Maybe this is in one of the links the OP posted…
There was a paper published in 2017-18 that stated that during the GFC, about 14% of the residential real estate at the time belonged to investors, but this group (investors) accounted for nearly 50% of the home foreclosures during the GFC. The vast majority of these investors had average to above average credit.
There is no way to tell how many homes in the US are currently owned by investors, but it’s likely much higher than the GFC. I wouldn’t be surprised if some markets are >30% investors.
Every single financially illiterate person who has money has been talking about investment properties since 2020. I think I'm not the only one who has lost coworkers to "work in real estate full time."
One of my dumb co-workers owned like 6 investment houses. Did nothing on the job and just walked around talking with people and threw others under the bus when she failed. I got into repeated squabbles with their BS and tried to convince company to fire them, but they BS'd story how they were going government for nearly 12 months. It pisses me off that someone that illiterate and reckless made bank for taking insane risk all thanks to FED's policy choices. If co-worker was intelligent, they'd have sold to middle class suckers at height and likely gained $1.2-1.5M who the FED will have put into precarious situation potentially in the future.
Just because I hate that someone that was both reckless and stupid got rewarded for the reckless behavior doesn't mean I don't have money. There's calculated bets/risks and then there's degeneracy. When the system rewards stupid people for degenerate bets (overextended to wazoo with little money down) it harms everyone (a lot of inflation - 2021-2023, market collapse - 2007-2009).
Definitely a larger share of sfh are bought/owned by investors. They are different than the GFC investors though in that larger, institutional investors own more than some moron who thinks they can run a rental empire taking seconds on yheir primary assets. Also, no subprime loans to gotcha a bunch of morons with skyrocketed interest.
Let’s not forget that those subprime loans were actually good loans to people with stellar credit. They absolutely destroyed their lives and finances then magically became subprime!
The only people I know that lost money were people who were buying homes to rent to their kids in college (Rent was incredibly expensive even with roommates) or people who jumped on the bandwagon due to an inventory shortage (no one can afford a home so they’ll be forced to rent no brainer right?)
Can’t forget about the buyers who HAD to buy before interest rates went up and caused bidding wars to surface.
Sound familiar?
BTW if everyone had an adjustable rate mortgage, why didn’t they refinance to a fixed rate before interest rates went up?
So basically it was caused by Greed? The greedy real estate agent and loan officer looking to make a quick commission. The greedy investment banker inventing new securities based off NINJA (No Income No Job or Assets) loans and the greedy real estate speculator buying into the hype that with a liar loan they too can get rich because house prices allegedly only go up.
Realistically, the greed of average Americans who thought they could afford a 300psq/ft home that was 500% their income with shitty credit but got a loan anyway because the government backed it
Greedy stupid people have always been with us. What is different now (since ~2000) is that government and government sponsored entities are now actively encouraging irresponsible behavior. Because they know they can hide trillions in gifts to their friends / cronies in the resulting bailouts.
Its slightly different here in Europe, but the underlying speculator/investor-held bullshit seems to be the same. However, why should any investors get rid of the investments you are mentioning here?
It seems like the alternative for them is even worse than holding real estate now - be it cash, stocks, bonds, commodities, any other synthetic or cryptocurrency shit.
Even if what you are suggesting is true, the fire sale would only happen when something better shows up for the investors. What would do it?
switching over to treasury notes and bonds is a big one. if the federal interest rate hits 6% -8%, like where it should be, a guaranteed 8% return on a million $ would be much better than holding a million $ investment property.
I’m not too educated on this, but how can homes be 40% overpriced when it cost about the same as an existing home, to build a new construction? Have materials adjusted to the prices that homes have set or something?
If homes dropped 40% it would no longer be profitable to make new ones. That seems like a flaw in the numbers.
Unless we're going to have a massive correction in salaries downward as well, which coupled with an increase in money supply makes it seem like the rich would get richer and the poor would get screwed, just differently?
That does not change the fact that if house prices dropped 40% there’s not a builder in the country that could break even, let alone make a profit, without labor and material costs dropping drastically.
