patrick.net

GNL says

Not sure how wookieman can be so sure lenders won't foreclose if it were to get bad though. I guess the lenders will just get bailed out again. This is why people are disgusted.

90% of people have no clue what foreclosure is. It's just a term they know. They don't understand amortization on a loan. With interest rates and appreciation it's almost impossible that a 2-5 year performing loans isn't a gain on the banks books. Why foreclose? You defer and work it out with the borrower. Banks can't manage property. I dealt with BOA losing probably $60k being fucking idiots on just one deal. There were many others during the bust. I saw multiple banks lose millions because they had idiots managing foreclosures. Banks lend money. They're not landlords. Neither are the brokers that manage the process.

Gotcha. How long until a 2-5 year performing non-performing loan becomes a drain?

WookieMan says

90% of people have no clue what foreclosure is.

Very true, if a home owner has a good amount of equity then it is better to do a fire sale and still make money.

Most likely they'll just throw the keys on the table for the bank if they cannot pay their mortgage AND cannot make money on the quick or fire sale.

Then the bank loses money trying to sell the home via foreclosure auction to shark investors or ruthless informed buyers. I saw that here in the Florida panhandle for 3 bedroom townhomes bought for $270,000 in 2006 and then sold for $120,000 in 2011.

The same townhomes in my community now are selling for around $280,000, and their prices recently peaked around $320,000 back in spring 2022.

.

Big_Johnson says

Big_Johnson says

GNL says

That's so true, Big_Pretender. Everyone should buy no matter what. Rates and prices are never too high...buy, buy, buuuuuuyyyyy. Now!!

Clown. So what do you suggest someone does who can comfortably afford to buy and wants to hold for the long run?
Do you tell him/her that now is a bad time?

Spare me the BS gnl,
What do you think that person should do? Give a straight answer.

I think they should ask you what they should do. You are 100% sure of yourself. There are endless numbers of people who look to others to lead them. You would have made a great Realtor.

GNL says

Gotcha. How long until a 2-5 year performing non-performing loan becomes a drain?

Mathematically and historically it doesn't. If it's in default from the closing onwards sure. But if payments were made for 2 years, the lender in almost all cases doesn't lose money. Look at an amortization schedule. Not sure this link will work. If it does it's on $100k to keep it simple: https://www.calculator.net/amortization-calculator.html?cloanamount=100%2C000&cloanterm=30&cloantermmonth=0&cinterestrate=7&cstartmonth=9&cstartyear=2023&cexma=0&cexmsm=9&cexmsy=2023&cexya=0&cexysm=9&cexysy=2023&cexoa=0&cexosm=9&cexosy=2023&caot=0&xa1=0&xm1=9&xy1=2023&xa2=0&xm2=9&xy2=2023&xa3=0&xm3=9&xy3=2023&xa4=0&xm4=9&xy4=2023&xa5=0&xm5=9&xy5=2023&xa6=0&xm6=9&xy6=2023&xa7=0&xm7=9&xy7=2023&xa8=0&xm8=9&xy8=2023&xa9=0&xm9=9&xy9=2023&xa10=0&xm10=9&xy10=2023&printit=0&x=Calculate#calresult

If you paid for 2 years, for the bank to start taking a loss it would take about $13k in property value loss. That's NOT including principle. It would take closer to $15k. Now factor in attorney fees, commissions and everything associated with foreclosure on the lender side. It doesn't make sense to foreclose. Forbearance is an option. You throw $1-2k on the back end of the loan or an agreement to make up the missed payments. Or foreclose and probably lose $30k as a bank. They learned from the bust. They ain't foreclosing on a loan that preformed for 2-5 years. After that, all bets are off as the asset is likely worth more in foreclosure.

Basically a 13-15% loss in value over 2 years PLUS costs of foreclosure on the banks end is a losing proposition. You're better off losing $2k in interest short term and getting it back later. We're talking $10-20k losses on just a $100k home in my example by foreclosing. That's what lenders have learned. Now do that with a $1M loan. We had a once in a lifetime occurrence that involved fraudulent loans that were legally allowed. Values aren't and won't drop 20% over 2 years in our lifetime very likely ever again in most regions. Detroit types aside. Not impossible, highly unlikely.

Big_Johnson says

Clown, never gives straight answers. Waste of time.

You're not losing confidence in yourself now, are you? Why do you need confirmation?

HeadSet says

Someone born in 1957 would have turned 65 in 2022, not 2023.

Meaning that in 2023, the members of the largest birth year in history have all hit 65, even if they were born on NYE of that year.

