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Updated almost 2 years ago, 01/14/2023
Housing crash deniers ???
Unfortunately I've been away for a few months while taking care of some personal matters, so I haven't been able to keep up on discussions.
However, several months ago there were ample amount of folks here insisting that a market crash/ correction was impossible and that prices would only continue to increase.
Curious if there are still people out there who feel this way? If so, I'd love to see some data that supports your view that the market isn't going to crash/ correct.
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @Michael Wooldridge:
Quote from @Peter Redmond:
The crash is here. Similar to 2008, most, including myself thought it would never happen. Then the home I purchased for $740k, resold for $450k & the condo I paid $250k for resold for $167k. The cheaper it is to borrow money the higher the prices, the more expensive it is to borrow money the lower the prices. We will have a wave of cash buyers, but they always want a cash discount. You will generally see folks offering incentives like free trips & upgrades before the prices reductions.
I don;t know anybody in the industry in 2005-2008 who was surprised by the crash. Whether you were in investor, realtor, or lender, you could see what was happening when they basically stopped verifying income. You could outright lie and the lenders knew it. The crash back then was obvious. Granted Lehman going under made it worse but there were a whole hell of a lot of people who saw it coming.
We literally referenced the mortgages as a "Liar Loan" lol.
nowadays, the joke is about the HELOC borrower who paid “cash” for a 2nd, 3rd, or 4th home.
new bubble, same burst.
The HELOC won't be an issue though, If they are investing they are still making their money (equity) make money, And if there rate is locked they could be in a pretty nice position to be honest with 30 year fixed at 7%
this is 3 months old data too and strongest jobs market likely in history.
the Fed is quickly peeling back the onion. The first domino has already fallen.
Well aware and not a new phenomena: https://www.bloomberg.com/news....
1/3 rd of people making $250k live paycheck to paycheck and to be in $250k you are roughly in top 5% of America.
Not sure why that means they are suddenly going to lose money on their HELOC rental properties they bought with low interest.
As rates stay higher for longer, more money shifts from consumers to banks, driving that percentage of paycheck to paycheck higher. We already know jobs are going to be lost. The fed is telling us that. Even going up to sub 5 percent employment will still have an impact on this economy. A 10 percent decline in demand does not equate to a linear 10 percent drop in prices. Everyone is stretched thin. What happens when a tenant stops paying their rent?
Banks are already tightening lending standards for fear of delinquencies. That is a fact happening now despite right now we are at record low levels. I’ll tell you why they are tightening now, because they use actual statisticians, and anyone with half a brain can see what is coming.
most people at 3 percent won’t have an issue, provided they aren’t max leveraged.
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @Michael Wooldridge:
Quote from @Peter Redmond:
The crash is here. Similar to 2008, most, including myself thought it would never happen. Then the home I purchased for $740k, resold for $450k & the condo I paid $250k for resold for $167k. The cheaper it is to borrow money the higher the prices, the more expensive it is to borrow money the lower the prices. We will have a wave of cash buyers, but they always want a cash discount. You will generally see folks offering incentives like free trips & upgrades before the prices reductions.
I don;t know anybody in the industry in 2005-2008 who was surprised by the crash. Whether you were in investor, realtor, or lender, you could see what was happening when they basically stopped verifying income. You could outright lie and the lenders knew it. The crash back then was obvious. Granted Lehman going under made it worse but there were a whole hell of a lot of people who saw it coming.
We literally referenced the mortgages as a "Liar Loan" lol.
nowadays, the joke is about the HELOC borrower who paid “cash” for a 2nd, 3rd, or 4th home.
new bubble, same burst.
The HELOC won't be an issue though, If they are investing they are still making their money (equity) make money, And if there rate is locked they could be in a pretty nice position to be honest with 30 year fixed at 7%
this is 3 months old data too and strongest jobs market likely in history.
the Fed is quickly peeling back the onion. The first domino has already fallen.
Well aware and not a new phenomena: https://www.bloomberg.com/news....
1/3 rd of people making $250k live paycheck to paycheck and to be in $250k you are roughly in top 5% of America.
Not sure why that means they are suddenly going to lose money on their HELOC rental properties they bought with low interest.
