For the Real Estate Drop in sales and price Naysayers HOLD ONTO YOUR HATS

[PaPaG]

definitely some good money to be made... but also requires a lot of risk.

This is where I differentiate between smart money, and not so smart money lol

I have a friend who's crushing it right now, runs multiple businesses, cash flowing like crazy.... but also has a lot of debt to service. He's living the high life right now and if all timing works out in his favor, will continue to do so. But we all know living that way carries a lot of risk.... all it takes is one bad quarter to end up in a massive hole. The other guys, that I consider in the smart money category are also doing great business wise, but have not debt to go with it...... not because of luck or inheritance, but because they all built and grew their businesses that way. So if everything falls apart, they are all still sitting pretty with enough money on the sidelines to capitalize on a down market.

Having debt in business can be a double edged sword, most businesses have to have debt, debt can bury you OR help you create a stable business or even wealth, some of the greatest minds in business say you have to have debt to create wealth but I was taught to have as little as debt as possible and if things change or go south for any number of reasons outside of my control it will barely effect us, that and also like you said would have us sitting pretty to capitalize on a down or volatile market whether it is the stock market or soon to be the lower real estate market

 

[Englewood]

I considered pulling all of the equity of this house and sit in the money for a while.
But i decided not to fuck with a good thing low debt tiny payment.

Now that I see this happening I should have went for it.

Oh well.. I will still buy if it comes down enough.

Let me get this straight...You are gonna pull out cash at 6%, then lose 9% per year (inflation) in an effort to capitalize on a situation that is TBD? Seems like financially solid advice.

 

[EmpirE231]

Having debt in business can be a double edged sword, most businesses have to have debt, debt can bury you OR help you create a stable business or even wealth, some of the greatest minds in business say you have to have debt to create wealth but I was taught to have as little as debt as possible and if things change or go south for any number of reasons outside of my control it will barely effect us, that and also like you said would have us sitting pretty to capitalize on a down or volatile market whether it is the stock market or soon to be the lower real estate market

exactly... my friend that is doing very well, but also very leveraged HAS to have debt... massive lines of credit to buy more and more units that they are moving for decent profits. The part where it can get ugly is when the units start moving slower than they have been, and he ends up with more inventory than he wants, and now has to service that debt. You can go from crushing it to losing it all within a few months when you have 500k-800K+ lines of credit and business slows down (BTW already starting to slow down) It is a necessary evil in some industries to grow to that level, but again comes with huge risks.

There's that old "tortoise and the hare" story.... and businesses / even personal financial success can run the same way. There are two camps when it comes to this, and it is best to find a spot in the middle IMO.

 

[HNL2LHC]

That is exactly my situation.
I dont know the owners but have little doubt the house is bought and paid for.
I am the dream tenant.
I have no pets, no kids in house, no spouse, no ball and chain, and few friends.
I’m there less than half the time. I pay the rent 2 weeks early just out of boredom.

I’m quite sure this latest rent structure was a real chore for the owners and management to balance.
House is 1950 ft. 3/ 2 1/2 with 2 car deep.
I can put 4 cars in the flat driveway, and I own the surveillance system.

There are a few members here that have been inside.
It’s a steal plain and simple.
I have no twitches about paying a monthly rent that is equivalent to what some members pay for a single truck payment.

Garage looks good this morning.

View attachment 1135824

It is for sure a great spot for now Tommy. As we discussed you stick to your plan and in a short amount of time you will have the home that you are looking for/. You got this man!!!!! :thumbups: by the way, we still need to get out in the water when we are both in town. THe next month is crazy for me. How does your. September look?

 

[hallett21]

With inflation coming out I wonder what rents will look like in a year.

 

[OldSchoolBoats]

I wonder who will walk away from their homes when they realize they are hundreds of thousands upside down in equity in the near future.

Why would they walk away when their mortgage is cheaper than a 2 bedroom apartment? People who purchase homes as a hedge against inflation and a rising rent market are smart money and they don't give AF about the equity in their home. It is their home, it is a roof over their head and a place to raise their kids.

 

[NicPaus]

With inflation coming out I wonder what rents will look like in a year.

Rental we just rehabbed for the 3rd time. It was 900$ a month 15 years ago. $1200 10 years ago. Tenants just moved out were paying $1850 they moved in 5 years ago. It's now $2600 a month 2/1 with single garage.

Rents are so high around here now it's crazy.