Only makes my point. This next year will see the about half of males born in 1957 pass or have passed. It's actually 66.something but I rounded up to 67.

WookieMan says

My mom and most of her peers and friends are 68-78. They've already downsized where I'm at. Large sample size. I don't think it's going to be a thing at all. Your average boomer still had a relatively modest home. The McMansion thing is blown out of proportion because they look stupid.

Wookie, it's clear you're from an affluent family, and good on you all. Affluent live longer, more assets, stay healthy longer.

However, most others your mother's age are not affluent.

But that's not my primary point - this is:

It's not about what boomers can, can't, or will do when they're healthy -- it's about what their heirs will do when their boomer relatives are no longer healthy.


It's not about bank foreclosures or locked in low interest loans or rental prices vs. home prices - it's about how the heirs will deal with a house 5 states away. Big, Small, Mondo Condo, downsized Retirement House, Zero Lot McMansion, 55+ or not, whatever it is.

House price collapse within the next few years, rates, rents, etc. will only play a supporting role - the main driver will be demographics.

I agree with Wookie’s assessment on lenders. This time around, I expect more loan mods and forbearance rather than foreclosures if it comes to that. Much more cost effective and less headaches for the banks. They’re in the lending biz, not foreclosure and landlording.

Onvacation says

Big_Johnson says

$5 for a sandwich? An avocado toast is $15.
As a millennial I don’t remember getting a good sandwich for $5. Was that 30years ago?

Before the COVID-19 scam our local bagel shop sold a chicken breast sandwich for less than $5. They now want almost $10.

But if people are paying $10 then perhaps that should have been the price all along.

Think of the late 60s to 80s but in reverse; when there was an dearth of homes/starter homes for young family forming boomers.

Now we're going to have a glut of homes, for much smaller families and many, many times more DINKs and SINKs as a percentage of the pop than that era

Big_Johnson says

Clown, never gives straight answers. Waste of time.

Eh, he's been aggressive lately I'd agree. But there might be a reason we'll never know. I don't think he's genuinely try to be a dick. I'm just trying to explain that banks aren't going to want to foreclose. So rumors of shadow inventory are not valid. I gave the math as to why. Probably under 1% default on a home loan in year 1-2. Loans are solid and if banks are losing money it's through other endeavors besides lending on residential homes.

GNL works in the industry and I think there's a slow down in his industry as there are fewer and fewer listings. That can bias someone's view of the market and the agents he communicates could be panicking. If you don't have a listing, you ain't making money. That flows into other vendors in the RE world. His view is from likely getting less work, agents freaking out and spreading fear about the market.

Fact is, I've never seen a market with 5-6 months or less of inventory drop in value. Less inventory is less business. Less commissions. So certain segments of the industry freak out. Agents WANT higher inventory. More listings, more opportunities to get buyers. More opportunities to market yourself and get your brand out there. Low inventory is killing everyone except sellers and the few agents that get the listings. Everyone is losing business from loans, attorneys, inspectors, marketing, etc.

We should probably stop refraining from the name calling. We all have different perspectives as I mentioned. GNL's might be out of fear of a 20% revenue drop or hell maybe a gain. We have no clue. RE will always go up due to scarcity and how our fiat works. People get worked up about 1-2 year periods where it drops. It's rare and it's not everywhere either. Everyone just needs to calm their ponies. We'll all be fine whether we own or rent. Lose money or make money. If you lose some, understand you're in the best country on the planet to be in regardless of flaws. We all have it pretty damn great. I've lost $150k on an investment property for perspective. Oh well. Who gives a fuck. Stay happy. Learn things so you don't end up in that spot again. Live life and have fun.

AmericanKulak says

Wookie, it's clear you're from an affluent family, and good on you all. Affluent live longer, more assets, stay healthy longer.

I'm from a smart family that took risks. My dad went bankrupt when I was 28. He pissed away a lot of money. This will come across pompous as can be but both my mom and dad's side of the family is extremely intelligent with money. My dad was the failure and it still turned out good after his passing. Risk can be bad, but even what appears to be a fuck up in the moment can turn into a blessing in disguise.

Housing wise, I don't worry about Millennials taking care of mom and dad. Mom and dad likely did the same for them when they were younger or even adults. The modern family structure is different. I still have friends that are 35 or so that live with mom and dad. It's gay from my point of view as I don't like to share space, but it generally is smart. Hence why the boomers heirs will manage just fine. Likely get a paid off house and take care of mom and dad. It's not the 1950's where you'd just leave after WWII and go start a family in the suburbs.

