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Updated almost 2 years ago, 01/14/2023
Housing crash deniers ???
Unfortunately I've been away for a few months while taking care of some personal matters, so I haven't been able to keep up on discussions.
However, several months ago there were ample amount of folks here insisting that a market crash/ correction was impossible and that prices would only continue to increase.
Curious if there are still people out there who feel this way? If so, I'd love to see some data that supports your view that the market isn't going to crash/ correct.
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
Quote from @Nicholas L.:
but folks that bought houses at fixed rates for the purposes of living in them are OK - right? doesn't this just put pressure on buyers going forward?
Yes, if you bought at a fixed rate to live in then your fine in terms of your monthly payment. That doesn't mean you actually have real equity in your asset. Equity is derived based on what the market prices your property at. Everybody is "stuck" in their properties right now. It is a standoff between sellers and buyers right now. Some buyers may get desperate and overpay, before this is realized. On the flip side, people have life circumstances that require them to move. However, if you sell out of a fixed rate mortgage, where are you going to go for a similar payment that you have? If rates stay this high for a prolonged period of time, then the home values will drop. The real estate market is broken. It is usually a 3-6 month lag before rates are fully priced in to real estate values.
Very true observation. There's no need to rush anything as the Fed implicitly said they may reduce the rate to 2.5% in 2024/2025. This is more like a waiting game until they reduce the Fed fund rate.
God wants more unemployment and much-lowered housing price.
Unemployment is 3.7% and roughly 10% of the population is useless. 12% of the people that take the ASVAB fail and are deemed completely useless by the US military. They are not qualified to peel potatoes or reconstitute food. The upside I guess is that very few of these folks are homeowners. Unemployment jumping to normal levels will not come from the top 50%. My 14-year-old daughter started putting in applications for her first job and had 9 interviews scheduled within 3 days. Her phone blew up. Pay is starting at $15/hr.
I predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refi. You will also see a lot more seller financing and subject 2 deals with actual cash coming into the deal. Not everyone makes decisions like those of us on BP. Some people want a certain house in a certain area and they don't really care about the details. They have the income to where a $1500 bump in payment doesn't move the needle for them. Rates may go up or may go down but they want to be living where they want to be living while it happens.
We are talking about homes, where people live. Not strictly investments. It is not like you can rent for much less than the mortgage payment in most desirable markets. A huge chunk of the SFR rental market was sold off over the past few years. Many Landlords have cashed out and sold to homeowners. That rental housing stock is not coming back on the market. It's not like 15 years ago when the market was flooded with housing. Boomers are not going to flood the market as they downsize because they have 2% rates. They are just going to stay in their larger homes. We didn't build very much housing from 2009-2019. And homebuilders barely got things cranked up and then covid hit and supply chain issues put the brakes on it. Inventory is 3.7 months in my market. I went to the caravan last week and there were 3 houses coming on. Anything decent still gets snapped up in a few days.
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
Quote from @John Carbone:
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
Quote from @Joe Bertolino:
Quote from @John Carbone:
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
That’s assuming rates will go lower in 2 years. That’s probably a good bet to happen, but the 2 year expected terminal rate is pretty high. The equity they are calculating is based off of the 3 percent rate environment we just had. I see what you are saying, YOY equity is up 27.8 percent, that will gradually decline as the fed funds rate stays elevated. Even for people who have a house free and clear, maybe several, those people could also try to sell to realize their gains putting pressure on the market. Those people don’t need to sell for “x” amount to pay a bank off. You are not seeing it In the data because you are looking at stale data that is not reflective of the current environment. Stock market is forward looking, and it’s pricing in some pain.
I don’t see how reverting back the false Covid equity gains is somehow considered a “crash” or the world would be ending scenario. It’s entirely plausible. the major stock indexes are less than 15 percent away from being at pre Covid levels and there have been 0 major bankruptcies
#1 Market Trends & Data Contributor
Quote from @Joe Bertolino:
Quote from @John Carbone:
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
From what I know, there is more ground-up development in MF both in the south and midwest. The MF supply is expected to outpace demand in that region.
Northern CA probably would be safe as there's no more supply.
However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.
Tech co. can't sell products if the dollar is too high.
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Quote from @Joe Bertolino:
I think you are. There are a few of you NoCal investors here that think it's the same everywhere. It is not.
https://sfstandard.com/housing...
Based on the data coming out, It looks like you will be in touch with reality pretty soon. rates are even higher now since this article was written.
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Quote from @Joe Bertolino:
Quote from @John Carbone:
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
They don't get-it Joe, they just don't get it.
It seems that there is such a blood-lust for a collapse in R.E., out of a desire to have been an investor in 2009, that anything and everything going on = "collapse" in peoples mind, it's tunnel-vision on shrooms, it really is.
Firstly, Inflation = Inflation, not Deflation. Homes did not just go up in price, your dollar went DOWN in it's purchasing power. I have not heard 1 person argue how groceries are going to go down 20%. Housing is coined "The" hedge against inflation for a reason, and it's not because it devalues while everything else inflates.
Next, and I still don't understand person's disconnect with this, we are at net SHORTAGE of housing, SHORTAGE. Now add that ingredient with INFLATION for all the things that go into making a home, the labor for everyone involved, the materials and tools they use, those cost's of inputs dictate the price to market. New unit costs will drop 20% when everything and everyone that makes on takes 20% less, it's not complicated. The result of this math, is called STAGFLATION, high cost of an item with more limited purchasing of that item makes lower volume NOT collapse.
And lastly the fun one also ignored all the time which is most are sitting on record high equity and liquidity. People in large part DON'T have to sell, at all. On average at least $100k of equity would have to be burned away AND then those occupants put into a financial crisis of income, and this is just to start to get in realm of potential for risk of foreclosure. Or in terms, 2008 collapse X3. It's a ridiculous notion.
We also have a massive net shortage of rental units. This makes a nice "landing" buffer for builder's/developers for pivoting there activity. Some won't, some will just stop, or decrease volume. Others will adjust. Things could not be more different then 2007, everything is different in world of development today.
A thought that high interest rates will collapse housing, please do the basic research of a little thing we call the '80's, rates hit 14% and guess what, no collapse. What did happen in the '80's was a setting of the stage for the bull-run of the 90's.
We are in STAGFLATION. This fall/winter will see the lowest prices in R.E. for the next years to come. By Q2 of '23' housing shortage will press the leveling and bounce up in R.E. pricing, and as much as people will not like the price level, they will pay it because it's the cost of having a roof over there head, shelter is non-optional.
And then, I predict political meddling to gain votes in the form of directing Fannie/Freddie to securitize and normalize the 40/50yr mortgage because, it gives feeling of affordability while not actually touching price. THAT's how housing becomes "affordable" again. That happens, median price will shoot up, yet again. I am betting there will also be something to address MBS purchases, but most will miss that point as it's over most persons heads but in truth that's where the whole issue of rates is coming from so most likely something done there.
Now then, then you may get into a high leverage environment, setting the stage for a "collapse" of some type in or around "25-'27'. As it stands now, we have inflation with liquidity, that spells STAGFLATION if anything.
- James Hamling
Quote from @James Hamling:
Quote from @Joe Bertolino:
Quote from @John Carbone:
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
They don't get-it Joe, they just don't get it.
It seems that there is such a blood-lust for a collapse in R.E., out of a desire to have been an investor in 2009, that anything and everything going on = "collapse" in peoples mind, it's tunnel-vision on shrooms, it really is.
Firstly, Inflation = Inflation, not Deflation. Homes did not just go up in price, your dollar went DOWN in it's purchasing power. I have not heard 1 person argue how groceries are going to go down 20%. Housing is coined "The" hedge against inflation for a reason, and it's not because it devalues while everything else inflates.
Next, and I still don't understand person's disconnect with this, we are at net SHORTAGE of housing, SHORTAGE. Now add that ingredient with INFLATION for all the things that go into making a home, the labor for everyone involved, the materials and tools they use, those cost's of inputs dictate the price to market. New unit costs will drop 20% when everything and everyone that makes on takes 20% less, it's not complicated. The result of this math, is called STAGFLATION, high cost of an item with more limited purchasing of that item makes lower volume NOT collapse.
