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Updated almost 2 years ago, 01/14/2023

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Greg R.
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Housing crash deniers ???

Greg R.
  • Investor
  • Dallas, TX
Posted

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. 

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Bruce Woodruff
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Replied

Good thoughts @James Hamling....! I suspect that you're spot on about a couple things: a) they are completely clueless, and b) they will have a fix before too long, and one that makes the rich richer and screws the have-nots.....

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Greg R.
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Greg R.
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Quote from @Matt Bishop:

@Greg R. I remain steadfastly confident in my real estate investments. Mortgages paid off and rents keep rise. No intention to sell anything for 10 years.

Good for you Matt. Sounds like you're position isn't dependent on the continuation of the bubble. Take care. 
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James Hamling
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James Hamling
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Quote from @Carlos Ptriawan:
Quote from @James Hamling:
Quote from @Carlos Ptriawan:

That 6 trillion US dollar that the Fed printed on April 2020 obviously is the ultimate root cause of the problem. Obviously if you add 40% more money into circulation it will trigger inflation. 

So in short. It's the Fed that's causing the inflation crisis. And then now they intentionally try to cause a recession crisis due to their previous action.


 Yeah, 100%, if you take a pie and cut a few trillion additional pieces, absolutely it makes every piece smaller, hence worth less. 

My point is EVERYONE needs to open eyes and come aware of what's going on, and WHY. Not just "oh, Fed is f'ing us adding more $$$$ into the system", no, we need to ask WHY are they adding $$$$ into the system. 

It's a WAYYYYYyy bigger problem then just the few trillion added, it's a SYSTEMIC problem, they system itself is broken, big time. When we point to just the $$$$ printing, we get this sense of a 1 time event, which it's not. 

Think of all the entitlement programs by the federal Gov., and not just adding more, but expanding those existing ones, raising those budgets. That's all "shadow inflation", because where is the Gov getting the $$$$ for it? And no, not taxes, the F. Gov spends WAY more then it takes in. So that itself is also "Shezame'd" $$$$ into existence. 

those "entitlement programs" aka "subsidy" programs..... All these can happen because of several things that occur globally:
Since USD is no longer pegged to the gold in 1960/70-ish :

1. the USD is the major reserve currency, everyone in the world is using the dollar literally
2. All oil purchase in the world is bought using USD, as a replacement of gold
3. The oil and gas export from the exporter country is converted to US bonds and saved in US banks 

The entitlement program could happen because US has special entitlement in the international financial world.
As long as it happened that way, there seem  no changes in 'spending'


 Aaaahhh but but but my friend. Now here is an interesting fun-fact. Russia is one of the biggest exporters of resources right, and what have they done now.... forced all purchase in Rubel NOT USD. The BRIC's are working actively to replace the USD in that position, and central to it has been Putin, for years. It's an interesting tie-in don't you think. Russia deploys a program to press the Rubel as a competitor to the USD in it's position, and don't yah know it Ukraine becomes the most important place and border on earth, we "gotta" issue billions weekly to support this "righteous" battle. 

Look, before jumping on me, I am pro-Ukraine people 100%, I am also pro-Kurd's, I am pro-any people who just wanna live there lives and are unjustly persecuted, hunted, enslaved and exterminated. Point I am making, for some reason we didn't give a squat about Ukraine when invaded in 2014, but once Ruble becomes a threat, it's the most important thing ever. Coincidence? 

The USD's position as world reserve currency is waning. China now holds all the gold, Russia endless oil and gas. BRIC's connect with UAE or OPEC, I think that's it, the music stops. What does the USD have left? Were no longer the manufacturing center of the world, no longer the leading resource exporter, no longer the primary innovator. The world has caught up, what is the significant advantage the U.S. holds going forward? 

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J. Mitchell Bernier
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J. Mitchell Bernier
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Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @John Myers:

Very lively conversation and let's face it, nobody knows what is going to happen.  That includes me!

Several posts have stated the housing market now is different from 2008. That is true, however, I always worry when someone tells me "it is different this time.

Inflation is high and not going to end any time soon. This is typically good for hard assets like gold, silver, real estate, etc.........

Interest rates are increasing, this is bad for almost every person and every business.

