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Updated almost 2 years ago, 01/14/2023
Housing crash deniers ???
Unfortunately I've been away for a few months while taking care of some personal matters, so I haven't been able to keep up on discussions.
However, several months ago there were ample amount of folks here insisting that a market crash/ correction was impossible and that prices would only continue to increase.
Curious if there are still people out there who feel this way? If so, I'd love to see some data that supports your view that the market isn't going to crash/ correct.
the fed could be losing control here. Oil back above 90, and jobs still going strong. The opec cuts are a slap in the face. There is no way they can retreat now: 75bp increase is locked in now next month. Seems the only thing they can crush is housing at this point.
#1 Market Trends & Data Contributor
Quote from @John Carbone:
the fed could be losing control here. Oil back above 90, and jobs still going strong. The opec cuts are a slap in the face. There is no way they can retreat now: 75bp increase is locked in now now month. Seems the only thing they can crush is housing at this point.
Fed and USA is already losing.
The rest of the world thinks the USA is de-stabilizing the world by strengthening the US Dollar.
What do you think the oil exporter country will do when there's the strong dollar ?
Of course, cutting the oil production Yoooooooooooooooo
Because they could be extremely rich very soon by producing less and arbitrarily creating higher oil prices.
So what the US gov/Fed should do ?
easy, by weakening dollar, so they can't take advantage of the strong dollar.
#1 Market Trends & Data Contributor
Quote from @Michael Wooldridge:
https://www.cnbc.com/2022/10/0...
Unemployment down and wages up. Can’t see fed backing off rate increase now.
8% mortgage rate is coming.
West coast prices dropped from -13% to -20% is coming. Hope they are happy when the home prices really dropped 20% (in CA).
John and Greg scenario is likely to happen.
@Michael Wooldridge @John Carbone & @john Carbone's PHD Stats friend - you guys have the right idea. As I mentioned, Joe V is really not saying anything other than "more leverage is good" or 80% leverage is good, but just wrapping it up in a very convoluted way (maybe to make it sound more sophisticated?), and to hide the assumptions he's making.
He makes (questionable) assumptions but doesn't disclose them, and makes them as if they are universally good assumptions (which they aren't - they're worth disclosing and worth discussion). For example, see the below from @Joe Villeneuve:
"Goes up or down, the impact is the same for everyone. When a property goes down it wipes out the same equity gains for all...from a percentage standpoint. From a dollar standpoint, the only one that matters, the more equity you have in a property, the more you have to lose.
Property 1:
Property Value = $200k
Equity = $100k (50%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss
Property 2:
Property Value = $200k
Equity = $40k (20%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss"
He is assuming that when properties lose equity value, it is not possible for rent (and ultimately cash flow) to go down. I wouldn't say that's a given - but if you did choose to make that assumption, at least be more explicit that you are preaching a strategy where an input is "rent cannot go down". Instead of just clearly communicating "Joe V is assuming rents will not go down even if property values go down" - he just writes out math as if that is a ubiquitous scenario that cash flow after loss would = same as before loss. It isn't - it's worth disclosing and worth discussion.
Clearly, if rents did go down, you would have less cushion on the downside with a property that had more leverage, because your net profit margin % would be lower w/ more leverage and higher with less leverage. i.e. RISKIER in a downside scenario.
Re selling a property vs. refinancing, which he was asked countless times and finally chose to answer, the main thing I can discern (that ultimately shows you what assumption he is actually making) is: "1 - Cash out refi reduces the cash flow on the original property due to the larger mortgage payment"
He is assuming that property B that you're buying (instead of refinancing property A) has more NOI (or a better risk adjusted return) than the property you're buying (and hopefully enough extra NOI to cover the transaction cost of selling + any loss if you're trading out of a lower interest mortgage into a higher interest mortgage).
Sure, if you have high conviction that there are much better properties than the one you bought a few years ago, then consider 1031. But it's still an assumption you're making. It's not "basic math" - it's just a simple assumption of, if there are much better properties out there, 1031 into them.
Devil is always in the detail. Be weary of people that won't answer questions, and when they do, aren't straight with their answers. And those that appeal to authority (https://en.wikipedia.org/wiki/...) or in this case, Appeal to "math".
Quote from @Nick H.:
@Michael Wooldridge @John Carbone & @john Carbone's PHD Stats friend - you guys have the right idea. As I mentioned, Joe V is really not saying anything other than "more leverage is good" or 80% leverage is good, but just wrapping it up in a very convoluted way (maybe to make it sound more sophisticated?), and to hide the assumptions he's making.
