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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 @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Quote from @Greg R.:
@Michael Wooldridge @Carlos Ptriawan @John Carbone @Jay Hinrichs
Gents, been out a couple months globe trotting (work). Have been almost completely unplugged... What did I miss?
If I were to venture a guess, I'd have to say what you missed was everything that mattered, because you were using confirmation bias.
Some love to post how nobody can predict the market, yet here we are and it's exactly as I forecasted weeks and months in advance. Sure, my ego will happily accept the "genius" moniker, but that's not accurate either. I was able to forecast and predict with such high accuracy because I removed myself from the equation and simply listened to what the math and fundamental factors were saying.
What I don't comprehend is the entrenchment in such opinions of "crash" even after the premise is shown and proven to be without merit. I don't understand that.
We are now into the "new" stagflation. The nation continues it's march into a Renter Nation, this will not change. Those grasping to some false narrative of "crash" and "timing the bottom" will soon adjust to frustration messages, posting how the market is "wrong", and "who keeps buying at these prices", quickly finding themselves struggling or incapable of entry into the market any longer at the new pricing levels.
And after the fact there will be realization of my message of warning that it WAS the best time to buy. Keyword "was" because barrier to entry will keep increasing for many and where being a spectator was a choice, it become a terminal fate.
As Corporate Investors continue to gobble market share, the new paradigm will be a 5 cap. The days of 8+ will be stories told by old cowboys around the camp-fire of "back when".
In simplest terms, this, today, is a corporate take-over. And the way those work is, by the time the average "Schmoe" realizes it, it's too late. This is one very big reason I have been warning to NOT try and time a bottom, just get in while you can, when it makes sense, where it makes sense. Anything else is just greed. Pigs get fat while hogs get slaughtered.
The market specific deviations where they DO have a "correction" event in play, it's a falling knife, do you really want to reach out and grab that? CA for example, these coming years will be the bursting of the CA bubble. Where prices are 90%+ based upon perceptual value, and that perception is what's bursting, pressing value points back to fundamentals. CA is no longer "the" place to be, it just isn't. TX and FL have smashed that perception, and others like TN are on the rise. This is a new "great migration", empowered via remote working.
The next "Guru's" of REI are those who today get this, and are right now setting out in satellite markets, blazing a new path of being a part of those areas people want to live. Focusing on demographics of such, tech enabled properties etc..
Those focusing on metrics of investing forged in '09', well it's a dinosaurs plight. It is not '09', nothing is the same. The market does not work the same, consumers do not work and think the same, the world does not operate the same.
This is evolution.
It will not stop for anyone's opinions of it.
Even though you don't know left from right when it comes to this topic, I sincerely hope you are doing ok. I know that people who work in the industry are hurting right now.
Quote from @Olivia Grabka:
@Greg R. Which are you asserting, that the market will correct or crash? A correction is not the same as a crash. Any claim regarding a market crash, is objectively wrong there is no evidence pointing to a crash.
Tell me your definition of a correction and crash, then I'll tell you which I am asserting.
Quote from @Casey Dimascio:
Quote from @Greg R.:
Quote from @Greg Scott:
The market may correct, but I firmly believe there won't be a crash. The reason is simple, equity.
Recently, prices have been surging. Given the laws passed after the Great Recession, appraisals and lending is highly restricted.
There is no house of cards here to come tumbling down.
So I respectfully disagree... there is a house of cards that will come tumbling down.
Who are your lenders?! I haven't had this experience, and I've been through dozens. Getting a loan (especially over the past 15 months) has not been easy. They check, check, and double check DTI, credit, income up until the final hour. It's my understanding this was the complete opposite in 2008. In fact fraud was encouraged by lenders. They even had expansion clauses (mortgage payment/ rate increases after X amount of time) which were specifically targeted at the poor, who were more likely to default. It seems like much different practices now
Quote from @James Hamling:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
so update from me, there's this desktop automation software.
So here's what this software telling me.
Peak is at June 2022
Market is reaching -3% from Dec 2022 to Dec 2023
Bottom is Q4 2023, and the price going to reach the range of June 2022 somewhere around 2026.
This is for our local market though, meaning in 2023 is a quite good time to buy at the bottom before we sell it in 2026/2027.
@Carlos Ptriawan what you are seeing is mostly what I’m seeing. The deals are slight adjustments but for the most part prices are flat or a few % points down locally for me (nationally is closer to 8% or so). Volume is way down as expected but inventory is flat.
@John Carbone it's funny but my STR are doing very well even brand new ones in FL. I would have been happy with less than what I'm achieving (expected a downturn) but just not seeing it yet. Which is a pleasant surprise. That said I wouldn't call it a blue chips market but more like upper middle class markets. Which has been fairly stable and still a lot of cash on hand.
That said the next 6 months will be telling. So many variables with Covid in china (ukraine/russia is silent in news these days funny enough) and other global levers that could hurt us. I’m expecting inflation to slow about March/April as housing will be at their peaks. I’m curious what happens when the markets see that in the inflation numbers.
I’m personally not seeing it yet either, but I’m seeing it in the competition by looking at calendars.
real competition though? Or people who "heard" you could jump in and make easy money on STR? It's amazing how many times people cut corners like not having beach chairs when near a beach, not having a high chair / pack in-play for family oriented homes or even just adding snacks. Not saying it's as simple as that but to your point around you managing ahead of time, strategy does matter.
