patrick.net

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Increase income by +3% annually while hold home prices and 30 yr mortgage rate constant to achieve more housing affordability
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There was a mainstream media headline that notes that poor Americans are benefiting from falling inflation !

gabbar says

There was a mainstream media headline that notes that poor Americans are benefiting from falling inflation !

Mainstream media is doing what it can for the Democrats going into this November elections.

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gabbar says

There was a mainstream media headline that notes that poor Americans are benefiting from falling inflation !

Noooooooooo!

gabbar says

There was a mainstream media headline that notes that poor Americans are benefiting from falling inflation !

Other than gasoline and used vehicles, too bad poor Americans aren't buying the (few) things whose prices are actually falling. Even those two categories are only falling from all-time highs to being merely near-all-time highs. As for food, clothing, and rents... up up and away!

If the median-income person is a house or apartment renter forever — as has been the case in much of Europe forever — does comparing median housing payment to median income make any sense? Maybe the comparison should be to median income of house owner. I also hear about the trend of investors buying up housing. This will make even more people renters for life and further reduce the predictive utility of the statistic.

https://nakedemperor.substack.com/p/has-the-american-dream-disappeared

gabbar says

There was a mainstream media headline that notes that poor Americans are benefiting from falling inflation !

Only the poor benefit from falling prices? LOL

Patrick says

Wow, this is really terrible. I guess Klauss is a genious. He was right. Well, except for the happy part.

SunnyvaleCA says

does comparing median housing payment to median income make any sense?

Of course it does: if renting is cheaper than buying, somebody must subsidize the whole thing, there is no other way around, and this somebody must be either the landlord or the government.

Every house for sale I follow in wine country still sells within a few days or weeks on the market, at asking or above.

mell says

Every house for sale I follow in wine country still sells within a few days or weeks on the market, at asking or above.

The drop in mortgage rates gave it a nice little tailwind.

This thread started about 2 years ago, right about the time that housing stopped going down on that little blip on the chart, Since then, prices have simply gone up confounding the housing bears who expected prices to crater like they did in 2008.

It is not just housing assets that are at a new all time peak vs income, but if someone were to graph outstanding financial assets vs income, the chart there would show a new peak as well.

The US GDP is about $23 trillion dollars. America's savings rate is right about 4%. That means we have to find a place to put about $920 billion per year. That 25% of houses are bought all cash should be no surprise. That the average amount of the down payments are at a new high should also be no surprise. That most states have new buyer assistance programs (giving the buyer about $10k in additional down payment assistance) and with 25% of new buyers also getting down payment assistance from their parents adds pure fuel to the prices that people can pay.

Prices could also shoot up more if Biden's plan for a Federal first time buyers program passes too.

Millions and millions of illegals with limited construction of housing adds to the dynamic.

https://homebuyer.com/learn/15000-first-time-home-buyer-tax-credit

All cash buyers is a Realtor distortion. Most cash buyers borrowed money from their equity line of credit or a bank at variable interest, or from investors demanding ROI or a mixture.

The Chinese aren't moving to Anniston, Alabama or the suburbs of El Paso, TX or Albany, NY. The $2300 mortgage payments aren't doable outside the land of Silly Con Valley make believe - outside of it the national median income is $4400/month.

Boomers aren't living for ever, subsequent generations have smaller households and less wealth, and the development SFH landlords are fucked once their variable rate equity loans start getting adjusted as the rents don't rise anymore, which began last year.

"The boomers will leave it to the Millies". And their 30 something SINK Millie Daughter won't want to live in Homestead, FL or Golfcartville, AZ and may not be able to find a comparable job there if she did. She'll sell it. It's hard to manage a rental multiple states away.

It's going to be interesting The market can stay alive longer than a short position can be maintained, but it can't last.

Demographics is destiny, and laughs at the market as a Deterministic Datapoint of DOOM!

Also, the coming housing bust of Boomers is NOT baked in, though known. Just like marketeers were touting the Child and Youth consumer boom of the 50s and 60s, but the homebuilders missed the boat in the 70s, way behind on housing. So it will be again but in reverse.

There's enough housing but the wrong kind in the wrong places. We're in a for a ride.