There is definitely a scenario for a crash in the housing market. That scenario is a crash in the economy and high unemployment. The CEO of FedEx gave a dire outlook on their business. If their business is down, guess what, so are a lot of other businesses.

Many Americans live paycheck to paycheck. If they lose their jobs, they will lose their houses (unless the government steps in). They may have equity so they can sell their houses if there are willing buyers.

That is above what I've been keep saying.

Inflation is like "oooh my used car" is now more expensive than new-car. That's supply-chain issue context.
To fix it, you need the supply chain economy to be recovered completely after covid from US to China as semi supplier.

Now the Fed solution for your "car problem" is by forcing you "to lose your job" so you will lose your truck entirely. hahaha LOL 

It seems for whatever minor problem here and there, the solution is just either to print more money or to burn more money. 

I dont think 21st century economy works like that anymore. If you have supply chain issue fix the problem at the supply side and not cutting the entire financial structure.
 


 Think about this Carlos. 

They say raising rates, tanking the overall economy will "fix" supply issues. That makes 0 sense, because there saying they need to slow the economy, and supply issues. Doesn't supply issues slow the economy?????? You can't buy, what you can't buy, right. 

It's an oxymoron what Fed is saying on that line. If such a supply issue where people can't buy things, how is there over-heated action from too much commerce (ie buying). Lol, it makes 0 sense, it cancels itself. 

It simply highlights the fact they don't know what's going on or what to do and simply following the playbook vs creating a play. 

Free market solves supply chain issues, it does, if left alone. When an item is in demand and supply is constrained, others emerge to fulfill that gap, yes? They know this, they did it with fuel! When prices went nuts, they released from strategic reserve, so why are they not doing similar on all else? Get the SBA the ability to empower more startups in that sector, and like magic, more supply comes into existence. 

And the Fed did say this week a problem is people have too much liquidity, THAT I believe is the real focus. 

This is just the next chapter in the war on the middle class. The surf class/ poverty class is in large part unaffected, there existence is subsidized right, none of the 87k auditors is looking at them, no. 

You can't issue trillions into existence without inflation, it's so basic, but they said no it won't do any, then oh it's "transient" lol, apparently just passing through, now a crisis. Once enough people are smashed down, watch, they will offer the cure, and it will be via loans of some kind, i guarantee it. 40/50yr mortgage is coming, no doubt.    


 I have been telling friends and other investors that don't be surprised to see over the next decade the agenda of "Housing is a Right", just like they did with healthcare. This I think will be the next big push on providing govt assistance for housing for almost everyone. Which means housing will get more expensive. 

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Greg R.
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Greg R.
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I suspect you're right - sounds par for the course. The scary thing will be when government starts to dictate the rental cost per unit  on a state/ federal level and cap rates that landlords are allowed to charge. If they get their way they could also try to strong arm investors into adding solar to all of their units and if they refuse they deem the property as "environmentally hazardous". There could be a tax or penalties for noncompliance. We might see something like this piloted in CA, they recently announced the banning of gas vehicles starting in mid-2030s
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Quote from @Greg R.:
I suspect you're right - sounds par for the course. The scary thing will be when government starts to dictate the rental cost per unit  on a state/ federal level and cap rates that landlords are allowed to charge. If they get their way they could also try to strong arm investors into adding solar to all of their units and if they refuse they deem the property as "environmentally hazardous". There could be a tax or penalties for noncompliance. We might see something like this piloted in CA, they recently announced the banning of gas vehicles starting in mid-2030s

 Exactly, this is why I mentioned there's no such thing as a true free market. As it's decided by the gov. and Fed who will be rich and who will be poor. We can only follow their guidance. 

The TX shall not follow the CA trends. Otherwise we don't have alternatives.  If we want energy prices to still be affordable we need more oil and gas drilling.

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Agree.

It's waning obviously after the Russian intervention and Powell's decision. What you described is actually the recent  backlash of the current US Dollar hegemony. It's unimaginable even yesterday that the Australian gov. is drafting a bill to use Digital Yuan as currency reserves. All BRICS countries are experimenting with buying (Russian) oil with their own currency now.

The world is moving into a new cold war version 2.5b.  

