Housing Market: crash or serfdom? Both?

We all know house prices are ridiculous right now. The NAR, Zillow, etc assure us no crash is coming because ARMs aren't happening. (Even though approving loans at 43% DTI is common and so is putting like 5% down.)

Yes, there's been covid migration, moving money from HCOL to LCOL areas, but that's not going to drain the wealthy coasts of their populations. That migration will end. As will work from home.

Mortgage rates will go up as the Fed scrambles to do something over inflation. Student loans will come out of forbearance in Feb. And who knows how many foreclosures will be hitting the books next year. These factors don't spell out continued manic house buying.

The only thing that could prevent a housing crash to 2018 price levels is the sheer number of investors propping up the market right now. They drive up prices by hoarding supply and beat out owner-occupiers with all cash offers. There's also a boom in Air Bnb purchases, driving residents out of neighborhoods and simulating a lack of housing. (For more info on how the housing shortage is a crock, Google Ivy Zelman. She's fascinating.) If we're not careful, tenant serfdom will become the norm. And imagine what a geriatric nightmare we will have in 30 years if a high percentage of seniors don't have equity in their homes because they rent permanently.

There's my theory. Please poke holes in it and tell me what I'm not seeing.

a reply to: Look2theSacredHeart

I have no doubt about this either. Maybe not in exactly the same words or same causes but over all, the balloon that is the US housing market has been a profit center for those with the wealth for too long.

a reply to: Look2theSacredHeart

I heard Zillow, Has stopped buying and selling . We own our home out right and have good credit but no one will give us a equity loan unless we show 2 years of income . Looks like no one wants houses .

a reply to: Ravenwatcher

Indeed. They are still trumpeting how bulletproof this housing market is. Not as optimistic as they had been in October, though.

a reply to: Look2theSacredHeart

I'm not sure if this is relevant but we just opened a business account and my god it's not like 5 years ago - All the questions about money laundering etc... It's getting crazy out there .

a reply to: Ravenwatcher

Interesting! I know Dodd Frank added a lot of paperwork to any sort of credit.

Home buyers that are self employed are absolutely put through the wringer. Justifying minutiae like podcast subscriptions.

Do you think this supports the NAR narrative that the mortgages issued now are responsible and non-predatory?

a reply to: Look2theSacredHeart

Well I could have got a great predatory loan 10 years ago ..I think they know something we don't I've got a friend that's a broker and all he could call a loan was products and that I need some exotic product ... They just not giving money .

Full time invester here. Part time builder.
No, it probably won't crash.
20% correction maybe as inventory opens up imo.
There's a lot going on.
Actual inventory shortages brought on by the plandemic is keeping a lot of sellers from opening their homes to public, coupled with an unstable stock market pushing typic asset investments and add to all of this an exodus from unstale liberal states and cities where the gov is allowing anarchy to happen and here we are.

It's all kind of in limbo right now.
Even new construction and intended material shortages are helping reduce inventory, holding prices up.
"Investors" aren't the only cash buyers out there, but cash buyers can buy without loan hassles.
From a seller perspective, it is better to do cash. Less fees, appraisals, paperwork, etc. That will always be preferable.

The market will sort itself out once these market crashing communists are dead or replaced.
It's going to take some time. Maybe the next election, assuming we make it that far.

Prices in normal, non over-populated areas are about 20% over normal.
Not massive, but detrimental to flippers.
The flip and rent crowd is really in for a surprise.
Terrible time to buy into that racket.

Holding actual notes in your name like zillow did is incredibly stupid, while the real money is in holding mortgages and staying out of the home maintenance business.
That point helps to keep institutional investors on a leash.

originally posted by: Mandroid7


It's all kind of in limbo right now.
Even new construction and intended material shortages are helping reduce inventory, holding prices up.
"Investors" aren't the only cash buyers out there, but cash buyers can buy without loan hassles.
From a seller perspective, it is better to do cash. Less fees, appraisals, paperwork, etc. That will always be preferable.