He makes (questionable) assumptions but doesn't disclose them, and makes them as if they are universally good assumptions (which they aren't - they're worth disclosing and worth discussion). For example, see the below from @Joe Villeneuve:
"Goes up or down, the impact is the same for everyone. When a property goes down it wipes out the same equity gains for all...from a percentage standpoint. From a dollar standpoint, the only one that matters, the more equity you have in a property, the more you have to lose.
Property 1:
Property Value = $200k
Equity = $100k (50%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss
Property 2:
Property Value = $200k
Equity = $40k (20%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss"
He is assuming that when properties lose equity value, it is not possible for rent (and ultimately cash flow) to go down. I wouldn't say that's a given - but if you did choose to make that assumption, at least be more explicit that you are preaching a strategy where an input is "rent cannot go down". Instead of just clearly communicating "Joe V is assuming rents will not go down even if property values go down" - he just writes out math as if that is a ubiquitous scenario that cash flow after loss would = same as before loss. It isn't - it's worth disclosing and worth discussion.
Clearly, if rents did go down, you would have less cushion on the downside with a property that had more leverage, because your net profit margin % would be lower w/ more leverage and higher with less leverage. i.e. RISKIER in a downside scenario.
Re selling a property vs. refinancing, which he was asked countless times and finally chose to answer, the main thing I can discern (that ultimately shows you what assumption he is actually making) is: "1 - Cash out refi reduces the cash flow on the original property due to the larger mortgage payment"
He is assuming that property B that you're buying (instead of refinancing property A) has more NOI (or a better risk adjusted return) than the property you're buying (and hopefully enough extra NOI to cover the transaction cost of selling + any loss if you're trading out of a lower interest mortgage into a higher interest mortgage).
Sure, if you have high conviction that there are much better properties than the one you bought a few years ago, then consider 1031. But it's still an assumption you're making. It's not "basic math" - it's just a simple assumption of, if there are much better properties out there, 1031 into them.
Devil is always in the detail. Be weary of people that won't answer questions, and when they do, aren't straight with their answers. And those that appeal to authority (https://en.wikipedia.org/wiki/...) or in this case, Appeal to "math".
Quote from @Carlos Ptriawan:
Quote from @Michael Wooldridge:
https://www.cnbc.com/2022/10/0...
Unemployment down and wages up. Can’t see fed backing off rate increase now.
8% mortgage rate is coming.
West coast prices dropped from -13% to -20% is coming. Hope they are happy when the home prices really dropped 20% (in CA).
John and Greg scenario is likely to happen.
Looks like the Dow is heading back down as well. That nice little surge a few days ago is disappearing.
#4 All Forums Contributor
- Plymouth, MI
Quote from @Nick H.:
@Michael Wooldridge @John Carbone & @john Carbone's PHD Stats friend - you guys have the right idea. As I mentioned, Joe V is really not saying anything other than "more leverage is good" or 80% leverage is good, but just wrapping it up in a very convoluted way (maybe to make it sound more sophisticated?), and to hide the assumptions he's making.
He makes (questionable) assumptions but doesn't disclose them, and makes them as if they are universally good assumptions (which they aren't - they're worth disclosing and worth discussion). For example, see the below from @Joe Villeneuve:
"Goes up or down, the impact is the same for everyone. When a property goes down it wipes out the same equity gains for all...from a percentage standpoint. From a dollar standpoint, the only one that matters, the more equity you have in a property, the more you have to lose.
Property 1:
Property Value = $200k
Equity = $100k (50%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss
Property 2:
Property Value = $200k
Equity = $40k (20%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss"
He is assuming that when properties lose equity value, it is not possible for rent (and ultimately cash flow) to go down. I wouldn't say that's a given - but if you did choose to make that assumption, at least be more explicit that you are preaching a strategy where an input is "rent cannot go down". Instead of just clearly communicating "Joe V is assuming rents will not go down even if property values go down" - he just writes out math as if that is a ubiquitous scenario that cash flow after loss would = same as before loss. It isn't - it's worth disclosing and worth discussion.
Clearly, if rents did go down, you would have less cushion on the downside with a property that had more leverage, because your net profit margin % would be lower w/ more leverage and higher with less leverage. i.e. RISKIER in a downside scenario.
