Housing market trash

[jeepinmatt]

What happens to all these home buyers when the houses go back to the value of where they should be?

I wish I thought that might happen. I think the housing market is just a one-way ratchet, unless there's a massive deflationary period. Especially in "hot" metro areas like Charlotte and Raleigh.

 

[rockcity]

What happens to all these home buyers when the houses go back to the value of where they should be?

tbey will either suck it up paying a mortgage payment for a $500k house that’s actually worth $350k, OR file bankruptcy and go into foreclosure eventually.
Repeat of 2009 from what I see. May not be this year, but will be soon.

 

[Ron]

tbey will either suck it up paying a mortgage payment for a $500k house that’s actually worth $350k, OR file bankruptcy and go into foreclosure eventually.
Repeat of 2009 from what I see. May not be this year, but will be soon.

Yep....
the key has always been if you are in for less than the cost of material and base labor you cant go wrong...but when material is hyper inflated....

specifically in this market, if you are spec building, and there is a modest to severe pull back as long as you can rent it and cover the note payment you can float and wait on the next wave. If you get too far over your skis...then its a decaptiation.

 

[RatLabGuy]

What happens to all these home buyers when the houses go back to the value of where they should be?

the same thing that happened in 2010.

 

[superman27344]

This has been an interesting read since me and my wife have finally started to talk seriously about get a new to us home. The tiny mill house we live in that I bought back in 2002 when I was single is just too damn cramped for a family, even one as small as ours. On one hand, sounds like right now is when I would get the most from selling my little place, but then again its also gonna be the hardest time to find a place at a good price too.

 

[jeepinmatt]

the same thing that happened in 2010.

Yep, and compare 2010 prices to now. Also, compare 2010 cost of goods to now. We are being fleeced.

 

[shawn]

Also, compare 2010 cost of goods to now. We are being fleeced.

The Federal government expanded the supply of dollars by 40% in the last year. Recalibrate your dollar ruler accordingly.

300 largest US metro areas ranked in terms of hottest housing markets: (WSJ)

Burlington 11
Greenville 28
Fayetteville 71
Jacksonville 74
Durham-Chapel Hill 77
Charlotte 78
Wilmington 95
Greensboro 99
Raleigh 105
Rocky Mount 122

NC is being outpaced on price. Thanks to low interest rates, homes remain cheap on a $/mo and as a percent of household income.

 

[bonecrusher]

Union county is insane. Everyone from Charlotte is moving out here. Bought for 310 in 2019 I can sell for 430 right now.

Neighbor just listed his this morning for 380 he bought for 300. It's expected to be sold by Saturday at the latest.

Insanity.

 

[jeepinmatt]

The Federal government expanded the supply of dollars by 40% in the last year. Recalibrate your dollar ruler accordingly.

300 largest US metro areas ranked in terms of hottest housing markets: (WSJ)

Burlington 11
Greenville 28
Fayetteville 71
Jacksonville 74
Durham-Chapel Hill 77
Charlotte 78
Wilmington 95
Greensboro 99
Raleigh 105
Rocky Mount 122

NC is being outpaced on price. Thanks to low interest rates, homes remain cheap on a $/mo and as a percent of household income.

Correct. Massive inflation due to governmental policies. I'm not following what you are getting at with the housing market comments. Can you elaborate?

 

[shawn]

Correct. Massive inflation due to governmental policies. I'm not following what you are getting at with the housing market comments. Can you elaborate?

On a national basis, the bigger NC metros are in the top 1/3, but some only barely. Burlington and Greenville are exceptions. The WSJ ranking is blended, though. It adjust for quality of life, cost of living, job market, etc, to get something that's a bit more arbitrary and nuanced than sales price alone.

Nationally, housing sales prices are up in absolute dollars, but mortgage payments in constant dollars are normal both as a percentage of household income and as a strict dollar amount. Compare that to 08 when mortgage payments were abnormally high as a percent of income. Houses are also increasingly larger, so people are getting more for their money.

I don't remember the source, but saw the other day that we're short 150-160k houses nationally. I know Raleigh is short several thousand. This is still hangover from 09-12 when few new houses were built.

