***Official Real Estate Thread***

[npsp]

Makes sense. Banks are losing to inflation because they are only making 2.5-4% interest on most of their notes. Every year they are getting paid back with money worth less and less. Although it often isn't their money to begin with and the notes get sold multiple times, so maybe they make more of their money on origination fees, rate buydowns stc


Inventory will likely stay in the crapper for years to come because nobody wants to give up their super low rate for a higher one and the higher property taxes that come with a more expensive house.

Where things could get interesting is when we reach peak boomer passing and their assets get shuffled to their heirs.

This for sure. Who's going to give up a sub 3% 30 year fixed mortgage for a 5-6% loan and higher property taxes unless they are relocating out of state? No one!
In addition to the elderly passing on homes as assets, the other thing that will get interesting is the people that borrowed $$$$ on low interest only short term loans that are fixed for 3-5-7 years. Those are going to come due and/or readjust and the rate increase will force many to sell their houses.

 

[casa_mugrienta]

Inventory will likely stay in the crapper for years to come because nobody wants to give up their super low rate for a higher one and the higher property taxes that come with a more expensive house.

Where things could get interesting is when we reach peak boomer passing and their assets get shuffled to their heirs.

This is what I'm hoping helps reverse some of the trends in Hawaii. Maybe not so much regarding property value, but there are a lot of older homeowners here whose children have moved to the mainland and started families. It would be awesome to see some of those families get to come back to Hawaii and raise their kids here in the family home.

Can they afford the payments and the property taxes?

58% the population living paycheck to paycheck according to CNBC today.

I haven't even a guess of what's going to happene - I think 1.5 years out we're going to be looking at a very different economic situation.

 

[grapedrink]

Can they afford the payments and the property taxes?

Many can. Aside from super luxury homes, any home in California bought more than 5 years ago is pretty much a bargain. Plus Prop 13 allows you to keep the property taxes the same. If we aren't adding new housing units, rents will stay and the kids inherit a profitable rental. Or they sell and walk with some equity money, which is what will likely happen if there are siblings.

58% the population living paycheck to paycheck according to CNBC today.

While the top 20% is well into the 6 figures.

I haven't even a guess of what's going to happene - I think 1.5 years out we're going to be looking at a very different economic situation.

Any day now. I expect the housing market to be on the uptick by then as rates trend back down, whether that's fueled by fundamentals or fed fuckery. Probably both.

I think that as the years go on the best zip codes (especially desirable tourist areas & college town downtown cores) will get exponentially more expensive, the neighboring zip codes will also be high, while the vast swaths of midwest wasteland continues to decline and stagnate at best.

 

[Senor Sopa]

Add fix leaky water mains & service lines, replace under-reading meters and manage pressure. Reducing non-revenue water loss is not rocket science.

That's called a sinkhole

 

[2surf]

Squatters take over Florida home for 34 days | Fox News Video

After squatters illegally moved into a Jacksonville, Florida home and trashed it for more than 30 days, the owners decided they have had enough of being landlords.

video.foxnews.com

Caution 8 minute video, try to keep up.

 

[PRCD]

While the top 20% is well into the 6 figures.

How much of your paycheck do you keep after taxes in these brackets?

Any day now. I expect the housing market to be on the uptick by then as rates trend back down, whether that's fueled by fundamentals or fed fuckery. Probably both.

I think that as the years go on the best zip codes (especially desirable tourist areas & college town downtown cores) will get exponentially more expensive, the neighboring zip codes will also be high, while the vast swaths of midwest wasteland continues to decline and stagnate at best.

Let's look at SF. Case-Shiller:

S&P CoreLogic Case-Shiller CA-San Francisco Home Price Index

Graph and download economic data for S&P CoreLogic Case-Shiller CA-San Francisco Home Price Index (SFXRSA) from Jan 1987 to Jan 2024 about San Francisco, CA, HPI, housing, price index, indexes, price, and USA.

fred.stlouisfed.org

Based on discussions with police officers I know, the urban crime wave is just beginning.

