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:

Expect a MORE NORMAL real estate market. Anyone expecting a continuation of 20/21 markets, is just plain delusional. 

I am keeping you on ignore setting Joe, so, feel free to distort and mislead all you want.

James, two points. You said that because, first, your market MN is following seasonal adjustment properly. 
Second also, not all market are behaving the same. 

Lets take a look at this three markets:

Abnormal:

nevada https://fred.stlouisfed.org/se...

Starting to be abnormal:
https://fred.stlouisfed.org/se...

Normal market:
MN: https://fred.stlouisfed.org/se...

 Nevada moved to 2017-level inventory. California regressed to late 2019 inventory, but your Minnesota market is doing good, only regressed
to mid-2021 level :) .....

this is why I keep saying everyone is looking at a different lens because everyone has a different experiences.

Greg and my market feel the price reduction and active inventory increasing a lot, your market is good so far. 

I think this is the point though. Nobody disagrees at looking through a lens on all the markets nationally. But to have a nationwide 20%, or more because some have said 20% is the minimum, adjustment, we would have to start seeing all markets move in the same direction or markets like CA, AZ etc.. hitting 2008 levels where they saw 40%. The reason most of us are saying 15% on the national level is because of some of those markets that did not see the insane growth.

One thing to me that is going to have a big impact on the national level is FL. they are slowing but overall not what CA/AZ are doing. They have a high population, obviously higher jumps in valuations, but they are still low relative from the places people are migrating from in terms of values. Also still people moving from Northeast to FL. 

IF FL doesn't tank like CA and see's a more modest 10-15% downtrend. then I don't see median being the disaster. CA, AZ, SLC, Washington I expect. Dallas will be interesting to see where they fall because theres tech money there but not like Austin. But I really see FL as the big question on the median level trending nationally. 

[Dan H.]

Quote from @Bruce Woodruff:

For what it's worth......We get quarterly updates (from Redfin/Trulia/Etc) re home value on a house we sold (San Diego County) about 2-1/2 years ago. 

At it's peak it was 'valued' at $1,050,000. This was approx a year ago.

Today's email had it at $935,163. That's over $100k less in about a year.

Now we don't know about their metrics, or even if they're accurate, but it shows a 10% drop in value in a major housing market.

Take this for what it's worth......

10% drop matches my guesstimate for San Diego county based on what I am seeing without actually running real numbers.  Note that CAR still shows over 11% YOY gain for the county.  This implies that the property could decline ~10% to reach the Sept 2021 price.  

granted if you purchased in the last 6 months, the loss is a real loss.  For those who purchased a year or more ago (the majority of RE owners), the recent decline is from gain via appreciation.  

point being that even a 20% decline for most San Diego county RE owners (excluding those that purchased recently) will only roll the value back to 2021 values.  The San Diego RE decline alone should not strain most owners finances.  

[James Hamling]

Quote from @Carlos Ptriawan:

Expect a MORE NORMAL real estate market. Anyone expecting a continuation of 20/21 markets, is just plain delusional. 

I am keeping you on ignore setting Joe, so, feel free to distort and mislead all you want.

James, two points. You said that because, first, your market MN is following seasonal adjustment properly. 
Second also, not all market are behaving the same. 

Lets take a look at this three markets:

Abnormal:

nevada https://fred.stlouisfed.org/se...

Starting to be abnormal:
https://fred.stlouisfed.org/se...

Normal market:
MN: https://fred.stlouisfed.org/se...

 Nevada moved to 2017-level inventory. California regressed to late 2019 inventory, but your Minnesota market is doing good, only regressed
to mid-2021 level :) .....

this is why I keep saying everyone is looking at a different lens because everyone has a different experiences.

Greg and my market feel the price reduction and active inventory increasing a lot, your market is good so far. 

 The context of what I am saying here on a "return" to a "more normal" market has nothing to do with prices or inventory size or any of that, it has to do with the "tried and true" seasonality adjustment to activity. 20/21 markets just, were there own universe completely. Everything changed, everything. 

