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

[LargeOrangeFont]

I think this is a good question. You make a good point about being different than 2008, but are you missing what is the same?



An artificial run-up of pricing fueled by an injection of liquidity? I tend to agree with you.



An artificial run-up of pricing fueled by an injection of liquidity?

I agree that the risky variable mortgages of 2008 played an important role in that housing crash. I'm not confident we will see the same type of crash, but I am looking for patterns to help me make educated decisions.

I should be clear I am looking at markets in vacation areas, not the suburbs. I think we have some of the same types of behavior patterns when you factor in the STR market. Cheap money with positive cash flow. If the STR market propped up some of these gains and the bottom falls out, I don't care if they have a cheap mortgage if they don't have the cash flow to cover it. The costs associated with STRs have been going up, and for the moment, the demand seems to be decreasing, with local regulations against them creeping up. It was fun while it lasted.

As recently as last week, I heard a friend talk about doing a refinance on a home to pull more cash out. I think more people than we care to admit have an obsession with using home equity to create a lifestyle. If the value starts to drop, people tend to think small and not put as much value on the low-interest rate they have. I think way too much credit is given to people understanding how valuable those rates are, and in six years, most of them will have been traded for something less desirable.

I've asked before, What is a crash anyway? I will be pleased to see 2019 prices and would not call that a crash. At least in the market, I am shopping.

A return to normal market dynamics will be lauded as the doomsday the RDP RE prophets have spoken about for 7 years.

For rational people that will be a return to normalcy.

We won’t see a 2011 type scenario for several years if that even happens. It simply takes too long for people to be kicked out of their houses. And as we have said, this time people have little reason to walk away, which will throw a wet blanket over the entire prophecy.

 

[Buddy]

For what its worth, over the weekend I had the #1 and #2 guy from JP Morgan on one of our yachts. They both said before the end of the yr the whole world will be in a large recession. Both citing massive defaults on every economy . We shall see!

 

[c_land]

For what its worth, over the weekend I had the #1 and #2 guy from JP Morgan on one of our yachts. They both said before the end of the yr the whole world will be in a large recession. Both citing massive defaults on every economy . We shall see!

Damn, you know Jamie Dimon? Baller

 

[angiebaby]

Lol at the 5% declines. These people are grasping at straws to be the first to have something to say.

5% price reductions are a starting offer in a buyers/over supply market.

LOL, you guys always have some kind of qualifier as to why information is bogus. "Wake me when people start losing their jobs." "Wake me when the lost jobs are high paying." "Wake me when the jobs are outside of the mortgage and tech industries." "That's only regional information." "No one wants to live there anyway." "It's seasonal, it's a traditionally slow time of year." "Sales in Havasu will go up 25% next year" (wish I could remember who said that one.) "But what about closings?" "People pull out of escrow all the time, usually because they don't qualify, not a big deal." "The prices won't rise as fast, but they will still rise." "A 10% price drop is really a 10% rise if they've been going up 20%, it's a great time to buy! (insert resident RE agent here). "Those places were overpriced to begin with." Keep on making excuses. Time will tell which camp is correct.

The infographic below is from my agent in Reno. What is that? a 7% drop or so in average home prices? Granted, still higher year over year, but the prices are dropping. This is not about individual offers at 5% less than asking price. This is average cost of a home in the area.

"Reno/Sparks area REALTORS sold 426 single-family homes in July, which was a 7.4% decrease from June and a 33.9% decrease from the exceptional number of sales in July 2021. These sales numbers are still very high compared to the amount of homes on the market and is further evidence of continued demand in our region."

"There were 1,292 homes active on the market and available for purchase (not in contract or escrow) at the end of July - a 12.3% increase from last month and a 211% increase in active/standing inventory from this time last year. More listings are coming to market as the summer selling season comes into full swing, and homes are taking longer to get into contract."

Right about now, I'm very happy we sold this time last year.

 

[angiebaby]

For what its worth, over the weekend I had the #1 and #2 guy from JP Morgan on one of our yachts. They both said before the end of the yr the whole world will be in a large recession. Both citing massive defaults on every economy . We shall see!