And lastly the fun one also ignored all the time which is most are sitting on record high equity and liquidity. People in large part DON'T have to sell, at all. On average at least $100k of equity would have to be burned away AND then those occupants put into a financial crisis of income, and this is just to start to get in realm of potential for risk of foreclosure. Or in terms, 2008 collapse X3. It's a ridiculous notion.
We also have a massive net shortage of rental units. This makes a nice "landing" buffer for builder's/developers for pivoting there activity. Some won't, some will just stop, or decrease volume. Others will adjust. Things could not be more different then 2007, everything is different in world of development today.
A thought that high interest rates will collapse housing, please do the basic research of a little thing we call the '80's, rates hit 14% and guess what, no collapse. What did happen in the '80's was a setting of the stage for the bull-run of the 90's.
We are in STAGFLATION. This fall/winter will see the lowest prices in R.E. for the next years to come. By Q2 of '23' housing shortage will press the leveling and bounce up in R.E. pricing, and as much as people will not like the price level, they will pay it because it's the cost of having a roof over there head, shelter in non-optional.
And then, I predict political meddling to gain votes in the form of directing Fannie/Freddie to securitize and normalize the 40/50yr mortgage because, it gives feeling of affordability while not actually touching price. THAT's how housing becomes "affordable" again. That happens, median price will shoot up, yet again. I am betting there will also be something to address MBS purchases, but most will miss that point as it's over most persons heads but in truth that's where the whole issue of rates is coming from so most likely something done there.
Now then, then you may get into a high leverage environment, setting the stage for a "collapse" of some type in or around "25-'27'. As it stands now, we have inflation with liquidity, that spells STAGFLATION if anything.
Your long term solutions make sense, and that’s what’s likely to occur. It doesn’t change the fact that housing prices will drop substantially before that happens if rates stay high.
serious question, do you know where I can lock in my home “equity” value right now for the next 2 years, so that if my properties lose value in 2 years the insurer will write me a check for the difference? I’d really like to find someone who has an insurance product like that with deep pockets. I wonder what the premium would be on that. Historically because housing always goes up, it should be very cheap insurance.
#1 Market Trends & Data Contributor
I don't know if this is what you looking for, but there's a company like hometap/unison that will give you cash for your home equity without monthly payment, but at the end of the term (10 y/30 y) you have to give up part of your equity/appreciation to the lender. They're betting on home appreciation value.
Quote from @Carlos Ptriawan:
I don't know if this is what you looking for, but there's a company like hometap/unison that will give you cash for your home equity without monthly payment, but at the end of the term (10 y/30 y) you have to give up part of your equity/appreciation to the lender. They're betting on home appreciation value.
I’d be more interested in a financial institution. Here’s the thing with companies like this. If things go badly for them, all of their exposure is long housing, I wouldn’t trust them to be able to pay everyone. Similar to what happened with AIG. I’ll look into them to see their position and if they could actually pay out if there was a market wide drop in prices.
The people who bet against housing with derivatives in 2008 didn’t realize the true gains that they should have because of counterparty risk. They failed to calculate that in their short.
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Quote from @John Carbone:
Quote from @James Hamling:
Quote from @Joe Bertolino:
Quote from @John Carbone:
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
They don't get-it Joe, they just don't get it.
It seems that there is such a blood-lust for a collapse in R.E., out of a desire to have been an investor in 2009, that anything and everything going on = "collapse" in peoples mind, it's tunnel-vision on shrooms, it really is.
Firstly, Inflation = Inflation, not Deflation. Homes did not just go up in price, your dollar went DOWN in it's purchasing power. I have not heard 1 person argue how groceries are going to go down 20%. Housing is coined "The" hedge against inflation for a reason, and it's not because it devalues while everything else inflates.
Next, and I still don't understand person's disconnect with this, we are at net SHORTAGE of housing, SHORTAGE. Now add that ingredient with INFLATION for all the things that go into making a home, the labor for everyone involved, the materials and tools they use, those cost's of inputs dictate the price to market. New unit costs will drop 20% when everything and everyone that makes on takes 20% less, it's not complicated. The result of this math, is called STAGFLATION, high cost of an item with more limited purchasing of that item makes lower volume NOT collapse.
And lastly the fun one also ignored all the time which is most are sitting on record high equity and liquidity. People in large part DON'T have to sell, at all. On average at least $100k of equity would have to be burned away AND then those occupants put into a financial crisis of income, and this is just to start to get in realm of potential for risk of foreclosure. Or in terms, 2008 collapse X3. It's a ridiculous notion.
We also have a massive net shortage of rental units. This makes a nice "landing" buffer for builder's/developers for pivoting there activity. Some won't, some will just stop, or decrease volume. Others will adjust. Things could not be more different then 2007, everything is different in world of development today.
A thought that high interest rates will collapse housing, please do the basic research of a little thing we call the '80's, rates hit 14% and guess what, no collapse. What did happen in the '80's was a setting of the stage for the bull-run of the 90's.
We are in STAGFLATION. This fall/winter will see the lowest prices in R.E. for the next years to come. By Q2 of '23' housing shortage will press the leveling and bounce up in R.E. pricing, and as much as people will not like the price level, they will pay it because it's the cost of having a roof over there head, shelter in non-optional.
And then, I predict political meddling to gain votes in the form of directing Fannie/Freddie to securitize and normalize the 40/50yr mortgage because, it gives feeling of affordability while not actually touching price. THAT's how housing becomes "affordable" again. That happens, median price will shoot up, yet again. I am betting there will also be something to address MBS purchases, but most will miss that point as it's over most persons heads but in truth that's where the whole issue of rates is coming from so most likely something done there.
Now then, then you may get into a high leverage environment, setting the stage for a "collapse" of some type in or around "25-'27'. As it stands now, we have inflation with liquidity, that spells STAGFLATION if anything.
Your long term solutions make sense, and that’s what’s likely to occur. It doesn’t change the fact that housing prices will drop substantially before that happens if rates stay high.
serious question, do you know where I can lock in my home “equity” value right now for the next 2 years, so that if my properties lose value in 2 years the insurer will write me a check for the difference? I’d really like to find someone who has an insurance product like that with deep pockets. I wonder what the premium would be on that. Historically because housing always goes up, it should be very cheap insurance.
You may be joking or making this as a snarky comment but there is constructs and products that effect that very thing. I am not an insurance broker so I have no idea the cost of such, but they do exist. You forget, people have insured there leg's and breasts, lol, so yeah, such a thing exists to assure performance.
20% drop is just not realistic, again to get that drop someone has to be willing to sell at 20% drop. In an environment where persons don't have to, why would they?
- James Hamling
Quote from @James Hamling:
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @Joe Bertolino:
Quote from @John Carbone:
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
They don't get-it Joe, they just don't get it.
It seems that there is such a blood-lust for a collapse in R.E., out of a desire to have been an investor in 2009, that anything and everything going on = "collapse" in peoples mind, it's tunnel-vision on shrooms, it really is.
Firstly, Inflation = Inflation, not Deflation. Homes did not just go up in price, your dollar went DOWN in it's purchasing power. I have not heard 1 person argue how groceries are going to go down 20%. Housing is coined "The" hedge against inflation for a reason, and it's not because it devalues while everything else inflates.
Next, and I still don't understand person's disconnect with this, we are at net SHORTAGE of housing, SHORTAGE. Now add that ingredient with INFLATION for all the things that go into making a home, the labor for everyone involved, the materials and tools they use, those cost's of inputs dictate the price to market. New unit costs will drop 20% when everything and everyone that makes on takes 20% less, it's not complicated. The result of this math, is called STAGFLATION, high cost of an item with more limited purchasing of that item makes lower volume NOT collapse.
And lastly the fun one also ignored all the time which is most are sitting on record high equity and liquidity. People in large part DON'T have to sell, at all. On average at least $100k of equity would have to be burned away AND then those occupants put into a financial crisis of income, and this is just to start to get in realm of potential for risk of foreclosure. Or in terms, 2008 collapse X3. It's a ridiculous notion.