Jamie Dimon is hedging bets and asskissing for a reason. He has the dataset, and got more at Davos. They know too, and the housing bust is going to both fuel and mitigate the Populist Wave

Talking up the market when they know they'll be a bust is par for the course for Wall Street And Realtors.

ad says

while hold home prices and 30 yr mortgage rate constant to achieve more housing affordability

Why not increase mortgage rates, and things like down payment requirements (minimum 20%) to get things back to historical norms?

All of you calling for a "housing bust" for the last 2 years have been wrong. How long do you get to be wrong before a real crash happens so that you can say you were right all along?

You're starting to sound like Peter Schiff. Get a grip.

Meanwhile, there is an on-going "housing bust" - just not the one you're hoping for. The one we have been in for the last three years involves a complete lack of shit to sell - which, if you are a realtor making your living doing this, has been considered a "housing bust". No transactions mean no money.

This is so easy a child can figure it out. There are more millennial's than boomers - and they want to buy a house.

AmericanKulak says

Also, the coming housing bust of Boomers is NOT baked in, though known.

People act as if boomers are all going to die at once. It's going to be a painfully slow process that takes place over the course of a couple of decades at least, and when you potentially add housing to the market at that slow of a rate it's not going to have an effect anytime soon.

I think $700 billion could default… The lenders are going to have to do things with them. They're going to be selling. It's going to be a generational change in real estate coming, end of 2024 and all of 2025. We will be talking about real estate being just a massive change, $700 billion to $1 trillion in defaults coming. - Howard Lutnick

stfu says

Meanwhile, there is an on-going "housing bust" - just not the one you're hoping for. The one we have been in for the last three years involves a complete lack of shit to sell - which, if you are a realtor making your living doing this, has been considered a "housing bust".

Very true. My thought is the only way we see a bust is continuing low transactions. Low transactions takes a huge bite out of the economy and "could" cause job losses. BUT, we definitely need more inventory/building also.

gabbar says

I think $700 billion could default… The lenders are going to have to do things with them. They're going to be selling. It's going to be a generational change in real estate coming, end of 2024 and all of 2025. We will be talking about real estate being just a massive change, $700 billion to $1 trillion in defaults coming. - Howard Lutnick

Based on the recent stats I got, office buildings are about 15% of the commercial real estate (CRE) market. $1.5T mortgages are coming due in the next 2 years. Say 20% of office buildings will go into default, we’re looking at $45B of losses.

If the Fed is going to cut rates this and next year as expected, this loss number will likely be less.

My friend is in contract to buy a 13-unit building for $3.2M. $1.8M loan with a $200k earn out once the vacant unit is rehabbed rented. So roughly a 62.5% LTV at 6.25% rate. With 30-35% upside potential in rent, it’s a good deal IMO.

Always be buying or selling for the right price regardless of where we are in the cycle of the housing market.

For the last 18-24 months or so since interest rate went vertical and up as much as 150% from the low, the housing market has held up extremely well. I’m surprised as an investor who live and breathe real estate everyday.

This shows buyers are going to buy based on their life circumstances. Sellers have more holding power as they have locked in the low mortgage. There’s no urgency to sell unless there’s a life changing circumstance.

https://twitchy.com/coucy/2024/01/18/boomers-american-dream-n2391887

Whine about Boomers owning homes but not the fact we aren't building new ones.

Eman says

For the last 18-24 months or so since interest rate went vertical and up as much as 150% from the low, the housing market has held up extremely well. I’m surprised as an investor who live and breathe real estate everyday.

This shows buyers are going to buy based on their life circumstances. Sellers have more holding power as they have locked in the low mortgage. There’s no urgency to sell unless there’s a life changing circumstance.

I agree and would add that although housing is the most expensive it has ever been, so is renting. If renting were dirt cheap, housing would drop significantly. People are sick and tired of ever-increasing rent increases, and buying a house largely at least gives you a predictable payment with the prospect of full ownership at the end. I know this as someone who rented most of his life and bought a house 1.5 years ago, and couldn't be happier.

zzyzzx says

AmericanKulak says

Also, the coming housing bust of Boomers is NOT baked in, though known.

People act as if boomers are all going to die at once. It's going to be a painfully slow process that takes place over the course of a couple of decades at least, and when you potentially add housing to the market at that slow of a rate it's not going to have an effect anytime soon.

