patrick.net

Under Basil 3, banks can't hold as many mortgage assets on their books like last time. Non-bank lenders took over the majority of mortgage financing. The banks originated then off load to MBS tranches or directly.

Also, people can't afford to make payments because of structural increases in their home costs, they won't be able to in the future as well, barring some large increase in their income.

WookieMan says

I like my financial independence. I don't need more money or care to work for more money. Life is short. I don't want to spend all my time adding digits to a banks account working like a dog.

What do you do to stay productive and live a fulfilling life?

We are going to see Realtors and Banks grovelling before the Fed very soon.

AmericanKulak says

We are going to see Realtors and Banks grovelling before the Fed very soon.

This may help to bring down home prices. New home sizes are shrinking: https://www.wjhg.com/2024/07/23/reports-show-new-homes-are-shrinking-size/

I'm seeing in townhome communities in Panama City Beach that nothing is really selling with peak prices set in early 2022 with a 3% mortgage rate, and now its at 7%.

Some investor from lower Alabama bought a townhome about 5 months ago for $230,000 and still has it on the market now at $255,000.

Same townhome likely would sell around $305,000 in early 2022, and it sold for around $250,000 back in 2006 at the last housing bubble.

What gets me is you have townhomes built 2004 to 2007 who now have market values at the same price when they were first put on the market at least 20 years ago :-(

But ultimately it comes down to mortgage lending standards (i.e.,total housing cost {mortgage+property tax+property insurance+HOA fee} is not more than ~37% of household income) and for every 1% increase in the 30 year mortgage rate, there should be a 10% drop in price.

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porkchopXpress says

What do you do to stay productive and live a fulfilling life?

Where to start. First is to support the wife. That's probably my biggest accomplishment of my life. That's really my biggest job currently. Then the kids. Just had golf last night with my oldest. Got pizza after. I get to shoot the shit with my kids at this age. I know it's going to end soon so it's fun.

Then you got travel. We'll be up in Wisconsin this weekend at a friends cabin. Maybe Michigan in August. Atlanta area in September. Costa Rica for spring break. Likely a trip or two solo out to Montana to visit my buddies. My kids have been to most of the lower 48 in 13 years. Brings me joy looking at all the places they've been.

Then we have a house build weeks from breaking ground. Tons of work there. Stressful, but will be fun once we start seeing the framing going up.

I don't know, I live like a college kid that doesn't get in trouble. I really can't, but I have fun. Hang with buddies on a weekly basis. Have neighborhood friends we hang out with weekly. On a town board as an elected official. Work 4-8 hours a week helping a local farmer/hoarder sell all this cool old shit on eBay.

With my free time I look at cooking and aviation videos. I don't watch tv besides the occasional political clip online. I fall asleep to congressional hearings. I golf, pong, yard games with friends. And I obviously dick around here on patnet a lot. I like writing. You judgement if it's good or bad. Therapy so to speak.

What was not fulfilling in my life was working 60 hours plus per week in real estate for a dumb fuck owner for 15 years. Never met anyone that could spend money faster than they earned it. Don't think I could work a "job" again. I make money still. But I sit in a barn with a 60 year old musician hoarder and just shoot the shit while listing his semi-organized stuff on eBay.

Basically I'm productive. My kids have a father that is there pretty much every hour. Trust me, I see my kids friends, I'm doing an A+ job in that realm. I don't think dual income families are good for kids if working 40 hours per week. Wife fortunately makes a fuck ton of money. I could write 200 pages on my life and that would maybe be 10-20% of it.

Writing a book will probably be my next goal. You gotta do stuff with idle time. There's plenty to do.

Just wait until you see how the government calculates "Owner Equivalent Rent" for CPI purposes.

Despite the tons of real time actual data available.

They call 1000 random homeowners and ask them how much they would charge to live in their house.

They don't look at rent.com, apartments.com, don't ask renters how much their lease is for. They call up people, many of whom haven't been in the market for two decades, and ask them what they'd charge.

"Well, let's see, Marvin and I last rented in 2009 and we were paying $1100/month for a 2 bed, so I guess our 3/2.5 house rents for maybe, $1300 in 2024?"

