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For a $2,500/month payment and 20% down, one can afford a $476K house today. In early 2021, the figure was $759K.

Ergo, the $759K house is now worth $476K.

Al_Sharpton_for_President says

For a $2,500/month payment and 20% down, one can afford a $476K house today. In early 2021, the figure was $759K.

Ergo, the $759K house is now worth $476K.

Doesn’t work like that. Drop your price $100k and a hedge fund buys it to add to their real estate portfolio. Or a real estate investor grabs it to flip or whatever. People with MONEY put a floor under a market like this because they HAVE TO in order to keep their existing real estate investments propped up.

This will continue until interest rates come down again. Until then, if you put your house on “sale,” it will sell.

ad says

Total insurance cost annually is $1600 plus $1500 (or $3100) for a $250,000 townhome.

This is fascinating. Well, it's a tradeoff for No State Income Tax.

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.

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Your crisis can also be your opportunity. Opportunities don't come along all the time. We have to seize them when they come.

Shaman says

HAVE TO in order to keep their existing real estate investments propped up.

Why buy one today, when you can buy two tomorrow?

https://www.reddit.com/r/RealEstate/comments/xroxo0/buyers_financing_fell_through_what_are_our_best/

Buyers financing fell through. What are our best options?

My parents sold their house, and bought another house both with the closing date of today. Today at 4:30pm they received a call saying that our buyers financing fell through and asked for a 4 week extension in order to refinance and pay for the house. The problem is, we cannot pay for the other house until we receive the payment for our house, and we payed professional movers 10k this morning to move everything out of the house into the other, so our furniture is now sitting in a truck outside of the house waiting to be moved tomorrow morning. However, we cannot move the furniture in because we haven’t paid for the house due to the financing issue from our buyer.

Our realtor said he cannot legally ask for more time, and we can take the 80k deposit and re-list our house. This gets messy though because we still need the money to pay for the other house, so we still cannot move in until our house closes, so we can pay them.

We’re in talks of bridge financing right now, however that’s at 10%, so it gets expensive. What is the best course of action we should take. I feel we should be able to benefit from this situation as it’s the buyers fault we’re in this mess. Please feel free to ask questions, I’m sure I left out lots of details. I live in Canada by the way, if that changes the laws. Thank you

https://www.realpage.com/analytics/us-rental-housing-market-cooling-off-fast/

The U.S. Rental Housing Market is Cooling Off Fast

Prices are noticeably dropping around the San Diego county. Also, discounts are increasing. A month or so ago, $10k drop was common, now it's more like $40k drop in asking, plus a starting price about $100k under what it was six months ago.

zzyzzx says

Today at 4:30pm they received a call saying that our buyers financing fell through

Our realtor said he cannot legally ask for more time, and we can take the 80k deposit and re-list our house.

Usually, a real estate contract has a contingency that if the buyer's loan is declined, the deposit is refunded. Not sure how the seller can keep the $80k, unless Canadian laws are different.

https://wtop.com/business-finance/2022/09/sellers-no-longer-getting-list-price-dc-metro-tops-that-list/

Average home sales dip below list prices — DC metro area’s drop is the biggest

http://crashrank.com/

HeadSet says

Usually, a real estate contract has a contingency that if the buyer's loan is declined, the deposit is refunded. Not sure how the seller can keep the $80k, unless Canadian laws are different.

It's extremely difficult if not impossible for the seller to keep earnest money (deposit) using standardized modern contracts, at least residential. As you mention Canada may be different.

I participated in 1k+ deals managing an RE brokerage (not selling myself) for 15 years and it happened 1-2 times and was a trivial amount like $2-5k. Earnest money/deposits are all fluff basically. A "feel" good for the seller that the deal will close so the agent can get it under contract and get a commission. Generally has nothing to do with what the seller "could" get if the deal falls apart. Brokers use EM as leverage all the time knowing their buyer won't lose shit. Oh he put $10k down, he's serious says the listing broker. It's fucked up. It's flat out lying. The attorneys know it too and know they'll get paid either way via an actual closing or representing them to collect earnest money that will never/rarely happen.

Al_Sharpton_for_President says

For a $2,500/month payment and 20% down, one can afford a $476K house today. In early 2021, the figure was $759K.

Ergo, the $759K house is now worth $476K.

That's about right with the rule for every 1% increase in the 30 year rate, there is about a 10% drop in price. The 30 your rate bottomed around 3% in 2021 and now is 7%.

