patrick.net

zzyzzx says

https://www.foxbusiness.com/economy/mortgage-rates-stay-above-6-through-2025-fannie-mae-says

Mortgage rates to stay above 6% through 2025, Fannie Mae says

But! But this is an election year!

zzyzzx says

Mortgage rates to stay above 6% through 2025, Fannie Mae says

Still too low.

zzyzzx says

https://www.foxbusiness.com/economy/mortgage-rates-stay-above-6-through-2025-fannie-mae-says

Mortgage rates to stay above 6% through 2025, Fannie Mae says

My original forecast was for it to steady between 5.5 and 6% by end of 2024, as I think PCE will remain 3%.

If it was at 6%, then I'd buy down 4 discount points to get the 30 yr mortgage to 5%. Recall the locked-in rate was around 3.5% when prices peaked in early 2022.

For every 1% increase in the 30 yr mortgage rate, there should be a 10% drop in home prices.

.

In my view, we are in a quaint little time where people believe in financial stability and people can make long term financial plans. The people have faith in things called dot plots even.

Banks haven't loaned money to each other since 2019 and the reason they do not still exists. The banking system is fragile as fuck. To force interest rates back down to where Gen Z can purchase a home, TPTB could decide to sacrifice a Too Big To Fail financial institution for the common good.

The Fed for all of its supposed all encompassing power, is going to be running up against a hard limit as to how far it can shrink its balance sheet. If they go too far, there simply won't be enough cash in the system for everyone to have their share. Biden, meanwhile, is spending a couple trillion more than he has cash coming in, and that is before aid to Ukraine and Israel. There's also always an emergency that takes up a few hundred billion extra. All this borrowing sucks cash out of the system. If people continue to get 2nd and 3rd jobs, say damn the interest rates charge it, and/or tap the equity in their homes via HELOCS to keep the economy not just expanding, but pushing up inflation, well the Fed could find itself having to buy Treasuries even with a higher than wanted inflation rate. If that happens, things could get really fucked up quick.

So there could be big movements in interest rates in either direction.

Someone could also pull back the curtain on how the Europeans are keeping their interest rates between countries at a seemingly reasonable level. If that happens...well the Euro could simply not exist...maybe even overnight.

AD says

For every 1% increase in the 30 yr mortgage rate, there should be a 10% drop in home prices.

I presume you mean that for every 1% increase in the 30 yr mortgage rate, there should be a 10% drop in price to maintain the same monthly payment. If inflation and other factors keep the house prices elevated despite the rate increases, then people will continue to rent, settle for smaller houses, or double up.

HeadSet says

AD says

For every 1% increase in the 30 yr mortgage rate, there should be a 10% drop in home prices.

I presume you mean that for every 1% increase in the 30 yr mortgage rate, there should be a 10% drop in price to maintain the same monthly payment. If inflation and other factors keep the house prices elevated despite the rate increases, then people will continue to rent, settle for smaller houses, or double up.

Yes, it is about mortgage affordability as the price of the house would have to drop 10% if the 30 year mortgage rate increases by 1%.

That is if the mortgage applicant is at the maximum loan rate (as percentage of household income) before the rate would increase by 1%.

For around here in the Florida panhandle, seems like townhomes are not above the peak prices set in early 2022, YET income has gone up since early 2022.

AD says

all about ABC

Coffee is for closers!

"The process of buying and selling houses in the United States is an egregious example of special interest politics" - Larry Summers, US Secretary of Treasury, President of Harvard University, March 2024

https://socketsite.com/archives/2024/03/median-new-home-sale-price-drops-down-nearly-20-from-peak.html

At the same time, the median sale price of the new homes sold last month dropped nearly 4 percent, from an upwardly revised $414,900 in January to $400,500 in February and was down 7.6 percent on a year-over-year basis and nearly 20 percent below its fourth quarter of 2022 peak, with inventory levels, which are over 40 percent higher than prior to the pandemic, having ticked up another percent to within a percent of a 16-year high, despite continued misreporting of “supply constraints” in the press, none of which should catch any plugged-in reader’s by surprise.