Jamie Dimon was on one of your yachts? How many yachts do you have? I'm impressed! What a score to get to pick his brain about things!

 

[2Driver]

In March only 3700 homes were on the market.

LOL now…..all is fine….

 

[mbrown2]

For what its worth, over the weekend I had the #1 and #2 guy from JP Morgan on one of our yachts. They both said before the end of the yr the whole world will be in a large recession. Both citing massive defaults on every economy . We shall see!

Jamie actually said that on Friday...report was published Saturday.... Jamie back in June a Hurricane was coming ....now on Tuesday he said it was storm clouds.... Are things getting worse yes....does inflation slowing help, yes, do gas prices falling help yes, lower rates help yes... moderation is better than steep inclines and declines....and last Jamie has been throwing darts at speculation no better than we have...

 

[PaPaG]

A return to normal market dynamics will be lauded as the doomsday the RDP RE prophets have spoken about for 7 years.

For rational people that will be a return to normalcy.

We won’t see a 2011 type scenario for several years if that even happens. It simply takes too long for people to be kicked out of their houses. And as we have said, this time people have little reason to walk away, which will throw a wet blanket over the entire prophecy.

lol, back peddling again. Return to normal, or are you saying correction lol

 

[LargeOrangeFont]

lol, back peddling again. Return to normal, or are you saying correction lol

I’m not peddling a RE doomsday religion, so how could I backpedal?

The dictionary is full of FACTS by the way.

 

[Havasu blue label]

mr orange

 

[c_land]

More from phoenix.

https://twitter.com/i/web/status/1559693363099496448

 

[94essex]

Bought a rental in Alabama few months ago Am I screwed? I should probably sell it for a loss right now just so it's not worse in 12 18 or 24 or 60 months.

 

[Havasu blue label]

Smart move I own one in North Dakota if you fill that tight you should sell do you live out there

 

[Dirtbag]

the re market was artificially inflated due to crazy low interest rate. It was buying season for 2+ years. buying season because of rates allowed many to buy homes way more expensive than they could have and the supply deteriorating led to super high prices. Nowhere is this more evident than in Phoenix metro. Add to the fact that investors were buying a shit ton for rental properties led to even less inventory. I would love to see how many homes are lying vacant. Phoenix metro over the next two years will see a 30% decline in value as investors realize there is noone to rent to. Inventory is already on an upward trend. ++ inventory coupled with higher interst rates means only one thing folks. Facts is facts.....prices are coming down.....hoping to buy in in 18-24 months

 

[CarolynandBob]

I used to own a SoCa Production Plumbing company pre-2008. I have some experience with this topic, but my experience could be different than the next person. I think this is a good question. I will share my thoughts, but disclaimer, this was my experience.

There is a difference between public companies and private, but not much. They are ALL fawkers IMHO. Risk mitigation is the rule of the day. Most tracts are set up as individual LLC's to help mitigate that risk. They use a lot of leverage to build these tracts, but the most underhanded is the use of Sub Contractors. The Subs basically finance the material and labor for each trade. The builder can manipulate the payment terms to make the Sub carry that liability for quite a while.

Example:
Plumbing C36 gets three draws and likely retention of some type for a period after the final inspection. I normally tried to front load my first draw.
Draw #1 Following underground. Let's call the date Sept 1st.
I paid to dig the trenches, buy the material, design the whole job, prefab the waste piping, deliver and storage, labor, insurance, and overhead. I got the contract, normally the day the job starts, and I am off to the races after the foundations are dug. Let's say this is phase 1 12 houses, of 125 house and 10 phases.
Let's say I get those underground six days after I start. Let's call it three weeks since I got a contract. Maybe a week for inspections and water service/sewer tie-ins. We work weekends with overtime because we are busy; we'll call today's date Sept 20th. (That date is important)

I can now submit my bill for the first draw with any lean releases.

