patrick.net

Rubicon says

You are missing the point.
There is no law that says that schmuck avg joe should or must afford a house. Median income doesn’t mean anything. In other countries the majority of people are life long renters. Just here in the US people think they deserve or are entitled to own their own house. If you make no more than the median household income you likely will never own and you are fucked. Paycheck to paycheck is your future.

It's part of the American Dream.

There is no law guaranteeing 1-2+% real estate appreciation or the rule of 72 on the stock market, either, but in a few years when the peak birth year starts needing to downsize/assisted living, and prices collapse, the same investors will be howling the government/fed needs to intervene as they deserve their income and ROI. Sicilian properties are given away for some taxes and repairs, entire islands are abandoned as the government can't support the aged and rapidly declining population on them; once upon a time a modest piece of land in Sicily went for a sack of gold. People couldn't afford it, so the emmigrated to the US, Canada, and Argentina. Once upon a time, suburban Detroit housing was the dream of many.

The same NYT and Economist that tells middle America to suck it up, racists, will be screeching for intervention.

It's coming, demographics are inevitable. The life expectancy for somebody born in the 1950s is the mid 70s. That's life expectancy, not "Assisted Living needs" or "Nursing Home Warehousing" expectancy. People will be in those a few years before they die, they're doing so right now. In less than a decade we're going to have a downsizing-by-neccessity explosion.

"The kids will inherit it"
Some will, some won't. Especially if Mom and Dad boomer brought a new retirement condo/house and there's an outstanding mortgage that Millie the Millennial can't afford with her $40k/year Starbucks income 5 states away from her job. She'll probably sell it if she can and pocket any difference to spend on Boxed Wine and Mexxxx-iii-coo, Girls!. There are millions like her.
https://www.youtube.com/watch?v=XBnQjGGkCuY

Those who can afford it may want to sell as they don't want to be arsed with renting it out, paying for a property manager, etc. Since it's probably not their childhood home in most cases, but Parent's Retirement Home in the Villages, in Arizona, or in Lake Boca Vista, Jerry, they have no sentimental attachment.

The dark secret about immigration, especially in Europe, is it isn't only about controlling demand for wages/workforce but also about filling the rentals which is the top cash flow source of the Elite. If Europe wasn't engaged in mass extreme hyperimmigration, housing costs would be declining YoY for the 2nd decade now.

Don't be fooled by the currently low inventory. There are many thinking they can outwait the high rates, and many are deluded into thinking 3-4% mortgages are the norm. They never were. We're close to the post war average now. That new house prices (as I've mentioned in other posts) are competitive with 30 year old used houses and in many cases, esp. after builder financing and covering closing costs, are cheaper, is a sign of what's coming.

* The Builders are not as optimistic as the Home Loaners waiting to sell are.
* Banks are laying off mortgage personnel
https://www.youtube.com/watch?v=rWbDRQ0mfbI
* A Demographic begging for $100k student loan relief is not ready to slap $300k-$1M on a place.

I wasn't going to write about this, but seeing that no one else has touched on this subject, here goes. The boring part that everyone knows about first:

Back when the residential real estate market collapsed in 2008, it did so primarily because of the sloppiness and greed that entered into all facets of the real estate market. Mortgage officers were making a killing not only on new mortgages, but on re-fis, in which the vast majority of homeowners did 'cash-out refis,' receiving cash that had been accumulated via inflation, while believing that prices will continue to rise. In an effort to make even more money, mortgage companies began offering more and more incentives, such as no documentation loans (often referred to as Liar Loans) etc. Appraisers were pressured to 'hit the number,' knowing that if they didn't, they would be ignored when it came to assigning appraisers in the future, which led to a great deal of fudging the numbers. Of course real estate agents went along for the ride. And, don't forget the consumer, who also wanted to 'make a killing' through either buying or selling.