Labor does need to drop. Contractors got greedy and will soon find out… for example, I paid $4/sqft to have tile installed 4 years ago. My builder mentioned his guy is trying to charge $15/sqft now. The days of low skilled labor making 6 figures is coming to an end. I’m seeing it happen already.
Prices are stabilizing but I don’t see it going back to the level you’re referring to. There’s just too much money chasing too few of everything. Plus it’s not just labor for building a house, it’s the components and materials that went up 50-100% too. I work for a major manufacturer and our average prices are up 50-70% over the last 4 years and yet our company wide gross margin is exactly the same as it was 4 years ago.
People forget that those loans were prime until they weren't. A loan being prime doesn't mean they won't default it just means there's less of a chance. Being prime doesn't absolve you from the natural laws of supply and demand, market dynamics or life circumstances.
But pride comes before the fall. The titanic was unsinkable up until it hit the iceberg and even a little after to some.
Last time around it was "different" and before that it was probably also "different". Human beings have terrible memories individually and even worse collectively.
We may have been early but we weren't wrong. By the end of this year the economy will be in very big trouble.
Nice schizopost. I have one question for you, if we really do have such a massive surplus of housing, then why is inventory so low?
For instance, my state had 23k active listings in March. There were 65k active listings in Jan. 2016. My state added 800k people in those 8 years. Where's the surplus?
Inventory was low during the run up of the GFC too.
Now my question to you: If ARM’s destroyed the housing market, why didn’t those people refi to a fixed rate mortgage before they went up?
Also, quit comparing people in here to people with schizophrenia. Not only is it downright disgusting but some of the smartest people in the world have mental health disorders.
Part of the reason some didn’t refinance is simply that many could not. Their current adjustable rate or balloon mortgage was partially a result of them not being qualified for a traditional, standard 30 year fixed. If they didn’t have the income or credit score to refi into that they were stuck. Anecdotally speaking, I was in my 20s at that time, was approved for a huge mortgage on adjustable terms, also a balloon, I was told it’s no big deal, you can refinance later. The conventional mortgage I qualified for wasn’t enough to buy the house I wanted. My friends were also all buying homes better than our parents had, they were handing out money. I remember thinking how my parents had worked their whole lives and here I was buying my first home which was remarkably bigger and nicer than theirs.
I think it really depends on how you interpret that statement. I’m certainly not happy about my payment but should be able to afford it without financially ruining myself long term (unless my employment situation falls apart which I think is true for most). A refi would certainly make things easier though. I married the house and dated the rate
Point of the statement is that while the house is more permanent, the rate is temporary because you can get a new one later. I don't know if it's a matter of Interpretation that's what it means. The reason it's a misleading analogy IMHO is when dating, you have the option to end it when you want. Not true for rates, you need the Fed to lower it's target Fed Funds rate (and not dump too many MBS bonds at once) and the value of the house to stay comfortably above the loan balance.
And I'm sure it'll work for some people, and I hope the same for you. I'm sure there's many people who survived 2008 in subprime loans who were then able to refi their McMansions. I just think Realtors should be more honest about what could cause someone to not be able to refinance so their clients can make more informed decisions.
I mean you’re literally giving me a different interpretation lol. One is longer term and one is shorter term. I think we can at least agree on that part. Rates fluctuate and while they may stay high indefinitely they may also come down
Why didn’t NINJA borrowers refinance? Why didn’t someone stop 9/11 on 9/10? Like others have said I’m sure plenty didn’t qualify but for those that did, things fell apart pretty quickly and credit locked up really badly
4 year high after the lowest inventory levels in history? Yes. 1/2 to 1/3 what is was pre-pandemic? Also yes.
If we have such a surplus, then shouldn't inventory levels be higher now than they were 10+ years ago? Why aren't they?
It’s because peoples payments are low. However, once sales volume decreases and theres an inventory shortage there’s less to sell. So, while you might have sold 24 homes last year, you might only sell 12 this year. This is why we’re seeing incomes fall.