The corporate billing cycle is such that they process payments submitted before the 15th on the following 15th with payment by the 30th. So I could not bill until the 20th of Sept, providing I get my lean releases taken care of. This means I won't see payment until Oct 30th at best. I started this project on Sept 1st. Let's call it 60 days I just financed the builder, but wait, it gets better. If anything is not done perfectly with your billing, you are asked to correct it sometime between the 15th and the 30th if you are lucky. Likely you won't know that you have a problem until your payment does not show up, pushing you back another 45 days.

They used to do that shit to me non-stop. Now spread that circus across multiple draws, phases, and tracts. I was chasing money as a full-time job. Now expand that across multiple trades. Don't get me started on back charges and retentions.

KB homes, for example, is a $4B a year company. They are just one of many. These people are printing money from the backs of sub-contractors, who most often are tradesmen who worked their way out of a ditch and into a half-decent pickup truck.

I can assure you that an economic slowdown does not hurt them. They just take a break from the action and work out a plan for the next cycle. Even the smaller builders don't get hurt. A guy I used to work for out of Canyon Lake has a badass waterfront pad at Islander, and he does not even remember my face or name as a guy he fawked the hell out of 25 years ago. I was just a pawn on his chess board.

They are masters of finance and high-stakes gamblers. If those tracts don't sell, it is not likely they will lose much, if anything, but someone will.

I was in Structural Steel. Did a bunch of apartment buildings. It was the same scenario that you posted. They way we kind of got around that was red lining the contract. We would always put " as long as the sub-contractor is paid on time". We would put that on any paragraph that had to do with schedule or performance. This saved us countless times. If you are late on payment, then good luck getting us to show up per your schedule. As you said the subs are carrying the financial cost for a month or two depending on timing. We also put in every contract that we would get a material draw as soon as we received material. Material suppliers would let us pay them when we were paid with a dual check.

We were also pretty picky about which GC's we would work with. Some just weren't worth the hassle. Some my say the larger companies won't let you redline the contract, which would be wrong. We worked for garden communities as an example. FYI they paid like clock work. We also "fired" GC's by refusing to bid their work, because they were a pain in the ass.

 

[c_land]

the re market was artificially inflated due to crazy low interest rate. It was buying season for 2+ years. buying season because of rates allowed many to buy homes way more expensive than they could have and the supply deteriorating led to super high prices. Nowhere is this more evident than in Phoenix metro. Add to the fact that investors were buying a shit ton for rental properties led to even less inventory. I would love to see how many homes are lying vacant. Phoenix metro over the next two years will see a 30% decline in value as investors realize there is noone to rent to. Inventory is already on an upward trend. ++ inventory coupled with higher interst rates means only one thing folks. Facts is facts.....prices are coming down.....hoping to buy in in 18-24 months

Opendoor and Zillow were buying like crazy through 2021 in PHX. Last stat I saw something like 1,700 listings in the metro are from opendoor and most are listed at a loss.

I don’t know how their model holds up In a declining market.

Edit, found the chart:

 

[PaPaG]

I’m not peddling a RE doomsday religion, so how could I backpedal?

The dictionary is full of FACTS by the way.

Still Back Peddling Mr. Know it All

 

[LargeOrangeFont]

Still Back Peddling Mr. Know it All

I thought you would have slept this off.

If I’m Mr Know it all that seems to make you Mr. Know Nothing, because all your prognostications never came to pass.

I’ve never said housing wouldn’t drop, ever. Find where I did.

Good luck.

 

[LargeOrangeFont]

Opendoor and Zillow were buying like crazy through 2021 in PHX. Last stat I saw something like 1,700 listings in the metro are from opendoor and most are listed at a loss.

I don’t know how their model holds up In a declining market.

Edit, found the chart:
View attachment 1146783

They lost so much money they stopped. They could not even make money in a rising market because they thought the market would continue spiking. It started flattening out this time last year and they couldn’t flip houses fast enough.

Watched them lose money on 7-10 houses in my areas in So Cal. One was across the street from me.