The prices seem to have picked up recently. Out of $500K drop from the recent high on my shack $200K has been "recovered" already.

I feel rich again!

https://www.marketwatch.com/story/renting-is-now-cheaper-than-owning-in-all-of-americas-50-biggest-metro-areas-8cd4cd03

Thanks to rising home prices and elevated mortgage rates, it’s now cheaper to rent than it is to buy a home in all of America’s biggest metropolitan areas

Article still full of manipulative bullshit, but at least it gets a few of the facts right.

Patrick says

but at least it gets a few of the facts right.

Patrick, they still charging ~2021 rental rates

https://www.zillow.com/homedetails/1874-Pointe-Dr-Panama-City-Beach-FL-32407/251474936_zpid/

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AD says

Patrick, they still charging ~2021 rental rates

Because building is too expensive and there's no labor force for it. Younger people have no clue what a drill even is or a hammer. Construction labor costs have gone through the roof. Building is an absolute hassle now for contractors. So people move and rent out their houses and don't build new anymore. Inventory stays restricted. No one new learns to build.

We're close to building a $700k ranch in a town with a median of about $260k.... Think about why there's no new inventory in many areas? My new house won't even appraise. 2,200 SF ranch. Sure it's a lot of concrete and form work, but that's not a big house at all. We'll eat it and can afford the payment. It's where we want to be. And I'm not buying/building a shit box, builder grade piece of shit. I have standards for my forever home.

WookieMan says

Because building is too expensive and there's no labor force for it.

I have mentioned that necessity is the mother of invention. I have said the future economy will requiring more productivity and innovation. That means do more with the same (not necessarily less).

There are innovation ideas which have worked for many years like this:

https://www.fadingwestdevelopment.com/

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AD says

There are innovation ideas which have worked for many years like this:

It doesn't work. Unless you're in a loose area with building requirements. Basically the country/rural. I worked on this for a decade in Chicago. Literally tried to get a plant opened in the city with Union workers and all that bull shit. It was impossible. I don't give up on much, but it was impossible.

Helped my dad build two modular homes, one of which my sister still owns. It's doable, just not in urban areas.

Where it works is apartment/townhome buildings. Don't want to dox myself too much be we have a facility in my town that builds large scale apartment buildings by panels framed out and shipped on a flatbed.

Municipalities and inspections are the bitch of it. You cannot roll in a section or cube and drop on site without inspection. So you have to leave it open and then hire labor on site which makes the costs basically the same as building in place if not more.

WookieMan says

Don't want to dox myself too much

WRONG, yes you do want to dox yourself here.

You are correct as I noticed more townhomes being pre-fabricated especially in Colorado like the The Farm in Buena Vista.
.

AD says

WRONG, yes you do want to dox yourself here.

Find me then. Not a chance anyone can. Even Patrick who knows my first name at least. Even if I gave my last name, there are plenty of "me" in my region. I have a semi famous name, so you'd never find anything on me. It would all be directed at that person or literally thousands of others if searched. Either way I try to tread lightly.

If I mentioned the company building the panels you would most certainly find my town. They're pumping out frames like gangbusters. My little town is doing well for what it is. It's only going to do better. Need to think and work on local. Everyone gets hung up on foreign affairs and federal government. Work on your own back yard.

https://youtu.be/MjUWf97xA7o

https://nakedemperor.substack.com/p/this-weeks-must-reads-25-31-march

Patrick says

https://nakedemperor.substack.com/p/this-weeks-must-reads-25-31-march

But the housing experts on PatNet said...

UkraineIsTotallyFucked says

But the housing experts on PatNet said...

Depends where you are. I'm in an area with no building and the exodus has basically ended en mass. As much as I hate the fat fuck Pritzker, IL is slowly leveling off. I don't see housing prices crashing here. CA is going to be the biggest drag on national median home price due to disfunction, along with NY and other east coast states as Boomers move to FL, TX and AZ with cheaper home prices.

