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Posted: 5/11/2024 8:27:31 AM EDT
[#1]
Quote HistoryOriginally Posted By MouseBoy: Why would an appraiser do that? They are not getting more $$ overstating the value. If they were, they would be gone fast. Given how fast values have increased, I would think very, very few are near 100% loan to value, other than real recent buyers. My house was appraised at $280K, $10K under the asking price. We filed a form with the VA asking them to honor the appraisal as the VA will only approve the loan up to the appraised value of the house. The VA denied the increase. We went back to the seller, who refused to drop the price. I told my realtor to withdraw our offer since we had a clause in the contract that allowed us to do so and keep our earnest money. Seller agreed to drop the price to the appraised value. As we closed 3 months ago, I have no idea what the "current" value is. |
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Posted: 5/11/2024 1:48:40 PM EDT
[#2]
I'm seeing price cuts galore in every market I'm looking at. And more fsbo.
Also seeing more muscle cars either restored or projects for sale than I have in years |
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Posted: 5/11/2024 1:52:38 PM EDT
[#3]
Quote HistoryOriginally Posted By Chromekilla: I'm seeing price cuts galore in every market I'm looking at. And more fsbo. Also seeing more muscle cars either restored or projects for sale than I have in years |
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USA
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Posted: 5/11/2024 7:59:58 PM EDT
[#4]
Quote HistoryOriginally Posted By Chromekilla: I'm seeing price cuts galore in every market I'm looking at. And more fsbo. Also seeing more muscle cars either restored or projects for sale than I have in years Impossible. Last page we were informed that housing will never go down. EVER. |
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Posted: 5/11/2024 11:45:31 PM EDT
[#5]
Quote HistoryOriginally Posted By JLPettimoreIII: good. It shocks me that people can even think shit is good to go, or nothing is wrong. Maybe for those with trust funds, mad retirement or tons of equity. But even then it won't go as far as it used to for them.take a run through a grocery store and you can see it's not good. Keeping a careful eye for them CrossFit baddies to come in outta the cold, so far haven't seen a scratch and dent fire sale just yet. But I reckon I keep waiting I can pry get my 4 slightly used models for a song in the not too distant future. 
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AS, USA
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Posted: 5/13/2024 10:45:40 AM EDT
[#6]
 Median household income is about $75-$80k. |
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Posted: 5/13/2024 10:56:23 AM EDT
[#7]
Quote HistoryOriginally Posted By CoconutLaCroix: https://i.postimg.cc/nLBqcWFM/IMG-5293.jpg Median household income is about $75-$80k. Good post. That’s a very useful graph for visualizing just how unsustainable the current price/rate combo is. Even someone making 4 times the Median income, shouldn’t be comfortable with that sort of payment. Especially, when insurance and upkeep are only going to go up. So that just leaves boomers and BC millionairs paying cash. There’s a lot of them, but not enough to float the whole market. |
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USA
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Posted: 5/13/2024 11:02:22 AM EDT
[#8]
Historical value or payments are not predictive of future value. It is nice entertainment to look at the past, though.
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USA
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Posted: 5/13/2024 11:08:22 AM EDT
[Last Edit: miseses]
[#9]
Quote HistoryOriginally Posted By BillofRights: Good post. That’s a very useful graph for visualizing just how unsustainable the current price/rate combo is. Even someone making 4 times the Median income, shouldn’t be comfortable with that sort of payment. Especially, when insurance and upkeep are only going to go up. So that just leaves boomers and BC millionairs paying cash. There’s a lot of them, but not enough to float the whole market. Quote HistoryOriginally Posted By BillofRights: Originally Posted By CoconutLaCroix: https://i.postimg.cc/nLBqcWFM/IMG-5293.jpg Median household income is about $75-$80k. Good post. That’s a very useful graph for visualizing just how unsustainable the current price/rate combo is. Even someone making 4 times the Median income, shouldn’t be comfortable with that sort of payment. Especially, when insurance and upkeep are only going to go up. So that just leaves boomers and BC millionairs paying cash. There’s a lot of them, but not enough to float the whole market. US has one of the lowest(cheapest) cost/income ratios in the world for home ownership. There is a hell of a lot of room to go higher.... way way way higher as proven worldwide. And with the current generation being more concerned about the 'environment' and at the ready too boot lick new regulations that constrain supply, there is no reason to rule out that prices won't keep going up. On the opposite side, as technology and automation make goods production ever more cheaper, people will have higher and higher fractions of their income open up to get gutted on rent. So there's also plenty of room to keep pushing rents up over time too. |
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Posted: 5/13/2024 11:11:03 AM EDT
[#10]
Quote HistoryOriginally Posted By Silverbulletz06: Rent to mortgage ratio is very strange right now. Friend pays $3200 to rent, but the same condo to buy is sitting around $4500-5000/mo plus downpayment. Too many people looking to buy, more young adults staying home, and the pool of renters is dropping. There are a few rent vs own graphs out there using various tools to compare. For example: https://www.wesmoss.com/wp-content/uploads/Rent-vs-own.png Quote HistoryOriginally Posted By Silverbulletz06: Originally Posted By Phil_Billy: You found one example so that makes it correct? I doubt that's correct they would be losing thousands every month if that were the case. There is no way you are renting a house for half of the mortgage cost. That makes zero financial sense. Why do I get the feeling you are one of those people who offers half and can never figure out why no one has ever accepted your offer. Lol this thread is pure comedy can we get Tooter back too? Rent to mortgage ratio is very strange right now. Friend pays $3200 to rent, but the same condo to buy is sitting around $4500-5000/mo plus downpayment. Too many people looking to buy, more young adults staying home, and the pool of renters is dropping. There are a few rent vs own graphs out there using various tools to compare. For example: https://www.wesmoss.com/wp-content/uploads/Rent-vs-own.png Not sure if I would call it strange. It's been like that around here, since 2021. The PE firms buying up all the single family homes are keeping the rent artificially low. This crushes competition in the RE market, and encourages average americans to sell their home when moving, rather than hanging on to it and renting it out for passive income. |
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Posted: 5/13/2024 11:20:35 AM EDT
[#11]
Quote HistoryOriginally Posted By Cobradriver: Florida house saga. Mom and her idiot boyfriend decided to sell her place in Florida(Port Charlotte) and move closer to my Brother in Huntsville,Al. I spend most summers in the area so I probably didn't help...🤪 Anyhow...home purchased in 2017 for about 175ish. Appraised at 450. First offer 505k. 😁 Accepted. 3 weeks in financing fell through. Next highest offer 470k. Accepted. 2 weeks in financing fell through. Next offer 450k. A couple of days before closing the buyer left the country? No additional information from anyone. That was roughly Christmas to current In the last 6 weeks they have had a couple of showings and no offers. There are a LOT of for sale signs in both hers and my neighborhood. Talking with my realtor/neighbor she mentioned sales slowed and then just sorta stopped.... It's getting interesting now. I think you were the one who convinced me to move to FL. Posting about the low prices of RE back in the ‘11 time frame. Lets say we’ve had 60% inflation since 2017: That’s a $280,000 house all day long. Or, lets assume we had 100% inflation. So, that makes it a $350,000 house. We’ve had massive price distortions, and prices are notoriously sticky, but the Invisible Hand has to reassert itself sooner of later. As you know “financing fell through” usually just means the buyer got cold feet. It’s the easiest way to get out of a contract. |
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USA
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Posted: 5/13/2024 11:23:05 AM EDT
[Last Edit: miseses]
[#12]
Quote HistoryOriginally Posted By Mr_Nasty99: Not sure if I would call it strange. It's been like that around here, since 2021. The PE firms buying up all the single family homes are keeping the rent artificially low. This crushes competition in the RE market, and encourages average americans to sell their home when moving, rather than hanging on to it and renting it out for passive income. Quote HistoryOriginally Posted By Mr_Nasty99: Originally Posted By Silverbulletz06: Originally Posted By Phil_Billy: You found one example so that makes it correct? I doubt that's correct they would be losing thousands every month if that were the case. There is no way you are renting a house for half of the mortgage cost. That makes zero financial sense. Why do I get the feeling you are one of those people who offers half and can never figure out why no one has ever accepted your offer. Lol this thread is pure comedy can we get Tooter back too? Rent to mortgage ratio is very strange right now. Friend pays $3200 to rent, but the same condo to buy is sitting around $4500-5000/mo plus downpayment. Too many people looking to buy, more young adults staying home, and the pool of renters is dropping. There are a few rent vs own graphs out there using various tools to compare. For example: https://www.wesmoss.com/wp-content/uploads/Rent-vs-own.png Not sure if I would call it strange. It's been like that around here, since 2021. The PE firms buying up all the single family homes are keeping the rent artificially low. This crushes competition in the RE market, and encourages average americans to sell their home when moving, rather than hanging on to it and renting it out for passive income. Is it artificially low? I don't think there's an entity in the world that can pin down a multi-billion market sustainably for months, not even by conspiring with others. The Fed only managed to swing the market so massively by offloading the costs onto non property owners via inflationary monetary policy, which is why you see the buy-in for young families entering the market at basically double the cost of their elders who cashed out bigtime on their kids via the fed. I would assert housing has become more of a 'medallion', the ownership of the house is more of a token to own something that you can't effectively make more of at least note with changing zoning. Therefore so long as you cover your interest and you can resell your medallion later you can let the rent blow in the wind quite a bit. Eventually rent approaches something like that of vacant land, where the price is barely above the interest rate of the land value plus cost of taxes. For a house add in maintenance costs and anything above that is a profit. Considering all these houses were locked in with near-zero real interest rates the market rate rent on the interest is basically zero, meaning at commodity pricing the rents are at cost of maintenance plus property tax. |