We also have a massive net shortage of rental units. This makes a nice "landing" buffer for builder's/developers for pivoting there activity. Some won't, some will just stop, or decrease volume. Others will adjust. Things could not be more different then 2007, everything is different in world of development today.
A thought that high interest rates will collapse housing, please do the basic research of a little thing we call the '80's, rates hit 14% and guess what, no collapse. What did happen in the '80's was a setting of the stage for the bull-run of the 90's.
We are in STAGFLATION. This fall/winter will see the lowest prices in R.E. for the next years to come. By Q2 of '23' housing shortage will press the leveling and bounce up in R.E. pricing, and as much as people will not like the price level, they will pay it because it's the cost of having a roof over there head, shelter in non-optional.
And then, I predict political meddling to gain votes in the form of directing Fannie/Freddie to securitize and normalize the 40/50yr mortgage because, it gives feeling of affordability while not actually touching price. THAT's how housing becomes "affordable" again. That happens, median price will shoot up, yet again. I am betting there will also be something to address MBS purchases, but most will miss that point as it's over most persons heads but in truth that's where the whole issue of rates is coming from so most likely something done there.
Now then, then you may get into a high leverage environment, setting the stage for a "collapse" of some type in or around "25-'27'. As it stands now, we have inflation with liquidity, that spells STAGFLATION if anything.
Your long term solutions make sense, and that’s what’s likely to occur. It doesn’t change the fact that housing prices will drop substantially before that happens if rates stay high.
serious question, do you know where I can lock in my home “equity” value right now for the next 2 years, so that if my properties lose value in 2 years the insurer will write me a check for the difference? I’d really like to find someone who has an insurance product like that with deep pockets. I wonder what the premium would be on that. Historically because housing always goes up, it should be very cheap insurance.
You may be joking or making this as a snarky comment but there is constructs and products that effect that very thing. I am not an insurance broker so I have no idea the cost of such, but they do exist. You forget, people have insured there leg's and breasts, lol, so yeah, such a thing exists to assure performance.
20% drop is just not realistic, again to get that drop someone has to be willing to sell at 20% drop. In an environment where persons don't have to, why would they?
I’d need the backing from someone like Lloyds of London for a policy like that, but my guess is the premium is substantial right now (or they will give a value that is not peak equity ), if not their risk management has some leaks. Wow, a 20 percent drop is unheard of? What metric will you track for that? Again this is all on the premise that rates will stay high. If mortgage rates are still 7 percent this time next year you will be selling homes for a minimum 20 percent less than the peak.
I’m on mailing lists across the country from developers and home builders. They are already offering 10 percent off in incentives on new construction.
#1 Market Trends & Data Contributor
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
I don't know if this is what you looking for, but there's a company like hometap/unison that will give you cash for your home equity without monthly payment, but at the end of the term (10 y/30 y) you have to give up part of your equity/appreciation to the lender. They're betting on home appreciation value.
I’d be more interested in a financial institution. Here’s the thing with companies like this. If things go badly for them, all of their exposure is long housing, I wouldn’t trust them to be able to pay everyone. Similar to what happened with AIG. I’ll look into them to see their position and if they could actually pay out if there was a market wide drop in prices.
The people who bet against housing with derivatives in 2008 didn’t realize the true gains that they should have because of counterparty risk. They failed to calculate that in their short.
The unison/hometap is kinda company that's betting in long-term appreciation of the housing market, I was once offered as their investor (so I have to be long housing). I can tell a few things from their underwriting process though :
They're expecting the home price to have a 9% IRR at very least. This is their bet.
So yes, expect your California home value to double again in 2032 :)
Quote from @Carlos Ptriawan:
Quote from @Joe Bertolino:
Quote from @John Carbone:
However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.
Tech co. can't sell products if the dollar is too high.
This is what I've been saying. The housing market is not in it's own disaggregated economy. It's a part of the larger macro economy. There are obviously nuances and specific variables that apply to different sectors, states, cities, and localities. However, we need to look at housing through the macro lens and evaluate all of the economical variables that impact housing.
There are a few things that I'm keeping a close eye on.
1) Foreclosures. I was reading that 16% of home owners used mortgage forbearance due to covid. A lot of people just came off, and others are still just coming off covid forbearance. For these folks there are generally three main options. The first is a repayment plan... so if someone missed 18 payments, they would divide those into 12 portions. The individual would need to pay not only their regular mortgage, but also the repayment. The second is lump sum, which really makes no sense. If someone was unable to make their normal payment for "x" months, how would they be able to repay it all in one shot? The third I believe is loan modification. According to Freddie the loan modification interest rate is 5.5%. Assuming someone went on forbearance with a 3.5 or 4% rate, their loan mod is going to add on all of the missed payments in terms of principal balance, and also shoot their rate up quite a bit.
- In short, I think there are going to be a lot of foreclosures in the coming months, years.
Student loans. Studnet loans have been "paused" due to covid, and are set to restart Jan 1, 2023. This is significant and can't be ignored.
Rents. This one is obviously local, but despite high rents pretty much across the board, there are a lot of areas where it's still cheaper to rent than buy. The top 10 on that list are San Francisco, Oakland, LA, San Jose, NYC, Long Beach, Seattle, DC, San Diego, and Boston.
Inflation. This one is major, as costs for basic necessities continue to shoot through the roof. There is ample info out there about the impact of inflation, how it's draining savings accounts, running up credit card debt, etc.
Stock Market. As the stock market continues to crash (Dow currently down to $29.417), this signals bad news since the stock market is generally see as a vote of confidence for the economy. This also means less $$ for businesses, cutting expenses, hiring freezes, layoffs, impacts on pension funds, reduced funding for expansion and R&D, etc.
Unemployment. For those still in denial about this one, Powell cautioned that a sharp rise in unemployment may be coming as the fed hikes interest rates at the fastest pace in a quarter-century. We're already seeing a significant slowing in private sector new jobs created. Tech sector is going to be hit hard as well as many publicly traded fortune 500 companies. There's a lot here and this can certainly be argued, but I believe that the signs/ indicators point to unemployment rising at a pretty significant pace over the upcoming months/ years.
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Quote from @John Carbone:
Quote from @James Hamling:
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @Joe Bertolino:
Quote from @John Carbone:
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
They don't get-it Joe, they just don't get it.
It seems that there is such a blood-lust for a collapse in R.E., out of a desire to have been an investor in 2009, that anything and everything going on = "collapse" in peoples mind, it's tunnel-vision on shrooms, it really is.
Firstly, Inflation = Inflation, not Deflation. Homes did not just go up in price, your dollar went DOWN in it's purchasing power. I have not heard 1 person argue how groceries are going to go down 20%. Housing is coined "The" hedge against inflation for a reason, and it's not because it devalues while everything else inflates.
Next, and I still don't understand person's disconnect with this, we are at net SHORTAGE of housing, SHORTAGE. Now add that ingredient with INFLATION for all the things that go into making a home, the labor for everyone involved, the materials and tools they use, those cost's of inputs dictate the price to market. New unit costs will drop 20% when everything and everyone that makes on takes 20% less, it's not complicated. The result of this math, is called STAGFLATION, high cost of an item with more limited purchasing of that item makes lower volume NOT collapse.
And lastly the fun one also ignored all the time which is most are sitting on record high equity and liquidity. People in large part DON'T have to sell, at all. On average at least $100k of equity would have to be burned away AND then those occupants put into a financial crisis of income, and this is just to start to get in realm of potential for risk of foreclosure. Or in terms, 2008 collapse X3. It's a ridiculous notion.
We also have a massive net shortage of rental units. This makes a nice "landing" buffer for builder's/developers for pivoting there activity. Some won't, some will just stop, or decrease volume. Others will adjust. Things could not be more different then 2007, everything is different in world of development today.
A thought that high interest rates will collapse housing, please do the basic research of a little thing we call the '80's, rates hit 14% and guess what, no collapse. What did happen in the '80's was a setting of the stage for the bull-run of the 90's.
We are in STAGFLATION. This fall/winter will see the lowest prices in R.E. for the next years to come. By Q2 of '23' housing shortage will press the leveling and bounce up in R.E. pricing, and as much as people will not like the price level, they will pay it because it's the cost of having a roof over there head, shelter in non-optional.