On paper it will look like shit. But in reality it's not like people will be losing their homes like 2006. They just won't be able to move and be stuck with 2020 interest rates. Oh well. That's the way I think it plays out. Boomers sell a paid off house for less and move to a lower COLA raising that areas prices, but the national median drops. Median is an awful metric for RE nationally. Especially when you factor in the US demographics. I could speak on this for an hour, but I'm too lazy, and I'd write a book already if I wanted to. I don't.

A massive paradigm difference between now and before is remote work. A ton of professionals (like me) do not have to move if we lose our jobs because we're remote and can get another remote gig. I know there's a lot of buzz about people returning to work, but remote work is here to stay forever. It's too lucrative for companies wanting to hire the best talent.

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/1bt63ak/underwater_cant_afford_mortgage_im_a_stupid_pos/

Underwater, can't afford mortgage, I'm a stupid POS

TL:DR - bought our first house in 2022 for way too much, now it's worth nearly 200k less, yet our property taxes exploded, and our mortgage is over $5,300/month. I can't afford this and can't sell and just feel like I'm sinking and will never recover.

....

Realtor "friend" badgered us into buying in 2022, saying prices would never go down, and we'd never own a home if we didn't buy then. Her lender friend agreed, and they assured us our income would easily cover the mortgage (which was supposed to be $2,000/month less than what it is now). It would be a "great investment". I work remotely, so tons of our expenses would be tax write-offs. The area she convinced us to buy in is a boring suburb, outside of the popular city where we rented (a bigger house for only $2,000/ month), but it was totally going to go up in value based on not being too far from the city. And realtor friend assured us we wouldn't have to worry about taxes increasing more than 10%, as long as we filed a homestead exemption.

Fast forward to today:

the area is flooded with apartment construction and traffic,

nobody's buying here - at least not for anything close to what we paid and maybe never will without some insane world event like the last one,

work from home tax write-offs only count if you're self-employed, so that was crap,

we owe thousands in income tax because the lender convinced us to pull from our 401ks for the downpayment - saying we'd get a tax break on it because it was for our first house (we didn't, that program stopped over 10 years ago),

The homestead exemption didn't kick in until after our first year of ownership (when I tried to contest our tax assessment, the people at the hearing literally laughed when they saw how much we overpaid for our house, but they went ahead and upheld the assessment, even though they knew houses weren't selling for that much anymore)

our increasing property taxes have kicked our mortgage up to $5,300 / month.

We can't sell, and we can't afford the mortgage, we were just fine renting... like I said - I'm a complete ignorant moron and I'm paying the price for it, except I can't afford to pay the price anymore, so I'm hopeless as well as stupid.

porkchopXpress says

A massive paradigm difference between now and before is remote work. A ton of professionals (like me) do not have to move we lose our jobs because we're remote and can get another remote gig. I know there's a lot of buzz about people returning to work, but remote work is here to stay forever. It's too lucrative for companies wanting to hire the best talent.

This is very true. There's also the fact that a couple that has one spouse that can remote work, then can move where they want to. They're usually leaving less desirable location to better ones. The other spouse is maybe a teacher, nurse, etc. that can easily find work elsewhere with the WFH spouse.

Basically as I think you're implying, there's just going to be less movement of people. I'd move in a heartbeat to a different state, but we're pushing $500k/yr with a $1,200 mortgage that we couldn't get in any other state because my wife can't work remote. She's the bread winner. Easy, fun job besides the bull shit meetings, which are remote. Everything else is golf outings, hanging out and expense reports. And I get to hang out too if I behave myself... lol.

Hmmmm.... not my jam to research this or build it. But someone should create an income to housing price app/site. You put in the income you expect or want and what you'd pay for a house. I did this for CA and CO with job offers. It wouldn't be easy, but you'd get real estate agents salivating over the leads. Headhunters salivating over it as well. Maybe it exists already, but link jobs with housing is a good idea in my opinion.