The "More Normal" I am saying here, in this, the context, is seasonal adjustments. The "summer" market uptick in activity, the "winter" market down tick in activity with consolidation in price activity (for those not in the know consolidation means pricing activity stepping back a bit, kind of like summer is 2 steps up, winter is 1 back, etc etc)

I say look for that "More Normal".     

And with that I expect a consolidation of pricing this fall/winter market. If prices hold, or increase, that means something is seriously wrong, just like 20/21 something was seriously wrong. If prices drop by 10% plus, that's NOT consolidation, that means something is seriously wrong. A 5-7% step back in pricing, that's a GOOD thing, healthy thing, that's consolidation. 

Think of consolidation as a resetting of the base, setting a new foundation. It's stability in a manner of speaking. 

Runaway markets up, down whatever, those are BAD, in any direction. Remember, at it's core all R.E. hinges on investor capital at some point. Mortgages come from somewhere, that $ comes from somewhere etc.. What we see today, is a reflection of volatility and uncertainty in the system. That $$$$ at the core origination of things is very boring, think elevator musac, it wants certainties, stability, not volatility. The more stable, the better the rate, more volatility, unknowns, it prices it in. 

So, a more normal market, consolidation step back in pricing, all very good, it signals to that investor class more certainty on the horizon, and it will get priced into things. 

Now, issue is we have that dang 1,200lb gorilla in the room called inflation of the $ supply who's going to keep impacting things for a time. But, 1 issue at a time right. Or, maybe I should say hopefully. 

[James Hamling]

Quote from @Carlos Ptriawan:

Expect a MORE NORMAL real estate market. Anyone expecting a continuation of 20/21 markets, is just plain delusional. 

I am keeping you on ignore setting Joe, so, feel free to distort and mislead all you want.

James, two points. You said that because, first, your market MN is following seasonal adjustment properly. 
Second also, not all market are behaving the same. 

 Yes, various regions have various market trends historically as a "norm". We are talking on a national level here, and nationally, there is the winter seasonality factor. 

[James Hamling]

Quote from @Dan H.:

Quote from @Bruce Woodruff:

For what it's worth......We get quarterly updates (from Redfin/Trulia/Etc) re home value on a house we sold (San Diego County) about 2-1/2 years ago. 

At it's peak it was 'valued' at $1,050,000. This was approx a year ago.

Today's email had it at $935,163. That's over $100k less in about a year.

Now we don't know about their metrics, or even if they're accurate, but it shows a 10% drop in value in a major housing market.

Take this for what it's worth......

10% drop matches my guesstimate for San Diego county based on what I am seeing without actually running real numbers.  Note that CAR still shows over 11% YOY gain for the county.  This implies that the property could decline ~10% to reach the Sept 2021 price.  

granted if you purchased in the last 6 months, the loss is a real loss.  For those who purchased a year or more ago (the majority of RE owners), the recent decline is from gain via appreciation.  

point being that even a 20% decline for most San Diego county RE owners (excluding those that purchased recently) will only roll the value back to 2021 values.  The San Diego RE decline alone should not strain most owners finances.  

 Let's say home prices DO step back 10%, nationally. Just go with me here for a mental exercise please.     So what is the most likely outcome of this? 

Would home owners; 

(a) Freak out, run around the living room, set hair on fire, and call agents to rapidly list home for sale? And go 11%, 15%, 20% discount to be the "best price", a kind of run-on-the-bank if you will.

(b) High-five and say "well, good thing were locked at ___%, looks like were staying where we are for a time".

Assuming a general state of genius in our fine BP community, I will venture the vast majority vote (b). Now, what effect does that hold on the market, this reduction in listings? Would this diminished supply not put upward pressure on pricing? And yes, higher interest rates present downward pressure on pricing. What would we call such condition, possibly "Market Compression"? 

It's hard to argue with Mr/Mrs home seller for sizable price drops when they can say "good luck finding another place". 

Who wins? 

My vote; Landlords. 

