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

[PaPaG]

FBC, Stock Market News is calling this week the "WEEK OF LAYOFFS" lots are very decent paying jobs, a lot in the TEC sector high paying jobs. Alphabet just announced 12k layoffs. (google).

Layoffs, Alphabet (Googles parent) 12k, Microsoft 10k, Amazon 18k, Facebook, Snap, Twitter all said downsizing due to economic uncertainty and more to follow. A portion of these jobs were due filling positions due to growth, growth is no longer there at a lot of major players so job losses have to be made, that said those employees bought houses, cars, durable goods, fuel, food, took trips and will no longer be doing so until they can find other jobs..... Just the facts.

 

[bk2drvr]

I agree… Iam was very surprised… in my opinion this was a steal unfortunately the listing agent sold it in less than 24hrs with a dozen offers supposedly all CASH…Had a RDP team leave a full asking price offer close in 15 days as is and never got a chance to counteroffer.. Will be interesting to see what it ended up selling for.
https://www.zillow.com/homedetails/...ssage&utm_medium=referral&utm_source=txtshare View attachment 1190556

The ceiling fan in the kitchen is hilarious.

 

[monkeyswrench]

FBC, Stock Market News is calling this week the "WEEK OF LAYOFFS" lots are very decent paying jobs, a lot in the TEC sector high paying jobs. Alphabet just announced 12k layoffs. (google).

Layoffs, Alphabet (Googles parent) 12k, Microsoft 10k, Amazon 18k, Facebook, Snap, Twitter all said downsizing due to economic uncertainty and more to follow. A portion of these jobs were due filling positions due to growth, growth is no longer there at a lot of major players so job losses have to be made, that said those employees bought houses, cars, durable goods, fuel, food, took trips and will no longer be doing so until they can find other jobs..... Just the facts.

Simpleton looking in...

Due to economic uncertainty, they cut jobs.
Doesn't that action, cause the very economic uncertainty of which they are worried about?

Seems like a self fulfilling prophecy.

 

[regor]

"Another Difficult Month For Buyers": US Existing Home Sales Suffer Biggest Annual Drop Ever​

...leading to a record 34% drop year-over-year (worse than the worst drop during the Great Financial Crisis)...

FRI JAN 20, AT 7:11 AM

 

[HNL2LHC]

This has potential as well. Holy heck it could use some staging for the listing though!

Looks like they had an addiction for Home Good or At Home shopping. LOL

 

[regor]

3M Tumbles After Huge Miss Despite Slashing Guidance Twice, Fires 2,500; Sees "Significant" Decline In Electronics Demand​

For some the recession is already here...

TUE JAN 24, AT 8:03 AM

 

[Sportin' Wood]

"Another Difficult Month For Buyers": US Existing Home Sales Suffer Biggest Annual Drop Ever​

...leading to a record 34% drop year-over-year (worse than the worst drop during the Great Financial Crisis)...

FRI JAN 20, AT 7:11 AM

Interesting cliff notes.

• The headline softened with the previous months' performance revised downward.
• Sales slump highest since "Great Recesion"
• The continued tight market of inventory.

The system could get jammed up without a push in one direction or the other. I see very few houses I'm interested in, and the ones I like have not budged on asking prices.

 

[Cdog]

It's not the end of the world. Yet...

 

[Gonefishin5555]

Microsoft beat earnings expectations. I'm sure its not popular on here but I'm calling the bottom of the real estate market this quarter....as long as rates don't go back above 6.5. Sure prices could decline in a future year but its going to be caused by some currently unforeseen events which makes it a decline completely unrelated to what is going on right now.

 

[Sportin' Wood]

Microsoft beat earnings expectations. I'm sure its not popular on here but I'm calling the bottom of the real estate market this quarter....as long as rates don't go back above 6.5. Sure prices could decline in a future year but its going to be caused by some currently unforeseen events which makes it a decline completely unrelated to what is going on right now.

Fair statement; let's explore this if you don't mind.

How long would you expect the upward trend to continue after this quarter bottoms out? Seasonality? Expect a dead cat bounce in Q2-3?

Spring is going to be interesting. I feel like we need something more to prime the pump than a rate improvement. I suspect we wander through a haze until the next Presidential Election.

 

[cofooter]

Microsoft beat earnings expectations. I'm sure its not popular on here but I'm calling the bottom of the real estate market this quarter....as long as rates don't go back above 6.5. Sure prices could decline in a future year but its going to be caused by some currently unforeseen events which makes it a decline completely unrelated to what is going on right now.

