Another Housing Market Crash Looming?
- Thread starter BigHornRam
- Start date
None of my new neighbors are tech.
44hunter45
Well-known member
And yet here in North Latah County prices have literally tripled in the last few months. And we have shit internet, so work from home is a PITA.
Virtually every real estate sign has a Spokane or CDA agent's name on it. This stuff goes on Zillow to be seen by buyers well beyond the means of local buyers.
You drive around to see glass and log palaces going up on every view lot.
I saw this in the Silicon Valley tech booms in California. Small communities within a long commute of Santa Clara county soon became so expensive that locals could not afford to live there any more. They couldn't handle the property taxes when their assessments skyrocketed. If it were not for Prop 13, they would have been taxed out of their homes.
Idaho does not have anything like Prop 13 to protect the legacy owners.
I left California over 30 years ago. It is hard for me to see this happen in my adopted home.
ida homer
Well-known member
A majority of the people flocking to Boise are retirees that are done with WA, OR and CA. Or fairly close to retirement.
Sold my house last month. All of our showings were retirees that had literally sold all their shit back home, loaded up their RV’s and found short term rentals up here. They’re driving around looking at homes and putting many offers in, looking for quick closes. The people that purchased ours told me they had been putting offers in for months, and if they couldn’t get an offer accepted by summer, they were moving onto the Midwest to try their luck there. Crazy.
Man we are in desperate need of a correction. And I hope it comes soon. At least for the sake of the draw odds
. Wishful thinking.
Sold my house last month. All of our showings were retirees that had literally sold all their shit back home, loaded up their RV’s and found short term rentals up here. They’re driving around looking at homes and putting many offers in, looking for quick closes. The people that purchased ours told me they had been putting offers in for months, and if they couldn’t get an offer accepted by summer, they were moving onto the Midwest to try their luck there. Crazy.
Man we are in desperate need of a correction. And I hope it comes soon. At least for the sake of the draw odds
. Wishful thinking.
Nick87
Well-known member
The longer it takes the worse the correction will be imo.A majority of the people flocking to Boise are retirees that are done with WA, OR and CA. Or fairly close to retirement.
Sold my house last month. All of our showings were retirees that had literally sold all their shit back home, loaded up their RV’s and found short term rentals up here. They’re driving around looking at homes and putting many offers in, looking for quick closes. The people that purchased ours told me they had been putting offers in for months, and if they couldn’t get an offer accepted by summer, they were moving onto the Midwest to try their luck there. Crazy.
Man we are in desperate need of a correction. And I hope it comes soon. At least for the sake of the draw odds
Gerald Martin
Well-known member
- Joined
- Jul 3, 2009
- Messages
- 8,637
Having just moved into our home that we built ourselves it’s got me in a bit of a dilemma. The increase in equity and a booming housing market makes me want to sell before a correction.
However, I know if I sold, most of the gains would be eaten by having to buy or build again with costs way higher than they were even a year ago.
Not only that, but there is definitely some builders fatigue that makes me want to agree with my wife’s desire to live in and enjoy our home and forget trying to be so strategic.
I wasn’t worried about a correction so much last year at this time. However, I think it’s just a matter of when, not if.
I am pretty sure that within a couple of years I will see my home worth much less than it would be if I listed it now. My strategy is to ensure my mortgage stays low enough so that it’s never worth less than I have to pay on it.
In this area I think it’s going to be a solid plan long term.
However, I know if I sold, most of the gains would be eaten by having to buy or build again with costs way higher than they were even a year ago.
Not only that, but there is definitely some builders fatigue that makes me want to agree with my wife’s desire to live in and enjoy our home and forget trying to be so strategic.
I wasn’t worried about a correction so much last year at this time. However, I think it’s just a matter of when, not if.
I am pretty sure that within a couple of years I will see my home worth much less than it would be if I listed it now. My strategy is to ensure my mortgage stays low enough so that it’s never worth less than I have to pay on it.
In this area I think it’s going to be a solid plan long term.
Carnage2011
Well-known member
So it doesn’t exist? Or what is your point?