As rates stay higher for longer, more money shifts from consumers to banks, driving that percentage of paycheck to paycheck higher. We already know jobs are going to be lost. The fed is telling us that. Even going up to sub 5 percent employment will still have an impact on this economy. A 10 percent decline in demand does not equate to a linear 10 percent drop in prices. Everyone is stretched thin. What happens when a tenant stops paying their rent?
Banks are already tightening lending standards for fear or delinquencies. That is a fact happening now despite right now we are at record low levels. I’ll tell you why they are tightening now, because they use actual statisticians, and anyone with half a brain can see what is coming.
Tightening of lending. Hmm I’ve mentioned probaly 3 weeks ago that 25% down vs 20% was a massive discount on points, so yeah not surprised. Oh the point, tightening of lending is on forward looking purchases. Which obviously need to happen given the shifts in rates.
So not suddenly going to make the current property hard ot afford now is it? Job losses will but not expecting those to come in at the higher end of the market.
Overall the data is trending down yes but it’s still heavy west vs east for the downgrade. And yes I’m still expecting 10-15% east coats. but hell even in 08 we only saw 13% in PA. So no not super worried.
This is pretty amazing. Look at all that inventory in the pipeline.
Shelter is 1/3rd of CPI, fed won’t stop raising until CPI is “under control”. Rents will be dropping and virtually nobody will be buying now.
Quote from @John Carbone:
This is pretty amazing. Look at all that inventory in the pipeline.
Shelter is 1/3rd of CPI, fed won’t stop raising until CPI is “under control”. Rents will be dropping and virtually nobody will be buying now.
Rents will be dropping why? And when in history has that happened?
https://ipropertymanagement.co...
OH right never. yes housing will slow down. Rents will stop going up. But dropping? you are kidding yourself. Especially when paired with inflation.
BTw look at what inflation did too rents in the 80’s……
#1 Market Trends & Data Contributor
Quote from @Michael Wooldridge:
Quote from @John Carbone:
This is pretty amazing. Look at all that inventory in the pipeline.
Shelter is 1/3rd of CPI, fed won’t stop raising until CPI is “under control”. Rents will be dropping and virtually nobody will be buying now.
Rents will be dropping why? And when in history has that happened?
https://ipropertymanagement.co...
OH right never. yes housing will slow down. Rents will stop going up. But dropping? you are kidding yourself. Especially when paired with inflation.
BTw look at what inflation did too rents in the 80’s……
I really think rent will be dropping.
Currently active inventory house is increased 2% YoY. The unsold goes to rent I think.
The rent appreciation is too much in 2021, but that's my speculation.
Quote from @Carlos Ptriawan:
Quote from @Michael Wooldridge:
Quote from @John Carbone:
This is pretty amazing. Look at all that inventory in the pipeline.
Shelter is 1/3rd of CPI, fed won’t stop raising until CPI is “under control”. Rents will be dropping and virtually nobody will be buying now.
Rents will be dropping why? And when in history has that happened?
https://ipropertymanagement.co...
OH right never. yes housing will slow down. Rents will stop going up. But dropping? you are kidding yourself. Especially when paired with inflation.
BTw look at what inflation did too rents in the 80’s……
I really think rent will be dropping.
Currently active inventory house is increased 2% YoY. The unsold goes to rent I think.
The rent appreciation is too much in 2021, but that's my speculation.
#1 Market Trends & Data Contributor
This market really puzzled me, I never see a market so strong.
my neighbour:
Listing August $1,130,000
Reduced to $900,000
SOLD FOR $1,070,000 just yesterday.
James could be right, maybe housing is so strong it only adjusted -5% for one year.
We have negative new listing MoM now, even in Las Vegas, it seems all flippers already sold their houses.
#1 Market Trends & Data Contributor
The shelter is like 0.35-0.43 of CPI.
What I'm interested in, is what market the buyer activities are really dropping ? It seems Atlanta has more active inventory now.
Bay Area, virtually nobody selling and the buyer is still there LOL there're signs of overbidding again, this market never tired LOL
I can't imagine if James moves to CA, maybe the price going to a new high during the recession :)
Quote from @Carlos Ptriawan:
This market really puzzled me, I never see a market so strong.
my neighbour:
Listing August $1,130,000
Reduced to $900,000
SOLD FOR $1,070,000 just yesterday.
