patrick.net

AD says

The problem is you are seeing everything from your South Florida perspective

I'm not in South Florida, I'm East Central. Daytona-Melbourne. A place where 5 years ago, before I returned to the states prior to COVID but was thinking about it, there were 100s of standard 3bed/2bath homes in the high 100s for a 60s Space Program Ranch /low 200s for more recent on the market. Hell, in 2021 during Covid you could rent a 3/2.5 Satellite Beach house a few blocks from the beach for less than $1800/month. Next to @Patrick SFB. Yeah, they're no longer AFB.

I brought my studio for ~65k in the mid 2010s. You can't find a studio under $150k now.

EDIT: $160k, and those are in the Crack Canaveral area, a few blocks of converted Army Missle Range Barracks, the only 'bad' part of the area.

The housing is too damned high.

And it's going to collapse.

AmericanKulak says

The decline of living standards in the USA is such that we're talking about this.

Back in 1993 when I was first stationed at the NAVSTA here, it was cheap living and high standard of living. You could afford to rent your own home and not need roommates.

Its gotten worse as far as living standards because of the investors (i.e., Eman, Blackstone, Blackrock, etc.) who have driven up residential real estate and treat housing like it is stocks.

But the standard of living is a lot better here in the Florida panhandle than it is in San Fran Bay Area.

By the way, when I was living in the Washington DC metro area, a lot of my friends lived in Dupont Circle and Adams Morgan and did not have cars.

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AmericanKulak says

Next to Patrick SFB. Yeah, they're no longer AFB.

Its Space Force, not an Air Force base. I use to live not far from Patrick AFB about 5 blocks from Ron John and the pier.

Yes, I have a buddy in the Panhandle, it's probably one of the better places. I'm not super familiar with it.

Eventually, and it's not possible due to family issues, would like to be in North Florida. Between Talahassee and Jax closer to the GA border for the 3 season and cheaper land.

I remember in the early 90s you could buy a brand spanking new 3/2 on a quarter/fifth acre in Central Florida for $70k. Boxy bland ranch, but still. And there would be maybe 3-4 houses on the block. Now they're selling in the mid $200k and up, over 300% appreciation, and their newer equivalents are zero lots and $300k+

Cheap money causes pain.

AD says

Its Space Force, not an Air Force base. I use to live not far from Patrick AFB about 5 blocks from Ron John and the pier.

Yep! They just changed the last of the signage a few months ago, finally.

I really can't complain living half a block from the beach. It got in the 40s many of the past few nights, though. I don't remember that, but then again, I was coming from a colder place.

That and I got to see the record 2 of 3 spaceX launches in 24 hours (the third was at Vanderburg)

In any case, we're getting there:

https://www.zillow.com/homedetails/415-Blue-Jay-Ln-2-5-Satellite-Beach-FL-32937/2056105604_zpid/

Originally listed a Aug 2023 at $359, now $299, or ~$250/sqft to ~$210sqft. Still too much, and not for me with the bedroom quantity and non-enclosed back space where I'd probably get shit for putting out a potted plant much less a Square Foot Garden. Wonder what it went for 10, 20 years ago, cause it ain't a new building and probably 70s-80s with the Dunkin Donut/Pizza Hut roof (forget what that is called).

In any case, it's !!!Happenning!!!

As much as I hate the POTATUS, some form of debt relief is necessary. Hell, even the Babylonians (Hammurabi ring a bell?) had 7-year periodic debt relief. Granted, debtors back then were literal slaves and treated like animals.

I'm hoping the debt relief will free enough people to risk taking on the gubment. It almost feels like the terminal phase of the Soviet Union, when everything was in slow motion collapse, and Gorbachev kept trying to incentivize the population not to rebel.

Hey Hey Momma, goin' down, goin' down





MUH APPRESHIASHION!!!

Seriously, this house is no more than $240k inc. inflationary past few years. $250k if it was updated and improved from the early-mid 90s build it appears to be

AmericanKulak says

That and I got to see the record 2 of 3 spaceX launches in 24 hours (the third was at Vanderburg)

“Vandenberg”

ForcedTQ says

“Vandenberg”

Right, the minor lesser, little used one whose name I forgot in tandem with it's importance. ;)

Looks like the latest housing prices came in today. Another record high. 5.5% year over year increase in prices.

Go figure.

https://finance.yahoo.com/news/home-price-growth-us-accelerates-140000941.html

Misc says

Looks like the latest housing prices came in today. Another record high. 5.5% year over year increase in prices.

Go figure.

https://finance.yahoo.com/news/home-price-growth-us-accelerates-140000941.html

Not sure if it is that home sellers like DR Horton are buying down mortgage rates and its not reflected in the sales price ?

