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We aren't happy until you aren't happy
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Every time I buy something for my RC car a pop up comes up asking if I want to finance it LOL.
Several of my clients walked away from long term homes when the walking was good. One really stood out to me as the client was late 50's and bought the house for sub 200K in the 80's yet walked away because he had a 650K + mortgage on the house.....Insane
Me too! Maybe I should finance my new motor lmao. I think it 26% tooEvery time I buy something for my RC car a pop up comes up asking if I want to finance it LOL.
Last time was a bit of a perfect storm with multiple factors leading to the downturn. Low interest rates due to the tech bubble, deregulation on investment, Arm resets in conjunction with rising interest rates later in the decade and companies over invested in bad loans. Some things are different, some are the same. Interest rates are rising again and banks can still invest in the MBS market which creates an insatiable market to write new debt. We are back to pre 2008 levels in terms of the MBS levels. That being said, loan quality has remained much higher than it was in the 2000's. LTV's are lower, the option arm's and no doc loans are rare. Borrower credit requirements are higher. The major insurer of mortgages today is the US government not companies like AIG and the rating agencies are doing a better job at rating the securities which investment funds depend upon to properly balance their portfolios.
The origination industry has been clamoring for the return of sub prime and its associated cash flow and it has occurred a bit with some lenders providing Non-QM mortgages but the overall percentage of these loans in bank and hedge fund portfolios is low. Non-QM is a completely different animal than sub-prime with tougher requirements. Heloc's and the like aren't getting written anticipating HPA anymore and most require LTV's under 85%.
With the loans backing the securitization's today being of a much higher quality we are in a better position today.
I think the main indicator on the Mortgage side will be when bond trading market slows and this hasn't happened. The investment market is still strong with the stock market performing the way that it is less funds are relying on MBS within their portfolios. I think the next downturn will have more to do with a stock market correction, higher interest rates and a overall economic slowdown than it will have to do with mortgage.
The securitization market as a whole is nearly twice as large today then it was in 2006 and it isn't mortgage that is driving it. Corporate securities are at an all time high and have doubled since 2006. Treasury securities are also at an all time high and have more than tripled since 2006. If you want to look at over extension and industries that are going to take the worst hits that's where I would start. It concerns me that so many have turned to the government as the safe investment since the crash that treasury securities have tripled. Here is a cool chart.
https://www.sifma.org/resources/research/bond-chart/
I live 3 blocks due east on 1.8 acres. The 607 bucks a foot you received is a grand slam in that neighborhood.
Nice job. Excellent result.
Your first post made it seem like you recall things fell apart very quickly. It took 18 months. There was an economic slowdown, followed by job losses, followed by more job losses and then deep recession. Everyone keeps talking about 2006 highs, and 2008-2009 lows.. remember there was a 2007 in there. The lesson is to pay attention to indicators. If you thought everything was all good and suddenly lost your job.. it is too late.
I worked in the mortgage industry and got laid off in 2006, just after the "peak". They knew the party was over. They laid off 17,000 people that day.
Many people don't learn and more importantly, most don't really care. If their toys get repoed..who cares? There is no real consequence. That will be the first thing they stop paying for when they lose a job.
People are not going to lose houses like they did last time. There is little reason for them to walk away... If they bought more than 2-3 years ago, rent is probably as high or higher than their house payment anyway. People walked away from their houses because they could not afford the increasing payments and had no skin in the game. An increasing payment is not a problem with a normal 30 year fixed mortgage like most people have now.
If you are waiting around thinking housing is going to drop 40%+ nationally again in this generation.. it isn't going to happen.
Seriously, sick and tired of seeing these threads.
This market is not ANYTHING like what happened in 2008.
You would think that after reading all the other EXACT SAME threads, people would have a clue by now.
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This is the same discussion that's been going on for years. Housing prices were supposed to drop or flatten out 2 years ago according to Nice Guy Eddie..... But of course they didn't.Sick of what? A discussion on various opinions on the state of the economy? Why so angry? Its just a discussion.
