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. 

[James Hamling]

Quote from @Bruce Woodruff:

Quote from @James Hamling:

 Yeah, I'd say way off the mark. 

But yet, James, I know of a couple of areas that are already at 10+%. Of course this is location specific, but I'm talking San Diego County and parts of Arizona, 2 pretty telling markets, right?

Just consider that you may be being too optimistic....? Not by much, perhaps, but at least a bit, in my estimation..... but what the F do I know right?

 CA is a place I would not consider telling, other then telling in what happens when one get's so arrogant that they ignore all sense for a multitude of years, and compound stupidity for many more.    For example, how many issues does CA have with there electrical grid yet, they still are killing anything fuel related and just throwing it on an already stressed out grid that the operator keeps screaming that is beyond the breaking point. It's a special kind of stupid. 

[JD Martin]

Quote from @Eric Bilderback:

Quote from @John Carbone:

Quote from @Eric Bilderback:

Just did my monthly report for my trendy little West Coast mountain town.  Transaction dropped by 40% this month.  Price and Sq ft price both dropped by over 20%.  Could be a blip or the collapse of Republic! LOL  Probably somewhere in the middle hopefully closer to a blip.  

And everyone in that town is still going to wake up tomorrow having lived through a “crash” and it won’t matter other than the fact they can’t call up their bank and get a heloc. Their phantom equity disappeared, but life goes on unlike in 2008. Prices dropping on low volume, as I suspected. 

 My concern would be that America is reliant on asset prices for consumer spending.  If that goes away we could start having employment issues and the house of cards could start being exposed.  Not sure but I think that is a real possibility.  If Americans cannot borrow against their inflating assets the entire economy will look and behave much differently.  America does not produce much in the way of goods and consumes an awful lot, it just might catch up with us one day.

 When you say "America does not produce much in the way of goods", what is your metric? The US was the 2nd largest manufacturing sector by output in the world for each of at least the past 5 years, trailing only China and only just barely. Manufacturing is a smaller percentage of US GDP than it used to be, but our manufacturing output is more than Germany, Japan, India and South Korea combined. 

I think this myth persists because a) we see so much Chinese stuff in our stores these days, and b) we're not aware of the things we construct that are exported because we don't buy them at Walmart. We are virtually unmatched in exporting energy exploration materials & machinery (drilling rigs, seismic equipment, etc), electrical & medical equipment, aircraft and parts, just to name a few. 

I agree we could increase our production for sure (if you can find anyone that wants to work) and I'm no fan of buying Chinese goods but that shouldn't cloud how the facts stand on their own. 

[James Hamling]

Quote from @Greg R.:

Quote from @James Hamling:

Quote from @John Carbone:

Quote from @James Hamling:

Quote from @Carlos Ptriawan:

Quote from @John Carbone:

Ok so I am saying there will be 20-30 percent drop in national median home values over next 18 months. I never said it was a “crash”, am I way off the mark? 

 Yeah, I'd say way off the mark. 

A 30% drop in median house value, nationally, that's 2008 collapse level. What makes you think that will happen again? You have to go back 75 yrs prior to 2008 for such a thing. 

I don't understand the rationale behind comments like this. Why in the world would we try to pretend that the conditions 50-100 years ago are the same as we're seeing today? And why would we pretend that these historic events and the economical environment back then are somehow analogous to what's to come in current times? 
America right now, and our economical conditions show very few similarities to the America of the 40s, 50s, 60s, 70s, 80s, and 90s. We are in unchartered territory. To think that we know what's coming next because "x" happened a century or a half-century ago is nonsensical. 
We just exited a global pandemic, the stock market is in free fall (Dow closed the worst September in 20 years), we've printed so much money that the dollar is on the brink of collapse, we just exited a time of true historically low mortgage rates which created a massive housing bubble, hyper-inflation is raging out of control which has caused the fed to raise the interest rate through the roof, and mortgage rates have more than doubled in the last few months. 

What we're seeing now has never happened before in the history of our country. Nothing that happened 50 or a 100 years ago is an indicator of what's going to happen next. 

And of course we should learn from the past and our history. But we should also learn to know when we're seeing something that we haven't encountered before. 

You don't like facts much do you? 
I am just trying to figure out your angle, what your slinging, where the profit is in selling the end of the world to lemmings? 
Your entire rant had nearly 10% of truth and fact to it, nearly. 

 The stock market is not in free fall, where are you plucking this from? Today was one hell of a rally actually so funny that on a wildly green day you've decided it's in "free fall". 

Your clearly just making things up. You decided the entire storyline and just sticking to it. So there is 0 point in any form of sense, your going to just deny any facts or info that refutes your fear-porn. 

So go ahead, freak out, blabble away. 

[Nick H.]

This is a chaotic argument, idk why I'm getting involved. Few points:

1) Easier to look at broad averages here, i.e. all of the US, rather than 1 location. All of the US according to zillow is plateauing but has not dropped. Of course some markets have dropped, and some are continuing to rise. 

2) Definitely need to be looking at change from the peak like @Bruce Woodruff correctly indicated. i.e. (this is purely hypothetical) if 12 months ago avg price of homes was $1,000,000, and they rose to $1,500,000 6 months ago, and then back to $1,000,000 today - it's relevant to what we're talking about that prices went down 33% from the peak - and the buyers who bought at $1.5M are in rough shape. We don't simply say "prices are flat" and move on. 

I do not think it is very likely that prices are going to go down by 20%+. Maybe a short term pullback of 5 - 10% on average, sure, that's very possible. Let's think about how supply and demand are each affected by interest rates going up. Simple econ 101. 

Demand is obvious - demand decreases as rates rise because each dollar of home that you buy becomes less affordable w/ a higher interest mortgage. i.e the subset of people who can afford a given home goes down

Supply - supply decreases as rates rise because fewer owners want to sell their homes, i.e. the subset of people who choose to put homes on the market goes down

So as rates rise, demand decreases, but so does supply. These are the two ingredients to home prices (to prices of anything....). No one knows the magnitude of the demand shift and the supply shift, so we cannot "mathematically" say we know what is going to happen. But, as @James Hamling (and maybe others?) has pointed out - we do have a roadmap of real world data in the 1970's when there was high inflation and quickly increasing interest rates. Real estate did not go down - it went up. 

It went up because inflation was high (that increases the prices of all stuff... i.e. wages roughly doubled in the 1970's) and because while the increasing interest rates lowered demand for housing, it also lowered the supply of it (less ppl wanting to sell because they were locked into much lower rates). So you had lower demand / lower supply that may roughly cancel out, and you have a lot of inflation, which puts upward pressure on home prices. So homes went up >2X in the 1970's. 

Certainly, as others have mentioned, if unemployment goes way up, to say, 10% like it did in 2009 (I don't think anyone credible thinks that is a likely outcome), then that would be a big risk to home prices because defaults go up, rent ppl are able to pay goes down, etc. Outside of that, there aren't many big risk factors here of a large decline in residential RE. Anything is possible (as it has been in 2011, 2012, 2013, 2014, 2015, etc), but I don't see any data/economic based reasoning that would lead to me betting on a 20% decline. The main argument I've heard in this thread from the "crash" side (outside of anecdotal evidence) is that since rates have gone up so much, it only makes sense for prices to come down - but I (very respectfully - we're all on the same team here) disagree as that ignores the supply side dynamics of rate increases. 

