nut of it was basically to cut out the realtor completely, because as an attorney realtors are the most fucking annoying humans to deal with. They also get paid more than the attorney.

All you really need is someone to review legal documents, get a loan and that's basically it. Then 6 other (making that up) industries trying to get a piece of the pie. I could understand a single woman getting an inspection, but inspectors are useless humans. Marketing is marketing, you need it which I think you do professionally, but why couldn't an attorney just refer your services instead of an agent? They have real estate paralegals that manage showings and marketing and contracts. I did all that and accounting for 15 years. Took care of corperate filings. Fucking car registration. Ipass (tolls). My bosses weekly parking ticket. The list goes on.

Beside actually selling, which I occasionally did, I ran everything except making cold calls and talking to people because I'm a dick. Actually I'm nice if I want to interact or the other person genuinely wants to interact with me. A lot of buyers and sellers expect you to wipe their ass after they shit. I ain't doing that. Hence why I just managed the background stuff that kept the business going.

WookieMan says

Headset can correct me, but I think most commercial pilots need 500+ hours of flight.

Way back when I was flying, it took 250 hours flight time, a flight test, and a written test to get a civilian commercial pilot license. Air Force pilot training graduates had about 200 hours of small jet (T-37 and T-38) but were able to get a civilian commercial license if they wanted by passing a flight test in a civilian pane with a civilian flight instructor. However, "commercial" does not mean left seat airline qualified. That would be an Airline Transport Pilot (ATP) which required a minimum of 1500 hours. Then you need a type rating on top of that (Boeing 737, etc).

HeadSet says

WookieMan says

Headset can correct me, but I think most commercial pilots need 500+ hours of flight.

Way back when I was flying, it took 250 hours flight time, a flight test, and a written test to get a civilian commercial pilot license. Air Force pilot training graduates had about 200 hours of small jet (T-37 and T-38) but were able to get a civilian commercial license if they wanted by passing a flight test in a civilian pane with a civilian flight instructor. However, "commercial" does not mean left seat airline qualified. That would be an Airline Transport Pilot (ATP) which required a minimum of 1500 hours. Then you need a type rating on top of that (Boeing 737, etc).

Ok so 250 hours to get paid shit. With a RE brokers it's 60-90 hours and that's not ACTUAL time of learning. You then get to sell a $1m home and make ~$25k on one transaction. A pilot would work all year to get that much with 250 hours. I get you cannot crash a house and kill people, but substantially more people get burned by shitty real estate brokers than pilots.

Planes don't have basements that can flood and you can lie about it. You can't cover a defect on a plane with annual inspections. Yet people just trust high school drop outs with the biggest purchase of their life. I was one and wouldn't trust one. Realtor, not high school drop out. History major with poly sci minor. Attorney path. Looked miserable so bailed into real estate. Good/bad decision. Made good money, wife's career took off and I realized people are not for me and there's too many in RE.