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Posted: 5/13/2024 11:27:01 AM EDT
[#13]
Quote HistoryOriginally Posted By miseses: US has one of the lowest(cheapest) cost/income ratios in the world for home ownership. There is a hell of a lot of room to go higher.... way way way higher as proven worldwide. And with the current generation being more concerned about the 'environment' and at the ready too boot lick new regulations that constrain supply, there is no reason to rule out that prices won't keep going up. On the opposite side, as technology and automation make goods production ever more cheaper, people will have higher and higher fractions of their income open up to get gutted on rent. So there's also plenty of room to keep pushing rents up over time too. Quote HistoryOriginally Posted By miseses: Originally Posted By BillofRights: Originally Posted By CoconutLaCroix: https://i.postimg.cc/nLBqcWFM/IMG-5293.jpg Median household income is about $75-$80k. Good post. That’s a very useful graph for visualizing just how unsustainable the current price/rate combo is. Even someone making 4 times the Median income, shouldn’t be comfortable with that sort of payment. Especially, when insurance and upkeep are only going to go up. So that just leaves boomers and BC millionairs paying cash. There’s a lot of them, but not enough to float the whole market. US has one of the lowest(cheapest) cost/income ratios in the world for home ownership. There is a hell of a lot of room to go higher.... way way way higher as proven worldwide. And with the current generation being more concerned about the 'environment' and at the ready too boot lick new regulations that constrain supply, there is no reason to rule out that prices won't keep going up. On the opposite side, as technology and automation make goods production ever more cheaper, people will have higher and higher fractions of their income open up to get gutted on rent. So there's also plenty of room to keep pushing rents up over time too. If that’s currently true, it’s because rates were below inflation for a very long time. Maybe the current prices were sustainable at 3%, but they aren’t, at 7%. You can’t “get both”. We shall see. |
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USA
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Posted: 5/13/2024 11:33:03 AM EDT
[Last Edit: miseses]
[#14]
Quote HistoryOriginally Posted By BillofRights: If that’s currently true, it’s because rates were below inflation for a very long time. Maybe the current prices were sustainable at 3%, but they aren’t, at 7%. You can’t “get both”. We shall see. Quote HistoryOriginally Posted By BillofRights: Originally Posted By miseses: Originally Posted By BillofRights: Originally Posted By CoconutLaCroix: https://i.postimg.cc/nLBqcWFM/IMG-5293.jpg Median household income is about $75-$80k. Good post. That’s a very useful graph for visualizing just how unsustainable the current price/rate combo is. Even someone making 4 times the Median income, shouldn’t be comfortable with that sort of payment. Especially, when insurance and upkeep are only going to go up. So that just leaves boomers and BC millionairs paying cash. There’s a lot of them, but not enough to float the whole market. US has one of the lowest(cheapest) cost/income ratios in the world for home ownership. There is a hell of a lot of room to go higher.... way way way higher as proven worldwide. And with the current generation being more concerned about the 'environment' and at the ready too boot lick new regulations that constrain supply, there is no reason to rule out that prices won't keep going up. On the opposite side, as technology and automation make goods production ever more cheaper, people will have higher and higher fractions of their income open up to get gutted on rent. So there's also plenty of room to keep pushing rents up over time too. If that’s currently true, it’s because rates were below inflation for a very long time. Maybe the current prices were sustainable at 3%, but they aren’t, at 7%. You can’t “get both”. We shall see. You cannot get both in a non-rigged market. However our market was rigged because the government backed 30 year mortgages as seen in their acquisition: https://fred.stlouisfed.org/series/WSHOMCB They basically paid for people to lock in their mortgage for 30 years, creating an artificial market for something that no longer exists. Therefore even as interest rates rise you must buy out the current owners not only of their house but an irreplaceable fed backed loan which they are now trying to offload their books of. The result is rather than depressing the price the homeowner simply pulls from the market, because you can't overcome their opportunity cost of selling. What we will see is as interest rates rise you just see fewer and fewer sales. The big trick in the US is housing is largely a command economy hidden under the auspices of a market, as soon as you play by market rules the game is just changed up to take advantage of you some other way. |
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Posted: 5/13/2024 11:35:38 AM EDT
[Last Edit: burkeva]
[#15]
What all the whiners and “home ownership is a right” crowd fail to understand is that housing prices (like everything else) is cyclic. Not everyone gets to buy a house and for most of the poor decision makers, it means a lifetime of renting. Accept your fate and move on. The only ones who really care are the others who - due to a variety of reasons - also are forced to rent.
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AS, USA
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Posted: 5/13/2024 11:39:56 AM EDT
[Last Edit: CoconutLaCroix]
[#16]
Quote HistoryOriginally Posted By miseses: US has one of the lowest(cheapest) cost/income ratios in the world for home ownership. There is a hell of a lot of room to go higher.... way way way higher as proven worldwide. And with the current generation being more concerned about the 'environment' and at the ready too boot lick new regulations that constrain supply, there is no reason to rule out that prices won't keep going up. On the opposite side, as technology and automation make goods production ever more cheaper, people will have higher and higher fractions of their income open up to get gutted on rent. So there's also plenty of room to keep pushing rents up over time too. And to what extent will a country whose entire economy has become reliant on consumer spending continue to function when more and more money is directed towards housing costs?  The US is currently a paltry 3.2%, almost the lowest in recorded history. In contrast the EU avg savings rate is 15%. We are only losing to Canada, Australia and Hong Kong Where is all this money for housing going to come from? What sectors of the economy are going to go into recession to offset the rise in housing costs? |
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Posted: 5/13/2024 11:44:01 AM EDT
[#17]
Quote HistoryOriginally Posted By CoconutLaCroix: The US has one of the lowest personal savings rate in the world. If the avg American is already this strapped, how much more can prices rise? And to what extent will a country whose entire economy has become reliant on consumer spending continue to function when more and more money is directed towards housing costs? https://i.postimg.cc/qMBcx00T/IMG-5295.jpg The US is currently a paltry 3.2%, almost the lowest in recorded history. In contrast the EU avg savings rate is 15%. We are only losing to Canada, Australia and Hong Kong Where is all this money for housing going to come from? What sectors of the economy are going to go into recession to offset the rise in housing costs? Not that it makes the number better or worse (actually a lot worse if yes), but does this 3.2% include retirement savings activities? Does the data differentiate? |
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USA
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Posted: 5/13/2024 11:45:59 AM EDT
[Last Edit: miseses]
[#18]
Quote HistoryOriginally Posted By CoconutLaCroix: The US has one of the lowest personal savings rate in the world. If the avg American is already this strapped, how much more can prices rise? And to what extent will a country whose entire economy has become reliant on consumer spending continue to function when more and more money is directed towards housing costs? https://i.postimg.cc/qMBcx00T/IMG-5295.jpg The US is currently a paltry 3.2%, almost the lowest in recorded history. In contrast the EU avg savings rate is 15%. We are only losing to Canada, Australia and Hong Kong Where is all this money for housing going to come from? What sectors of the economy are going to go into recession to offset the rise in housing costs? Quote HistoryOriginally Posted By CoconutLaCroix: Originally Posted By miseses: US has one of the lowest(cheapest) cost/income ratios in the world for home ownership. There is a hell of a lot of room to go higher.... way way way higher as proven worldwide. And with the current generation being more concerned about the 'environment' and at the ready too boot lick new regulations that constrain supply, there is no reason to rule out that prices won't keep going up. On the opposite side, as technology and automation make goods production ever more cheaper, people will have higher and higher fractions of their income open up to get gutted on rent. So there's also plenty of room to keep pushing rents up over time too. And to what extent will a country whose entire economy has become reliant on consumer spending continue to function when more and more money is directed towards housing costs? https://i.postimg.cc/qMBcx00T/IMG-5295.jpg The US is currently a paltry 3.2%, almost the lowest in recorded history. In contrast the EU avg savings rate is 15%. We are only losing to Canada, Australia and Hong Kong Where is all this money for housing going to come from? What sectors of the economy are going to go into recession to offset the rise in housing costs? They can do as done everywhere else. Eat shittier food, take worse care of their children, neglect their health and teeth, drive a tiny scooter instead of a car, seek cheaper or less education, cut school funding, cook at home and not eat out, and do little else other than work and tend to their family. It is the status quo in the vast majority of the world and only disbelief of American exceptionalism precludes us from thinking we won't regress to the mean if we continue down ever more socialist and regulatory policies. |