Here's where it gets interesting; prior to this monumental collapse, Mortgage Backed Securities (MBS) were considered to be AAA rated. MBS made up approximately 98% of all home mortgages, which were sold on what is known as the Secondary Market, where large bundles were packaged on Wall Street, and sold to investors for a handling fee. When the collapse hit in 2008 and the rampant fraud was exposed, millions of homeowners, now underwater on their loans, lost their homes, or, simply walked away. As mortgage payments were no longer being paid by millions of people, the investment funds collapsed as well. Quite literally, the Secondary Market completely disappeared, leaving the industry with nowhere to go to sell their mortgages.

The Federal Reserve quietly stepped in and began a program in which they were buying MBS at the rate of $80 Billion per month, and have been doing so (some months are $60 Billion) ever since the collapse in 2008. THAT , and that alone is the explanation for the crazy inflation that we have seen ... virtually all of it fueled by the purchases of MBS by the Fed, which also kept interest rates at historic lows for over 10 years. Now that rates are being forced up by the Fed as a means to control inflation, prices will no doubt fall. IMO, we are going to end up with a catastrophe, probably much worse than that of 2008.

PeopleUnited says

Richard. This is exactly how the Nazis talked. Subhumans were F-ing up the world and they needed to be purged from the earth.

Who do you think I'm talking about? Are the people that lied about the pandemic, and created hysteria, and lied to the population for 2 years - are they human? The people that insisted you take an untested vaccine for a disease which 99.9% of the population survived - are they human? The people that have lied us into 7 wars, and are lying about Ukraine now - are they human?

WHO do you think I'm talking about? The Nazis run this country. You know why we go to war, it makes money for defense contractors and a other affiliated contractors.

Those are the predators.

PeopleUnited says

The sheep, cattle, whatever you call the “subhumans” blind to their enslavers, they are the victims.

You can't wake them up, I've been trying for 30 years. It's no longer my responsibility. If these people could do basic simple reasoning, we could have stayed out 7 wars, Ukraine would have never happened.

But they continue to listen to known liars and propagandists. Doesn't matter if you point out they are liars and propagandists. People still listen to Rachael Maddow after 4 years of "Russian Collusion", she helped restart the fucking Cold War, people still listen to her - IF they can be considered people.

I don't want to associate myself with the Nazis, who are predators, nor the cattle who are the victims. I'm neither one. We could make use of our incredible technology to improve this world for everything, not just people.

PeopleUnited says

That might happen on a small scale, but the global cabal of satanic banksters will not be defeated by their victims.

Yes they will. What keeps people supporting this system is they have a stake in it, fighting it, they will lose that stake. When nobody has a stake in it, it will collapse.

richwicks says

she helped restart the fucking Cold War

Oh, Putler is female now?

RayAmerica says

The Federal Reserve quietly stepped in and began a program in which they were buying MBS at the rate of $80 Billion per month, and have been doing so (some months are $60 Billion) ever since the collapse in 2008.

There was a brief period of time, starting in 2018, when the Fed was actually selling off their MBS holdings. That didn't last long...

And, interestingly, the Fed was buying COMMERICIAL MBSes at the beginning of the pandemic. Thankfully it is a piddly $8 billion (out of $2.5 trillion of MBSes).

The median house price jumped from $260k to $419k in 4 years? Is this legit?

It appears that Rubicon and E-man may be the same individual.

Waitup says

The median house price jumped from $260k to $419k in 4 years? Is this legit?

No, it's not legit. We've been in a phony real estate market (and economy) since the crash of 2008. The entire economic balloon is being floated by inflationary economics ... the wanton printing of 'money' without restraint. Also, the USA has benefitted since the close of WW II when the dollar was made the reserve currency for the civilized world. That enabled the US to spend without any regard for the future. Now however, there is a major push to create a global, or regional, currency in order to challenge the American dollar. If and when that actually happens, it will be lights out for this economy.

RWSGFY says

The book I'm listening to right now says that typical PM company charges 1 month rent when they find a tenant and 1 months rent every time that tenant renews the lease. Is this really how it is on the ground? Seems expensive AF.