Yeah, the listings with no bookings are not operated or set up properly. However, last year at this time those places were renting out at a good clip going into 2022. So there is clearly a strong shift in demand going into 2023 relative to 2022. This could be a short blip though, and I hope it is as I don’t have bookings beyond Memorial Day.
That makes sense to me. Markets ar definitely slower just not a lot out there so prices are not holding strong but not dropping much so to speak. Generally obviously a few big markets got hit nationally.
On the rental side - people seem more cautious - so those not setup right I’m not surprised are hurting. On the flip side on a brand new property, I’m still seeing last minute rentals and long ones - and as reviews have been coming in bookings are jumping quick. So I feel like the market is there just selective.
Will it hold? Right now my concern there is china/fed. CHina Covid impact no supply chain has not been felt yet. Will be interesting.
I see very good things coming in manner of supply chain via a pivot to S. America.
The whole run to China was an abortion of an idea in the first place, the outcome was inevitable. But S. America, it's multiple solutions in 1.
A N/S American trade pact is simply liquid gold. We have proven out the path on how to develop such via what was done in China, now it's just a pivot to apply all lessons learned in S. America. The geo-political risks of enriching S. American nations is next to nil. It's just a no-brainer.
So I say go riddance China, thanks' for the Beta run on it all, now it's time for Alpha in S. America.
Anyone have any idea how far $1m USD will go in Guatemala? Far, very very far. Want farmers to stop growing coca in Columbia, hello chip-plant. Economic stability in Nicaragua, "Yo quiero Apple manufacturing".
South America is the future of manufacturing. Mexico become "the" logistical hub of the American continent. All win.... except China, they lose, big time. Good luck funding that military expansion when western commerce has gone to S. America.
Cool idea bud, but it's not going to happen. The current admin is deeply beholden to China. To think they are going to pivot to Honduras and El Salvador is beyond far fetched. Plus, manufacturing will cost WAY more in South/ Central America. China uses forced/ slave labor/ child labor/ and other really sickening practices that wouldn't fly in South/ Central America (these practices are the primary reason for low cost). Plus there is a wayyyyy larger workforce in China. Central America AND South America population combined is roughly 600 million. China?? 1.4 BILLION.
I do business in SA & CA, and while pay rates are much lower than the US, they are way higher than China. What does that mean? Higher prices for American consumers & less profits for corporations.
Again, not going to happen, so you can stop it with this idea.
Based on just the number of responses to this topic it appears that most people are anticipating a down turn now. And you are the market or a large portion of it. This wasn't the case 6 months ago when most were anticipating slight increase this year, but it is flat to turning down in areas. Not by much yet. As previously so eloquent put it, it will take some time to unfold. Wise man there. Only two things happen in a business cycle. It goes up and goes down. It never stays the same. I saw article the other day in financial news and can't remember where but it was talking about how one reit had put a hold and then limits on pulling any money out because they were quickly going insolvent. We are the market people. It appears most everyone except one extremely intelligent man, that the market has topped out and looks to be going down or that is there main concern. If most thinking it is going down they are getting if from what they are seeing around them and will act accordingly. Credit markets are tightening. I think everyone agrees on that. So that is less buyers. Intuitional buyers from every thing I am seeing on financial news sources is they have quit buying and been selling which is requiring them to lower prices to move the inventory. Now these are the areas where the big guys where buying up entire subdivisions. The righting is on the wall. These are commercial loans which are getting tighter with reduced LTV's. Then double the interest rate on a billion dollar loan and they are not cash flowing now. 3 to 7 years on these loans. So as they refi well things are different. I don't know what world some live in but I graduated high school in 1973 and been thru multiple recessions. People don't go on vacation, they don't buy toys, they don't eat out, and they sure as hell are not buying any 70k electric cars and trucks. The feds have stated they are going to drive the economy into a recession to cure inflation along with crashing the housing market. I don't know what J Powell's definition of crash is but my gut says it ain't a good thing. If 30 to 50% that is a **** load of money for a investor. Does anyone thing if the market drops 30% in the next year it is going to go back up 30% in 2024? Or 50%. I think most would agree a drop of 30% in value in 12 months is a crash.
Lets take a survey and just see where everyone stands. We are the market and should be the most knowledgeable market participants overall. Maybe email every member ask a series of questions. What is a crash to them. What do they anticipate. Hell we are a trove of info and data from all other the country. I bet as group we would have the most accurate prediction of where the market is and where it is going.
If you are not buying and hesitating everyone else is to. So what would make you feel comfortable enough to take the risk you have taken in the past 5 years. Very low rates would do it. But that is not happening for 24 months. Not much good in the economy is expected over the next 12 months minimum. If prices came down 30% I would be buyer or if the interest rate drops dramatically. If prices do start dropping in most areas buyers will really sit on the side line then. If the population is going to adopt a rental stance and never own well they still have to afford the rent. You have to make 125k a year now to qualify for the medium priced house in the entire country. If you have no buyers you have no market and the buyers have spoken by the recent data where buyers have quit buying in a larger number. How could it get better from here when every economic indicator says bad days ahead. Everyone I talk to says the same thing everything is high as hell regardless of what the govt says. People are feeling it in the pocket. That is what counts as they are the market. Can't believe all this came out of me tonight. Sorry for how long it is.