[Carlos Ptriawan]

 Yeah, maybe the fate of the market will be decided Q4 this year, If the general inventory reduces by then, we could say relatively phew the reduction is only temporary ........

[Dan H.]

Quote from @James Hamling:

Quote from @Dan H.:

Quote from @Bruce Woodruff:

For what it's worth......We get quarterly updates (from Redfin/Trulia/Etc) re home value on a house we sold (San Diego County) about 2-1/2 years ago. 

At it's peak it was 'valued' at $1,050,000. This was approx a year ago.

Today's email had it at $935,163. That's over $100k less in about a year.

Now we don't know about their metrics, or even if they're accurate, but it shows a 10% drop in value in a major housing market.

Take this for what it's worth......

10% drop matches my guesstimate for San Diego county based on what I am seeing without actually running real numbers.  Note that CAR still shows over 11% YOY gain for the county.  This implies that the property could decline ~10% to reach the Sept 2021 price.  

granted if you purchased in the last 6 months, the loss is a real loss.  For those who purchased a year or more ago (the majority of RE owners), the recent decline is from gain via appreciation.  

point being that even a 20% decline for most San Diego county RE owners (excluding those that purchased recently) will only roll the value back to 2021 values.  The San Diego RE decline alone should not strain most owners finances.  

 Let's say home prices DO step back 10%, nationally. Just go with me here for a mental exercise please.     So what is the most likely outcome of this? 

Would home owners; 

(a) Freak out, run around the living room, set hair on fire, and call agents to rapidly list home for sale? And go 11%, 15%, 20% discount to be the "best price", a kind of run-on-the-bank if you will.

(b) High-five and say "well, good thing were locked at ___%, looks like were staying where we are for a time".

Assuming a general state of genius in our fine BP community, I will venture the vast majority vote (b). Now, what effect does that hold on the market, this reduction in listings? Would this diminished supply not put upward pressure on pricing? And yes, higher interest rates present downward pressure on pricing. What would we call such condition, possibly "Market Compression"? 

It's hard to argue with Mr/Mrs home seller for sizable price drops when they can say "good luck finding another place". 

Who wins? 

My vote; Landlords. 

 I mostly agree with your sentiment, but your binary choice does not represent all choices (or even most).  IF there are significant layoffs owners may need to sell. They could down size or rent. They could use ARM loans to lesson the rate impact.

there are countless reasons why property owners decide to sell.  Some times the owners have minimal options.  If there are mass job losses, many owners may be forced to sell. 

[James Hamling]

Quote from @Carlos Ptriawan:

 Yeah, maybe the fate of the market will be decided Q4 this year, If the general inventory reduces by then, we could say relatively phew the reduction is only temporary ........

 For all we know it could be a "nuclear winter" this Q4.... Iodine may become the most appreciating asset here soon. 

[James Hamling]

Quote from @Dan H.:

Quote from @James Hamling:

Quote from @Dan H.:

Quote from @Bruce Woodruff:

....  IF there are significant layoffs....  .......If there are mass job losses,.... 

 If if's and but's were candy and nut's we'd all have a very merry x-mas.......

[Michael Wooldridge]

Quote from @Dan H.:

Quote from @James Hamling:

Quote from @Dan H.:

Quote from @Bruce Woodruff:

For what it's worth......We get quarterly updates (from Redfin/Trulia/Etc) re home value on a house we sold (San Diego County) about 2-1/2 years ago. 

At it's peak it was 'valued' at $1,050,000. This was approx a year ago.

Today's email had it at $935,163. That's over $100k less in about a year.

Now we don't know about their metrics, or even if they're accurate, but it shows a 10% drop in value in a major housing market.

Take this for what it's worth......

10% drop matches my guesstimate for San Diego county based on what I am seeing without actually running real numbers.  Note that CAR still shows over 11% YOY gain for the county.  This implies that the property could decline ~10% to reach the Sept 2021 price.  

granted if you purchased in the last 6 months, the loss is a real loss.  For those who purchased a year or more ago (the majority of RE owners), the recent decline is from gain via appreciation.  

point being that even a 20% decline for most San Diego county RE owners (excluding those that purchased recently) will only roll the value back to 2021 values.  The San Diego RE decline alone should not strain most owners finances.  