Inventory cannot be stated enough. Until more houses are built, ain't nothing changing. Millennials would buy up all the boomer houses as prices stagnate yet not drop. The prices we're at are here for the foreseeable future, if not higher. There's no data, even interest rates showing a negative trend that I've seen nationwide. And no, no one give me a one off shit neighborhood that lost 20%. That's not reality.

I know nothing in the short term particularly over priced metros. But I'd suspect at least prices would be >40% up from now in the next 4 years given the double digit inflation alone which I doubt will go down any time soon. Given the prices went down for the last two years.
I witnessed land price went up >10K times elsewhere in my life time. Never underestimate inflation which is a stealth tax by design!

“Risk can be bad, but even what appears to be a fuck up in the moment can turn into a blessing in disguise.”

@Wookieman,

Not risk, but sometimes a bad problem can be a blessing in disguise. My sister got layoff in late 2011 due to her company got bought out. She was devastated as she was the sole bread winner of the household. She was collecting unemployment around $1.8k/month while her month expenses were around $3.4k. I gave her $1k/month at the time to help bridge the gap in addition to her severance package, which should help her last for at least a year without touching her savings. Itold her it could be a blessing in disguise. Don’t worry about it. Keep her chin up

3 months later, she landed a job with a new company. She now makes 3.5x income compared her former job. She paid off her million dollar house in May. Her company stock options are so good, which makes her a multi-millionaire on paper after a decade or so.

Rather than do something positive with our lives, people are wasting their lives complaining about Prop 13. 🤣

Big_Johnson says

Clown. So what do you suggest someone does who can comfortably afford to buy and wants to hold for the long run?
Do you tell him/her that now is a bad time?

You call that person very wealthy if they want to live in the bay area and own a home.

It seems foolish to pay over $10,000 a month PITI plus a small fortune (triple or quadruple the average salary) for a down payment PLUS EMERGENCY REPAIRS! when you can rent a similar or better place for $4,000 per month. Many of us were lucky enough to be born in the bay area or bought in at the right time. Even somebody that could afford a house around here would be wiser to rent, invest, and save. In my opinion now is not the right time to buy in the SF Bay Area.

But if you got fuck you money, you do you.

WookieMan says

I'm just trying to explain that banks aren't going to want to foreclose.

That was a genuine question. Our business is down about 30%. Is tacking arrears to the end of the loan something new? I think it would be worse if we didn't have as many high acheivers as we do.

GNL says

WookieMan says

I'm just trying to explain that banks aren't going to want to foreclose.

That was a genuine question. Our business is down about 30%. Is tacking arrears to the end of the loan something new?

Forbearance has been around forever. Banks were hit with too many loan defaults, and they panicked. After a year or so, they wised up, coordinated, and controlled the flood of REOs hitting the market. Inventory started to dried up at the courthouse steps = less foreclosures. Real estate prices started rise. The rising tide lifted all boats. They were able to get higher prices for their REOs in addition to working out loan mods/forbearance with the borrowers. Win-win for everyone.

WookieMan says

Mathematically and historically it doesn't.

Nice analysis.

"But it's different this time."

WookieMan says

Low inventory is killing everyone except sellers and the few agents that get the listings. Everyone is losing business from loans, attorneys, inspectors, marketing, etc.

Exactly what I pointed to above. Low economic activity can be caused by low RE movement/transactions. I am not an economist but my opinion is a recession is about the only way RE "could" have issues going forward.

Big_Pretender is a chestbeater. I like to mess with chestbeaters.

Eman says

GNL says

WookieMan says

I'm just trying to explain that banks aren't going to want to foreclose.

That was a genuine question. Our business is down about 30%. Is tacking arrears to the end of the loan something new?

Forbearance has been around forever. Banks were hit with too many loan defaults, and they panicked. After a year or so, they wised up, coordinated, and controlled the flood of REOs hitting the market. Inventory started to dried up at the courthouse steps = less foreclosures. Real estate prices started rise. The rising tide lifted all boats. They were able to get higher prices for their REOs in addition to working out loan mods/forbearance with the borrowers. Win-win for everyone.

If I remember correctly, there was just a wee bit of bailout money and the government got involved with keeping people in their homes also. This is fraud but, whatever. I would say that is NOT a win-win for everyone either. People need to fail. Failure is a cleansing agent but, no, the government and the fiat controllers fucked it up. Risk? Hahaha, there is no risk if daddy gov is always there to print $$.

exfatguy says

Onvacation says

Big_Johnson says

$5 for a sandwich? An avocado toast is $15.
As a millennial I don’t remember getting a good sandwich for $5. Was that 30years ago?

