patrick.net

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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In my opinion, we only get a crash if people can't pay their mortgages. If RE transactions stay low enough, that could happen.

UkraineIsFucked says

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.

But adjustments are being made as the new home construction rate is still well below 2005 levels.

The home building industry is seeing the same demographic data as you, so I don't think they will overbuild and there will be an oversupply condition to cause a major drop in prices in the long term.

If anything home prices may return to the mean such as fall back to the trend line of 4.25% annual increase in home value.

I see the air slowly being let out of any housing bubble, as there are not as many subprime mortgages as in 2004-2007.

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AD says

The home building industry is seeing the same demographic data as you, so I don't think they will overbuild and there will be an oversupply condition to cause a major drop in prices in the long term.

Did I say they were going to overbuild? No, I did not.

And you don't know what I was referring to by demographics. Had nothing to do with demand for housing. Had to do with cost of money. Since I was talking about mortgage rates I figured that was pretty clear.

UkraineIsFucked says

AD says

The home building industry is seeing the same demographic data as you, so I don't think they will overbuild and there will be an oversupply condition to cause a major drop in prices in the long term.

Did I say they were going to overbuild? No, I did not.

And you don't know what I was referring to by demographics. Had nothing to do with demand for housing. Had to do with cost of money. Since I was talking about mortgage rates I figured that was pretty clear.

I never said you said they were going to overbuild. I stated they would adjust the new construction rate to match forecasted demand. Yes the cost of money impacts demand. The higher the future cost, then prices may drop even more if there is an over supply. That is why home builders are cautious.

Also combine this with housing prices essentially remaining flat from 2022 to 2025 so that income catches up with housing costs.

And also demographic trends may cause a drop in demand for +4 bedroom homes as AmericanKulak pointed out. That is another factor that is making home builders cautious.

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UkraineIsFucked says

Had to do with cost of money. Since I was talking about mortgage rates I figured that was pretty clear.

The 30 year mortgage rate is eventually going to steady around 5.5% this year, which puts it about 2% above the locked-in mortgage rate when housing prices peaked (circa February 2022).

Even motivated home sellers in 2024 and 2025 may offer to buy down 4 discount points to lower that rate from 5.5% to 4.5%. It only costs 4% of the mortgage to buy the 4 points, but is nearly comparable to a 10% drop in home price.

Sale prices in my townhome HOA have fallen about 15% from Februrary 2022 peak. So a rate of 4.5% is a great deal for a mortgagee especially since the median local household income has increased +5% annually since early 2022.

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WookieMan says

Boomers are keeping their homes. Likely paid off. Kids living in them.

Until they MUST pay for assisted living that day, no delaying for market recovery. And many boomers haven't entirely paid off their homes.

And if the kids inherit, you're assuming the kids can move from Indiana to Arizona and ditch their jobs or businesses and their own kid's schools in a heartbeat to live in them.

And if they do so, that only means yet another house will go on the market in Indiana instead of Arizona. It will still be rented out or sold, and it will mostly happen in a decade time frame

AD says

I never said you said they were going to overbuild. I stated they would adjust the new construction rate to match forecasted demand. Yes the cost of money impacts demand. The higher the future cost, then prices may drop even more if there is an over supply. That is why home builders are cautious.

This is basic math guys and understand the past. There are no builders. There are no skilled trades for new construction. All this happened because of the housing crash. Throw covid on top of it. We're 10 years from have any substantial building at all nationally. Millennials will eventually get their shit in order OR they'll take mom and dads house. The latter is the most likely.

So no one learns the skills to build anything. No new houses are built. This is obvious as can be. Sales will stay low (which don't matter) because of interest rates. Prices will be on a slow upslope for another decade until building ramps up. Honestly unless any of us live to 100, I don't see how there could be a housing crash. It would be an economic collapse for whatever reason.

The 2000 tech crash was minor to the housing crash. These thing don't go boom that often. If you're gonna live somewhere for 5-10 years minimum I'd buy even at today's interest rates. Not saying it's a buyers market, but you won't lose.

AmericanKulak says

That graph looks sucky.

WookieMan says

The 2000 tech crash was minor to the housing crash.

Yes as the 2000 tech crash led to the dissolution of tech firms that were vampires as far as equity blood.

So the stronger companies survived, as even Jeff Bezos said that Amazon would make it through the crash because it was wisely investing for the future.

Yes, the housing crash definitely had a bigger disastrous footprint.

Yes, I was just reading PCB Life (myPCBlife.com) about in-home assisted living by "Panhandle Assisted Care". The future trend is this as far as innovative ways to care for senior citizens in their homes.