WookieMan says

This is very true. There's also the fact that a couple that has one spouse that can remote work, then can move where they want to. They're usually leaving less desirable location to better ones. The other spouse is maybe a teacher, nurse, etc. that can easily find work elsewhere with the WFH spouse.

Yep. Companies are severely limiting themselves in hiring the best talent if they require people to relocate and go into the office. When I hire people, I have a massive advantage because they can be anywhere in the contiguous US and not have to move, or they can choose to move wherever they desire. This is what I did when I left CA for TN, which was the best decision I've made in a LONG time.

If I get recruiters pinging me about interesting positions that require relocation, I make sure to let them know that I would consider it if I can stay remote. Otherwise, it's a dealbreaker. They need to understand that so many people are never going back to the old way, unless it means putting food on the table.

https://boredbat.com/homebuyers-need-to-earn-80-more-than-they-did-in-2020-to-afford-a-home-in-todays-market/

Homebuyers need to earn 80% more than they did in 2020 to afford a home in today’s market

zzyzzx says

https://boredbat.com/homebuyers-need-to-earn-80-more-than-they-did-in-2020-to-afford-a-home-in-todays-market/

Homebuyers need to earn 80% more than they did in 2020 to afford a home in today’s market

Noooooooo. The Housing Experts said...

zzyzzx says

Homebuyers need to earn 80% more than they did in 2020 to afford a home in today’s market

Move or make more money? Neither are difficult if you want it. Most people settle and stay in the same place. There are cheaper areas. Higher paying jobs. I'm working to charter my friends private jet in September to the Ozark's.

Bitching about it and doing something about it are two different things. I'll take the latter. I give no shits what my house is worth. It will be paid off before I'm dead and there WILL be someone there to buy it or my kids inherit it loan free.

I think the bigger problem is the castration of men. They don't know how to turn a wrench. They rely on the limited trades currently available. Get ripped off when they could do it themselves. They're gay by default. My rehab would have been $120k easy. I did it for $20k. Includes a kitchen. My former boss came to the house and was like WTF? You did this? He was a broker, but also a general contractor. If you have boys, teach them. Hell even girls. The TV show with females is bull shit, but there are women that can work. If they're hot, keep them, keep them.

Oh man! This is the bomb!

https://theamericansun.substack.com/p/a-state-based-proposal-to-change

The comments make us on PatNet seem like humanitarian saints by comparison.

https://finance.yahoo.com/news/2-3-million-home-listing-180556772.html

A $2.3 million home listing in Nantucket slashed its price by a whopping 74% after its shoreline experienced drastic erosion in just a few weeks

zzyzzx says

https://finance.yahoo.com/news/2-3-million-home-listing-180556772.html

A $2.3 million home listing in Nantucket slashed its price by a whopping 74% after its shoreline experienced drastic erosion in just a few weeks

My daughter married into a family that owns quite a bit of real estate on Nantucket. I visited last summer. She took us to an old lighthouse that had to be moved because of the erosion. At the same spot were homes that are extremely close to going over the edge. I think she said one of them was worth $20,000,000 at one time.

GNL says

My daughter married into a family that owns quite a bit of real estate on Nantucket.

There was a girl from Nantucket...

Translation: The Fed won't really cut rates beyond some tokenism. Oh, and they really don't give a shit about housing affordability but will use it as a rhetorical foil to justify not cutting rates.



https://www.dallasfed.org/research/economics/2024/0402

UkraineIsTotallyFucked says

I want INCEASES, dammit!

HeadSet says

UkraineIsTotallyFucked says

I want INCEASES, dammit!

We have to get to the no cuts phase before moving on to the we need increases phase.

zzyzzx says

We have to get to the no cuts phase before moving on to the we need increases phase.

Too bad, since the price of renting money should rise as has the price of renting houses, cars, and probably women.

UkraineIsTotallyFucked says

ERECTION INTENSFYING!!!

Any suggestions on good rental property in pa philly north suburb. Philly has lot of cheap property but funding good tenant in those bad neighborhood is issue. Something in decent suburb with good cap rate would be good.