A lot of times you don't know if cash was given to the buyer unless you see the closing documents. So the price does not reflect that.

Hence, should there be an automate adjustment to the median price that is being reported ? Such as discount it by 5% ?

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AD says

Not sure if it is that home sellers like DR Horton are buying down mortgage rates and its not reflected in the sales price ?

A lot of times you don't know if cash was given to the buyer unless you see the closing documents. So the price does not reflect that.

Yup. Wolf Street covers that.

https://wolfstreet.com/2024/02/26/prices-of-new-houses-v-prices-of-existing-houses-why-sales-of-new-houses-hang-in-there-while-sales-of-existing-houses-plunge/

Nope these are Case/Shiller prices. They measure the difference in prices for the same houses over time.

Misc says

Nope these are Case/Shiller prices. They measure the difference in prices for the same houses over time.

Not new houses then.

I'll post my prediction again.

House prices will not see any kind of significant decrease. In fact, I believe we will see prices hold and go higher and higher. America is for sure creating a 2-tier economy...the haves and the have nots. The % of have nots will increase. But I do believe that property taxes will go to the moon OR the fed printer will continue to go brrrrrrrrrrrrrrrrrrrr.

GNL says

I'll post my prediction again.

House prices will not see any kind of significant decrease. In fact, I believe we will see prices hold and go higher and higher. America is for sure creating a 2-tier economy...the haves and the have nots. The % of have nots will increase. But I do believe that property taxes will go to the moon OR the fed printer will continue to go brrrrrrrrrrrrrrrrrrrr.

I agree with this. For many years I believed the next crash must bring house prices down, but any industry which is a racket is mostly immune to severe downturns
There are too many subsidies at play for both healthcare and housing, plus the unfettered pressure of immigration, which is why these 2 sectors won't crash.

UkraineIsFucked says

https://wolfstreet.com/2024/02/26/prices-of-new-houses-v-prices-of-existing-houses-why-sales-of-new-houses-hang-in-there-while-sales-of-existing-houses-plunge/

There was a bit of a hold breath moment about 15 years ago when new was holding out while used started to dip. Then it was bombs away.

We could be in that phase now.

The rates dropped a bit but the buyers are staying away in droves. Remember, last year was the weakest year for RE transactions since 1993, when the population was 15-20% smaller and boomers right in the wheelhouse of homeowner/family ages.

Left shoulder and head done. Maybe this summer and fall the right shoulder. it's goin' down. Fundamentals and Demographics can be delayed, but not defeated.



EDIT: Interesting point noticed by Wolf Richter - there's never been a double top in the history of the Case-Shiller. My comments above are me looking at it like other (stock) charts.

"Buy now, before competition resumes!" - spoken to the last bagholder

Wolf Richter
Feb 26, 2024 at 3:40 pm
ChS,

“Home prices aren’t that out of step with CPI”

LOL. CPI Rose by 31.6% over the past 10 years, while the median price of existing homes rose by 97% — home prices rose three times faster than CPI and nearly doubled!!!

30% of office buildings are ‘worth nothing’ and have to be torn down, say experts

https://creditnews.com/economy/30-of-office-buildings-are-worth-nothing-and-have-to-be-torn-down/

I think a dirty little secret is that Insurers, which always invested in large office buildings in Metros and retail around them, are actually raising premiums because their investments are foooked.

mell says

which is a racket

100% IMO. Everything starts there. Debt cannot be allowed to break the economy or cause deflation or be written off (no, it just gets papered over) so, less affordable homes will be built and only homes will be built for the upper levels of society because that is where the $$ is. It costs too damn much to build so, nothing can be "affordable" (look at all the companies starting or talking about dynamic pricing. Why? Entities are looking for every last shred of profit. Nothing can be left for the next person. You cannot have a robust society society wide (or as wide as possible) if nothing is left on the table for the next guy.). So, we will either get social unrest (human nature simply will not sit by and watch a small % of people have everything) or higher property taxes to pay the poor not to rip the country apart or printer continue to go brrrrrrrrrrrrrrrrr. The cost structure of America is too damn high.

Wouldn't it be easier and better to simply ensure everyone has a living wage job? Or is that muh socialism speaking?

UkraineIsFucked says

30% of office buildings are ‘worth nothing’ and have to be torn down, say experts

https://creditnews.com/economy/30-of-office-buildings-are-worth-nothing-and-have-to-be-torn-down/

Yes, because of climate change the forecast for Jewish lightning strikes has never been higher.

GNL says

Wouldn't it be easier and better to simply ensure everyone has a living wage job? Or is that muh socialism speaking?

Inflation and Housing costs won't be a problem until matching wage pressure happens, then it will be a problem.