I see new ways for boomers to live out there years in their homes. This means new businesses like more innovative Nurse Aid care such as highly advanced versions of Visiting Angels. Smart watches that monitor the boomers. Wyze cameras with advanced technology also will help.

Perhaps also arrangements for younger roommates who can study and work from home as well as look after the boomers. Look at how a lot of college is being placed online, which makes it easier for college students to study at home.

Hence, there will be less of a need to sell the baby boomer homes right away.

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Tenpoundbass says

https://twitchy.com/coucy/2024/01/18/boomers-american-dream-n2391887

Whine about Boomers owning homes but not the fact we aren't building new ones.

I look at housing starts on the website for the Federal Reserve Bank of St Louis. They are not over building. They are building just enough based on their demographic forecasts.

So the net outcome is Florida is booming and Democrat shitholes like Illinois and New Jersey are a housing construction cemetery.

Also another major resistance or inertia to movement is the zoning and building code restrictions. Some posters from California have pointed this out.

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Congrats porkchop. That’s the thing about home ownership. You have essentially fixed the cost of your living expenses compared to renting where rent tends to go up almost every year. There will always be exceptions, but in general, annual rent increases due to inflation are real. We’re living in an inflationary economy. This is why the Fed has 2% inflation target. Sometimes, paying some premium for a piece of mind is really worth it. Time and inflation will do the rest of the heavy lifting.

Eman says

Congrats porkchop. That’s the thing about home ownership. You have essentially fixed the cost of your living expenses compared to renting where rent tends to go up almost every year. There will always be exceptions, but in general, annual rent increases due to inflation are real. We’re living in an inflationary economy. This is why the Fed has 2% inflation target. Sometimes, paying some premium for a piece of mind is really worth it. Time and inflation will do the rest of the heavy lifting.

Not quite fixed: even in CA property taxes go up. In other states they
sometimes JUMP. And don't get me started on fucking insurance. So while I do enjoy my 2.03% mortgage, I'm still annoyed by other ownership-related costs going up.

Guest Post by Martin Armstrong

Could this be the catalyst for the next civil war? The federal government warned the Texas National Guard to “cease and desist its efforts to block Border Patrol’s access in and around the Shelby Park area and remove all barriers to access to the U.S.-Mexico border.” Texas said NO and numerous states are sending resources to Texas to stand against the federal government.

Since the Biden Administration has adopted an open border policy, Texas has implemented a state law whereby they will arrest all illegal aliens entering their state. The federal government has done everything to prevent Texas from stopping the surge of migrants and neither side will cave. “The recent actions by the State of Texas have impeded operations of the Border Patrol. Those actions conflict with the authority and duties of Border Patrol under federal law and are preempted under the Supremacy Clause of the Constitution. Texas’s actions also improperly seek to regulate the federal government,” the DHS said in a letter to Texas AG Ken Paxton. Texas responded by saying it will “not surrender to Biden’s destructive open-border policies.”

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A mother and her two children drowned in the river while crossing into Texas. The federal government is solely blaming Texas rather than their failed policies that invited people to cross into the nation in the first place. The Mexican government stepped in to retrieve the family, and US Border Patrol did not show up until after the incident. Forget the millions who have died from the drugs and crime crossing into the US; the MSM will now focus on these three people over the coming weeks.

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Numerous Republican governors in other states, especially the south, are sending resources to Texas immediately. Around 100 migrants are crossing into Texas from this specific area every HOUR. This is one of the dirtiest ploys in recent political history. The year 2023 marked the first time in modern US history that the number of migrants far outpaced the number of births in America. The demographics of America have been permanently altered and people are continuing to pile into the country. The Democrats admitted the open border policy was a deliberate attempt to flood the nation with people who would vote for socialistic policies as the usher in the New World Order, but most were utterly clueless regarding the resources required to carry out their failed scheme. Now, their Sanctuary cities and states are in ruin; they have run out of resources.

American Dream

The far-left told migrants to come to America where the American dream would await them. The American Dream of the 1950s is DEAD. Even hardworking Americans can no longer obtain the lifestyle that was once promised and provided to legal immigrants. These migrants today are unable to work and expect the taxpaying citizens of this nation to pay for their new lives. The future of our nation depends on stopping the deliberate invasion of America.