 

[OldSchoolBoats]

Paradoxical Bond Bounce Despite Hotter Inflation Data
By: Matt Graham | 7/13/2022 11:59 AM

We knew CPI was the biggest potential market mover this week and it hasn't disappointed in that regard. It has also provided bonus entertainment in the form of a paradoxical recovery after a sharp initial sell-off.
Truth be told, the initial sell-off was surprisingly tame given the 1.3 vs 1.1 CPI headline. 10yr yields didn't even make it up to last week's highs. Far more surprising was the move back to stronger territory that happened shortly after 10am.

There are no obvious individual headlines to blame/credit for the swift recovery. In other words, it's not as if some new news came out that rivaled CPI in importance or market focus. Rather, it was more of a cascade of buying followed by a cascade of short-covering (also technically buying). As for "why," that is a matter of speculation, but the word on the street is that traders are still thinking today's report represents peak inflation. Don't ask me why they think that. I don't know if they should or shouldn't (or even if they really are), but I've heard/seen it in more than a few places.

Today's report does little to change the already-priced-in 75bp rate hike seen from the Fed in 2 weeks, and it added roughly an additional quarter point of rate hikes to the end-of-year outlook. After that, however, the outlook hasn't much changed. Turn your attention to the green line in the chart below. It represents the expected Fed Funds rate after the June 2023 Fed meeting. Note that it was already lower than the December 2022 level (orange line) and that it dropped significantly faster during today's correction.

This is essentially the market's way of saying "yeah, we see that hotter inflation in today's numbers likely means another 25bps for the Fed, but we still think they'll be forced to cut rates in 2023." As for WHY, that's as simple as the growing chorus calling for recession and the ongoing decline in commodities prices that theoretically results in lower inflation at some point.

 

[pronstar]

I agree with you on all counts. Jobs are the last indicator but that is the one that really matters when we are talking about a significant decrease in RE values (this thread). We are now seeing upticks in inventory and downticks in prices, but if no one is moving out and no one is moving in, we are seeing what we are seeing now, still historically low inventory and far fewer transactions.

The economy will be rebounding as home prices hit their lows… that has happened in every recession I have looked at data on.

100%

Home ownership overall is down, but the percentage of people who either own their home outright, have significant equity and/or have 3% mortgages is sky-high.

These folks won’t be walking away from their houses IMHO…so we won’t have quite the bargain-basement liquidation prices like in the past. High-end and vacation homes will see the biggest corrections. The lower the price of the home, the less we’ll see corrections because the lower-end of the market has, and will continue to have, extremely tight supply.

Folks should also keep in mind that a 6% mortgage is still free money when the rate of inflation (reported or actual) is higher than the cost of the loan.

Funny how things have changed so dramatically that a 6% mortgage is considered outrageous.

We should also keep in mind that the fed is unable to raise rates significantly, because the only way we would be able to service our national debt at that point would be to print more money…obviously compounding inflationary pressure.

 

[LargeOrangeFont]

Let me get this straight...You are gonna pull out cash at 6%, then lose 9% per year (inflation) in an effort to capitalize on a situation that is TBD? Seems like financially solid advice.

That is what the smart money does. All cash, all the time, stuff it under yore mattress and wait.

 

[HTMike]

Why would they walk away when their mortgage is cheaper than a 2 bedroom apartment? People who purchase homes as a hedge against inflation and a rising rent market are smart money and they don't give AF about the equity in their home.

They wont give a fuck because there wont be any.. LMFAO.

They will be trapped in their forever debt on a house that's worth 50% of its loaned value.

 

[OldSchoolBoats]

They wont give a fuck because there wont be any.. LMFAO.

You are missing the point here sport. You said they will walk away because they migjt be upside down and that couldn't be farther from the truth.

 

[CLdrinker]

Let me get this straight...You are gonna pull out cash at 6%, then lose 9% per year (inflation) in an effort to capitalize on a situation that is TBD? Seems like financially solid advice.

No before the rates went up. 3/4 quarter last year’ish.

I went back and edited the comment for clarity.

 

[PaPaG]

I considered pulling all of the equity of this house and sit in the money for a while.
But i decided not to fuck with a good thing low debt tiny payment.

Now that I see this happening I should have went for it.

Oh well.. I will still buy if it comes down enough.

I think it was smart of you NOT to pull your equity out in hopes to be cash ready for another investment especially if you have a great rate and small payments on a home you are living in.

 

[hallett21]

They wont give a fuck because there wont be any.. LMFAO.

They will be trapped in their forever debt on a house that's worth 50% of its loaned value.

Trapped? Maybe.

If they pay fair market rent to their mortgage it’ll be paid off in 15 years.