Re selling a property vs. refinancing, which he was asked countless times and finally chose to answer, the main thing I can discern (that ultimately shows you what assumption he is actually making) is: "1 - Cash out refi reduces the cash flow on the original property due to the larger mortgage payment"
He is assuming that property B that you're buying (instead of refinancing property A) has more NOI (or a better risk adjusted return) than the property you're buying (and hopefully enough extra NOI to cover the transaction cost of selling + any loss if you're trading out of a lower interest mortgage into a higher interest mortgage).
Sure, if you have high conviction that there are much better properties than the one you bought a few years ago, then consider 1031. But it's still an assumption you're making. It's not "basic math" - it's just a simple assumption of, if there are much better properties out there, 1031 into them.
Devil is always in the detail. Be weary of people that won't answer questions, and when they do, aren't straight with their answers. And those that appeal to authority (https://en.wikipedia.org/wiki/...) or in this case, Appeal to "math".
#1 Market Trends & Data Contributor
Looks like the Dow is heading back down as well. That nice little surge a few days ago is disappearing.
The market is easily manipulated by the Fed as well as they can sell put at the bottom, it's very easy technique and they ack'ed as well.
Don't believe the market as everything is pre-mediated.
Fed wants a steady market crash, not a turbo super qick crash. They really want CA price to drop to 20%. We should follow whatever they want LOL
Quote from @Joe Villeneuve:
Quote from @Nick H.:
@Michael Wooldridge @John Carbone & @john Carbone's PHD Stats friend - you guys have the right idea. As I mentioned, Joe V is really not saying anything other than "more leverage is good" or 80% leverage is good, but just wrapping it up in a very convoluted way (maybe to make it sound more sophisticated?), and to hide the assumptions he's making.
He makes (questionable) assumptions but doesn't disclose them, and makes them as if they are universally good assumptions (which they aren't - they're worth disclosing and worth discussion). For example, see the below from @Joe Villeneuve:
"Goes up or down, the impact is the same for everyone. When a property goes down it wipes out the same equity gains for all...from a percentage standpoint. From a dollar standpoint, the only one that matters, the more equity you have in a property, the more you have to lose.
Property 1:
Property Value = $200k
Equity = $100k (50%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss
Property 2:
Property Value = $200k
Equity = $40k (20%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss"
He is assuming that when properties lose equity value, it is not possible for rent (and ultimately cash flow) to go down. I wouldn't say that's a given - but if you did choose to make that assumption, at least be more explicit that you are preaching a strategy where an input is "rent cannot go down". Instead of just clearly communicating "Joe V is assuming rents will not go down even if property values go down" - he just writes out math as if that is a ubiquitous scenario that cash flow after loss would = same as before loss. It isn't - it's worth disclosing and worth discussion.
Clearly, if rents did go down, you would have less cushion on the downside with a property that had more leverage, because your net profit margin % would be lower w/ more leverage and higher with less leverage. i.e. RISKIER in a downside scenario.
Re selling a property vs. refinancing, which he was asked countless times and finally chose to answer, the main thing I can discern (that ultimately shows you what assumption he is actually making) is: "1 - Cash out refi reduces the cash flow on the original property due to the larger mortgage payment"
He is assuming that property B that you're buying (instead of refinancing property A) has more NOI (or a better risk adjusted return) than the property you're buying (and hopefully enough extra NOI to cover the transaction cost of selling + any loss if you're trading out of a lower interest mortgage into a higher interest mortgage).
Sure, if you have high conviction that there are much better properties than the one you bought a few years ago, then consider 1031. But it's still an assumption you're making. It's not "basic math" - it's just a simple assumption of, if there are much better properties out there, 1031 into them.
Devil is always in the detail. Be weary of people that won't answer questions, and when they do, aren't straight with their answers. And those that appeal to authority (https://en.wikipedia.org/wiki/...) or in this case, Appeal to "math".
Given that my ultimate goal is cash flow of say $4 Million (post taxes) - so that $2.5 - $3million is being paid directly as income. I don't see a scenario where flipping the houses makes sense. Refinancing makes sense at a certain point to accelerate in about the middle of the process but I'm not sure I can find math that makes sense in the scenario I outlined above.
Quote from @Michael Wooldridge:
Quote from @Joe Villeneuve:
Quote from @Nick H.:
@Michael Wooldridge @John Carbone & @john Carbone's PHD Stats friend - you guys have the right idea. As I mentioned, Joe V is really not saying anything other than "more leverage is good" or 80% leverage is good, but just wrapping it up in a very convoluted way (maybe to make it sound more sophisticated?), and to hide the assumptions he's making.