Note: for full transparency, imo commercial/apartments probably higher risk of decline (compared to SFH's), given they're tied to shorter term debt

[John Carbone]

Quote from @Nick H.:

This is a chaotic argument, idk why I'm getting involved. Few points:

1) Easier to look at broad averages here, i.e. all of the US, rather than 1 location. All of the US according to zillow is plateauing but has not dropped. Of course some markets have dropped, and some are continuing to rise. 

2) Definitely need to be looking at change from the peak like @Bruce Woodruff correctly indicated. i.e. (this is purely hypothetical) if 12 months ago avg price of homes was $1,000,000, and they rose to $1,500,000 6 months ago, and then back to $1,000,000 today - it's relevant to what we're talking about that prices went down 33% from the peak - and the buyers who bought at $1.5M are in rough shape. We don't simply say "prices are flat" and move on. 

I do not think it is very likely that prices are going to go down by 20%+. Maybe a short term pullback of 5 - 10% on average, sure, that's very possible. Let's think about how supply and demand are each affected by interest rates going up. Simple econ 101. 

Demand is obvious - demand decreases as rates rise because each dollar of home that you buy becomes less affordable w/ a higher interest mortgage. i.e the subset of people who can afford a given home goes down

Supply - supply decreases as rates rise because fewer owners want to sell their homes, i.e. the subset of people who choose to put homes on the market goes down

So as rates rise, demand decreases, but so does supply. These are the two ingredients to home prices (to prices of anything....). No one knows the magnitude of the demand shift and the supply shift, so we cannot "mathematically" say we know what is going to happen. But, as @James Hamling (and maybe others?) has pointed out - we do have a roadmap of real world data in the 1970's when there was high inflation and quickly increasing interest rates. Real estate did not go down - it went up. 

It went up because inflation was high (that increases the prices of all stuff... i.e. wages roughly doubled in the 1970's) and because while the increasing interest rates lowered demand for housing, it also lowered the supply of it (less ppl wanting to sell because they were locked into much lower rates). So you had lower demand / lower supply that may roughly cancel out, and you have a lot of inflation, which puts upward pressure on home prices. So homes went up >2X in the 1970's. 

Certainly, as others have mentioned, if unemployment goes way up, to say, 10% like it did in 2009 (I don't think anyone credible thinks that is a likely outcome), then that would be a big risk to home prices because defaults go up, rent ppl are able to pay goes down, etc. Outside of that, there aren't many big risk factors here of a large decline in residential RE. Anything is possible (as it has been in 2011, 2012, 2013, 2014, 2015, etc), but I don't see any data/economic based reasoning that would lead to me betting on a 20% decline. The main argument I've heard in this thread from the "crash" side (outside of anecdotal evidence) is that since rates have gone up so much, it only makes sense for prices to come down - but I (very respectfully - we're all on the same team here) disagree as that ignores the supply side dynamics of rate increases. 

Note: for full transparency, imo commercial/apartments probably higher risk of decline (compared to SFH's), given they're tied to shorter term debt

I don’t think it ignores the supply side. The demand shift from buyers is projected (by me) to be significantly more than the supply side. So there  will be excess inventory of homes and apartments. Americans find ways and adapt. Apart from places in California in this country, we don’t have people living on the streets in droves everywhere. People are living somewhere right now. If someone doesn’t own a home now, there’s nothing they can do to afford it other than make more money. The problem is, wages are not growing with inflation to have this be a similar situation in the 70s. Wages are growing for the very bottom rung of workers in society, but these people are also experiencing the brunt of inflation with higher food and energy prices along with rents doubling…plus they likely will now owe federal taxes due to bracket creeping. Buyers will find alternatives for living arrangements when they are pushed into a corner…it’s already happening. When demand craters, there will be supply and at the right price a transaction will occur. 

[James Hamling]

Quote from @Nick H.:

This is a chaotic argument, idk why I'm getting involved. Few points:

1) Easier to look at broad averages here, i.e. all of the US, rather than 1 location. All of the US according to zillow is plateauing but has not dropped. Of course some markets have dropped, and some are continuing to rise. 

2) Definitely need to be looking at change from the peak like @Bruce Woodruff correctly indicated. i.e. (this is purely hypothetical) if 12 months ago avg price of homes was $1,000,000, and they rose to $1,500,000 6 months ago, and then back to $1,000,000 today - it's relevant to what we're talking about that prices went down 33% from the peak - and the buyers who bought at $1.5M are in rough shape. We don't simply say "prices are flat" and move on. 

I do not think it is very likely that prices are going to go down by 20%+. Maybe a short term pullback of 5 - 10% on average, sure, that's very possible. Let's think about how supply and demand are each affected by interest rates going up. Simple econ 101. 

Demand is obvious - demand decreases as rates rise because each dollar of home that you buy becomes less affordable w/ a higher interest mortgage. i.e the subset of people who can afford a given home goes down

Supply - supply decreases as rates rise because fewer owners want to sell their homes, i.e. the subset of people who choose to put homes on the market goes down

So as rates rise, demand decreases, but so does supply. These are the two ingredients to home prices (to prices of anything....). No one knows the magnitude of the demand shift and the supply shift, so we cannot "mathematically" say we know what is going to happen. But, as @James Hamling (and maybe others?) has pointed out - we do have a roadmap of real world data in the 1970's when there was high inflation and quickly increasing interest rates. Real estate did not go down - it went up. 

It went up because inflation was high (that increases the prices of all stuff... i.e. wages roughly doubled in the 1970's) and because while the increasing interest rates lowered demand for housing, it also lowered the supply of it (less ppl wanting to sell because they were locked into much lower rates). So you had lower demand / lower supply that may roughly cancel out, and you have a lot of inflation, which puts upward pressure on home prices. So homes went up >2X in the 1970's. 

Certainly, as others have mentioned, if unemployment goes way up, to say, 10% like it did in 2009 (I don't think anyone credible thinks that is a likely outcome), then that would be a big risk to home prices because defaults go up, rent ppl are able to pay goes down, etc. Outside of that, there aren't many big risk factors here of a large decline in residential RE. Anything is possible (as it has been in 2011, 2012, 2013, 2014, 2015, etc), but I don't see any data/economic based reasoning that would lead to me betting on a 20% decline. The main argument I've heard in this thread from the "crash" side (outside of anecdotal evidence) is that since rates have gone up so much, it only makes sense for prices to come down - but I (very respectfully - we're all on the same team here) disagree as that ignores the supply side dynamics of rate increases. 

Note: for full transparency, imo commercial/apartments probably higher risk of decline (compared to SFH's), given they're tied to shorter term debt

 Eloquent, detailed, concise, fact based and 100% agree whole heartedly. 

My 1 add-on is; the front loaded unit supply shortage moving into this situation vs the 70's. I fear this could be "the" mechanism that forces a stagflation so tight that it very literally strangles the middle class to near extinction, and in that a protracted event. We backoff rates to afford space of economic movement, it births rampant inflation cycle that could runaway. Press on the brakes with rates to get inflation under control, unit supply shortages, as well as others, induce a defensive mechanism working in reverse action to rate deployments, inducing a compression effect vs receding action. Inducing a severe stagflation event.    Vacillate in focus and action of policy, protract the entire cycle of pain via uncertainty. 