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Posted: 5/13/2024 11:49:16 AM EDT
[#19]
Quote HistoryOriginally Posted By miseses: You cannot get both in a non-rigged market. However our market was rigged because the government backed 30 year mortgages as seen in their acquisition: https://fred.stlouisfed.org/series/WSHOMCB They basically paid for people to lock in their mortgage for 30 years, creating an artificial market for something that no longer exists. Therefore even as interest rates rise you must buy out the current owners not only of their house but an irreplaceable fed backed loan which they are now trying to offload their books of. The result is rather than depressing the price the homeowner simply pulls from the market, because you can't overcome their opportunity cost of selling. What we will see is as interest rates rise you just see fewer and fewer sales. The big trick in the US is housing is largely a command economy hidden under the auspices of a market, as soon as you play by market rules the game is just changed up to take advantage of you some other way. Quote HistoryOriginally Posted By miseses: Originally Posted By BillofRights: Originally Posted By miseses: Originally Posted By BillofRights: Originally Posted By CoconutLaCroix: https://i.postimg.cc/nLBqcWFM/IMG-5293.jpg Median household income is about $75-$80k. Good post. That’s a very useful graph for visualizing just how unsustainable the current price/rate combo is. Even someone making 4 times the Median income, shouldn’t be comfortable with that sort of payment. Especially, when insurance and upkeep are only going to go up. So that just leaves boomers and BC millionairs paying cash. There’s a lot of them, but not enough to float the whole market. US has one of the lowest(cheapest) cost/income ratios in the world for home ownership. There is a hell of a lot of room to go higher.... way way way higher as proven worldwide. And with the current generation being more concerned about the 'environment' and at the ready too boot lick new regulations that constrain supply, there is no reason to rule out that prices won't keep going up. On the opposite side, as technology and automation make goods production ever more cheaper, people will have higher and higher fractions of their income open up to get gutted on rent. So there's also plenty of room to keep pushing rents up over time too. If that’s currently true, it’s because rates were below inflation for a very long time. Maybe the current prices were sustainable at 3%, but they aren’t, at 7%. You can’t “get both”. We shall see. You cannot get both in a non-rigged market. However our market was rigged because the government backed 30 year mortgages as seen in their acquisition: https://fred.stlouisfed.org/series/WSHOMCB They basically paid for people to lock in their mortgage for 30 years, creating an artificial market for something that no longer exists. Therefore even as interest rates rise you must buy out the current owners not only of their house but an irreplaceable fed backed loan which they are now trying to offload their books of. The result is rather than depressing the price the homeowner simply pulls from the market, because you can't overcome their opportunity cost of selling. What we will see is as interest rates rise you just see fewer and fewer sales. The big trick in the US is housing is largely a command economy hidden under the auspices of a market, as soon as you play by market rules the game is just changed up to take advantage of you some other way. You seem desperate to convince yourself that prices can’t drop. You type common observations as if they are some sort of epiphany. Your hypothesis depends on people selling only when they want to. Sometimes, people sell because they have to. As prices come down, the greed turns to fear, and the retreat becomes a rout. The herd goes from graze to stampede. We’ve seen it all before. The only question, is can the Fed keep rates high long enough to take effect. |
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USA
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Posted: 5/13/2024 11:55:00 AM EDT
[Last Edit: miseses]
[#20]
Quote HistoryOriginally Posted By BillofRights: You seem desperate to convince yourself that prices can’t drop. You type common observations as if they are some sort of epiphany. Your hypothesis depends on people selling only when they want to. Sometimes, people sell because they have to. As prices come down, the greed turns to fear, and the retreat becomes a rout. The herd goes from graze to stampede. We’ve seen it all before. The only question, is can the Fed keep rates high long enough to take effect. Quote HistoryOriginally Posted By BillofRights: Originally Posted By miseses: Originally Posted By BillofRights: Originally Posted By miseses: Originally Posted By BillofRights: Originally Posted By CoconutLaCroix: https://i.postimg.cc/nLBqcWFM/IMG-5293.jpg Median household income is about $75-$80k. Good post. That’s a very useful graph for visualizing just how unsustainable the current price/rate combo is. Even someone making 4 times the Median income, shouldn’t be comfortable with that sort of payment. Especially, when insurance and upkeep are only going to go up. So that just leaves boomers and BC millionairs paying cash. There’s a lot of them, but not enough to float the whole market. US has one of the lowest(cheapest) cost/income ratios in the world for home ownership. There is a hell of a lot of room to go higher.... way way way higher as proven worldwide. And with the current generation being more concerned about the 'environment' and at the ready too boot lick new regulations that constrain supply, there is no reason to rule out that prices won't keep going up. On the opposite side, as technology and automation make goods production ever more cheaper, people will have higher and higher fractions of their income open up to get gutted on rent. So there's also plenty of room to keep pushing rents up over time too. If that’s currently true, it’s because rates were below inflation for a very long time. Maybe the current prices were sustainable at 3%, but they aren’t, at 7%. You can’t “get both”. We shall see. You cannot get both in a non-rigged market. However our market was rigged because the government backed 30 year mortgages as seen in their acquisition: https://fred.stlouisfed.org/series/WSHOMCB They basically paid for people to lock in their mortgage for 30 years, creating an artificial market for something that no longer exists. Therefore even as interest rates rise you must buy out the current owners not only of their house but an irreplaceable fed backed loan which they are now trying to offload their books of. The result is rather than depressing the price the homeowner simply pulls from the market, because you can't overcome their opportunity cost of selling. What we will see is as interest rates rise you just see fewer and fewer sales. The big trick in the US is housing is largely a command economy hidden under the auspices of a market, as soon as you play by market rules the game is just changed up to take advantage of you some other way. You seem desperate to convince yourself that prices can’t drop. You type common observations as if they are some sort of epiphany. Your hypothesis depends on people selling only when they want to. Sometimes, people sell because they have to. As prices come down, the greed turns to fear, and the retreat becomes a rout. The herd goes from graze to stampede. We’ve seen it all before. The only question, is can the Fed keep rates high long enough to take effect. We saw it before due to ARM, market interest rates. Market interest rates were the whole reason why the market crashed last time. Market interest is SUPPOSED to be how corrections happen as a result of changes in interest rates, unfortunately that no longer is a thing. Now we have the exact opposite. Rather than crashing we created an uncrushable market that instead crashes by going to no liquidity. The lack of sales we see right now IS the crash. You can't buy something that no longer exists, and the mortgages people now hold simply no longer exist, all you can do is buy out the opportunity cost at massive price. Yes it will erode, slowly, as people die, divorce, or new housign slowly gets built. But I don't see how it crashes off a cliff purely from market correction. |
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AS, USA
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Posted: 5/13/2024 12:00:24 PM EDT
[Last Edit: CoconutLaCroix]
[#21]
Quote HistoryOriginally Posted By miseses: They can do as done everywhere else. Eat shittier food, take worse care of their children, neglect their health and teeth, drive a tiny scooter instead of a car, seek cheaper or less education, cut school funding, cook at home and not eat out, and do little else other than work and tend to their family. It is the status quo in the vast majority of the world and only disbelief of American exceptionalism precludes us from thinking we won't regress to the mean if we continue down ever more socialist and regulatory policies. So given that the US is already performing worse than countries with much higher savings rates in the criteria you listed, what additional consumption will Americans need to cut in order to support greater housing costs? And why won't that result in a recession? I think there is room in auto spending, but even if the US scales down to smaller and cheaper cars, that's going to result in a recession as there are a ton of jobs tied to making existing vehicles. |
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USA
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Posted: 5/13/2024 12:02:16 PM EDT
[Last Edit: miseses]
[#22]