 Let's say home prices DO step back 10%, nationally. Just go with me here for a mental exercise please.     So what is the most likely outcome of this? 

Would home owners; 

(a) Freak out, run around the living room, set hair on fire, and call agents to rapidly list home for sale? And go 11%, 15%, 20% discount to be the "best price", a kind of run-on-the-bank if you will.

(b) High-five and say "well, good thing were locked at ___%, looks like were staying where we are for a time".

Assuming a general state of genius in our fine BP community, I will venture the vast majority vote (b). Now, what effect does that hold on the market, this reduction in listings? Would this diminished supply not put upward pressure on pricing? And yes, higher interest rates present downward pressure on pricing. What would we call such condition, possibly "Market Compression"? 

It's hard to argue with Mr/Mrs home seller for sizable price drops when they can say "good luck finding another place". 

Who wins? 

My vote; Landlords. 

 I mostly agree with your sentiment, but your binary choice does not represent all choices (or even most).  IF there are significant layoffs owners may need to sell. They could down size or rent. They could use ARM loans to lesson the rate impact.

there are countless reasons why property owners decide to sell.  Some times the owners have minimal options.  If there are mass job losses, many owners may be forced to sell. 

 Well what would be significant lay offs? Right now we have low unemployment 3.7%. Even if we go up to the target level of 5-5.5%. That's still relatively low unemployment and won't be catastrophic. BTW we will see more lay offs between now and end of year, I know a dozen or so F250 planning already. But they aren't massive like they have been in the past. Far more measured. 

Downside, I don't see how that works if the rates are that much higher. Downsizing won't really be an option which is one of points we've pointed to.

Rents will continue to go up so it's a far less appealing option to. Hell where rents are at lately in my neck of the woods I could put nominal money in on just a standard 2 bed condo and end up cash flow positive immediately. I'm sure we will see some movement here but it's a far less attractive option than in prior years. Unless we think rents are going down? 

[Carlos Ptriawan]

 Well what would be significant lay offs? Right now we have low unemployment 3.7%

This would be market specific as well. In CA to afford a proper house, both H+W has to work especially in Bay Area. The median/rent income is high enough to make $1.5m  an average house.  Any disturbance in the job market will affect housing quickly. Just yesterday FB announced "company restructuring". 

During dotcom crash of 2001 I remember rental market also plummeted for 5 years. 

If Fed holds high Fed rate for too long, this has potential combination of combining the mother of all crashes:
dotcom 01, GFC 08 and hyperinflation of Asia in 98 within developed world

[Carlos Ptriawan]

Quote from @James Hamling:

Quote from @Dan H.:

Quote from @James Hamling:

Quote from @Dan H.:

Quote from @Bruce Woodruff:

....  IF there are significant layoffs....  .......If there are mass job losses,.... 

 If if's and but's were candy and nut's we'd all have a very merry x-mas.......

only when the CB increases their balance sheet and then we can buy a house again :) lol

[John Carbone]

Quote from @James Hamling:

Quote from @Dan H.:

Quote from @James Hamling:

Quote from @Dan H.:

Quote from @Bruce Woodruff:

....  IF there are significant layoffs....  .......If there are mass job losses,.... 

 If if's and but's were candy and nut's we'd all have a very merry x-mas.......

My apologies for the misinterpretation of your post sir james. A minor correction of 5-7 percent by next year is kind of your worst case scenario now and anything above 10 percent and especially 20 percent would be a shock to you. I thought i recalled you saying a few days ago that prices wouldn’t drop at all, my apologies again if that was someone else. 

you bring up a good little case study of those two options. The reality now is in a lot of markets prices are dropping already, im guaranteeing this is not due to “seasonal” adjustments. This is going to accelerate much faster through winter and into spring. 

