Housing crash deniers ???

[Greg R.]

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. 

[Michael Wooldridge]

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

3) 40% of homeowners own their houses free-and-clear and another 30% or so locked in 30-year fixed rates in the 3-4% rate and are unlikely to sell or let their houses go to foreclosure for the next 20 years.  I don't see much room for a crash with those stats alone.  

>>>

This has been discussed before. If #3 is true, then we would not see an increase in active inventory.
See housing market and equity market works in a similar fashion. The market needs liquidity. Liquidity comes from the buyer.

Currently, 100% of market in US has a negative YoY of new listing. Good, the theory is right. BUT. for those who has to sell, they don't see enough buyer so in about 75% of the market, there's positive increase in active inventory. Literally we have more seller than buyer.

Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY. 

 That's an interesting idea, problem is how do you know the actual # of buyers in a market? How do you know if it's growing, declining? 

I think the only way to get any read on such is using listing times, % of listing to pending. That will show the velocity and velocity is a reflection of buyer volume. 

Would be a great metric to have of "buyer vectoring". Very interesting. I wonder how MLS data could be utilized to build this.....

 Here's more data so we have a complete picture :

January 2022
Active Inventory YoY -31%
New Listing YoY -8%

May 2022
Active Inventory YoY 10%
New Listing YoY 4%
(Most inventories increased in Austin, Phoenix and Florida)

August 2022
Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY.

Bottomline: there's a crack in the housing market STARTING from May 2022 as there are more sellers than buyers.
If we want to make a balanced market where # of buyers equal to #seller, the mortgage rate has to adjust to March-April 2022 timeframe.  

This is from aggregated MLS data James. I found this is the easiest method to check the balance between # buyer and seller.

So the bold is interesting. I would have assumed, and maybe it happen in May, but that Califronia has the most inventory increase.  PHX isn't surprising to me at all nor Texas.

That August data are you able to see Cali/AZ and maybe Washington? Those 3 states have particularly been hit and seeing valuation changes last 3 months. IF the inventory isn't coming from there (well PHX is one) but if CA isn't driving up inventory are people coming off market and/or still selling. 

[Michael Wooldridge]

Quote from @Carlos Ptriawan:

I think it depends on the area. In many metro areas the cool thing now is walkability. Many of the young folks want to be walking distance to the grocery store, bars, restaurants, gyms, etc. If that's the case, most options are going to be these modern apartments/ townhouses. 

Yeah I read the same, basically, it's the generation that prefers "pay-per-demand" / "pay-per-usage" rather than "ownership".

They may prefer renting to ownership as they will have more mobility
They like when facilities are available nearby
They prefer airbnb over hotel
prefer Uber/lyft than owning a car
prefer some places that's quite Instagrammable
prefer online banking
and of course online dating LOL 

Class A MF is created for them

 True but on the flip side they are about to inherit a massive %  of the homes out there. So the question is what do they do with it?

[Jay Hinrichs]

Quote from @Michael Wooldridge:

Quote from @Carlos Ptriawan:

I think it depends on the area. In many metro areas the cool thing now is walkability. Many of the young folks want to be walking distance to the grocery store, bars, restaurants, gyms, etc. If that's the case, most options are going to be these modern apartments/ townhouses. 

Yeah I read the same, basically, it's the generation that prefers "pay-per-demand" / "pay-per-usage" rather than "ownership".

They may prefer renting to ownership as they will have more mobility
They like when facilities are available nearby
They prefer airbnb over hotel
prefer Uber/lyft than owning a car
prefer some places that's quite Instagrammable
prefer online banking
and of course online dating LOL 

Class A MF is created for them

 True but on the flip side they are about to inherit a massive %  of the homes out there. So the question is what do they do with it?

 inheritied homes will be sold and or rented out..  

[Carlos Ptriawan]

Quote from @Michael Wooldridge:

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

3) 40% of homeowners own their houses free-and-clear and another 30% or so locked in 30-year fixed rates in the 3-4% rate and are unlikely to sell or let their houses go to foreclosure for the next 20 years.  I don't see much room for a crash with those stats alone.  

>>>

This has been discussed before. If #3 is true, then we would not see an increase in active inventory.
See housing market and equity market works in a similar fashion. The market needs liquidity. Liquidity comes from the buyer.

Currently, 100% of market in US has a negative YoY of new listing. Good, the theory is right. BUT. for those who has to sell, they don't see enough buyer so in about 75% of the market, there's positive increase in active inventory. Literally we have more seller than buyer.

Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY. 

 That's an interesting idea, problem is how do you know the actual # of buyers in a market? How do you know if it's growing, declining? 

I think the only way to get any read on such is using listing times, % of listing to pending. That will show the velocity and velocity is a reflection of buyer volume. 

Would be a great metric to have of "buyer vectoring". Very interesting. I wonder how MLS data could be utilized to build this.....

 Here's more data so we have a complete picture :

January 2022
Active Inventory YoY -31%
New Listing YoY -8%

May 2022
Active Inventory YoY 10%
New Listing YoY 4%
(Most inventories increased in Austin, Phoenix and Florida)

August 2022
Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY.

Bottomline: there's a crack in the housing market STARTING from May 2022 as there are more sellers than buyers.
If we want to make a balanced market where # of buyers equal to #seller, the mortgage rate has to adjust to March-April 2022 timeframe.  

This is from aggregated MLS data James. I found this is the easiest method to check the balance between # buyer and seller.

So the bold is interesting. I would have assumed, and maybe it happen in May, but that Califronia has the most inventory increase.  PHX isn't surprising to me at all nor Texas.

That August data are you able to see Cali/AZ and maybe Washington? Those 3 states have particularly been hit and seeing valuation changes last 3 months. IF the inventory isn't coming from there (well PHX is one) but if CA isn't driving up inventory are people coming off market and/or still selling. 

 Found this for LA County: https://fred.stlouisfed.org/se...
LA county has the largest houses in the state. Inventory regressed to July 2020.

It seems the trends are the same, the leak in the housing market started in April-May 2022. 
We really need to adjust mortgage rate to April's rate to bring back the liquidity. 

If we remain 7% too long there's potential for GFC-like crisis.

[John Carbone]

@James Hamling

[John Carbone]

Quote from @Carlos Ptriawan:

Quote from @Michael Wooldridge:

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

3) 40% of homeowners own their houses free-and-clear and another 30% or so locked in 30-year fixed rates in the 3-4% rate and are unlikely to sell or let their houses go to foreclosure for the next 20 years.  I don't see much room for a crash with those stats alone.  

>>>

This has been discussed before. If #3 is true, then we would not see an increase in active inventory.
See housing market and equity market works in a similar fashion. The market needs liquidity. Liquidity comes from the buyer.

Currently, 100% of market in US has a negative YoY of new listing. Good, the theory is right. BUT. for those who has to sell, they don't see enough buyer so in about 75% of the market, there's positive increase in active inventory. Literally we have more seller than buyer.

Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY. 

 That's an interesting idea, problem is how do you know the actual # of buyers in a market? How do you know if it's growing, declining? 

I think the only way to get any read on such is using listing times, % of listing to pending. That will show the velocity and velocity is a reflection of buyer volume. 

Would be a great metric to have of "buyer vectoring". Very interesting. I wonder how MLS data could be utilized to build this.....

 Here's more data so we have a complete picture :

January 2022
Active Inventory YoY -31%
New Listing YoY -8%

May 2022
Active Inventory YoY 10%
New Listing YoY 4%
(Most inventories increased in Austin, Phoenix and Florida)

August 2022
Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY.

Bottomline: there's a crack in the housing market STARTING from May 2022 as there are more sellers than buyers.
If we want to make a balanced market where # of buyers equal to #seller, the mortgage rate has to adjust to March-April 2022 timeframe.  

This is from aggregated MLS data James. I found this is the easiest method to check the balance between # buyer and seller.

So the bold is interesting. I would have assumed, and maybe it happen in May, but that Califronia has the most inventory increase.  PHX isn't surprising to me at all nor Texas.

That August data are you able to see Cali/AZ and maybe Washington? Those 3 states have particularly been hit and seeing valuation changes last 3 months. IF the inventory isn't coming from there (well PHX is one) but if CA isn't driving up inventory are people coming off market and/or still selling. 

 Found this for LA County: https://fred.stlouisfed.org/se...
LA county has the largest houses in the state. Inventory regressed to July 2020.

It seems the trends are the same, the leak in the housing market started in April-May 2022. 
We really need to adjust mortgage rate to April's rate to bring back the liquidity. 

If we remain 7% too long there's potential for GFC-like crisis.

This pretty much sums everything up right here. The longer rates stay high, the more damage is done. 

