Another Housing Market Crash Looming?

[Foxtrot1]

Wood is not good right now.

Lumber Markets Hint at Housing Slowdown

Lumber futures have plummeted of late and mills are dramatically dialing back production of two-by-fours, plywood and other building materials.

www.wsj.com

Starting to see it now. Mills are stopping production. Prices for stumpage are bottoming out. Buyers with lots of standing timber bought are getting hung out to dry. Not sure what's gonna happen when loggers cant work for 3 months and demand is slow when the mills come back online

 

[Big Fin]

Starting to see it now. Mills are stopping production. Prices for stumpage are bottoming out. Buyers with lots of standing timber bought are getting hung out to dry. Not sure what's gonna happen when loggers cant work for 3 months and demand is slow when the mills come back online

The exact discussion I had with my brother on Sunday about his logging business. They always have "spring break up" when the swamps start to thaw, shutting them down for a month or so. He is gauging some of these same things.

Not sure how he handles being a business owner in that industry. I lucked out. Being the older brother and the worst logger in family history, I was told to find a way to pay for college. He enjoys being in the woods, but I suspect he doesn't like his business being at the mercy of so many uncontrollable market forces.

 

[nontyp]

I still like the AirBnB/VRBO model for investment real estate, but now is not the time to be buying one. Anyone who bought one and wasn't aggressively paying it down has made a terrible mistake. Those properties can generate impressive cash flow but can sink in a hurry with a long period of vacancy. If you're going to be an owner or property like that you really should have something like 6 months of reserves saved up.

Agreed, but I would add that there will be a time to buy these type of properties on fire sale very soon. If I had the cash on hand I would be looking at real estate purchases late this year and early next year. To me these type of properties would be a 100% cash purchase, otherwise in hard times you get forced to sell and lose your a**.

 

[TN2shot07]

Agreed, but I would add that there will be a time to buy these type of properties on fire sale very soon. If I had the cash on hand I would be looking at real estate purchases late this year and early next year. To me these type of properties would be a 100% cash purchase, otherwise in hard times you get forced to sell and lose your a**.

That’s always been my thought on this type of property as well, no renters and extra mortgage payments seem like a dangerous investment. Unfortunately not everyone in that business shares the belief

 

[ShootsManyBullets]

Some of these will just get sold to owner occupied buyers. Remember the housing markets overcorrect in both directions so there'll be some deals before things go back up if the economy gets back on track.

Maybe some of these hunting leases and outfitter deals will dry up this year with low demand?

 

[JohnCushman]

I hope the market is back up when I put my house on the market this fall

 

[LousyResident]

That’s always been my thought on this type of property as well, no renters and extra mortgage payments seem like a dangerous investment. Unfortunately not everyone in that business shares the belief

The offset is the potential cash flow. In the right area the income can be multiples higher. Here in South Florida a condo in the right area could generate monthly income 3 - 5 times what a normal rental could generate. If you bank the extra cash flow early you can build enough of a reserve to weather (most) down times.

 

[Nick87]

Some of these will just get sold to owner occupied buyers. Remember the housing markets overcorrect in both directions so there'll be some deals before things go back up if the economy gets back on track.

Maybe some of these hunting leases and outfitter deals will dry up this year with low demand?

It would really break my heart to see some of these leases sit empty around here. They probably wont though there a line of guys waiting to pay more than whatever the current lease is.

 

[TN2shot07]

The offset is the potential cash flow. In the right area the income can be multiples higher. Here in South Florida a condo in the right area could generate monthly income 3 - 5 times what a normal rental could generate. If you bank the extra cash flow early you can build enough of a reserve to weather (most) down times.

That’s always the theory with using someone else’s money, but the equation ignores risk. The fact that well over half over Americans live pay check to pay check says that there’s a better chance of the money getting spent than getting banked for a down turn. We like to live high on the hog when times are good and hope the government can fix it when it goes south

 

[PrairieHunter]

Will be interesting to see if it happens in places like CO or Bozeman. All those people who moved there the last 10 years will be looking to move back "home" to wherever they came from. Might actually be able to afford to buy a house in Colorado at some point.

Cars will go first. All the people who have no $ but drive a 70k Escalade King Ranch Mercedes etc with a huge payment... Will be crazy in places like Dallas where people really love to live above their means.

 

[Deleted member 28227]

Will be interesting to see if it happens in places like CO or Bozeman. All those people who moved there the last 10 years will be looking to move back "home" to wherever they came from. Might actually be able to afford to buy a house in Colorado at some point.

Cars will go first. All the people who have no $ but drive a 70k Escalade King Ranch Mercedes etc with a huge payment... Will be crazy in places like Dallas where people really love to live above their means.

I would agree... but I mean if your in NYC, Boston, literally any other city Bozeman and Denver are looking pretty great right now.

 

[azelkhntr]

I don't see it happening. Demand exceeds supply right now.

 

[1_pointer]

The exact discussion I had with my brother on Sunday about his logging business. They always have "spring break up" when the swamps start to thaw, shutting them down for a month or so. He is gauging some of these same things.

Not sure how he handles being a business owner in that industry. I lucked out. Being the older brother and the worst logger in family history, I was told to find a way to pay for college. He enjoys being in the woods, but I suspect he doesn't like his business being at the mercy of so many uncontrollable market forces.

And the logger just started on our place this week. Ugghhh.

 

[pointingdogsrule]

Housing market spiral is a gold mine for those with the $. Wish I had the $... Haha!

Stock market spiral is a gold mine for those with the $

good luck to all
the dog

 

[LousyResident]

That’s always the theory with using someone else’s money, but the equation ignores risk. The fact that well over half over Americans live pay check to pay check says that there’s a better chance of the money getting spent than getting banked for a down turn. We like to live high on the hog when times are good and hope the government can fix it when it goes south

Lol I hear you. I think commercial property, and investment real estate, will fare better overall if it was underwritten properly. That sort of purchase is usually limited to 80% LTV or less so the borrower starts out with a better equity position compared to most primary home mortgages. People that can save 20+% to put down are more likely to save after the purchase, in my opinion.

 

[Red Fox]

It is hard to say with the interest rates so low. If someone was looking to move before this it could slow that down but will still need to move (that is if the job is still there). It all comes down on how long this will last, it is anyone's guess making it hard to make any move.

 

[1_pointer]

The last crisis cost me a lot of money as I relocated during that time and the house I sold was less than I owed. I'm in a "forever house" now so I'm hoping I can avoid any such stings from a housing market crash. Reduction in home value would just affect me on a refi, but I'm not unhappy with the terms we got two months ago.

 

[Carnage2011]

I’ve been watching a couple houses for about 3 months now and none of them had a price drop until last week. One dropped 7k, one dropped 10k, and the last one dropped 135k! The last one was way overpriced to start but that’s still an insane drop. It’ll be interesting to see where they go from here.

 

[homers]

As far as housing mortgages triggering a financial event, I've been watching the AirBnB's, many people bought multiple properties with the expectations of entirely renting the property. With no one traveling, they have to make the payments themselves, which I don't believe they'll be able to do. Secondly, over the next couple of months, the unemployment numbers and that impact on making the mortgage payments. We won't know about both of these for a few months.

 

[brymoore]

I don't see it happening. Demand exceeds supply right now.

Unemployed and furloughed people don’t buy houses. We’re going to see a good drop in demand for housing once Fed numbers come out.