the fed is hell bent on causing jobs to be lost. Even going up to 5 percent unemployment will have an impact. Stocks keep making new 52 week lows and we are close to erasing all of the gains made during the Covid boom. Once earnings come out these corporations are going to have no choice but to do layoffs. As you said yourself, there will be a ton of realtors laid off, it will not only be isolated to your industry. Tech jobs, financial services, hospitality, food will have layoffs. Yes, we have a shortage now of workers, but when every company starts to cut, things can change on a dime, and the fed is saying they won’t stop hiking until they get that outcome. To me, that means housing prices need to fall. A laid off worker will have to sell or an investor decides to get out. Imagine this scenario , and there are many like this, someone owns multiple rentals, and they have massive “equity” of say 40 percent. Once they realize that they lost 10-20 percent in the next several months and they see that rental rates are not as robust as during Covid there will be a lot of investors who will try to do a rug pull and get out of their depreciating homes. There is a lot of mortgage leverage out there. 

[Greg R.]

Quote from @Michael Wooldridge:

Quote from @Dan H.:

Quote from @James Hamling:

Quote from @Dan H.:

Quote from @Bruce Woodruff:

For what it's worth......We get quarterly updates (from Redfin/Trulia/Etc) re home value on a house we sold (San Diego County) about 2-1/2 years ago. 

At it's peak it was 'valued' at $1,050,000. This was approx a year ago.

Today's email had it at $935,163. That's over $100k less in about a year.

Now we don't know about their metrics, or even if they're accurate, but it shows a 10% drop in value in a major housing market.

Take this for what it's worth......

10% drop matches my guesstimate for San Diego county based on what I am seeing without actually running real numbers.  Note that CAR still shows over 11% YOY gain for the county.  This implies that the property could decline ~10% to reach the Sept 2021 price.  

granted if you purchased in the last 6 months, the loss is a real loss.  For those who purchased a year or more ago (the majority of RE owners), the recent decline is from gain via appreciation.  

point being that even a 20% decline for most San Diego county RE owners (excluding those that purchased recently) will only roll the value back to 2021 values.  The San Diego RE decline alone should not strain most owners finances.  

 Let's say home prices DO step back 10%, nationally. Just go with me here for a mental exercise please.     So what is the most likely outcome of this? 

Would home owners; 

(a) Freak out, run around the living room, set hair on fire, and call agents to rapidly list home for sale? And go 11%, 15%, 20% discount to be the "best price", a kind of run-on-the-bank if you will.

(b) High-five and say "well, good thing were locked at ___%, looks like were staying where we are for a time".

Assuming a general state of genius in our fine BP community, I will venture the vast majority vote (b). Now, what effect does that hold on the market, this reduction in listings? Would this diminished supply not put upward pressure on pricing? And yes, higher interest rates present downward pressure on pricing. What would we call such condition, possibly "Market Compression"? 

It's hard to argue with Mr/Mrs home seller for sizable price drops when they can say "good luck finding another place". 

Who wins? 

My vote; Landlords. 

 I mostly agree with your sentiment, but your binary choice does not represent all choices (or even most).  IF there are significant layoffs owners may need to sell. They could down size or rent. They could use ARM loans to lesson the rate impact.

there are countless reasons why property owners decide to sell.  Some times the owners have minimal options.  If there are mass job losses, many owners may be forced to sell. 

 Well what would be significant lay offs? Right now we have low unemployment 3.7%. Even if we go up to the target level of 5-5.5%. That's still relatively low unemployment and won't be catastrophic. BTW we will see more lay offs between now and end of year, I know a dozen or so F250 planning already. But they aren't massive like they have been in the past. Far more measured. 

Downside, I don't see how that works if the rates are that much higher. Downsizing won't really be an option which is one of points we've pointed to.

Rents will continue to go up so it's a far less appealing option to. Hell where rents are at lately in my neck of the woods I could put nominal money in on just a standard 2 bed condo and end up cash flow positive immediately. I'm sure we will see some movement here but it's a far less attractive option than in prior years. Unless we think rents are going down? 

