Market Watch

[milkman636]

Price reductions won’t happen. Rates will be cut, housing is already seeing a rebound. Welcome to the new normal

Saw some data earlier this week that says the rebound is in the $750k+ housing market. On the lower end of the market 9.6% of FHA mortgage loans are currently in delinquency according to the same source. Annual sales volume is trending about %25 below projections, and some metropolitan markets are experiencing 30+% of the current listings have had a price reduction. The increase in high end housing has been strong enough to keep the reported median home price on the rise, but there is broad underlying weakness in the lower 2/3 of the real estate market.

 

[2manyrocks]

IMO, same people who set 3% inflation target are the ones who caused inflation to rear its head again, set off rampant speculation in the residential housing market by setting interest rates too low, act like they had nothing to do with it and conveniently don't count housing costs as a component measure of inflation.

As for an unofficial economic measure, the nearest animal shelter posted in July, 2023 that owner surrenders are up to 40%, adoptions are down and euthanization is up. The shelter is operating at about double the occupancy it was built to accomodate. In the past two weeks, I recall seeing three different people post requests to rehome their dogs outright saying they are losing their home. There are probably more people than these three, but they chose to explain the circumstances in their decision to rehome so potential adopters would know it wasn't the dog's fault.

 

[two_bit_score]

It happened in my city of Oakland in the 70’s when abandoned homes were offered for $1 if you moved in and made improvements.

40-50 years later the dollar homes sell for $600-750k

Agreed! In many places. Market changes frequently. Generally, over time, it goes up. Sometimes it takes 40-50 years. In the meantime somebody is probably paying taxes, insurance and maintenance. Possibly going in the hole on rents. Nothing is guaranteed.

 

[jyoutz]

Depends on the location. In some areas, over time, the whole area can deteriorate to the point people just abandon their homes. Because they become worthless.

Much of W VA and rural areas in the Great Plains are seeing depopulation at this time. Also some deteriorating urban areas like Detroit. And some rural areas in my state, so you are correct. My comment was more focused on areas where depopulation isn’t occurring.

 

[rScotty]

It happened in my city of Oakland in the 70’s when abandoned homes were offered for $1 if you moved in and made improvements.

40-50 years later the dollar homes sell for $600-750k

I lived there during the 1970s. Never heard of such a thing as dollar homes for making improvements. It would be nice if it had happened and now they are worth more, but it didn't. At least not to any great extent.

Sales of houses and properties to recover liens against utilities and back taxes happen every year in every town. They are going on locally right now. But actually gaining a title to a property that way is rare.

 

[ultrarunner]

I lived there during the 1970s. Never heard of such a thing as dollar homes for making improvements. It would be nice if it had happened and now they are worth more, but it didn't. At least not to any great extent.

Sales of houses and properties to recover liens against utilities and back taxes happen every year in every town. They are going on locally right now. But actually gaining a title to a property that way is rare.

In the early 70’s the city of Oakland California had a glut of abandoned homes in high crime neighborhoods which led to lending and insurance redlining.

The vacant homes were magnets for illegal activity and squatters and a fire hazard.

City said the costs to raze were often more than the property was worth.

A novel idea came about to solve blight, crime and get the property back on the tax rolls while avoiding additional city expense.

Low income first time would be home buyers could submit their name for a lottery to buy with the conditions they move in, pay taxes, make improvements so property no longer blighted and after 5 years eligible to purchase from the city for $1.

I walked by several of these shells on my way to school and from day to day witness the deterioration…

I wanted one in the worst way but too young at the time.

It was 10 years later in 1983 I bought my first home and total cash price was $11,500 and no government program as it was listed on the MLS

Not long after buying I met my backyard neighbor who told me I paid too much and that he only paid $1 for his place 10 years ago.

I still own my $11,500 SF Bay Area home to this day…

Kind of the same deal in Detroit with block after block of abandoned homes when I was there… homes that could be bought for as little as $1,000 no strings…

HUD about Dollar Homes

www.hud.gov

 

[two_bit_score]

Much of W VA and rural areas in the Great Plains are seeing depopulation at this time. Also some deteriorating urban areas like Detroit. And some rural areas in my state, so you are correct. My comment was more focused on areas where depopulation isn’t occurring.

And Detroit was the first place I thought about upon reading your post. We can't always just cherry pick our parameters when evaluating the market. That is, if we aim to be accurate.

 

[Yander]

I had no trouble predicting the economy would be horrible starting in 2020 when the gov____ment started spending wildly. Thats when the inflation kicked in and then interest rates went up. Now everything costs a lot more and it’s here to stay.

The 1-2 punch that ruins the economy- government overspending is usually where it starts.

But that's the price of "building back better" don't cha know.

 

[rScotty]

In the early 70’s the city of Oakland California had a glut of abandoned homes in high crime neighborhoods which led to lending and insurance redlining.

The vacant homes were magnets for illegal activity and squatters and a fire hazard.

City said the costs to raze were often more than the property was worth.

A novel idea came about to solve blight, crime and get the property back on the tax rolls while avoiding additional city expense.

Low income first time would be home buyers could submit their name for a lottery to buy with the conditions they move in, pay taxes, make improvements so property no longer blighted and after 5 years eligible to purchase from the city for $1.

I walked by several of these shells on my way to school and from day to day witness the deterioration…

I wanted one in the worst way but too young at the time.

It was 10 years later in 1983 I bought my first home and total cash price was $11,500 and no government program as it was listed on the MLS

Not long after buying I met my backyard neighbor who told me I paid too much and that he only paid $1 for his place 10 years ago.

I still own my $11,500 SF Bay Area home to this day…

Kind of the same deal in Detroit with block after block of abandoned homes when I was there… homes that could be bought for as little as $1,000 no strings…

HUD about Dollar Homes

www.hud.gov

Yes, what you are describing with the tax resale of property is unfortuately a pretty common municipal growth model where things go wrong. We could add a hundred other towns to Detroit, LA, SF - including Denver in the 1960 & 70s. It's a microcosm of the federal problems.

Problems start with a poorly run local gov't cannot support its financial obligations. Taxes and fees cause properties to be abandoned, resold, and then a new owner improves them until high taxes begin again... and so the cycle repeats. It isn't progressive/liberal thing so much as just laziness and lack of education thing.

Danger signals are rising assessments, restrictive building ordinances, and specialized zoning.
People's reactions are predictable - we can see them happening right now in the progressive/conservative splits. The results of various ways to fix the problem are also predictable in broad terms. And so are the outcomes. They are predictable because they have happened so many times before.

If this subject interests anyone, most every state has an active Municipal League composed of representatives from all the local town governments as well as minor politicians like small town mayors and town and county trustees.

Instead of talking about tractors, Municipal League members discuss things that communities need - like how to maintain parks, structure taxes, charge for utilities, types of property assessments, street and bridge bonds, zoning, schools, funding a fire dept, land and housing, & local laws and ordinances...

Most every solution to people living together has been tried for years in hundreds if not thousands of communities with the results compiled for generations now. So the history is there for the learning.

Municipal Leagues are always recruiting. If working to fix the poblems discussed in this thread are interesting anyone, consider joining.

rScotty

 

[Hay Dude]

Our major cities in the USA have been run into the ground by their corrupt leadership. You drive around cities like Philly and Baltimore wondering where did all the manufacturing go? Why did it leave? Why so much trash and urban decay? Such irresponsible, corrupt leadership.
What a disgrace.