[John Carbone]

Quote from @James Hamling:

Quote from @Nick H.:

This is a chaotic argument, idk why I'm getting involved. Few points:

1) Easier to look at broad averages here, i.e. all of the US, rather than 1 location. All of the US according to zillow is plateauing but has not dropped. Of course some markets have dropped, and some are continuing to rise. 

2) Definitely need to be looking at change from the peak like @Bruce Woodruff correctly indicated. i.e. (this is purely hypothetical) if 12 months ago avg price of homes was $1,000,000, and they rose to $1,500,000 6 months ago, and then back to $1,000,000 today - it's relevant to what we're talking about that prices went down 33% from the peak - and the buyers who bought at $1.5M are in rough shape. We don't simply say "prices are flat" and move on. 

I do not think it is very likely that prices are going to go down by 20%+. Maybe a short term pullback of 5 - 10% on average, sure, that's very possible. Let's think about how supply and demand are each affected by interest rates going up. Simple econ 101. 

Demand is obvious - demand decreases as rates rise because each dollar of home that you buy becomes less affordable w/ a higher interest mortgage. i.e the subset of people who can afford a given home goes down

Supply - supply decreases as rates rise because fewer owners want to sell their homes, i.e. the subset of people who choose to put homes on the market goes down

So as rates rise, demand decreases, but so does supply. These are the two ingredients to home prices (to prices of anything....). No one knows the magnitude of the demand shift and the supply shift, so we cannot "mathematically" say we know what is going to happen. But, as @James Hamling (and maybe others?) has pointed out - we do have a roadmap of real world data in the 1970's when there was high inflation and quickly increasing interest rates. Real estate did not go down - it went up. 

It went up because inflation was high (that increases the prices of all stuff... i.e. wages roughly doubled in the 1970's) and because while the increasing interest rates lowered demand for housing, it also lowered the supply of it (less ppl wanting to sell because they were locked into much lower rates). So you had lower demand / lower supply that may roughly cancel out, and you have a lot of inflation, which puts upward pressure on home prices. So homes went up >2X in the 1970's. 

Certainly, as others have mentioned, if unemployment goes way up, to say, 10% like it did in 2009 (I don't think anyone credible thinks that is a likely outcome), then that would be a big risk to home prices because defaults go up, rent ppl are able to pay goes down, etc. Outside of that, there aren't many big risk factors here of a large decline in residential RE. Anything is possible (as it has been in 2011, 2012, 2013, 2014, 2015, etc), but I don't see any data/economic based reasoning that would lead to me betting on a 20% decline. The main argument I've heard in this thread from the "crash" side (outside of anecdotal evidence) is that since rates have gone up so much, it only makes sense for prices to come down - but I (very respectfully - we're all on the same team here) disagree as that ignores the supply side dynamics of rate increases. 

Note: for full transparency, imo commercial/apartments probably higher risk of decline (compared to SFH's), given they're tied to shorter term debt

 Eloquent, detailed, concise, fact based and 100% agree whole heartedly. 

My 1 add-on is; the front loaded unit supply shortage moving into this situation vs the 70's. I fear this could be "the" mechanism that forces a stagflation so tight that it very literally strangles the middle class to near extinction, and in that a protracted event. We backoff rates to afford space of economic movement, it births rampant inflation cycle that could runaway. Press on the brakes with rates to get inflation under control, unit supply shortages, as well as others, induce a defensive mechanism working in reverse action to rate deployments, inducing a compression effect vs receding action. Inducing a severe stagflation event.    Vacillate in focus and action of policy, protract the entire cycle of pain via uncertainty. 

@James Hamling has another “never crasher” member! I give you credit James, you are up at all hours, a true grinder! A+ for effort!

[James Hamling]

Quote from @John Carbone:

Quote from @Nick H.:

I don’t think it ignores the supply side. The demand shift from buyers is projected (by me) to be significantly more than the supply side. So there  will be excess inventory of homes and apartments. Americans find ways and adapt. Apart from places in California in this country, we don’t have people living on the streets in droves everywhere. People are living somewhere right now. If someone doesn’t own a home now, there’s nothing they can do to afford it other than make more money. The problem is, wages are not growing with inflation to have this be a similar situation in the 70s. Wages are growing for the very bottom rung of workers in society, but these people are also experiencing the brunt of inflation with higher food and energy prices along with rents doubling…plus they likely will now owe federal taxes due to bracket creeping. Buyers will find alternatives for living arrangements when they are pushed into a corner…it’s already happening. When demand craters, there will be supply and at the right price a transaction will occur. 

 This is based on emotion Joe, not facts or data, just your emotion and feelings of things, that's what makes it so wildly inaccurate and incorrect. 

We sit at more then 6million unit net shortage right now, today. That's an unprecedented number, it took an entire decade of the most epic slowdown, and total stop, in home building to create such a bonkers unit shortage. That is a massive absorption factor your not taking into any account. 

As for rentals, I have no idea how one can think there will be any excess of rental units, that's completely opposite of your own argument. people loosing homes RENT. Your own argument is one that makes MORE renters, yet you say there will be empty units all over, and empty homes. Where are all these people going? Your talking more then 18 million people!

What will buyers do, they will adjust there purchasing. It's not a buy or not to buy, it's not an on or off switch. They adjust budget level. This is Market Compression; buyers who were 400-500k move too 350-450k, those who were at 300-350k move to 250-300k, etc.. And as the bottom pricing rungs get stacked with buyers it RAISES competition, which raises pricing, for the lower strata of homes. 

And the whole time, rental rates run up, as more and more move into rental vs purchasing. 

AT END OF THE DAY, the risk vs reward is HEAVILY risk weighted for sellers in this environment where more then 75% have current rates of sub 4/5%. AND buyers are highly REWARD weighted, despite the higher rates, as it's the same cycle it has always been; a renter is paying matching or more for rents vs ownership, and getting nowhere with the payments, 0 equity, moving nowhere in life, just burning $. Renters know this. The #1 reason people buy a home, SECURITY, via accruing equity. This will not change at 8% nor 14%. The American dream will remain the American dream regardless of rate fee. 

SO, the premise Joe presents is dead flat wrong, disconnected from the reality of social dynamics. Sellers have greatest risk, lowest reward, to sell in such a market and hence they will wait it out, making much MUCH less sellers. Buyers will have exact same motives as ever to buy, just adjusted budgets. 

Impacts will be seem in relation to areas household median incomes, far as which pricing levels have compression in what direction. An area with median incomes of $700k will have downward pressure on homes upward of $1m mark where areas of household median income of say $65k will see compression on pricing at entirely different levels, including much more upward pressure on the lowest pricing strata. 

It will NOT, I say again NOT be a universal downward pressure on home prices. There will NOT be mass vacant units. 

[John Carbone]

Quote from @James Hamling:

Quote from @John Carbone:

Quote from @Nick H.:

This is a chaotic argument, idk why I'm getting involved. Few points:

1) Easier to look at broad averages here, i.e. all of the US, rather than 1 location. All of the US according to zillow is plateauing but has not dropped. Of course some markets have dropped, and some are continuing to rise. 