"Thanks ma'am, our economics-degree bearing asses are lying our ass off for the government, so instead of finding what's on zillow, we thank you for your out of touch number, knowing you probably aren't involved in real estate leasing and are out of touch"

Which explains this insane discrepancy:

"My favorite Central Banker was Paul Volcker. He was not worried about nailing the soft landing. He put us into a terrible recession and we got 20 years of prosperity because of the pain we took for 18 months. And I’d like to remind those who think this has been in their political interests, Reagan won 49 states in 1984 after the economy was absolutely in the tank in 1982 because he did the right thing."

porkchopXpress says

What do you do to stay productive and live a fulfilling life?

Hey @porkchopXpress I was watching my usual Sunday night, "Viva and Barnes", and I saw a guy named porkchopexpre55 post a question in the super chat. Was that you?!

AmericanKulak says

"My favorite Central Banker was Paul Volcker. He was not worried about nailing the soft landing. He put us into a terrible recession and we got 20 years of prosperity because of the pain we took for 18 months. And I’d like to remind those who think this has been in their political interests, Reagan won 49 states in 1984 after the economy was absolutely in the tank in 1982 because he did the right thing."

To get to the "right spot" , do housing prices have to drop at least 20% from their peak values set in early 2022 ?

I'm seeing 3 bedroom townhomes in east Panama City Beach priced around $295,000 that were selling for $235,000 in February 2020 and peaked around $330,000 in February 2022.

I would expect they could sell for (1.04^4.5) x $235,000, or 1.193 x $235,000 based on 4% annual appreciation over last 4.5 years (February 2020 to July 2024). This is $280.361, but this would only be a drop of around 15% from peak.

However, household wages and/or income for the demographic that would buy this townhome has gone up about 25% since February 2020.

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AD says

However, household wages and/or income for the demographic that would buy this townhome has gone up about 25% since February 2020.

With a 30% rise in the cost of groceries, insurance, etc. So that wage increase was more than soaked up by other things, most of them "iron costs" or essentials, not just jetskis and vacation jaunts.

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses.

That includes prop taxes and insurance?

SoTex says

porkchopXpress says

What do you do to stay productive and live a fulfilling life?

Hey porkchopXpress I was watching my usual Sunday night, "Viva and Barnes", and I saw a guy named porkchopexpre55 post a question in the super chat. Was that you?!

Nah, it wasn't me

"Fedprinting is ruining our economy creating unsustainable inflation across the board. Except in home prices. Everything there is 100% real and don't you dare interfere with the valuation of my paper wealth. "

AD says

However, household wages and/or income for the demographic that would buy this townhome has gone up about 25% since February 2020.

Do you really believe that number?

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

Lot of it to do with "keeping up with Joneses" .. The pressure especially from women/children is forcing the families to live on financial edge.
Responsible men are worse off in this society as they shoulder most responsibility but little say and still get blamed as cheapstakes.

If people live 1990s lifestyles they will live much better.

A new law will make it easier for Americans to use their 401(k)s and other retirement funds as an emergency ATM.

Under new IRS rules, Americans can now withdraw up to $1,000 from their 401(k)s without any penalties if the money is needed to cover a financial emergency. Acceptable reasons for a withdrawal include medical care, funeral expenses, auto repairs or "any other necessary emergency personal expenses."

https://www.foxbusiness.com/personal-finance/new-401k-rule-makes-easier-tap-savings-emergencies

The Economy is fine.

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

That is why it take two income earners to own a home and support a family. Back in 1993, it was more possible to raise a family with just one income earner.

I see it in Panama City Beach with essentially 3 bedroom townhomes being rented as a boarding house among 3 people each contributing to the rent.

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Probably the least bad area in Florida.


Rents in Jax are down 12%, and Naples inventory... WHEW, more than double since last year.

Looks like the inevitable, never ending 10-15 year Florida R/E bust-boom cycle remains undefeated.

FarmersWon says

AmericanKulak says

And that's in a vacuum without considering the cost of groceries, gas, and other non-delayable, immediate regular expenses competing for the household's budget.

Lot of it to do with "keeping up with Joneses" .. The pressure especially from women/children is forcing the families to live on financial edge.
Responsible men are worse off in this society as they shoulder most responsibility but little say and still get blamed as cheapstakes.

If people live 1990s lifestyles they will live much better.