I should clarify I think the housing price in the second home market along the gulf coast in Northwest Florida can go down 30% but keep mind if you are in a stable interior location where nothing much ever changes it probably sky rocket there and won't decline by much. The decline in values will very according to the areas that sky rocket up so much in the past 2 years. So for some of you where you have seen crazy prices you know it can't going like this. These are the areas that will crash or down 30% but in Kansas if it drops 5% that is not much and that person will be contending there was no crash. We all are influenced by what is around us. And if you own all over the country you mainly understand the immediate market where you live better. So a crash to one may not be a crash to all. The important thing is to make money. And being nervous about tomorrow is a good thing. If it is the ones that thing everything will be ok are the ones that get caught off guard and loose.
Quote from @James Hamling:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
so update from me, there's this desktop automation software.
So here's what this software telling me.
Peak is at June 2022
Market is reaching -3% from Dec 2022 to Dec 2023
Bottom is Q4 2023, and the price going to reach the range of June 2022 somewhere around 2026.
This is for our local market though, meaning in 2023 is a quite good time to buy at the bottom before we sell it in 2026/2027.
@Carlos Ptriawan what you are seeing is mostly what I’m seeing. The deals are slight adjustments but for the most part prices are flat or a few % points down locally for me (nationally is closer to 8% or so). Volume is way down as expected but inventory is flat.
@John Carbone it's funny but my STR are doing very well even brand new ones in FL. I would have been happy with less than what I'm achieving (expected a downturn) but just not seeing it yet. Which is a pleasant surprise. That said I wouldn't call it a blue chips market but more like upper middle class markets. Which has been fairly stable and still a lot of cash on hand.
That said the next 6 months will be telling. So many variables with Covid in china (ukraine/russia is silent in news these days funny enough) and other global levers that could hurt us. I’m expecting inflation to slow about March/April as housing will be at their peaks. I’m curious what happens when the markets see that in the inflation numbers.
I’m personally not seeing it yet either, but I’m seeing it in the competition by looking at calendars.
real competition though? Or people who "heard" you could jump in and make easy money on STR? It's amazing how many times people cut corners like not having beach chairs when near a beach, not having a high chair / pack in-play for family oriented homes or even just adding snacks. Not saying it's as simple as that but to your point around you managing ahead of time, strategy does matter.
Yeah, the listings with no bookings are not operated or set up properly. However, last year at this time those places were renting out at a good clip going into 2022. So there is clearly a strong shift in demand going into 2023 relative to 2022. This could be a short blip though, and I hope it is as I don’t have bookings beyond Memorial Day.
That makes sense to me. Markets ar definitely slower just not a lot out there so prices are not holding strong but not dropping much so to speak. Generally obviously a few big markets got hit nationally.
On the rental side - people seem more cautious - so those not setup right I’m not surprised are hurting. On the flip side on a brand new property, I’m still seeing last minute rentals and long ones - and as reviews have been coming in bookings are jumping quick. So I feel like the market is there just selective.
Will it hold? Right now my concern there is china/fed. CHina Covid impact no supply chain has not been felt yet. Will be interesting.
I see very good things coming in manner of supply chain via a pivot to S. America.
The whole run to China was an abortion of an idea in the first place, the outcome was inevitable. But S. America, it's multiple solutions in 1.
A N/S American trade pact is simply liquid gold. We have proven out the path on how to develop such via what was done in China, now it's just a pivot to apply all lessons learned in S. America. The geo-political risks of enriching S. American nations is next to nil. It's just a no-brainer.
So I say go riddance China, thanks' for the Beta run on it all, now it's time for Alpha in S. America.
Anyone have any idea how far $1m USD will go in Guatemala? Far, very very far. Want farmers to stop growing coca in Columbia, hello chip-plant. Economic stability in Nicaragua, "Yo quiero Apple manufacturing".
South America is the future of manufacturing. Mexico become "the" logistical hub of the American continent. All win.... except China, they lose, big time. Good luck funding that military expansion when western commerce has gone to S. America.
@James Hamling I agree with a lot of this over the long term. It’s going to be quite beneficial on so many fronts and that said though I think we will diversify across several countries and leave stuff in China. Simply because they saw what happened with only one place to build. It’s sort of a macro version of what’s going on in the chip manufacturing.
That said the pivot over next 18-36 months should be fun. One as the supply chain won’t move immediately and two towards the end of it China will probably play games. If China continues to be overwhelmed by covid for some time it’s going to be a fun short term with more pressure on inflation.
Long term should be good though. The quesiton is how quickly.
So I am curious what the predictions are. Since equity is high for many but financing ability has dropped, so you think that A. Prices will stay the same, houses will sit on market, owners will hold out or eventually give up on selling and inventory will drop, or B. Sellers will eventually need to sell for xyz reason and drop their prices until someone buys, or C. It depends on the region and the demographics?
To me it seems most young folks without equity can no longer afford to buy and corporate interests will keep buying up until everyone without familial wealth is a renter, or until interest rates drop back down to affordable levels. My guess is that prices will stay where they are at for the foreseeable future.
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I choose C - depends on the region!
Also - "corporate interests will keep buying up until everyone without familial wealth is a renter" - I still don't know what this looks like. Not sure if you saw it, but I asked James Hamling a version of this question and he gave some interesting thoughts on a previous page.
Corporate ownership of real estate varies so much by state and market. So my opinion is... we don't know how this will play out.