2) Definitely need to be looking at change from the peak like @Bruce Woodruff correctly indicated. i.e. (this is purely hypothetical) if 12 months ago avg price of homes was $1,000,000, and they rose to $1,500,000 6 months ago, and then back to $1,000,000 today - it's relevant to what we're talking about that prices went down 33% from the peak - and the buyers who bought at $1.5M are in rough shape. We don't simply say "prices are flat" and move on. 

I do not think it is very likely that prices are going to go down by 20%+. Maybe a short term pullback of 5 - 10% on average, sure, that's very possible. Let's think about how supply and demand are each affected by interest rates going up. Simple econ 101. 

Demand is obvious - demand decreases as rates rise because each dollar of home that you buy becomes less affordable w/ a higher interest mortgage. i.e the subset of people who can afford a given home goes down

Supply - supply decreases as rates rise because fewer owners want to sell their homes, i.e. the subset of people who choose to put homes on the market goes down

So as rates rise, demand decreases, but so does supply. These are the two ingredients to home prices (to prices of anything....). No one knows the magnitude of the demand shift and the supply shift, so we cannot "mathematically" say we know what is going to happen. But, as @James Hamling (and maybe others?) has pointed out - we do have a roadmap of real world data in the 1970's when there was high inflation and quickly increasing interest rates. Real estate did not go down - it went up. 

It went up because inflation was high (that increases the prices of all stuff... i.e. wages roughly doubled in the 1970's) and because while the increasing interest rates lowered demand for housing, it also lowered the supply of it (less ppl wanting to sell because they were locked into much lower rates). So you had lower demand / lower supply that may roughly cancel out, and you have a lot of inflation, which puts upward pressure on home prices. So homes went up >2X in the 1970's. 

Certainly, as others have mentioned, if unemployment goes way up, to say, 10% like it did in 2009 (I don't think anyone credible thinks that is a likely outcome), then that would be a big risk to home prices because defaults go up, rent ppl are able to pay goes down, etc. Outside of that, there aren't many big risk factors here of a large decline in residential RE. Anything is possible (as it has been in 2011, 2012, 2013, 2014, 2015, etc), but I don't see any data/economic based reasoning that would lead to me betting on a 20% decline. The main argument I've heard in this thread from the "crash" side (outside of anecdotal evidence) is that since rates have gone up so much, it only makes sense for prices to come down - but I (very respectfully - we're all on the same team here) disagree as that ignores the supply side dynamics of rate increases. 

Note: for full transparency, imo commercial/apartments probably higher risk of decline (compared to SFH's), given they're tied to shorter term debt

I don’t think it ignores the supply side. The demand shift from buyers is projected (by me) to be significantly more than the supply side. So there  will be excess inventory of homes and apartments. Americans find ways and adapt. Apart from places in California in this country, we don’t have people living on the streets in droves everywhere. People are living somewhere right now. If someone doesn’t own a home now, there’s nothing they can do to afford it other than make more money. The problem is, wages are not growing with inflation to have this be a similar situation in the 70s. Wages are growing for the very bottom rung of workers in society, but these people are also experiencing the brunt of inflation with higher food and energy prices along with rents doubling…plus they likely will now owe federal taxes due to bracket creeping. Buyers will find alternatives for living arrangements when they are pushed into a corner…it’s already happening. When demand craters, there will be supply and at the right price a transaction will occur. 

 This is based on emotion Joe, not facts or data, just your emotion and feelings of things, that's what makes it so wildly inaccurate and incorrect. 

We site a more then 6million unit net shortage right now today. That's an unprecedented number, it took an entire decade of the most epic slowdown, and total stop, in home building to create such an epic unit shortage. That is a massive absorption factor your not taking into any account. 

As for rentals, i have no idea how you can think there will be any excess of rental units, that's completely opposite of your own argument. people loosing homes RENT. Your own argument is one that makes MORE renters, yet you say there will be empty units all over, and empty homes. Where are all these people going? Your talking more then 18 million people. 

What will buyers do, they will adjust there purchasing. It's not to buy or not to buy, it's not an on or off switch. The adjust pricing level, that's it. This is Market Compression; buyers who were 400-500 move too 350-450, those who were at 300-350 move to 250-300, etc.. And as the bottom pricing rungs get stacked with buyers it RAISES competition, which raises pricing, for the lower strata of homes. 

And the whole time, rental rates run up, as more and more move into rental vs purchasing. 

AT END OF THE DAY, the risk vs reward is HEAVILY risk weighted for sellers in this environment where more then 75% have current rates of sub 4/5%. AND buyers are highly REWARD weighted, despite the higher rates, as it's the same cycle it has always been; a renter is paying matching or more for rents vs ownership, and getting nowhere with the payments, 0 equity, moving nowhere forward just burning $. The #1 reason people buy a home, SECURITY, via accruing equity. This will not change at 8% nor 14%. 

SO your premise is dead flat wrong, it's disconnected from the reality of social dynamics. Sellers have greatest risk, lowest reward, and hence they will wait it out, making much MUCH less sellers. Buyers will have exact same motives as ever, just adjusted budgets. 

Impacts will be seem in relation to areas household median incomes, far as which pricing levels have compression in what direction. An area with median incomes of $700k will have downward pressure on homes upward of $1m mark where areas of household median income of say $65k will see compression on pricing at entirely different levels, including much more upward pressure on the lowest pricing strata. 

It will NOT, I say again NOT be a universal downward pressure on home prices. There will NOT be mass vacant units. 

Print this out, save it, my e-mail and # is here. I have a greater then 90% certainty score on this forecast. That, in forecasting, is absolute certainty, as close to 100% as anything gets. I am trying to help people by sharing this, I get paid considerably for this advisory. I don't need to post such here, I am trying to help the "average Joe" from making a horrible mistake via following the loudest arm-chair quarterbacks and not knowing the difference from solid analysis and guesstimates. 

You are entitled to your opinion, but even you said a 10 percent drop is definitely in the cards coming up. So under your assumption, how does it make sense for someone to purchase a home right now, staring a 10 percent haircut in the mirror, 3 percent closing plus, add in liquidation costs of 7 percent if they need to sell, looking at 20 percent negative equity in 6 months according to your projected “market adjustments” 

let’s look at a median home buyer. $425k purchase price and putting 20 percent down. A true qualified buyer. So that’s 85k (plus 12k closing) let’s call it 100k out of pocket. They have a mortgage of $340,000 30 year fixed 7 percent rate. 

here is how it breaks down.

$2,262 payment (23k interest and 3k principle first year)

so after 2 years, they only get 6-7k in principle reduction (doesn’t even cover half of closing costs), the rest is “rent” payments. 

this doesn’t include property taxes or homeowners either which can vary significantly by location. 

I just don’t see the bull case to buy a home right now for personal use. 

That prospective homebuyer can take that 100k down payment and buy 20k of ibonds (if married) earning 2k a year and the other 80k at 4 percent in 1 year treasuries for $3200

that's $5,200 in risk free gains on the 100k down payment. Whereas their principle payment first few years is around $3500 a year buying into a market that is unstable and momentum shifting downwards. Telling people to buy right now is a disservice. 
 

[Joe Villeneuve]

I went back and read some of the comments added since I last made a comment of my own, and looked at the number of comments posted (WOW!!!  30 pages worth), and the first thing that came to mind was...food fight!!

[Nicholas L.]