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

ForcedTQ says

if people lived a 1980s lifestyle

Not possible with $420k homes and $75k incomes at 7%.

The solution to the dark funk is an interest rate shock. Don't just take away the punch bowl, replace it with mung bean gruel and get some TP to get that economic enema.

AmericanKulak says

Not possible with $420k homes and $75k incomes at 7%.

You can't buy a $420k home on $75k unless it's weed (sorry 420). Ours will be $680k as of now. That's on $300-400k income though. 3x income rule. Problem is if banks lend it, people will buy it.

Most people we know ask us how the fuck we travel so much. We didn't over extend ourselves on our current home. We're still within the safe margin with the build, but there will be less trips. We make good money so it's time for a nice house. We'll still travel, but 50% less. You spend a lot of time in your house generally, especially with school aged kids. I want to come home from a baseball game to a nice house.

ForcedTQ says

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

Most of the world outside our country follows this philosophy today, I reckon.

gabbar says

ForcedTQ says

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

Most of the world outside our country follows this philosophy today, I reckon.

In 1980s there were mostly single earners and the womyn cooked at home from scratch = no daycare and no inflated food costs to Uber over some shit sandwiches to their place. That alone freed up most of the cash to buy a home they don't have today, it's not just expectations, add in house price inflation and they surely aren't better off today, but I somewhat agree that they could do better with an attitude and strategy shift.

mell says

In 1980s there were mostly single earners and the womyn cooked at home from scratch = no daycare and no inflated food costs to Uber over some shit sandwiches to their place. That alone freed up most of the cash to buy a home they don't have today,

I was thinking about my childhood, which was working middle class. We had a 18 inch color TV with rabbit ears, and no cable, but still received about 8 TV channel signals.

We had only a Dodge Aries 4 door car that my family paid for in cash and brand new.

We rarely ate at a restaurant and maybe once every 3 months, and we never went on a vacation, and had family visit us and sleep in the living room.

The rent for our two bedroom, 2 bathroom townhome was $300 a month, and it was in a good neighborhood, a brand new townhome, and it had many amenities like clubhouse, pool, etc. It was enough space for my brother, parents, and myself.

Back in mid-to-late 1980s while a junior in high school, I was making $5 an hour (no tips) at a restaurant in south Florida as a greeter, busboy, etc. That is how I started to invest and eventually rolled that saved money into a healthcare mutual fund in 1993.

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Watch Months-of-Supply!

Both inventory and sales are well below normal levels, and I think we need to keep an eye on months-of-supply to forecast price changes. Historically nominal prices declined when months-of-supply approached 6 months - and that is unlikely this year - but we could see months-of-supply back to 2019 levels in the next month or two.

As I mentioned in a recent interview with Lance Lambert at ResiClub:

"I expect this measure to continue to increase, and be over 4 months soon – and to be above 2019 levels in a few months. This doesn’t mean national price declines, but it suggests price growth will slow significantly later this year. We might see national price decline with months-of-supply above 5 (as opposed to 6) since most potential sellers have substantial equity and might be willing to sell for a little less."

Months-of-supply was at 4.1 months in June compared to 4.3 months in June 2019. Note that months-of-supply peaked at 4.3 months in May and June 2019 and then declined to 4.2 months in July 2019.

What would it take to get months-of-supply back to 2019 levels in July? And what would it take to get months-of-supply above 5 months? The following table is a simple exercise. If sales stay depressed at 2023 levels, how much would inventory have to increase to put months-of-supply at 2019 levels in July?

https://calculatedrisk.substack.com/p/watch-months-of-supply-b38

Al_Sharpton_for_President says

Watch Months-of-Supply!

Yes, if it continues to increase then it may put pressure on sellers (even those who have below 3.5% rate mortgages) to lower their prices more.

But other factors are going to determine how motivated the sellers are to sell at a lower price such as unemployment, the stock market, mortgage rates, demographics, work from home ending for corporate America, etc.

Right now a lot of sellers are counting on the 30 Year mortgage rate to drop to 5.5% by next spring.

If I was selling and I was motivated to sell, I'd offer to buy up to 4 discount points for the buyer's mortgage to lower the rate from 5.5% to 4.5%.

AD says

I was thinking about my childhood, which was working middle class. We had a 18 inch color TV with rabbit ears, and no cable, but still received about 8 TV channel signals.