The news is predicting "2008" for CRE: e.g. SalesForce is trying to sell one of their new buildings in San Francisco. A bunch of big chain stores are shuttering as well. Another business owner I know is trying to leave b/c he can't get to off-broadway productions without being escorted through homeless encampments. I've heard similar things in other big metros. Think of the '70s.

 

[grapedrink]

How much of your paycheck do you keep after taxes in these brackets?

A lot more than I did when I made less.

Let's look at SF. Case-Shiller:

S&P CoreLogic Case-Shiller CA-San Francisco Home Price Index

Graph and download economic data for S&P CoreLogic Case-Shiller CA-San Francisco Home Price Index (SFXRSA) from Jan 1987 to Jan 2024 about San Francisco, CA, HPI, housing, price index, indexes, price, and USA.

fred.stlouisfed.org

Based on discussions with police officers I know, the urban crime wave is just beginning.

The news is predicting "2008" for CRE: e.g. SalesForce is trying to sell one of their new buildings in San Francisco. A bunch of big chain stores are shuttering as well. Another business owner I know is trying to leave b/c he can't get to off-broadway productions without being escorted through homeless encampments. I've heard similar things in other big metros. Think of the '70s.

Note how I specified desirable tourist and college towns. Where do you think all the SF people went? Places like Santa Barbara, Aspen, Hanalei, La Jolla village etc will only get more and more expensive, even if/as population growth declines. There are more multi millionaires than there are housing units in these places.

 

[PRCD]

A lot more than I did when I made less.

The top 20% don't have infinite headroom either - even if you're making well-above $100k - b/c your gross pay starts compressing into higher and higher tax brackets.

$200,000 income tax calculator 2024 - California - salary after tax

If you make $200,000 in California, what will your paycheck after tax be? The Talent.com Online Salary and Tax Calculator can help you understand your net pay.

www.talent.com

Note how I specified desirable tourist and college towns. Where do you think all the SF people went? Places like Santa Barbara, Aspen, Hanalei, La Jolla village etc will only get more and more expensive, even if/as population growth declines. There are more multi millionaires than there are housing units in these places.

Got it. SF is now undesirable and has no colleges. Mountain towns and secluded beach towns are where it's at. Meanwhile, the rest of the country experiences what I'm talking about.

 

[sdsrfr]

SF is a funny place for real estate, imo, and doesn’t compare well to most of the country - for better or worse.

antidotally to me, a lot of properties are viewed more as luxury condos/flats than single family (town)homes.

the luxury condo market in SF has been virtually flat for the last 5-10 years. Meanwhile, prices in Corte Madera and Oakland/Berkely/Richmond went up.

 

[grapedrink]

The top 20% don't have infinite headroom either - even if you're making well-above $100k - b/c your gross pay starts compressing into higher and higher tax brackets.

Well, yeah. A $10k salary raise at this point only adds ~$220 to each paycheck, where when I was in the mid 5s it felt like a game changer. Although at the end of the day it beats the alternative.

Got it. SF is now undesirable and has no colleges. Mountain towns and secluded beach towns are where it's at. Meanwhile, the rest of the country experiences what I'm talking about.

For sure. Which is why I wouldn’t put my money in way overpriced urban cores, where the inflated cost was based on a captive audience of super high earners who wanted/needed to live close to work, or stagnating Midwest properties where the median home value has barely moved for the last 2 decades.

pre Covid the lack of remote work kept areas like SLO County from getting too obscene because if you lived here you worked here, and most employers don’t pay much. Once the pandemic started, an $850k home was a bargain for Silicon Valley transplants

 

[npsp]

That's called a sinkhole

Just like the one on Crest. What a mess.... Buried infrastructure gets no love!

 

[StuAzole]

This for sure. Who's going to give up a sub 3% 30 year fixed mortgage for a 5-6% loan and higher property taxes unless they are relocating out of state? No one!
In addition to the elderly passing on homes as assets, the other thing that will get interesting is the people that borrowed $$$$ on low interest only short term loans that are fixed for 3-5-7 years. Those are going to come due and/or readjust and the rate increase will force many to sell their houses.