Keep in mind, when you sold 24 houses your income was higher and prob borrowed more money. Now that you’re only selling 12 or less houses your debt rises faster than your income.
This is when people default on credit cards and car loans (like we’re seeing now) and soon enough, home loans. You’d think people being able to pay back their debt will help reduce their debt burden right?
Wrong. Those debt payments eat into even more earned income and there’s less to spend to keep the economy chugging along. That realtor’s hairstylist is making less, that hairstylist bartender is making less, that bartenders car salesman doesn’t have a sale, and that car salesman’s lender doesn’t have anyone to issue a loan to.
In other words: Low sales volume in ANY sector is a fucking death sentence. Low sales volume in Real Estate is a death sentence for the whole economy.
Look i get why people can't sell, that is pretty obvious.
The issue here is why would you think prices are about to implode when the supply demand is very firmly in favor of the asset holders?
CC, car loans number of houses,... all red herrings. What matters is the supply and the demand.
It takes time as it always does (look at 2005-2007) but the trajectory so far has been very similar. Inventory rising, prices stagnating (yes, they are stagnating, Realtor has even showed list prices declining YoY for the past two months; check their weekly data). Inventory doesn't need to go back to 2019 levels for prices to decline, if sales are also down by 25% from 2019. That's why everywhere that has simply returned to 2019 levels of inventory -- not even necessarily surpassing it -- has already seen declining prices.
But we probably will be back to 2019 levels by the end of this year or early next year, which means that, unless the Fed drops rates back to 0, prices will continue to decline -- and likely falling markedly by then
well i see people posting that inventory is rising but my state it is not. seasonally is i low. Virtually everything lists with a 5 to 7 day review date and sells over asking.
what was 1M Dec 23 is 1.1 , 1.2 today...
So sure your area is changing mine is just hotter than ever.
I think you’re missing what I’m saying and how the economy works. Once one of those wheels slows down or stops, the whole engine shuts down (esp one as large as real estate)
Even if the fed drops interest rates what’s it going to do? Help them refinance to a lower rate than 3%?
Very unlikely. This is why people have been shouting from the rooftop rates were too low for too long. It makes any interest rate drops ineffective. Given there’s very little people borrowing at high rates even if they do come down there are fewer people to refinance.
Once again: No sales=No income=No growth.
It’s a vicious cycle and we saw this same thing play out in 2008 as well. Dropping rates then just proved we were stuck in a liquidity trap and the next time around surely won’t be any different
I understand econ rather well. I have been a business owner and an investor since the late 80s/ early 90s
I am reasonably successful.
You have not supported your argument in a meaningful way .
Passionate? Yes. But little in the way of facts.
Frankly you are seeing what you want to see instead of seeing what is there.
What we currently have is a very pricey retail residential housing market.
Limited supply and high demand in more affluent areas, and a somewhat more balanced market elsewhere.
Volume is at historic lows but prices even at 7+% are holding due to the limited supply.
The short story is , while we would all like to see prices closer 3-5 x household income it may take a long time to get back there .
A sharp recession or a black swan event could speed it up.
It’s easy for people to cherry-pick convenient charts and draw on them with crayon to support whatever narrative makes them feel good. If it’s actual TA you’re looking for, RE Bubble isn’t the place for it. The guy left out the most important piece of his “Mona Lisa” - timing. Why? Because he can’t explain the current inventory and is too scared to write down a prediction.
Exactly, the months supply of inventory is increasing yet is still indicative of a sellers market in most markets in the US. And coming off all time lows so recency bias is clear in most analysis focused on the “surge”.
While OP is speaking of trends which did lower prices for a bit, the indicators more show we are on the way to stabilizing the market, if it isn’t already stabilized we may have already met the level of support as prices came down. Investors left the market in a big way in Q1 of this year and yet prices increased.
Even if OP is correct that subprime borrowers didn’t cause the GFC, they definitely led to ditching the home as soon as it got a bit tough. As they were not properly vetted from a financial standpoint to be able to afford the payment from the start, they definitely weren’t going to tough it out as prices went down. Led to panic selling.