@Nick H. great post!  I'm trying to keep up with this thread as well, as I do think there are good points being made by both "sides."  I'm staying away from the macro / Fed stuff and just trying to observe my own market reacting.

@Greg R. you said a few posts ago that there's going to be pressure on higher price point homes.  I totally agree with that and think we're already seeing it.  I just think there is a tendency for this to get a disproportionate amount of attention.  If I recall correctly <10% of US homes are valued at $1M or more. 

And, I do disagree about the stock market.  Take Microsoft - I own a non-trivial number of shares.  It hit $350 per share and has now fallen (crashed?) to $240... where it was in late 2020 / early 2021.  A huge drop for sure, I'm not trying to minimize it.  But, I want to go back to 2012 and buy it at $25 per share!  The run-up in the last 10 years has still been astonishing despite losing the crazy gains in the last 2 years.

@John Carbone aren't you looking at things like an investor though?  a lot of primary buyers are just going to have to suck it up and buy if they need more room for an additional child or are moving for a job or whatever.  I suppose they could rent for a while while they take stock - and I think that would be good advice! - but mortgage payment alone isn't the only deciding factor.  Thoughts?

[Michael Wooldridge]

Quote from @John Carbone:

Quote from @James Hamling:

Quote from @John Carbone:

Quote from @Nick H.:

This is a chaotic argument, idk why I'm getting involved. Few points:

1) Easier to look at broad averages here, i.e. all of the US, rather than 1 location. All of the US according to zillow is plateauing but has not dropped. Of course some markets have dropped, and some are continuing to rise. 

2) Definitely need to be looking at change from the peak like @Bruce Woodruff correctly indicated. i.e. (this is purely hypothetical) if 12 months ago avg price of homes was $1,000,000, and they rose to $1,500,000 6 months ago, and then back to $1,000,000 today - it's relevant to what we're talking about that prices went down 33% from the peak - and the buyers who bought at $1.5M are in rough shape. We don't simply say "prices are flat" and move on. 

I do not think it is very likely that prices are going to go down by 20%+. Maybe a short term pullback of 5 - 10% on average, sure, that's very possible. Let's think about how supply and demand are each affected by interest rates going up. Simple econ 101. 

Demand is obvious - demand decreases as rates rise because each dollar of home that you buy becomes less affordable w/ a higher interest mortgage. i.e the subset of people who can afford a given home goes down

Supply - supply decreases as rates rise because fewer owners want to sell their homes, i.e. the subset of people who choose to put homes on the market goes down

So as rates rise, demand decreases, but so does supply. These are the two ingredients to home prices (to prices of anything....). No one knows the magnitude of the demand shift and the supply shift, so we cannot "mathematically" say we know what is going to happen. But, as @James Hamling (and maybe others?) has pointed out - we do have a roadmap of real world data in the 1970's when there was high inflation and quickly increasing interest rates. Real estate did not go down - it went up. 

It went up because inflation was high (that increases the prices of all stuff... i.e. wages roughly doubled in the 1970's) and because while the increasing interest rates lowered demand for housing, it also lowered the supply of it (less ppl wanting to sell because they were locked into much lower rates). So you had lower demand / lower supply that may roughly cancel out, and you have a lot of inflation, which puts upward pressure on home prices. So homes went up >2X in the 1970's. 

Certainly, as others have mentioned, if unemployment goes way up, to say, 10% like it did in 2009 (I don't think anyone credible thinks that is a likely outcome), then that would be a big risk to home prices because defaults go up, rent ppl are able to pay goes down, etc. Outside of that, there aren't many big risk factors here of a large decline in residential RE. Anything is possible (as it has been in 2011, 2012, 2013, 2014, 2015, etc), but I don't see any data/economic based reasoning that would lead to me betting on a 20% decline. The main argument I've heard in this thread from the "crash" side (outside of anecdotal evidence) is that since rates have gone up so much, it only makes sense for prices to come down - but I (very respectfully - we're all on the same team here) disagree as that ignores the supply side dynamics of rate increases. 

Note: for full transparency, imo commercial/apartments probably higher risk of decline (compared to SFH's), given they're tied to shorter term debt

I don’t think it ignores the supply side. The demand shift from buyers is projected (by me) to be significantly more than the supply side. So there  will be excess inventory of homes and apartments. Americans find ways and adapt. Apart from places in California in this country, we don’t have people living on the streets in droves everywhere. People are living somewhere right now. If someone doesn’t own a home now, there’s nothing they can do to afford it other than make more money. The problem is, wages are not growing with inflation to have this be a similar situation in the 70s. Wages are growing for the very bottom rung of workers in society, but these people are also experiencing the brunt of inflation with higher food and energy prices along with rents doubling…plus they likely will now owe federal taxes due to bracket creeping. Buyers will find alternatives for living arrangements when they are pushed into a corner…it’s already happening. When demand craters, there will be supply and at the right price a transaction will occur. 

 This is based on emotion Joe, not facts or data, just your emotion and feelings of things, that's what makes it so wildly inaccurate and incorrect. 

We site a more then 6million unit net shortage right now today. That's an unprecedented number, it took an entire decade of the most epic slowdown, and total stop, in home building to create such an epic unit shortage. That is a massive absorption factor your not taking into any account. 

As for rentals, i have no idea how you can think there will be any excess of rental units, that's completely opposite of your own argument. people loosing homes RENT. Your own argument is one that makes MORE renters, yet you say there will be empty units all over, and empty homes. Where are all these people going? Your talking more then 18 million people. 

What will buyers do, they will adjust there purchasing. It's not to buy or not to buy, it's not an on or off switch. The adjust pricing level, that's it. This is Market Compression; buyers who were 400-500 move too 350-450, those who were at 300-350 move to 250-300, etc.. And as the bottom pricing rungs get stacked with buyers it RAISES competition, which raises pricing, for the lower strata of homes. 

And the whole time, rental rates run up, as more and more move into rental vs purchasing. 

AT END OF THE DAY, the risk vs reward is HEAVILY risk weighted for sellers in this environment where more then 75% have current rates of sub 4/5%. AND buyers are highly REWARD weighted, despite the higher rates, as it's the same cycle it has always been; a renter is paying matching or more for rents vs ownership, and getting nowhere with the payments, 0 equity, moving nowhere forward just burning $. The #1 reason people buy a home, SECURITY, via accruing equity. This will not change at 8% nor 14%. 

SO your premise is dead flat wrong, it's disconnected from the reality of social dynamics. Sellers have greatest risk, lowest reward, and hence they will wait it out, making much MUCH less sellers. Buyers will have exact same motives as ever, just adjusted budgets. 

Impacts will be seem in relation to areas household median incomes, far as which pricing levels have compression in what direction. An area with median incomes of $700k will have downward pressure on homes upward of $1m mark where areas of household median income of say $65k will see compression on pricing at entirely different levels, including much more upward pressure on the lowest pricing strata. 

It will NOT, I say again NOT be a universal downward pressure on home prices. There will NOT be mass vacant units. 

Print this out, save it, my e-mail and # is here. I have a greater then 90% certainty score on this forecast. That, in forecasting, is absolute certainty, as close to 100% as anything gets. I am trying to help people by sharing this, I get paid considerably for this advisory. I don't need to post such here, I am trying to help the "average Joe" from making a horrible mistake via following the loudest arm-chair quarterbacks and not knowing the difference from solid analysis and guesstimates. 