Quote from @Kevin Maher:
Based on just the number of responses to this topic it appears that most people are anticipating a down turn now. And you are the market or a large portion of it. This wasn't the case 6 months ago when most were anticipating slight increase this year, but it is flat to turning down in areas. Not by much yet. As previously so eloquent put it, it will take some time to unfold. Wise man there. Only two things happen in a business cycle. It goes up and goes down. It never stays the same. I saw article the other day in financial news and can't remember where but it was talking about how one reit had put a hold and then limits on pulling any money out because they were quickly going insolvent. We are the market people. It appears most everyone except one extremely intelligent man, that the market has topped out and looks to be going down or that is there main concern. If most thinking it is going down they are getting if from what they are seeing around them and will act accordingly. Credit markets are tightening. I think everyone agrees on that. So that is less buyers. Intuitional buyers from every thing I am seeing on financial news sources is they have quit buying and been selling which is requiring them to lower prices to move the inventory. Now these are the areas where the big guys where buying up entire subdivisions. The righting is on the wall. These are commercial loans which are getting tighter with reduced LTV's. Then double the interest rate on a billion dollar loan and they are not cash flowing now. 3 to 7 years on these loans. So as they refi well things are different. I don't know what world some live in but I graduated high school in 1973 and been thru multiple recessions. People don't go on vacation, they don't buy toys, they don't eat out, and they sure as hell are not buying any 70k electric cars and trucks. The feds have stated they are going to drive the economy into a recession to cure inflation along with crashing the housing market. I don't know what J Powell's definition of crash is but my gut says it ain't a good thing. If 30 to 50% that is a **** load of money for a investor. Does anyone thing if the market drops 30% in the next year it is going to go back up 30% in 2024? Or 50%. I think most would agree a drop of 30% in value in 12 months is a crash.
Lets take a survey and just see where everyone stands. We are the market and should be the most knowledgeable market participants overall. Maybe email every member ask a series of questions. What is a crash to them. What do they anticipate. Hell we are a trove of info and data from all other the country. I bet as group we would have the most accurate prediction of where the market is and where it is going.
If you are not buying and hesitating everyone else is to. So what would make you feel comfortable enough to take the risk you have taken in the past 5 years. Very low rates would do it. But that is not happening for 24 months. Not much good in the economy is expected over the next 12 months minimum. If prices came down 30% I would be buyer or if the interest rate drops dramatically. If prices do start dropping in most areas buyers will really sit on the side line then. If the population is going to adopt a rental stance and never own well they still have to afford the rent. You have to make 125k a year now to qualify for the medium priced house in the entire country. If you have no buyers you have no market and the buyers have spoken by the recent data where buyers have quit buying in a larger number. How could it get better from here when every economic indicator says bad days ahead. Everyone I talk to says the same thing everything is high as hell regardless of what the govt says. People are feeling it in the pocket. That is what counts as they are the market. Can't believe all this came out of me tonight. Sorry for how long it is.
Good take Kevin. You're right, 6 months ago many were insisting the market would continue to climb and that there would be no crash or correction. However, very few are saying that now. It's beyond deniable that there's a shift occurring in the market. Prices haven't fallen significantly YET. But volume is WAY WAY down and prices are coming down. Before prices fall, volume falls. That's what's going to force sellers to lower their prices, because there are so few buyers and they aren't able to command high prices.
Regarding correction vs crash, I don't really care any more. There has been a ton of back and forth on that topic. People can call it whatever they want, they can coin a new word or phrase if makes them feel warm and fuzzy. But the outcome will be the same, there is going to be a significant decline in the market and prices will come down.
And I agree, virtually every economic indicator says "bad" ahead. What I'm doing (and what I hope others do) is ignore fake experts who continue to claim that everything is fine and dandy, and that there will be no meaningful shift in the market. These people are very short sighted and are unable to see the big picture.
@Carlos Ptriawan not long ago you and I were going back and forth on food prices. I was telling you that what I'm seeing in real life is that prices are way up and you were responding with some dataset that claimed prices were lowering & the general spirit of your comment was that food prices weren't that bad.
What's your take on that now?
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just as a reminder, here's what you said in your 5th post to this thread:
"I would say take the 10 years prior to the bubble and get the average rate of appreciation. Use the same rate of appreciation for 2021 & 2022, once you get to where values are at that point, that's the market correction. Crash is beyond that."
i haven't done the math to see what that would be. and i think you'd agree that it's not the case that every single market corrects to that... right?
@Greg R. 6 months ago puts us in the heart of this conversation when I and many were saying flat to small corrections maybe 5-10% which is what I've been saying personally - especially when inflation is factored in. TX had some markets hit harder than a lot of areas but for the most part the East Coast has been flat
Volume down? Absolutely but most of us said that - we said people would sit tight on their rates.
Now to me the real question is where are inflation stats come Aprilish. That is when housing had hit it's a peak and hosuing has been driving 40% of inflation. I expect numbers to trend better but mostly we will inflate are way out of some of the drop.
Which goes for the same thing on food. Thats been trending better overall not worse meats in particular have been better for me locally - steak etc.. IT's still high for average person though.
On the flip side still more jobs out there than people looking. Boomer retirement accelerating over next few years. Things aren't good but they aren't bad either. We are in this weird stagnation and pause phase. Even corporate profits have been ok. A lot of the pain corporations are experiencing is the rate reset on their loans. That's been very expensive for everybody. So the fed could have some real pain down the road. I also have major concerns about china supply chain right now that could have a big impact. On the flip side demand is down on the consumer aspect side (think tvs, playsation etc...). Some things demand remains consistent like food, housing, gas, medicine (thats a huge pain point right now).