Our local school district which includes Haney Tech is promoting blue collar trade certifications. They are offering scholarships such as for training to be carpenters, conditioning techs, electricians, etc.

Also Florida is working to ensure the state is not flooded with undocumented workers in the construction trade.

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AmericanKulak says

yeah, as the home construction industry is tapping the brakes as far as what they see ahead in the future such as with respect to demographics and also interest rates.

I think the new norm is not low interest rates or Zero Interest Rate Policy like from 2008 to 201, so the 30 yr mortgage rate will likely be around 5.75% instead of being below 4% for at least 12 months.

You're predicting sub 4% rates in 12 months?

GNL says

You're predicting sub 4% rates in 12 months?

No. I am predicting the 30 year mortgage rate steadying around 5.5% within the next 12 months.

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VA which has been providing no money down mortgages and 100% cash out refis calls for halt to foreclosures:

https://news.va.gov/press-room/va-calls-on-mortgage-servicers-to-pause-foreclosures-of-va-guaranteed-loans-through-may-31-2024/

FHA suspends foreclosures for 60 days: https://www.housingfinance.com/news/hud-halts-foreclosures-for-60-days_o

The entire US monetary and financial system depends on overpriced real estate and that system is going fight like a meth-crazed army of drooling red-eyed Orcs to defend its goblin infested empire,

GNL says

VA which has been providing no money down mortgages and 100% cash out refis calls for halt to foreclosures:

https://news.va.gov/press-room/va-calls-on-mortgage-servicers-to-pause-foreclosures-of-va-guaranteed-loans-through-may-31-2024/

FHA suspends foreclosures for 60 days: https://www.housingfinance.com/news/hud-halts-foreclosures-for-60-days_o

Election year scheme ? I am expecting more announcements like in addition to the regular proclamations of student loan debt forgiveness.

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Seems plausible. This country is so fucked politically.

GNL says

The entire US monetary and financial system depends on overpriced real estate and that system is going fight like a meth-crazed army of drooling red-eyed Orcs to defend its goblin infested empire,

How could this be! We were told by the RE 'experts' on PatNet...

UkraineIsFucked says

Hey PatNet Fed Rate Cut Experts!

WTF ya gonna do now?



https://wolfstreet.com/2024/02/29/worst-monthly-spike-of-core-services-pce-inflation-in-22-years-and-not-just-housing-powells-gonna-have-another-cow/

UkraineIsFucked says

https://wolfstreet.com/2024/02/29/worst-monthly-spike-of-core-services-pce-inflation-in-22-years-and-not-just-housing-powells-gonna-have-another-cow/

Yeah The Wolfman at Wolf Street website has been warning about core inflation (or inflation excluding food and energy) such as the costs for home repair (i.e., air condition repair, etc.), housing costs, etc.

Still core inflation was up 0.4% from December 2023 to January 2024 and up 2.8% for the last 12 months.

As The Wolfman says, lets see how this plays out such as with the 6 month moving average for core inflation and overall inflation.

That is if we can trust the economic numbers reported by the Biden Admin are not being massaged more than usual during an election year.

Just seems like the circumstance is too ideal for the Biden Admin to show inflation going down while unemployment remaining low. And I say this in the same context of not being shocked by any "October surprise".

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There are no maximum number of people allowed in a SFH via Supreme Court.

https://olis.oregonlegislature.gov/liz/2021R1/Downloads/PublicTestimonyDocument/4278

There is no maximum number of owners. There are no maximum number of parties on mortgages.

A bill has been introduced to allow illegals in California access to the California Dream for All Shared Appreciation Loans program, which launched spring of 2023 to give qualifying first-time home buyers a loan that covers up to 20% of a property’s purchase price that will not accumulate interest or have required monthly payments. Loanees are instead expected to pay back the original loan amount in addition to 20% of the increase in the home’s value when the property’s mortgage is refinanced or resold.

https://www.foxnews.com/media/new-california-bill-make-illegal-immigrants-eligible-first-time-homebuyer-loans

So, no down payment needed 'cause the 20% is covered by the State of California. You just cram enough illegals into the dwelling so their combined wages/social benefits conform to Fannie/Freddie guidelines and voila the American dream.

We may get some new highs on house prices.

Misc says

So, no down payment needed 'cause the 20% is covered by the State of California. You just cram enough illegals into the dwelling so their combined wages/social benefits conform to Fannie/Freddie guidelines and voila the American dream.

We may get some new highs on house prices.

Think.about it.

This is quite brilliant when looking at the perspective of what it is really designed to accomplish.

Misc says

You just cram enough illegals into the dwelling so their combined wages/social benefits conform to Fannie/Freddie guidelines cover the rent for our favorite landlord.

More landless peasants to exploit.