[Bruce Woodruff]

Quote from @Jay Hinrichs:

Well, some will be moved into...what percentage? Maybe 20%?

[Greg R.]

Quote from @Carlos Ptriawan:

I think it depends on the area. In many metro areas the cool thing now is walkability. Many of the young folks want to be walking distance to the grocery store, bars, restaurants, gyms, etc. If that's the case, most options are going to be these modern apartments/ townhouses. 

Yeah I read the same, basically, it's the generation that prefers "pay-per-demand" / "pay-per-usage" rather than "ownership".

They may prefer renting to ownership as they will have more mobility
They like when facilities are available nearby
They prefer airbnb over hotel
prefer Uber/lyft than owning a car
prefer some places that's quite Instagrammable
prefer online banking
and of course online dating LOL 

Class A MF is created for them

Yeah you nailed it on the head, pay-per-use & subscription services are big with this group.

It's interesting because I'm actually staying in one of these communities right now. I recently moved from San Diego to north Dallas and decided not to buy right away. For one, prices were sky high 6-months ago (and still are) and I didn't know the area. Though it would be better for us to rent for a while to let the market cool a little and also learn the area and decide where to set our roots long-term. 

So I'm in this very nice/ expensive "urban" style community. It's a pretty large community of "luxury" apartments and they have a very few townhomes in the community - which is where I'm staying. It's a three story unit, no neighbors above or below. Only one common wall with a neighbor. Overall a very nice place w/ high quality finishes. 

With that, this community is 99% the folks your described. Seems like almost everyone here is a "high tech" millennial. Walking distance to a ton of bars/ restaurants, a Whole Foods, Starbucks, etc. One other thing that really stuck out to me is that there are a ton of "designer" dogs in this community. It's like a zoo here. The millennials all have their Shiba's, dalmatian's, golden-doodle's etc., and are constantly walking them around the community. Virtually no kids. Mine seem to be the only ones in the community.

Definitely a different generation. 

[James Hamling]

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

3) 40% of homeowners own their houses free-and-clear and another 30% or so locked in 30-year fixed rates in the 3-4% rate and are unlikely to sell or let their houses go to foreclosure for the next 20 years.  I don't see much room for a crash with those stats alone.  

>>>

This has been discussed before. If #3 is true, then we would not see an increase in active inventory.
See housing market and equity market works in a similar fashion. The market needs liquidity. Liquidity comes from the buyer.

Currently, 100% of market in US has a negative YoY of new listing. Good, the theory is right. BUT. for those who has to sell, they don't see enough buyer so in about 75% of the market, there's positive increase in active inventory. Literally we have more seller than buyer.

Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY. 

 That's an interesting idea, problem is how do you know the actual # of buyers in a market? How do you know if it's growing, declining? 

I think the only way to get any read on such is using listing times, % of listing to pending. That will show the velocity and velocity is a reflection of buyer volume. 

Would be a great metric to have of "buyer vectoring". Very interesting. I wonder how MLS data could be utilized to build this.....

 Here's more data so we have a complete picture :

January 2022
Active Inventory YoY -31%
New Listing YoY -8%

May 2022
Active Inventory YoY 10%
New Listing YoY 4%
(Most inventories increased in Austin, Phoenix and Florida)

August 2022
Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY.

Bottomline: there's a crack in the housing market STARTING from May 2022 as there are more sellers than buyers.
If we want to make a balanced market where # of buyers equal to #seller, the mortgage rate has to adjust to March-April 2022 timeframe.  

This is from aggregated MLS data James. I found this is the easiest method to check the balance between # buyer and seller.

 Problem with this is taking ALL real estate, as a whole, in the entire U.S., so this includes the malibu home at $28.3M, the Telluride condos at $3.6m, etc etc..     The luxury segment of real estate, that's it's own universe completely, it trades like wine, art and dinosaur eggs. A fart in the breeze 1 way or the other can have massive market movements. 

You gotta narrow things at minimum into pricing strata's. If not strata's and regions. For one thing regional impacts will adjust things, for example, I am betting Florida is going to have a seriously down month in homes sales this month, does that mean the market is crashing there, or that a hurricane just tore through the place. Gotta keep context in mind, and not get into skewed data. 

Inventory levels will speak much louder as to status of things, you could eliminate all those stats and what your trying to infer from them by simply going with inventory level which out right says the data of it. My market, inventory shot up too 1.3mnths. Although, that's right on par for normal seasonal adjustment.    A healthy "strong" market is 2 months inventory, so we are still, as of today, in significant shortage of units territory. 