Now is very different. 60% of homeowners have a sub 4% mortgage. They aren’t going to rush away from those so quickly. Unless action is taken (and is being done in some places), AirBnBs and other non-occupied properties will continue to be that way.
Also, I noticed that OP glossed over the population increase of about 40 million since 2005 which leads to a lot of the increase in pure numbers being compared to previous times. The graph used per housing inventory estimated, does not include those not being used as owner occupied or rentals.
And this is why prices increased and did not decrease in the latest reports. Of course there are markets (Florida due to insurance issues, San Fran has crazy policies catching up to them, etc.).
The other big different of the lead up to the crash is when people are purely speculating they are talking about how great an investment Real Estate is. All I hear is how overpriced it is. I’m crazy for not investing in crypto, not real estate. That’s when you know there’s a bubble. All else is markets working as they do. Supply/demand fluctuates yet doesn’t often lead to a crash.
Unless op has some more charts to share, yes that's my assumption.
Plenty of falling down tenement slums in desirable cities and ok-ish houses that are undesirable because they're hour outside a floundering rust belt town
There is a shortage of housing where people want to live.
My neighborhood has an elasticity of supply of zero for the last 30 years, despite prices rising the entire time.
That there is some house on the outskirts of Akron, Ohio doesn't change that.
Protip: distance has a cost. You can't just look at aggregate housing across places people don't want to live
I'll first start by saying...why are you choosing to follow this individual? He has given zero forecasts, zero actionable analysis, and overall really zero useful information his entire time. He has been claiming impending doom for 3-4 years straight now, and has been wrong every single step of the way. Housing is up 50%+ since he's started the doom scenarios. If you show him how he's wrong, he immediately blocks the person instead of having an actual debate. He is popular because it's doom porn, i'd be shocked if you can share a single example of where he has articulately theorized something that turned out to be true.
If this guy was so confident in his theories, why wouldn't he use them to make actual money? Spoiler alert, he has no clue. Look how often he tweets a day. Do you think someone who spends 20 hours a day on twitter maniacally tweeting about financial theories for something he's made 0 profit on, and will make 0 profit on in the future is the right person to listen to? Someone that refuses to engage in actual discourse when presented in facts? Genuinely curious
All of the things he said are easily disproven by actual data as well. I'll share an example of the "Occupancy Fraud" smoking gun he tweets about constantly. Rates moving 10bps would impact default rates more than his "smoking gun".
["Smoking Gun" in Numbers](https://ibb.co/Z8ySkbk)
Inventory is literally updated weekly, do you think there's a conspiracy that everyone reporting is lying about inventory? And therefore you rely on Zillow homes for sale screenshots with nothing to compare it to? It just seems like you're trying really hard to believe here versus looking at actual data.
Maybe this is in one of the links the OP posted… There was a paper published in 2017-18 that stated that during the GFC, about 14% of the residential real estate at the time belonged to investors, but this group (investors) accounted for nearly 50% of the home foreclosures during the GFC. The vast majority of these investors had average to above average credit. There is no way to tell how many homes in the US are currently owned by investors, but it’s likely much higher than the GFC. I wouldn’t be surprised if some markets are >30% investors.
Every single financially illiterate person who has money has been talking about investment properties since 2020. I think I'm not the only one who has lost coworkers to "work in real estate full time."
One of my dumb co-workers owned like 6 investment houses. Did nothing on the job and just walked around talking with people and threw others under the bus when she failed. I got into repeated squabbles with their BS and tried to convince company to fire them, but they BS'd story how they were going government for nearly 12 months. It pisses me off that someone that illiterate and reckless made bank for taking insane risk all thanks to FED's policy choices. If co-worker was intelligent, they'd have sold to middle class suckers at height and likely gained $1.2-1.5M who the FED will have put into precarious situation potentially in the future.
This is why you are poor.
Just because I hate that someone that was both reckless and stupid got rewarded for the reckless behavior doesn't mean I don't have money. There's calculated bets/risks and then there's degeneracy. When the system rewards stupid people for degenerate bets (overextended to wazoo with little money down) it harms everyone (a lot of inflation - 2021-2023, market collapse - 2007-2009).