How are you defining the "bottom"? Prices, inventory, days on market? Not that I am disagreeing, but would like to understand the metric.

 

[Gonefishin5555]

Fair statement; let's explore this if you don't mind.

How long would you expect the upward trend to continue after this quarter bottoms out? Seasonality? Expect a dead cat bounce in Q2-3?

Spring is going to be interesting. I feel like we need something more to prime the pump than a rate improvement. I suspect we wander through a haze until the next Presidential Election.

Upward trend would only happen if rates go to the low 5s. I'd expect a seasonal bounce for the buying season with competition on properties that are in top condition or best location. Then into the fall it slows back down per the usual. So 2023 for Socal, AZ, NV maybe 1-3% price increase avg which is still below inflation by a couple percent. I've been bookmarking some homes that I think are priced fairly or have decent value and these homes are going pretty quick and the ones in my track both sold. That along with uptick in mortgage volume to start the year I just don't think its going to get any worse not saying there will be a recovery on prices of any significance. The other thing is the stock market, its really not tanking even on some of these bad earning releases which says these things are already priced in. Real estate got kicked in the nuts really hard last year and I just can't see much worse happening unless rates spike again or unemployment does the same. So my read is that demand has stabilized and is going to result in firmer pricing as people move in the make their purchase,

 

[Gonefishin5555]

How are you defining the "bottom"? Prices, inventory, days on market? Not that I am disagreeing, but would like to understand the metric.

Primarily pricing. Inventory is still low it never approached any number that would be considered high by historical avg standards. Days on market I never considered what I looked at was total inventory vs transaction marked "pending" on realtor.com not exactly scientific. 535 total vs 376 available so pending is 159 homes for havasu right now. orange county 2559 total vs. 1753 available. The other thing about that stat is when people price their home unrealistically it just sits there and makes the stat look bad when a nice home fairly priced is going under contract pretty quickly. My theory is we've waited long enough for something "bad" but its not coming anytime soon maybe further into earning season we see some big fails that makes me change my mind. When I say fail I mean like a Lehman bros bankruptcy or Enron type thing or something wild like that.

 

[retaocleg]

I'm calling the bottom of the real estate market this quarter....

bottom by march?........lol what creates the upswing?

 

[bk2drvr]

I still think we have further to fall over an extended period of time on housing. Stabilized mtg rates or even dipping a little doesn't solve buyer fear when short term interest rates keep going up. These rate hikes and layoffs continues to cast a dark shadow over peoples spending which transitions into housing. As long as the fed keeps raising rates I don't think we will see an upward trend in home buying or an upward trend in housing prices. Just MO of course.

 

[LargeOrangeFont]

Fair statement; let's explore this if you don't mind.

How long would you expect the upward trend to continue after this quarter bottoms out? Seasonality? Expect a dead cat bounce in Q2-3?

Spring is going to be interesting. I feel like we need something more to prime the pump than a rate improvement. I suspect we wander through a haze until the next Presidential Election.

I feel like this whole deal is wandering through the haze…. Not a trap door we are going to fall through at some arbitrary time in 18 months.

The stock market is bumbling up and down, not falling. I just talked to a contractor an hour ago here in Southern UT and he confirmed what I’m seeing and hearing.. there is still quite a bit of competition for inventory. He looked at 11 homes last weekend and half of them had accepted offers over the weekend. He’s looked as 50+ houses in the last couple months.

My parents just put up their house for sale this week.. I’m interested to see how that goes.

What’s going to tip this apple cart over? We needs tons more job losses. I agree more are coming but how many?

 

[cofooter]

I also think we have a ways to go. People have taken homes off the market hoping prices would rebound. I think they may be in for a shock come spring. Especially areas popular for second homes. I'm waiting but am thinking sometime next summer/fall may be a good time.

 

[Sportin' Wood]

I appreciate the last couple of posts.

Good houses priced right are selling quickly. There are not too many good houses priced right in inventory. The people who hope to bank a couple of hundred grand for buying in 2019 or 2020 and have not improved their homes give a bit of a false narrative when you look at the market, and they don't seem to need to sell.

Ya gotta sift through the trash to find a value. I'm guessing negotiations are happening in the background on homes that are selling.

 

[bk2drvr]

I will also throw in that I think the dynamics between resale and new home construction are quite different. I think national home builders are ripe for taking discounts from at the moment and will be for quite some time.

 

[cofooter]

What’s going to tip this apple cart over? We needs tons more job losses. I agree more are coming but how many?