 

[monkeyswrench]

And people say I'm a grumpy, stubborn bastard...
You two don't just agree to disagree, I think you enjoy it a bit too much.

 

[PaPaG]

I thought you would have slept this off.

If I’m Mr Know it all that seems to make you Mr. Know Nothing, because all your prognostications never came to pass.

I’ve never said housing wouldn’t drop, ever. Find where I did.

Good luck.

There you go again back peddling and making up your Imaginary FACTS again lol. The funny thing of all this is that every single thing I have posted related to the market trend and where we are heading is reported by legit agencies not here say or wishful thinking and we are heading for exactly what the data showed we are heading into. I would suggest you keep to your posts factual and not out of your supposed wheelhouse.

 

[LargeOrangeFont]

And people say I'm a grumpy, stubborn bastard...
You two don't just agree to disagree, I think you enjoy it a bit too much.

This entire thread has been if you don’t agree with him that the market is dropping as hard and as fast as he thinks it is you are ignoring facts. In the 90+ days he’s been screaming about this… it has not dropped hard or fast.

Prices are still historically high, inventories are still historically low. Yes the market is turning. It’s a market, it fluctuates and always has. But the constant black cloud, chicken little, sky falling, I told you so smugness, from the economic Nostradamuses is comically old, and has been proven wrong… for 7 years straight now.

 

[PaPaG]

Update: Fitch Credit Reporting Agency

Severe US housing downturn ‘possible,’ prices could fall 15%: Fitch​

The probability of a “severe downturn” in the US housing market is on the rise, according to new guidance from credit reporting agency Fitch.
Fitch’s likely projections suggest that US home prices could sink by 10% to 15% in the case of a major housing slump, alongside a roughly 30% decline or more in housing activity over the next few years.
“The likelihood of a severe downturn in US housing has increased; however, our rating case scenario provides for a more moderate pullback that includes a mid-single-digit decline in housing activity in 2023, and further pressure in 2024,” Fitch analysts said in a release on Tuesday.
The agency noted a severe downtown was “possible, but not yet probable,” with a minor slowdown still the most likely outcome for the housing market. Fitch said it recently affirmed a “stable outlook” for US homebuilders.
Fitch pointed to several factors as “key indicators” for the health of the housing market, including US GDP growth, unemployment, consumer confidence and home affordability.

 

[NicPaus]

The market has dropped. But nothing like 08-10. It dropped to 2019-2020. The 6 houses I rehabbed that were sold in 2020 and bought in 2010-2011 each one sold for almost double.

 

[LargeOrangeFont]

There you go again back peddling and making up your Imaginary FACTS again lol. The funny thing of all this is that every single thing I have posted related to the market trend and where we are heading is reported by legit agencies not here say or wishful thinking and we are heading for exactly what the data showed we are heading into. I would suggest you keep to your posts factual and not out of your supposed wheelhouse.

Considering you “Never heard of NGE,”can’t seem to remember the weekly threads just like this one for the last 7 years, and dismiss any facts that go outside your narriative of rooting for a housing market collapse. I don’t think you have much credibility left in this space.

I’ll ask again. Find a post where I said the market won’t go down.

My stance has been consistent for at least 5 years. The RE market will drop when jobs go away. That is when I will start caring. We are still not there. We are not even back to traditional pre covid market fundamentals.

 

[MSum661]

The melt-up has sent everything and many unsuspecting good people high into the bullshit phase and shows how myopic markets like this can make people.

Few understand this.

 

[LargeOrangeFont]

The market has dropped. But nothing like 08-10. It dropped to 2019-2020. The 6 houses I rehabbed that were sold in 2020 and bought in 2010-2011 each one sold for almost double.

Exactly.

 

[PaPaG]

This entire thread has been if you don’t agree with him that the market is dropping as hard and as fast as he thinks it is you are ignoring facts. In the 90+ days he’s been screaming about this… it has not dropped hard or fast.

Prices are still historically high, inventories are still historically low. Yes the market is turning. It’s a market, it fluctuates and always has. But the constant black cloud, chicken little, sky falling, I told you so smugness, from the economic Nostradamuses is comically old, and has been proven wrong… for 7 years straight now.