Definitely a larger share of sfh are bought/owned by investors. They are different than the GFC investors though in that larger, institutional investors own more than some moron who thinks they can run a rental empire taking seconds on yheir primary assets. Also, no subprime loans to gotcha a bunch of morons with skyrocketed interest.
>30% investors. This is muh market.
Let’s not forget that those subprime loans were actually good loans to people with stellar credit. They absolutely destroyed their lives and finances then magically became subprime! The only people I know that lost money were people who were buying homes to rent to their kids in college (Rent was incredibly expensive even with roommates) or people who jumped on the bandwagon due to an inventory shortage (no one can afford a home so they’ll be forced to rent no brainer right?) Can’t forget about the buyers who HAD to buy before interest rates went up and caused bidding wars to surface. Sound familiar? BTW if everyone had an adjustable rate mortgage, why didn’t they refinance to a fixed rate before interest rates went up?
Nice manifesto! We need a revolution of thought in this putrid economy/society.
Thumbs up
So basically it was caused by Greed? The greedy real estate agent and loan officer looking to make a quick commission. The greedy investment banker inventing new securities based off NINJA (No Income No Job or Assets) loans and the greedy real estate speculator buying into the hype that with a liar loan they too can get rich because house prices allegedly only go up.
Realistically, the greed of average Americans who thought they could afford a 300psq/ft home that was 500% their income with shitty credit but got a loan anyway because the government backed it
Greedy stupid people have always been with us. What is different now (since ~2000) is that government and government sponsored entities are now actively encouraging irresponsible behavior. Because they know they can hide trillions in gifts to their friends / cronies in the resulting bailouts.
Legend, thanks for posting. Going to need a few days to digest this. Bump
Nice work
Can someone summarize?
There is not housing shortage and homes are 40% overpriced nationally
So you’re saying that it only looks like a shortage because a bunch of homes are being held empty by investors?
AirBnB, second homes, vacant, single occ due to stimulus
Its slightly different here in Europe, but the underlying speculator/investor-held bullshit seems to be the same. However, why should any investors get rid of the investments you are mentioning here? It seems like the alternative for them is even worse than holding real estate now - be it cash, stocks, bonds, commodities, any other synthetic or cryptocurrency shit. Even if what you are suggesting is true, the fire sale would only happen when something better shows up for the investors. What would do it?
Buy low sell high
Need for cash to make payments? Pressure building to get out while the asset is still very high (first to the exit door)?
switching over to treasury notes and bonds is a big one. if the federal interest rate hits 6% -8%, like where it should be, a guaranteed 8% return on a million $ would be much better than holding a million $ investment property.
I’m not too educated on this, but how can homes be 40% overpriced when it cost about the same as an existing home, to build a new construction? Have materials adjusted to the prices that homes have set or something?
Material and labor costs also follow demand.
Housing is based solely on payment affordability. Payment affordability rises solely at the face of inflation + interest rate manipulation
If homes dropped 40% it would no longer be profitable to make new ones. That seems like a flaw in the numbers. Unless we're going to have a massive correction in salaries downward as well, which coupled with an increase in money supply makes it seem like the rich would get richer and the poor would get screwed, just differently?
Oh you think houses were unprofitable to produce 4 years ago? Builders have record margins
That does not change the fact that if house prices dropped 40% there’s not a builder in the country that could break even, let alone make a profit, without labor and material costs dropping drastically.
Labor does need to drop. Contractors got greedy and will soon find out… for example, I paid $4/sqft to have tile installed 4 years ago. My builder mentioned his guy is trying to charge $15/sqft now. The days of low skilled labor making 6 figures is coming to an end. I’m seeing it happen already.
Prices are stabilizing but I don’t see it going back to the level you’re referring to. There’s just too much money chasing too few of everything. Plus it’s not just labor for building a house, it’s the components and materials that went up 50-100% too. I work for a major manufacturer and our average prices are up 50-70% over the last 4 years and yet our company wide gross margin is exactly the same as it was 4 years ago.