We start considering inventory getting outsized at 3mnths. 

[James Hamling]

Quote from @Bruce Woodruff:

Quote from @Jay Hinrichs:

Well, some will be moved into...what percentage? Maybe 20%?

 As in by a family member? I see that happen very rarely, surprisingly rarely actually, I'd say maybe 2.5% of the time, or less. ALTHOUGH, with rates where they are now, having mom & dads free & clear home, pretty incentivizing to tell siblings "hey, I will buy the place but let me pay all of you, not the bank, you give me a mortgage on it, i pay you directly, were family. And I will pay 3% that's more then double what bank pays you on $, that's fair". So could see that % shoot up. 

[Carlos Ptriawan]

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

3) 40% of homeowners own their houses free-and-clear and another 30% or so locked in 30-year fixed rates in the 3-4% rate and are unlikely to sell or let their houses go to foreclosure for the next 20 years.  I don't see much room for a crash with those stats alone.  

>>>

This has been discussed before. If #3 is true, then we would not see an increase in active inventory.
See housing market and equity market works in a similar fashion. The market needs liquidity. Liquidity comes from the buyer.

Currently, 100% of market in US has a negative YoY of new listing. Good, the theory is right. BUT. for those who has to sell, they don't see enough buyer so in about 75% of the market, there's positive increase in active inventory. Literally we have more seller than buyer.

Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY. 

 That's an interesting idea, problem is how do you know the actual # of buyers in a market? How do you know if it's growing, declining? 

I think the only way to get any read on such is using listing times, % of listing to pending. That will show the velocity and velocity is a reflection of buyer volume. 

Would be a great metric to have of "buyer vectoring". Very interesting. I wonder how MLS data could be utilized to build this.....

 Here's more data so we have a complete picture :

January 2022
Active Inventory YoY -31%
New Listing YoY -8%

May 2022
Active Inventory YoY 10%
New Listing YoY 4%
(Most inventories increased in Austin, Phoenix and Florida)

August 2022
Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY.

Bottomline: there's a crack in the housing market STARTING from May 2022 as there are more sellers than buyers.
If we want to make a balanced market where # of buyers equal to #seller, the mortgage rate has to adjust to March-April 2022 timeframe.  

This is from aggregated MLS data James. I found this is the easiest method to check the balance between # buyer and seller.

 Problem with this is taking ALL real estate, as a whole, in the entire U.S., so this includes the malibu home at $28.3M, the Telluride condos at $3.6m, etc etc..     The luxury segment of real estate, that's it's own universe completely, it trades like wine, art and dinosaur eggs. A fart in the breeze 1 way or the other can have massive market movements. 

You gotta narrow things at minimum into pricing strata's. If not strata's and regions. For one thing regional impacts will adjust things, for example, I am betting Florida is going to have a seriously down month in homes sales this month, does that mean the market is crashing there, or that a hurricane just tore through the place. Gotta keep context in mind, and not get into skewed data. 

Inventory levels will speak much louder as to status of things, you could eliminate all those stats and what your trying to infer from them by simply going with inventory level which out right says the data of it. My market, inventory shot up too 1.3mnths. Although, that's right on par for normal seasonal adjustment.    A healthy "strong" market is 2 months inventory, so we are still, as of today, in significant shortage of units territory. 

We start considering inventory getting outsized at 3mnths. 

 yes yes, we can show regionally as well in which city there are more leaks. Most market just regressed to 2020-2021 inventory.

But Nevada is the example of bit anomaly here, it is regressed into 2016-2019 level : https://fred.stlouisfed.org/se... 

Your MN market still seems healthy and within the range. But NV in May has 6k and now 12k listing.

So the theory that people would not sell when interest rate changes, is partially inaccurate, if we use Nevada as example.

[John Carbone]

Quote from @James Hamling:

Quote from @Bruce Woodruff:

Quote from @Jay Hinrichs:

Well, some will be moved into...what percentage? Maybe 20%?

 As in by a family member? I see that happen very rarely, surprisingly rarely actually, I'd say maybe 2.5% of the time, or less. ALTHOUGH, with rates where they are now, having mom & dads free & clear home, pretty incentivizing to tell siblings "hey, I will buy the place but let me pay all of you, not the bank, you give me a mortgage on it, i pay you directly, were family. And I will pay 3% that's more then double what bank pays you on $, that's fair". So could see that % shoot up. 

