patrick.net

S&P 500 is about 9% above February 2020 levels. In real or inflation-adjusted terms, it is below February 2020 levels.

So the Fed got what it wanted as far as COVID-pandemic asset gains being wiped out.

Housing naturally takes longer to respond but I would not be surprised if it drops to mid 2021 levels within the next 2 years.

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BayArea says

Patrick says

zzyzzx says

Looks like money laundering.

Redfin doesn’t show that sale price. Maybe just a print error?

Error with "7". house wasn't listed for sale. Last sold for 307,000 1.5 year ago.

One thing I remember in San Diego is that the most desirable areas ALWAYS had demand, even in a job loss recession. Prices dipped somewhat but rich people, in general, always have cash and aren't as impacted by the economy. Everyone has to live somewhere even in economic disaster.

The coming contraction will be painful for many.

porkchopexpress says

The coming contraction will be painful for many.

Having worked in RE during the housing crisis. It's not painful. People need to realize you're not going to jail for not paying debt, but I think a lot of people believe that's a consequence. Even intelligent people. It's not YOUR fault that interest rates or prices got insane. Walk away. Besides credit score damage, there's nothing else. At least on a primary home. Even investments. You take the ding. 7 years later it's gone completely no matter what. AND you could still get financing for a home within 3-4 years or get creative.

My advice is take the emotion out of it. You think the banks have emotion about it? Hells no. They know they're raping 90% of their customers. If you're the 10% that screws them that's called business.

A new weird in the housing market.

“Since the vast majority of homeowners who might consider moving have a mortgage rate far below current levels, there’s very little new supply hitting the market.”

https://www.redfin.com/news/housing-market-update-welcome-to-the-new-weird/?inquirySource=365

This may explain why…

https://www.redfin.com/news/homeowners-locked-into-low-mortgage-rates/

Need job losses for more people to sell.

porkchopexpress says

One thing I remember in San Diego is that the most desirable areas ALWAYS had demand, even in a job loss recession. Prices dipped somewhat but rich people, in general, always have cash and aren't as impacted by the economy. Everyone has to live somewhere even in economic disaster.

The coming contraction will be painful for many.

What portion of their water comes from the Colorado River these days?

https://www.nbcnews.com/politics/pandemics-real-estate-jobs-boom-turning-bust-layoffs-hit-rcna48811

The pandemic's real estate jobs boom is turning into a bust as layoffs hit

As housing sales slow amid higher interest rates, thousands of workers who found jobs in the booming housing market of the pandemic are now facing widespread layoffs with steeper cuts expected ahead.

Some of the biggest players in the real estate industry, including RE/MAX, Redfin and Wells Fargo, have announced layoffs in recent months totaling thousands of jobs. Industry analysts are projecting the cuts could eventually be on par with what was seen during the housing crash of 2008.

According to the National Association of Realtors, the number of homes being sold in the U.S. fell nearly 20% between August 2021 and August 2022 in large part because of the Federal Reserve's decision to begin raising interest rates in March in an effort to bring down decades-high inflation. As a result, home mortgage interest rates have doubled this year, pricing an increasing number of buyers out of the market.

“It’s gonna be tough, layoffs are a common occurrence right now,” said Linda McCoy, head of the National Association of Mortgage Brokers, who has been in the mortgage industry for 30 years. “It’s scary, because you just don’t know where or when it’s going to stop.”

It’s a stark reversal from where the housing-related job market has been over the past two years. As more people found themselves working from home and interest rates hit record lows, a surge of buyers entered the market looking for new homes. Existing home sales last year reached their highest level since 2006.

The demand for housing, and the jobs that were created, provided a bright spot in a bleak job market for workers during the first two years of the pandemic. Many of them were looking to pivot from industries hit hard by the pandemic, such as hospitality, food service, health care and education, according to industry analysts.

Over that period, 200,000 people became real estate agents, according to data from the National Association of Realtors.

In addition to the demand for houses, many homeowners looked to refinance their mortgages. Mortgage firms rapidly started hiring workers, some straight out of college or with little experience, said McCoy.

The number of people employed as loan originators or processors grew 31% from the start of 2020 to the end of 2021, according to data from SimpleNexus.

Some companies offered five-figure bonuses to new hires and thousands of dollars a month in bonus pay, said Myiesha Lacy, who has worked in the real estate finance industry for 20 years and was recently laid off from her job at Sprout Mortgage when it went out of business.

While the overall job market remains strong with the economy adding 315,000 jobs in August, industry analysts warn the trends in the housing sector could have a wider ripple effect as fewer people buying homes means cuts to spending in other areas, such as appliances, furniture and renovations.

“The housing market is in a sense holding back the economic growth or even pushing the overall economy slightly negative, and it has a ripple effect,” said Lawrence Yun, chief economist for the National Association of Realtors.

