OT: Housing Market
- Thread starter Jeffreauxdawg
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We sold ours at the top of the market when I switched jobs and moved to the wife's hometown. Luckily my in laws have a ton of room and we get along well, so we're crashing with them while we house hunt. We're trying to wait for the dip so we don't lose all our profits from selling but we shall see.
I built my house for $190,000 10 years ago. It appraised for $340,000 this year. Bout to yank some of that equity for some stuff. Low rates, high values = free money
Depending on the market, this winter probably is the dip. Interest rates will start creeping up and silly season starts in the Spring.
Especially when the Lane Train leaves the station for Baton Rouge in November
It's out of control. Average here is $562,000.
The U.S. median sales price for a single-family home was 368,000 in the second quarter of 2016. It grew 30% to $485,000 by the same quarter in 2021.
https://kdvr.com/news/data/denver-metro-home-prices-could-reach-650k-by-end-of-2022/
The U.S. median sales price for a single-family home was 368,000 in the second quarter of 2016. It grew 30% to $485,000 by the same quarter in 2021.
https://kdvr.com/news/data/denver-metro-home-prices-could-reach-650k-by-end-of-2022/
I spoke to a builder who has been building houses for over 40 years yesterday, he’s predicting a crash in the housing market in a few years that will make 2008 look like a picnic.
How's that going to happen? Are a 100 million people going to die off? Even if interest rates get in the teens, people still need homes to live in.
If there's a crash, it's not going to revolve around real estate like in 2007. It's going to be a larger problem than that.
If there's a crash, it's not going to revolve around real estate like in 2007. It's going to be a larger problem than that.
Trying to buy our second house in Atlanta. It’s stupid everywhere, but it’s like double stupid here.
Everybody knows that real estate is going to continue to go up, for the exact reasons you state. There are more people in the country, and there's only so much land.
However, here's the deal. First, COVID has disrupted things, and that will correct gradually. We all know this, although hot-takers like the OP just like to get people riled up. Second, who are the people truly cashing out on California? Those are baby boomers, who are now taking their money elsewhere. And you mentioned something about people dying off, well, that is coming. Not to morbid, but boomers are old. That's a lot of inventory, and again, it may not happen fast.
The 'crash' per se is going to be in places where folks can't afford their mortgage. To me, that's where all these people are cashing out, which is California/New York/etc. Places like Austin/Nashville will see a drop, due to baby boomers dying, but not as pronounced. But who knows, it could all happen at one time.
Have you also noticed that there is huge pressure to buy right now? The marketing is insane. They know what they are doing. But during a bust, everyone is telling you not to do anything. Hmmmmmm.....
I've benefitted by whole life from Buy Low Sell High. So easy to say, so difficult to execute. Just like anything in life.
In the 50 years since we came off the gold standard our national debt and global debt has exploded to levels not imagined by any economist. There is no check on money printing anywhere in the world. Interest rates haven't been controlled by markets in decades. They are completely controlled by government policy.
Some here talk about interest rates rising. If they do it won't be at the behest of a government because national debts are not remotely sustainable if rates rise in any meaningful way.
I see no way to avoid rampant inflation and forced devaluation of currencies around the world. The thing I can't predict is when.
It would seem holding hard assets would be a good thing in this scenario and it may be, but I'd be sure I had a fixed rate loan with a payment I can easily service for the duration of the debt.
I don’t think home builders are known for their skills in the field of national and global macroeconomic forecasting. Many builders who have been at it for 40 years know how to build houses and that’s about it. And many of them don’t even have that knowledge down pat.
IDK… this guy is a cash money millionaire many times over. His reasoning for the crash coming is that many people are going to get stuck with homes that were overvalued when they financed that they can’t afford.
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Thinking about a "barndominium" for my next house. If financing one, refer to it as a custom built home.