You are entitled to your opinion, but even you said a 10 percent drop is definitely in the cards coming up. So under your assumption, how does it make sense for someone to purchase a home right now, staring a 10 percent haircut in the mirror, 3 percent closing plus, add in liquidation costs of 7 percent if they need to sell, looking at 20 percent negative equity in 6 months according to your projected “market adjustments” 

let’s look at a median home buyer. $425k purchase price and putting 20 percent down. A true qualified buyer. So that’s 85k (plus 12k closing) let’s call it 100k out of pocket. They have a mortgage of $340,000 30 year fixed 7 percent rate. 

here is how it breaks down.

$2,262 payment (23k interest and 3k principle first year)

so after 2 years, they only get 6-7k in principle reduction (doesn’t even cover half of closing costs), the rest is “rent” payments. 

this doesn’t include property taxes or homeowners either which can vary significantly by location. 

I just don’t see the bull case to buy a home right now for personal use. 

That prospective homebuyer can take that 100k down payment and buy 20k of ibonds (if married) earning 2k a year and the other 80k at 4 percent in 1 year treasuries for $3200

that's $5,200 in risk free gains on the 100k down payment. Whereas their principle payment first few years is around $3500 a year buying into a market that is unstable and momentum shifting downwards. Telling people to buy right now is a disservice. 
 

 Well nobody said now like this month was a prime time to buy. We just said the market is unlikely to flattened out. More people will likely pause and continue with what they are doing right now. IN fact one of the comments I made is the markets will likely stagnate a big the next year. People in rentals will stay there, people in homes will stay there, and meanwhile builders will keep doing the same thing which is not building homes.

So not sure who said you should go buy now. BUt if you want a reason to buy it’s because the numbers work ( I have no interest in cash sitting there in the bank ) OR it’s because we like the house and if rates go up 1% it evens out anyway more or less and we plan to stay there at least 10 years. 

Anyway I’m still buying but numbers need to work. If I was in a home I liked with my 3% rate I’d stay there which is the primary answer people have been giving all along.

At the end of the day 2023 is likely to have less deals done overall. 

[Jay Hinrichs]

Quote from @John Carbone:

Quote from @James Hamling:

Quote from @John Carbone:

Quote from @Nick H.:

This is a chaotic argument, idk why I'm getting involved. Few points:

1) Easier to look at broad averages here, i.e. all of the US, rather than 1 location. All of the US according to zillow is plateauing but has not dropped. Of course some markets have dropped, and some are continuing to rise. 

2) Definitely need to be looking at change from the peak like @Bruce Woodruff correctly indicated. i.e. (this is purely hypothetical) if 12 months ago avg price of homes was $1,000,000, and they rose to $1,500,000 6 months ago, and then back to $1,000,000 today - it's relevant to what we're talking about that prices went down 33% from the peak - and the buyers who bought at $1.5M are in rough shape. We don't simply say "prices are flat" and move on. 

I do not think it is very likely that prices are going to go down by 20%+. Maybe a short term pullback of 5 - 10% on average, sure, that's very possible. Let's think about how supply and demand are each affected by interest rates going up. Simple econ 101. 

Demand is obvious - demand decreases as rates rise because each dollar of home that you buy becomes less affordable w/ a higher interest mortgage. i.e the subset of people who can afford a given home goes down

Supply - supply decreases as rates rise because fewer owners want to sell their homes, i.e. the subset of people who choose to put homes on the market goes down

So as rates rise, demand decreases, but so does supply. These are the two ingredients to home prices (to prices of anything....). No one knows the magnitude of the demand shift and the supply shift, so we cannot "mathematically" say we know what is going to happen. But, as @James Hamling (and maybe others?) has pointed out - we do have a roadmap of real world data in the 1970's when there was high inflation and quickly increasing interest rates. Real estate did not go down - it went up. 

It went up because inflation was high (that increases the prices of all stuff... i.e. wages roughly doubled in the 1970's) and because while the increasing interest rates lowered demand for housing, it also lowered the supply of it (less ppl wanting to sell because they were locked into much lower rates). So you had lower demand / lower supply that may roughly cancel out, and you have a lot of inflation, which puts upward pressure on home prices. So homes went up >2X in the 1970's. 

Certainly, as others have mentioned, if unemployment goes way up, to say, 10% like it did in 2009 (I don't think anyone credible thinks that is a likely outcome), then that would be a big risk to home prices because defaults go up, rent ppl are able to pay goes down, etc. Outside of that, there aren't many big risk factors here of a large decline in residential RE. Anything is possible (as it has been in 2011, 2012, 2013, 2014, 2015, etc), but I don't see any data/economic based reasoning that would lead to me betting on a 20% decline. The main argument I've heard in this thread from the "crash" side (outside of anecdotal evidence) is that since rates have gone up so much, it only makes sense for prices to come down - but I (very respectfully - we're all on the same team here) disagree as that ignores the supply side dynamics of rate increases. 

Note: for full transparency, imo commercial/apartments probably higher risk of decline (compared to SFH's), given they're tied to shorter term debt

I don’t think it ignores the supply side. The demand shift from buyers is projected (by me) to be significantly more than the supply side. So there  will be excess inventory of homes and apartments. Americans find ways and adapt. Apart from places in California in this country, we don’t have people living on the streets in droves everywhere. People are living somewhere right now. If someone doesn’t own a home now, there’s nothing they can do to afford it other than make more money. The problem is, wages are not growing with inflation to have this be a similar situation in the 70s. Wages are growing for the very bottom rung of workers in society, but these people are also experiencing the brunt of inflation with higher food and energy prices along with rents doubling…plus they likely will now owe federal taxes due to bracket creeping. Buyers will find alternatives for living arrangements when they are pushed into a corner…it’s already happening. When demand craters, there will be supply and at the right price a transaction will occur. 

 This is based on emotion Joe, not facts or data, just your emotion and feelings of things, that's what makes it so wildly inaccurate and incorrect. 

We site a more then 6million unit net shortage right now today. That's an unprecedented number, it took an entire decade of the most epic slowdown, and total stop, in home building to create such an epic unit shortage. That is a massive absorption factor your not taking into any account. 

As for rentals, i have no idea how you can think there will be any excess of rental units, that's completely opposite of your own argument. people loosing homes RENT. Your own argument is one that makes MORE renters, yet you say there will be empty units all over, and empty homes. Where are all these people going? Your talking more then 18 million people. 

What will buyers do, they will adjust there purchasing. It's not to buy or not to buy, it's not an on or off switch. The adjust pricing level, that's it. This is Market Compression; buyers who were 400-500 move too 350-450, those who were at 300-350 move to 250-300, etc.. And as the bottom pricing rungs get stacked with buyers it RAISES competition, which raises pricing, for the lower strata of homes. 

And the whole time, rental rates run up, as more and more move into rental vs purchasing. 

AT END OF THE DAY, the risk vs reward is HEAVILY risk weighted for sellers in this environment where more then 75% have current rates of sub 4/5%. AND buyers are highly REWARD weighted, despite the higher rates, as it's the same cycle it has always been; a renter is paying matching or more for rents vs ownership, and getting nowhere with the payments, 0 equity, moving nowhere forward just burning $. The #1 reason people buy a home, SECURITY, via accruing equity. This will not change at 8% nor 14%. 