He makes (questionable) assumptions but doesn't disclose them, and makes them as if they are universally good assumptions (which they aren't - they're worth disclosing and worth discussion). For example, see the below from @Joe Villeneuve:
"Goes up or down, the impact is the same for everyone. When a property goes down it wipes out the same equity gains for all...from a percentage standpoint. From a dollar standpoint, the only one that matters, the more equity you have in a property, the more you have to lose.
Property 1:
Property Value = $200k
Equity = $100k (50%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss
Property 2:
Property Value = $200k
Equity = $40k (20%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss"
He is assuming that when properties lose equity value, it is not possible for rent (and ultimately cash flow) to go down. I wouldn't say that's a given - but if you did choose to make that assumption, at least be more explicit that you are preaching a strategy where an input is "rent cannot go down". Instead of just clearly communicating "Joe V is assuming rents will not go down even if property values go down" - he just writes out math as if that is a ubiquitous scenario that cash flow after loss would = same as before loss. It isn't - it's worth disclosing and worth discussion.
Clearly, if rents did go down, you would have less cushion on the downside with a property that had more leverage, because your net profit margin % would be lower w/ more leverage and higher with less leverage. i.e. RISKIER in a downside scenario.
Re selling a property vs. refinancing, which he was asked countless times and finally chose to answer, the main thing I can discern (that ultimately shows you what assumption he is actually making) is: "1 - Cash out refi reduces the cash flow on the original property due to the larger mortgage payment"
He is assuming that property B that you're buying (instead of refinancing property A) has more NOI (or a better risk adjusted return) than the property you're buying (and hopefully enough extra NOI to cover the transaction cost of selling + any loss if you're trading out of a lower interest mortgage into a higher interest mortgage).
Sure, if you have high conviction that there are much better properties than the one you bought a few years ago, then consider 1031. But it's still an assumption you're making. It's not "basic math" - it's just a simple assumption of, if there are much better properties out there, 1031 into them.
Devil is always in the detail. Be weary of people that won't answer questions, and when they do, aren't straight with their answers. And those that appeal to authority (https://en.wikipedia.org/wiki/...) or in this case, Appeal to "math".
Given that my ultimate goal is cash flow of say $4 Million (post taxes) - so that $2.5 - $3million is being paid directly as income. I don't see a scenario where flipping the houses makes sense. Refinancing makes sense at a certain point to accelerate in about the middle of the process but I'm not sure I can find math that makes sense in the scenario I outlined above.
You're maximizing your buying power and can achieve the amount of properties needed to CF a lot faster w/ this method. If you hold you're just increasing rents as normally, 3-5% a year or whatever while also diminishing CF by pulling out cash.
#1 Market Trends & Data Contributor
Quote from @Michael Wooldridge:
https://www.cnbc.com/2022/10/0...
Unemployment down and wages up. Can’t see fed backing off rate increase now.
This guy is so genius, read the Fed chairman's comment , literally they just want us to be destroyed (losing job,losing homes,losing everything LOL):
https://www.benzinga.com/news/...
Quote from @Greg R.:
Quote from @Michael Wooldridge:
Quote from @Joe Villeneuve:
Quote from @Nick H.:
@Michael Wooldridge @John Carbone & @john Carbone's PHD Stats friend - you guys have the right idea. As I mentioned, Joe V is really not saying anything other than "more leverage is good" or 80% leverage is good, but just wrapping it up in a very convoluted way (maybe to make it sound more sophisticated?), and to hide the assumptions he's making.
He makes (questionable) assumptions but doesn't disclose them, and makes them as if they are universally good assumptions (which they aren't - they're worth disclosing and worth discussion). For example, see the below from @Joe Villeneuve:
"Goes up or down, the impact is the same for everyone. When a property goes down it wipes out the same equity gains for all...from a percentage standpoint. From a dollar standpoint, the only one that matters, the more equity you have in a property, the more you have to lose.