My PM is a broker in the family so I get it for free. He tells me the going rate is 10-12% for gross rent in San Antonio plus listing fees but that was several years ago. When I list that's free to me too but I typically pay the agent that shows it to the renter I select $400-500.

I've checked out local PM websites and they run from cheap with little service to some with many levels of service to choose from that can get pricey.

RayAmerica says

If and when that actually happens, it will be lights out for this economy.

At least 10 years to start getting concerned about that. First India just backed out in the near to medium term and second it would need to have a deep deep pool of liquidity / bond market before it worked well at all and that will take lots of time.

Eric Holder says

richwicks says

she helped restart the fucking Cold War

Oh, Putler is female now?

No no no.

We are the 4th Reich. How can you not see this? We've been lied into 7 wars, you can't even name them, we have constant propaganda, and corporations control our government. Our FDA is nothing more than PR for big pharma, we're all being spied upon constantly (everything you say or hear in a year fits in 10 GB or so, that's $1 worth of storage at this point - so I guarantee the government just collects it), we cannot talk openly, we are constantly censored, our our "news" media is propaganda and will never inform you.

Maddow is just part of that. Sean Hannity is as well. They all are, Anderson Cooper, and all the assholes you know as the talking heads.

Our nation has attacked and bombed Afghanistan, Iraq, Pakistan, Libya, Syria, Somalia, and Yemen. How many people dead? What were the actual reasons for these attacks? I'm looking for answers, and even I don't know and I try very hard.

99.99% of Americans can't even identify what nations our government has attacked, nobody knows how many people have been killed. We're the Nazi regime of this century.

I fully believe that Maui was an internal attack. I know 9/11 likely was, I know for certain that the 1993 WTC bombing was. I can't convince anybody, I can't get them to open their eyes. Our government is a tyrannical fascist system, and nobody recognizes it. It's maddening.

richwicks says

I fully believe that Maui was an internal attack.

Well it wasn't. I have dozens of friends who were on the ground there. The tall dry grass catches on fire uphill from there frequently but the winds usually aren't blowing through the valley like that (or even in that direction) most of the time. It was powerlines falling over catching things on fire as-usual but turned into a blow torch this time.

I do like @ceffer's conspiracy theories though!

Also all manner of dumbassery from the government. This asshole takes the cake so far: https://twitter.com/EndWokeness/status/1691909193656152465

just_passing_through says

richwicks says

I fully believe that Maui was an internal attack.

Well it wasn't. I have dozens of friends who were on the ground there. The tall dry grass catches on fire uphill from there frequently but the winds usually aren't blowing through the valley like that (or even in that direction) most of the time. It was powerlines falling over catching things on fire as-usual but turned into a blow torch this time.

I do like ceffer's conspiracy theories though!

I don't know.

I'm past the age of drawing conclusions quickly. We'll find out in a few years.

Don't be so quick to trust your government not to do something evil, they do it all the time. January 6th is one obvious example. The fallout from these fires, will tell us what happened. I know it's difficult to see your government as an enemy, but if you really knew their history, it's pretty trivial.

Time will tell. I know that Syria was something the US instigated, Libya was not attacked "to prevent a humanitarian crisis", the Hussein wasn't making a "weapons of mass destruction program", and Russia didn't "invade Ukraine for no reason at all".

Of course they will take this treachery and murder at home in time. I think in 5 years time, you'll suspect, but time will tell. I don't honestly know at this point, but I know this government, it's a bunch of murderers and thugs.

What they depend on, is in 5 years, you'll forget about it all. Remember Flint Michigan? That's when the government poisoned the population with with lead laced water. Remember Palestine Ohio? That was much more recent. I am cursed with a memory. I'll be looking at Maui in 5 years. Nearly nobody else will.

richwicks says

I know it's difficult to see your government as an enemy, but if you really knew their history, it's pretty trivial.

Not at all, I'm quite aware of that but I know the culture there and people ain't so bright. Now will the government and others try to leverage this? Damn straight!