 

[RatLabGuy]

I don't remember the source, but saw the other day that we're short 150-160k houses nationally. I know Raleigh is short several thousand. This is still hangover from 09-12 when few new houses were built.

yup, and the obvious demand that is driving the market is the proof a deficit must exist...
e.g.

New-home construction rebounds as America faces dire housing shortage

The U.S. has a major housing shortfall currently that should give builders room to continue constructing new homes throughout 2021.

www.marketwatch.com

but I can't wrap my head around where it's coming from.
Nationally the population hasn't really changed, if anything its decreasing. Meanwhile more people are staying at home w/ parents longer in life than before.
So where does the "shortage" come from? We are constantly building new houses, and at a rate faster than the population changes or that old homes are destroyed.

I know there is a movement out of cities, and from denser cities to less dense ones, migrations southward etc (e.g. NC). But that dosn't mean there is a "shortage" per se... that there are more people wanting homes than exist... but just that people are increasingly picky and don't want old homes or city block homes etc.
Which sounds like a very American problem to have.

 

[shawn]

people are increasingly picky and don't want old homes or city block homes etc.
Which sounds like a very American problem to have

What if I told you it's a Japanese problem?

 

[UTfball68]

yup, and the obvious demand that is driving the market is the proof a deficit must exist...
e.g.

New-home construction rebounds as America faces dire housing shortage

The U.S. has a major housing shortfall currently that should give builders room to continue constructing new homes throughout 2021.

www.marketwatch.com

but I can't wrap my head around where it's coming from.
Nationally the population hasn't really changed, if anything its decreasing. Meanwhile more people are staying at home w/ parents longer in life than before.
So where does the "shortage" come from? We are constantly building new houses, and at a rate faster than the population changes or that old homes are destroyed.

I know there is a movement out of cities, and from denser cities to less dense ones, migrations southward etc (e.g. NC). But that dosn't mean there is a "shortage" per se... that there are more people wanting homes than exist... but just that people are increasingly picky and don't want old homes or city block homes etc.
Which sounds like a very American problem to have.

I was actually going to ask/say something similar earlier. I understand buying is hot right this second, but I still can't help but feel that's because folks have gotten a financial shot in the arm a few times over the last year. If I remember right, they say a stable housing market is one that's around 6 months of supply. So where were we with supply in December 2019, March 2020, any time before the stimmies started hitting. And I'm legitimately asking, because it makes sense, people have money in their pocket now, as a result houses are selling quicker...so does that mean it's an artificial shortage, and again when benefits dry up and folks realize they can't afford the things they bought, there's an impending surplus?

 

[Wes]

I was actually going to ask/say something similar earlier. I understand buying is hot right this second, but I still can't help but feel that's because folks have gotten a financial shot in the arm a few times over the last year. If I remember right, they say a stable housing market is one that's around 6 months of supply. So where were we with supply in December 2019, March 2020, any time before the stimmies started hitting. And I'm legitimately asking, because it makes sense, people have money in their pocket now, as a result houses are selling quicker...so does that mean it's an artificial shortage, and again when benefits dry up and folks realize they can't afford the things they bought, there's an impending surplus?

Hopefully the impending surplus will be lakefront just a few miles from me. Scoop me up a cheap one. I’m hoping staying put and not selling will play out in my favor later on.

 

[UTfball68]

Hopefully the impending surplus will be lakefront just a few miles from me. Scoop me up a cheap one. I’m hoping staying put and not selling will play out in my favor later on.

My wife and I started playing that 'what will it take' game. I got talking to my buddy/mortgage broker...he drafted up a full comp review and he seems to think my house comps out more than zillow says it's worth (which I thought was a high valuation) and he'd be surprised if I couldn't get $25k more than his valuation. I would have sold by now...and pocketed 6 figures...my wife said pocketing $250k before she'd sell. My neighbor across the street just listed their house yesterday for $100k more than what they paid for it a year ago. They're not that far from $500k and our valuations are similar. If they can get their number, my wife might be eating crow. And all of this is mind-bogglingly insane to me to even be discussing, because we just bought the house 4 years ago, and I can easily get a 35% return on it and there seems to be some belief 60% return isn't out of the realm of possibility. No wonder some of you guys like investing in real estate.