And then, I predict political meddling to gain votes in the form of directing Fannie/Freddie to securitize and normalize the 40/50yr mortgage because, it gives feeling of affordability while not actually touching price. THAT's how housing becomes "affordable" again. That happens, median price will shoot up, yet again. I am betting there will also be something to address MBS purchases, but most will miss that point as it's over most persons heads but in truth that's where the whole issue of rates is coming from so most likely something done there.
Now then, then you may get into a high leverage environment, setting the stage for a "collapse" of some type in or around "25-'27'. As it stands now, we have inflation with liquidity, that spells STAGFLATION if anything.
Your long term solutions make sense, and that’s what’s likely to occur. It doesn’t change the fact that housing prices will drop substantially before that happens if rates stay high.
serious question, do you know where I can lock in my home “equity” value right now for the next 2 years, so that if my properties lose value in 2 years the insurer will write me a check for the difference? I’d really like to find someone who has an insurance product like that with deep pockets. I wonder what the premium would be on that. Historically because housing always goes up, it should be very cheap insurance.
You may be joking or making this as a snarky comment but there is constructs and products that effect that very thing. I am not an insurance broker so I have no idea the cost of such, but they do exist. You forget, people have insured there leg's and breasts, lol, so yeah, such a thing exists to assure performance.
20% drop is just not realistic, again to get that drop someone has to be willing to sell at 20% drop. In an environment where persons don't have to, why would they?
I’m on mailing lists across the country from developers and home builders. They are already offering 10 percent off in incentives on new construction.
Why would someone sell for less? Your missing this simple key point, why does a person sell for less? Most don't have to, so why would one? It's not complicated.
As for 7% rates, pull up some charts, it's not all that high, it isn't, it's more a normal rate. Your just contracting it against insanely historically low low's of 3%, which was a bubble, rates were artificially low. We are now back to a normalized level. Again, I reference the '80's, check out those rates of 12%+, and please find the corresponding market "crash". Your arguing 20% drop at 7%, ok, so in the '80's why didn't we see a 30% drop at 14%?
People are sitting on mountains of equity, they don't have to sell.
Home builder incentives, I was getting those last year on pre-sales, nothing new there.
And you will note I keep saying STAGFLATION, which is low volume. I expect to see lower volume, which is exactly what your saying for builders offering incentives openly. Do you think there gonna just keep building at same rate? Your whole argument is based on builders have to keep building, at a net loss, and home owners have to keep selling, at lower and lower prices. COMPLETLY ignoring the fact that NO, builders DON'T have to keep building, NO most home owners DON'T have to sell. In 2009 people HAD to sell, they had to due to being in high leverage positions and loosing income, AND the BIGGEST reason was the re-setting of mortgage payments doubling, tripling a persons mortgage payment from what it was before. They got into payment structures they NEVER had capacity to pay, that was #1 driver.
Again, that does NOT exist today. There is NOT a mountain of mortgage payments re-setting to double/triple payment level.
So people will simply stay put, buy less, move less. For the 97th time, STAGFLATION!
The obsession with collapse is NOT supported by the facts. Sure, your emotions maybe, but not FACTS.
- James Hamling
Quote from @James Hamling:
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @Joe Bertolino:
Quote from @John Carbone:
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
They don't get-it Joe, they just don't get it.
It seems that there is such a blood-lust for a collapse in R.E., out of a desire to have been an investor in 2009, that anything and everything going on = "collapse" in peoples mind, it's tunnel-vision on shrooms, it really is.
Firstly, Inflation = Inflation, not Deflation. Homes did not just go up in price, your dollar went DOWN in it's purchasing power. I have not heard 1 person argue how groceries are going to go down 20%. Housing is coined "The" hedge against inflation for a reason, and it's not because it devalues while everything else inflates.
Next, and I still don't understand person's disconnect with this, we are at net SHORTAGE of housing, SHORTAGE. Now add that ingredient with INFLATION for all the things that go into making a home, the labor for everyone involved, the materials and tools they use, those cost's of inputs dictate the price to market. New unit costs will drop 20% when everything and everyone that makes on takes 20% less, it's not complicated. The result of this math, is called STAGFLATION, high cost of an item with more limited purchasing of that item makes lower volume NOT collapse.
And lastly the fun one also ignored all the time which is most are sitting on record high equity and liquidity. People in large part DON'T have to sell, at all. On average at least $100k of equity would have to be burned away AND then those occupants put into a financial crisis of income, and this is just to start to get in realm of potential for risk of foreclosure. Or in terms, 2008 collapse X3. It's a ridiculous notion.
We also have a massive net shortage of rental units. This makes a nice "landing" buffer for builder's/developers for pivoting there activity. Some won't, some will just stop, or decrease volume. Others will adjust. Things could not be more different then 2007, everything is different in world of development today.
A thought that high interest rates will collapse housing, please do the basic research of a little thing we call the '80's, rates hit 14% and guess what, no collapse. What did happen in the '80's was a setting of the stage for the bull-run of the 90's.
We are in STAGFLATION. This fall/winter will see the lowest prices in R.E. for the next years to come. By Q2 of '23' housing shortage will press the leveling and bounce up in R.E. pricing, and as much as people will not like the price level, they will pay it because it's the cost of having a roof over there head, shelter in non-optional.
And then, I predict political meddling to gain votes in the form of directing Fannie/Freddie to securitize and normalize the 40/50yr mortgage because, it gives feeling of affordability while not actually touching price. THAT's how housing becomes "affordable" again. That happens, median price will shoot up, yet again. I am betting there will also be something to address MBS purchases, but most will miss that point as it's over most persons heads but in truth that's where the whole issue of rates is coming from so most likely something done there.
Now then, then you may get into a high leverage environment, setting the stage for a "collapse" of some type in or around "25-'27'. As it stands now, we have inflation with liquidity, that spells STAGFLATION if anything.
Your long term solutions make sense, and that’s what’s likely to occur. It doesn’t change the fact that housing prices will drop substantially before that happens if rates stay high.
serious question, do you know where I can lock in my home “equity” value right now for the next 2 years, so that if my properties lose value in 2 years the insurer will write me a check for the difference? I’d really like to find someone who has an insurance product like that with deep pockets. I wonder what the premium would be on that. Historically because housing always goes up, it should be very cheap insurance.
You may be joking or making this as a snarky comment but there is constructs and products that effect that very thing. I am not an insurance broker so I have no idea the cost of such, but they do exist. You forget, people have insured there leg's and breasts, lol, so yeah, such a thing exists to assure performance.
20% drop is just not realistic, again to get that drop someone has to be willing to sell at 20% drop. In an environment where persons don't have to, why would they?
I’m on mailing lists across the country from developers and home builders. They are already offering 10 percent off in incentives on new construction.
Why would someone sell for less? Your missing this simple key point, why does a person sell for less? Most don't have to, so why would one? It's not complicated.
As for 7% rates, pull up some charts, it's not all that high, it isn't, it's more a normal rate. Your just contracting it against insanely historically low low's of 3%, which was a bubble, rates were artificially low. We are now back to a normalized level. Again, I reference the '80's, check out those rates of 12%+, and please find the corresponding market "crash". Your arguing 20% drop at 7%, ok, so in the '80's why didn't we see a 30% drop at 14%?
People are sitting on mountains of equity, they don't have to sell.
Home builder incentives, I was getting those last year on pre-sales, nothing new there.
And you will note I keep saying STAGFLATION, which is low volume. I expect to see lower volume, which is exactly what your saying for builders offering incentives openly. Do you think there gonna just keep building at same rate? Your whole argument is based on builders have to keep building, at a net loss, and home owners have to keep selling, at lower and lower prices. COMPLETLY ignoring the fact that NO, builders DON'T have to keep building, NO most home owners DON'T have to sell. In 2009 people HAD to sell, they had to due to being in high leverage positions and loosing income, AND the BIGGEST reason was the re-setting of mortgage payments doubling, tripling a persons mortgage payment from what it was before. They got into payment structures they NEVER had capacity to pay, that was #1 driver.
Again, that does NOT exist today. There is NOT a mountain of mortgage payments re-setting to double/triple payment level.