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Greg R.
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Greg R.
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Replied
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
I suspect you're right - sounds par for the course. The scary thing will be when government starts to dictate the rental cost per unit  on a state/ federal level and cap rates that landlords are allowed to charge. If they get their way they could also try to strong arm investors into adding solar to all of their units and if they refuse they deem the property as "environmentally hazardous". There could be a tax or penalties for noncompliance. We might see something like this piloted in CA, they recently announced the banning of gas vehicles starting in mid-2030s

 Exactly, this is why I mentioned there's no such thing as a true free market. As it's decided by the gov. and Fed who will be rich and who will be poor. We can only follow their guidance. 

This further emphasizes the importance of being forward thinking and flexible. Anyone who has a dinosaur mindset and thinks that scenarios 50 years ago are somehow analogous to what's to come is going to be hurting. Like any other negative economic event, those who are agile/ quick to adapt can still make a tremendous amount of money. There won't be years worth of data and a ton of time to evaluate everything. The key will be to read the economic and market indicators and move quickly based on what we're seeing. 
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Bruce Woodruff
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Bruce Woodruff
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Replied
Quote from @Greg R.:

Perhaps. But even though the specific playing field has changed the basic rules of 'physics' still apply. The truly wise will learn the new game and get an advantage by remembering the old concepts and outcomes....

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John Warren
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John Warren
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Replied

@Greg R. I have no idea why everyone keeps thinking there is going to be a crash. There is such low inventory, at least here in Chicago, that prices can't sag that much. There is too much demand for housing. Will interest rates cool things off? Of course. I still don't see a "crash' though. I see a return to normalcy where there are some stagnant years and some years where things go up a bit. 

  • John Warren
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    Joe Bertolino
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    When gas went from $3 a gallon to $6 a gallon and then back down to $4 per gallon did we say that the oil and gas market has collapsed and the sky is falling?    If you wanted to cherry-pick statistics you would make that argument and come up with some amazing clickbait.  Same with lumber.  Should we use historical data or should we focus on the short-term trends after a freak event that drove pricing through the roof temporarily.  Softwood lumber decreased 23% in June... does that mean the Lumber market has collapsed and the entire industry is in chaos?   

    If you want to find data suggesting the real estate market is healthy and we are seeing the normal fall/winter slow down combined with the rate increase then you can find that.   If you want to dig for negative stats and sensationalize them (The Biggest drop since 2011!!!!) then you can find those.   

    The market is already adjusting to rate issues.   There are seller financing classes everywhere popping up and mortgage companies are offering 2-1 buy downs so you are paying 4% for the next two years (with hopes rates trickle back down).  I think as the lending market adjusts you will see prices stabilize.  There is still not enough housing.  Rents are quite high.  The recipe for what I consider a crash isn't there.   

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    Bruce Woodruff
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    Quote from @John Warren:

    I have no idea why everyone keeps thinking there is going to be a crash. There is such low inventory, at least here in Chicago, that prices can't sag that much. 

    We're not saying crash as much as a correction. And low inventory doesn't matter if a large number of people are not buying for whatever reason. Higher interest rates, general economic concerns about inflation/recession/stagflation/depression/whatever.

    Only savvy and experienced investors will be buying in the next few years, I sense.....


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    @Greg R. Just go onto any real estate website and sort by something like ‘price reduced’ and scroll through. Draw your own conclusions. Too many people and bots on websites have vested interests in one narrative or another. Just do your own research and see. It’s pretty plain to see the way I list it above.

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    Greg R.
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    Greg R.
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    Quote from @Joe Bertolino:

    When gas went from $3 a gallon to $6 a gallon and then back down to $4 per gallon did we say that the oil and gas market has collapsed and the sky is falling?    If you wanted to cherry-pick statistics you would make that argument and come up with some amazing clickbait.  Same with lumber.  Should we use historical data or should we focus on the short-term trends after a freak event that drove pricing through the roof temporarily.  Softwood lumber decreased 23% in June... does that mean the Lumber market has collapsed and the entire industry is in chaos?   

    If you want to find data suggesting the real estate market is healthy and we are seeing the normal fall/winter slow down combined with the rate increase then you can find that.   If you want to dig for negative stats and sensationalize them (The Biggest drop since 2011!!!!) then you can find those.   