No one has to agree with me, I am just pointing out facts and data as reported by some of the largest agencies in the world along with my opinions from my research. You really must have a hard time researching and understanding. Point in fact, 7 years straight? lol you really have some issues Mr. Know It All. Why don't you stick to what you actually know...opps I forgot it is Everything. lol lol

 

[LargeOrangeFont]

The melt-up has sent everything and many unsuspecting good people high into the bullshit phase and shows how myopic markets like this can make people.

Few understand this.

Yes. Fear porn examples from just the last couple months around $10/gallon fuel, massive food shortages in “10-12 weeks” DEF shortages that would bring the country to its knees never came to pass.

 

[PaPaG]

Considering you “Never heard of NGE,”can’t seem to remember the weekly threads just like this one for the last 7 years, and dismiss any facts that go outside your narriative of rooting for a housing market collapse. I don’t think you have much credibility left in this space.

I’ll ask again. Find a post where I said the market won’t go down.

My stance has been consistent for at least 5 years. The RE market will drop when jobs go away. That is when I will start caring. We are still not there. We are not even back to traditional pre covid market fundamentals.

Something is seriously wrong with you MKA. Please show me where I said I "Never heard of NGE", I have also not posted threads like this weekly for the last 7 years...just strange you are so obsessed.
PS: My credibility is proven by reporting what is being reported not by magically thinking I know it all.

 

[Buddy]

Jamie actually said that on Friday...report was published Saturday.... Jamie back in June a Hurricane was coming ....now on Tuesday he said it was storm clouds.... Are things getting worse yes....does inflation slowing help, yes, do gas prices falling help yes, lower rates help yes... moderation is better than steep inclines and declines....and last Jamie has been throwing darts at speculation no better than we have...

Like I said. For what its worth

 

[LargeOrangeFont]

No one has to agree with me, I am just pointing out facts and data as reported by some of the largest agencies in the world along with my opinions from my research. You really must have a hard time researching and understanding. Point in fact, 7 years straight? lol you really have some issues Mr. Know It All. Why don't you stick to what you actually know...opps I forgot it is Everything. lol lol

That must be why everyone that does not agree with you or brings up opposing facts from the some of the largest agencies in the world and then offers their opinions are naysaying hat holders and you call them names like a small child . Carry on!

 

[Buddy]

Jamie Dimon was on one of your yachts? How many yachts do you have? I'm impressed! What a score to get to pick his brain about things!

I work for Ferretti Group.

 

[PaPaG]

That must be why everyone that does not agree with you or brings up opposing facts from the some of the largest agencies in the world and then offers their opinions are naysaying hat holders and you call them names like a small child . Carry on!

Something is really wrong with you. Are you 12 or 8?

 

[MSum661]

Yes. Fear porn examples from just the last couple months around $10/gallon fuel, massive food shortages in “10-12 weeks” DEF shortages that would bring the country to its knees never came to pass.

Yup, and a another good example are chips.
Micron's finance chief Mark Murphy said last week that industrial and automotive customers were the latest to cut their chip purchases.
They sell us on the "fact" there is a major chip shortage, then with the flip of the switch a new massive chip glut grows.

We're all thrown into this idea, at no fault of our own, that bad news = good news.

It forces us all to stay nimble and thread carefully.

 

[LargeOrangeFont]

Something is seriously wrong with you MKA. Please show me where I said I "Never heard of NGE", I have also not posted threads like this weekly for the last 7 years...just strange you are so obsessed.
PS: My credibility is proven by reporting what is being reported not by magically thinking I know it all.

You have only proved you can regurgitate data you find that fits your “rooting for failure” belief system.

You have mistaken that for credibility.

Awaiting your reply.

You should do yourself a favor and just hit the ignore button near my name pops.

 

[PaPaG]

You have only proved you can regurgitate data you find that fits your “rooting for failure” belief system.

You have mistaken that for credibility.

Awaiting your reply.