So people will simply stay put, buy less, move less. For the 97th time, STAGFLATION!
The obsession with collapse is NOT supported by the facts. Sure, your emotions maybe, but not FACTS.
I agree with your sentiment regarding Stagflation and think that is the most likely scenario, but lets play that out. Say we get stagflation and homes prices don't come down along with other major purchases. US Businesses will have to deal with higher input costs and higher financing costs cutting profits. This cutting of profits will then lead to layoffs. So if unemployment goes up from 3.7% to say 5% and rates stay high this could cause some distress in the market. Let me also say that unemployment going to 5% is the best case scenario and it could go higher.
So now you have a slowing US and Global economy, unemployment rising, and increased borrowing costs. Don't know of any asset that will be safe in a situation like that, including housing. Its not going to happen overnight; remember the peak to trough of the last recession was over 18 months.
But if Stagflation happens every investor will suffer if not prepared.
Quote from @James Hamling:
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @Joe Bertolino:
Quote from @John Carbone:
@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
They don't get-it Joe, they just don't get it.
It seems that there is such a blood-lust for a collapse in R.E., out of a desire to have been an investor in 2009, that anything and everything going on = "collapse" in peoples mind, it's tunnel-vision on shrooms, it really is.
Firstly, Inflation = Inflation, not Deflation. Homes did not just go up in price, your dollar went DOWN in it's purchasing power. I have not heard 1 person argue how groceries are going to go down 20%. Housing is coined "The" hedge against inflation for a reason, and it's not because it devalues while everything else inflates.
Next, and I still don't understand person's disconnect with this, we are at net SHORTAGE of housing, SHORTAGE. Now add that ingredient with INFLATION for all the things that go into making a home, the labor for everyone involved, the materials and tools they use, those cost's of inputs dictate the price to market. New unit costs will drop 20% when everything and everyone that makes on takes 20% less, it's not complicated. The result of this math, is called STAGFLATION, high cost of an item with more limited purchasing of that item makes lower volume NOT collapse.
And lastly the fun one also ignored all the time which is most are sitting on record high equity and liquidity. People in large part DON'T have to sell, at all. On average at least $100k of equity would have to be burned away AND then those occupants put into a financial crisis of income, and this is just to start to get in realm of potential for risk of foreclosure. Or in terms, 2008 collapse X3. It's a ridiculous notion.
We also have a massive net shortage of rental units. This makes a nice "landing" buffer for builder's/developers for pivoting there activity. Some won't, some will just stop, or decrease volume. Others will adjust. Things could not be more different then 2007, everything is different in world of development today.
A thought that high interest rates will collapse housing, please do the basic research of a little thing we call the '80's, rates hit 14% and guess what, no collapse. What did happen in the '80's was a setting of the stage for the bull-run of the 90's.
We are in STAGFLATION. This fall/winter will see the lowest prices in R.E. for the next years to come. By Q2 of '23' housing shortage will press the leveling and bounce up in R.E. pricing, and as much as people will not like the price level, they will pay it because it's the cost of having a roof over there head, shelter in non-optional.
And then, I predict political meddling to gain votes in the form of directing Fannie/Freddie to securitize and normalize the 40/50yr mortgage because, it gives feeling of affordability while not actually touching price. THAT's how housing becomes "affordable" again. That happens, median price will shoot up, yet again. I am betting there will also be something to address MBS purchases, but most will miss that point as it's over most persons heads but in truth that's where the whole issue of rates is coming from so most likely something done there.
Now then, then you may get into a high leverage environment, setting the stage for a "collapse" of some type in or around "25-'27'. As it stands now, we have inflation with liquidity, that spells STAGFLATION if anything.
Your long term solutions make sense, and that’s what’s likely to occur. It doesn’t change the fact that housing prices will drop substantially before that happens if rates stay high.
serious question, do you know where I can lock in my home “equity” value right now for the next 2 years, so that if my properties lose value in 2 years the insurer will write me a check for the difference? I’d really like to find someone who has an insurance product like that with deep pockets. I wonder what the premium would be on that. Historically because housing always goes up, it should be very cheap insurance.
You may be joking or making this as a snarky comment but there is constructs and products that effect that very thing. I am not an insurance broker so I have no idea the cost of such, but they do exist. You forget, people have insured there leg's and breasts, lol, so yeah, such a thing exists to assure performance.
20% drop is just not realistic, again to get that drop someone has to be willing to sell at 20% drop. In an environment where persons don't have to, why would they?
I’m on mailing lists across the country from developers and home builders. They are already offering 10 percent off in incentives on new construction.
Why would someone sell for less? Your missing this simple key point, why does a person sell for less? Most don't have to, so why would one? It's not complicated.
As for 7% rates, pull up some charts, it's not all that high, it isn't, it's more a normal rate. Your just contracting it against insanely historically low low's of 3%, which was a bubble, rates were artificially low. We are now back to a normalized level. Again, I reference the '80's, check out those rates of 12%+, and please find the corresponding market "crash". Your arguing 20% drop at 7%, ok, so in the '80's why didn't we see a 30% drop at 14%?
People are sitting on mountains of equity, they don't have to sell.
Home builder incentives, I was getting those last year on pre-sales, nothing new there.
And you will note I keep saying STAGFLATION, which is low volume. I expect to see lower volume, which is exactly what your saying for builders offering incentives openly. Do you think there gonna just keep building at same rate? Your whole argument is based on builders have to keep building, at a net loss, and home owners have to keep selling, at lower and lower prices. COMPLETLY ignoring the fact that NO, builders DON'T have to keep building, NO most home owners DON'T have to sell. In 2009 people HAD to sell, they had to due to being in high leverage positions and loosing income, AND the BIGGEST reason was the re-setting of mortgage payments doubling, tripling a persons mortgage payment from what it was before. They got into payment structures they NEVER had capacity to pay, that was #1 driver.
Again, that does NOT exist today. There is NOT a mountain of mortgage payments re-setting to double/triple payment level.
So people will simply stay put, buy less, move less. For the 97th time, STAGFLATION!
The obsession with collapse is NOT supported by the facts. Sure, your emotions maybe, but not FACTS.
My emotions? You are the one typing in CAPS.
the FACT that you are comparing 1980’s interest rates and housing to home values now is extremely misguided.
as deflation makes its way through the supply chain and lumber prices drop and labor markets normalize as a result of the higher rates people will lose jobs in areas that aren’t needed for the economy. There is a need for housing and it’s already starting to happen. there is a never ending supply of land across this country and people don’t need to live so close to the downtown cities anymore.
here’s a FACT nugget for you trying to compare 1980 prices to 2022…1980 median home value was $47,200 and adjusted for inflation today that puts median home value at 170k! The median home value now is 422k
median household income 1980 : $21,020
median house income 2022: $71,186
median household income is up 3.3x since then and home values are up 10x
but sure….housing CANT drop 20 percent taking us back to late 2020 prices
#1 Real Estate Agent Contributor
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Quote from @Greg R.:
Quote from @Carlos Ptriawan:
Quote from @Joe Bertolino:
Quote from @John Carbone:
However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.
Tech co. can't sell products if the dollar is too high.
This is what I've been saying. The housing market is not in it's own disaggregated economy. It's a part of the larger macro economy. There are obviously nuances and specific variables that apply to different sectors, states, cities, and localities. However, we need to look at housing through the macro lens and evaluate all of the economical variables that impact housing.
There are a few things that I'm keeping a close eye on.
1) Foreclosures. I was reading that 16% of home owners used mortgage forbearance due to covid. A lot of people just came off, and others are still just coming off covid forbearance. For these folks there are generally three main options. The first is a repayment plan... so if someone missed 18 payments, they would divide those into 12 portions. The individual would need to pay not only their regular mortgage, but also the repayment. The second is lump sum, which really makes no sense. If someone was unable to make their normal payment for "x" months, how would they be able to repay it all in one shot? The third I believe is loan modification. According to Freddie the loan modification interest rate is 5.5%. Assuming someone went on forbearance with a 3.5 or 4% rate, their loan mod is going to add on all of the missed payments in terms of principal balance, and also shoot their rate up quite a bit.