 There are huge implications (taxes/IRS) to doing this with rates being so much higher now. It’s not that simple to just give a below market interest rate even to family. 

[James Hamling]

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

3) 40% of homeowners own their houses free-and-clear and another 30% or so locked in 30-year fixed rates in the 3-4% rate and are unlikely to sell or let their houses go to foreclosure for the next 20 years.  I don't see much room for a crash with those stats alone.  

>>>

This has been discussed before. If #3 is true, then we would not see an increase in active inventory.
See housing market and equity market works in a similar fashion. The market needs liquidity. Liquidity comes from the buyer.

Currently, 100% of market in US has a negative YoY of new listing. Good, the theory is right. BUT. for those who has to sell, they don't see enough buyer so in about 75% of the market, there's positive increase in active inventory. Literally we have more seller than buyer.

Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY. 

 That's an interesting idea, problem is how do you know the actual # of buyers in a market? How do you know if it's growing, declining? 

I think the only way to get any read on such is using listing times, % of listing to pending. That will show the velocity and velocity is a reflection of buyer volume. 

Would be a great metric to have of "buyer vectoring". Very interesting. I wonder how MLS data could be utilized to build this.....

 Here's more data so we have a complete picture :

January 2022
Active Inventory YoY -31%
New Listing YoY -8%

May 2022
Active Inventory YoY 10%
New Listing YoY 4%
(Most inventories increased in Austin, Phoenix and Florida)

August 2022
Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY.

Bottomline: there's a crack in the housing market STARTING from May 2022 as there are more sellers than buyers.
If we want to make a balanced market where # of buyers equal to #seller, the mortgage rate has to adjust to March-April 2022 timeframe.  

This is from aggregated MLS data James. I found this is the easiest method to check the balance between # buyer and seller.

 Problem with this is taking ALL real estate, as a whole, in the entire U.S., so this includes the malibu home at $28.3M, the Telluride condos at $3.6m, etc etc..     The luxury segment of real estate, that's it's own universe completely, it trades like wine, art and dinosaur eggs. A fart in the breeze 1 way or the other can have massive market movements. 

You gotta narrow things at minimum into pricing strata's. If not strata's and regions. For one thing regional impacts will adjust things, for example, I am betting Florida is going to have a seriously down month in homes sales this month, does that mean the market is crashing there, or that a hurricane just tore through the place. Gotta keep context in mind, and not get into skewed data. 

Inventory levels will speak much louder as to status of things, you could eliminate all those stats and what your trying to infer from them by simply going with inventory level which out right says the data of it. My market, inventory shot up too 1.3mnths. Although, that's right on par for normal seasonal adjustment.    A healthy "strong" market is 2 months inventory, so we are still, as of today, in significant shortage of units territory. 

We start considering inventory getting outsized at 3mnths. 

 yes yes, we can show regionally as well in which city there are more leaks. Most market just regressed to 2020-2021 inventory.

But Nevada is the example of bit anomaly here, it is regressed into 2016-2019 level : https://fred.stlouisfed.org/se... 

Your MN market still seems healthy and within the range. But NV in May has 6k and now 12k listing.

So the theory that people would not sell when interest rate changes, is partially inaccurate, if we use Nevada as example.

 No, I didn't say people selling, in general, during high interest rates. I said selling AT DESCENDING PRICES. 

And to further define that, up too 5% in median home price is fluctuations and variations, MORE then 5% drop in a quarter, that's descending prices. If just 5% in a Q, that's consolidation, variations, fluctuations etc.. 

People are still happy to try and cash in on the equity, if they can. Most often they are buying new homes, at least what I am seeing a lot of. 

But if prices start dropping, you will also see listing start dropping as well. 

[J. Mitchell Bernier]

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

3) 40% of homeowners own their houses free-and-clear and another 30% or so locked in 30-year fixed rates in the 3-4% rate and are unlikely to sell or let their houses go to foreclosure for the next 20 years.  I don't see much room for a crash with those stats alone.  

>>>

This has been discussed before. If #3 is true, then we would not see an increase in active inventory.
See housing market and equity market works in a similar fashion. The market needs liquidity. Liquidity comes from the buyer.

Currently, 100% of market in US has a negative YoY of new listing. Good, the theory is right. BUT. for those who has to sell, they don't see enough buyer so in about 75% of the market, there's positive increase in active inventory. Literally we have more seller than buyer.

Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY. 

 That's an interesting idea, problem is how do you know the actual # of buyers in a market? How do you know if it's growing, declining? 

I think the only way to get any read on such is using listing times, % of listing to pending. That will show the velocity and velocity is a reflection of buyer volume. 

Would be a great metric to have of "buyer vectoring". Very interesting. I wonder how MLS data could be utilized to build this.....

 Here's more data so we have a complete picture :

January 2022
Active Inventory YoY -31%
New Listing YoY -8%

May 2022
Active Inventory YoY 10%
New Listing YoY 4%
(Most inventories increased in Austin, Phoenix and Florida)

August 2022
Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY.

Bottomline: there's a crack in the housing market STARTING from May 2022 as there are more sellers than buyers.
If we want to make a balanced market where # of buyers equal to #seller, the mortgage rate has to adjust to March-April 2022 timeframe.  

This is from aggregated MLS data James. I found this is the easiest method to check the balance between # buyer and seller.

 Problem with this is taking ALL real estate, as a whole, in the entire U.S., so this includes the malibu home at $28.3M, the Telluride condos at $3.6m, etc etc..     The luxury segment of real estate, that's it's own universe completely, it trades like wine, art and dinosaur eggs. A fart in the breeze 1 way or the other can have massive market movements. 

You gotta narrow things at minimum into pricing strata's. If not strata's and regions. For one thing regional impacts will adjust things, for example, I am betting Florida is going to have a seriously down month in homes sales this month, does that mean the market is crashing there, or that a hurricane just tore through the place. Gotta keep context in mind, and not get into skewed data. 

Inventory levels will speak much louder as to status of things, you could eliminate all those stats and what your trying to infer from them by simply going with inventory level which out right says the data of it. My market, inventory shot up too 1.3mnths. Although, that's right on par for normal seasonal adjustment.    A healthy "strong" market is 2 months inventory, so we are still, as of today, in significant shortage of units territory. 

We start considering inventory getting outsized at 3mnths. 

 I agree I think listings will tell the story. 

Zillow data shows that the top of the market was in February of this year with listing being at the lowest since 2017 at 645k across the US. Since then listings have been rising every month are up over 323K since February. Will be interesting to see where it will be for September, most likely going to be up again. 

For context, the most listings in 2019 was in July at 1.725 million listings on Zillow, yall can find the data at the link below

Housing Data - Zillow Research

[Michael Wooldridge]

Quote from @Carlos Ptriawan:

Quote from @Michael Wooldridge:

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

3) 40% of homeowners own their houses free-and-clear and another 30% or so locked in 30-year fixed rates in the 3-4% rate and are unlikely to sell or let their houses go to foreclosure for the next 20 years.  I don't see much room for a crash with those stats alone.  

>>>

This has been discussed before. If #3 is true, then we would not see an increase in active inventory.
See housing market and equity market works in a similar fashion. The market needs liquidity. Liquidity comes from the buyer.

Currently, 100% of market in US has a negative YoY of new listing. Good, the theory is right. BUT. for those who has to sell, they don't see enough buyer so in about 75% of the market, there's positive increase in active inventory. Literally we have more seller than buyer.

Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY. 

 That's an interesting idea, problem is how do you know the actual # of buyers in a market? How do you know if it's growing, declining? 

I think the only way to get any read on such is using listing times, % of listing to pending. That will show the velocity and velocity is a reflection of buyer volume. 

Would be a great metric to have of "buyer vectoring". Very interesting. I wonder how MLS data could be utilized to build this.....

 Here's more data so we have a complete picture :

January 2022
Active Inventory YoY -31%
New Listing YoY -8%

May 2022
Active Inventory YoY 10%
New Listing YoY 4%
(Most inventories increased in Austin, Phoenix and Florida)

August 2022
Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY.

Bottomline: there's a crack in the housing market STARTING from May 2022 as there are more sellers than buyers.
If we want to make a balanced market where # of buyers equal to #seller, the mortgage rate has to adjust to March-April 2022 timeframe.  

This is from aggregated MLS data James. I found this is the easiest method to check the balance between # buyer and seller.

So the bold is interesting. I would have assumed, and maybe it happen in May, but that Califronia has the most inventory increase.  PHX isn't surprising to me at all nor Texas.

That August data are you able to see Cali/AZ and maybe Washington? Those 3 states have particularly been hit and seeing valuation changes last 3 months. IF the inventory isn't coming from there (well PHX is one) but if CA isn't driving up inventory are people coming off market and/or still selling. 