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And we'll see how popular the 5 year Adjustable Rate Mortgage is as a substitute for the 30 year mortgage if the 30 year rate remains for the long term above 6%.

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Even more inventory coming on in Live Oak, Capitola, Soquel. The hang times are increasing. Prices have dropped on some, but it looks like many are trying to hang on to their dream equity. Winter might be brutal if mortgage rates go up another point to point and a half.

Ceffer says

Even more inventory coming on in Live Oak, Capitola, Soquel. The hang times are increasing. Prices have dropped on some, but it looks like many are trying to hang on to their dream equity. Winter might be brutal if mortgage rates go up another point to point and a half.

Depends on how desperate people want to sell such as if they are in a rush to sell. Unemployment of white collar jobs is a major factor.

Another matter is that those who bought recently with assumable mortgages like VA or FHA, then have very low rates like 3.25%. These assumable mortgages can be assumed or taken on by the buyers of these homes.

But how many of those who recently bought with assumable mortgages are really going to be desperate to sell or just abandon their homes ? This is not like the subprime mortgage crisis in 2008.

Ceffer says

Even more inventory coming on in Live Oak, Capitola, Soquel. The hang times are increasing. Prices have dropped on some, but it looks like many are trying to hang on to their dream equity. Winter might be brutal if mortgage rates go up another point to point and a half.

I assume sales will remain slow until people accept the "New Normal" pricing. IF rates remain high for some time. Those who have to sell will sell.

GNL says

IF rates remain high for some time. Those who have to sell will sell.

My guess is that rates will stabilize around 5%. It will be interesting if a lot of owners will just wait until the rate stabilizes and then sell.

I am glad we got an assumable 30 year mortgage (Veteran Affairs) at 3% back in 2016. That will help us to buy more buyers at a better price if the buyers qualify to assume the mortgage.

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Who has to sell? This isn’t leveraged out the ass flipper owned properties like 2008. Everyone is working remote. Cost to build is sky high. Sorry you didn’t buy a house in the last 12 years, you missed your window.

Only way house prices decrease significantly is if there is a massive recession. In that case you won’t be able to get the financing to buy anyways.

pudil says

Sorry you didn’t buy a house in the last 12 years, you missed your window.

What do they say about making assumptions? I'm imagining lower sales volume and a higher % of sellers will be those that have to sell. I guess you forgot how often people in 2008 said "if you don't buy now you'll never be able to buy". Then after 2010ish we witnessed literally millions and millions of people do what? That's right...THEY BOUGHT HOMES!!

ad says

My guess is that rates will stabilize around 5%.

Can gov pay interest on its ever increasing debt beyond this point!

Blue says

Can gov pay interest on its ever increasing debt beyond this point!

Good point as I suspect the Fed Funds rate will stabilize around 4.25% from currently at 3.25%.

The 10 year Treasury is 3.8%. It averaged about 2% a year under Obama when he was borrowing $1 trillion annually.

Right now I think debt service is still sustainable for the federal government. Its only about 9% of the federal budget.

https://www.pewresearch.org/fact-tank/2019/07/24/facts-about-the-national-debt/ft_19-07-18_nationaldebt_2/

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This US Treasury site states interest payment is 5% of total federal budget : https://fiscaldata.treasury.gov/federal-spending/#deficit-by-year

The site accounts for all spending including entitlements including Social Security.

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cisTits says

And the Fed owns the largest sungle chunk of it.

Yes the Federal Reserve owns US debt and so does the Social Security Trust Fund. Any surplus of Social Security is used to buy US debt (Treasury bills, notes, and bonds).

.

ad says

My guess is that rates will stabilize around 5%.

What makes you say that when at this moment mortgage rates are 7% and the fed say they will continue to raise?

https://www.marketwatch.com/picks/the-major-county-in-america-where-home-prices-just-dropped-the-most-is-01664637133

The major county in America where home prices just dropped the most is...

Alameda County (Oakland, Calif.), which is down 11%;
Travis County (Austin, Texas), which is down 9%;
Santa Clara County (San Jose, Calif., which is down 8%;
Contra Costa County (outside Oakland), which is down 7%; and
Fairfax County, Virginia (outside Washington, D.C.), which is down 7%.

pudil says

Cost to build is sky high.

For now, but building supplies are trending downward (like lumber). Garage door and windows, etc will become available if they aren't already.

pudil says

Who has to sell? This isn’t leveraged out the ass flipper owned properties like 2008. Everyone is working remote. Cost to build is sky high. Sorry you didn’t buy a house in the last 12 years, you missed your window.