Quote HistoryOriginally Posted By CoconutLaCroix: In the EU the food is much higher quality, there is typically a longer life expectancy, they typically are less overweight have better school performance, and yet they are still able to maintain a savings rate that is over 4x greater than ours. So given that the US is already performing worse than countries with much higher savings rates in the criteria you listed, what additional consumption will Americans need to cut in order to support greater housing costs? And why won't that result in a recession? Quote HistoryOriginally Posted By CoconutLaCroix: Originally Posted By miseses: They can do as done everywhere else. Eat shittier food, take worse care of their children, neglect their health and teeth, drive a tiny scooter instead of a car, seek cheaper or less education, cut school funding, cook at home and not eat out, and do little else other than work and tend to their family. It is the status quo in the vast majority of the world and only disbelief of American exceptionalism precludes us from thinking we won't regress to the mean if we continue down ever more socialist and regulatory policies. So given that the US is already performing worse than countries with much higher savings rates in the criteria you listed, what additional consumption will Americans need to cut in order to support greater housing costs? And why won't that result in a recession? EU they spend higher fraction of their income on rent so you just gave yourself your own answer on it being possible. You've basically contradicted yourself by bringing EU as your argument. |
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Posted: 5/13/2024 12:05:15 PM EDT
[Last Edit: BillofRights]
[#23]
Quote HistoryOriginally Posted By miseses: We saw it before due to ARM, market interest rates. Market interest rates were the whole reason why the market crashed last time. Market interest is SUPPOSED to be how corrections happen as a result of changes in interest rates, unfortunately that no longer is a thing. Now we have the exact opposite. Rather than crashing we created an uncrushable market that instead crashes by going to no liquidity. The lack of sales we see right now IS the crash. You can't buy something that no longer exists, and the mortgages people now hold simply no longer exist, all you can do is buy out the opportunity cost at massive price. Yes it will erode, slowly, as people die, divorce, or new housign slowly gets built. But I don't see how it crashes off a cliff purely from market correction. Quote HistoryOriginally Posted By miseses: Originally Posted By BillofRights: Originally Posted By miseses: Originally Posted By BillofRights: Originally Posted By miseses: Originally Posted By BillofRights: Originally Posted By CoconutLaCroix: https://i.postimg.cc/nLBqcWFM/IMG-5293.jpg Median household income is about $75-$80k. Good post. That’s a very useful graph for visualizing just how unsustainable the current price/rate combo is. Even someone making 4 times the Median income, shouldn’t be comfortable with that sort of payment. Especially, when insurance and upkeep are only going to go up. So that just leaves boomers and BC millionairs paying cash. There’s a lot of them, but not enough to float the whole market. US has one of the lowest(cheapest) cost/income ratios in the world for home ownership. There is a hell of a lot of room to go higher.... way way way higher as proven worldwide. And with the current generation being more concerned about the 'environment' and at the ready too boot lick new regulations that constrain supply, there is no reason to rule out that prices won't keep going up. On the opposite side, as technology and automation make goods production ever more cheaper, people will have higher and higher fractions of their income open up to get gutted on rent. So there's also plenty of room to keep pushing rents up over time too. If that’s currently true, it’s because rates were below inflation for a very long time. Maybe the current prices were sustainable at 3%, but they aren’t, at 7%. You can’t “get both”. We shall see. You cannot get both in a non-rigged market. However our market was rigged because the government backed 30 year mortgages as seen in their acquisition: https://fred.stlouisfed.org/series/WSHOMCB They basically paid for people to lock in their mortgage for 30 years, creating an artificial market for something that no longer exists. Therefore even as interest rates rise you must buy out the current owners not only of their house but an irreplaceable fed backed loan which they are now trying to offload their books of. The result is rather than depressing the price the homeowner simply pulls from the market, because you can't overcome their opportunity cost of selling. What we will see is as interest rates rise you just see fewer and fewer sales. The big trick in the US is housing is largely a command economy hidden under the auspices of a market, as soon as you play by market rules the game is just changed up to take advantage of you some other way. You seem desperate to convince yourself that prices can’t drop. You type common observations as if they are some sort of epiphany. Your hypothesis depends on people selling only when they want to. Sometimes, people sell because they have to. As prices come down, the greed turns to fear, and the retreat becomes a rout. The herd goes from graze to stampede. We’ve seen it all before. The only question, is can the Fed keep rates high long enough to take effect. We saw it before due to ARM, market interest rates. Market interest rates were the whole reason why the market crashed last time. Market interest is SUPPOSED to be how corrections happen as a result of changes in interest rates, unfortunately that no longer is a thing. Now we have the exact opposite. Rather than crashing we created an uncrushable market that instead crashes by going to no liquidity. The lack of sales we see right now IS the crash. You can't buy something that no longer exists, and the mortgages people now hold simply no longer exist, all you can do is buy out the opportunity cost at massive price. Yes it will erode, slowly, as people die, divorce, or new housign slowly gets built. But I don't see how it crashes off a cliff purely from market correction. Nobody is expecting it to crash off a cliff. Hell, it could stagnate for 5 years, and that would be a 30% correction. All RE is local. Every market, different. |
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AS, USA
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Posted: 5/13/2024 12:09:33 PM EDT
[Last Edit: CoconutLaCroix]
[#24]
Quote HistoryOriginally Posted By miseses: EU they spend higher fraction of their income on rent so you just gave yourself your own answer on it being possible. You've basically contradicted yourself by bringing EU as your argument. How are people going to pay even more for housing when their jobs that were tied to consumer spending are cut because the money that would have flowed in was instead spent on ever-increasing rent and housing? It doesn't add up. |
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Posted: 5/13/2024 12:11:12 PM EDT
[#25]
Quote HistoryOriginally Posted By miseses: They basically paid for people to lock in their mortgage for 30 years, creating an artificial market for something that no longer exists. Therefore even as interest rates rise you must buy out the current owners not only of their house but an irreplaceable fed backed loan which they are now trying to offload their books of. The result is rather than depressing the price the homeowner simply pulls from the market, because you can't overcome their opportunity cost of selling. What we will see is as interest rates rise you just see fewer and fewer sales. I get this impression. The market isn't screwed up because of the interest rates, the market is screwed up because the interest rates rose so fast. Housing costs as a portion of income can drop via a price reduction in homes or by home prices staying put and inflation raising incomes. I feel like we're experience the latter and the market is simply waiting for inflation to make housing a more reasonable fraction of incomes. |
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USA
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Posted: 5/13/2024 12:16:07 PM EDT
[Last Edit: miseses]
[#26]
Quote HistoryOriginally Posted By CoconutLaCroix: In the EU they have 15% household savings. We have 3.2% household savings currently, and an economy that is built on consumer consumption. So how's it going to work for us when consumption is cut in order to pay for even greater housing costs? How are people going to pay even more for housing when their jobs that were tied to consumption are cut because the money that would have flowed in was instead spent on ever-increasing rent and housing? It doesn't add up. Quote HistoryOriginally Posted By CoconutLaCroix: Originally Posted By miseses: EU they spend higher fraction of their income on rent so you just gave yourself your own answer on it being possible. You've basically contradicted yourself by bringing EU as your argument. How are people going to pay even more for housing when their jobs that were tied to consumption are cut because the money that would have flowed in was instead spent on ever-increasing rent and housing? It doesn't add up. First of all lets make clear, you are using % which is fractional share. If their income goes down, I'll give you a hint, their fractional share for rent does not go down. Your issue is you keep flipping between nominal and fractional. Whenever I use one, you counterpoint on the other setting yourself up for "heads I win tails you lose." That is why you are getting confused. |
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UT, USA
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Posted: 5/13/2024 12:17:18 PM EDT
[#27]
Quote HistoryOriginally Posted By BillofRights: You seem desperate to convince yourself that prices can't drop. You type common observations as if they are some sort of epiphany. Your hypothesis depends on people selling only when they want to. Sometimes, people sell because they have to. As prices come down, the greed turns to fear, and the retreat becomes a rout. The herd goes from graze to stampede. We've seen it all before. The only question, is can the Fed keep rates high long enough to take effect. Dense housing markets like LA, SF, Seattle, NYC, Chicago, etc, where the population has outpaced housing supply have warped a lot of people's perception of the market. Washington is attempting a force-sell by pumping property taxes up. 10-30% per year increases. The problem is finding affordable alternatives. The town I'm from is building 3-4br homes on small lots (<7000sqft) and priced around $1m, +/- $100k. It's not in a good commuting location, unless you work for Boeing. The "starter homes" that multiplied like bunnies in the mid-90s to early 2000s are ~30ish years old now. An average new family home (3/4br, ~2000sqft) from that build era sold for around $200k in 2000 now sells for around $750k-$800k. Any new "starter home" starts well above $500k. Prices in WA aren't the highest, but they rank near the top. And despite popular opinion, not everyone works for Boeing or Microsoft, pulling down $100k/yr per working member of the household. And for most of Washington, it's a vehicle-based commuter state. Drive for an hour, or take a bus for 3 hours. |
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Posted: 5/13/2024 12:22:50 PM EDT
[#28]