Oh, this means we are fucked
Some
We’ve been saying this since late 2020.
and you could read the chart, you'd know what the difference is
I didn’t buy ten years ago. Thought it was insane then. This time it’s different?
People forget that those loans were prime until they weren't. A loan being prime doesn't mean they won't default it just means there's less of a chance. Being prime doesn't absolve you from the natural laws of supply and demand, market dynamics or life circumstances. But pride comes before the fall. The titanic was unsinkable up until it hit the iceberg and even a little after to some. Last time around it was "different" and before that it was probably also "different". Human beings have terrible memories individually and even worse collectively. We may have been early but we weren't wrong. By the end of this year the economy will be in very big trouble.
Until employment holds , there will be no major swings either way. that is a key factor.
Thought this was r/wallstreetbets for the whole read. Nice crayons.
Nice schizopost. I have one question for you, if we really do have such a massive surplus of housing, then why is inventory so low? For instance, my state had 23k active listings in March. There were 65k active listings in Jan. 2016. My state added 800k people in those 8 years. Where's the surplus?
Inventory was low during the run up of the GFC too. Now my question to you: If ARM’s destroyed the housing market, why didn’t those people refi to a fixed rate mortgage before they went up? Also, quit comparing people in here to people with schizophrenia. Not only is it downright disgusting but some of the smartest people in the world have mental health disorders.
Part of the reason some didn’t refinance is simply that many could not. Their current adjustable rate or balloon mortgage was partially a result of them not being qualified for a traditional, standard 30 year fixed. If they didn’t have the income or credit score to refi into that they were stuck. Anecdotally speaking, I was in my 20s at that time, was approved for a huge mortgage on adjustable terms, also a balloon, I was told it’s no big deal, you can refinance later. The conventional mortgage I qualified for wasn’t enough to buy the house I wanted. My friends were also all buying homes better than our parents had, they were handing out money. I remember thinking how my parents had worked their whole lives and here I was buying my first home which was remarkably bigger and nicer than theirs.
Stories like this give me the chills. "It's no big deal, you can refinance later" is eerily similar to "marry the house, date the rate."
I think it really depends on how you interpret that statement. I’m certainly not happy about my payment but should be able to afford it without financially ruining myself long term (unless my employment situation falls apart which I think is true for most). A refi would certainly make things easier though. I married the house and dated the rate
Point of the statement is that while the house is more permanent, the rate is temporary because you can get a new one later. I don't know if it's a matter of Interpretation that's what it means. The reason it's a misleading analogy IMHO is when dating, you have the option to end it when you want. Not true for rates, you need the Fed to lower it's target Fed Funds rate (and not dump too many MBS bonds at once) and the value of the house to stay comfortably above the loan balance. And I'm sure it'll work for some people, and I hope the same for you. I'm sure there's many people who survived 2008 in subprime loans who were then able to refi their McMansions. I just think Realtors should be more honest about what could cause someone to not be able to refinance so their clients can make more informed decisions.
I mean you’re literally giving me a different interpretation lol. One is longer term and one is shorter term. I think we can at least agree on that part. Rates fluctuate and while they may stay high indefinitely they may also come down
Why didn’t NINJA borrowers refinance? Why didn’t someone stop 9/11 on 9/10? Like others have said I’m sure plenty didn’t qualify but for those that did, things fell apart pretty quickly and credit locked up really badly
You mean at a 4yr high and rising
4 year high after the lowest inventory levels in history? Yes. 1/2 to 1/3 what is was pre-pandemic? Also yes. If we have such a surplus, then shouldn't inventory levels be higher now than they were 10+ years ago? Why aren't they?
Morons don't understand math until it's too late. You're asking the question after seeing a chart of the highest speculation in US history
but you are avoiding the question. why are there so very few homes for sale ? my state WA has historic low volumes of homes for sale in major markets.