RayAmerica says

The Federal Reserve quietly stepped in and began a program in which they were buying MBS at the rate of $80 Billion per month, and have been doing so (some months are $60 Billion) ever since the collapse in 2008. THAT , and that alone is the explanation for the crazy inflation that we have seen ... virtually all of it fueled by the purchases of MBS by the Fed, which also kept interest rates at historic lows for over 10 years. Now that rates are being forced up by the Fed as a means to control inflation, prices will no doubt fall. IMO, we are going to end up with a catastrophe, probably much worse than that of 2008.

Yes, this is the rigged market and what some of us lement. Chickens come home to roost at some point. Those chickens don't always come back to roost at the same place as last time. How someone can disparage a person for pointing it out is beyond my comprehension. Fraud is on the rise and coming from above. Richwicks points this out all the time. Societies die when fraud is the leading way to make a fortune.

B.A.C.A.H. says

It appears that Rubicon and E-man may be the same individual.

That would be interesting. How can we find out?

Rubicon says

Prices will go down because of higher rates or because inventory will skyrocket? If the latter, how/when/why will inventory skyrocket?

Let's not forget a key equation in all of this; buyers. With rising interest rates, which are now more than double than last year, more and more buyers will drop out of the market, or, be forced to lower their housing expectations dramatically.

Bd6r says

No it is not sustainable . Land prices in rural TX are up three to five-fold. A few acres near Round Rock sell for a million. Fifty unimproved acres near where we bought land two years ago now go for more than a million. This is ridiculous.

Few people I know bought land near Dallas area about 18 months ago in a large syndicate. They have no clue why it went up 2.7 times already. I heard the property taxes are a bit high in TX.

richwicks says

When nobody has a stake in it, it will collapse.

Everyone has a stake in it. When it collapses you are going to wish it didn’t.

Rubicon says

“Sicilian properties are given away for some taxes and repairs, entire islands are abandoned as the government can't support the aged and rapidly declining population on them; once upon a time a modest piece of land in Sicily went for a sack of gold. People couldn't afford it, so the emmigrated to the US”

True. It’s a shame, Sicily is beautiful! However, the younger generation has much better job opportunity in northern Italy. Detroit got destroyed by unions and shitty products. Japan and Germany made much better cars than the trash coming out of Detroit.
I get your point but it’s not valid for predictions in our lifetime. Sicily won’t become the next tech hub in our lifetime.

Anyone suggesting in 1968 that Detroit would be doomed in 20 years and to sell at the high and leave now, would have been laughed out the room as a crank. There are people alive who grew up in Detroit and escaped it; it happened in their lifetimes. Nothing done in Detroit couldn't be done in Tennessee or Alabama or later, Mexico.

Nobody in Sicily in 1880 could have predicted that in a generation or two, propeller driven vessels with displacement measured in the thousands of tons would allow bulk grain and fruit shipment with a down to the hour schedule from the New World, with half the crew of a few hundred ton Med Sailing Tramp, ruining millenia of Sicily being the breadbasket of Europe.

As Detroit went from the combustion vehicle powerhouse of multiple continents to a rustbelt slum in a generation, Big Tech will happen faster. It's already a shithold and companies are steadily leaving. There's no need to be in SFBA for venture capital or workers, and bit by bit the prestige factor will fade. Only reason it's taking longer is because half the city is Polyamorous degenerates who don't want to move and don't have kids impelling them to move, but the employers will leave.

Thing is, demographics are inescapable. Despite ludicrous hyperimmigration, the US is still predominantly native born, and the most educated and productive are having one or none kids; the 4-person family is already obsolete. In 5-10 years, there will be tens of millions with no hope of children by the iron hand of biological fertility, so for many the 3-person family isn't happening either. A single person or an adult with a child does not need a 4-bed, 2.5 bath McMansion or ZeroLot.

There is no Doom here, only the inescapable grasp of demographics. People said long before 2008 that anybody with a pulse could get a mortgage.