What part of CaliforDeux are you in? I'm in Leander right at edge of Liberty Hill. Seems like all our friends from the Steiner Ranch/Lakeway area are moving to this area or Dripping Springs.
If you look at it on an affordability basis, the household income is just under $70k, so if use a 3.25% 80/20 loan to buy a 485k house, that works out to about 29% of your gross household income to pay mortgage and interest. THrow in an average property tax of $2471 (I'm thinking this is well below the median but can't find a decent median on a nationwide level), you're up to 32% of gross income before paying for insurance or maintenance.
That seems painfully high, and is 15% higher than the traditional 28% rule of thumb (but obviously only 4 percentage points; not sure which is a better way to look at it), but at the same time, that doesn't scream that we're about to have a correction like 2008, especially since there (supposedly) aren't as many subprime loans out there now.
Of course, that's assuming somebody puts 20% down. Change that to a 90/10 loan and the P&I is now over 32% of gross income and over 36% with just taxes added in.
And probably the bigger shortfall of looking at that is that the median isn't particularly representative of most markets. The median housing price multiple of median household earnings in most hot markets is way higher than looking at it on a nationwide basis. And a lot of the hottest markets have relatively higher property taxes.
That said, I'll never understand how people have the houses they do. We wouldn't be able to buy anything near the median priced home in our area if we made a median income. We'd barely be able to afford a starter home. We sure as hell wouldn't have ever bought a $468k house making $70k a year. We'd have been pushing it to buy a $250k house on that income. It certainly seems like it should be a bubble at this point but I guess there's just that many people out there that have considerably more assets than their earnings would indicate.
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Between current interest rates and borrower credit-worthiness to buy today, he's simply wrong. There's no real scenario in which a national housing crisis occurs that isn't a result of the national economic picture.
Without knowing the particulars, it seems to scream that you should try to buy in an area that isn't seeing as many rentals and either sell lif you think the increase in rentals is going to bring the neighborhood down or keep it as a rental if you think it's going to be stable enough.
Not that it's the same thing, but you already have had this option with modular homes and prebuilt panels for houses. You're going to have to have the 3D printed houses look like regular houses or be competitive with trailers for it to take off it seems.
Of course, I am actually surprised the prebuilt panels never took off since you can build a good looking house with them. Most of the housing being built seems to be cookie cutter housing with limited options to customize anyway. Seems like you'd be able to save some money and improve quality by prebuilding the panels in a factory setting and then shipping them to the job site. I guess there's just not that much labor saved though compared to having workers on site building the same house over and over again.
What exactly does this mean? Of course there are scenarios for a national housing meltdown. Some can be seen easily and some will be obvious in retrospect.
What are the scenarios for a national housing meltdown that are not due to broader economic issues that can be seen easily?
I bought my home during the housing crisis 15 years ago. Got a steal on a very nice property. Now I'm seeing the sale price of homes around me and holy cow.
I'm very tempted to sell. Loving where I am is the only thing keeping me from it.
First. I fat fingered your upvote.
Second. I'm not a "hot taker" other than when I eat to much chorizo. Everything I am pointing out is backed up by data, facts, and expert forecasts by people like analysts at Goldman Sachs, Zillow, and Fannie Mae. You have nothing but gut info to suggest something bad will happen.
If you're worried about rising interest rates... Don't. During the last inflationary period in the US, the 1970's, mortgages rates rose from 7.5-15% in the decade... Guess what median home prices did in the US... Tripled. From 1970 the median US home price rose from $22k to $66k.
Come prices in 70's
View attachment 22598
Interest Rates for 30 year mortgage
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Income is increasing. Interest rates are ultra low. If interest rates do rise it's because inflation is rising, which means income and asset prices are rising. The simple fact is there's a massive shortage of single family homes. Boomers are not going to move into cramped senior living facilities. Millennials are starting families and moving to the suburbs. People that own homes have excellent credit these days and more disposable income than ever before.