    The market is already adjusting to rate issues.   There are seller financing classes everywhere popping up and mortgage companies are offering 2-1 buy downs so you are paying 4% for the next two years (with hopes rates trickle back down).  I think as the lending market adjusts you will see prices stabilize.  There is still not enough housing.  Rents are quite high.  The recipe for what I consider a crash isn't there.   

    When gas went from $3 to $6 (or close to $7 in San Diego), no one was trying to pretend that the inflated gas price was the norm. We all knew it was artificial and temporary. Same can be said for lumber. 

    That seems to be the difference with the recent housing bubble. Prices surged due to a variety of reasons including historically low rates and a ton of cheap money floating around, and many "experts" started arguing that market conditions at the peak of the bubble was the new norm and that prices would only go up. 

    There were lenders here on BP saying that if you didn't buy for 50-100k over list and over value that you would never have an opportunity to buy again. There were many realtors pressuring buyers to waive all contingencies, including appraisal and inspection contingencies to get their offer accepted. 

    When the market adjusts it's a bit like an aircraft carrier making a u-turn. It takes a little time. The impacts of the rates and inflation that we're seeing right now won't be fully realized in the housing market for months. And this is obviously localized, some markets are going to feel it far worse than others. 

    Don't forget about the national economical indicators either. The stock market is witnessing a major crash as we approach bear markets. Inflation is raging out of control as the fed just raised the rate 75 basis points and is planning to raise it 1-2 more times before the end of the year. Next domino to fall will be the labor market. We're unfortunately going to see a lot more layoffs and high unemployment. I'm expecting foreclosures to skyrocket in the next year - especially when the group who purchased at the top of the market falls on hard times and see that their equity has evaporated. 

    Again, I hope I'm wrong but I don't see how we come out of this any other way. How many trillion of dollars were printed in the last 2 years? How many people quit their jobs and transitioned to relying on government handouts in the name of covid? How many home owners that took advantage of covid forbearance are going to be unable to make double payments or 1.5x payments to repay the 18 months of skipped payments? How about the landlords that didn't get paid for the last 18 months from tenants that stopped paying rent and couldn't be evicted? 

    You can look at things through a rose colored lens if you like, but I prefer recognizing thing as they are. I wish it weren't this way, but I'd rather see it for what it is and prepare for what the market is evolving into so I can plan my next moves accordingly. 

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    Joe Bertolino
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    Quote from @Greg R.:
    Quote from @Joe Bertolino:

    When gas went from $3 a gallon to $6 a gallon and then back down to $4 per gallon did we say that the oil and gas market has collapsed and the sky is falling?    If you wanted to cherry-pick statistics you would make that argument and come up with some amazing clickbait.  Same with lumber.  Should we use historical data or should we focus on the short-term trends after a freak event that drove pricing through the roof temporarily.  Softwood lumber decreased 23% in June... does that mean the Lumber market has collapsed and the entire industry is in chaos?   

    If you want to find data suggesting the real estate market is healthy and we are seeing the normal fall/winter slow down combined with the rate increase then you can find that.   If you want to dig for negative stats and sensationalize them (The Biggest drop since 2011!!!!) then you can find those.   

    The market is already adjusting to rate issues.   There are seller financing classes everywhere popping up and mortgage companies are offering 2-1 buy downs so you are paying 4% for the next two years (with hopes rates trickle back down).  I think as the lending market adjusts you will see prices stabilize.  There is still not enough housing.  Rents are quite high.  The recipe for what I consider a crash isn't there.   

    When gas went from $3 to $6 (or close to $7 in San Diego), no one was trying to pretend that the inflated gas price was the norm. We all knew it was artificial and temporary. Same can be said for lumber. 

    That seems to be the difference with the recent housing bubble. Prices surged due to a variety of reasons including historically low rates and a ton of cheap money floating around, and many "experts" started arguing that market conditions at the peak of the bubble was the new norm and that prices would only go up. 

    There were lenders here on BP saying that if you didn't buy for 50-100k over list and over value that you would never have an opportunity to buy again. There were many realtors pressuring buyers to waive all contingencies, including appraisal and inspection contingencies to get their offer accepted. 