Before the COVID-19 scam our local bagel shop sold a chicken breast sandwich for less than $5. They now want almost $10.

But if people are paying $10 then perhaps that should have been the price all along.

I'm not paying that. Last time I went in the sandwich was $9 and some change.

I remember when I could go to the store and buy a can of soda for a nickel. Of course minimum wage was $1.60 and a decent salary was $10,000 a year. A young man could buy a house have a family and pursue a wholesome hobby like car racing or deer hunting. It was a different time.

It's so fucking corrupt now that we're at war with Russia, everything is made in China, money is completely fiat and shipped overseas on pallets, and the main purpose of government is to put on a good show while the puppet masters continue to rape, murder, and plunder.

But I digress. Good sandwich, but I have not been back there since.

Onvacation says

I remember when I could go to the store and buy a can of soda for a nickel.

I was making $4.25 an hour as a teenager in the mid 1980s working at a major chain restaurant as front help (bus boy and host) and remember soda being 25 cents from the soda machine.

Now a can of soda is at least $1.25 and the same type of job pays $15 an hour.

The purchasing power has diminished and I wish there was economic reports which would show purchasing power trends over the last 50 years.

I realize some products like cars cannot be easily compared as cars now are a lot different as far as reliability (average service life), mileage, and features.

I would venture even more so with a gallon of gasoline as cars average around 30 miles per gallon versus 20 miles per gallon back in the mid 1980s. So mileage improvement would need to be factored in the cost of gasoline over the last 50 years.

.

Eman says

Rather than do something positive with our lives, people are wasting their lives complaining about Prop 13. 🤣

See, these are the comments that are massively assumptive. You do realize a person can do both, right? I would say I'm successful but that doesn't mean I have to turn a blind eye to the bullshit going on around me. Just stop with this BS.

exfatguy says

But if people are paying $10 then perhaps that should have been the price all along.

More likely the bagel shop's costs have inflated to where the shop cannot profit unless they charge $10. Same with the shop's competition, so prices rise for customers.

GNL says

In fact one of our Realtors has their own radio show

WMAL by any chance?

HeadSet says

exfatguy says

But if people are paying $10 then perhaps that should have been the price all along.

More likely the bagel shop's costs have inflated to where the shop cannot profit unless they charge $10. Same with the shop's competition, so prices rise for customers.

yeah mcdonalds here in panama city beach on front beach rd charges about $11 (includes tax) for a big mac meal (medium size)....the mcdonalds pays about $14.50 an hour entry level ...

https://www.axios.com/2022/04/17/mcdonalds-big-mac-inflation-food-prices

.

GNL says

WookieMan says

Low inventory is killing everyone except sellers and the few agents that get the listings. Everyone is losing business from loans, attorneys, inspectors, marketing, etc.

Exactly what I pointed to above. Low economic activity can be caused by low RE movement/transactions. I am not an economist but my opinion is a recession is about the only way RE "could" have issues going forward.

Big_Pretender is a chestbeater. I like to mess with chestbeaters.

Let’s all hope for a recession so we can load up on real estate after the bubble pops. I am loading up on cash for now.

@Big_Pretender, you crack me up. Somehow you think you're morally superior when you raise rent on a guy who's trying to purchase but if that same guy hopes housing crashes so he can get out from under your rent seeking is the bad guy?

Big_Pretender thinks he's Big_Moral guy. LMAO.

Big_Pretender, you funny guy. I like you. I think I keep you as pet.

Big_Johnson says

“Let’s all hope for a recession so we can load up on real estate after the bubble pops. I am loading up on cash for now.”

Wow, you hero. Hoping for people to lose their jobs and houses. If pathetic has a definition this is it. Jesus, you all had a decade to buy real estate that appears to be cheap in todays terms. But I bet you were copy and pasting Zerohedge article talking about the upcoming housing crash.

Not buying a house or more houses was a financial mistake some of you perma bears won’t recover from. You will wait another decade for this “buying opportunity” and the big crash.

Meanwhile Patrick is happily retired on income from his stock portfolio. Are you still working?

There is more than one way to skin a cat, mkay?

WookieMan says

I'm a hard pass on Subway. It's just so bland for a sub. Jimmy Johns, Jersey Mikes and Firehouse are the chains around me that I'd pick over Subway 100% of the time.