- In short, I think there are going to be a lot of foreclosures in the coming months, years.
Student loans. Studnet loans have been "paused" due to covid, and are set to restart Jan 1, 2023. This is significant and can't be ignored.
Rents. This one is obviously local, but despite high rents pretty much across the board, there are a lot of areas where it's still cheaper to rent than buy. The top 10 on that list are San Francisco, Oakland, LA, San Jose, NYC, Long Beach, Seattle, DC, San Diego, and Boston.
Inflation. This one is major, as costs for basic necessities continue to shoot through the roof. There is ample info out there about the impact of inflation, how it's draining savings accounts, running up credit card debt, etc.
Stock Market. As the stock market continues to crash (Dow currently down to $29.417), this signals bad news since the stock market is generally see as a vote of confidence for the economy. This also means less $$ for businesses, cutting expenses, hiring freezes, layoffs, impacts on pension funds, reduced funding for expansion and R&D, etc.
Unemployment. For those still in denial about this one, Powell cautioned that a sharp rise in unemployment may be coming as the fed hikes interest rates at the fastest pace in a quarter-century. We're already seeing a significant slowing in private sector new jobs created. Tech sector is going to be hit hard as well as many publicly traded fortune 500 companies. There's a lot here and this can certainly be argued, but I believe that the signs/ indicators point to unemployment rising at a pretty significant pace over the upcoming months/ years.
Foreclosures - I am so exhausted of hearing about this twisting of the narrative. We have had post after post for nearly 2 years on B.P. how there is this giant foreclosure "mass" that's "just about to it". No, no there is not, just as nothing has come of it for the last 2 years. It's grabbing a few data points and building a pre-determined narrative with selective data. The lion's share of these deferments where at request and direction of banks and media to take them "just in case". Millions, and I do mean MILLIONS had no need, but took them "just in case" because there was unknowns and that was the directives given of no negative potential if taken. Also, the prevailing construct is missed payments are just added onto the end of the mortgage. Banks are not setting up REO system like 20-teens era, that is the first and biggest signal to watch for, it's very telling. It will matter when actual foreclosure fillings move forward, until then forbearance is a pointless metric unless it's to pump views on your YT channel.
Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such. Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today?
Inflation - Inflation does not only increase consumer costs, it hit's everything. We are now seeing the start of wage increase "wave" of inflationary cycle.
Stock Market - Yes, this does matter much as regularly just after inspection is completed, pre-closing we do have that Stock Market check to complete closing.......... Ok, there is some relation but reality is housing costs and activity does not follow the fluctuations and movement of the Stock Market. And actually, a bad stock market is good for housing, it helps promote the sale of various bonds. Covid start the stocks went into free-fall, did housing?
Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset. I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol. All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people. On that end I say don't tease me with a good time! When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW". Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing. A shift would be amazing, and speed the economic recovery into a bull-run.
The BEST thing that could come out of all this is smashing this mirage of global dependance, which the U.S. got wayyyy out of wack on, and a balanced move of production WHICH MEANS a renaissance in U.S. domestic production, and innovations that come with such.
- James Hamling
Quote from @James Hamling:
Quote from @Greg R.:
Quote from @Carlos Ptriawan:
Quote from @Joe Bertolino:
Quote from @John Carbone:
However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.
Tech co. can't sell products if the dollar is too high.
This is what I've been saying. The housing market is not in it's own disaggregated economy. It's a part of the larger macro economy. There are obviously nuances and specific variables that apply to different sectors, states, cities, and localities. However, we need to look at housing through the macro lens and evaluate all of the economical variables that impact housing.
There are a few things that I'm keeping a close eye on.
1) Foreclosures. I was reading that 16% of home owners used mortgage forbearance due to covid. A lot of people just came off, and others are still just coming off covid forbearance. For these folks there are generally three main options. The first is a repayment plan... so if someone missed 18 payments, they would divide those into 12 portions. The individual would need to pay not only their regular mortgage, but also the repayment. The second is lump sum, which really makes no sense. If someone was unable to make their normal payment for "x" months, how would they be able to repay it all in one shot? The third I believe is loan modification. According to Freddie the loan modification interest rate is 5.5%. Assuming someone went on forbearance with a 3.5 or 4% rate, their loan mod is going to add on all of the missed payments in terms of principal balance, and also shoot their rate up quite a bit.
- In short, I think there are going to be a lot of foreclosures in the coming months, years.
Student loans. Studnet loans have been "paused" due to covid, and are set to restart Jan 1, 2023. This is significant and can't be ignored.
Rents. This one is obviously local, but despite high rents pretty much across the board, there are a lot of areas where it's still cheaper to rent than buy. The top 10 on that list are San Francisco, Oakland, LA, San Jose, NYC, Long Beach, Seattle, DC, San Diego, and Boston.
Inflation. This one is major, as costs for basic necessities continue to shoot through the roof. There is ample info out there about the impact of inflation, how it's draining savings accounts, running up credit card debt, etc.
Stock Market. As the stock market continues to crash (Dow currently down to $29.417), this signals bad news since the stock market is generally see as a vote of confidence for the economy. This also means less $$ for businesses, cutting expenses, hiring freezes, layoffs, impacts on pension funds, reduced funding for expansion and R&D, etc.
Unemployment. For those still in denial about this one, Powell cautioned that a sharp rise in unemployment may be coming as the fed hikes interest rates at the fastest pace in a quarter-century. We're already seeing a significant slowing in private sector new jobs created. Tech sector is going to be hit hard as well as many publicly traded fortune 500 companies. There's a lot here and this can certainly be argued, but I believe that the signs/ indicators point to unemployment rising at a pretty significant pace over the upcoming months/ years.
Foreclosures - I am so exhausted of hearing about this twisting of the narrative. We have had post after post for nearly 2 years on B.P. how there is this giant foreclosure "mass" that's "just about to it". No, no there is not, just as nothing has come of it for the last 2 years. It's grabbing a few data points and building a pre-determined narrative with selective data. The lion's share of these deferments where at request and direction of banks and media to take them "just in case". Millions, and I do mean MILLIONS had no need, but took them "just in case" because there was unknowns and that was the directives given of no negative potential if taken. Also, the prevailing construct is missed payments are just added onto the end of the mortgage. Banks are not setting up REO system like 20-teens era, that is the first and biggest signal to watch for, it's very telling. It will matter when actual foreclosure fillings move forward, until then forbearance is a pointless metric unless it's to pump views on your YT channel.
Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such. Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today?
Inflation - Inflation does not only increase consumer costs, it hit's everything. We are now seeing the start of wage increase "wave" of inflationary cycle.
Stock Market - Yes, this does matter much as regularly just after inspection is completed, pre-closing we do have that Stock Market check to complete closing.......... Ok, there is some relation but reality is housing costs and activity does not follow the fluctuations and movement of the Stock Market. And actually, a bad stock market is good for housing, it helps promote the sale of various bonds. Covid start the stocks went into free-fall, did housing?
Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset. I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol. All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people. On that end I say don't tease me with a good time! When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW". Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing. A shift would be amazing, and speed the economic recovery into a bull-run.
The BEST thing that could come out of all this is smashing this mirage of global dependance, which the U.S. got wayyyy out of wack on, and a balanced move of production WHICH MEANS a renaissance in U.S. domestic production, and innovations that come with such.
Do you realize when this happens that there will be more workers to build houses? Oil and lumber prices have already deflated which will make home building cheaper. Add in more skilled workers and we will get housing more affordable and in line with what it should be based on inflation since 1980 and wage growth, easily 20 percent less than now.
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@Joe BertolinoI predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refinance
What happens in 2026 if/when home values are lower? Are these homebuyers with this product just going to be bag holders? Why not have 6-6 buy downs and let people get 1 percent mortgages, that will fix the issue. Will there be a government bailout forcing lenders to refi people at new lower rates with negative equity or will we have 2008 all over again?
They don't get-it Joe, they just don't get it.
It seems that there is such a blood-lust for a collapse in R.E., out of a desire to have been an investor in 2009, that anything and everything going on = "collapse" in peoples mind, it's tunnel-vision on shrooms, it really is.