SO your premise is dead flat wrong, it's disconnected from the reality of social dynamics. Sellers have greatest risk, lowest reward, and hence they will wait it out, making much MUCH less sellers. Buyers will have exact same motives as ever, just adjusted budgets. 

Impacts will be seem in relation to areas household median incomes, far as which pricing levels have compression in what direction. An area with median incomes of $700k will have downward pressure on homes upward of $1m mark where areas of household median income of say $65k will see compression on pricing at entirely different levels, including much more upward pressure on the lowest pricing strata. 

It will NOT, I say again NOT be a universal downward pressure on home prices. There will NOT be mass vacant units. 

Print this out, save it, my e-mail and # is here. I have a greater then 90% certainty score on this forecast. That, in forecasting, is absolute certainty, as close to 100% as anything gets. I am trying to help people by sharing this, I get paid considerably for this advisory. I don't need to post such here, I am trying to help the "average Joe" from making a horrible mistake via following the loudest arm-chair quarterbacks and not knowing the difference from solid analysis and guesstimates. 

You are entitled to your opinion, but even you said a 10 percent drop is definitely in the cards coming up. So under your assumption, how does it make sense for someone to purchase a home right now, staring a 10 percent haircut in the mirror, 3 percent closing plus, add in liquidation costs of 7 percent if they need to sell, looking at 20 percent negative equity in 6 months according to your projected “market adjustments” 

let’s look at a median home buyer. $425k purchase price and putting 20 percent down. A true qualified buyer. So that’s 85k (plus 12k closing) let’s call it 100k out of pocket. They have a mortgage of $340,000 30 year fixed 7 percent rate. 

here is how it breaks down.

$2,262 payment (23k interest and 3k principle first year)

so after 2 years, they only get 6-7k in principle reduction (doesn’t even cover half of closing costs), the rest is “rent” payments. 

this doesn’t include property taxes or homeowners either which can vary significantly by location. 

I just don’t see the bull case to buy a home right now for personal use. 

That prospective homebuyer can take that 100k down payment and buy 20k of ibonds (if married) earning 2k a year and the other 80k at 4 percent in 1 year treasuries for $3200

that's $5,200 in risk free gains on the 100k down payment. Whereas their principle payment first few years is around $3500 a year buying into a market that is unstable and momentum shifting downwards. Telling people to buy right now is a disservice. 
 

 it does not matter what real estate you buy if you have to exit in one or two years your going to take a loss.  At least in a normal market which we did not have the last two years with the bull run..   there is nothing new about this.. rare is it a home owner that buys a home and plans on selling in one to two years.. only an emergency or a job move usually causes that kind of sale. 

[Carlos Ptriawan]

 I read somewhere, MF complex is already repriced to -20% in few deals.

For the rest of the comment, we could just say: "Based on data, some California markets already adjusted to -20%". Data is showing a 13% decline, but in reality, I've seen some homes sold for -20% from top to peak, but it is still within standard long-term appreciation of 6% YoY.

This is very tricky, because the news headline, the general sentiment of realtor/investor are not matching, this is very common in the very early trend of bear market. 

In December or Jan next year the trend will be clear.

For me everyone here is right, Greg , James and everyone else is right ; because one is looking at the past, one is looking in the future, one is looking for west coast only and many folks are sleeping in high cap rate market that would not be impacted by interest rate hike anyway

[Carlos Ptriawan]

This is probably in your MN market James, In a low cap rate market like CA, the renting cost is still much cheaper than a mortgage. For 3k BR one can find rent in $2.5k-$4k range but to pay the mortgage it is $4.5-6k.

But this is another indication that like  @Michael Wooldridge said, the price adjustment perhaps is affecting more in the high cap rate market in the west coast only like CA/WA/NV/CO and even AZ(?).

One thing that's interesting from Michael and Blackknight data is "why this time, price adjustment mostly occur in West coast property ?"
Not even NY is having the same adjustment(need to research on this).

[Carlos Ptriawan]

 I think we have to agree on this. The data is showing similar results so far, even January data perhaps having a similar pattern.

[Carlos Ptriawan]

Quote from @Eric Bilderback:

Just did my monthly report for my trendy little West Coast mountain town.  Transaction dropped by 40% this month.  Price and Sq ft price both dropped by over 20%.  Could be a blip or the collapse of Republic! LOL  Probably somewhere in the middle hopefully closer to a blip.  

Some folks here will say "oh that's west coast problem :) LOL"

[Jay Hinrichs]

Quote from @Carlos Ptriawan:

Quote from @Eric Bilderback:

Just did my monthly report for my trendy little West Coast mountain town.  Transaction dropped by 40% this month.  Price and Sq ft price both dropped by over 20%.  Could be a blip or the collapse of Republic! LOL  Probably somewhere in the middle hopefully closer to a blip.  

Some folks here will say "oh that's west coast problem :) LOL"

 Where Eric lives saw some of the biggest downturns in values in the GFC  Bend Redmond and some of the strongest gains this last bull run. 

[Carlos Ptriawan]

Quote from @Jay Hinrichs:

Quote from @Carlos Ptriawan:

Quote from @Eric Bilderback:

Just did my monthly report for my trendy little West Coast mountain town.  Transaction dropped by 40% this month.  Price and Sq ft price both dropped by over 20%.  Could be a blip or the collapse of Republic! LOL  Probably somewhere in the middle hopefully closer to a blip.  

Some folks here will say "oh that's west coast problem :) LOL"

 Where Eric lives saw some of the biggest downturns in values in the GFC  Bend Redmond and some of the strongest gains this last bull run. 

 These are probably just another area where Bay Area / California folks overbidding the market. 

[Michael Wooldridge]

Quote from @Carlos Ptriawan:

This is probably in your MN market James, In a low cap rate market like CA, the renting cost is still much cheaper than a mortgage. For 3k BR one can find rent in $2.5k-$4k range but to pay the mortgage it is $4.5-6k.

But this is another indication that like  @Michael Wooldridge said, the price adjustment perhaps is affecting more in the high cap rate market in the west coast only like CA/WA/NV/CO and even AZ(?).

One thing that's interesting from Michael and Blackknight data is "why this time, price adjustment mostly occur in West coast property ?"
Not even NY is having the same adjustment(need to research on this).

 NY is actually flat so you are correct there. The fundamentals of the local economy though are a bit different than the west coast Silicon Valley tech economy. It’s hard to say 100% but out west the stock plays a big role for engineers  even in compensation plans and so you start to get some fast cash scenarios often. 

It obviously happens in NYC but it’s just a bit more consistent. Otherwise though there aren’t many fundamentals that are different both have very high cost of living.

And I can tell you first hand in some of the middle / wealthier suburbs of the Philadelphia NYC regions homes are still selling and fast. Philadelphia has slowed down a bit but they didn’t grow dramatically either. And thats the bigger thing I’d have to go back and compare but I don’t believe  we have had same uplift of the west coast overall. Which had so many folks in Silicon Valley spreading out across the north nd south west regions - especially mountain towns which are taking a big hit.

TO me the very big question is Florida. It’s a massive population state, huge valuation uplift, but not dropping. Now on the flip side they had a ton of Northeast transplants so maybe that’s part of the consistency. but if FL doesn’t drop it’s going to keep things higher nationally. 