Quote HistoryOriginally Posted By miseses: Is it artificially low? I don't think there's an entity in the world that can pin down a multi-billion market sustainably for months, not even by conspiring with others. The Fed only managed to swing the market so massively by offloading the costs onto non property owners via inflationary monetary policy, which is why you see the buy-in for young families entering the market at basically double the cost of their elders who cashed out bigtime on their kids via the fed. I would assert housing has become more of a 'medallion', the ownership of the house is more of a token to own something that you can't effectively make more of at least note with changing zoning. Therefore so long as you cover your interest and you can resell your medallion later you can let the rent blow in the wind quite a bit. Eventually rent approaches something like that of vacant land, where the price is barely above the interest rate of the land value plus cost of taxes. For a house add in maintenance costs and anything above that is a profit. Considering all these houses were locked in with near-zero real interest rates the market rate rent on the interest is basically zero, meaning at commodity pricing the rents are at cost of maintenance plus property tax. No clue what you said, but I'm interested. |
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Posted: 5/13/2024 12:28:00 PM EDT
[#29]
Quote HistoryOriginally Posted By Morgan321: I get this impression. The market isn't screwed up because of the interest rates, the market is screwed up because Remember 2019. |
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AS, USA
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Posted: 5/13/2024 12:31:45 PM EDT
[Last Edit: CoconutLaCroix]
[#30]
Quote HistoryOriginally Posted By miseses: First of all lets make clear, you are using % which is fractional share. If their income goes down, I'll give you a hint, their fractional share for rent does not go down. Your issue is you keep flipping between nominal and fractional. Whenever I use one, you counterpoint on the other setting yourself up for "heads I win tails you lose." That is why you are getting confused. We have 3.2% household savings rate and some of the "lowest housing costs in the world." You seem to be arguing that rent and housing will continue going up in perpetuity and there's still plenty of room for prices to rise, and you say that comparatively speaking we spend much less on housing than others. I am saying that we don't have much flexibility for prices to rise given that the avg American is already financially tapped out and living way beyond their means as it is. Further moves higher will result in no/negative savings which is obviously terrible for the economy. Or it will result in cost cutting elsewhere which is also terrible for an economy that is driven by consumer spending. Do you see how people losing their jobs that are based on consumer sending because Americans are forced to cost-cut doesn't support even higher housing costs? |
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USA
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Posted: 5/13/2024 12:40:46 PM EDT
[#31]
Quote HistoryOriginally Posted By CoconutLaCroix: They have higher rent costs in the EU, and yet they still have 15% household savings rate. We have 3.2% household savings rate and some of the "lowest housing costs in the world." You seem to be arguing that rent and housing will continue going up in perpetuity and there's still plenty of room for prices to rise, and you say that comparatively speaking we spend much less on housing than others. I am saying that we don't have much flexibility for prices to rise given that the avg American is already financially tapped out and living way beyond their means as it is. Further moves higher will result in no/negative savings which is obviously terrible for the economy. Or it will result in cost cutting elsewhere which is also terrible for an economy that is driven by consumer spending. Do you see how people losing their jobs that are based on consumer sending because Americans are forced to cost-cut doesn't support even higher housing costs? Quote HistoryOriginally Posted By CoconutLaCroix: Originally Posted By miseses: First of all lets make clear, you are using % which is fractional share. If their income goes down, I'll give you a hint, their fractional share for rent does not go down. Your issue is you keep flipping between nominal and fractional. Whenever I use one, you counterpoint on the other setting yourself up for "heads I win tails you lose." That is why you are getting confused. We have 3.2% household savings rate and some of the "lowest housing costs in the world." You seem to be arguing that rent and housing will continue going up in perpetuity and there's still plenty of room for prices to rise, and you say that comparatively speaking we spend much less on housing than others. I am saying that we don't have much flexibility for prices to rise given that the avg American is already financially tapped out and living way beyond their means as it is. Further moves higher will result in no/negative savings which is obviously terrible for the economy. Or it will result in cost cutting elsewhere which is also terrible for an economy that is driven by consumer spending. Do you see how people losing their jobs that are based on consumer sending because Americans are forced to cost-cut doesn't support even higher housing costs? You chose to frame in %, fractional. Yes people losing your jobs, your premise here, means housing costs going up much higher in fractional terms. Quite a bit. |
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AS, USA
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Posted: 5/13/2024 12:55:22 PM EDT
[Last Edit: CoconutLaCroix]
[#32]
Quote HistoryOriginally Posted By miseses: You chose to frame in %, fractional. Yes people losing your jobs, your premise here, means housing costs going up much higher in fractional terms. Quite a bit. |
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TX, USA
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Posted: 5/13/2024 12:57:19 PM EDT
[#33]
Quote HistoryOriginally Posted By miseses: They can do as done everywhere else. Eat shittier food, take worse care of their children, neglect their health and teeth, drive a tiny scooter instead of a car, seek cheaper or less education, cut school funding, cook at home and not eat out, and do little else other than work and tend to their family. It is the status quo in the vast majority of the world and only disbelief of American exceptionalism precludes us from thinking we won't regress to the mean if we continue down ever more socialist and regulatory policies. Let’s not forget multiple generations living in the same house together. We’re already starting to see more of that here around Austin. It can mean living with mom and dad longer in order to save more money or building a bigger house and moving retired parents in and so forth. |
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Posted: 5/13/2024 1:20:30 PM EDT
[#34]
Quote HistoryOriginally Posted By miseses: Is it artificially low? I don't think there's an entity in the world that can pin down a multi-billion market sustainably for months, not even by conspiring with others. The Fed only managed to swing the market so massively by offloading the costs onto non property owners via inflationary monetary policy, which is why you see the buy-in for young families entering the market at basically double the cost of their elders who cashed out bigtime on their kids via the fed. I would assert housing has become more of a 'medallion', the ownership of the house is more of a token to own something that you can't effectively make more of at least note with changing zoning. Therefore so long as you cover your interest and you can resell your medallion later you can let the rent blow in the wind quite a bit. Eventually rent approaches something like that of vacant land, where the price is barely above the interest rate of the land value plus cost of taxes. For a house add in maintenance costs and anything above that is a profit. Considering all these houses were locked in with near-zero real interest rates the market rate rent on the interest is basically zero, meaning at commodity pricing the rents are at cost of maintenance plus property tax. Quote HistoryOriginally Posted By miseses: Originally Posted By Mr_Nasty99: Originally Posted By Silverbulletz06: Originally Posted By Phil_Billy: You found one example so that makes it correct? I doubt that's correct they would be losing thousands every month if that were the case. There is no way you are renting a house for half of the mortgage cost. That makes zero financial sense. Why do I get the feeling you are one of those people who offers half and can never figure out why no one has ever accepted your offer. Lol this thread is pure comedy can we get Tooter back too? Rent to mortgage ratio is very strange right now. Friend pays $3200 to rent, but the same condo to buy is sitting around $4500-5000/mo plus downpayment. Too many people looking to buy, more young adults staying home, and the pool of renters is dropping. There are a few rent vs own graphs out there using various tools to compare. For example: https://www.wesmoss.com/wp-content/uploads/Rent-vs-own.png Not sure if I would call it strange. It's been like that around here, since 2021. The PE firms buying up all the single family homes are keeping the rent artificially low. This crushes competition in the RE market, and encourages average americans to sell their home when moving, rather than hanging on to it and renting it out for passive income. Is it artificially low? I don't think there's an entity in the world that can pin down a multi-billion market sustainably for months, not even by conspiring with others. The Fed only managed to swing the market so massively by offloading the costs onto non property owners via inflationary monetary policy, which is why you see the buy-in for young families entering the market at basically double the cost of their elders who cashed out bigtime on their kids via the fed. I would assert housing has become more of a 'medallion', the ownership of the house is more of a token to own something that you can't effectively make more of at least note with changing zoning. Therefore so long as you cover your interest and you can resell your medallion later you can let the rent blow in the wind quite a bit. Eventually rent approaches something like that of vacant land, where the price is barely above the interest rate of the land value plus cost of taxes. For a house add in maintenance costs and anything above that is a profit. Considering all these houses were locked in with near-zero real interest rates the market rate rent on the interest is basically zero, meaning at commodity pricing the rents are at cost of maintenance plus property tax. I think we have PE firms that could very easily pin down the market for as long as they need. It doesn't matter if the rental market is a multi-billion dollar market nationally/globally, rates are set and controlled locally. Rental rates in NYC have very little impact on rental rates in Boise. Given the fact that institutional investors are purchasing 25%-50% of the homes being sold in just about every given market, it would be pretty easy, and beneficial, to push rental prices down in those individual market. |