 Found this for LA County: https://fred.stlouisfed.org/se...
LA county has the largest houses in the state. Inventory regressed to July 2020.

It seems the trends are the same, the leak in the housing market started in April-May 2022. 
We really need to adjust mortgage rate to April's rate to bring back the liquidity. 

If we remain 7% too long there's potential for GFC-like crisis.

 That's more what I expected. We know a lot of the cali led run up - mix of money/tech stocks and the impact on homes is big for that locality so to speak. So high valuations already that have only gone higher and west coast is seeing a lot more valuation reductions than say east coast today. And obviously it's spread outside Cali, Austin is feeling it, Arizona, Washington and Oregon has parts where Californians or tech in general have relocated and caused big run ups. 

Cali also happens to have a massive population and those things paired with big rate increases equal big swings. The national impact a state like that has on all median home valuations is big. 

I'm by no means saying it won't play out that way else where but those markets have very specific reasons to be more extreme. 

Which actually brings me to Florida I know there are variations across the state but May-July when median home prices were swinging down 0-10% west coast. Florida has been doing 0-10%. Again big population, lot of large growth, I'm kind of curious to see how that state swings valuations in the long run also or if it does as it hasn't quite reach that Cali level nor probably quite Austin. 

Anyway I was expecting to see cali jump - LA county is a great example just given in how damn large it is (miles and people/homes). Thanks for sharing.

[Michael Wooldridge]

Quote from @John Carbone:

Quote from @Carlos Ptriawan:

Quote from @Michael Wooldridge:

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

3) 40% of homeowners own their houses free-and-clear and another 30% or so locked in 30-year fixed rates in the 3-4% rate and are unlikely to sell or let their houses go to foreclosure for the next 20 years.  I don't see much room for a crash with those stats alone.  

>>>

This has been discussed before. If #3 is true, then we would not see an increase in active inventory.
See housing market and equity market works in a similar fashion. The market needs liquidity. Liquidity comes from the buyer.

Currently, 100% of market in US has a negative YoY of new listing. Good, the theory is right. BUT. for those who has to sell, they don't see enough buyer so in about 75% of the market, there's positive increase in active inventory. Literally we have more seller than buyer.

Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY. 

 That's an interesting idea, problem is how do you know the actual # of buyers in a market? How do you know if it's growing, declining? 

I think the only way to get any read on such is using listing times, % of listing to pending. That will show the velocity and velocity is a reflection of buyer volume. 

Would be a great metric to have of "buyer vectoring". Very interesting. I wonder how MLS data could be utilized to build this.....

 Here's more data so we have a complete picture :

January 2022
Active Inventory YoY -31%
New Listing YoY -8%

May 2022
Active Inventory YoY 10%
New Listing YoY 4%
(Most inventories increased in Austin, Phoenix and Florida)

August 2022
Active Inventory increases by 25% YoY.
New Listing decreased by -10% YoY.

Bottomline: there's a crack in the housing market STARTING from May 2022 as there are more sellers than buyers.
If we want to make a balanced market where # of buyers equal to #seller, the mortgage rate has to adjust to March-April 2022 timeframe.  

This is from aggregated MLS data James. I found this is the easiest method to check the balance between # buyer and seller.

So the bold is interesting. I would have assumed, and maybe it happen in May, but that Califronia has the most inventory increase.  PHX isn't surprising to me at all nor Texas.

That August data are you able to see Cali/AZ and maybe Washington? Those 3 states have particularly been hit and seeing valuation changes last 3 months. IF the inventory isn't coming from there (well PHX is one) but if CA isn't driving up inventory are people coming off market and/or still selling. 

 Found this for LA County: https://fred.stlouisfed.org/se...
LA county has the largest houses in the state. Inventory regressed to July 2020.

It seems the trends are the same, the leak in the housing market started in April-May 2022. 
We really need to adjust mortgage rate to April's rate to bring back the liquidity. 

If we remain 7% too long there's potential for GFC-like crisis.

This pretty much sums everything up right here. The longer rates stay high, the more damage is done. 

 For Cali sure. And some of the other states like AZ, Washington, parts of Oregon. I'm not sure if SLC has shifted yet but I'm sure it will also given that it's silicon sloped and had some pretty big run ups also. I expected to see that it's why I asked. Look at markets east coast. There are a lot of variations across country. Cali alone has the population and median values to shift the national median in a big way (08 FL, AZ, CA and just LAS Vegas caused a massive amount of shifts in the median values). 