Job Losses + Fear of Job Losses = Big Pull Back. For every job loss there are a dozen people waiting for the shoe to drop and, whether it happens or not, they stop spending. We don't need tons of more job losses to see peoples spending habits change. I'm sure its already started we just have not seen it yet in the data.

 

[Echo Lodge]

My neighbor just sold his 1230 sq ft house for full price at $1,285,000. I thought he was high when he listed it 3 months ago at that price. A 1965 William Lyon track home in North Huntington Beach. Its the new buyer's vacation home. Just don't understand.

 

[Sportin' Wood]

My neighbor just sold his 1230 sq ft house for full price at $1,285,000. I thought he was high when he listed it 3 months ago at that price. A 1965 William Lyon track home in North Huntington Beach. Its the new buyer's vacation home. Just don't understand.

How old is the buyer? I'm wondering how the transfer of wealth from Boomers to GenX will play a role in the next few years.

 

[Echo Lodge]

How old is the buyer? I'm wondering how the transfer of wealth from Boomers to GenX will play a role in the next few years.

35-45 from SFO.... Maybe Tech money?

 

[bk2drvr]

My neighbor just sold his 1230 sq ft house for full price at $1,285,000. I thought he was high when he listed it 3 months ago at that price. A 1965 William Lyon track home in North Huntington Beach. Its the new buyer's vacation home. Just don't understand.

Jesus what a disappointing purchase. Can’t even begin to imagine the mindset going into that purchase. And I’m from north HB. Lol…

 

[Gonefishin5555]

My neighbor just sold his 1230 sq ft house for full price at $1,285,000. I thought he was high when he listed it 3 months ago at that price. A 1965 William Lyon track home in North Huntington Beach. Its the new buyer's vacation home. Just don't understand.

That’s kinda nuts. We all know that is a pretty small and old house. My tract list of 1.3 and another 1.45 both under contract waiting to see the actual sale price. The 1.45 house backs a busy street it’s a bigger one.

 

[bonesfab]

My neighbor just sold his 1230 sq ft house for full price at $1,285,000. I thought he was high when he listed it 3 months ago at that price. A 1965 William Lyon track home in North Huntington Beach. Its the new buyer's vacation home. Just don't understand.

And the property taxes on that. Wow.

 

[Echo Lodge]

And the property taxes on that. Wow.

Zillow says its only $739 a month! Just a new F150 payment! Yikes

 

[Echo Lodge]

Jesus what a disappointing purchase. Can’t even begin to imagine the mindset going into that purchase. And I’m from north HB. Lol…

You and me both.... Been in my HB shack since 93.... Couldn't afford to buy here now. Hope Prop 13 survives longer than I do!

 

[Orange Juice]

It appears new construction is coming to a stand still in Phoenix.
This will cause prices to rise in Phoenix.

Arizona might have to stop construction on homes for more than 800,000 people if it can't find another water source

Arizona homebuyers may have to start looking elsewhere if the state can't find enough water to support development in the desert outside of Phoenix.

www.businessinsider.com

 

[OldSchoolBoats]

Even if rates fall farther down, Fannie and Freddie (the government) are really putting the squeeze on new borrowers. The new loan level price adjustments are aimed at sticking it to people with good credit and 20% down payments. Also, big pricing hits to DTI's over 40% (backend). Talked to a buddy who works for a large retail lender and 29% of their conventional loans done in the past year were over 40% DTI.....

I am seeing a big uptick in activity amongst my core group of Realtors. Applications coming in and pre approvals going out. Should be a decent spring/summer, but pessimistic as to how these new adjustments are going to play into everything.


FJB

 

[PaPaG]

Yes it is copied and pasted and from a firm that invests BILLIONS of dollars.

From Goldman Sachs, As interest rates continue to skyrocket, home prices across the country have continued to plummet — and Goldman Sachs says the declines will only worsen and extend through 2023.

In a note to clients earlier this month, Goldman Sachs forecasted that four American cities in particular should gear up for a seismic decline compared to that of the 2008 housing crash.

San Jose, California; Austin, Texas; Phoenix, Arizona; and San Diego, California will likely see boom and bust declines of more than 25%.

Such declines would rival those seen around 15 years ago during the Great Recession. Home prices across the United States fell around 27%, according to the S&P CoreLogic Case-Shiller index.

They also state that the rest of the country will likely see a 15% decline.

Something to think about.

 

[OldSchoolBoats]

Yes it is copied and pasted and from a firm that invests BILLIONS of dollars.