Or they take their “savings” and pursue other investments.

Maybe homeowners are “stuck” for 5-10 years in their homes but didn’t they want to live there in the first place?

 

[CLdrinker]

I think it was smart of you NOT to pull your equity out in hopes to be cash ready for another investment especially if you have a great rate and small payments on a home you are living in.

I figured erroring on the side of caution was best.

Now hunting buddy on the other hand... He is building a spec house in Texas and has 2 months until it’s finished. He is sweating bullets.

 

[PaPaG]

I figured erroring on the side of caution was best.

Now hunting buddy on the other hand... He is building a spec house in Texas and has 2 months until it’s finished. He is sweating bullets.

You made the right choice that is for sure, sorry about your friend in TX I hope it works out for him.

 

[Englewood]

They wont give a fuck because there wont be any.. LMFAO.

They will be trapped in their forever debt on a house that's worth 50% of its loaned value.

What Joe, and I, and others are saying is that regardless of the "equity", it will be more expensive for someone to walk away and rent a comparable home.

I live in a modest home in CA. If my life fell apart financially, It would be 2x my mortgage payment to rent something comparable.

 

[HTMike]

You are missing the point here sport. You said they will walk away because they migjt be upside down and that couldn't be farther from the truth.

I mean, assloads did in 2008. They walked away from cars, boats, everything.

This is entirely different, I suppose.

 

[HTMike]

What Joe, and I, and others are saying is that regardless of the "equity", it will be more expensive for someone to walk away and rent a comparable home.

Sure, maybe renting in their current homes market but not in an entirely different states " slum " market.

 

[LargeOrangeFont]

What Joe, and I, and others are saying is that regardless of the "equity", it will be more expensive for someone to walk away and rent a comparable home.

When you define a home being worth less than you paid for it temporarily as "forever debt" I guess you don't realize that.

 

[hallett21]

Other than @BHC Vic (btw when’s he unbanned lol) talking about his buddy who shared his whole life on Facebook. I haven’t seen anyone post about first and second hand knowledge of over leveraged real estate.

@HTMike spoke about neighbors over extended with Ford Broncos.

 

[Havasu blue label]

Ok your saying they won’t walk because of equity there upside down property taxes stay the same . The will try to sell and get there 20 percent back and say we had fun

 

[LargeOrangeFont]

I mean, assloads did in 2008. They walked away from cars, boats, everything.

This is entirely different, I suppose.

Well yea, assloads in the last 12 years have bought homes on adjustable arms paying interest only with 0 down, not historically low fixed rates with at least some money down. It is all totally the same.

 

[hallett21]

Sure, maybe renting in their current homes market but not in an entirely different states " slum " market.

Why would they care about another states real estate and rental market?

 

[Havasu blue label]

2nd homes go first then cash out home start to struggle

 

[LargeOrangeFont]

Other than @BHC Vic (btw when’s he unbanned lol) talking about his buddy who shared his whole life on Facebook. I haven’t seen anyone post about first and second hand knowledge of over leveraged real estate.

@HTMike spoke about neighbors over extended with Ford Broncos.

He's unbanned, just not here out of spite. LOL

 

[hallett21]

Ok your saying they won’t walk because of equity there upside down property taxes stay the same . The will try to sell and get there 20 percent back and say we had fun

So they can go and pay more per month to rent? Pay moving costs and potentially storage costs for their stuff?

Why would you do that?

 

[RVR SWPR]

What the opinion of this situation this morning? Far has i’m concerned this mess created at the hands of just a segment of people that could admit they have fucked up using procedures that have become ancient. We need people in charge in that Oval office fixing this mess. Could be fixed in a matter of hours.

 

[LargeOrangeFont]

Why would they care about another states real estate and rental market?

Following the logic of some of the smart money is like trying to talk to a vagrant in San Francisco.

 

[OldSchoolBoats]

I mean, assloads did in 2008. They walked away from cars, boats, everything.

This is entirely different, I suppose.

It is absolutely 1000000% different. It is like beating a dead horse around here and I constantly have to repeat myself to you guys, the differences between now and 2008, along with why people in this market will not walk away.

I mean, my 12 year old understands the differences. How come none of the smart money around here can??

 

[Englewood]

What the opinion of this situation this morning? Far has i’m concerned this mess created at the hands of just a segment of people that could admit they have fucked up using procedures that have become ancient. We need people in charge in that Oval office fixing this mess. Could be fixed in a matter of hours.
View attachment 1135872

Raise rates, get it over with. That's my uneducated opinion.

