Real Estate Days on Market?

[Snobdds]

Some believe it will not be a total repeat because few homes in this lead up were bought with no money or little money down...

The number of all cash sales has never been higher...

Have you asked yourself, why are there so many cash sales? In reality, they are not cash sales, they just appear that way.

The answer is because so many people have used a new financial tool where banks are lending money to people that put their entire asset portfolio as collateral, including retirement accounts . Banks have had cheap money from the fed to loan out and when money is cheap, it makes the risk premium low as well. When a person can put their house, car, guns, collections as collateral, they can then purchase houses with this leveraged money as cash. Then the new purchased house gains 15% equity due to the heated market and this new house then provides some capital for the next purchase.

This market is being fuel with leveraged money. The absolute train wreck in the crypto world recently is what awaits the housing market. There were so many crypto millionaires in 2021. They all got wiped out.

I'm going to say it...the housing market over the last two years is a ponzi scheme. It will blow up.

 

[Snobdds]

Mortgage rates this week saw thier largest one week drop since, wait for it…

2008

Due to the reality that we are in a recession, and the market is cooling.

Ive seen this story before. It’s time to buy things cheap.

The housing market has cooled, but so far has not retracted...YET.

Plus, agents are still pricing housing like 2021. Reality hasn't hit the agents yet.

 

[Oaktree]

I'm going to say it...the housing market over the last two years is a ponzi scheme. It will blow up.

I wouldn't call it a Ponzi scheme if for no other reason than the product (real estate) actually exists. In total agreement that the bottom will fall out at some point.

 

[ultrarunner]

Have you asked yourself, why are there so many cash sales? In reality, they are not cash sales, they just appear that way.

The answer is because so many people have used a new financial tool where banks are lending money to people that put their entire asset portfolio as collateral, including retirement accounts . Banks have had cheap money from the fed to loan out and when money is cheap, it makes the risk premium low as well. When a person can put their house, car, guns, collections as collateral, they can then purchase houses with this leveraged money as cash. Then the new purchased house gains 15% equity due to the heated market and this new house then provides some capital for the next purchase.

This market is being fuel with leveraged money. The absolute train wreck in the crypto world recently is what awaits the housing market. There were so many crypto millionaires in 2021. They all got wiped out.

I'm going to say it...the housing market over the last two years is a ponzi scheme. It will blow up.

It's always been cyclical...

I've gone through resets of 25% loss to 80%. Of course only realized at time of sale.

So far the blow ups have been buy opportunities and when the market tanked the worst the rents held and even increased.

Most need a place to call home.

Part of the problem last time is many opted to walk because they were locked out of refi at lower rates because of loan to value lack of equity

Ashamed to say some well to do people I know such as Doctors and Lawyers did strategic defaults...

The bought same or better in same neighbors for hundreds of thousands less and the walked away from their old home saying it is nothing more than a business transaction...

Pay 1.6m in 2007 and buy same in 2009 for 900k and pocket nearly 700k...

Fast forward 15 years and that 900k home is pushing 2 m.

 

[2manyrocks]

Per the inflation calculator website, $900,000 in 2007 would be $1,226,205.27 in 2022 at a cumulative rate of 36.2%.

$1,600,000 in 2007 would be $2,255,566.17 in 2022 at a cumulative rate of 41%. Inflation Calculator | Find US Dollar's Value from 1913-2022

IDK, maybe that suggests prices are what they are because of inflation slightly reduced by the 2008 downturn.

 

[dmccarty]

House prices in Wake county, NC, which is were the state capital is located, has been growing by leaps and bounds, set a new high price record for housing. Having said that, the market is in flux in that some homes are being reduced in price but the prices are still high. Inventory is growing but going from .5 month of supply to 1.1 month is hardly a disaster.

People are moving to the area because of jobs. As long as the jobs are here, people will move to get those jobs. That is not a bubble.

The Fed is talking about raising rates by 1-1.25% to get a handle on inflation. From a mortgage perspective, all that does is drive down the size/cost of a house a person can afford to buy. They are arriving here and they need a place to buy or rent. Raising rates just increases the cost of a mortgage, limits how much house can be bought, and encourages people to buy more home than they should. While that might calm some of the home prices it does not really do anything for the cost of fuel, food and vehicles. The cost of fuel and food is due to Putin's War and government policy. Price increase of vehicles is from the pandemic and will take time to settle down. Wage increases due to a shortage of workers is not likely to go away unless we drive into a bad recession. I really wonder if the interest rate increases are going to have a positive impact on inflation that is expected.

Later,
Dan

 

[2manyrocks]

Every home price chart shows a dramatic run up in prices over the past two years with price increases far exceeding wage growth and the price increases far exceeding historical norms of appreciation. 30% home appreciation in a year isn't normal.

Mortgage rates in March 2022 were at 3.76% which is an abnormally low rate compared to historical trends. With an inflation rate of 9%, it's no wonder people will pay a lot to buy a house if they can borrow at 3.76%.

Mortgage rates are now closer to 5.25-6%--hardly a high rate compared to the rate of inflation or historical loan mortgage rates.

 

[dmccarty]

Every home price chart shows a dramatic run up in prices over the past two years with price increases far exceeding wage growth and the price increases far exceeding historical norms of appreciation. 30% home appreciation in a year isn't normal.

Mortgage rates in March 2022 were at 3.76% which is an abnormally low rate compared to historical trends. With an inflation rate of 9%, it's no wonder people will pay a lot to buy a house if they can borrow at 3.76%.

Mortgage rates are now closer to 5.25-6%--hardly a high rate compared to the rate of inflation or historical loan mortgage rates.

In our area, well nearby, the housing price rises are simply to supply and demand. There is huge demand and limited supply. And has you say, 5.25-6% rates are still low, which is why I really wonder if rising the prime rate is going to have the impact that is expected.

How is the prime rate increases going to lower our food, fuel and vehicle costs? The prime rate increases will certainly increase housing costs.

Later,
Dan

 

[2manyrocks]

An abnormally low interest rate has a tendency to push prices upwards. If anything, abnormally low interest rates create a financial incentive to make purchases and have a stimulative effect. It creates an incentive to borrow and spend when someone can borrow at 5% and inflation is running at 9%.

In a normal market, interest rates would reflect the cost of funds, the risk inherent in the loan, and the rate of inflation.

If they want to slow down the rate of inflation, one way is to increase the interest rate to take away this artificial incentive that is contributing to the dramatic increase in the median price of homes far above wage growth.

How crazy is it that people have been willing to pay more than the fair market value that appraisers were willing to place on houses?

I'm looking at a listing in Nashville right now for $374,900, but the 2022 tax appraisal is $269,900. The tax assessor in Nashville isn't shy about making sure that tax valuations are current, and yet there's a $100,000 difference between what the tax assessor says the house is worth versus the list price. Historically, there wouldn't have been more than a 10-15% difference between list and tax valuation.

Part of the problem with the inventory of homes is people look at the runup in prices and thinking they need to hold onto their houses because where else could they invest their funds for these kinds of returns and what would it cost them to buy another house if they sold the one they have? So they stay put and don't list their houses.

 

[arto98607]

Looks like a recession is on it's way and may already be here - it will correct the situation eventually.

Many people will get hurt.