There will be a time where home prices cool in a given market, some will even see a drop here or there, but housing will see excellent overall appreciation until building can meet demand, which appears to be many years away.
If you want to make an intelligent argument about declining home values it will be centered around deflationary pressures. That's only going to happen by building homes cheaper, which means eliminating labor. It means using new materials that are more cost effective. That's not happening anywhere anytime soon.
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DFW is nuts. I'm in Benbrook (SW corner of Ft Worth). Paid $112/sq ft in Nov 2015 for my house. Zillow had it at around $131/sq ft pre Covid. Zillow has it valued at $172/sq ft now.
Private equity money is rampant in markets driving up prices. Highly doubtful anyone has a full understanding of how this ends, but history is littered with disasters caused by financial giants entering markets looking for quick profits, with no intention of being long term players.
Even credit worthy borrowers won't be able to service their debt if inflation becomes an issue, which is looking more real. This may be what you mean by broader economic issues, but if it's easily seen it should be factored into lending standards and debt to income standards should be less. Obviously they aren't, otherwise the price increases wouldnt be feasible.
Saying there's no real scenario for a crisis sounds like famous last words.
I very much doubt a market in which buyers are routinely paying above asking price and driving up appraisals to false levels is going to end well for those with high debt loads, which is most Americans.
I can't even pretend to know how this housing situation plays out, but I'm positive Goldman Sachs, Zillow and Fannie Mae won't have analysts who correctly call the top and accurately tell you when to be fearful.
Clayton Homes is by far the largest builder of manufactured housing. They've been acquiring site builders at a steady clip for the last 6-8 years. They're moving in exactly that direction, and the savings in materials and labor would be as you say, substantial. No subcontractors who don't show up, no materials sitting in the rain deteriorating, minimization of waste, etc. Build it, ship it, and assemble on site with a company crew. The main thing limiting them now is they have an insane backlog for manufactured homes. Clayton has been in the Berkshire Hathaway portfolio for about a decade now.
You are correct. And when they want to know what lumber prices are going to do they call the sales rep at the lumberyard. About 10% of those lumberyard reps are smart enough to call someone like me to get them a non ******** answer.
Lumber guys forecast lumber.
Economists forecast supply and demand.
Builders eat **** from pissed off homebuyers and chase subs around trying to get **** done.
This is the way of the world.
Lumber guys forecast lumber.
Economists forecast supply and demand.
Builders eat **** from pissed off homebuyers and chase subs around trying to get **** done.
This is the way of the world.
I think it depends on your definition of bad times. If you take any extra margin and invest it instead of paying your mortgage off early, you’d have more liquidity if you lost your job. A paid off house is well and good, but home equity doesn’t pay the bills if you lost your job. Now that statement obviously flies out the window if you use any excess margin to increase your lifestyle.
It's all based on age and ability to earn income for me. It's probably silly to pay of the house at 40 in a sub 3% interest rate environment. At 60 it's a different story.
The worst housing crisis in history took all of 5 years to completely recover from. It was preceded by 45 years of consistent appreciation.
Agreed. I’ve got 15-16 financed properties with an average rate of 3.65% so I’m not in any hurry to pay any of them off. It’s essentially a huge carry trade…borrow low for long and invest the difference.
14.4% year over year increase in 2005. In 2021 we're trouncing that number
But even if the Fed tapers, the labor shortage is going to have to subside to see another bursting of the bubble on the level we saw in 2007. Phrases like "how this is all going to end" aren't applicable. The housing market isn't going to end. It's a constant cycle that never stops. If your property value was crushed in the Great Recession all that was required of you is to ride it out until the next bubble.
But even if the Fed tapers, the labor shortage is going to have to subside to see another bursting of the bubble on the level we saw in 2007. Phrases like "how this is all going to end" aren't applicable. The housing market isn't going to end. It's a constant cycle that never stops. If your property value was crushed in the Great Recession all that was required of you is to ride it out until the next bubble.
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