Im bowing out

[MarvB]

... is the honeymoon over?

Gone like yesterday’s avocado toast!

 

[BigHornRam]

This is what makes it hard to figure out what is really happening.

Lots of charts for @wllm1313 to digest in this analysis.

Real-time market monitoring finds signs of brewing U.S. housing bubble

There is growing cause for concern that U.S. house prices are again becoming unhinged from fundamentals.

www.dallasfed.org

 

[Nick87]

Rates up over 5 here for a 30 year now. This is escalating quite quickly.

 

[SAJ-99]

Lots of charts for @wllm1313 to digest in this analysis.

Real-time market monitoring finds signs of brewing U.S. housing bubble

There is growing cause for concern that U.S. house prices are again becoming unhinged from fundamentals.

www.dallasfed.org

All the charts start in 1982, thereby capturing the one housing bubble we can all remember. This is a statistical hack job where the authors went looking for something until they found it. It is basically a RSI for house prices.

 

[Deleted member 28227]

Rates up over 5 here for a 30 year now. This is escalating quite quickly.

Our neighbors recently sold and the new buyers, just paid in cash.... obviously that's not going to happen everywhere. But I do wonder how many cash buyers are out there and how that will effect prices.

Anecdotally, I know a lot of people with cash who have been "waiting for a crash" to buy... which makes me think, that in some markets it might be a while if ever before we see prices drop.

 

[LousyResident]

Our neighbors recently sold and the new buyers, just paid in cash.... obviously that's not going to happen everywhere. But I do wonder how many cash buyers are out there and how that will effect prices.

Anecdotally, I know a lot of people with cash who have been "waiting for a crash" to buy... which makes me think, that in some markets it might be a while if ever before we see prices drop.

That's what I've been telling my group of friends; there are still too many cash buyers in the market to see a significant correction. When people stop losing out to cash buyers, or even losing to people with enough cash to waive the appraisal and pay the difference, then we might start to see prices slow down.

 

[Nick87]

Our neighbors recently sold and the new buyers, just paid in cash.... obviously that's not going to happen everywhere. But I do wonder how many cash buyers are out there and how that will effect prices.

Anecdotally, I know a lot of people with cash who have been "waiting for a crash" to buy... which makes me think, that in some markets it might be a while if ever before we see prices drop.

I hear ya but with rates going up at some point prices are going to have to reflect monthly affordability. I don't think a crash but some sort of correction. Unless I'm the only guy out there who isn't a millionaire I guess. I understand cash buyers back in 08. Not recently though just doesn't make sense why so many when interest was so low?

 

[Deleted member 28227]

Not recently though just doesn't make sense why so many when interest was so low?

Because you can get the house. At the end of the day any time you involve a lender it impedes a sale so cash is preferable even if it's not for the full price.

Property I helped my aunt sell, we told folks it was going up for sale on Monday the Friday before, Saturday we had 4 offers via word of mouth alone. Sunday we were under contract. House never made it to MLS. Buyer financed 1/3 of the closing price.

That's silly ^ and in that CF cash gives you the upper hand.

If interest rates increase the cost that person who can pay over asking, can now just put 40% down on list price instead of over paying and have a very affordable monthly payment even with 8% rates. So potentially the property value explosion flattens, but may not drop.


I have no idea, but I do think @SAJ-99 is right that the market conditions of 2022 are totally different than 2008 and we can't assume the exact same things will happen.

 

[BlakeA]

At the end of the day any time you involve a lender it impedes a sale so cash is preferable even if it's not for the full price.

This.

 

[Nick87]

Because you can get the house. At the end of the day any time you involve a lender it impedes a sale so cash is preferable even if it's not for the full price.

Property I helped my aunt sell, we told folks it was going up for sale on Monday the Friday before, Saturday we had 4 offers via word of mouth alone. Sunday we were under contract. House never made it to MLS. Buyer financed 1/3 of the closing price.

That's silly ^ and in that CF cash gives you the upper hand.

If interest rates increase the cost that person who can pay over asking, can now just put 40% down on list price instead of over paying and have a very affordable monthly payment even with 8% rates. So potentially the property value explosion flattens, but may not drop.


I have no idea, but I do think @SAJ-99 is right that the market conditions of 2022 are totally different than 2008 and we can't assume the exact same things will happen.

Yah I get that, but what happened to "the cure for high prices is high prices?"

 

[BigHornRam]

Yah I get that, but what happened to "the cure for high prices is high prices?"

Demand destruction only applies for commodities like oil, lumber, and corn.

 

[LousyResident]

Yah I get that, but what happened to "the cure for high prices is high prices?"