We can take the power back by telling the HR Ditz we're not driving an hour each way and getting suited up to go to the Third Interview, only to be asked if what color socks we like to wear and why, or what our totem animal is, or the other "Internet Quiz" BS that passes for Cutting Edge Human Resources Managerial Techniques.

If she (dumbass 23 year old or bitter 55 year old Cruise Ship taker who can't even entice the horny 20-something 5'5" Indonesian Bartender anymore) wants to ask, the job needs to pay 3X the annual rent of the two bed apt near the company HQ office building. Or you can work remote and the company can save everybody some time and money.

GNL says

You cannot have a robust society society wide (or as wide as possible) if nothing is left on the table for the next guy.).

Materialism and Female Liberation (80% of consumer spending is female, and 2/3 of credit card debt AND the majority of college loans) was very expensive.

The funny thing is that if we lived and married and raised families like the 1950s, with banking laws from the 1950s not after the disasterous "reforms" of the 90s that "Modernized the banking system", most people could probably retire by 55 or semi-retire by 50 without the traditional pensions.

https://www.youtube.com/watch?v=7CMConpppdc

AmericanKulak says

Materialism and Female Liberation (80% of consumer spending is female, and 2/3 of credit card debt AND the majority of college loans) was very expensive.

Those numbers are accurate?

AmericanKulak says

Wolf Richter
Feb 26, 2024 at 3:40 pm
ChS,

“Home prices aren’t that out of step with CPI”

LOL. CPI Rose by 31.6% over the past 10 years, while the median price of existing homes rose by 97% — home prices rose three times faster than CPI and nearly doubled!!!

I thought the housing aggregate for CPI or PCE was around 6.5% annually and about twice the overall CPI or PCE rate. So I'm not sure why The Wolfman at Wolf Street would state that.

I saw that firsthand as the average 3 bedrm townhome in my hoa was $150,000 in 2014 and rented for around $1300 a month. Same townhome sold for $310,000 in February 2022 when townhome prices peaked in Bay County, Florida.

Right now the average 3 bedrm townhome is easily selling for around $275,000 and renting for $2200 a month, based on monthly costs of $400 for HOA, $150 for property insurance and $140 for property tax.

Fortunately household income in Bay County has been catching up with housing since February 2022.

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GNL says

Those numbers are accurate?

Going by memory. The 80% of consumer spending is accurate, and is the college loans (women have been the majority of college attendees for decades now). I'm foggy on the CC spending, as I am going by memory from hearing a podcast. I will verify - I have a book ordered on the subject by an Economist who worked for financial institutions.

AD says

Right now the average 3 bedrm townhome is easily selling for around $275,000 and renting for $2200 a month, based on monthly costs of $400 for HOA, $150 for property insurance and $140 for property tax.

We'll see - I know we disagree on this, but I think the median home price is more fairly in the $200k neighborhood when all is said and done.

I'm focused mostly on Central and South Florida, but I think the whole state will shake out on a trip back to the historical mean.

According to rent.com:

Rents in Florida have decreased -4.15% year over year.
Tampa’s rent has decreased -.96% year over year and -3.38% month over month, with a median rent of $2,162.
Orlando’s rent has decreased -1.99% year over year and -.04% month over month with a median rent of $2,110.

https://thelistingrem.com/are-rents-going-down-in-florida/

As flipping shifted to Short Term Rentals, a lot of people and entities leveraged to buy properties, esp. in and around vacation areas (like Orlando Theme Parks/Disney). However, with rents dropping, insurance and taxes rising, can they hold on? Alot of those "Cash buyers" were actually using loaned money from stocks or other bank loans rather than mortgages. As an example, my mother took a 2% loan on a fraction of her stocks to upgrade her apartment, but that loan is now up to 7%, fortunately she's mostly paid it down by now. Those who took big loans to buy COVID priced Zero Lot SFHs or Condo are probably in worse shape than her.

AmericanKulak says

We'll see - I know we disagree on this, but I think the median home price is more fairly in the $200k neighborhood when all is said and done.

I'm focused mostly on Central and South Florida, but I think the whole state will shake out on a trip back to the historical mean.

According to rent.com:

Rents in Florida have decreased -4.15% year over year.
Tampa’s rent has decreased -.96% year over year and -3.38% month over month, with a median rent of $2,162.
Orlando’s rent has decreased -1.99% year over year and -.04% month over month with a median rent of $2,110.

That is a "different Florida" compared to the Florida panhandle, also affectionately referred to as America's Riviera or The Emerald Coast.

Okay, you mention a "return to the mean" ... so you mean (no pun) that housing prices should have went up about 5% each year since 2014 (when an avg townhome was $150,000) ?

