patrick.net

.

I examine total state and local tax burden: https://wallethub.com/edu/states-with-highest-lowest-tax-burden/20494

Florida is 46 and California is 17.

9 out of the top 10 are Democrat shitholes.

.

US real estate investors have been losing money on 1 in 7 homes sold — nearly the highest share since 2016. And they most likely took huge hits in these 5 cities
High mortgage rates have eaten into investor profits and dramatically increased the typical homebuyer’s monthly payment. This in turn has slowed homebuying demand and pushed down sale prices, meaning the share of investor-owned homes selling at a loss has gone up.
Phoenix, Arizona, the hardest hit market in March. Just over 30% of homes sold by investors lost money. Phoenix was followed by Las Vegas, Nevada, (28%), Jacksonville, Florida, (20.9%), Sacramento, California, (20.2%) and Charlotte, N.C. (17.4%).

GNL says

I love America and would hate to see it become a 3rd world country. I read that 25% of all homes are owned by corporations? True?

RFK Jr. was hitting this point pretty heavily in his CNBC interview, quoting Jefferson, of course...

How did Canada housing prices become so disconnected with all other countries since the Great Recession?

Eman says

@Eman, What does it mean by "Real House Prices"?

GNL says

Eman, What does it mean by "Real House Prices"?

Adjusted for inflation

.

It’s not only my imagination of the buy/rent disparity ratio. I guess it’s NOT only happening in the Bay Area, but almost across the country.

Eman says

It’s not only my imagination of the buy/rent disparity ratio. I guess it’s NOT only happening in the Bay Area, but almost across the country.

I was looking at rent in Colorado Springs. Seems reasonable as far as $1900 for a 3 bedroom, 2 bath townhome which would normally sell for about $350,000 at the current mortgage rate (around 7%).

.

In July 2023, San Jose home prices were up 10.9% compared to last year, selling for a median price of $1.4M. On average, homes in San Jose sell after 12 days on the market compared to 21 days last year. There were 432 homes sold in July this year, down from 464 last year.

https://www.redfin.com/city/17420/CA/San-Jose/housing-market

The reality of MY market and buy/rent ratio disparity.

Eman says

ad,

It doesn’t impact me. I’m always a buyer/seller for the right price. They’re hurting the consumers more than anything.

The huge rent/buy ratio disparity in our market makes it hard for people to buy so they rent. This is why we’ve been getting record rents in our market. It’s just much cheaper to rent than to buy. How will the Fed bring it to disparity or 4% annual appreciation target?

In theory, it’s easy. Reality is so different. I’ve had this discussion with my Federal Reserve buddy frequently. Even he doesn’t have an answer for it. Hope is the magic word for them

i have a tenant. had multiple applications. i can see why they can’t buy. no Downpayment saved up, they make more than i do. they drive nicer car and have credit cards. not a knock on them, but people really need to control their spending.

Fort Wayne,

That’s society. That’s how some people choose to live. There’s nothing we can do.

Some people value education so they choose to pay more for housing and live in a good school district. Some people live in more secluded neighborhoods due to the potential connections. Some people choose to rent in a good school district for their kids’ sake while some choose to live in a cheaper area and send their kids to private schools.

Some people are flashy and about the outside image. On my birthday, one of my biz partners gave me a pair of Hermès sneakers worth $1.2k. Another person gave me a $300 Louis Vuitton wallet, and I don’t even carry a wallet. I still haven’t worn these shoes…yet, and I don’t know under what occasions to wear them. I still wear my $28 Sketchers shoes from Costco on a daily basis. The LV wallet is in my car’s glove compartment with an extra couple CC’s and some cash all the time.

We went out to lunch with the partner, who bought me the Hermès shoes, and his wife once. When we got to the car, my wife said did you notice his wife? I asked about what? Wife said she wore Valentino shoes, Prada glasses, Louis Vuitton purse, etc… Basically, several thousand dollars worth of wearing stuff. Personally, I feel people who wear these stuff are shallow, but it’s none of my business. Again, that’s society. People do whatever they want with their money. Did I mention his wife drives a $160k brand new car? Again, it’s none of my business. 🤣

Eman says

How did Canada housing prices become so disconnected with all other countries since the Great Recession?