Unemployment is only one of the scenarios that could trigger mass sales & foreclosures. However, there are a ton of every day events that require people to sell. Death in the family, divorce, health problems, loss of job, can't afford repairs, tired of being house poor, etc. 

Again, a majority of home owners are not investors. Regular people are reactive, not proactive. They are going to wait for something to come up, e.g., one of the situations  above or the infinite amount of other situations that will force someone to sell. 

Also, have we considered that a lot of home owners were able to pull out cheap money in the last couple years via refi? which might have bought them time, provided a temporary band aid on an otherwise unsustainable financial situation. I don't think that's an unrealistic factor to consider. 

[Michael Wooldridge]

Quote from @Carlos Ptriawan:

 Well what would be significant lay offs? Right now we have low unemployment 3.7%

This would be market specific as well. In CA to afford a proper house, both H+W has to work especially in Bay Area. The median/rent income is high enough to make $1.5m  an average house.  Any disturbance in the job market will affect housing quickly. Just yesterday FB announced "company restructuring". 

During dotcom crash of 2001 I remember rental market also plummeted for 5 years. 

If Fed holds high Fed rate for too long, this has potential combination of combining the mother of all crashes:
dotcom 01, GFC 08 and hyperinflation of Asia in 98 within developed world

So I agree on all of that. I’m in tech they’ll be more facebooks for sure. I know of more coming just not super bad yet. I think CA will 100% be outsized impact. AZ also and likely Washington all related to tech/cost values etc..

Texas looks to be in the middle but too early to tell. 

I still come back to Florida. If you are talking about median national valuation changes (short of market destruction, and I mean US entire economy, which is possible although I don’t think likely nor will I plan on it) FL will need to play a role from a volume perspective. I’m not convinced that entire market will fall out same way as Cali. But if it does I’d get on board with 20% being possible quickly 


 

[Aaron Gordy]

@Greg R. I am a big believer in the long term prospects of real estate. If you have a long view then I think that history is on my side. I don't know with certainty about the short term prospects. The short term and the long term looks pretty darn good in Austin Texas. There are so many jobs in the Austin metro that we need folks to move here. The higher interest rates may pull back some of that growth but right now we are red hot and have been red hot for a very long time. I suspect that the higher interest rates will make would be buyers, renters thus putting increased demand upon rental properties pushing up rents even more. 

My question is that if you are absolutely certain that the housing prices will plummet then why not short the big house builders like KB, DR Horton? 

[John Carbone]

Quote from @Aaron Gordy:

@Greg R. I am a big believer in the long term prospects of real estate. If you have a long view then I think that history is on my side. I don't know with certainty about the short term prospects. The short term and the long term looks pretty darn good in Austin Texas. There are so many jobs in the Austin metro that we need folks to move here. The higher interest rates may pull back some of that growth but right now we are red hot and have been red hot for a very long time. I suspect that the higher interest rates will make would be buyers, renters thus putting increased demand upon rental properties pushing up rents even more. 

My question is that if you are absolutely certain that the housing prices will plummet then why not short the big house builders like KB, DR Horton? 

The homebuilders are already down 30-40 percent. The XHB homebuilders etf is down 36 percent. It’s a longer process to sell a home than a stock. Market is already pricing this in though, it’s just not reflecting completely yet in home sales….but it has started.

[Aaron Gordy]

House prices are sticky and certainly aren't volatile like stock prices. Homeowners who don't have to sell won't sell. As long as they have jobs then they will stay put. 

[John Carbone]

Quote from @Aaron Gordy:

House prices are sticky and certainly aren't volatile like stock prices. Homeowners who don't have to sell won't sell. As long as they have jobs then they will stay put. 

They are sticky until they aren’t. Then they become very liquid and flush down the drain. I don’t know Austin specifically, but a lot of markets are going to take big haircuts and overall median home values will drop. 

[Account Closed]

to me the scary part is middle America and the general public is busted. I review financials daily for rental applications and the amount of debt the general public has is mind boggling. It's a payment based world and most are maxed out with their payments along with significant credit card/medical debt.  