James could be right, maybe housing is so strong it only adjusted -5% for one year.
We have negative new listing MoM now, even in Las Vegas, it seems all flippers already sold their houses.
Quote from @Carlos Ptriawan:
This market really puzzled me, I never see a market so strong.
my neighbour:
Listing August $1,130,000
Reduced to $900,000
SOLD FOR $1,070,000 just yesterday.
James could be right, maybe housing is so strong it only adjusted -5% for one year.
We have negative new listing MoM now, even in Las Vegas, it seems all flippers already sold their houses.
$1million is the the higher side of the market. It’s not like they are really impacted by inflation, not in a meaningful way.
@Carlos Ptriawan@John Carbone - as to rent since 1980 we’ve seen average of 8.8% increase, much higher when inflation is up. 16-19 was below that due to a combination of housing and cheap rates. So a jump of 8-9% is not unusual. ALl that aside, which is just historical trending and speculation, the rent increases are high but not outside the realm of normal if you factor in the 8% inflation. Factor that in and all of a sudden we are close to the 10% John is calling for.
Rents have never reduced since 1940. Not sure why people would expect that hear. ESPECIALLY with 7% rates. They have no where to go. PRetty much they are screwed.
#1 Market Trends & Data Contributor
no dude 1 mil is a definition for a Class C neighborhood in bay ; $2mil house is for middle-income family, the high end started by 3.5m I think LOL
Actually when I rented in Bay between 1999-2006, I did experience reduced rents, I really enjoyed rentals below $1200 that time.I also see a LOT of Rent reduction, both in bay area and Denver market, the actual rent is actually much less than what's predicted by Zillow/ZORI as people can negotiate the rent in SF rental. Based on chart, rent growth is already normalized, it's negative growth in last 5 months.
The very reason why rent can be reduced is if the owner purchased prior to 2015 and never refi so mortgage is pretty low. My mortgage is only $1900 for gross rents of $3200. I don't want to increase my rent.
Quote from @Carlos Ptriawan:
no dude 1 mil is a definition for a Class C neighborhood in bay ; $2mil house is for middle-income family, the high end started by 3.5m I think LOL
Actually when I rented in Bay between 1999-2006, I did experience reduced rents, I really enjoyed rentals below $1200 that time.I also see a LOT of Rent reduction, both in bay area and Denver market, the actual rent is actually much less than what's predicted by Zillow/ZORI as people can negotiate the rent in SF rental. Based on chart, rent growth is already normalized, it's negative growth in last 5 months.
The very reason why rent can be reduced is if the owner purchased prior to 2015 and never refi so mortgage is pretty low. My mortgage is only $1900 for gross rents of $3200. I don't want to increase my rent.
I was htinking you were texas regardless though it’s still on the higher end of market. Most Bay Area makes couples make $300k clear so the point still stands it’s not going to impact a $1million home. $3-4million changes things with rates thoguh. Middle income for Bay Area perhaps but not for the country and thats why they don’t care about their $20 steaks at the grocery store. It just doesn’t hurt that income level.
Also NYC and Bay Area are their own thing and you know that. They don’t really run with all of the country trends and even Cali itself is at the point where the rest of country jumps.
Nationally you won’t see negative rent growth. Bay Area is unique we’ve already established that to date. And Denver is one of those west coast markets being impacted. If you are pulling in some of the mountain towns I could see rent dropping a bit given the run up but they far outpaced the national median (just like housing also).
And sure you could reduce your rents. But why would you? I know i won’t be and I could reduce mine also. There’s no pressure on it at all and the demand here in the northeast for rents is still especially high. I’m seeing no change over 2022 at all. And I just watched another one in my neighborhood (family member invested there also) rent in an hour. At the rates I was getting bidding wars to land at 6 months ago.
Ahh look at that fed meeting minutes are out: https://www.cnbc.com/2022/10/1...
Inflation section alone drive by what? Supply chain shortages in not just materials but labor like I’ve been saying for last 4 weeks.
We are absolutely going to have a recession but those expecting 08 level drops are going to in for some surprises.