Heard that Canada do not have enough and will not allow to build enough housing. Plus crazy Justin allow quite a number of legal immigrants while illegals sounds like out of control!. Its a disaster for housing market and a real trouble for poor citizens.

This article articulates well about the current dilemma for the housing market. The Fed screwed up again by leaving the Fed fund rate too low for too long. Now, they’re trying to fix it by hiking rates aggressively, and here we are.

The housing market is stuck: Americans can't afford homes, investors aren't buying property, and economists see little relief ahead.

https://markets.businessinsider.com/news/commodities/housing-market-outlook-mortgage-rates-homeowners-investors-real-estate-property-2023-8

Eman says

The Fed screwed up again by leaving the Fed fund rate too low for too long. Now, they’re trying to fix it by hiking rates aggressively, and here we are.

The cycle is skewed whereas the time to reach peak is a matter of about 18 months (July 2020 to February 2022) and the time to reach bottom is at least 4 years (~July 2022 to ???).

Look at how housing prices generally started to bottom from mid 2007 to mid 2012. That was different economic conditions as far as subprime mortgages, the job market, proliferation of work from home, etc.

That is why I think the real estate market will stabilize around 15 to 20% below its peak price (set around February 2022) if the 30 year rate steadies around 5.5% AND unemployment remains below 5.5%. This is emblematic of what Jerome Powell describes of a soft landing.

.

.

I think its much different for stocks and crypto given they have a lot more liquidity. The correction or drop is within a very short period compared to the run up.

.

https://notthebee.com/article/homebuyer-with-a-3000-monthly-home-budget-has-lost-71000-in-buying-power-in-just-one-year

Homebuyers with $3,000 monthly home budget have lost $71,000 in buying power in just one year

Historically high mortgage rates are cutting into buyers' budgets. A homebuyer on a $3,000 monthly budget, for instance, can afford a $429,000 home with a 7.4% mortgage rate, roughly the daily average on August 23. That buyer has lost $71,000 in purchasing power since August 2022, when they could have bought a $500,000 home with an average rate of about 5.5%.

Eman says

It’s not only my imagination of the buy/rent disparity ratio. I guess it’s NOT only happening in the Bay Area, but almost across the country.

Someone on LinkedIn shared this data to make a point on owning vs. renting while our Federal Reserve’s inflation target has always been 2%. 🧐

1337irr says

This is easy to spot. Numbers don’t pencil out for investors at the current borrowing rates. While rents have gone up, they haven’t gone up as fast as the borrowing rates. Something has to give

1337irr says

Your chart supports this chart below. Rents were going up since early 2010’s while mortgage rates kept going down until spring 2022, which made buying residential real estate ludicrous for investors. Not so much since so they have sidelined.

I still remember people on this site kept arguing that prices had to drop more between 2009-2012 and beyond especially that Thomas Wong guy.

Wait and see if home prices remain unchanged while the 30 year mortgage rate drops from now around 7.25%, and steadies between 5% and 5.5% next year.

Also income goes up 3% during the same time period.

That should lead to a substantial decrease of "cost to buy" on the above graph, and closing the gap or difference between "cost to buy" and "cost to rent".

.

“Mortgage delinquency rate falls to lowest level since 1979.”

https://www.housingwire.com/articles/mortgage-delinquency-rate-falls-to-lowest-level-since-1979/

Eman says

“Mortgage delinquency rate falls to lowest level since 1979.”

Yes, lets also track unemployment rate as well as credit card debt. Increasing credit card debt delinquency may be a prelude to future mortgage delinquency.

.


.

ad says

Eman says

“Mortgage delinquency rate falls to lowest level since 1979.”

Yes, lets also track unemployment rate as well as credit card debt. Increasing credit card debt delinquency may be a prelude to future mortgage delinquency.

.


.

Wow, I would expect it to be higher, but it’s lower than the two previous recessions, the Great Recession and S&L crisis.

Eman says

Wow, I would expect it to be higher, but it’s lower than the two previous recessions, the Great Recession and S&L crisis.

Wait and see as far as economic statistics like credit card delinquency and unemployment as it may get worse toward the end of this year.

The problem for the Dems is that they want to start promoting the economy's health by next August.

So we'll see how all this plays out and if the Dems put pressure on the Federal Reserve to lower rates by next spring.