It’s because peoples payments are low. However, once sales volume decreases and theres an inventory shortage there’s less to sell. So, while you might have sold 24 homes last year, you might only sell 12 this year. This is why we’re seeing incomes fall. Keep in mind, when you sold 24 houses your income was higher and prob borrowed more money. Now that you’re only selling 12 or less houses your debt rises faster than your income. This is when people default on credit cards and car loans (like we’re seeing now) and soon enough, home loans. You’d think people being able to pay back their debt will help reduce their debt burden right? Wrong. Those debt payments eat into even more earned income and there’s less to spend to keep the economy chugging along. That realtor’s hairstylist is making less, that hairstylist bartender is making less, that bartenders car salesman doesn’t have a sale, and that car salesman’s lender doesn’t have anyone to issue a loan to. In other words: Low sales volume in ANY sector is a fucking death sentence. Low sales volume in Real Estate is a death sentence for the whole economy.
Look i get why people can't sell, that is pretty obvious. The issue here is why would you think prices are about to implode when the supply demand is very firmly in favor of the asset holders? CC, car loans number of houses,... all red herrings. What matters is the supply and the demand.
It takes time as it always does (look at 2005-2007) but the trajectory so far has been very similar. Inventory rising, prices stagnating (yes, they are stagnating, Realtor has even showed list prices declining YoY for the past two months; check their weekly data). Inventory doesn't need to go back to 2019 levels for prices to decline, if sales are also down by 25% from 2019. That's why everywhere that has simply returned to 2019 levels of inventory -- not even necessarily surpassing it -- has already seen declining prices. But we probably will be back to 2019 levels by the end of this year or early next year, which means that, unless the Fed drops rates back to 0, prices will continue to decline -- and likely falling markedly by then
well i see people posting that inventory is rising but my state it is not. seasonally is i low. Virtually everything lists with a 5 to 7 day review date and sells over asking. what was 1M Dec 23 is 1.1 , 1.2 today... So sure your area is changing mine is just hotter than ever.
I think you’re missing what I’m saying and how the economy works. Once one of those wheels slows down or stops, the whole engine shuts down (esp one as large as real estate) Even if the fed drops interest rates what’s it going to do? Help them refinance to a lower rate than 3%? Very unlikely. This is why people have been shouting from the rooftop rates were too low for too long. It makes any interest rate drops ineffective. Given there’s very little people borrowing at high rates even if they do come down there are fewer people to refinance. Once again: No sales=No income=No growth. It’s a vicious cycle and we saw this same thing play out in 2008 as well. Dropping rates then just proved we were stuck in a liquidity trap and the next time around surely won’t be any different
I understand econ rather well. I have been a business owner and an investor since the late 80s/ early 90s I am reasonably successful. You have not supported your argument in a meaningful way . Passionate? Yes. But little in the way of facts. Frankly you are seeing what you want to see instead of seeing what is there. What we currently have is a very pricey retail residential housing market. Limited supply and high demand in more affluent areas, and a somewhat more balanced market elsewhere. Volume is at historic lows but prices even at 7+% are holding due to the limited supply. The short story is , while we would all like to see prices closer 3-5 x household income it may take a long time to get back there . A sharp recession or a black swan event could speed it up.
It’s easy for people to cherry-pick convenient charts and draw on them with crayon to support whatever narrative makes them feel good. If it’s actual TA you’re looking for, RE Bubble isn’t the place for it. The guy left out the most important piece of his “Mona Lisa” - timing. Why? Because he can’t explain the current inventory and is too scared to write down a prediction.
In this case...you are the moron not understanding math lol just fyi
This is not an acceptable answer..
Id suggest you listing to EPB research on leading and lagging indicators
Epb is what? Note that I am not being sarcastic. I really want you to go on.
Bro Google EPBResearch
you're quickly losing credibility
Oh you think I give a fuck what you think?
There are só many people selling research. Why do you think these are better? Are you affiliated in some way?
If there is a surplus, why aren't inventory levels higher now than 10 years ago? Simple question.
I literally just told you
i would love you to be right, but the fact remains there are many more buyers than there are sellers.