The economy is very much a mixed bag - sort of like the housing market nationally. Some weakness, some things doing fine, and jobs still strong.
Anyway I think if you go back 6 months most people were saying flat to -10%
Quote from @Aria Drexler:
So I am curious what the predictions are. Since equity is high for many but financing ability has dropped, so you think that A. Prices will stay the same, houses will sit on market, owners will hold out or eventually give up on selling and inventory will drop, or B. Sellers will eventually need to sell for xyz reason and drop their prices until someone buys, or C. It depends on the region and the demographics?
To me it seems most young folks without equity can no longer afford to buy and corporate interests will keep buying up until everyone without familial wealth is a renter, or until interest rates drop back down to affordable levels. My guess is that prices will stay where they are at for the foreseeable future.
That said, there are a lot more people that will need to sell to due life circumstances. Relocation, divorce, death in the family, layoffs, etc. Those people are in a no-choice situation and have to sell. For them they don't have the ability to ask a ridiculous price that they'll never get. They will have to take whatever the market dictates. If they refuse we can be looking at another mass foreclosure situation. Either that or a lot of short sales.
And of course the location will play a big impact on things. The areas that spiked the most and experienced crazy gains are going to fall the hardest. A small town you've never heard of in Kansas that didn't experience a massive bubble is not going to be the same.
Quote from @Nicholas L.:
just as a reminder, here's what you said in your 5th post to this thread:
"I would say take the 10 years prior to the bubble and get the average rate of appreciation. Use the same rate of appreciation for 2021 & 2022, once you get to where values are at that point, that's the market correction. Crash is beyond that."
i haven't done the math to see what that would be. and i think you'd agree that it's not the case that every single market corrects to that... right?
Housing historically has always just been an inflation hedge. Your home price should go up with the rate of inflation. Houses are a deteriorating asset that require maintenance and upkeep. This last 10 year boom in housing will not last.
I’m not 100 percent convinced it will “crash” but we could have a lost decade in housing where prices are stagnant and inflation just eats away at the “hedge” so 10 years from now wages will be higher and home prices in a flattish range over this time.
Quote from @Nicholas L.:
just as a reminder, here's what you said in your 5th post to this thread:
"I would say take the 10 years prior to the bubble and get the average rate of appreciation. Use the same rate of appreciation for 2021 & 2022, once you get to where values are at that point, that's the market correction. Crash is beyond that."
i haven't done the math to see what that would be. and i think you'd agree that it's not the case that every single market corrects to that... right?
Without the bubble these properties still would have appreciated +/- 4%, so one would need to calculate that out to see that amount compared to the current amount. I don't think it will necessarily be exact, but it should be somewhat close IMO.
Quote from @Greg R.:
Quote from @Nicholas L.:
just as a reminder, here's what you said in your 5th post to this thread:
"I would say take the 10 years prior to the bubble and get the average rate of appreciation. Use the same rate of appreciation for 2021 & 2022, once you get to where values are at that point, that's the market correction. Crash is beyond that."
i haven't done the math to see what that would be. and i think you'd agree that it's not the case that every single market corrects to that... right?
Without the bubble these properties still would have appreciated +/- 4%, so one would need to calculate that out to see that amount compared to the current amount. I don't think it will necessarily be exact, but it should be somewhat close IMO.
Except you forgot calculate inflation.
And there are still booms on housing. one of the big ones for your period, which is why TX, FL have seen such big booms.Is work from home becoming more standard. That cause a lot of the boom in many places even if they weren't moving long distance people relocated for backyards, pools etc.. How much is that impact though?
Which is why generally thinking I think we will fall some where in the middle.
Quote from @John Carbone:
Quote from @Nicholas L.:
just as a reminder, here's what you said in your 5th post to this thread:
"I would say take the 10 years prior to the bubble and get the average rate of appreciation. Use the same rate of appreciation for 2021 & 2022, once you get to where values are at that point, that's the market correction. Crash is beyond that."
i haven't done the math to see what that would be. and i think you'd agree that it's not the case that every single market corrects to that... right?
Housing historically has always just been an inflation hedge. Your home price should go up with the rate of inflation. Houses are a deteriorating asset that require maintenance and upkeep. This last 10 year boom in housing will not last.
I’m not 100 percent convinced it will “crash” but we could have a lost decade in housing where prices are stagnant and inflation just eats away at the “hedge” so 10 years from now wages will be higher and home prices in a flattish range over this time.
I definitely see a long slow on the housing but decade? That seems far too long when economy moves faster not slower the last 20 years. Also rents will still increase (people have to live somewhere and we've seen that with gas/food) so it's hard to really thinking what a slow decade looks like when housing ownership for younger generations has been declining. That means they are renting which will keep some movement in housing (likely a lot more MF).
Rent still went up in the 70's and housing was one of the things that generally did ok through the period in the long run. So historically it might not be that flat growth - hence that inflation hedge you mention.
Anyway this thread just shows how many "different and big" factors there are at play here. It's a very mixed bag.
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Quote from @Greg R.:
Quote from @James Hamling:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
so update from me, there's this desktop automation software.
So here's what this software telling me.