 

[HTMike]

Why would they care about another states real estate and rental market?

Because in certain areas you can rent 3/2's for $12-1400 mo.

 

[LargeOrangeFont]

Raise rates, get it over with. That's my uneducated opinion.

Yea. Hit it hard for 6 months to a year. This half measure shit is stupid.

 

[OldSchoolBoats]

So they can go and pay more per month to rent? Pay moving costs and potentially storage costs for their stuff?

Why would you do that?

Come on man, the smart money says that if you are upside down in your house you walk away, uproot your family and go rent in another state with shitty weather, bugs and humidity. DUH!!!

 

[HTMike]

Well yea, assloads in the last 12 years have bought homes on adjustable arms paying interest only with 0 down, not historically low fixed rates with at least some money down. It is all totally the same.

2 out of 6 of my office employees have variable rate mortgages right now.. LMFAO

I told them to lock in months ago but they didn't want to go through the hassle.

Say what you will.

 

[LargeOrangeFont]

Because in certain areas you can rent 3/2's for $12-1400 mo.

Those areas don't have the wages or the jobs to support assloads. And if the assloads come, that rent figure will double.

 

[hallett21]

Because in certain areas you can rent 3/2's for $12-1400 mo.

No argument there. But if I live and work in Phoenix, I would purchase a home there.

Wisconsins (fill in any location) real estate and rental market has no effect on my life.

 

[HTMike]

Come on man, the smart money says that if you are upside down in your house you walk away, uproot your family and go rent in another state with shitty weather, bugs and humidity. DUH!!!

LOL. beats living on street in nice weather I guess.

 

[hallett21]

2 out of 6 of my office employees have variable rate mortgages right now.. LMFAO

I told them to lock in months ago but they didn't want to go through the hassle.

Say what you will.

That’s the first of variables that I’ve heard. What are their terms?

 

[OldSchoolBoats]

Because in certain areas you can rent 3/2's for $12-1400 mo.

So take your perfectly affordable mortgage and trade it in for a rental in some shit area??

2 out of 6 of my office employees have variable rate mortgages right now.. LMFAO

I told them to lock in months ago but they didn't want to go through the hassle.

Say what you will.

Do you even know the differences between an ARM today versus an ARM in 2008?? I will wait for the answer...........................forever.

 

[LargeOrangeFont]

2 out of 6 of my office employees have variable rate mortgages right now.. LMFAO

I told them to lock in months ago but they didn't want to go through the hassle.

Say what you will.

If 1/3 of your office is dumb, I'd talk to the person that hired them.

 

[HTMike]

If 1/3 of your office is dumb, I'd talk to the person that hired them.

I need an office full of indians.. not chiefs.

 

[HTMike]

So take your perfectly affordable mortgage and trade it in for a rental in some shit area??




Do you even know the differences between an ARM today versus an ARM in 2008?? I will wait for the answer...........................forever.

I wouldn't. I haven't had a mortgage payment in years.


I don't and I don't even care. LOL

 

[HTMike]

That’s the first of variables that I’ve heard. What are their terms?

How can I know the answer to a question that they don't even know the answer to ?

They both on separate occasions said their payment keeps going up and their interest rate keeps changing. I just give them the ol' eye raise and keep on moving. I'm not their Daddy..

 

[OldSchoolBoats]

I don't and I don't even care. LOL

So then stop speaking on subjects that you have no clue about champ.

 

[HTMike]

So then stop speaking on subjects that you have no clue about champ.

I ain't your champ, guy !

 

[HTMike]

So then stop speaking on subjects that you have no clue about champ.

One is for losers and the other one is for losers. There. Happy ? LOL

 

[EmpirE231]

Like mentioned before… all things being certain, nobody is willingly selling their home to go rent elsewhere, especially if their income is not impacted.

But some of you act like we live in the magical land of plenty, where peoples jobs and incomes will not impacted. We are approaching very uncertain times… and a LOT of people are a few OT hours away from not being able to handle all their debt. This usually Causes things to go on sale.

 

[LargeOrangeFont]

Like mentioned before… all things being certain, nobody is willingly selling their home to go rent elsewhere, especially if their income is not impacted.

But some of you act like we live in the magical land of plenty, where peoples jobs and incomes will not impacted. We are approaching very uncertain times… and a LOT of people are a few OT hours away from not being able to handle all their debt. This usually Causes things to go on sale.

No one is disagreeing with that. Sale yes, pack up and walkaway, no.

And I'll say it again. If it gets that bad you think the .gov won't step in with forbearance again going into an election year?