Not from a buyers side I paid cash thinking I would have the equity available at all times ..... Nope worthless from a loan prospective if you own your are put at the bottom of the list .

a reply to: Mandroid7

That 20% over normal translates to about $70k in my area- a deal breaker for the median earners and slightly above. Doesn't just affect flippers - owner-occupiers too.

a reply to: Look2theSacredHeart

The only piece that I disagree on is the work from home aspect. That will continue for most large companies either full time remote or hybrid. The folks that migrated during the pandemic work for organizations that are 100% remote.

a reply to: Look2theSacredHeart

interesting question.


cassually,
the one who predicteded the past housing market crisis told me once that ne next crisis that is coming is related to food and transportation.

as it is known, the group has been buying properties worldwide.

time go, they started with historic places via their owned organization called unesco/UN

then they got the strategic reserves of natural resources worlwide.

then they got the natual reserves for biosphere conservation.

now, buying in the specific main cities, via low cost credits for them, and low value of properties.

there are 2 remanents now:
one is in the largest urban cities now, when they will buy as many as possible, so the people only will have the option to rent near 70-80 % of population expected to live here.

the second is the rural areas. they have bought large ranchs, lands.
30 to 20% of population here.

the crisis in urban areas.
think in all the possibilities that could lead to this simulations:

people selling their poperties because they will need that money to survive.
and people without enough money to buy properties. (even if the value of properties were reduced)

a reply to: Hypntick
Interesting! I saw all the big work from home proponents in my area flip last summer. New normal of WFH returned to being a temporary treat.

(I loved work from home. So easy to concentrate. Personality clashes melt away when you aren't 7 ft from someone all day.)

originally posted by: Look2theSacredHeart
a reply to: Mandroid7

That 20% over normal translates to about $70k in my area- a deal breaker for the median earners and slightly above. Doesn't just affect flippers - owner-occupiers too.

I know I'm on all sides right now. Selling, buying and building.
It is insane.
I've been trying to buy for 2 years straight as well.
Flipping is doa. 20% plus ask, plus cap gains tax=not remotely worth it.

Home prices are way up in my area. I'm seeing a lot of modest homes being torn down and replaced with big houses obviously intended for people who make a lot of money. I'm concerned about this gentrification, and that it might lead to some sort of scheme to push out us middle-class folk so they can get our property for more McMansions.

a reply to: Mandroid7

So why is there no value if you own out right from a loan prospective ? Is the value in selling paper I did that in the alarm industry sign up and turn around and sell your contract for immediate profit .

a reply to: AndyFromMichigan
You might enjoy the book "Pushed Out" by Ryanne Pilgeram. She's a sociologist that studies rural gentrification.

a reply to: Look2theSacredHeart

Depends where you are located.

Down here in SWFL they sell quickly and the inventory is low. Plus last I heard closing were at near 75% cash purchases from the usual 50%.

I have houses in different locations in swfl and in each neighborhood that I keep an eye on as soon as they get listed they go pending within a 2 week period and 1 day if on the water.

Florida is hot right now and as long as the commies keep ruining the democrat controlled states I don't see that changing any time soon. Plus then you have inflation that is about to skyrocket.

I do think we are for a correction as the market cycles, but I don't think it will happen until next year at the earliest and not in all markets. I think the democrat states and big cities will likely start to get hit first IMO but that is just a gut feeling. Especially if teleworking becomes the norm.

Also like you mentioned short term rental market is also influencing the sales of home which unlike the flippers they hold on to the properties.So the short term rental investors are also helping to reduce the inventory.

I also think blackstone and other real estate investor groups are enjoying the rental game. I think this is a trend that is going to move forward where you will own nothing and be happy.

a reply to: Ravenwatcher

I'm not sure exactly what you are asking. Can you clarify a bit?
Thanks

a reply to: Mandroid7

So in the alarm industry I could sign you up for a 24 month contract and turn around and sell that contract and get 48 times "in months" In value up front .

I'm just wondering if the home and business loans work the same . No one wants to hold paper .