    When the market adjusts it's a bit like an aircraft carrier making a u-turn. It takes a little time. The impacts of the rates and inflation that we're seeing right now won't be fully realized in the housing market for months. And this is obviously localized, some markets are going to feel it far worse than others. 

    Don't forget about the national economical indicators either. The stock market is witnessing a major crash as we approach bear markets. Inflation is raging out of control as the fed just raised the rate 75 basis points and is planning to raise it 1-2 more times before the end of the year. Next domino to fall will be the labor market. We're unfortunately going to see a lot more layoffs and high unemployment. I'm expecting foreclosures to skyrocket in the next year - especially when the group who purchased at the top of the market falls on hard times and see that their equity has evaporated. 

    Again, I hope I'm wrong but I don't see how we come out of this any other way. How many trillion of dollars were printed in the last 2 years? How many people quit their jobs and transitioned to relying on government handouts in the name of covid? How many home owners that took advantage of covid forbearance are going to be unable to make double payments or 1.5x payments to repay the 18 months of skipped payments? How about the landlords that didn't get paid for the last 18 months from tenants that stopped paying rent and couldn't be evicted? 

    You can look at things through a rose colored lens if you like, but I prefer recognizing thing as they are. I wish it weren't this way, but I'd rather see it for what it is and prepare for what the market is evolving into so I can plan my next moves accordingly. 

     Time will tell but I am not seeing significant year over year decreases.  I think most of those that bought at the peak will be fine as they likely sold their prior home at the peak and locked in very low rates.  Very few were stretched to make the deal happen.  Weak buyers were not winning those bidding wars.  Those that take action typically do better than those who think they can time the market.  I know buyers have been waiting “for the crash” since 2014.   We still don’t have enough inventory.  There was very little new construction from 2009-2019 and now builders are slowing down for supply chain issues to avoid any sitting inventory.  They are not slowing due to a lack of buyers.  They are still buying down rate and selling houses,  just an an intentionally slower pace.  

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    Greg R.
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    Greg R.
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    Right, we just recently started to see the shift in the past few months, it's going to take a while for the market to show the impacts of the current interest rate and environmental conditions. 
    Yes, some people made their deals comfortably and hopefully they'll be fine. But many didn't, and completely stretched and mortgaged their financial future (no pun intended) & emptied their savings to cover shortfalls from appraisal contingency waivers.
    From my perspective a lot of the construction is slowing down because sales have dramatically slowed. There are huge developments in Dallas, hundreds if not thousands of homes recently completed and others nearing completion without buyers - lots and lots of signs in yards. I can guarantee you that they're not intentionally slowing down the pace of sales. 
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    Joe Bertolino
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    Quote from @Greg R.:
    Right, we just recently started to see the shift in the past few months, it's going to take a while for the market to show the impacts of the current interest rate and environmental conditions. 
    Yes, some people made their deals comfortably and hopefully they'll be fine. But many didn't, and completely stretched and mortgaged their financial future (no pun intended) & emptied their savings to cover shortfalls from appraisal contingency waivers.
    From my perspective a lot of the construction is slowing down because sales have dramatically slowed. There are huge developments in Dallas, hundreds if not thousands of homes recently completed and others nearing completion without buyers - lots and lots of signs in yards. I can guarantee you that they're not intentionally slowing down the pace of sales. 

     Which subdivisions and builders in Dallas have hundreds if not thousands of homes sitting right now?

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    Greg R.
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    Greg R.
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    Quote from @Joe Bertolino:
    Quote from @Greg R.:
    Right, we just recently started to see the shift in the past few months, it's going to take a while for the market to show the impacts of the current interest rate and environmental conditions. 
    Yes, some people made their deals comfortably and hopefully they'll be fine. But many didn't, and completely stretched and mortgaged their financial future (no pun intended) & emptied their savings to cover shortfalls from appraisal contingency waivers.
    From my perspective a lot of the construction is slowing down because sales have dramatically slowed. There are huge developments in Dallas, hundreds if not thousands of homes recently completed and others nearing completion without buyers - lots and lots of signs in yards. I can guarantee you that they're not intentionally slowing down the pace of sales. 