(1.05^10) x $150,000 = 1.63 x $150,000 = $244,500

I think Robert Shiller stated back in 2015 that historically housing prices have appreciated about 4% annually since 1950.

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AD says

I think Robert Shiller stated back in 2015 that historically housing prices have appreciated about 4% annually since 1950.

The decline of family formation - we are a post-nuclear family, not just post-extended family society - and the record unaffordability, and the building of 4/5 beds on Zero Lots is going to break the long term trend. Not many lazy girl jobs can support a $350k SFH mortgage when there's only a cat or single child, when factoring in 6 figure college debt on top of it all.

Then we're going to have the Boomer expiration/mandatory downsize (meaning, it will not longer be an option to delay leaving the larger home due to health or death) starting in the next 5-10 years. While Millies will inherit Boomer properties, they as often as not be many states away, not able or willing to relocate due to job/other factors, and add to a rental or property dumping glut, which will impact house sale prices.

The market can remain irrational for very long periods of time, esp. when there's been easy money and lots of regulatory capture to keep it running.

AD says

I'm focused mostly on Central and South Florida, but I think the whole state will shake out on a trip back to the historical mean.

According to rent.com:

Rents in Florida have decreased -4.15% year over year.

3 bedrm townhome rents went up 7% over last 12 months for Panama City Beach: https://www.zillow.com/rental-manager/market-trends/32407/?propertyTypes=townhouse&bedrooms=3

My guess is because the 3 bedrm townhomes come with a very valuable garage and people don't want to rent a 3 bedroom apartment on the 2nd floor.

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AmericanKulak says

The decline of family formation - we are a post-nuclear family, not just post-extended family society - and the record unaffordability, and the building of 4/5 beds on Zero Lots is going to break the long term trend. Not many lazy girl jobs can support a $350k SFH mortgage when there's only a cat or single child, when factoring in 6 figure college debt on top of it all.

I see your point as far as "demographics is destiny" (to quote Professor Larry Sabato)

You are saying there won't be enough demand for McMansion's (+4 bedroom, +3200 square feet, 3 car garage, etc.) such as in Eman's zip code as well as in mountain towns of Colorado and Idaho, etc

I guess then that is why we are not seeing a large increase in new home starts as even with immigration, the home builders are accounting for this ?

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AmericanKulak says

Then we're going to have the Boomer expiration/mandatory downsize (meaning, it will not longer be an option to delay leaving the larger home due to health or death) starting in the next 5-10 years.

Boomers are keeping their homes. Likely paid off. Kids living in them. I'm working on a deal to get my mom $200k or so for 65 acres on a river. They're staying put and she'll buy my house or give me money for the build. Best Man in my wedding parents pay $30k/yr in property taxes. No kids in the school. The one's with wealth ain't leaving. They don't care. If you have $2M+ in the bank/investments, You can sit on your ass with everything paid especially in this high interest environment.

I don't see the market changing for kind of a long time. I don't like predictions, but I think we're going to see the lowest SLOWEST housing boom. I'm talking 2 decades. This is slight upward/sideways movement for a long time. There's no crash coming. It just won't be gang busters with a few regions that might eat shit, but 20-30% losses ain't coming.

I don't think people realize what the housing bust was. It was financing and overbuilding. That's not happening and probably won't in most our lifetimes outside of some hipster areas.

AD says

My guess is because the 3 bedrm townhomes come with a very valuable garage and people don't want to rent a 3 bedroom apartment on the 2nd floor.

You would think that being on at least the 2nd floor in a place like Panama City beach would be the more desirable location.

https://finance.yahoo.com/news/us-home-buying-demand-nears-120000320.html

US Home-Buying Demand Nears Worst Since 1995 With Rates Above 7%

zzyzzx says

https://finance.yahoo.com/news/us-home-buying-demand-nears-120000320.html

US Home-Buying Demand Nears Worst Since 1995 With Rates Above 7%

But...BUT RE 'experts' On PatNet Who Don't Know Shit About The Fed Nor Demographics TOLD US the 7% mortgage rate was DOA in 2024!

Reality: Not only is it still here, but...despite the occasional dips below the 7% threshold...is going to stay or even rise, over time.

That means housing prices are going to have to fall, in general. All markets are local so there will be some big variations.

Fall...or don't get sold. Homebuilders have already figured this out and now outcompete with existing home sellers with mortgage points buy downs. They have to move their houses, after all.

zzyzzx says

AD says

My guess is because the 3 bedrm townhomes come with a very valuable garage and people don't want to rent a 3 bedroom apartment on the 2nd floor.

You would think that being on at least the 2nd floor in a place like Panama City beach would be the more desirable location.

Bedrooms are on the 2nd floor of townhomes in Panama City Beach. Are you implying because of flooding ? Or even worse such as a tsunami ?

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