Workers in the mortgage industry have been among the hardest hit as demand for refinancing and home sales tumble. More than three dozen companies in the mortgage sector have shut down, been acquired or announced job cuts in the past six months, eliminating thousands of jobs, according to a tally by NBC News.

Wow, thousands of jobs? Out of over 160,000,000 jobs, we've lost thousands? Katie bar the door!!

Inventories are definitely starting to uptick in Santa Cruz, Capitola, Live Oak and Soquel. There are punch throughs of large price drops on some, though prices are still ridiculous. Will the Silicon Valley jet setters save RE prices in Santa Cruz? Only the nose knows.

My ARM @ 5.5%/5 for 25 years is looking REAL good right now.

Rates will drop. They can go higher, but if you can afford the payment what difference does it make? If you want to buy, you're going to. If you have to rent, you're still paying the landlords PITI at minimum. So a renter is paying the same interest rates, generally with a 10-30% premium depending on what the landlord bought it for. Outside of CA, you need a roof over your head.

If prices drop who cares. Most or all of us lived through the worst housing crisis in modern history. High interest rates for qualified borrowers is substantially better than 2006-08. And sure prices will stall or drop slightly. Until there's more building I cannot envision a crash in most areas. The hipster areas will be hit first though.

Booger says

Most or all of us lived through the worst housing crisis in modern history.

THIS is the worst housing crisis ever in history right now.
Many will lose their homes and jobs. There will be no money in the economy for consumption (US GDP is what, 70% consumption?) so the economy will tank.
There are bubbles everywhere, not just housing, hence the saying 'the bursting of the everything bubble".
An entire generation is in for a very, very rude awakening as reality bites. (Not necessarily a bad thing as the woke agenda will lose steam).
America no longer has an industrial base.
This time the bansters won't be bailed out and so will go under.
Maybe the ATMs will stop dispensing cash and debit cards won't work in supermarkets as the system goes under.

But it could get even worse than that, when all else fails they take you to war. There are some that believe a limited nuclear war against Russia is winnable!
They are insane and still believe in their Build Back Better Great Reset.

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charlie303 says

This time the banksters won't be bailed out and so will go under.

Are you sure about that???

I forget to mention the US Govn.
US$30 Trillion in debt and needing at least US$1 Trillion extra every year to make up the budget deficit.
Where's that money going to come from? The printing press? Who else is going to want to hold the debt? China?
How is the US Govn going to pay the interest on US$30 Trillion? Is that why they are arming IRS agents?
Who's going to pay for all the welfare? Food, shelter, medicine, etc?
How are public sector workers like the police for example, going to feel when their pensions evaporate into nothing?
What will happen when the US Govn goes bankrupt?

Very interesting times indeed.

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zzyzzx says

charlie303 says

This time the banksters won't be bailed out and so will go under.

Are you sure about that???

Yes, I am very sure. At least 90% sure.

How will they bail them out?
Where will the money come from?
The bailout will be in the trillions of $$$'s not the billions, if you include the property, bond, equity and derivatives markets.
They can't really lower interest rates to zero, that's not going to make much difference.

When the GFC happened they rushed through the Troubled Asset Relief Program, in record time with bipartisan support and no oversight I might add.
Then they followed that up with a decade of 0% interest rates and QE to the trillions.
And then they printed a few more trillion during covid so everyone could stay at home and binge Netflix.

How are they going to cover all of that?
How are they going to restore confidence, full faith and credit in the institution known as the Government of the United States of America?
A money not backed up by gold, silver or platinum or land or anything.

The end of an empire is close to hand.

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1337irr says

My ARM @ 5.5%/5 for 25 years is looking REAL good right now.

I'm confused here: is it 5 or 25?

RWSGFY says

I'm confused here: is it 5 or 25?

I think that means a 25 year variable mortgage currently at 5.5% that adjusts every 5 years.

https://www.breitbart.com/economy/2022/09/27/case-shiller-july-2022/

Home prices fell in July compared with the previous month, according to the S&P CoreLogic Case-Shiller Index. This is the first national decline since 2012.

charlie303 says

THIS is the worst housing crisis ever in history

I dunno, bro.

There was a huge housing crisis (shortage of housing) during WW2, - biggest public spending stimulus in history on the heels of a decade of no investment in housing stock due to the Great Depression.

Biggest housing crisis since then has been affordability crisis from high prices from insanely low borrowing rates. What you are calling a crisis I'd call a welcome relief on the prices.

Are you a house flipper or serial HELOC'er? Just asking.

30 year rate today is around 6.2%. The rate bottomed around 2.9% in August 2021.

I think we need to see rates stabilize between 4.5 and 5% which means about a 20% drop in home price levels set in late 2021.