From Goldman Sachs, As interest rates continue to skyrocket, home prices across the country have continued to plummet — and Goldman Sachs says the declines will only worsen and extend through 2023.

In a note to clients earlier this month, Goldman Sachs forecasted that four American cities in particular should gear up for a seismic decline compared to that of the 2008 housing crash.

San Jose, California; Austin, Texas; Phoenix, Arizona; and San Diego, California will likely see boom and bust declines of more than 25%.

Such declines would rival those seen around 15 years ago during the Great Recession. Home prices across the United States fell around 27%, according to the S&P CoreLogic Case-Shiller index.

They also state that the rest of the country will likely see a 15% decline.

Something to think about.

So back to 2019 levels when we were already "in a bubble" and "overpriced?"

Ever think that Goldman releasing something like this may in some way benefit them on a specific trade?? Of course Government Sachs wants housing to fail. They want to be able to buy everything up at a discount, further eroding homeownership.

 

[evantwheeler]

Even if rates fall farther down, Fannie and Freddie (the government) are really putting the squeeze on new borrowers. The new loan level price adjustments are aimed at sticking it to people with good credit and 20% down payments.

Can you explain what this means to someone who doesn't sell mortgages?

 

[OldSchoolBoats]

Can you explain what this means to someone who doesn't sell mortgages?

Loan level pricing adjusters (LLPA's) are hits to a rates pricing for things like loan to value, credit score, property type and now, DTI over 40%.

Say I have a rate of 6% that is priced at 100.00. That means, that rate costs no points to obtain. Now lets say I got a borrower with 5% down and a score range of 680-699, buying an attached condo. They now have adjustments to the rate price based on those factors. So now instead of costing no points the borrower now has a 6% rate that has 2% worth of LLPAS. Their option at that point would be to pay the points OR they have to go to a higher rate that absorbs those points and is priced at 100.00.

The new LLPA's are BRUTAL, especially for borrowers putting 20% down with credit in between 720 - 759. They will pay much more in rate or points to get their mortgage because of this.

Hopefully that makes sense??

 

[c_land]

Loan level pricing adjusters (LLPA's) are hits to a rates pricing for things like loan to value, credit score, property type and now, DTI over 40%.

Say I have a rate of 6% that is priced at 100.00. That means, that rate costs no points to obtain. Now lets say I got a borrower with 5% down and a score range of 680-699, buying an attached condo. They now have adjustments to the rate price based on those factors. So now instead of costing no points the borrower now has a 6% rate that has 2% worth of LLPAS. Their option at that point would be to pay the points OR they have to go to a higher rate that absorbs those points and is priced at 100.00.

The new LLPA's are BRUTAL, especially for borrowers putting 20% down with credit in between 720 - 759. They will pay much more in rate or points to get their mortgage because of this.

Hopefully that makes sense??

So if I'm reading this right, you need to be able to come up with 40% down to avoid that additional interest on an FHA loan?

 

[PaPaG]

So back to 2019 levels when we were already "in a bubble" and "overpriced?"

Ever think that Goldman releasing something like this may in some way benefit them on a specific trade?? Of course Government Sachs wants housing to fail. They want to be able to buy everything up at a discount, further eroding homeownership.

Yup that thought crosses my mind anytime a big wall street firm makes comments like that, but I tend to also listen when they are warning their clients whom without would be out of business. Also, back to 2019 or 2018 prices when we were overpriced still means anyone who bought a home in the last few years in these areas along with most parts of the entire country could face a large decline as prices catch up to interest rate hikes. We have a interesting year to follow that is for sure.

 

[OldSchoolBoats]

So if I'm reading this right, you need to be able to come up with 40% down to avoid that additional interest on an FHA loan?

View attachment 1192641

The chart you posted is for a conventional loan with FNMA. They haven't announced any changes to FHA yet. The chart there is old. This is the new one that affects all loans purchased on or before 5/1/2023

https://singlefamily.fanniemae.com/media/9391/display

 

[OldSchoolBoats]

The loan level pricing adjustment lesson here is a good example as to why your rate might be higher than what is advertised in the media. Every scenario is different and a lot of things can affect your rate. Down payment, credit score, property type and now DTI. Just keep that in mind. Just because your buddy got a specific rate from his loan guy, doesn't mean you have the same scenario. Lots of factors, as you can see, go into how your rate is determined.

 

[cofooter]

35-45 from SFO.... Maybe Tech money?

Yes it is copied and pasted and from a firm that invests BILLIONS of dollars.