We had only a Dodge Aries 4 door car that my family paid for in cash and brand new.

We rarely ate at a restaurant and maybe once every 3 months, and we never went on a vacation, and had family visit us and sleep in the living room.

Yeah. Pretty much the only wares that got cheaper are electronics. Everything else is more expensive today, incl. all services. If you want to become financially independent you have to start investing and side hustling early, it's def possible, and avoid unnecessary expenses such as new cars, food delivery, eating out too much, medical expenses etc. Many aren't financially educated though or listen to msm propaganda

mell says

Many aren't financially educated though or listen to msm propaganda

True, as the mainstream media are just shills for their advertisers and its all about promoting endless consumerism

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DemocratsAreTotallyFucked says

There was never any cash on the sidelines. There was borrowing cash at near zero rates that was used to buy houses.

Now there is no opportunity to borrow cash at near zero rates.

AmericanKulak says

There was never any cash. There was borrowing cash at near zero rates that was used to buy houses.

Where I live it is cash, cash cash! Mostly Indian and Chinese. That's why I gave up looking or a home years ago. Buyers wouldn't even entertain looking at my offers because I got pre-approved with FHA but closing with all cash offers I was competing against was what they wanted instead.

mell says

gabbar says

ForcedTQ says

Hell, if people lived a 1980s lifestyle and were debt averse they would be much better off. Don’t live beyond your means, invest for retirement, and pay your house off 15 years of less so you’re spending less on interest.

Most of the world outside our country follows this philosophy today, I reckon.

In 1980s there were mostly single earners and the womyn cooked at home from scratch = no daycare and no inflated food costs to Uber over some shit sandwiches to their place. That alone freed up most of the cash to buy a home they don't have today, it's not just expectations, add in house price inflation and they surely aren't better off today, but I somewhat agree that they could do better with an attitude and strategy shift.

Yep. Late 70s Ford Econoline my dad had since from about when I was born that was his car right up until my Senior Year, then he brought himself a Big White Lincoln to celebrate his retirement and gave me the old Van for my first summer as a College Student.

No vacations, we did go out to eat once every two weeks.

The Lincoln I sold off about 20 years later when when I flew back to take care of things as my father was in the hospital.

Brought them a 2014 Nissan Rogue which my mother still has, my father passing away a few years ago.

mell says

In 1980s there were mostly single earners and the womyn cooked at home from scratch

Are you sure that was the 80s and not the 60s? By the time of the 80s. women were fully "liberated" and out in the labor market, including flying combat aircraft. The economy had already adjusted to the dual income household.

A lot of women were still the secondary income earners in the 80s.

But being sick a few times, I noticed being a housewife wasn't all that hard. I'd say about 5-6 hours soap opera/phone/coffee klatching and maybe 2 hours cooking and clearning once the kids were school age.

People are also retconning gyms and so forth; in the 80s everybody drove everywhere, joggers were regarded as cultists, racquetball was a Yuppie thing, and the only people who really lifted weights were football players and boxers, maybe some wrestlers, and private gyms were pretty rare in the burbs. Exercise was mostly limited to walking around the mall or beach, maybe a pickup basketball game once a week, or perhaps a 2-3 sessions of Buns of Steel Yoga stuff on VHS. Instead of 5 hours on the internet, people just watched 5 hours of TV

The real obesity crisis is the shit in the food.

By the way, Susan Powter is even more completely batshit insane these days, but she was a 90s phenomenon.

AmericanKulak says

A lot of women were still the secondary income earners in the 80s.

I relate this to the labor participation rate where it was 58% in 1965, and then steadily increased to 66% of population in late 1980s , and is now around 63%.

It plateaued from 1988 to 2008 around 66% to 67%. Its been trending downward since 2008.

https://fred.stlouisfed.org/series/CIVPART

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Only 63% of working aged women are in the workforce? What % of working age men are in the workforce? Looks like about 75%.

GNL says

Only 63% of working aged women are in the workforce? What % of working age men are in the workforce? Looks like about 75%.

I updated my post with the link to the total labor participation rate.

I suspect as part of that increase in labor participation from 1965 to 2000 that a lot of that was because a great percentage of women entered the labor force.

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