[Michael Wooldridge]

Quote from @Carlos Ptriawan:

Quote from @Jay Hinrichs:

Quote from @Carlos Ptriawan:

Quote from @Eric Bilderback:

Just did my monthly report for my trendy little West Coast mountain town.  Transaction dropped by 40% this month.  Price and Sq ft price both dropped by over 20%.  Could be a blip or the collapse of Republic! LOL  Probably somewhere in the middle hopefully closer to a blip.  

Some folks here will say "oh that's west coast problem :) LOL"

 Where Eric lives saw some of the biggest downturns in values in the GFC  Bend Redmond and some of the strongest gains this last bull run. 

 These are probably just another area where Bay Area / California folks overbidding the market. 

IT’s 100% from the Bay Area folks, as well as Amazon/MS. Bend and some of the areas near Mt. bachelor (ski mt) saw big gains. but then do so did Colorado, Tahoe, and some of the other mountain towns thanks to the zoom markets. That on top of the cali money is going to drive valuations up. Also Bend was growing even pre-covid for similar reasons. It’s a shame it’s one of the towns I had an eye on for a ski house. 
 

[Carlos Ptriawan]

Quote from @Michael Wooldridge:

Quote from @Carlos Ptriawan:

Quote from @Jay Hinrichs:

Quote from @Carlos Ptriawan:

Quote from @Eric Bilderback:

Just did my monthly report for my trendy little West Coast mountain town.  Transaction dropped by 40% this month.  Price and Sq ft price both dropped by over 20%.  Could be a blip or the collapse of Republic! LOL  Probably somewhere in the middle hopefully closer to a blip.  

Some folks here will say "oh that's west coast problem :) LOL"

 Where Eric lives saw some of the biggest downturns in values in the GFC  Bend Redmond and some of the strongest gains this last bull run. 

 These are probably just another area where Bay Area / California folks overbidding the market. 

IT’s 100% from the Bay Area folks. Bend and some of the areas near Mt. bachelor (ski mt) saw big gains. but then do so did Colorado, Tahoe, and some of the other mountain towns thanks to the zoom markets. That on top of the cali money is going to drive valuations up. Also Bend was growing even pre-covid for similar reasons. It’s a shame it’s one of the towns I had an eye on for a ski house. 
 

 Holy Cow !

Then it's quite accurate when the Fed saying last week 'The housing inflation is caused by the migration of remote workers'.

[Jay Hinrichs]

Quote from @Michael Wooldridge:

Quote from @Carlos Ptriawan:

Quote from @Jay Hinrichs:

Quote from @Carlos Ptriawan:

Quote from @Eric Bilderback:

Just did my monthly report for my trendy little West Coast mountain town.  Transaction dropped by 40% this month.  Price and Sq ft price both dropped by over 20%.  Could be a blip or the collapse of Republic! LOL  Probably somewhere in the middle hopefully closer to a blip.  

Some folks here will say "oh that's west coast problem :) LOL"

 Where Eric lives saw some of the biggest downturns in values in the GFC  Bend Redmond and some of the strongest gains this last bull run. 

 These are probably just another area where Bay Area / California folks overbidding the market. 

IT’s 100% from the Bay Area folks, as well as Amazon/MS. Bend and some of the areas near Mt. bachelor (ski mt) saw big gains. but then do so did Colorado, Tahoe, and some of the other mountain towns thanks to the zoom markets. That on top of the cali money is going to drive valuations up. Also Bend was growing even pre-covid for similar reasons. It’s a shame it’s one of the towns I had an eye on for a ski house. 
 

 Not really  Bend gets a lot of buyers from Portland metro who tire of the overcast and drizzle and move to the sun but don't want to leave the state.  California buyers for sure impact but there is certainly a lot of organic Oregon buyers as well .  its well known that CA transplants to Oregon and Washington has been a huge driver ( I am one )  but that has slowed a lot since the rise of values in Oregon and Wa.  values here are akin to Sacramento type market and the gold country .. where in the past there was a huge price difference ..  but again nothing compares to values from Los Gatos to Menlo Park when it comes to price per sq ft of housing .  Although Seattle rose a ton and is very close to the same values. 

[Michael Wooldridge]

Quote from @Jay Hinrichs:

Quote from @Michael Wooldridge:

Quote from @Carlos Ptriawan:

Quote from @Jay Hinrichs:

Quote from @Carlos Ptriawan:

Quote from @Eric Bilderback:

Just did my monthly report for my trendy little West Coast mountain town.  Transaction dropped by 40% this month.  Price and Sq ft price both dropped by over 20%.  Could be a blip or the collapse of Republic! LOL  Probably somewhere in the middle hopefully closer to a blip.  

Some folks here will say "oh that's west coast problem :) LOL"

 Where Eric lives saw some of the biggest downturns in values in the GFC  Bend Redmond and some of the strongest gains this last bull run. 

 These are probably just another area where Bay Area / California folks overbidding the market. 

IT’s 100% from the Bay Area folks, as well as Amazon/MS. Bend and some of the areas near Mt. bachelor (ski mt) saw big gains. but then do so did Colorado, Tahoe, and some of the other mountain towns thanks to the zoom markets. That on top of the cali money is going to drive valuations up. Also Bend was growing even pre-covid for similar reasons. It’s a shame it’s one of the towns I had an eye on for a ski house. 
 

 Not really  Bend gets a lot of buyers from Portland metro who tire of the overcast and drizzle and move to the sun but don't want to leave the state.  California buyers for sure impact but there is certainly a lot of organic Oregon buyers as well .  its well known that CA transplants to Oregon and Washington is been a huge driver ( I am one )  but that has slowed a lot since the rise of values in Oregon and Wa.  values here are akin to Sacramento type market and the gold country .. where in the past there was a huge price difference ..  but again nothing compares to values from Los Gatos to Menlo Park when it comes to price per sq ft of housing .  Although Seattle rose a ton and is very close to the same values. 

 I mentioned Amazon and MS for that reason. As those companies broke down offices folks from Seattle and Portland, big offices, they moved. So yes not just cali. 

Since you moved to the area I know Bend I’ve had my eye on for years since Mt Bachelor is a great mountain. I’m sure you can confirm while Covid accelerated it was already growing nicely pre 2020. 

[Carlos Ptriawan]

IT’s 100% from the Bay Area folks, as well as Amazon/MS. Bend and some of the areas near Mt. bachelor (ski mt) saw big gains. but then do so did Colorado, Tahoe, and some of the other mountain towns thanks to the zoom markets. That on top of the cali money is going to drive valuations up. Also Bend was growing even pre-covid for similar reasons. It’s a shame it’s one of the towns I had an eye on for a ski house. 
 

Again this solves the mystery here.
I think the most likely explanation is this. So what happened was during 2020-2022 Silicon Valley folks received a lot of significant gain from their company stock price. After cashing out they immediately purchased property. Many of them bought in Austin, Phoenix, Seattle, Oregon,Boise Idaho (and for me  Hawaii).  Later this year this create the 'partial home price adjustment' that we see today.

 
Their gains actually came from the Fed printing cheap money, which cause tech stock price melt-up. This probably explains why NY doesn't have price reduction problem.