You should do yourself a favor and just hit the ignore button near my name pops.

LOL, should be your new name Mr. Know It All. Why would I ignore posts on my thread? maybe you should ignore my thread pops, lol...I'm guessing 8...lol

 

[LargeOrangeFont]

Yup, and a another good example are chips.
Micron's finance chief Mark Murphy said last week that industrial and automotive customers were the latest to cut their chip purchases.
They sell us on the "fact" there is a major chip shortage, then with the flip of the switch a new massive chip glut grows.

We're all thrown into this idea, at no fault of our own, that bad news = good news.

It forces us all to stay nimble and thread carefully.

Indeed. That is why we shoud weed through “facts” carefully these days.

 

[LargeOrangeFont]

LOL, should be your new name Mr. Know It All. Why would I ignore posts on my thread? maybe you should ignore my thread pops, lol...I'm guessing 8...lol

You are banging on the keyboard faster than your brain can process written words now. You already got carried away again today, and it is still early.

I am trying to post facts, data and info on the current issues regarding real estate. I just went tit for tat with Mr. Know it All and got carried away and I agree with that this is getting old...lets see if we can keep this factual and accurate.

Stick to the FACTS like you said you would yesterday.

 

[MSum661]

Indeed. That is why we shoud weed through “facts” carefully these days.

That's true, but keep the facts straight in both directions of which way the pendulum swings. Because it can and will swing violently.
People that are perma bullish or perma bearish and believe everything pushes only in direction are thee last voices I will take seriously.
They're everywhere lately.

Balance is everything.

 

[PaPaG]

You are banging on the keyboard faster than your brain can process written words now. You already got carried away again today, and it is still early.


Stick to the FACTS like you said you would yesterday.

It seems like you are looking in the mirror MKA, proof is in the responses you are providing at every second something is said, lol lol....your facts are as real as the speed car in your driveway. lol. Your history of obsessiveness has been proven for years now, time to take a break and maybe a little vacation lol

 

[LargeOrangeFont]

That's true, but keep the facts straight in both directions of which way the pendulum swings. Because it can and will swing violently.
People that are perma bullish or perma bearish and believe everything pushes only in direction are thee last voices I will take seriously.
They're everywhere lately.

Balance is everything.

X1000

I value the data you and other have brought to this thread, thank you for that.

 

[LargeOrangeFont]

It seems like you are looking in the mirror MKA, proof is in the responses you are providing at every second something is said, lol lol....your facts are as real as the speed car in your driveway. lol.

I did the mirror thing on you just yesterday morning. Remember what I just said about regurgitating?

The tank is empty. It’s time to let it go.

 

[PaPaG]

I did the mirror thing on you just yesterday morning. Remember what I just said about regurgitating?

It’s time to let it go.

You must be a legend in your own mind

 

[Havasu blue label]

It’s California they will sell

 

[Havasu blue label]

He is a conversation piece mr orange I said havasu will drop 50 percent

 

[LargeOrangeFont]

You must be a legend in your own mind

If you keep this up people will think you are 8 years old instead of me.

 

[PaPaG]

LOL LOL, you are just toooooooooooooooooooooooooooooooooooooooooooooooo easy....
5 -4- 3- 2-

 

[NicPaus]

He is a conversation piece mr orange I said havasu will drop 50 percent

My River neighbor is in escrow now. For a Havasu house. Below asking but not much only Like 20k below. They have been trying to buy there for a while. They have a lot They owned for years but build costs are to high. Sold CA house for top dollar. Retired.

Once the out of state buyers dry up. I can see it dropping fast. Local jobs won't sustain those prices.

 

[LargeOrangeFont]

He is a conversation piece mr orange I said havasu will drop 50 percent

You said in 50% in 90 days, 45 days ago. Still sticking with that?

LOL LOL, you are just toooooooooooooooooooooooooooooooooooooooooooooooo easy....
5 -4- 3- 2-

It’s unfortunate you turned your back on Carolynandbob so quickly and let me get to you 2 days in a row.