BUT the most important thing is to discuss muh house and muh RE empire. We may find out soon what the plan is for America. It doesn't look good. Endless inflation, endless free shit army and endless taxes paid by those who have stuff.

GNL says

BUT the most important thing is to discuss muh house and muh RE empire. We may find out soon what the plan is for America. It doesn't look good. Endless inflation, endless free shit army and endless taxes paid by those who have stuff.

Let’s be realistic here. What can you do to change the outcome? In the mean time, whining and bitching do nothing other than put ourselves and our family in the poor house.

Having money will allow us to flee this place if/when SHTF. Relocating to Philippines or Thailand may not be a bad option. Just ask the expats or nomads.

Eman says

GNL says

BUT the most important thing is to discuss muh house and muh RE empire. We may find out soon what the plan is for America. It doesn't look good. Endless inflation, endless free shit army and endless taxes paid by those who have stuff.

Let’s be realistic here. What can you do to change the outcome? In the mean time, whining and bitching do nothing other than put ourselves and our family in the poor house.

Having money will allow us to flee this place if/when SHTF. Relocating to Philippines or Thailand may not be a bad option. Just ask the expats or nomads.

I agree with you except that running is something I loath. One world government means there is NO WHERE to go. I admit I am fearful. Living fearfully is not a great existance but it is a motivator. For me anyway. Some of the greatest people and things came from the attitudes created by the Great Depression.

Eman says

Having money will allow us to flee this place if/when SHTF. Relocating to Philippines or Thailand may not be a bad option.

The commies had a method of preventing people from leaving when SHTF. The Soviet and East German model will be dusted off.

TBH, I don’t know how many more years I have left to live so I just focus on what I can control. Living in fear or stress is like living in hell. I never want to go back to that dark place.

We get to choose to be happy or fearful each day. It's a choice….until it's not. Right now, we still have that choice so I'm not going to let all these negative news affect my daily beautiful life.

Communism happens in phases. In the USA, I don’t think 💩 will hit the fan, and we’ll become commies in my lifetime so why worry about 💩 I have no control and deprive my day to day happiness? WHY?

Eman says

TBH, I don’t know how many more years I have left to live so I just focus on what I can control. Living in fear or stress is like living in hell. I never want to go back to that dark place.

We get to choose to be happy or fearful each day. It's a choice….until it's not. Right now, we still have that choice so I'm not going to let all these negative news affect my daily beautiful life.

Communism happens in phases. In the USA, I don’t think 💩 will hit the fan, and we’ll become commies in my lifetime so why worry about 💩 I have no control and deprive my day to day happiness? WHY?

Do you give a damn about your progeny? If I remember correctly, you are an immigrant. Maybe that's why you think the way you do. You aren't a real American. That isn't a knock on you, I'm just making an observation.

GNL says

If I remembe correctly, you are an immigrant. Maybe that's why you think the way you do.

I think Eman is ethnic Han and an engineer (electrical?). I don't know if he is from Singapore, Thailand, etc. But I think Eman mentioned he is an immigrant.

Eman knows a lot about residential real estate finance and operations (and maintenance?).

Did Eman graduate from a university or college in the USA ?

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I’m an immigrant from Vietnam, which is a communist country. I saw communism first hand. People are clueless when they talk about communism. We were able to get out of a communist country just fine.

I came to this country at the age of 16. Graduated HS and SJSU with honor. Kids made fun of my English in HS. Kids were being kids. Who could blame them.

I love this country. I’m sided with conservatives on most issues and damn proud of them. Did I say I love this country? I LOVE USA

ad says

GNL says

If I remembe correctly, you are an immigrant. Maybe that's why you think the way you do.

I think Eman is ethnic Han and an engineer (electrical?). I don't know if he is from Singapore, Thailand, etc. But I think Eman mentioned he is an immigrant.

Eman knows a lot about residential real estate finance and operations (and maintenance?).

Did Eman graduate from a university or college in the USA ?

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You don't really seem to care what happens. Only about yourself. This is not a knock on you. Self interest is very important. We don't help ourselves without it. However, we must care about society.