.

https://www.coffeeandcovid.com/p/remarkably-consistent-tuesday-september

📉 President Peters has bigger problems than Jill’s covid infection. As Wall Street Silver tweeted yesterday, in the face of rising mortgage interest rates, home sales growth (measured by investor purchases) has fallen below previously-historic levels seen during the 2008 real-estate collapse:

Eman says

The reality of MY market and buy/rent ratio disparity.

That's nothing! Check out my shack (and also don't forget a new buyer will be paying more than $2k/month in property taxes).

Eman says

It looks like RE investors are subsidizing their tenants. Or at least that RE investing is becoming less and less lucrative. Where am I wrong?

RWSGFY says

Where am I wrong?

Where you're wrong is you're not being smug and not trying to keep face.

Silly RWSGFY.

Well, Rubicon is a VERY successful RE investor and he says to buy rental RE at any time, all the time and any time you see a house for sale you should buy it. Price, rates and the economy simply doesn't matter. I'm sure he knows what he's talking about.

.

https://www.cnbc.com/2023/09/05/mortgage-rate-tipping-point-homeowners-say-5percent-is-the-magic-number.html

" But there is a tipping point, recent reports found: Homeowners are nearly twice as willing to sell their home if their mortgage rate is 5% or higher, according to Zillow, and 71% of prospective homebuyers who plan to purchase their next home with a mortgage said they would not accept a rate above 5.5% — that is the “magic mortgage rate,” according to a survey by John Burns Research and Consulting. "

.

SunnyvaleCA says

Eman says

The reality of MY market and buy/rent ratio disparity.

That's nothing! Check out my shack (and also don't forget a new buyer will be paying more than $2k/month in property taxes).

Thanks, good summary of my housing arguments right there.

Big_Johnson says

GNL says

Well, Rubicon is a VERY successful RE investor and he says to buy rental RE at any time, all the time and any time you see a house for sale you should buy it. Price, rates and the economy simply doesn't matter. I'm sure he knows what he's talking about.

Liar. Never said it that way ever. Show an example.

My mistake. I thought you were a cost averager. Also, I see you changed your name again.

ad says

Is this a joke? Even if such a modest home is worth $1.6 million, it is very difficult to get a bank to cash out rental property, or even just to refinance. Even if you did manage a loan, through compensating balances or other scheme, the interest rate will be higher. There are also points and origination fees.

HeadSet says

ad says

Is this a joke? Even if such a modest home is worth $1.6 million, it is very difficult to get a bank to cash out rental property, or even just to refinance. Even if you did manage a loan, through compensating balances or other scheme, the interest rate will be higher. There are also points and origination fees.

Interesting. The books and sites on the subject of RE investing are all braying about regularly refinancing rental properties and how easy it is.

RWSGFY says

Interesting. The books and sites on the subject of RE investing are all braying about regularly refinancing rental properties and how easy it is.

It is and it isn't. You need a banking relationship. We're not talking the VP of a Chase branch. You need to know the owner or primary shareholder of the bank. Not happening with Chase. You need to get in with the top commercial lending people at a small regional bank. Or OPM. There are ways. We'd cash out and buy another building after rehabbing it and getting it fully rented. It was a small bank on the South side of Chicago. As long as you perform on the loan and financials are solid, small banks will lend to you. Buying a couple dinners or taking people on vacations doesn't hurt either. Cost of doing business.

If you're doing Fannie/Freddie loans you're gonna find it harder. One your capped at 4 units. Two you can only have so many loans held by them. Can't remember if it's was 6 or 10. So if you want a RE empire, you're going to have to find a lender that can do more for you.

Acquaintance in Oakland put his home up for sale over a month ago. No bites and price was lowered a couple of weeks ago. His real estate professional said the whole area was the same. And so it begins?

ad says

It all works out very well unless it doesn't. That same leverage that allows for huge capital gains also means there's a chance you lose it all if things go only moderately downhill.

I know a person who had 3 highly-leveraged rentals. He might have pulled through the 2008-2009 meltdown except that his highest-paying renter decided to stop paying the rent. Without the cash flow, he lost that house and the two other condos.

There's plenty to be made in landlording and creating a rental empire, but beware of survivorship bias: We only hear about the success stories!