AmericanKulak says

4-bed, 2.5 bath McMansion

You and I have a very different opinion on what a McMansion is. 4 Bed 2 .5 bath is an average home in most foreman working-class or lower middle-class suburbs.

just_passing_through says

richwicks says

I fully believe that Maui was an internal attack.

Well it wasn't. I have dozens of friends who were on the ground there. The tall dry grass catches on fire uphill from there frequently but the winds usually aren't blowing through the valley like that (or even in that direction) most of the time. It was powerlines falling over catching things on fire as-usual but turned into a blow torch this time.

I do like ceffer's conspiracy theories though!

Power lines: https://www.youtube.com/watch?v=YA28m8oYwQg

Rubicon says

HeadSet says

AmericanKulak says

4-bed, 2.5 bath McMansion

You and I have a very different opinion on what a McMansion is. 4 Bed 2 .5 bath is an average home in most foreman working-class or lower middle-class suburbs.

I got 4b/3B plus large loft and office, 3 car garage. Would never dream of calling my house a McMansion.

It's not just the size of the house, it's also the size in relation to the lot. If the house comically oversized in relation to its lot - then you have a McMansion. Also having supreficial architectrual embellishments helps to achieve the status, columns being the most desirable. =))

PeopleUnited says

there are people with essentially bottomless pockets

The Fed and its friends have literally bottomless pockets.

Wow, looks like Ramaswamy is telling the truth about this:

https://www.joemygod.com/2023/07/ramaswamy-backs-insane-claim-about-federal-reserve/

QUESTIONER: But that is illegally taking money out the back door, not through the proper channels, or adding zeroes to bank accounts to the media or maybe your political opponents. How are you going to stop that illegal under-the-table spending of money from the Federal Reserve?

RAMASWAMY: The answer is, you have to actually make sure the Federal Reserve is politically accountable. See, this idea that it’s supposed to be some sort of special entity that exists outside the checks and balances of government, that’s where the original sin begins, right? And you’re correct to point out what very few people are aware of. Absolutely, that happens.

CNN anchor Jake Tapper was dumbfounded: “Ramaswamy — who is polling quite well in several states — is agreeing with a completely untrue and, frankly, unhinged conspiracy theory about the Federal Reserve illegally adding zeros to the bank accounts of media companies. You can’t invent it. None of that is true. That is a deranged conspiracy theory, and then here you have a Republican presidential candidate saying, ‘You’re correct to point out what very few people are aware of.'”

I'm pretty damn sure that the Fed simply prints up and hands cash to whomever is on the side of the shadowy oligarchy/mafia that is really running things.

Median sales price should be around $350,000 based on dashed trend line. Another way to examine this is that the median price was around $200,000 at beginning of 2004. So a 4% annual appreciation over 19 years means the price should be $200,000 x (1.04)^19 which is equal to $421,370. Professor Robert Shiller stated that housing typically appreciates 4% annually over the long run.

Median price was $329,000 around February 2020.
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ad says

Median sales price should be around $350,000 based on dashed trend line. Another way to examine this is that the median price was around $200,000 at beginning of 2004. So a 4% annual appreciation over 19 years means the price should be $200,000 x (1.04)^19 which is equal to $421,370. Professor Robert Shiller stated that housing typically appreciates 4% annually over the long run.

Median price was $329,000 around February 2020.
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4% compound annual appreciation = should be plotted in a log scale. Share with us the graph in a log scale and it will give us a different picture.

The same with plotting growth in the stock market in linear rather than log scale. Here’s the stock market in linear scale. Do you think it’s sustainable?

AmericanKulak says

Thing is, demographics are inescapable. Despite ludicrous hyperimmigration, the US is still predominantly native born

Not true in the Bay Area, Homie.

About half the world's population lives in India and China.

There are many more billionaire families in either of those countries than in the US.

And many, probably most, of them covet to have their college age kids to relocate to the SF Bay Area. We who live here are immersed among them.

Remember, compared to where they came from, SF Bay Area is like the Wild Open Praire, at Bargain Prices, with (in spite of American-type crime) Rule Of Law.