Firstly, Inflation = Inflation, not Deflation. Homes did not just go up in price, your dollar went DOWN in it's purchasing power. I have not heard 1 person argue how groceries are going to go down 20%. Housing is coined "The" hedge against inflation for a reason, and it's not because it devalues while everything else inflates.
Next, and I still don't understand person's disconnect with this, we are at net SHORTAGE of housing, SHORTAGE. Now add that ingredient with INFLATION for all the things that go into making a home, the labor for everyone involved, the materials and tools they use, those cost's of inputs dictate the price to market. New unit costs will drop 20% when everything and everyone that makes on takes 20% less, it's not complicated. The result of this math, is called STAGFLATION, high cost of an item with more limited purchasing of that item makes lower volume NOT collapse.
And lastly the fun one also ignored all the time which is most are sitting on record high equity and liquidity. People in large part DON'T have to sell, at all. On average at least $100k of equity would have to be burned away AND then those occupants put into a financial crisis of income, and this is just to start to get in realm of potential for risk of foreclosure. Or in terms, 2008 collapse X3. It's a ridiculous notion.
We also have a massive net shortage of rental units. This makes a nice "landing" buffer for builder's/developers for pivoting there activity. Some won't, some will just stop, or decrease volume. Others will adjust. Things could not be more different then 2007, everything is different in world of development today.
A thought that high interest rates will collapse housing, please do the basic research of a little thing we call the '80's, rates hit 14% and guess what, no collapse. What did happen in the '80's was a setting of the stage for the bull-run of the 90's.
We are in STAGFLATION. This fall/winter will see the lowest prices in R.E. for the next years to come. By Q2 of '23' housing shortage will press the leveling and bounce up in R.E. pricing, and as much as people will not like the price level, they will pay it because it's the cost of having a roof over there head, shelter in non-optional.
And then, I predict political meddling to gain votes in the form of directing Fannie/Freddie to securitize and normalize the 40/50yr mortgage because, it gives feeling of affordability while not actually touching price. THAT's how housing becomes "affordable" again. That happens, median price will shoot up, yet again. I am betting there will also be something to address MBS purchases, but most will miss that point as it's over most persons heads but in truth that's where the whole issue of rates is coming from so most likely something done there.
Now then, then you may get into a high leverage environment, setting the stage for a "collapse" of some type in or around "25-'27'. As it stands now, we have inflation with liquidity, that spells STAGFLATION if anything.
Your long term solutions make sense, and that’s what’s likely to occur. It doesn’t change the fact that housing prices will drop substantially before that happens if rates stay high.
serious question, do you know where I can lock in my home “equity” value right now for the next 2 years, so that if my properties lose value in 2 years the insurer will write me a check for the difference? I’d really like to find someone who has an insurance product like that with deep pockets. I wonder what the premium would be on that. Historically because housing always goes up, it should be very cheap insurance.
You may be joking or making this as a snarky comment but there is constructs and products that effect that very thing. I am not an insurance broker so I have no idea the cost of such, but they do exist. You forget, people have insured there leg's and breasts, lol, so yeah, such a thing exists to assure performance.
20% drop is just not realistic, again to get that drop someone has to be willing to sell at 20% drop. In an environment where persons don't have to, why would they?
I’m on mailing lists across the country from developers and home builders. They are already offering 10 percent off in incentives on new construction.
Why would someone sell for less? Your missing this simple key point, why does a person sell for less? Most don't have to, so why would one? It's not complicated.
As for 7% rates, pull up some charts, it's not all that high, it isn't, it's more a normal rate. Your just contracting it against insanely historically low low's of 3%, which was a bubble, rates were artificially low. We are now back to a normalized level. Again, I reference the '80's, check out those rates of 12%+, and please find the corresponding market "crash". Your arguing 20% drop at 7%, ok, so in the '80's why didn't we see a 30% drop at 14%?
People are sitting on mountains of equity, they don't have to sell.
Home builder incentives, I was getting those last year on pre-sales, nothing new there.
And you will note I keep saying STAGFLATION, which is low volume. I expect to see lower volume, which is exactly what your saying for builders offering incentives openly. Do you think there gonna just keep building at same rate? Your whole argument is based on builders have to keep building, at a net loss, and home owners have to keep selling, at lower and lower prices. COMPLETLY ignoring the fact that NO, builders DON'T have to keep building, NO most home owners DON'T have to sell. In 2009 people HAD to sell, they had to due to being in high leverage positions and loosing income, AND the BIGGEST reason was the re-setting of mortgage payments doubling, tripling a persons mortgage payment from what it was before. They got into payment structures they NEVER had capacity to pay, that was #1 driver.
Again, that does NOT exist today. There is NOT a mountain of mortgage payments re-setting to double/triple payment level.
So people will simply stay put, buy less, move less. For the 97th time, STAGFLATION!
The obsession with collapse is NOT supported by the facts. Sure, your emotions maybe, but not FACTS.
My emotions? You are the one typing in CAPS.
the FACT that you are comparing 1980’s interest rates and housing to home values now is extremely misguided.
as deflation makes its way through the supply chain and lumber prices drop and labor markets normalize as a result of the higher rates people will lose jobs in areas that aren’t needed for the economy. There is a need for housing and it’s already starting to happen. there is a never ending supply of land across this country and people don’t need to live so close to the downtown cities anymore.
here’s a FACT nugget for you trying to compare 1980 prices to 2022…1980 median home value was $47,200 and adjusted for inflation today that puts median home value at 170k! The median home value now is 422k
median household income 1980 : $21,020
median house income 2022: $71,186
median household income is up 3.3x since then and home values are up 10x
but sure….housing CANT drop 20 percent taking us back to late 2020 prices
Is housing dropping 20% a "crash" though? The stock market is down 20% from the beginning of the year and I don't hear many calling this a crash. I think what would signify a crash is another major spike in foreclosure and subsequent financial crisis. A 20% drop is relatively likely (I would be surprised by anything less than 10%) but another epidemic of foreclosures and financial crisis I think is quite unlikely.
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The BEST thing that could come out of all this is smashing this mirage of global dependance, which the U.S. got wayyyy out of wack on, and a balanced move of production WHICH MEANS a renaissance in U.S. domestic production, and innovations that come with such.
While I disagree with most of your arguments, I agree with this ^^
Let's focus on one of these at a time. You claim "Inflation does not only increase consumer costs, it hit's everything. We are now seeing the start of wage increase "wave" of inflationary cycle."
You appear to be making the argument that wage increases are neutralizing inflation, which is not at all the case. Inflation is still far beyond wage increases and actual wages are decreasing when inflation is accounted for.
The Bureau of Labor Statistics released its latest earnings data. Average hourly earnings increased 5.2% year over year in August 2022, while average weekly earnings rose 4.6%. These percentages don’t account for inflation.
Salary increases in the United States are projected to grow at an average of 4.1% by 2023, according to WorldatWork. This projection is less than half the current annual inflation rate of 8.3%. In 2022, salary increase budgets rose to an average of4.1%, a 20-year high much larger than the average 3.3% increase projected in 2021. Many organizations increased their budget projections as inflation began to rise.
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#3 All Forums Contributor
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However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.
Tech co. can't sell products if the dollar is too high.
This is what I've been saying. The housing market is not in it's own disaggregated economy. It's a part of the larger macro economy. There are obviously nuances and specific variables that apply to different sectors, states, cities, and localities. However, we need to look at housing through the macro lens and evaluate all of the economical variables that impact housing.
There are a few things that I'm keeping a close eye on.
1) Foreclosures. I was reading that 16% of home owners used mortgage forbearance due to covid. A lot of people just came off, and others are still just coming off covid forbearance. For these folks there are generally three main options. The first is a repayment plan... so if someone missed 18 payments, they would divide those into 12 portions. The individual would need to pay not only their regular mortgage, but also the repayment. The second is lump sum, which really makes no sense. If someone was unable to make their normal payment for "x" months, how would they be able to repay it all in one shot? The third I believe is loan modification. According to Freddie the loan modification interest rate is 5.5%. Assuming someone went on forbearance with a 3.5 or 4% rate, their loan mod is going to add on all of the missed payments in terms of principal balance, and also shoot their rate up quite a bit.