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Posted: 5/13/2024 3:03:12 PM EDT
[#35]
Quote HistoryOriginally Posted By Mr_Nasty99: I think we have PE firms that could very easily pin down the market for as long as they need. It doesn't matter if the rental market is a multi-billion dollar market nationally/globally, rates are set and controlled locally. Rental rates in NYC have very little impact on rental rates in Boise. Given the fact that institutional investors are purchasing 25%-50% of the homes being sold in just about every given market, it would be pretty easy, and beneficial, to push rental prices down in those individual market. Quote HistoryOriginally Posted By Mr_Nasty99: Originally Posted By miseses: Originally Posted By Mr_Nasty99: Originally Posted By Silverbulletz06: Originally Posted By Phil_Billy: You found one example so that makes it correct? I doubt that's correct they would be losing thousands every month if that were the case. There is no way you are renting a house for half of the mortgage cost. That makes zero financial sense. Why do I get the feeling you are one of those people who offers half and can never figure out why no one has ever accepted your offer. Lol this thread is pure comedy can we get Tooter back too? Rent to mortgage ratio is very strange right now. Friend pays $3200 to rent, but the same condo to buy is sitting around $4500-5000/mo plus downpayment. Too many people looking to buy, more young adults staying home, and the pool of renters is dropping. There are a few rent vs own graphs out there using various tools to compare. For example: https://www.wesmoss.com/wp-content/uploads/Rent-vs-own.png Not sure if I would call it strange. It's been like that around here, since 2021. The PE firms buying up all the single family homes are keeping the rent artificially low. This crushes competition in the RE market, and encourages average americans to sell their home when moving, rather than hanging on to it and renting it out for passive income. Is it artificially low? I don't think there's an entity in the world that can pin down a multi-billion market sustainably for months, not even by conspiring with others. The Fed only managed to swing the market so massively by offloading the costs onto non property owners via inflationary monetary policy, which is why you see the buy-in for young families entering the market at basically double the cost of their elders who cashed out bigtime on their kids via the fed. I would assert housing has become more of a 'medallion', the ownership of the house is more of a token to own something that you can't effectively make more of at least note with changing zoning. Therefore so long as you cover your interest and you can resell your medallion later you can let the rent blow in the wind quite a bit. Eventually rent approaches something like that of vacant land, where the price is barely above the interest rate of the land value plus cost of taxes. For a house add in maintenance costs and anything above that is a profit. Considering all these houses were locked in with near-zero real interest rates the market rate rent on the interest is basically zero, meaning at commodity pricing the rents are at cost of maintenance plus property tax. I think we have PE firms that could very easily pin down the market for as long as they need. It doesn't matter if the rental market is a multi-billion dollar market nationally/globally, rates are set and controlled locally. Rental rates in NYC have very little impact on rental rates in Boise. Given the fact that institutional investors are purchasing 25%-50% of the homes being sold in just about every given market, it would be pretty easy, and beneficial, to push rental prices down in those individual market. That’s a helluva take on it. First I’ve heard of that theory. Everybody else is worried about the large investors constraining supply, thus making The Rents Too Damned High! 
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Posted: 5/13/2024 3:07:46 PM EDT
[#36]
Quote HistoryOriginally Posted By Mr_Nasty99: Given the fact that institutional investors are purchasing 25%-50% of the homes being sold in just about every given market, Source? |
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Posted: 5/13/2024 4:32:36 PM EDT
[#37]
Quote HistoryOriginally Posted By BillofRights: That’s a helluva take on it. First I’ve heard of that theory. Everybody else is worried about the large investors constraining supply, thus making The Rents Too Damned High! https://www.memecreator.org/static/images/memes/5568659.jpg Quote HistoryOriginally Posted By BillofRights: Originally Posted By Mr_Nasty99: Originally Posted By miseses: Originally Posted By Mr_Nasty99: Originally Posted By Silverbulletz06: Originally Posted By Phil_Billy: You found one example so that makes it correct? I doubt that's correct they would be losing thousands every month if that were the case. There is no way you are renting a house for half of the mortgage cost. That makes zero financial sense. Why do I get the feeling you are one of those people who offers half and can never figure out why no one has ever accepted your offer. Lol this thread is pure comedy can we get Tooter back too? Rent to mortgage ratio is very strange right now. Friend pays $3200 to rent, but the same condo to buy is sitting around $4500-5000/mo plus downpayment. Too many people looking to buy, more young adults staying home, and the pool of renters is dropping. There are a few rent vs own graphs out there using various tools to compare. For example: https://www.wesmoss.com/wp-content/uploads/Rent-vs-own.png Not sure if I would call it strange. It's been like that around here, since 2021. The PE firms buying up all the single family homes are keeping the rent artificially low. This crushes competition in the RE market, and encourages average americans to sell their home when moving, rather than hanging on to it and renting it out for passive income. Is it artificially low? I don't think there's an entity in the world that can pin down a multi-billion market sustainably for months, not even by conspiring with others. The Fed only managed to swing the market so massively by offloading the costs onto non property owners via inflationary monetary policy, which is why you see the buy-in for young families entering the market at basically double the cost of their elders who cashed out bigtime on their kids via the fed. I would assert housing has become more of a 'medallion', the ownership of the house is more of a token to own something that you can't effectively make more of at least note with changing zoning. Therefore so long as you cover your interest and you can resell your medallion later you can let the rent blow in the wind quite a bit. Eventually rent approaches something like that of vacant land, where the price is barely above the interest rate of the land value plus cost of taxes. For a house add in maintenance costs and anything above that is a profit. Considering all these houses were locked in with near-zero real interest rates the market rate rent on the interest is basically zero, meaning at commodity pricing the rents are at cost of maintenance plus property tax. I think we have PE firms that could very easily pin down the market for as long as they need. It doesn't matter if the rental market is a multi-billion dollar market nationally/globally, rates are set and controlled locally. Rental rates in NYC have very little impact on rental rates in Boise. Given the fact that institutional investors are purchasing 25%-50% of the homes being sold in just about every given market, it would be pretty easy, and beneficial, to push rental prices down in those individual market. That’s a helluva take on it. First I’ve heard of that theory. Everybody else is worried about the large investors constraining supply, thus making The Rents Too Damned High! https://www.memecreator.org/static/images/memes/5568659.jpg But rent isn't keeping up with the price of homes. The theory is that they have the money to take the small loss of rent for a whole lot longer than any mom and pop landlords. This will continue to push more small-time landlords out of the game, allowing the PE's to purchase more homes and gain more control of the market. Raising rent would only increase competition at this point. Suppressing rent would strongly discourage anyone else from wanting to compete. |
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Posted: 5/13/2024 4:43:30 PM EDT
[#38]
Quote HistoryOriginally Posted By Mr_Nasty99: I think we have PE firms that could very easily pin down the market for as long as they need. It doesn't matter if the rental market is a multi-billion dollar market nationally/globally, rates are set and controlled locally. Rental rates in NYC have very little impact on rental rates in Boise. Given the fact that institutional investors are purchasing 25%-50% of the homes being sold in just about every given market, it would be pretty easy, and beneficial, to push rental prices down in those individual market. Careful, there is a difference between investors and PE. PE owns less than 5% of all residential homes in the US. Anyone is an "investor" including mom and pop rentals and working people with an income property. |
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Posted: 5/13/2024 4:54:29 PM EDT
[#39]