 

[Wes]

My wife and I started playing that 'what will it take' game. I got talking to my buddy/mortgage broker...he drafted up a full comp review and he seems to think my house comps out more than zillow says it's worth (which I thought was a high valuation) and he'd be surprised if I couldn't get $25k more than his valuation. I would have sold by now...and pocketed 6 figures...my wife said pocketing $250k before she'd sell. My neighbor across the street just listed their house yesterday for $100k more than what they paid for it a year ago. They're not that far from $500k and our valuations are similar. If they can get their number, my wife might be eating crow. And all of this is mind-bogglingly insane to me to even be discussing, because we just bought the house 4 years ago, and I can easily get a 35% return on it and there seems to be some belief 60% return isn't out of the realm of possibility. No wonder some of you guys like investing in real estate.

I could maybe pocket $100k, but I’d for sure be upside down on the next purchase when the market drops. I can’t believe I’m turning my nose up at 100k, but the houses around us that used to be in our price range are out of sight now.

 

[UTfball68]

I could maybe pocket $100k, but I’d for sure be upside down on the next purchase when the market drops. I can’t believe I’m turning my nose up at 100k, but the houses around us that used to be in our price range are out of sight now.

I think I said it before in this thread, but the plan would be to go live out of a meth trailer or something for a couple years until the bubble bursts.

 

[shawn]

was actually going to ask/say something similar earlier. I understand buying is hot right this second, but I still can't help but feel that's because folks have gotten a financial shot in the arm a few times over the last year. If I remember right, they say a stable housing market is one that's around 6 months of supply

There was a shortage before last year, and it was exacerbated by a slowing supply chain 2020.

There are 10mm more households and 25mm more people in the US than 10 years ago. We need to build places for all those people to live.

 

[shawn]

I think I said it before in this thread, but the plan would be to go live out of a meth trailer or something for a couple years until the bubble bursts.

What will you do when you find out there was no bubble, and you've been without a major asset that can hedge against inflation?

 

[UTfball68]

What will you do when you find out there was no bubble, and you've been without a major asset that can hedge against inflation?

With gains like we’re experiencing, there’s always a bubble and the market always self-corrects. It may not drop to what it was, but I highly doubt my house will still be a half million dollar house 3 years from now. Even if it drops to a $400k house, it’s still a 30% increase from what I paid, that’s the inflation variable. If I sell at the half million peak, that’s still a realized gain of $100k. And frankly, I don’t think my house will even be a $400k house 3 years from now, I just don’t see how it’s sustainable.

Edit…but that’s also why I don’t play the real estate game and I’m a rather bland investor. Spikes and volatility make me anxious.

 

[shawn]

there’s always a bubble and the market always self-corrects.

Where is the evidence of a bubble?

 

[UTfball68]

Where is the evidence of a bubble?

You’re saying you think the value of your home will never drop below the value it is today?

 

[Futbalfantic]

Every bull market ever?

Where is the evidence of a bubble?

 

[shawn]

You’re saying you think the value of your home will never drop below the value it is today?

I'm saying that housing prices are at least matching pace with most every commodity out there, and being outpaced by many. Oil, steel, copper, wheat, soybeans, corn, hogs, cows, lumber, iron ore - the only one that isn't up huge on a 5yr basis is coal. Why is wheat up 50% since last year? Why have hogs doubled? Have you looked at your YOY grocery spending? Ask a gold bug. They know what's up.

Every bull market ever?

All bull markets are not bubbles. Bubbles have tells. The housing bubble in 07-08 is still visible in charts.

 

[UTfball68]

I'm saying that housing prices are at least matching pace with most every commodity out there, and being outpaced by many. Oil, steel, copper, wheat, soybeans, corn, hogs, cows, lumber, iron ore - the only one that isn't up huge on a 5yr basis is coal. Why is wheat up 50% since last year? Why have hogs doubled? Have you looked at your YOY grocery spending? Ask a gold bug. They know what's up.

I’m not disagreeing everything is up, I’m just saying I don’t think it’s sustainable or realistic to think those items are on a perpetual upward trajectory.