     Which subdivisions and builders in Dallas have hundreds if not thousands of homes sitting right now?

    I don't know the names of the developments as I'm new to the area but one was in Rockwall. It was absolutely massive. I drove through it to check out a house and while there saw a huge amount of signs in yards. However, It's not a single development or builder. There are many new developments/ projects in the area. This is a massive area. A realtor I'm working with (been in the DFW market for 30+ years) also confirmed this to me. 

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    I've said the same. It's a spillover effect that's not good. Here's some notes to support your assumptions based on some Fed comments :

    a- Please note today's Fed rate 'could be' the LOWEST of what 'restrictive rate' they want to hold for the long term. Put it differently, 6.25-6.50% interest rate could be the low-interest rate for the next 12 months at the very least

    b- Fed does NOT have the intention to reduce the rate until they see the rise in unemployment. Currently, the Fed see there's 2:1 ratio demand:supply hence Fed thinks this position is safe enough (not to trigger a major recession).

    Although actually Facebook and Google already announced non-performance-based layoffs as of this week

    c- Fed still see that majority of employer will raise their employee salary by 6 percent, outpacing their expectation of 3% inflation target

    d- Fed only started reducing MBS holding in October.

    As a summary from (a) to (d), it's too early to say there's no crash/no correction.

    But it's quite possible to see a much weaker housing/job market in 2023. 

    It's like what James said, stagflation.

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    Quote from @Greg Scott:

    The market may correct, but I firmly believe there won't be a crash.  The reason is simple, equity.

    Before 2008 people with no income could get liars loans and buy much more real estate than they could afford.  We heard stories of cleaning ladies buying multiple million dollar homes.  When home prices starting falling, the whole thing collapses like a house of cards because nobody had any equity.  They couldn't sell and get out.  We had cascading foreclosures creating a downward spiral.

    Recently, prices have been surging.  Given the laws passed after the Great Recession, appraisals and lending is highly restricted.  Appraisals have not been keeping up with prices and lenders won't lend above appraised value.  We sold a house in 2021 and in one day had 20 offers.  Several of them had acceleration clauses stating they would pay more than anyone else up to $X.  Both of them waived any financing contingency because they KNEW the house wouldn't appraise for what they were offering.  They had to make up the difference with cash.  Those people have a ton of equity in their homes.  If they had to sell, they might take a haircut, but they aren't going to get foreclosed. 

    There is no  house of cards here to come tumbling down.

     @Greg Scott

    I disagree here, I think a lot of people believe what you are saying, but it is misguided. The "equity" that has been gained over the past decade has primarily been driven by the low interest rate environment. The interest rate is the main component to housing affordability (monthly payment.) So by having 2-3% interest rates, it artificially inflates housing values. This "equity" while it appears real, is really phantom. The fed has aggressively raised rates, we are now sitting at a 7% primary home mortgage rate. A 500k mortgage in 2021 at 3% has a payment of $2,108. a 500k mortgage now at 7% is $3,327. In order to have the payment be $2,108 now at 7% rates, you need a 320k mortgage ($2,129). That is a 36% drop in value now due to rates rising to where they are now. The "equity" is being recaptured now to reflect the reality.

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    @John Carbone

    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?

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    Quote from @Nicholas L.:

    @John Carbone

    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. 

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    @John Carbone

    agree with all that.  sellers who have to sell want 2021 prices, and there is increasing pressure on buyers because of rising interest rates.  but... what happens?  who blinks first?  how much of an increase removes all buyers?  

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    Quote from @John Carbone:
    Quote from @Nicholas L.:

    @John Carbone

    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.

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    Quote from @Nicholas L.:

    @John Carbone

    agree with all that.  sellers who have to sell want 2021 prices, and there is increasing pressure on buyers because of rising interest rates.  but... what happens?  who blinks first?  how much of an increase removes all buyers?  


    August data. Closed sales in major metro -20% YoY, new listing -10% YoY.
    In actual number,new listing ratio compare to closed sales: 150k:136k.
    MoM difference of active inventory between August and July: increase of 4%

    There are more sellers than buyers already. October data would be fun.

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