Quote HistoryOriginally Posted By Mr_Nasty99: But rent isn't keeping up with the price of homes. The theory is that they have the money to take the small loss of rent for a whole lot longer than any mom and pop landlords. This will continue to push more small-time landlords out of the game, allowing the PE's to purchase more homes and gain more control of the market. Raising rent would only increase competition at this point. Suppressing rent would strongly discourage anyone else from wanting to compete. Quote HistoryOriginally Posted By Mr_Nasty99: Originally Posted By BillofRights: Originally Posted By Mr_Nasty99: Originally Posted By miseses: Originally Posted By Mr_Nasty99: Originally Posted By Silverbulletz06: Originally Posted By Phil_Billy: You found one example so that makes it correct? I doubt that's correct they would be losing thousands every month if that were the case. There is no way you are renting a house for half of the mortgage cost. That makes zero financial sense. Why do I get the feeling you are one of those people who offers half and can never figure out why no one has ever accepted your offer. Lol this thread is pure comedy can we get Tooter back too? Rent to mortgage ratio is very strange right now. Friend pays $3200 to rent, but the same condo to buy is sitting around $4500-5000/mo plus downpayment. Too many people looking to buy, more young adults staying home, and the pool of renters is dropping. There are a few rent vs own graphs out there using various tools to compare. For example: https://www.wesmoss.com/wp-content/uploads/Rent-vs-own.png Not sure if I would call it strange. It's been like that around here, since 2021. The PE firms buying up all the single family homes are keeping the rent artificially low. This crushes competition in the RE market, and encourages average americans to sell their home when moving, rather than hanging on to it and renting it out for passive income. Is it artificially low? I don't think there's an entity in the world that can pin down a multi-billion market sustainably for months, not even by conspiring with others. The Fed only managed to swing the market so massively by offloading the costs onto non property owners via inflationary monetary policy, which is why you see the buy-in for young families entering the market at basically double the cost of their elders who cashed out bigtime on their kids via the fed. I would assert housing has become more of a 'medallion', the ownership of the house is more of a token to own something that you can't effectively make more of at least note with changing zoning. Therefore so long as you cover your interest and you can resell your medallion later you can let the rent blow in the wind quite a bit. Eventually rent approaches something like that of vacant land, where the price is barely above the interest rate of the land value plus cost of taxes. For a house add in maintenance costs and anything above that is a profit. Considering all these houses were locked in with near-zero real interest rates the market rate rent on the interest is basically zero, meaning at commodity pricing the rents are at cost of maintenance plus property tax. I think we have PE firms that could very easily pin down the market for as long as they need. It doesn't matter if the rental market is a multi-billion dollar market nationally/globally, rates are set and controlled locally. Rental rates in NYC have very little impact on rental rates in Boise. Given the fact that institutional investors are purchasing 25%-50% of the homes being sold in just about every given market, it would be pretty easy, and beneficial, to push rental prices down in those individual market. That’s a helluva take on it. First I’ve heard of that theory. Everybody else is worried about the large investors constraining supply, thus making The Rents Too Damned High! https://www.memecreator.org/static/images/memes/5568659.jpg But rent isn't keeping up with the price of homes. The theory is that they have the money to take the small loss of rent for a whole lot longer than any mom and pop landlords. This will continue to push more small-time landlords out of the game, allowing the PE's to purchase more homes and gain more control of the market. Raising rent would only increase competition at this point. Suppressing rent would strongly discourage anyone else from wanting to compete. That only works if you are a Nation State like Saudi Arabia and can convince other Nations to participate. Even then, it doesn’t work all that great. A giant company could potentially do it in one market, and make up the losses by overcharging other markets… Nah, it’s a lot more likely the price of real estate is temporarily upside down. We all saw rates suddenly go from 2.5 to 7%. That’s a Very Big Deal, when you consider that most buyers are only concerned with making the monthly payment. |
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Posted: 5/13/2024 10:28:10 PM EDT
[#40]
Quote HistoryOriginally Posted By miseses: Is it artificially low? I don't think there's an entity in the world that can pin down a multi-billion market sustainably for months, not even by conspiring with others. The Fed only managed to swing the market so massively by offloading the costs onto non property owners via inflationary monetary policy, which is why you see the buy-in for young families entering the market at basically double the cost of their elders who cashed out bigtime on their kids via the fed. I would assert housing has become more of a 'medallion', the ownership of the house is more of a token to own something that you can't effectively make more of at least note with changing zoning. Therefore so long as you cover your interest and you can resell your medallion later you can let the rent blow in the wind quite a bit. Eventually rent approaches something like that of vacant land, where the price is barely above the interest rate of the land value plus cost of taxes. For a house add in maintenance costs and anything above that is a profit. Considering all these houses were locked in with near-zero real interest rates the market rate rent on the interest is basically zero, meaning at commodity pricing the rents are at cost of maintenance plus property tax. Quote HistoryOriginally Posted By miseses: Originally Posted By Mr_Nasty99: Originally Posted By Silverbulletz06: Originally Posted By Phil_Billy: You found one example so that makes it correct? I doubt that's correct they would be losing thousands every month if that were the case. There is no way you are renting a house for half of the mortgage cost. That makes zero financial sense. Why do I get the feeling you are one of those people who offers half and can never figure out why no one has ever accepted your offer. Lol this thread is pure comedy can we get Tooter back too? Rent to mortgage ratio is very strange right now. Friend pays $3200 to rent, but the same condo to buy is sitting around $4500-5000/mo plus downpayment. Too many people looking to buy, more young adults staying home, and the pool of renters is dropping. There are a few rent vs own graphs out there using various tools to compare. For example: https://www.wesmoss.com/wp-content/uploads/Rent-vs-own.png Not sure if I would call it strange. It's been like that around here, since 2021. The PE firms buying up all the single family homes are keeping the rent artificially low. This crushes competition in the RE market, and encourages average americans to sell their home when moving, rather than hanging on to it and renting it out for passive income. Is it artificially low? I don't think there's an entity in the world that can pin down a multi-billion market sustainably for months, not even by conspiring with others. The Fed only managed to swing the market so massively by offloading the costs onto non property owners via inflationary monetary policy, which is why you see the buy-in for young families entering the market at basically double the cost of their elders who cashed out bigtime on their kids via the fed. I would assert housing has become more of a 'medallion', the ownership of the house is more of a token to own something that you can't effectively make more of at least note with changing zoning. Therefore so long as you cover your interest and you can resell your medallion later you can let the rent blow in the wind quite a bit. Eventually rent approaches something like that of vacant land, where the price is barely above the interest rate of the land value plus cost of taxes. For a house add in maintenance costs and anything above that is a profit. Considering all these houses were locked in with near-zero real interest rates the market rate rent on the interest is basically zero, meaning at commodity pricing the rents are at cost of maintenance plus property tax. You weren't paying attention during the little subprime problem that caused the 2008 GFC, were you? I'll disagree with the notion of a house being like a taxi medallion since a taxi medallion is a requirement to make money in certain corrupt cities. Also, you can always make more houses. Land, not so much. |
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Posted: 5/13/2024 10:38:25 PM EDT
[#41]
Quote HistoryOriginally Posted By Morgan321: I get this impression. The market isn't screwed up because of the interest rates, the market is screwed up because the interest rates rose so fast. Housing costs as a portion of income can drop via a price reduction in homes or by home prices staying put and inflation raising incomes. I feel like we're experience the latter and the market is simply waiting for inflation to make housing a more reasonable fraction of incomes. Quote HistoryOriginally Posted By Morgan321: Originally Posted By miseses: They basically paid for people to lock in their mortgage for 30 years, creating an artificial market for something that no longer exists. Therefore even as interest rates rise you must buy out the current owners not only of their house but an irreplaceable fed backed loan which they are now trying to offload their books of. The result is rather than depressing the price the homeowner simply pulls from the market, because you can't overcome their opportunity cost of selling. What we will see is as interest rates rise you just see fewer and fewer sales. I get this impression. The market isn't screwed up because of the interest rates, the market is screwed up because the interest rates rose so fast. Housing costs as a portion of income can drop via a price reduction in homes or by home prices staying put and inflation raising incomes. I feel like we're experience the latter and the market is simply waiting for inflation to make housing a more reasonable fraction of incomes. I'm gonna disagree here in that it appears to me that the market is screwed up because rates were kept artificially low for too long and everybody got addicted to low interest rates. The artificially low interest rates resulted in an artificially stimulated housing market. Further, once the stimmy checks came off the printers, that enabled people to buy that otherwise would not have been able to. (Well, that, and the economic shockwave of the Kung Flu shutdowns forced people to postpone buying. Once the economy started to turn around that increased demand and drove prices markedly higher quicker than they otherwise would have.) Inflation isn't going to make homes more affordable, quite the opposite, particularly as inflation is rising much faster than incomes. |
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Posted: 5/13/2024 11:36:23 PM EDT
[#42]
Noticed a semi local contractor is selling off some newish equipment, muscle cars and more. Makes me curious how the economy is really doing
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Posted: 5/14/2024 11:52:31 AM EDT
[#43]
Quote HistoryOriginally Posted By Chromekilla: Noticed a semi local contractor is selling off some newish equipment, muscle cars and more. Makes me curious how the economy is really doing Not great. 