I hear ya but with rates going up at some point prices are going to have to reflect monthly affordability. I don't think a crash but some sort of correction. Unless I'm the only guy out there who isn't a millionaire I guess. I understand cash buyers back in 08. Not recently though just doesn't make sense why so many when interest was so low?

When you grant half of America the opportunity to not make a mortgage or rent payment for 6+ months, while paying them the same money and reducing expenses while working from home, and also send them $5-10K+ in direct money, you end up with a cash rich populace. This is especially true when you look at places like CA and NY where the monthly rent/mortgage payments were significant already. It's a lot of those people moving out across America taking their CA/NY salaries with them via remote work.

There were plenty of articles talking about how the stimulus checks weren't stimulating the economy because a fair number of people were just stuffing them in the bank. Looks like they were right.

And like @wllm1313 said, cash buying or putting a big down payment, just makes everything easier. Then you wait 6-12 months and refinance whatever portion you'd like to get your monthly payment where you want and also have money back in your pocket (to do it again if you want).

Plus, if your lender is super accommodating, they'll get a new appraisal showing you have $100K in equity already lol. I bought my TN house in April last year for $370K. Per Zillow it's now worth $465K. I get HELOC offers from my current lender via email at least monthly, probably more, and other HELOC offers in the mail constantly.

 

[rogerthat]

Trust me guys, this time is different.

 

[Nick87]

When you grant half of America the opportunity to not make a mortgage or rent payment for 6+ months, while paying them the same money and reducing expenses while working from home, and also send them $5-10K+ in direct money, you end up with a cash rich populace. This is especially true when you look at places like CA and NY where the monthly rent/mortgage payments were significant already. It's a lot of those people moving out across America taking their CA/NY salaries with them via remote work.

There were plenty of articles talking about how the stimulus checks weren't stimulating the economy because a fair number of people were just stuffing them in the bank. Looks like they were right.

And like @wllm1313 said, cash buying or putting a big down payment, just makes everything easier. Then you wait 6-12 months and refinance whatever portion you'd like to get your monthly payment where you want and also have money back in your pocket (to do it again if you want).

Plus, if your lender is super accommodating, they'll get a new appraisal showing you have $100K in equity already lol. I bought my TN house in April last year for $370K. Per Zillow it's now worth $465K. I get HELOC offers from my current lender via email at least monthly, probably more, and other HELOC offers in the mail constantly.

So 10 to 12k grand in stimulus and now you can pay 450k cash for a house?
I agree the stimulus deal killed the value of the dollar Ray Charles saw that coming. Nothing in life is free, gotta pay the piper sooner or later in one form or another.

 

[LousyResident]

So 10 to 12k grand in stimulus and now you can pay 450k cash for a house?
I understand. I agree the stimulus deal killed the value of the dollar Ray Charles saw that coming. Nothing in life is free, gotta pay the piper sooner or later in one form or another.

No, no, you missed the first part which was the big one. 6 - 12 months of not paying your rent or mortgage can easily equal $40K+ in some places. And imagine the investors that had several properties in this scenario.

Then the stimulus on top, then the reduced expenses, etc. If you were already saving for a move you've just padded your savings in a hurry. If not, well, then you sell your current house with the highest price/equity you've ever seen, and add that to your savings from the last year. Next thing you know you're moving across the country, retaining your big city wages, with $450K in cash to buy in a market where house were going for $200K - $300K last year. You buy what you want, pay what it costs, and screw the next guy by creating a new sales comp for the appraisers.

 

[Nick87]

, you missed the first part which was the big one. 6 - 12 months of not paying your rent or mortgage can easily equal $40K+ in some places. And imagine the investors that had several properties in this scenario

Do you not have to repay those rent or mortgage payments?

 

[BigHornRam]

Exuberance.

Investors bought a record share of homes at the end of 2021

The buyers spent an average of $433K per house and paid cash in three of every four purchases, Redfin reported.

www.nationalmortgagenews.com

 

[LousyResident]

Do you not have to repay those rent or mortgage payments?

I would speculate that the vast majority got pushed to the end of the loan as a balloon payments. No interest paid on that balance, just a free loan for now. So it ultimately comes of sales proceeds/equity. But it probably doesn't matter with the market values increasing. Plus others that simply bought another property without selling won't even give it a second thought until they sell or refinance.

 

[TOGIE]

Trust me guys, this time is different.

ah, but it is different.

or, at least, sure as hell isn't the same, that's the only think i do know

 

[LousyResident]

Trust me guys, this time is different.

I mean, the final result might be the same, but the circumstances right now are very different than 2008. There are different pillars that might/will come crashing down lol.

Fewer short term ARM's, entirely different secondary market, different underwriting approaches, different buyer strength, etc.