BigHornRam
Well-known member
The life of a builder! Just remember, it will be worth half as much today if you get divorced.
ignorethefringes
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- Joined
- Sep 19, 2016
- Messages
- 3,036
This is the house we are leaving in Florida. I bought this house for $157,000 in 2009. It appraised for $285,000 in late 2017. And this is where Zillow has it as of right now.
i can't help but feel like if *everyone* thinks something is going to happen (real estate crash) then that's not what's going to happen. we can't all get rich.
something will pop for sure, my naive suspicion is michael burry isn't shorting the housing market right now.
it's not currently sustainable, that's for darn sure, but that doesn't mean it's about to pop like teenagers zit.
i'm very open to reasons why i'm wrong
something will pop for sure, my naive suspicion is michael burry isn't shorting the housing market right now.
it's not currently sustainable, that's for darn sure, but that doesn't mean it's about to pop like teenagers zit.
i'm very open to reasons why i'm wrong
Nick87
Well-known member
I dont feel like it's going to be a housing correction as much as an everything correction. Last time it was houses, this time everything is off its axis, what the hell do I know tho
Also I think just about everyone knows that pumping out money like its toilet paper will do more harm than good. Its embarrassing that anyone in charge doesnt know or care
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SAJ-99
Well-known member
Agree. There has been a nationwide decrease in housing prices two times in the last 120yrs (1930s Great Depression and 2008 GFC). Of course, local markets vary. This is with a dozen or so major recessions. Housing prices tend to be sticky because of high friction cost (Agent fees, lawyer, inspection, etc). Your house may be up 10% in value but all these cost chip into that. It takes a lot more than just high valuation to pop the bubble. 2008 was leverage and the amount of people flipping homes, the Great Depression was mostly caused by bad monetary policy. The Fed can solve the problem of an imploding housing market by just printing more money and buying mortgages or houses - and they will. So I think that won't be the problem. The next problem will be caused by something different, but I'm not sure what that might be. Many think inflation, but you can't have bubbles popping (deflationary) and inflation at the same time, so that is hard to reconcile. Given that leverage is the cause of most major financial calamities, I keep looking there.
Nick87
Well-known member
Please explain further for us high school educated.
SAJ-99
Well-known member
Leverage = borrowing money to buy another asset. Examples of bad leverage - Borrow money to buy dotcom stocks in 2000, borrow money to buy a second house to fix and flip in 2007, etc. Low rates make borrowing money look attractive. It always seems like a great idea until the price of the asset you purchased falls. The fast it falls the worse it is. Selling tends to drive more selling when there is high leverage. Houses are tough because most people live in them. You don't come home every day to see the market price of your house listed on the front door. But you can check stocks, bonds, bitcoin, etc any second of the day. That creates more volatility in those prices. You house is mostly a question on whether or not you earn enough income to pay the mortgage. Banks have done a pretty good job of verifying income, unlike in 2005-2007 time frame. There might be some instances of people from CA posting privately held shares in tech startups as collateral for the mortgage for the home. Value of the company drops and suddenly the bank is calling for more collateral.
This was discussed earlier in this thread, but the ban on foreclosures ends at the end of this month. It might have some impact on housing supply. I tend to think it won't be enough to cause a drop in prices but it might slow the rise. The entirety of government (state, local, federal) has a vested interest in making sure housing prices don't fall a lot.
i've heard people speculate that treasury bills are over leveraged on wall street.
what are your thoughts there?
SAJ-99
Well-known member
Not sure what that means. Why borrow money to buy an asset that doesn't yield anything?
The problem we have seen is banks have a ton of cash but can't buy treasuries. This is probably mostly because the Fed is still purchasing $120B every month. To keep money moving the Fed has to do reverse repos blocks (sell the treasures to banks and buy them back the next day) and the amounts of those transactions have been spiking lately. Everyone is waiting for the initial push of the dominos to be the Fed saying they are lowering the purchases, which is essentially turning off or down the money printing press. But we keep waiting.
i guess the way i understood it is that banks are using bonds sorta like the mortgage backed securites of 08. don't make a ton of money on a treasury note, sorta like a mortgage, but you can give that bond to another bank, they give you cash owed back with interst at some point, and then you go off and invest that cash hoping to make more than the note itself and the interest you'll owe.
could be totally off on my understanding or not remembering correctly
Addicting
Well-known member
Had a discussion about investing with my Sis yesterday. She blindly puts money into her 401k and doesn’t look at it or manage it. It’s in whatever fund she chose when she started at the company 18 years ago. I really hope my come to Jesus speech got her to finally look at it and move it to a conservative fund. 9 years from retirement is not the time to be lacksadaisical in this bubble.
SAJ-99
Well-known member
That's a repo. Banks can do them with other banks when one bank needs cash. Right now banks are flush with cash (deposits) and want to overnight them into Treasuries so the Fed doing the repo because they own the treasuries. As for what the bank does with it, that is anyones guess. I think Dodd-Frank and Fed stress tests would certainly prohibit too much risk taking from Banks. The banks don't seem to be a problem at this point in terms of the risk they have on their books. Shadow banks could be a problem.
My point is your ramblings are wrong. I work as a commercial banker and see the business coming into Boise.
