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Housing Appreciation and Inflation: Future Outlook?

BigHornRam said:
Easy to follow analysis here.

www.curzioresearch.com

We’re facing another 2008-style housing crisis

The housing market is in serious trouble… It’s imperative to protect your portfolio from another “Lehman moment.” Here’s what you need to know.
www.curzioresearch.com www.curzioresearch.com
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Sorry, catching up. Easy analysis, but a little flawed. Below is another take (which I tend to agree with, hence the post). For the TLDR crowd I post the charts. It doesn't mean prices don't fall, it just means the structure of the market is different - so no "crash".
Screenshot 2022-12-18 at 4.43.08 PM.pngScreenshot 2022-12-18 at 4.42.36 PM.png


www.wsj.com

Why This Housing Downturn Isn’t Like the Last One

Before the 2008 financial crisis, lenders barely bothered to verify mortgage applicants’ income. Today, they demand reams of evidence that borrowers can afford their loans.
www.wsj.com www.wsj.com
 
SAJ-99 said:
Sorry, catching up. Easy analysis, but a little flawed. Below is another take (which I tend to agree with, hence the post). For the TLDR crowd I post the charts. It doesn't mean prices don't fall, it just means the structure of the market is different - so no "crash".
View attachment 256244View attachment 256245


www.wsj.com

Why This Housing Downturn Isn’t Like the Last One

Before the 2008 financial crisis, lenders barely bothered to verify mortgage applicants’ income. Today, they demand reams of evidence that borrowers can afford their loans.
www.wsj.com www.wsj.com
Click to expand...
Feb-May2023 is going to be very interesting.

My bet is we see housing prices decline overall slightly, shitty flips will take it in the shorts, but a lot of people will try and ride it out so inventory will be very tight.

I’m betting I won’t have to worry about bidding wars and waving inspections, but might end up continuing to rent because I just don’t find anything worth buying.
 
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wllm said:
Feb-May2023 is going to be very interesting.

My bet is we see housing prices decline overall slightly, shitty flips will take it in the shorts, but a lot of people will try and ride it out so inventory will be very tight.

I’m betting I won’t have to worry about bidding wars and waving inspections, but might end up continuing to rent because I just find anything worth buying.
Click to expand...
Good luck and keep us in formed on the search. A wise person once told me having options is always a good thing, ‘cause a lot of people don’t.
 
SAJ-99 said:
Sorry, catching up. Easy analysis, but a little flawed. Below is another take (which I tend to agree with, hence the post). For the TLDR crowd I post the charts. It doesn't mean prices don't fall, it just means the structure of the market is different - so no "crash".
View attachment 256244View attachment 256245


www.wsj.com

Why This Housing Downturn Isn’t Like the Last One

Before the 2008 financial crisis, lenders barely bothered to verify mortgage applicants’ income. Today, they demand reams of evidence that borrowers can afford their loans.
www.wsj.com www.wsj.com
Click to expand...
The housing market is still all about location. Areas with population and employment declines will always be more at risk. The equity line in your graph can come down as fast as it shot up. It's coming down right now. Overall how bad the housing market gets will depend on how employment shakes out and much debt including credit cards, homeowners take on moving forward. How long can unemployed home owners continue to make mortgage payments while their equity dries up? Challenging times ahead for sure. Housing Crash? I wouldn't rule it out.
 
BigHornRam said:
The housing market is still all about location. Areas with population and employment declines will always be more at risk. The equity line in your graph can come down as fast as it shot up. It's coming down right now. Overall how bad the housing market gets will depend on how employment shakes out and much debt including credit cards, homeowners take on moving forward. How long can unemployed home owners continue to make mortgage payments while their equity dries up? Challenging times ahead for sure. Housing Crash? I wouldn't rule it out.
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Agree. I think the point of the WSJ article is that the causes and results will be very different. The author of your article was trying to compare it to 2008. I still strongly disagree with the comparison, but it doesn't mean the result in housing won't be similar. In the end, I wonder what any "new normal" will look like. Are builders going to offer more incentives to buyers, like points to reduce rates? This is happening already in many places. Will they start reducing the average size of homes, which stands at about 2500ft? Builders are going to build because that is the business they are in. You may have a better guess than me on what kinds on incentives we see. Any way you look at them, the NAHB numbers today are terrible.

Screenshot 2022-12-19 at 7.42.56 AM.png
 
SAJ-99 said:
Agree. I think the point of the WSJ article is that the causes and results will be very different. The author of your article was trying to compare it to 2008. I still strongly disagree with the comparison, but it doesn't mean the result in housing won't be similar. In the end, I wonder what any "new normal" will look like. Are builders going to offer more incentives to buyers, like points to reduce rates? This is happening already in many places. Will they start reducing the average size of homes, which stands at about 2500ft? Builders are going to build because that is the business they are in. You may have a better guess than me on what kinds on incentives we see. Any way you look at them, the NAHB numbers today are terrible.