Peak is at June 2022
Market is reaching -3% from Dec 2022 to Dec 2023
Bottom is Q4 2023, and the price going to reach the range of June 2022 somewhere around 2026.
This is for our local market though, meaning in 2023 is a quite good time to buy at the bottom before we sell it in 2026/2027.
@Carlos Ptriawan what you are seeing is mostly what I’m seeing. The deals are slight adjustments but for the most part prices are flat or a few % points down locally for me (nationally is closer to 8% or so). Volume is way down as expected but inventory is flat.
@John Carbone it's funny but my STR are doing very well even brand new ones in FL. I would have been happy with less than what I'm achieving (expected a downturn) but just not seeing it yet. Which is a pleasant surprise. That said I wouldn't call it a blue chips market but more like upper middle class markets. Which has been fairly stable and still a lot of cash on hand.
That said the next 6 months will be telling. So many variables with Covid in china (ukraine/russia is silent in news these days funny enough) and other global levers that could hurt us. I’m expecting inflation to slow about March/April as housing will be at their peaks. I’m curious what happens when the markets see that in the inflation numbers.
I’m personally not seeing it yet either, but I’m seeing it in the competition by looking at calendars.
real competition though? Or people who "heard" you could jump in and make easy money on STR? It's amazing how many times people cut corners like not having beach chairs when near a beach, not having a high chair / pack in-play for family oriented homes or even just adding snacks. Not saying it's as simple as that but to your point around you managing ahead of time, strategy does matter.
Yeah, the listings with no bookings are not operated or set up properly. However, last year at this time those places were renting out at a good clip going into 2022. So there is clearly a strong shift in demand going into 2023 relative to 2022. This could be a short blip though, and I hope it is as I don’t have bookings beyond Memorial Day.
That makes sense to me. Markets ar definitely slower just not a lot out there so prices are not holding strong but not dropping much so to speak. Generally obviously a few big markets got hit nationally.
On the rental side - people seem more cautious - so those not setup right I’m not surprised are hurting. On the flip side on a brand new property, I’m still seeing last minute rentals and long ones - and as reviews have been coming in bookings are jumping quick. So I feel like the market is there just selective.
Will it hold? Right now my concern there is china/fed. CHina Covid impact no supply chain has not been felt yet. Will be interesting.
I see very good things coming in manner of supply chain via a pivot to S. America.
The whole run to China was an abortion of an idea in the first place, the outcome was inevitable. But S. America, it's multiple solutions in 1.
A N/S American trade pact is simply liquid gold. We have proven out the path on how to develop such via what was done in China, now it's just a pivot to apply all lessons learned in S. America. The geo-political risks of enriching S. American nations is next to nil. It's just a no-brainer.
So I say go riddance China, thanks' for the Beta run on it all, now it's time for Alpha in S. America.
Anyone have any idea how far $1m USD will go in Guatemala? Far, very very far. Want farmers to stop growing coca in Columbia, hello chip-plant. Economic stability in Nicaragua, "Yo quiero Apple manufacturing".
South America is the future of manufacturing. Mexico become "the" logistical hub of the American continent. All win.... except China, they lose, big time. Good luck funding that military expansion when western commerce has gone to S. America.
Cool idea bud, but it's not going to happen. The current admin is deeply beholden to China. To think they are going to pivot to Honduras and El Salvador is beyond far fetched. Plus, manufacturing will cost WAY more in South/ Central America. China uses forced/ slave labor/ child labor/ and other really sickening practices that wouldn't fly in South/ Central America (these practices are the primary reason for low cost). Plus there is a wayyyyy larger workforce in China. Central America AND South America population combined is roughly 600 million. China?? 1.4 BILLION.
I do business in SA & CA, and while pay rates are much lower than the US, they are way higher than China. What does that mean? Higher prices for American consumers & less profits for corporations.
Again, not going to happen, so you can stop it with this idea.
So your saying, when we are at WAR with China, no-way no-how is manufacturing and trade relations going to shift to S. America? That is, yet again, one heck of a ignorant thought path.
Not to burst your bubble but the shift has already begun, FYI. Conflict with China is inevitable, and this is a rather universally known fact.
The statement that China is a slave & child labor nation, is bordering on racist in it's degree of ignorance and stereotyping. The statement does not merit a response beyond that and that you may need to get out and experience the world a bit more so to stop broadcasting from your own bias's and shift to a bit of experience based instead.
S. America's primary export at this time is it's people. Let's just hang on that for a moment.
Logistics' of S. American import has opportunity of cost savings vs China, that cancels out some of pricing differentials. S. America presents a Geo-Political diversification that has emerged as an issues with China trade relations, not to mention presenting a cure for that primary export shifting from PEOPLE too goods, there is significant savings in that isn't there?
I agree, the powers-that-be are in bed with China rather considerably, but time of reconning is at the door so a shift is pressed, it's non-optional now, only questions is where to and with whom. A developing American continental trade relationship is long over-due, and now it stands as last option because China beat the world too Africa.
- James Hamling
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Quote from @Greg R.:
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Quote from @Greg R.:
@Michael Wooldridge @Carlos Ptriawan @John Carbone @Jay Hinrichs
Gents, been out a couple months globe trotting (work). Have been almost completely unplugged... What did I miss?
If I were to venture a guess, I'd have to say what you missed was everything that mattered, because you were using confirmation bias.