Only way house prices decrease significantly is if there is a massive recession. In that case you won’t be able to get the financing to buy anyways.

I just bought a house a few months ago and I knew it was at the peak, but I had more important reasons to leave CA and start elsewhere. I think you underestimate the probabilities of a job-loss recession with the record pace of monetary contraction that the Fed is driving. Having said that, the most desirable areas will always have demand which is why location matters so much especially in times of recession.

https://archive.ph/no8v3

'Big Short' analyst says Florida home values could drop as much as 50% in some areas when markets factor in flood and storm costs from disasters like Hurricane Ian

Lee County, which includes Fort Myers and its suburb Cape Coral in southwest Florida, was home to one of the biggest disconnects between what homeowners were paying in flood insurance and what insurers should be charging to cover their risk, DeltaTerra found. In an analysis the firm shared with investors in May 2021, DeltaTerra estimated that single-family home values in the metropolitan area could fall by between 32.3 and 52.8% once the market correctly priced in flood-protection costs.

Fort Myers was squarely in the middle of Hurricane Ian when it made landfall. Now that buyer demand is cooling because of higher interest rates, a reckoning with the true costs of flood protection could make it all the more difficult for its housing market to recover. That would send a warning to other metros, Burt said.

"People actually being exposed to events where they aren't bailed out by home-price appreciation, and you see these problems a year and a half from now persisting — unlike what's happened in previous disaster events. It's a strong signal to other markets," Burt said.

"Once people actually observe some financial harm, that's when they'll start reacting to it," he added.

https://en.wikipedia.org/wiki/Florida_land_boom_of_the_1920s#End_of_the_boom

Hurricanes played a part in ending the 1920s Florida property bubble too.

The 1926 Miami hurricane ended the boom and the much smaller 1928 Okeechobee hurricane made certain it was extinguished. The 1926 hurricane destroyed "whatever public enthusiasm for Florida vacation properties and real estate development that remained," as there had been little preparation for the storm.

In 2006 there were four storms that crossed Florida. I think it was 2006. After that insurance doubled for everybody not just the areas that were hit. People could no longer afford the mortgage payment with the new insurance on top of it and everybody that had bought in the suburbs needed to move closer to work because it cost of gas had also gone up. A lot of homes went up for sale and they were fire sales. And then they were short sales. So don't think that this won't happen again because it is unbelievable the timing.

New Orleans native here. Katrina definitely destroyed housing prices for nearly a decade. Sure, if a storm decimates homes but demand for some reason remains unreasonably strong, then sure maybe housing prices continue to rise. But as someone who lived through that shit show, and had many friends who were natives for generations relocate to Texas after the storm, I can tell you, most people will not want to live in the area after an event like Ian, unless they are true locals, and have all of their family and lifelong friends there. But locals aren’t who drive up prices, transplants are. And transplants don’t have the stomach for living through the YEARS of cleanup an event like this requires. Also, New Orleans is truly one of the funnest and most unique cities in the country, despite it’s pitfalls, so in my opinion worth the bullshit. Fort Myers? Imo not so much.

porkchopexpress says

I just bought a house a few months ago and I knew it was at the peak, but I had more important reasons to leave CA and start elsewhere.

I think you said Nashville area. I don't like that area, but I think you'll do fine there. Better than CA. I don't like the area because bad musicians piss me off. Lots of drunk tourist. You can avoid it if you stay away from Broadway, but downtown Nashville is a shit hole in my opinion. I'd get better BBQ and food in the ghetto South Side neighborhoods in Chicago. Basically Nashville is an over rated binge drinkers paradise.

It has the party atmosphere of NOLA, but NOLA knows it's fucking trash. They own it. I generally like TN though. The Smokies are beautiful. Best spot is Cosby to the East of the park. Way less tourist. I parked my camper there for 4 days because the vacation rental probably had a 30% grade driveway. Almost fucked shit up in a bad way with our car and camper. My fault, but shit was that scary for a minute or two attempting to get the camper up there. Canned ham too, so only 14'. I trailer a lot and that was fucked up.

https://finance.yahoo.com/news/why-home-buyers-may-be-about-to-catch-a-break-141032221.html

Home buyers may finally catch a break

zzyzzx says

https://finance.yahoo.com/news/why-home-buyers-may-be-about-to-catch-a-break-141032221.html

Home buyers may finally catch a break

Nooooooooo!