[John Carbone]

My buddy @James Hamling is looking decent in his market with inventories (for now)

Austin looks to be in trouble. 

[Bruce Woodruff]

Quote from @Dan H.:

granted if you purchased in the last 6 months, the loss is a real loss.  For those who purchased a year or more ago (the majority of RE owners), the recent decline is from gain via appreciation.  

point being that even a 20% decline for most San Diego county RE owners (excluding those that purchased recently) will only roll the value back to 2021 values.  The San Diego RE decline alone should not strain most owners finances.  

Oh, for sure it's just a loss in money they never really had in pocket....but it still has some value in the big picture....

[Bruce Woodruff]

Quote from @Carlos Ptriawan:

Even in 2019, the mortgage/rent ratio and mortgage/income ratio are higher in Austin compared to San Jose,CA

I've been thinking that someone else would figure this out.....over 1/4 million people a year (net) leaving any state and taking their wealth and assets elsewhere has GOT TO have an impact on regional and national economics....

We'll see what the end results will be....

[Michael Wooldridge]

Quote from @Bruce Woodruff:

Quote from @Carlos Ptriawan:

Even in 2019, the mortgage/rent ratio and mortgage/income ratio are higher in Austin compared to San Jose,CA

I've been thinking that someone else would figure this out.....over 1/4 million people a year (net) leaving any state and taking their wealth and assets elsewhere has GOT TO have an impact on regional and national economics....

We'll see what the end results will be....

Which would actually suggest Tx/AZ aren’t the best to look at it for trending….

Semi-kidding. But time will tell on a lot of things. Fortunately I’m not looking to cash out any earlier than 27 years (and not even sure i will then). Cash flow approach works fine for now. I somehow figure I’ll have appreciation one way or another after 30 years… 

 

[Greg R.]

Quote from @Carlos Ptriawan:

@James Hamling
@John Carbone
@Matt Kalish
@Michael Wooldridge

Expect a MORE NORMAL real estate market. Anyone expecting a continuation of 20/21 markets, is just plain delusional. 

I am keeping you on ignore setting Joe, so, feel free to distort and mislead all you want.

James, two points. You said that because, first, your market MN is following seasonal adjustment properly. 
Second also, not all market are behaving the same. 

Lets take a look at this three markets:

Abnormal:

nevada https://fred.stlouisfed.org/se...

Starting to be abnormal:
https://fred.stlouisfed.org/se...

Normal market:
MN: https://fred.stlouisfed.org/se...

 Nevada moved to 2017-level inventory. California regressed to late 2019 inventory, but your Minnesota market is doing good, only regressed
to mid-2021 level :) .....

this is why I keep saying everyone is looking at a different lens because everyone has a different experiences.

Greg and my market feel the price reduction and active inventory increasing a lot, your market is good so far. 

Agreed, this is going to vary on location. However, there is also a national (macro) trend that we're starting to see. In some areas it's not currently super obvious, but give it a month or two. In November/ December we'll be seeing more aggressive price dips and there will be little/ no denial that prices are declining across the board. I suspect at that time the discussion will change from "will the market crash" to "how far down will prices go." Very similar to the talks people are having about the stock market right now. 

Talked to a lender today that's at a national mortgage brokers conference in Las Vegas (AIME Fuse.) I'm sure it won't be a surprise to anyone here that the outlook in the lending industry is incredibly grim and optimism is at ground level. They've see rates in the 5s and 6s wipe out a significant amount of their mortgages and all but kill refinances.

Now we have rates in the 7s, and from what I hear they are expecting them to go even higher. We can look at all kinds of different stats and metrics, but the main factor that's going to cripple the market is the debilitating rates. The cash buyers are drying up. Most of the people who sold at the top of the bubble and had duffle bags full of cash have already bought. The investors who have enough cash to avoid financing are a small minority and are not nearly as numerous as would be need to be to keep prices from falling.

 It becomes a game of chicken now, who will flinch first... how long can owners hold for. if they can weather the storm for the next few years they'll survive. If they can't, their only option will be to drop their prices to make a sale or go into foreclosure.