Some love to post how nobody can predict the market, yet here we are and it's exactly as I forecasted weeks and months in advance. Sure, my ego will happily accept the "genius" moniker, but that's not accurate either. I was able to forecast and predict with such high accuracy because I removed myself from the equation and simply listened to what the math and fundamental factors were saying.
What I don't comprehend is the entrenchment in such opinions of "crash" even after the premise is shown and proven to be without merit. I don't understand that.
We are now into the "new" stagflation. The nation continues it's march into a Renter Nation, this will not change. Those grasping to some false narrative of "crash" and "timing the bottom" will soon adjust to frustration messages, posting how the market is "wrong", and "who keeps buying at these prices", quickly finding themselves struggling or incapable of entry into the market any longer at the new pricing levels.
And after the fact there will be realization of my message of warning that it WAS the best time to buy. Keyword "was" because barrier to entry will keep increasing for many and where being a spectator was a choice, it become a terminal fate.
As Corporate Investors continue to gobble market share, the new paradigm will be a 5 cap. The days of 8+ will be stories told by old cowboys around the camp-fire of "back when".
In simplest terms, this, today, is a corporate take-over. And the way those work is, by the time the average "Schmoe" realizes it, it's too late. This is one very big reason I have been warning to NOT try and time a bottom, just get in while you can, when it makes sense, where it makes sense. Anything else is just greed. Pigs get fat while hogs get slaughtered.
The market specific deviations where they DO have a "correction" event in play, it's a falling knife, do you really want to reach out and grab that? CA for example, these coming years will be the bursting of the CA bubble. Where prices are 90%+ based upon perceptual value, and that perception is what's bursting, pressing value points back to fundamentals. CA is no longer "the" place to be, it just isn't. TX and FL have smashed that perception, and others like TN are on the rise. This is a new "great migration", empowered via remote working.
The next "Guru's" of REI are those who today get this, and are right now setting out in satellite markets, blazing a new path of being a part of those areas people want to live. Focusing on demographics of such, tech enabled properties etc..
Those focusing on metrics of investing forged in '09', well it's a dinosaurs plight. It is not '09', nothing is the same. The market does not work the same, consumers do not work and think the same, the world does not operate the same.
This is evolution.
It will not stop for anyone's opinions of it.
Even though you don't know left from right when it comes to this topic, I sincerely hope you are doing ok. I know that people who work in the industry are hurting right now.
Wow, your helpless....
So your argument is now that as I have been PROVEN correct on EVERY point of my statements and forecasts/predictions, that's now "proof" I am wrong...... So some how in your world correct = proof of wrong.......
It's obvious your completely closed off from facts and reality, that no matter what happens your ego comes 1st and that you MUST be "right" especially when your wrong. You woke up one morning and randomly decided the sky is falling and gosh-darn-it if it doesn't happen well "it's coming, it's coming, just wait, it's coming, soon, any day now, just around the corner, soon, some time soon"........
You started this whole BS with hiding behind point of no defined time, then with great pressure did commit to a timeline which we have blown past, and now running to hide behind the BS of "oh, coming soon, someday, some time, eventually".
- James Hamling
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Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
so update from me, there's this desktop automation software.
So here's what this software telling me.
Peak is at June 2022
Market is reaching -3% from Dec 2022 to Dec 2023
Bottom is Q4 2023, and the price going to reach the range of June 2022 somewhere around 2026.
This is for our local market though, meaning in 2023 is a quite good time to buy at the bottom before we sell it in 2026/2027.
Maui and BI are fully booked til May-June. I hate it when it's fully booked like this lol
Those places are smaller sample size of units and they appeal to only primarily affluent market. A place like Gatlinburg appeals to everyone and has been most visited park for decades.
The only time Gatlinburg ever slowed down was GFC. This is something to keep an eye on.
Is that supposed to be a joke? That people know Gatlinburg over MAUI?!!!!
The entire world knows HI and Maui! Most people don't even know what or where Gatlinburg is, and don't have any interest in Banjo's to go and explore it. Yeah, I said it, "RED-neck", that's what most people think when they hear the word "Gatlinburg". Know what people think when they hear "Maui", they think VACATION, destination wedding, beaches, resorts, etc..
Come on, this confirmation bias stuff is just exhausting now. It's great to have pride in your local area but to do it to such ridiculous extent, come-on-man!
- James Hamling
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Quote from @James Hamling:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
Is that supposed to be a joke? That people know Gatlinburg over MAUI?!!!!
The entire world knows HI and Maui! Most people don't even know what or where Gatlinburg is, and don't have any interest in Banjo's to go and explore it. Yeah, I said it, "RED-neck", that's what most people think when they hear the word "Gatlinburg". Know what people think when they hear "Maui", they think VACATION, destination wedding, beaches, resorts, etc..
Come on, this confirmation bias stuff is just exhausting now. It's great to have pride in your local area but to do it to such ridiculous extent, come-on-man!
hahaha hahaha yea this is super LOL , you ask random guy in Bangkok or any girl in Cairo they will know where Maui is. Gatlinburg ? Come on man, I only know after having BP account :)
Quote from @Michael Wooldridge:
@Greg R. 6 months ago puts us in the heart of this conversation when I and many were saying flat to small corrections maybe 5-10% which is what I've been saying personally - especially when inflation is factored in. TX had some markets hit harder than a lot of areas but for the most part the East Coast has been flat
Volume down? Absolutely but most of us said that - we said people would sit tight on their rates.