Property 1:
Property Value = $200k
Equity = $100k (50%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss
Property 2:
Property Value = $200k
Equity = $40k (20%)
Market/Equity Loss/New PV = 20%/$40k/$160k
Cash flow after loss = Same as before loss"
He is assuming that when properties lose equity value, it is not possible for rent (and ultimately cash flow) to go down. I wouldn't say that's a given - but if you did choose to make that assumption, at least be more explicit that you are preaching a strategy where an input is "rent cannot go down". Instead of just clearly communicating "Joe V is assuming rents will not go down even if property values go down" - he just writes out math as if that is a ubiquitous scenario that cash flow after loss would = same as before loss. It isn't - it's worth disclosing and worth discussion.
Clearly, if rents did go down, you would have less cushion on the downside with a property that had more leverage, because your net profit margin % would be lower w/ more leverage and higher with less leverage. i.e. RISKIER in a downside scenario.
Re selling a property vs. refinancing, which he was asked countless times and finally chose to answer, the main thing I can discern (that ultimately shows you what assumption he is actually making) is: "1 - Cash out refi reduces the cash flow on the original property due to the larger mortgage payment"
He is assuming that property B that you're buying (instead of refinancing property A) has more NOI (or a better risk adjusted return) than the property you're buying (and hopefully enough extra NOI to cover the transaction cost of selling + any loss if you're trading out of a lower interest mortgage into a higher interest mortgage).
Sure, if you have high conviction that there are much better properties than the one you bought a few years ago, then consider 1031. But it's still an assumption you're making. It's not "basic math" - it's just a simple assumption of, if there are much better properties out there, 1031 into them.
Devil is always in the detail. Be weary of people that won't answer questions, and when they do, aren't straight with their answers. And those that appeal to authority (https://en.wikipedia.org/wiki/...) or in this case, Appeal to "math".
Given that my ultimate goal is cash flow of say $4 Million (post taxes) - so that $2.5 - $3million is being paid directly as income. I don't see a scenario where flipping the houses makes sense. Refinancing makes sense at a certain point to accelerate in about the middle of the process but I'm not sure I can find math that makes sense in the scenario I outlined above.
You're maximizing your buying power and can achieve the amount of properties needed to CF a lot faster w/ this method. If you hold you're just increasing rents as normally, 3-5% a year or whatever while also diminishing CF by pulling out cash.
I gave a scenario above at $40k cash flow per year, that gets added to the $125k a yer in capital. The properties cost $220k to buy/furnish and add. The net of it is it's steam rolls fast. These are $720k properties. yes I could go up to 1.5-3million properties but given the risk there I'll wait until I have at least $300k in cash flow (100% reinvested right now) and buy one before I ever consider flipping.
The problem I have with the premise is it assumes I go to $1.4million lets say and cash flow at least $95k a year (would roughly be the point where it makes sense). Maybe that's possible but I better have some decent cash flow before I do that.
I'm just saying there are a whole lot more variables when you get to a certain point. So far I've heard the basics and yes it "could" work but I don't see a clear path to make that jump. Not in the way that is described anyway.
Or put another way short of jumping into commercial or going very big on the purchases - I don't see any easy way to replace $40k cash flowing properties that quickly. When I hit something like $400k a year in cash flow I'll take a look at one of these larger properties and potentially test the water. If it works then I'll move to that but still keeping the small ones for a bit anyway.
Quote from @Carlos Ptriawan:
Quote from @Michael Wooldridge:
https://www.cnbc.com/2022/10/0...
Unemployment down and wages up. Can’t see fed backing off rate increase now.
This guy is so genius, read the Fed chairman's comment , literally they just want us to be destroyed (losing job,losing homes,losing everything LOL):
https://www.benzinga.com/news/...
I don't have access to the article... any excerpts to highlight?
There will not be a crash...there will be a soft landing correction that the fed will handle. Prices will be pushed down through currency manipulation or rate manipulation until the numbers make sense for the gov. And I will almost guarantee there won't be a crash. Regardless of what people say about guarantees in real estate. The US has an unlimited printing press. There is no way in hell they let another 2009 happen. They won't let the stock market crash, they won't let the housing market crash, they won't let another depression happen. Because if it does...we're all F'd. And it won't matter how many rent houses or MFH you own. Inflation be damned everyone, they'll open the tap and send out as much funny money into existence that they have to in order to forego a crash.
That's my opinion.
None of it matters though. What really matters is are you prepared for ANY OUTCOME. Are you hedged? Do you have protection? Or are you primed for extreme losses with no way out?
What I'm saying is, get prepared and don't keep your blinders on.