- In short, I think there are going to be a lot of foreclosures in the coming months, years.
Student loans. Studnet loans have been "paused" due to covid, and are set to restart Jan 1, 2023. This is significant and can't be ignored.
Rents. This one is obviously local, but despite high rents pretty much across the board, there are a lot of areas where it's still cheaper to rent than buy. The top 10 on that list are San Francisco, Oakland, LA, San Jose, NYC, Long Beach, Seattle, DC, San Diego, and Boston.
Inflation. This one is major, as costs for basic necessities continue to shoot through the roof. There is ample info out there about the impact of inflation, how it's draining savings accounts, running up credit card debt, etc.
Stock Market. As the stock market continues to crash (Dow currently down to $29.417), this signals bad news since the stock market is generally see as a vote of confidence for the economy. This also means less $$ for businesses, cutting expenses, hiring freezes, layoffs, impacts on pension funds, reduced funding for expansion and R&D, etc.
Unemployment. For those still in denial about this one, Powell cautioned that a sharp rise in unemployment may be coming as the fed hikes interest rates at the fastest pace in a quarter-century. We're already seeing a significant slowing in private sector new jobs created. Tech sector is going to be hit hard as well as many publicly traded fortune 500 companies. There's a lot here and this can certainly be argued, but I believe that the signs/ indicators point to unemployment rising at a pretty significant pace over the upcoming months/ years.
Foreclosures - I am so exhausted of hearing about this twisting of the narrative. We have had post after post for nearly 2 years on B.P. how there is this giant foreclosure "mass" that's "just about to it". No, no there is not, just as nothing has come of it for the last 2 years. It's grabbing a few data points and building a pre-determined narrative with selective data. The lion's share of these deferments where at request and direction of banks and media to take them "just in case". Millions, and I do mean MILLIONS had no need, but took them "just in case" because there was unknowns and that was the directives given of no negative potential if taken. Also, the prevailing construct is missed payments are just added onto the end of the mortgage. Banks are not setting up REO system like 20-teens era, that is the first and biggest signal to watch for, it's very telling. It will matter when actual foreclosure fillings move forward, until then forbearance is a pointless metric unless it's to pump views on your YT channel.
Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such. Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today?
Inflation - Inflation does not only increase consumer costs, it hit's everything. We are now seeing the start of wage increase "wave" of inflationary cycle.
Stock Market - Yes, this does matter much as regularly just after inspection is completed, pre-closing we do have that Stock Market check to complete closing.......... Ok, there is some relation but reality is housing costs and activity does not follow the fluctuations and movement of the Stock Market. And actually, a bad stock market is good for housing, it helps promote the sale of various bonds. Covid start the stocks went into free-fall, did housing?
Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset. I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol. All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people. On that end I say don't tease me with a good time! When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW". Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing. A shift would be amazing, and speed the economic recovery into a bull-run.
The BEST thing that could come out of all this is smashing this mirage of global dependance, which the U.S. got wayyyy out of wack on, and a balanced move of production WHICH MEANS a renaissance in U.S. domestic production, and innovations that come with such.
Do you realize when this happens that there will be more workers to build houses? Oil and lumber prices have already deflated which will make home building cheaper. Add in more skilled workers and we will get housing more affordable and in line with what it should be based on inflation since 1980 and wage growth, easily 20 percent less than now.
lumber futures are way down but we are not seeing that quite yet in the field. I am waiting on ordering lumber packs another few weeks to compare prices.
- Jay Hinrichs
- Podcast Guest on Show #222
Quote from @James Hamling:
Quote from @Greg R.:
Quote from @Carlos Ptriawan:
Quote from @Joe Bertolino:
Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such. Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today?
Ok, now let's dissect the claims made in this statement.
1) Certain individuals will have their loan reduced or eliminated all together. However, this greatly varies depending on the type of loans they had and also their current income.
2) You didn't mention the estimated cost to repay this debt, which effects 100% of tax payers. The estimated cost per tax payer is $2,000. So while a small segment of people are getting a break, the rest aren't. As you would phrase it "What will be the effect of all these people having that ADDED $$$". I can similarly ask, what will be the effect be on the entire tax paying population of the United States having to endure further tax burdens and having LESS $$$?
3) You state that "many accounts will now be at $0", which is also misleading and missing context. CNBS projects that roughly 8 million people can have their loans "cleared". However, per the DOE there are over 45 million Americans that hold federal student loans.
This means that only 17% of people with student loans would have their loans "forgiven", leaving well over 80% still having to manage their student loans.
In short, is an incredibly weak argument that the Biden "loan forgiveness" is going to create an overall positive impact on the economy as a whole. The data supports the opposite. A very few people are going to benefit and many are going to suffer in terms of higher taxes. Further, an overwhelming majority of student loan holders will NOT have their loans erased and will have to resume making payments in a few months. And now since inflation is raging, wages are lower now than what they were when loans were paused.
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#1 Real Estate Agent Contributor
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Quote from @Greg R.:
Quote from @James Hamling:
Quote from @Greg R.:
Quote from @Carlos Ptriawan:
Quote from @Joe Bertolino:
Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such. Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today?
Ok, now let's dissect the claims made in this statement.
1) Certain individuals will have their loan reduced or eliminated all together. However, this greatly varies depending on the type of loans they had and also their current income.
2) You didn't mention the estimated cost to repay this debt, which effects 100% of tax payers. The estimated cost per tax payer is $2,000. So while a small segment of people are getting a break, the rest aren't. As you would phrase it "What will be the effect of all these people having that ADDED $$$". I can similarly ask, what will be the effect be on the entire tax paying population of the United States having to endure further tax burdens and having LESS $$$?
3) You state that "many accounts will now be at $0", which is also misleading and missing context. CNBS projects that roughly 8 million people can have their loans "cleared". However, per the DOE there are over 45 million Americans that hold federal student loans.
This means that only 17% of people with student loans would have their loans "forgiven", leaving well over 80% still having to manage their student loans.
In short, is an incredibly weak argument that the Biden "loan forgiveness" is going to create an overall positive impact on the economy as a whole. The data supports the opposite. A very few people are going to benefit and many are going to suffer in terms of higher taxes. Further, an overwhelming majority of student loan holders will NOT have their loans erased and will have to resume making payments in a few months. And now since inflation is raging, wages are lower now than what they were when loans were paused.
This is a great example here of a pre-determined conclusion and just, sticking to it, no matter the data, just keep sticking to it over n over......
Look, I did say "and the resulting inflation from such...." because reality is it's not gonna be tax payers paying for Student Loan forgiveness, it's not, because that would require a balanced fed. budget which we are just a few trillion away from. So it's going to be added inflation, more $$$$ "shazamed" into existence. Again.
Your argument, Lol, you point out I said " many accounts will now be at $0" and go on to say 8 million accounts will be brought to $0. As to argue it's "only" 8 million? Last i checked, 8 million firmly qualifies as "a lot". Or 17% of all Student Loans, which again, I'd call that a lot, wouldn't you?
I am not arguing pro-S.L. forgiveness, not arguing pro or con really. Your argument was Student Loan forgiveness was some data-point proof of trouble in housing price, I simply point out that one item, it actually does the opposite.
In the grand scheme of things, Student Loan forgiveness seems to me as the best, smartest entitlement program in contrast with all the others. It's at least rewarding those who have at some level at least attempted to do something, right? I mean, vs another handout for, IDK, free cell phones, or how about free internet for all, it's the smartest dumb thing done.
If this whole thing get's you all ruffled you should go on and actually read through the annual budget at things like how much $ is being spent to study the migration patterns of Canadian Geese, lol. And yeah, wish that was a joke, it's not. And there is a mountain of similar moronic spending.
As for wages, what the heck are you talking about? Where do you invent this nonsense that wages have been DROPPING since covid?! That's just patently NOT TRUE. Most the nation, MOST industries, MOST employers have been struggling to hire people including pressing $/bribes up and up and up. maybe in whatever Inuit village of the arctic where your at, but for majority of populated North America it's a totally different story.
Your wage statement is an oxymoron, feel free to make that the word of the day, OXYMORON. A good example: "....since inflation is raging, wages are lower......", Oxymoron.
- James Hamling