Now to me the real question is where are inflation stats come Aprilish. That is when housing had hit it's a peak and hosuing has been driving 40% of inflation. I expect numbers to trend better but mostly we will inflate are way out of some of the drop.
Which goes for the same thing on food. Thats been trending better overall not worse meats in particular have been better for me locally - steak etc.. IT's still high for average person though.
On the flip side still more jobs out there than people looking. Boomer retirement accelerating over next few years. Things aren't good but they aren't bad either. We are in this weird stagnation and pause phase. Even corporate profits have been ok. A lot of the pain corporations are experiencing is the rate reset on their loans. That's been very expensive for everybody. So the fed could have some real pain down the road. I also have major concerns about china supply chain right now that could have a big impact. On the flip side demand is down on the consumer aspect side (think tvs, playsation etc...). Some things demand remains consistent like food, housing, gas, medicine (thats a huge pain point right now).
The economy is very much a mixed bag - sort of like the housing market nationally. Some weakness, some things doing fine, and jobs still strong.
Anyway I think if you go back 6 months most people were saying flat to -10%
Most people did not say volume would be down - I want to contest that. Most people were saying that INVENTORY would be down. Which the opposite has actually happened. Inventory has increased. The decrease is in transactional volume. The bottom has fallen out of loan apps, loans, and RE transactions.
Not sure what you're experiencing with food, but food prices are way up for Americans and across the globe.
https://www.cnn.com/2022/12/13...
https://apnews.com/article/rus...
The job discussion is complicated. Per Mike Rowe 7 million Americans are not looking for work because of the "topography that ultimately encourages people not to work". https://www.dailywire.com/news... Plus we're going to see a lot more layoffs in Q1. 17k just announced by Amazon, etc.
But to address your last statement, I disagree. People were all over the place, many insisting no decline and even an increase in prices.
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Quote from @Chris John:
You've definitely made some compelling arguments throughout this thread. However, I've gotta quibble a little with this statement:
"When you buy a home, do you own the home? No, in 99% of cases no, the BANK does, and your a tenant to the bank are you not?"
The real owner of all the houses is the government in the form of property taxes. Even if you don't have a mortgage on your home, you still don't actually own it and never will. Uncle Sam sees to that.
On land side, 100% Chris, your spot on, one NEVER actually "owns" that land as long as someone else has a position of control over such and rights to receivership regardless of the red-tape to do such. Although this is a point of semantics because there is no change of such, never has been never will be, it's a necessary mechanism of society.
When a person takes $ from a bank, to buy a home, that is the Bank "owning" that real estate. A person has a option to own that real estate once they perform on that note with the bank.
There is a education deficit in the U.S. where people like to lie to themselves and say they "own" that property, which they just paid 3.5 - 20% upon.
Think on it, what is renting out a property? We give a person use of the property in full, in exchange they must make regular payments and maintain that property to a set standard to retain that usership right. And this is given, at profit. Ok, now when one "buys" a home via banks $, on must do the exact same, and again, for profit to the bank. Yes, your a tenant to the bank.
You have to think big picture to comprehend how these elitist view the world and structure of things. When they say "you will own nothing, and be happy" most put it in there personal "box" of life and scratch there head picturing some entity coming in and taking all real estate, all assets, and making them lease everything. No, you have to jump into there shoes to comprehend.
Those who FUND the purchases, control via lending mechanism, THEY own "everything" do they not? And when a person get's that home for 3.5% down, are they not "happy"? And completely ignoring the fact they will be paying that bank 2X+?
Auto loans are now commonly going 7+yrs, that was once unthinkable, especially with people cycling autos on average ever 5yrs. That makes for perpetual debt, which is NOT owning anything, just purchasing usership rights. Expand home mortgages to 50yrs and you get the same, lifetime debt.
People are happily moving into perpetual debt service, and doing it with a smile because they "feel" they "own" those things because they "own" the use and responsibility of it.
I see this same mindset in my long-term tenants. Once in a home 10+yrs, they say "my home" and act in ways that they own it. I like this, heck I encourage it, because it makes me a bunch of $ and I love them accepting on the responsibility and care of my assets, that I allow them use of, at profit.
- James Hamling
Quote from @Michael Wooldridge:
Quote from @Greg R.:
Quote from @Nicholas L.:
just as a reminder, here's what you said in your 5th post to this thread:
"I would say take the 10 years prior to the bubble and get the average rate of appreciation. Use the same rate of appreciation for 2021 & 2022, once you get to where values are at that point, that's the market correction. Crash is beyond that."
i haven't done the math to see what that would be. and i think you'd agree that it's not the case that every single market corrects to that... right?
Without the bubble these properties still would have appreciated +/- 4%, so one would need to calculate that out to see that amount compared to the current amount. I don't think it will necessarily be exact, but it should be somewhat close IMO.
Except you forgot calculate inflation.
And there are still booms on housing. one of the big ones for your period, which is why TX, FL have seen such big booms.Is work from home becoming more standard. That cause a lot of the boom in many places even if they weren't moving long distance people relocated for backyards, pools etc.. How much is that impact though?
Which is why generally thinking I think we will fall some where in the middle.
And I agree re: remote work. However, a lot of that is starting to become frown upon. Many companies are wanting a return to the office because of decreased productivity and an unsavory work environment due to everyone working from home.