patrick.net

“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.

WookieMan says

Inventory cannot be stated enough. Until more houses are built, ain't nothing changing.

(That 65-69 is now the largest existing age cohort)

In 5 years, the remaining ~23M Silents will only be ~10M. There's probably 9-10M housing units getting freed up since Silents have high levels of home ownership, almost 80%.

In 5 years, Boomers drop 12M, to the size of GenX, That's another good 8M housing units. They also have home ownership in the 70%+ range.

So we have ~20M housing units coming on due to death in the next 5 years. NOT including the millions that will open up due to infirmity.

Then remember that 2/3 of Gen X (likely inheritors of Silents/Oldest Boomers) and just below half of Millennials are already homeloaners (43%), so what they will do with an inherited 2 bedroom, 1.5 bath in the 55+ Condo Building in Port Saint Joe or half an hour around Phoenix when they live in SFBA or Atlanta or Houston Suburbs is unknown.

This will happen regardless of interest rates, home prices, unemployment, economy, etc.

(Numbers can go up due to the tens of millions of immigrants)

Those boomers will likely be passing their homes down to their kids. Doesn't mean the kids will sell them. I rent out my inherited home.

RedStar says

Those boomers will likely be passing their homes down to their kids. Doesn't mean the kids will sell them. I rent out my inherited home.

It depends. Many of these homes are several states away. If there are siblings, property management costs, etc. it may not make sense. Also many Millennials have debts or just want to have 'more life experiences' and prefer the cash. Not all siblings would prefer the rental income to a cash injection.

We're talking millions of homes.

(hype) SILVER TSUNAMI!! (/hype)

One thing I remember in 2006 was how many were certain there could be no crash, low inventory, high demand, high household formation rates, etc.

Big_Johnson says

It won’t even be a silver wave. Tsunami is a Zerohedge perma bear hype term.

Remember the forbearance foreclosure tsunami?

Let’s do this, wake us up when inventory goes back to historical trend of 2.5M first before you spread the perma bear-zerohedge nonsense.

Buy now or be locked out FOREVER!!!

I dislike the term "Inventory". If you're only trying to actively sell a fraction of the goods in your warehouse, that's not your "Inventory".

Prices WILL normalize. Count on it. Sell now.

"8x Median Income is Sustainable with 7% interest rates!11!Eleventy!! Forever!"

Big_Johnson says

You can like it or not like or call it something else. Nothing matters except for what’s for sale and you want to measure that and see where we headed.

The trend is your friend until you end.

Big_Johnson says

Remember the shadow inventory narrative of millions of homes that are empty and might come on the market which would crash the price? Every year there is a new narrative (and then every other year an old narrative gets recycled) but none of that nonsense means anything until it actually comes online for sale.

Yes, I remember the 2010s.

Big_Johnson says

The market decides what the price is. At any given time the price is normal.

True if you have a free and open market like Vancouver, Canada. Look at the prices there relative to the median wage. Prices are beyond disconnected or detached from wages and income. That is because of foreign buyers from Asia inflating the housing costs, and I think this applies in some ways to Southern California and San Fransisco Bay Area.

Big_Johnson says

The market decides what the price is. At any given time the price is normal. There is no speculation or loose lending standards in this current market. And there is no forced selling. This could go on forever. No homeowner is hurting. Quite the opposite. Any homeowners “feels” like sitting on a goldmine with the locked in low rates.

You just contradicted yourself.

By that metric the prices in 2004-2008 and 2010-2018 were normal, too ;)

When Betty is 74 and can't walk up the stairs of her Tampa townhouse from a busted hip and needs an oxygen tank on top of that, her Feelz about locking in a low interest rate don't matter. It's necessity, not "look at my low rate when my late husband and I brought this place in 2011 when he turned 65 and were found our retirement home"

It doesn't matter what the interest rate is, the percentage of goods in the warhouse up for sale ("Inventory"), the multiplier of annual median income to housing, the unemployment rate, how the homebuyer feels about the deal they got years ago, or any thing else.

There will be many Bettys in the next few years.

Big_Johnson says

2004-2008 was a ONCE in a lifetime event. Anyone who could fog a mirror could buy a home back then. This will never ever be allowed in the US. We have very strict lending standards…..I know from experience….I bought several homes.

Big_Johnson says

The market decides what the price is. At any given time the price is normal

Was the 2010s normal? How about the early 80s? The Levittown explosion of the 50s and 60s? All Normal?

Nobody went broke from taking profits too soon!

Big_Johnson says

At any given point in time the price is normal and 2008 was a once in a lifetime event. Forget about 2008. The world of RE couldn’t be more different than 2008.

"It's normal, except when my preferred investment vehicle market went loco."

"It's different this time."

We just need "Permanent Plateau" for the trifecta of famous last words.

Big_Johnson says

I remember when people called me crazy for buying bitcoin

Full stop.

Big_Johnson says

Same with RE. People told me I will lose my equity when I bought my most expensive house in 2020. Now 2020 is dirt cheap and I made over 500k on that house alone.

I remember when angry mortgage brokers and Realtors would call in and demand people stop "talking down the market and hurting people" and that "Realtors and Mortgages were DA MOST REGULATED BUSINESSES EVA"

It's never been a better time to buy a Home(tm)

With rates as low as 14.5%!! - Phil Rizzuto, Spokesperson, "The Money Store" 1984

https://www.youtube.com/watch?v=LMpC5eRMcEg

Big_Johnson says

And the last comment about best time to buy a house doesn’t make sense either.
Maybe it’s a great time for me to buy a house if I have the cash and want to hold long term. Maybe it doesn’t make sense for Jack Meyer because he is planning on only living in a certain place for 2 years before he moves. it always depends on each individual to make the decision. Just because some people can’t afford a house doesn’t mean there arent other people where money is burning a hole in their pocket.

Wow, I thought I'd never see Big_Pretender utter some truth. You've been saying since the beginning of this thread that everyone should buy a house no matter what. You've done nothing but cheerlead everyone into buying.