Rates were low enough that most people didnt have to resort to loans with lower introductory rates.

One fix to inventory most people overlook is the capital gains cap of $250/$500k, a number which hasn’t changed in decades. If those numbers were adjusted upward to $500k/$1mil, you’d see a lot of sellers make a move. There’s a bipartisan bill floating out there now but I have no idea if it’ll ever get to a vote.

 

[npsp]

Rates were low enough that most people didnt have to resort to loans with lower introductory rates.

One fix to inventory most people overlook is the capital gains cap of $250/$500k, a number which hasn’t changed in decades. If those numbers were adjusted upward to $500k/$1mil, you’d see a lot of sellers make a move. There’s a bipartisan bill floating out there now but I have no idea if it’ll ever get to a vote.

Many people still went for those lower intro rate loans because like in the run up to 2008, they wanted to buy something that is just out of their range or they were looking to flip. Some of those loans are starting to adjust.
My wife owns her own RE brokerage and has been seeing this more frequently in the last few months vs two years ago.

 

[casa_mugrienta]

"We good"

National home prices just bottomed out, says real estate data juggernaut CoreLogic

"Prices in most markets have already bottomed out" says Selma Hepp, chief economist for CoreLogic.

fortune.com

 

[StuAzole]

Many people still went for those lower intro rate loans because like in the run up to 2008, they wanted to buy something that is just out of their range or they were looking to flip. Some of those loans are starting to adjust.
My wife owns her own RE brokerage and has been seeing this more frequently in the last few months vs two years ago.

From 2030 to 2022, arm’s made up less than 5% of loans. They exist, but not to an extent that they’ll be impacting the market much.

 

[surfadelphia]

"We good"

National home prices just bottomed out, says real estate data juggernaut CoreLogic

"Prices in most markets have already bottomed out" says Selma Hepp, chief economist for CoreLogic.

fortune.com

Wish I saw some of this bottoming out, still trying to buy and my zone has been up 20% on the year. People still bidding 15-20% over, all cash. The frustrating thing is all the other buyers in our demo are showing up to showings and opens with their boomer ass parents who are presumably throwing down a large chuck of cash.

 

[casa_mugrienta]

From 2030 to 2022, arm’s made up less than 5% of loans. They exist, but not to an extent that they’ll be impacting the market much.

2030?

I read the other day ARMS now make up 10% of mortgage apps.

And I read last year they make up something like 8% or all mortgages, mostly for homes over $1 million .

 

[casa_mugrienta]

Wish I saw some of this bottoming out, still trying to buy and my zone has been up 20% on the year. People still bidding 15-20% over, all cash. The frustrating thing is all the other buyers in our demo are showing up to showings and opens with their boomer ass parents who are presumably throwing down a large chuck of cash.

Just get an ARM.

You should have heard the guy in the article talking about how great they are, "They're capped at only 7.68%" lol

 

[grapedrink]

2030?

I read the other day ARMS now make up 10% of mortgage apps.

And I read last year they make up something like 8% or all mortgages, mostly for homes over $1 million .

So even if they do default, it probably won’t have much of an impact on the rest of us mortals. If anything it would be a good thing

 

[StuAzole]

2030?

I read the other day ARMS now make up 10% of mortgage apps.

And I read last year they make up something like 8% or all mortgages, mostly for homes over $1 million .

People are definitely moving to ARMs more now given the jump in rates, but they’re also betting rates are done moving up. sh!t, people who got a loan a year ago can now refinance a full point lower.

You also have to remember that home purchases in general are at historically low numbers, and underwriting standards are still tough. 10% of almost nothing is not a big number. It’s the complete opposite of the 2005 era, where home sales were at record numbers and anyone could get a loan.

The reality remains that 80% of all current home loans are under 5%. Barring some major shock to the economy, inventory won’t start to free up until rates get back to that level.