View attachment 256305
Click to expand...

Points is an interesting piece of the puzzle that I hadn’t really considered.

Was messing around with numbers on my lenders website, and I can get to 2019-2020 30 year rates buying points.

Doesn’t make any sense for me personally with a 4-5 year horizon, but if you have cash and are waiting for prices to come down to buy your “forever” home then the current rate hikes are irrelevant as with an extra $20k at signing you can get that monthly payment that better fits your budget.
 
wllm said:
Points is an interesting piece of the puzzle that I hadn’t really considered.

Was messing around with numbers on my lenders website, and I can get to 2019-2020 30 year rates buying points.

Doesn’t make any sense for me personally with a 4-5 year horizon, but if you have cash and are waiting for prices to come down to buy your “forever” home then the current rate hikes are irrelevant as with an extra $20k at signing you can get that monthly payment that better fits your budget.
Click to expand...
Home builders are also cancelling a lot of land purchases they had options on, which is a change from 2008 when they bought outright.

When I think of your situation, the thing that stands out is from a previous post. The median expected home tenure for first-time buyers was 18 years. That number is ridiculous. And it's the MEDIAN. They are 35 and buying a home that they expect to be in for 18yrs? I think it means when buyers buy, they are going to buy larger homes in areas that they want to stay in forever. They are skipping the "starter" home of 1500sq ft that they eventually outgrow in 5 yrs. They are going straight to 3000sq ft or more. To BHR's point, all real estate is local, and it will be even more important going forward.

The caveat to those numbers would be if second homes were skewing the number. I.e. people buy a home outside of Bozeman, or Boise, or some vacation place and say they are going to make it a family getaway. Those places tend to have longer tenures, as long as the cash flow remains stable.
 
The difference between 2008 and now is 2008 had a lot of sub prime mortgages out but the rapid house price appreciation was not out of control. Maybe better borrower quality today, but home price appreciation has been out of control up till recently. Both scenerios can lead to trouble. I see HELOC ads popping up everywhere lately. Those loans can get borrowers in trouble too.

I think overall home prices have a ways to fall before they level out and that is assuming the recession is mild.

Yes, agree the average size houses we are building today are too large.
 
SAJ-99 said:
When I think of your situation, the thing that stands out is from a previous post. The median expected home tenure for first-time buyers was 18 years. That number is ridiculous. And it's the MEDIAN. They are 35 and buying a home that they expect to be in for 18yrs? I think it means when buyers buy, they are going to buy larger homes in areas that they want to stay in forever. They are skipping the "starter" home of 1500sq ft that they eventually outgrow in 5 yrs. They are going straight to 3000sq ft or more. To BHR's point, all real estate is local, and it will be even more important going forward.
Click to expand...
BigHornRam said:
Yes, agree the average size houses we are building today are too large.
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Getting hit with this square in the face. I'm looking for ~1700sqft. looking for a higher cost per square foot as I don't want to fix stuff.

This just doesn't exist right now but plenty of 90s castles and tract home being built in the 2700-3500 range.
 
SAJ-99 said:
Any interest/thoughts?

apple.news

These Pint-Size Prefab Cabins Are Now Available in the USA Starting at $37K — Dwell

A family in Latvia built this idyllic country retreat with three tiny homes from My Cabin, a European builder with a new facility in Chicago.
apple.news apple.news
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I put up prefab housing in college. The 3 most important tools on house set day were sawzall, sledgehammer, and the ball of the crane if it really need to be persuaded.

Looks like a typical apple news article as well......😁
 
BigHornRam said:
I put up prefab housing in college. The 3 most important tools on house set day were sawzall, sledgehammer, and the ball of the crane if it really need to be persuaded.

Looks like a typical apple news article as well......😁
Click to expand...
I thought the size would be an obstacle for most. I knew you wouldn’t like it was an “Apple” article and I figured you wouldn’t like the idea of prefab. Most builders don’t because they don’t like not being able to hide their mistakes. 😝
 
Stoltze is getting into the prefab CLT market I see. Tough timing with the pandemic, fluctuating lumber prices, and rising interest rates. Hope they come out okay investing in this building technology at this time. Attractive but very expensive build method.

www.stoltzetimber.com

Stoltze Timber Systems | Cross Laminated Timber Montana

www.stoltzetimber.com www.stoltzetimber.com

What housing is going for in Whitefish, they will probably do well.
 
SAJ-99 said:
I thought the size would be an obstacle for most. I knew you wouldn’t like it was an “Apple” article and I figured you wouldn’t like the idea of prefab. Most builders don’t because they don’t like not being able to hide their mistakes. 😝
Click to expand...
Believe me, you can hide all kinds of ugly in a prefab!
 
The're still around! Good education on how not to do things, and didn't lose any body parts while getting educated. Lot of close calls for sure, like the time a fully loaded semi came rolling down the hill backwards, with no one in it!

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