I'd agree Subway is very low on quality for a sandwich. There's SOMEBODY here that lives in Upstate NY - I'd recommend Jreck's Subs. I like them. It's basically in the Adirondack region. That shop was started out of an old school bus from my highschool. Harrisville.

Big_Johnson says

The clown show will be disappointed again when Americans don’t lose their jobs in mass and housing won’t crash. Pathetic losers. Lol

B.J. , there are layoffs happening.

https://www.reuters.com/technology/alphabet-lays-off-hundreds-global-recruitment-team-2023-09-13/

"Economists polled by Reuters had forecast that new claims for state unemployment benefits would rise by about 8% in the week ended Sept. 9, after having fallen 13,000 to 216,000 in the prior seven-day period"

ad says

there are layoffs happening.

In tech it doesn't matter really. Fact is you can get a job at a tech mom and pop place in Nebraska and live way cheaper. Or if you can get solid internet live in some remote location in a camper and WFH. Blue collar and manufacturing job layoffs are way more important. They get laid off they cut to bare bones. No spending. That's when the real layoffs start in the white collar jobs because revenues are down because the plebs are no longer spending money.

Speaking of WFH, I think most of these layoffs are exactly because of that. These people can easily find new jobs, they just might need to come into the office. So I don't think layoffs in the tech space move the needle that much. GDP wise tech is huge, but employment it's not as huge of an employer. And frankly they tend to live in high cost of living areas, so I really don't care. They made their own bed. If a bunch of yuppies in CA or Austin, TX spending more than they can afford lose their home, that doesn't impact me. They likely lost their jobs because of performance.

You cut the trash early even if you lose $20k. It's better than $100k or more over 3 year before finally pulling the trigger on a shit employee. I think that's the layoffs we're seeing. I'm not seeing it as the economy going to shit and it moving housing at all. It's very minimal as well. There are plenty of jobs, just not in places where the exodus is occurring. I witnessed it in IL. We're much more stable now, but that has more to do with the market in housing and employment figuring it out. Not our governors or legislators.

Put this way. My wife and I have a large network of friends and co-workers. I haven't heard of any of them without a job for YEARS. No one is worried about work that I know outside of day to day stresses. Coastal areas tend to be different though. So I might be talking out my ass for you guys.

Big_Johnson says

The clown show will be disappointed again when Americans don’t lose their jobs in mass and housing won’t crash. Pathetic losers. Lol

I never said they are going to lose their jobs and houses. I said you have no moral superiority over someone who hopes housing crashes.

Reading for comprehension is a lost skill.

Big_Johnson says

Damn, you must be in your 90’s?
And a multi millionaire (if you bought real estate)?

That's what's cool about the internet, nobody knows you're a dog..

We've even had teenagers pretend they're real estate moguls.

A repeat of 2008? Don't be silly. Everyone knows residential real estate always appreciates in value. /S

"Getting Cold Feet": Rising Home Contract Cancellations Hits 10-Month High As Affordability Crisis Worsens

In August, around 60,000 home-purchase contracts fell through nationwide, accounting for 15.7% of homes under contract that month. This is an increase from 14.3% the previous year and represents the largest percentage since October 2022, when the 30-year fixed mortgage rate first rose above 7% for the first time since the Dot Com bust.
https://www.zerohedge.com/markets/getting-cold-feet-rising-home-contract-cancellations-hits-10-month-high-affordability

BJ, there is low inventory because there is less incentive to sell especially when the average and median 30 year rate for homeowners is below 4%.

Homeowners are making payments as there is no data to show mortgage delinquency is rising.

And the job market is holding up also for now, but lets see how it fares for the next 6 to 9 months.

Need to see an increase in housing starts, as well as vacation and 2nd homes becoming more long term rentals.

From what I've read, the desired mortgage rate is 5.5% as its low enough to entice buyers but not that high to cause a run up of prices.

I'd plan on living in the home for at least 7 years to realize the benefit of buying down the maximum discount points (4 points) to lower the rate to 4.5%.

Distressed inventory is a mighty ways off. You see people can still tap those free equity gimme bucks via HELOCs and homeowners equity just hit a new all time high of over $30 trillion. Of course, that equity is not evenly distributed.

Also, keeping prices inflated is the new thing of gifting the down payment to ones' children. Over 40% of new buyers get this free coin, and it helps the price to income ratio be higher than it has been historically.

Big_Johnson says

Don’t be ashamed of your age.

I'm not going hold your immaturity and lack of experience against you.