Much hasn't changed with the economy over the years. Massive money printing. Ever increasing deficits (funded and unfunded liabilities topping $100 Trillion Dollars). Runaway spending programs. Massive government intervention in domestic and international markets.
This is the same discussion that's been going on for years. Housing prices were supposed to drop or flatten out 2 years ago according to Nice Guy Eddie..... But of course they didn't.
and then now because some people are using their Equity to consolidate debt or renovate their house or buy another property...etc...... We must be heading towards another massive real estate collapse [emoji23][emoji23]
seriously this discussion just gets old and it's like beating a freaking dead horse.
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Actually it doesn't because right now Americans are actually sitting on the most equity in decades and they aren't taking it out. Everybody sees other people buying toys in automatically assumes that they must have used their house as an ATM to get it. Assumptions in my opinion is your first screw up. Nobody Knows the story behind how they got it. Maybe they inherited some money and bought it with that, maybe they got an awesome loan at the credit union and make the payment on it.. who knows and who cares!!History does repeat itself often. Some people never learn. Debt is extremely risky, especially when over-levering to purchase toys.
Actually it doesn't because right now Americans are actually sitting on the most equity in decades and they aren't taking it out. Everybody sees other people buying toys in automatically assumes that they must have used their house as an ATM to get it. Assumptions in my opinion is your first screw up. Nobody Knows the story behind how they got it. Maybe they inherited some money and bought it with that, maybe they got an awesome loan at the credit union and make the payment on it.. who knows and who cares!!
The downturn of 2008 was a once-in-a-generation occurrence. Most of us will never see something like that again in our lifetime.
People need to stop living in the past.
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I have been watching the yield curve flatten out for some time now. I know we are due for a recession, but a recession isn't going to bring down the housing market which seems to be everybody's point of contention these days.Have you studied the level of consumer and corporate debt levels? It might just surprise you. I am not saying we are in for a crash of 2008 proporations. But the risk of recession is clearly a distinct possibility.
P.S. my career is in the banking sector
Actually it doesn't because right now Americans are actually sitting on the most equity in decades and they aren't taking it out. Everybody sees other people buying toys in automatically assumes that they must have used their house as an ATM to get it. Assumptions in my opinion is your first screw up. Nobody Knows the story behind how they got it. Maybe they inherited some money and bought it with that, maybe they got an awesome loan at the credit union and make the payment on it.. who knows and who cares!!
The downturn of 2008 was a once-in-a-generation occurrence. Most of us will never see something like that again in our lifetime.
People need to stop living in the past.
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OSB, Sorry if this thread is a re-hashing of old threads, I really am new here. I just wanted to get input from people in different areas. In my daily excursions, I only seem to deal with Ca. retirees, and good 'ol boys with horses and cattle. One group is only seeing interest rates as an effect to income, the other group worries about the cost of hay and diesel. As you can tell, not exactly fingers on the pulse of high finance. I have no interest in home prices anymore, I already told my wife to bury me here.
Like I said, don't want to ruffle feathers. I have spent the last few years trying to be more laid back.
People are trying to tell you the Equity is not real.. it is being made out of air by debt. your losing dollar purchasing power how much was your same house in 2008 compared to today?
OSB, Sorry if this thread is a re-hashing of old threads, I really am new here. I just wanted to get input from people in different areas. In my daily excursions, I only seem to deal with Ca. retirees, and good 'ol boys with horses and cattle. One group is only seeing interest rates as an effect to income, the other group worries about the cost of hay and diesel. As you can tell, not exactly fingers on the pulse of high finance. I have no interest in home prices anymore, I already told my wife to bury me here.
Like I said, don't want to ruffle feathers. I have spent the last few years trying to be more laid back.