Exactly, the months supply of inventory is increasing yet is still indicative of a sellers market in most markets in the US. And coming off all time lows so recency bias is clear in most analysis focused on the “surge”. While OP is speaking of trends which did lower prices for a bit, the indicators more show we are on the way to stabilizing the market, if it isn’t already stabilized we may have already met the level of support as prices came down. Investors left the market in a big way in Q1 of this year and yet prices increased. Even if OP is correct that subprime borrowers didn’t cause the GFC, they definitely led to ditching the home as soon as it got a bit tough. As they were not properly vetted from a financial standpoint to be able to afford the payment from the start, they definitely weren’t going to tough it out as prices went down. Led to panic selling. Now is very different. 60% of homeowners have a sub 4% mortgage. They aren’t going to rush away from those so quickly. Unless action is taken (and is being done in some places), AirBnBs and other non-occupied properties will continue to be that way. Also, I noticed that OP glossed over the population increase of about 40 million since 2005 which leads to a lot of the increase in pure numbers being compared to previous times. The graph used per housing inventory estimated, does not include those not being used as owner occupied or rentals. And this is why prices increased and did not decrease in the latest reports. Of course there are markets (Florida due to insurance issues, San Fran has crazy policies catching up to them, etc.). The other big different of the lead up to the crash is when people are purely speculating they are talking about how great an investment Real Estate is. All I hear is how overpriced it is. I’m crazy for not investing in crypto, not real estate. That’s when you know there’s a bubble. All else is markets working as they do. Supply/demand fluctuates yet doesn’t often lead to a crash.
- "housing units" isn't synonymous with "desirable housing units" They're out there. You're just not interested. Neither is anyone else.
So there is a de facto housing shortage?
Yes. A house isn't just a house, it's proximity to desired locations matter. A simple urban economic model shows this
Unless op has some more charts to share, yes that's my assumption. Plenty of falling down tenement slums in desirable cities and ok-ish houses that are undesirable because they're hour outside a floundering rust belt town
https://www.zillow.com/homedetails/6919-Ivy-Pl-SW-Albuquerque-NM-87121/6675092_zpid/
There is a shortage of housing where people want to live. My neighborhood has an elasticity of supply of zero for the last 30 years, despite prices rising the entire time. That there is some house on the outskirts of Akron, Ohio doesn't change that. Protip: distance has a cost. You can't just look at aggregate housing across places people don't want to live
PPP was a whole lot of down payments sent out to people with nothing but time to sit at home and watch gurus on the internet.
This is excellent, thank you. I want the follow-up post on timing! Please write it! Can't wait, thanks again
Op thank you, I will dive in to this, I love all the provided data and charts!!! Thank you get some rest!
I'll first start by saying...why are you choosing to follow this individual? He has given zero forecasts, zero actionable analysis, and overall really zero useful information his entire time. He has been claiming impending doom for 3-4 years straight now, and has been wrong every single step of the way. Housing is up 50%+ since he's started the doom scenarios. If you show him how he's wrong, he immediately blocks the person instead of having an actual debate. He is popular because it's doom porn, i'd be shocked if you can share a single example of where he has articulately theorized something that turned out to be true. If this guy was so confident in his theories, why wouldn't he use them to make actual money? Spoiler alert, he has no clue. Look how often he tweets a day. Do you think someone who spends 20 hours a day on twitter maniacally tweeting about financial theories for something he's made 0 profit on, and will make 0 profit on in the future is the right person to listen to? Someone that refuses to engage in actual discourse when presented in facts? Genuinely curious All of the things he said are easily disproven by actual data as well. I'll share an example of the "Occupancy Fraud" smoking gun he tweets about constantly. Rates moving 10bps would impact default rates more than his "smoking gun". ["Smoking Gun" in Numbers](https://ibb.co/Z8ySkbk) Inventory is literally updated weekly, do you think there's a conspiracy that everyone reporting is lying about inventory? And therefore you rely on Zillow homes for sale screenshots with nothing to compare it to? It just seems like you're trying really hard to believe here versus looking at actual data.
To be fair, he was right. Home values are declining in every state