If that 20% drop would occur today, I estimate it would equate to about a 4% annual increase in home value for my townhome since I bought it new back in late 2016. I just hope home prices do not over correct so that sharks with cash will make excessive ROI's again like they did in 2011-2013.
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ad says

I just hope home prices do not over correct so that sharks with cash will make excessive ROI's again like they did in 2011-2013.

Sharks with cash? You mean savers? The same savers that have been priced out of the car and housing market by reckless borrowers? This may be the only chance for savers to buy before all the Joe Monthly Payments are able to borrow again and run up the prices.

https://sfstandard.com/housing-development/sfs-downtown-condos-are-piling-up-and-pricing-down-as-housing-market-cools/

High-rise condos near San Francisco’s downtown—which account for the bulk of San Francisco’s newer housing stock—are piling up amid rising interest rates and a shift in the city’s housing market.

The luxury condos are another casualty of San Francisco’s slow return to offices, with a once-thriving social and retail scene in SoMa and Mission Bay now gasping for air. Home buyers are looking to other neighborhoods for less cookie-cutter units, more outdoor space and—frankly—more life.

“The amenities you can take advantage of living downtown now versus before the pandemic are much smaller,” said Laila Salma, a broker with Salma & Company. “Right now it’s just not a space that’s vibrant.”

Take the $4 million July sale of a unit in 181 Fremont, one of the city’s premier condo towers, as a recent example. The unit sold for some 30% lower than the $5.77 million paid by the seller in 2018, according to real estate blog Socketsite.

A letter about the sale from real estate brokerage The Krishnan Team said while the discount they were seeking initially “didn’t seem possible,” the offer was eventually accepted at $1.4 million below the list price.

“The market is the softest it’s been since 2008. This is especially true for high-rise developments in San Francisco,” the brokerage wrote.

The same trends hold true for condos in the lower-tier mid-Market area: A unit at 1075 Market that was purchased for $882,000 in 2018 is currently on the market for $670,000. ...

At 2238 Market St. for example, a 44-unit condo building that wrapped up construction in May with units starting at $800,000. Just a few months later, the base price has already dropped by $50,000.

But price drops in the area that includes SoMa and South Beach have been especially stark in the ultra luxury segment, defined as condos over $3 million, which saw a nearly 23% year-over-year drop in average price per square foot for the second quarter, according to Compass.

“If you’re an investor you’re not going to want to sit and keep a unit empty for three years. You’re going to want to sell,” Minkoff said, noting that the supply glut has made that more difficult. She’s currently working with a client to sell a condo in Mission Bay and recommended they drop the asking price by $100,000.

https://sfstandard.com/housing-development/why-san-francisco-nations-richest-renters-u-s-census/

San Francisco is home to some of the highest rents in the country. But SF renters pay relatively less out of their paychecks to live in the priciest market in the U.S.

More San Franciscans pay below 20% of their household income on rent than any other major city in the nation, according to a new analysis of census data by The Standard.

This counterintuitive finding speaks to how extreme the city’s high property values have become, keeping home ownership out of reach for even high-earning residents, who would undoubtedly buy property in almost any other market in the country. The result: San Francisco has the nation’s richest renters. ...

Housing researchers commonly look at a city’s ratio of median house price to median household income as an indicator of housing affordability, Professor Ayse Pamuk, director of San Francisco State University’s Applied Housing Research Initiative, explained in an email. Any value over three means the city’s housing stock is not affordable to the average worker.

San Francisco’s value is 10.7.

Even if someone is able to scrape together enough money to put down money on one of these premium properties, they’ll be shelling out staggering sums for decades. The median monthly cost for housing unit owners who still owe on their mortgage is $3,964, which is the highest in the nation.

B.A.C.A.H. says

charlie303 says

THIS is the worst housing crisis ever in history

I dunno, bro.

There was a huge housing crisis (shortage of housing) during WW2, - biggest public spending stimulus in history on the heels of a decade of no investment in housing stock due to the Great Depression.

Biggest housing crisis since then has been affordability crisis from high prices from insanely low borrowing rates. What you are calling a crisis I'd call a welcome relief on the prices.

Are you a house flipper or serial HELOC'er? Just asking.

Ask away. That's fine. There is free speech on Patrick.net.

No, I have no conflict of interest nor am I invested in the property market.
I appreciate how my comments may seem a little out of perspective when compared to The Great Depression or WW2 but please bear in mind I am referring to the next 12 to 18 months.

This crisis is just getting started.

Now that the gas pipelines in Europe have been bombed the Russia Ukraine war will intensify, escalate. The spill over will affect the US and not just the housing market.

This is the collapse of the 'Everything bubble' and the end of US hegemony but it's going to take a year or so to play out.

Or I'm wrong.