Quote from @Darren Marks:
There will not be a crash...there will be a soft landing correction that the fed will handle. Prices will be pushed down through currency manipulation or rate manipulation until the numbers make sense for the gov. And I will almost guarantee there won't be a crash. Regardless of what people say about guarantees in real estate. The US has an unlimited printing press. There is no way in hell they let another 2009 happen. They won't let the stock market crash, they won't let the housing market crash, they won't let another depression happen. Because if it does...we're all F'd. And it won't matter how many rent houses or MFH you own. Inflation be damned everyone, they'll open the tap and send out as much funny money into existence that they have to in order to forego a crash.
That's my opinion.
None of it matters though. What really matters is are you prepared for ANY OUTCOME. Are you hedged? Do you have protection? Or are you primed for extreme losses with no way out?
What I'm saying is, get prepared and don't keep your blinders on.
Won’t let the stock market collapse? It’s happening now. Why won’t they let housing down? Everything they are doing now is to bring down all asset prices. There is no discrimination by the fed. There is no fed put “yet”, I think they consider a pivot at 3k spx. They have managed this very well so far. What’s most remarkable is I don’t think there has been a daily drop above 3-4 percent, it’s just been a gradual drawdown (with some remarkable rallies mixed in). I’m sure before this is all done we will have a 6-10 percent drop day that will spook the fed.
To put this into context, we are well more than halfway there with SPX, if it goes to 2800 it will be the same drop in value as a percentage drop as during the GFC. But yet, having a 20 percent drop in RE is not realistic?
Real estate is local, even in a high inflationary market like we have now. You will see areas that saw explosive growth over the past few years, like Jacksonville, FL, Nashville, TN, and Phoenix, AZ likely take 20 - 30% hits. I've been looking to buy in Jacksonville over the past six months, and some homes on my radar have decreased hundreds of thousands.
Darren, the issue the FED has is it can't print trillions into existence in the face of the next crisis, because inflation is way too high now. Otherwise, we would end up in a hyperinflationary environment like Venezuela.
Quote from @John Carbone:
Quote from @Darren Marks:
There will not be a crash...there will be a soft landing correction that the fed will handle. Prices will be pushed down through currency manipulation or rate manipulation until the numbers make sense for the gov. And I will almost guarantee there won't be a crash. Regardless of what people say about guarantees in real estate. The US has an unlimited printing press. There is no way in hell they let another 2009 happen. They won't let the stock market crash, they won't let the housing market crash, they won't let another depression happen. Because if it does...we're all F'd. And it won't matter how many rent houses or MFH you own. Inflation be damned everyone, they'll open the tap and send out as much funny money into existence that they have to in order to forego a crash.
That's my opinion.
None of it matters though. What really matters is are you prepared for ANY OUTCOME. Are you hedged? Do you have protection? Or are you primed for extreme losses with no way out?
What I'm saying is, get prepared and don't keep your blinders on.
Won’t let the stock market collapse? It’s happening now. Why won’t they let housing down? Everything they are doing now is to bring down all asset prices. There is no discrimination by the fed. There is no fed put “yet”, I think they consider a pivot at 3k spx. They have managed this very well so far. What’s most remarkable is I don’t think there has been a daily drop above 3-4 percent, it’s just been a gradual drawdown (with some remarkable rallies mixed in). I’m sure before this is all done we will have a 6-10 percent drop day that will spook the fed.
To put this into context, we are well more than halfway there with SPX, if it goes to 2800 it will be the same drop in value as a percentage drop as during the GFC. But yet, having a 20 percent drop in RE is not realistic?
Exactly, @James Hamling is also denying that the stock market is nose diving.
#1 Market Trends & Data Contributor
Quote from @Account Closed:
Real estate is local, even in a high inflationary market like we have now. You will see areas that saw explosive growth over the past few years, like Jacksonville, FL, Nashville, TN, and Phoenix, AZ likely take 20 - 30% hits. I've been looking to buy in Jacksonville over the past six months, and some homes on my radar have decreased hundreds of thousands.
Darren, the issue the FED has is it can't print trillions into existence in the face of the next crisis, because inflation is way too high now. Otherwise, we would end up in a hyperinflationary environment like Venezuela.
This post put you into Greg's camp :-) lol
#1 Market Trends & Data Contributor
Quote from @John Carbone:
To put this into context, we are well more than halfway there with SPX, if it goes to 2800 it will be the same drop in value as a percentage drop as during the GFC. But yet, having a 20 percent drop in RE is not realistic?