That is kind of what I was after. If the whole economy tanks, the wheels fall off for everyone! To me, it was kind of a shock to hear all the toy shops are busy with new builds. Obviously I haven't been shopping for new boats. It's also interesting to see what trades are busy. Just pieces of the bigger picture.I thought it was a good thread but took it as more of a industry specific and regional question for each member. What are they seeing good and bad? Industry trends, are you currently busy or slow? Projected trends for the year ahead. Hiring or laying off in specific industry or area?
Labor is any issue everywhere. There is a masonry contractor here that has taken the residential block wall market by using government freebies to intice employees. He tells them max pay is $13.50 per hour BUT you can get housing, healthcare, cellphone and assistance on top. But his employees production is shit. They have no incentive to lay more block. Killer is he is doing everything for below cost. No he doesn’t buy from me but I could GIVE the block to another masonry contractor and they still could not compete even in large volume. Oh but this jackass filed a 13 million dollar bankruptcy in the last crash. Again sorry for the rant. It’s been a long week.Public works construction is going strong in Southern California. If SB1 gas tax gets rolled back that could make things get interesting. As mentioned before seeing a few issues with contractors paying suppliers and subs, not a lot but they seem to be increasing from my prospective.
Labor is an issue for all contractors. The old guys don't have the patience or ability to teach it seems. That or the young guy are too busy checking their phones to learn how to work.
Public works contractors always had 10% retention held per payment in the past to insure project was completed. That changed to 5% about five years ago and the trend seems to be going to no retention held on federally funded projects lately. I have a feeling that is driving profit margins down and is going to be bad for the industry in general.
For now things are crazy busy.
so I'm try'n to do the math here, and try'n to figure out the 4 mil. for the property...so here's what I thought...there's a little over 1 acre,,, and 6400 sq ft of home.... If you divide that by four.... that would give you 4 ,1/4 acre lots, with four 1600 sq ft homes...with that you would get 4 kitchens, 8 baths, 12 bed rooms,4 two car garages, and 4 rv garages,,four separate drive ways...but heres the part I'm not getting???who would pay 1 mil for a 1600 sq ft home?? and who would give up 4 mil for all four...and so with this post... you shot the dream consept of mine to build a bunch of mini houses... when I should be building one 6400 sq ft house ….????One of the larger hard money loans I've done for a ground up spec home just sold for full price in less than 6 weeks. I thought for sure it would sit a bit.
https://www.russlyon.com/homes-for-...3/6109_n_33rd_st/lid-5b6f5823c9e72ec6929ee27b
There are people on this board from all financial and business backgrounds, from all over. What do you see economically speaking? Please try to leave the political side out of it. I personally feel they're all liars. That being said, this is what I mean: Things seem quite the same as a few years back. Just heard on the news that some are pulling equity to pay household bills. I've been watching them build houses like all hell out here. Just a lot of things that match the characteristics of before. I live in a smallish town 100 miles N/NW of Phoenix, but don't head there with any regularity to know the cycle there. Things have really picked up here, causing prices for general construction to go up...everyone is busy. For now at least. From the people I talk to that have been here for more than 10 years, it was the same before the last decline. So what is happening in your neck of the woods?
I try to be ready for the next downturn. The product of a construction home growing up I guess. (Rain=Dad's home, though cool when young, bad when you're old enough to realize Dad's home= Dad's not getting paid!) I hope I don't ruffle any feathers, but curious if anyone else has seen this in their area.
Maybe the first $100k, after that it's the lenders screw up.That is called bank robbery.
Maybe the first $100k, after that it's the lenders screw up.
There's a lot of debt coming due. College loans, a lot of retail stores are billions in debt and underperforming. State and municipal governments owe untold billions in unfunded pension liabilities.
Unlike the fed, they can't print money. These chickens will come home to roost in the coming years. There will be lots of tax increases and services cut. Potholes will be going unfilled.
Maybe we should open up a wheel and alignment shop.. LOL