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I know from the past my agent said in a down market to set a high price and then adjust it down every two weeks with the goal of trying to sell it within 7 to 9 months.

In an average market, my agent said it takes about 3 to 4 months to sell, and a hot market it takes less than 1 to 2 months to sell. A super hot market means homes can sell within 1 to 2 weeks.

So we have to wait at least 9 months to see at least a 10% drop in prices.

I suspect the Fed wants to see prices drop at least 20%, which may take at least 2 years to occur.

I know for my HOA and neighborhood, a drop from $300,000 (early 2022 sales prices) to $240,000 would bring the price to early 2020 price levels.

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ad says

I know for my HOA and neighborhood, a drop from $300,000 (early 2022 sales prices) to $240,000 would bring the price to early 2020 price levels.

I believe you're in the panhandle FL? First stay safe unless you're far enough west from the hurricane. Weather junkie as a side hobby.

Here in fly over country, rural living, a 20% drop really doesn't move the needle for most people. Panhandle (off water) can be pretty cheap. My folks owned a bunch down there. I think upwards of 6-7 properties at one point. A lot for an out of state owner.

I'm game for price drops anywhere as I've been tempted to get back in the game in my area. No one is building here in IL (generally) so rents are coming up. I like projects, have the time and tools. We'll see. I don't have my MLS access here in IL anymore, but we're not seeing decreases locally. I'm still super interested in industrial/warehouse type buildings. I need to research more, but it's an emotionless transaction with tenants. It's business. Not a roof over your head. Just had a family get evicted in town. Landlord piled ALL of their shit in the front lawn. Total dick, but maybe the tenants were too.

charlie303 says

This is the collapse of the 'Everything bubble' and the end of US hegemony but it's going to take a year or so to play out.

"The Sky Is Falling Down!"

https://finance.yahoo.com/news/housing-pending-home-sales-drop-140030400.html

Pending home sales drop for third straight month

B.A.C.A.H. says

charlie303 says

This is the collapse of the 'Everything bubble' and the end of US hegemony but it's going to take a year or so to play out.

"The Sky Is Falling Down!"

Yes. Chicken Little lives!

Massive intervention by the Central Bank of England intervention today to prop up the pension market which would have collapsed.
Panic and turmoil as people realise they might lose their property as well.
Asian Central Banks now also intervening as the carnage spreads.

Remember we are in a global economy that has been synchronised for at least 20 years so when one domino goes they all will.
US $ to rise before being the last to fail.

You heard it first here.

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charlie303 says

B.A.C.A.H. says

charlie303 says

This is the collapse of the 'Everything bubble' and the end of US hegemony but it's going to take a year or so to play out.

"The Sky Is Falling Down!"

Yes. Chicken Little lives!

Massive intervention by the Central Bank of England intervention today to prop up the pension market which would have collapsed.
Panic and turmoil as people realise they might lose their property as well.
Asian Central Banks now also intervening as the carnage spreads.

Remember we are in a global economy that has been synchronised for at least 20 years so when one domino goes they all will.
US $ to rise before being the last to fail.

You heard it first here.

.

THE ONLY SAFE HEAVEN IS RUBBLE!!!

Many central banks, like the Fed, are still solely focused on pressure to quickly get core inflation back to 2% without fully acknowledging how much economic pain it will take in a world shaped by production constraints. We’re tactically underweight developed market stocks and prefer credit. Central banks can’t fix these constraints, in our view, hence a brutal trade-off: trigger a deep recession by hiking rates or live with more persistent inflation. The Fed’s forecasts don’t acknowledge this trade-off. - BlackRock, September 28, 2022

WookieMan says

I believe you're in the panhandle FL? First stay safe unless you're far enough west from the hurricane. Weather junkie as a side hobby.

Yes, my townhome (3 bedrm, 2.5 bath, 2 car garage, built in 2016) is in the Florida panhandle about 2 miles from the beach. We have HO-3 insurance ($1600 a month for $250,000 replacement value and $1000 deductible). HO-3 cost same as HO-6 insurance. Also we have HOA master insurance which comes out to around $1500 a month.

The HOA manages our structure (roof, exterior, etc) so they have to have insurance. Total insurance cost annually is $1600 plus $1500 (or $3100) for a $250,000 townhome.

Plus the HOA monthly fee is $380 a month (which includes the cost for HOA master insurance).

Between $380 a month plus $133 a month for HO-3 insurance and $145 a month for property tax, that is $658. Our mortgage is 3% for 30 years and is $800 a month (now is $450 principal and $350 interest).

All the "other housing costs" like HOA fee/property tax/insurance is almost equal to our mortgage payment after 6 years of buying the home.

All the "other housing costs" was around $400 back when we bought in summer 2016, and gone up 65% to currently $658. That is a 9% annual increase :-(

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