Folks we shall just use what the Fed has been telling us, they don't give a damn care.
As long as unemployment is still recorded below 2.5 percent in my market, they don't care if Stock market crash to even 90%.
You have Job and I will destroy it. That's what the Fed says. They don't care if the whole Europe is under the great depression after the Weimar republic :) lol
They want 1 out of 83 people to lose job. I hope you are not part of the lucky guy though :)
#1 Market Trends & Data Contributor
Exactly, @James Hamling is also denying that the stock market is nose diving.
Maybe some dude doesn't understand how the real economy outside real estate works.
AAA+ rating corporate bond is now at 9-10%. Imagine 9-10%.
Any company that doesnt generate its own cash flow and has to borrow money , has to make business exceeding 9-10%.
The only way you could achieve 15% cash flows is only by increasing price.
So real economic growth is 0 or negative this year around. No company that doesn't have CF could expand.
latest data I read about 10% of smaller companies that can't access cheap financing will be wiped out soon.
I hope that's not your company though.
looks like the fed is pricking the car bubble finally. Just received this email from a car dealer. To put this in perspective this vehicle mentioned below had a 5k premium above msrp 3 months ago. Now, it’s 4K below msrp, so in the matter of months 17 percent drop in value for new vehicle from peak.
Over the summer heard the same BS from the car gurus..”but there’s a car shortage from the chips, the chips, the chips, it will take years to recover….then rates spiked and poof there goes the demand.
but sure…..real estate is different.
Jerome Powell is out there popping bubbles in every asset class. He’s saving the best for the last (housing)
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Quote from @John Carbone:
looks like the fed is pricking the car bubble finally. Just received this email from a car dealer. To put this in perspective this vehicle mentioned below had a 5k premium above msrp 3 months ago. Now, it’s 4K below msrp, so in the matter of months 17 percent drop in value for new vehicle from peak.
Over the summer heard the same BS from the car gurus..”but there’s a car shortage from the chips, the chips, the chips, it will take years to recover….then rates spiked and poof there goes the demand.
Actually CAR and FOOD prices already goes down.
Read the chart here:
https://www.zerohedge.com/mark...
For Food it's already trending down including meat. Only cereal slightly up than last month.
Read the chart here:
https://www.fao.org/worldfoods...
To be honest I don't understand why the Fed is so crazy fighting inflation when inflation is already almost normalized. These grand-pa really needs to be replaced their way of thinking LOL
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
looks like the fed is pricking the car bubble finally. Just received this email from a car dealer. To put this in perspective this vehicle mentioned below had a 5k premium above msrp 3 months ago. Now, it’s 4K below msrp, so in the matter of months 17 percent drop in value for new vehicle from peak.
Over the summer heard the same BS from the car gurus..”but there’s a car shortage from the chips, the chips, the chips, it will take years to recover….then rates spiked and poof there goes the demand.
Actually CAR and FOOD prices already goes down.
Read the chart here:
https://www.zerohedge.com/mark...
For Food it's already trending down including meat. Only cereal slightly up than last month.
Read the chart here:
https://www.fao.org/worldfoods...
To be honest I don't understand why the Fed is so crazy fighting inflation when inflation is already almost normalized. These grand-pa really needs to be replaced their way of thinking LOL
I don’t think they will stop until we get to near pre Covid prices on everything. 17 percent drop though on new vehicle in 3 months is pretty remarkable, and this was nationwide 5k on top of msrp for this.
They will stop once housing gets their 20 percent. Then that’s the green light to pile back in.
Quote from @John Carbone:
looks like the fed is pricking the car bubble finally. Just received this email from a car dealer. To put this in perspective this vehicle mentioned below had a 5k premium above msrp 3 months ago. Now, it’s 4K below msrp, so in the matter of months 17 percent drop in value for new vehicle from peak.
Over the summer heard the same BS from the car gurus..”but there’s a car shortage from the chips, the chips, the chips, it will take years to recover….then rates spiked and poof there goes the demand.
but sure…..real estate is different.
Jerome Powell is out there popping bubbles in every asset class. He’s saving the best for the last (housing)
Not familiar enough with the the truck market but I’m still seeing 50-100k mark-up on some higher end Porsches. And car price edged up in August even higher. It would be nice if this is changing but car prices are out of control with new car price now $49k average…
@Carlos Ptriawan used cars did drop but new cars still went up. Considering used was selling above new for a bit there not so sure it’s a win… yet.