From Goldman Sachs, As interest rates continue to skyrocket, home prices across the country have continued to plummet — and Goldman Sachs says the declines will only worsen and extend through 2023.

In a note to clients earlier this month, Goldman Sachs forecasted that four American cities in particular should gear up for a seismic decline compared to that of the 2008 housing crash.

San Jose, California; Austin, Texas; Phoenix, Arizona; and San Diego, California will likely see boom and bust declines of more than 25%.

Such declines would rival those seen around 15 years ago during the Great Recession. Home prices across the United States fell around 27%, according to the S&P CoreLogic Case-Shiller index.

They also state that the rest of the country will likely see a 15% decline.

Something to think about.

Interesting, here is a substantially different spin on the exact same Goldman announcement

MSN

 

[bonesfab]

I heard somewhere the fed is going to do the "pivot" sometime soon. There were some recent changes that allow them to print more money so they are supposedly not going raise rates. It was on a youtube deal. so who knows what is really going on.

 

[LargeOrangeFont]

Job Losses + Fear of Job Losses = Big Pull Back. For every job loss there are a dozen people waiting for the shoe to drop and, whether it happens or not, they stop spending. We don't need tons of more job losses to see peoples spending habits change. I'm sure its already started we just have not seen it yet in the data.

I agree

Interesting, here is a substantially different spin on the exact same Goldman announcement

MSN

Facts are only Facts if they predict financial armageddon in 18 months.

 

[PaPaG]

Interesting, here is a substantially different spin on the exact same Goldman announcement

MSN

Is that from TODAY? and from MSN lol.... not sure I would trust anything from MSN. Mine is from Goldmans TODAY directly from their company.

 

[LargeOrangeFont]

I heard somewhere the fed is going to do the "pivot" sometime soon. There were some recent changes that allow them to print more money so they are supposedly not going raise rates. It was on a youtube deal. so who knows what is really going on.

That seems like a reliable source

 

[LargeOrangeFont]

Is that from TODAY? Mine is.

5 hours ago…

 

[HNL2LHC]

Loan level pricing adjusters (LLPA's) are hits to a rates pricing for things like loan to value, credit score, property type and now, DTI over 40%.

Say I have a rate of 6% that is priced at 100.00. That means, that rate costs no points to obtain. Now lets say I got a borrower with 5% down and a score range of 680-699, buying an attached condo. They now have adjustments to the rate price based on those factors. So now instead of costing no points the borrower now has a 6% rate that has 2% worth of LLPAS. Their option at that point would be to pay the points OR they have to go to a higher rate that absorbs those points and is priced at 100.00.

The new LLPA's are BRUTAL, especially for borrowers putting 20% down with credit in between 720 - 759. They will pay much more in rate or points to get their mortgage because of this.

Hopefully that makes sense??

DTI = Debit To Income for some that might not know the term.

So Joe if I am understand you….are you saying that they are penalizing those in good standing when in the past they gave better rates to those of us who did the right thing? We are typically the ones putting down 20% or more with good credit scores. Even our son who is the next purchase for is in the 750+ credit score. In the past we got more favorable rates because of this. Are they now going to ding our son for what was good in the past? Rules of the game are changiNg and I need to know how best to play the game with the new rules.

 

[LargeOrangeFont]

DTI = Debit To Income for some that might not know the term.

So Joe if I am understand you….are you saying that they are penalizing those in good standing when in the past they gave better rates to those of us who did the right thing? We are typically the ones putting down 20% or more with good credit scores. Even our son who is the next purchase for is in the 750+ credit score. In the past we got more favorable rates because of this. Are they now going to ding our son for what was good in the past? Rules of the game are changiNg and I need to know how best to play the game with the new rules.

It sounds like yore son who I had the pleasure meeting last month can afford to pay more because he is successful, so he should!

 

[PaPaG]

I knew the board "Know it All" LOF would be in here to post the second I post anything contradictory to his expert opinion lol lol

 

[cofooter]

Is that from TODAY? and from MSN lol.... not sure I would trust anything from MSN. Mine is from Goldmans TODAY directly from their company.

I would not trust either "story". As has been pointed out already, they all have different agendas.

 

[yuppie]

I still just don't see a "crash". Maybe next year? Yeah, interest rates are hurting the market, but inventory is still low and prices are still rather high.

 

[PaPaG]

I would not trust either. As has been pointed out already, they all have different agendas.

To some degree I agree, If I had to trust one over the other I would trust the company sending memos to their high end clients vs a msn article. Just my Opinion.