[Michael Wooldridge]

Quote from @Bruce Woodruff:

Quote from @Jay Hinrichs:

Well, some will be moved into...what percentage? Maybe 20%?

  More curious about rented out vs sold. To me thats the big question how does that market shift. Rented keeps inventory high. Sold could bean interesting scenario. I can't even begin to figure out how that would impact things. It's 48% of market about to change hands over next 20-25 years. That's well impactful. not to mention all the other money that will change hands as well. 

In just the great wealth transfer alone we have a massive amount of factors that could impact housing nationally. 

[Sebastian Marroquin]

Quote from @Bruce Woodruff:

Quote from @Sebastian Marroquin:

If you knew that your properties and the market as a whole was going to drop next year by 50% percent, you are saying you wouldn't sell them to buy other more unique properties?

No I actually would not. 3 of these are for sure irreplaceable due to location, architecture, lack of anything similar, etc...and could not replaced for 50% for the current value.

But I definitely get the point of your question and it is a good one.....

 Good for you brother! And I get that you love your properties. But don't forget to always assess them from a return on equity or "opportunity costs"  

Eventually, almost all properties are ripe for a recapitalization or 1031 exchange. 

(I am not ready for that… but eventually my properties will fit that category also). 

Good luck 

[Matt Kalish]

Florida market could be strong with damaged homes from the hurricane. 

[Erich Henson]

Do any of you home investors have rental houses in Adjustable-Rate Mortgages that will be adjusting soon?  That could be an issue for some investors.  Since I own more than 10 rental houses, I had to get portfolio loans on some of my rentals that are financed with 5-year ARMs.  The first ones adjust at the end of 2024...  But I'm sure some have ARMs adjusting soon?

[Christopher Warren]

Quote from @Alex Hochberger:

A correction is a 10% decline in a market.

A bear market is a 20% decline in a market.

A crash is sudden and abrupt.

Thank you Alex! We have to keep things in proper perspective. A correction is taking place in a lot of markets right now. Does not mean that the bottom is about to fall out.

A correction (or even a bear market) should be welcome news for investors who are looking to jump in.

[Michael Wooldridge]

Quote from @Erich Henson:

Do any of you home investors have rental houses in Adjustable-Rate Mortgages that will be adjusting soon?  That could be an issue for some investors.  Since I own more than 10 rental houses, I had to get portfolio loans on some of my rentals that are financed with 5-year ARMs.  The first ones adjust at the end of 2024...  But I'm sure some have ARMs adjusting soon?

 I'm entering into arms now (7 primarily) on new pruchases but most of my portfolio is 30 yr fixed. I have 2 in 15 years fixed 

[Carlos Ptriawan]

Quote from @Matt Kalish:

Florida market could be strong with damaged homes from the hurricane. 

Here's the statistic for Mid-Florida MLS

                    AUG22/JUN22 __JUL22/MAY22__AUG21 MOM% YOY%
MID-FLORIDA 47K/29K______34K/21K________20K 40%/38% 36%/36%

What's interesting about Mid-Florida is, although there's a huge increase of new listing/inventory in Q2 2022.
But the same doesn't occur in Miami market. All these markets have a very bizarre pattern.

Overall, every market between Jun 22 to July 22 has an active inventory increase of about 30%, so all markets moved at the same pattern.

I really guess it's a flipper that bought in Q4 21 or Q1 22 then sell in Q2 22, but that was my speculation. 

So all theories in BP that said people would not sell during an interest rate hike, may not be that accurate after all.

[Carlos Ptriawan]

Quote from @Erich Henson:

Do any of you home investors have rental houses in Adjustable-Rate Mortgages that will be adjusting soon?  That could be an issue for some investors.  Since I own more than 10 rental houses, I had to get portfolio loans on some of my rentals that are financed with 5-year ARMs.  The first ones adjust at the end of 2024...  But I'm sure some have ARMs adjusting soon?

I am pretty sure the Fed already Pivot much before Q4 2024 so you should be pretty much safe. Their "dot-" Fed rate in 2025 is grossly estimated at 2.5%, maybe 30YFRM would be 4-5% in 2025. 

This news is worst for ARM folks that will reset Q4 22.

[Joe H.]

The market is going to get slammed and already is in many places. 

r/REbubble has called this for a year now.