One chart that stockbrokers, financial planners, and especially financial firms never ever show their marks is the debt per share chart.

You will have to create it yourself, but if you want to see something unsustainable instead of looking at the earnings chart of the S&P over time, look at a chart of the debt the S&P has over time.

While the federal government can print the money, corporations cannot. -- Feel free to giggle at the absurdity of increasing stock prices when you look at the accumulated debt these companies have.

Even with much higher interest rates, the corporations are adding to the debt at a nice clip. - Yes, a lot of it is a Ponzi scheme.

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/us-corporate-debt-issuance-picked-up-in-h1-2023-76491899#:~:text=Debt%20issuance%20rose%20sharply%20in,from%20S%26P%20Global%20Market%20Intelligence.

B.A.C.A.H. says

There are many more billionaire families in either of those countries than in the US.

And many, probably most, of them covet to have their college age kids to relocate to the SF Bay Area. We who live here are immersed among them.

What percentage of +$1 million homes in the San Fran Bay Area are being bought by foreigners ? Is there any trend data on this for the last 30 years ?

I can see where localities like Palo Alto and San Jose are very attractive to rich foreigners.

That would help those who sell their homes in California, as they can then buy a much lower cost home in states like Colorado, Nevada, and Arizona.

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Rubicon says

Hate the game but not the player.

What if the player is an amoral asshole?

Misc says

One chart that stockbrokers, financial planners, and especially financial firms never ever show their marks is the debt per share chart.

Another way I would examine this is book value since debt cannot be examined only. One metric is price to book value.

https://www.multpl.com/s-p-500-price-to-book

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Misc says

ne chart that stockbrokers, financial planners, and especially financial firms never ever show their marks is the debt per share chart.

Even Apple has taken on a lot of new debt over the last few years, but its still has high financial scores according to Guru Focus.
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Ok, here's a quick look under the hood of AAPL. Increasing liabilities, decreasing shareholder equity, and in its latest quarter it had smaller revenues than the previous year. That extra $18 billion in year over year debt from 2021 to 2022 didn't really pan out so well for it.

...and this is supposedly one of the better companies.

Yes, click on the link and see the yearly increases in liabilities and declines in shareholder equity.

https://www.msn.com/en-us/money/stockdetails/fi-a1mou2?ocid=hpmsn&duration=1D

You will need to click on the "Financials" tab and then the "Balance SHeet" tab

$2.8 trillion dollar company with $50 billion in shareholder equity. The shear amount of malinvestment is un-freaking real.

Misc says

$2.8 trillion dollar company with $50 billion in shareholder equity. The shear amount of malinvestment is un-freaking real.

Have to examine earnings and profit margin trends also. Profit margin is still +24%.

But yes, as Apple's current liabilities have nearly doubled since 2016. Let's see if they remain flat or nearly constant going into 2024 to 2027.

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Onvacation says

Rubicon says

Hate the game but not the player.

What if the player is an amoral asshole?

America has a problem. Most Americans defer to those who are doing financially better than them. Psychologically, most people think those with money are smarter, prettier etc. How they make/made their money is of no importance. Just look at how people fawn over some of the most insidious people on earth. Stand up to that and you'll be accused of being jealous. Morallity is way down the line in importance. Fiat and those who control it are the worst people on the planet. It doesn't take a genious to know this. No, it only takes some critical thinking mixed with a smidgeon of morallity.

During the pandemic and right after, money was literally free for almost all companies to borrow. It made sense for these companies to load up on “long-term” debt and use the money to fund more profitable ventures.

AAPL is projected to grow at 12% annually and pays 0.5% in dividend. It prints money consistently with free cash flow of $90B from their operation annually. $110B of debt is nothing in the scheme of things.

Then we look at AAPL’s chart in “linear scale” and ask ourselves if it’s sustainable.

Onvacation says

Rubicon says

Hate the game but not the player.

What if the player is an amoral asshole?

In any line of work, there will always be amoral aholes. Real estate is NOT an exception.