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Posted: 5/14/2024 11:55:59 AM EDT
[#44]
Quote HistoryOriginally Posted By Chromekilla: Noticed a semi local contractor is selling off some newish equipment, muscle cars and more. Makes me curious how the economy is really doing |
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Posted: 5/14/2024 12:24:19 PM EDT
[#45]
Quote HistoryOriginally Posted By BillofRights: That only works if you are a Nation State like Saudi Arabia and can convince other Nations to participate. Even then, it doesn’t work all that great. A giant company could potentially do it in one market, and make up the losses by overcharging other markets… Nah, it’s a lot more likely the price of real estate is temporarily upside down. We all saw rates suddenly go from 2.5 to 7%. That’s a Very Big Deal, when you consider that most buyers are only concerned with making the monthly payment. Quote HistoryOriginally Posted By BillofRights: Originally Posted By Mr_Nasty99: Originally Posted By BillofRights: Originally Posted By Mr_Nasty99: Originally Posted By miseses: Originally Posted By Mr_Nasty99: Originally Posted By Silverbulletz06: Originally Posted By Phil_Billy: You found one example so that makes it correct? I doubt that's correct they would be losing thousands every month if that were the case. There is no way you are renting a house for half of the mortgage cost. That makes zero financial sense. Why do I get the feeling you are one of those people who offers half and can never figure out why no one has ever accepted your offer. Lol this thread is pure comedy can we get Tooter back too? Rent to mortgage ratio is very strange right now. Friend pays $3200 to rent, but the same condo to buy is sitting around $4500-5000/mo plus downpayment. Too many people looking to buy, more young adults staying home, and the pool of renters is dropping. There are a few rent vs own graphs out there using various tools to compare. For example: https://www.wesmoss.com/wp-content/uploads/Rent-vs-own.png Not sure if I would call it strange. It's been like that around here, since 2021. The PE firms buying up all the single family homes are keeping the rent artificially low. This crushes competition in the RE market, and encourages average americans to sell their home when moving, rather than hanging on to it and renting it out for passive income. Is it artificially low? I don't think there's an entity in the world that can pin down a multi-billion market sustainably for months, not even by conspiring with others. The Fed only managed to swing the market so massively by offloading the costs onto non property owners via inflationary monetary policy, which is why you see the buy-in for young families entering the market at basically double the cost of their elders who cashed out bigtime on their kids via the fed. I would assert housing has become more of a 'medallion', the ownership of the house is more of a token to own something that you can't effectively make more of at least note with changing zoning. Therefore so long as you cover your interest and you can resell your medallion later you can let the rent blow in the wind quite a bit. Eventually rent approaches something like that of vacant land, where the price is barely above the interest rate of the land value plus cost of taxes. For a house add in maintenance costs and anything above that is a profit. Considering all these houses were locked in with near-zero real interest rates the market rate rent on the interest is basically zero, meaning at commodity pricing the rents are at cost of maintenance plus property tax. I think we have PE firms that could very easily pin down the market for as long as they need. It doesn't matter if the rental market is a multi-billion dollar market nationally/globally, rates are set and controlled locally. Rental rates in NYC have very little impact on rental rates in Boise. Given the fact that institutional investors are purchasing 25%-50% of the homes being sold in just about every given market, it would be pretty easy, and beneficial, to push rental prices down in those individual market. That’s a helluva take on it. First I’ve heard of that theory. Everybody else is worried about the large investors constraining supply, thus making The Rents Too Damned High! https://www.memecreator.org/static/images/memes/5568659.jpg But rent isn't keeping up with the price of homes. The theory is that they have the money to take the small loss of rent for a whole lot longer than any mom and pop landlords. This will continue to push more small-time landlords out of the game, allowing the PE's to purchase more homes and gain more control of the market. Raising rent would only increase competition at this point. Suppressing rent would strongly discourage anyone else from wanting to compete. That only works if you are a Nation State like Saudi Arabia and can convince other Nations to participate. Even then, it doesn’t work all that great. A giant company could potentially do it in one market, and make up the losses by overcharging other markets… Nah, it’s a lot more likely the price of real estate is temporarily upside down. We all saw rates suddenly go from 2.5 to 7%. That’s a Very Big Deal, when you consider that most buyers are only concerned with making the monthly payment. I don't think you have to be a Nation State to make it work. I think they end goal would have to be the desire to control the real estate market. Real estate has been "temporarily upside down" for 4 years now. Mortgage rates are irrelevant when you pay cash. They should be relevant, but most cities haven't seen prices come down in relation to rates suddenly skyrocketing. If your theory is correct, then why are all the PE firms buying up so much real estate when prices are temporarily high? That would be the worst time for them to start pumping billions of dollars into those investments. |
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Posted: 5/14/2024 3:28:01 PM EDT
[#46]
Quote HistoryOriginally Posted By wookie1562: Not great. https://pbs.twimg.com/media/GNjFXJEXAAALW0U?format=jpg&name=small
Quote HistoryOriginally Posted By wookie1562: Originally Posted By Chromekilla: Noticed a semi local contractor is selling off some newish equipment, muscle cars and more. Makes me curious how the economy is really doing Not great. https://pbs.twimg.com/media/GNjFXJEXAAALW0U?format=jpg&name=small
Notice that "student loan" drop. All that money went somewhere else. |
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Posted: 5/14/2024 4:26:19 PM EDT
[#47]
Quote HistoryOriginally Posted By Chromekilla: Noticed a semi local contractor is selling off some newish equipment, muscle cars and more. Makes me curious how the economy is really doing It ain't going the way the MSM is portraying it that is for certain... |
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Posted: 5/14/2024 4:50:36 PM EDT
[#48]
Quote HistoryOriginally Posted By LesBaer45: Notice that "student loan" drop. All that money went somewhere else. There's no money. It's delinquent debt. |
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Posted: 5/14/2024 8:31:10 PM EDT
[#49]
Quote HistoryOriginally Posted By wookie1562: There's no money. It's delinquent debt. Quote HistoryOriginally Posted By wookie1562: Originally Posted By LesBaer45: Notice that "student loan" drop. All that money went somewhere else. There's no money. It's delinquent debt. The scary part is all the others started climbing while student loan payments were paused still. Going to be quite the whiplash since payments have restarted. |
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Posted: 5/15/2024 10:17:25 AM EDT
[#50]
Quote HistoryOriginally Posted By Chromekilla: Noticed a semi local contractor is selling off some newish equipment, muscle cars and more. Makes me curious how the economy is really doing Yesterday Bloomberg Radio was talking about how builders buy down the rate to 5.x% to get buyers in the door and otherwise the market is at a standstill with 7.x%. It's rather funny to hear them switch between shilling during commentary to horrible economic predictors. Kharn |
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