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#1 Real Estate Agent Contributor
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Quote from @Carlos Ptriawan:
This market really puzzled me, I never see a market so strong.
my neighbour:
Listing August $1,130,000
Reduced to $900,000
SOLD FOR $1,070,000 just yesterday.
James could be right, maybe housing is so strong it only adjusted -5% for one year.
We have negative new listing MoM now, even in Las Vegas, it seems all flippers already sold their houses.
Carlos, my friend, I have been trying to tell ya, your viewing all this with the wrong lens. I get where your coming from in this, it makes sense, but this whole witches brew, it's totally different ingredients.
This economy was front-loaded going into this with extremally unique factors. We have factors impacting from the '08' collapse, which is the "lost decade" in construction field, which is not just a loss of produced units BUT namely production capacity, the assets and resources TO produce. Creating a 1st of it's kind lag and shortage in production inventory and capacity.
Then we have the front-loading from both the covid-run, and the insanely low rates which held for years not weeks.
This has all set a kind of invisible safety net in the market. The actions of the Fed should have had certain impacts, and look up article after article there all saying, in short "WTF, this is not what's supposed to be happening right now, why is this damn thing not dropping". Yeah, the front-loading going into this, that's why.
And as time goes, there going to get hard pressed that they either accept Stagflation OR, they gotta inflate there way out of it. And that means Wage inflation. There going to have to try to do segregated inflation, by some wizardry, of measured wage inflation without it hitting housing or other sectors. Which I think will fail, miserably, but Stagflation is the execution of many things and they will do all kinds of gymnastics to avoid it.
- James Hamling
#1 Market Trends & Data Contributor
Quote from @James Hamling:
And as time goes, there going to get hard pressed that they either accept Stagflation OR, they gotta inflate there way out of it. And that means Wage inflation. There going to have to try to do segregated inflation, by some wizardry, of measured wage inflation without it hitting housing or other sectors. Which I think will fail, miserably, but Stagflation is the execution of many things and they will do all kinds of gymnastics to avoid it.
Yea, perhaps "front running" the Fed is right statement. Why sell now if we know the mortgage rate would be 4-5% again in 2025 anyway. Right...
If there's no more inventory to sell like this month; there's no pressure for sellers to reduce their price except (perhaps) in a higher liquidity market.
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- Real Estate Broker
- Minneapolis, MN
- 5,188
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#1 Real Estate Agent Contributor
- Real Estate Broker
- Minneapolis, MN
Quote from @Carlos Ptriawan:
Quote from @James Hamling:
And as time goes, there going to get hard pressed that they either accept Stagflation OR, they gotta inflate there way out of it. And that means Wage inflation. There going to have to try to do segregated inflation, by some wizardry, of measured wage inflation without it hitting housing or other sectors. Which I think will fail, miserably, but Stagflation is the execution of many things and they will do all kinds of gymnastics to avoid it.
Yea, perhaps "front running" the Fed is right statement. Why sell now if we know the mortgage rate would be 4-5% again in 2025 anyway. Right...
If there's no more inventory to sell like this month; there's no pressure for sellers to reduce their price except (perhaps) in a higher liquidity market.
Yeah, just look back at the bonkers bull-run of the last 24mnths, the sheer volume of transactions that happened. That was commerce compression. It wasn't that all those people were sitting the sidelines since 2017 and then just collectively decided "hey, let's buy a home", it was an un-natural event.
We had years of transaction happen in a very compressed window. And that means a volume drop going forward. Those people are not induced to sell. It makes for a volume drop across the board, less listings. So it nerf's the impact of reduction in buyers, because the economy was front-loaded to have less sellers. Thus, creating a net 0 impact right. Which helps hold home prices up, even though in a way they should be going down due to diminished buyer capacity, the seller volume is equally dropping.
It's a perfect storm, it is, change any 1 ingredient and results would be wildly different.
This is a truly once in a lifetime event, and the reverberations will continue for years.
Now, the big deal is, the political powers that be are going to "need" to strong running economy, and only way to get that now is by pumping it up, inflating it. Only way to inflate from here is leverage, epic leverage. I see us at the beginning of a massive inflation in housing prices. Lol, yeah, how nuts does that sound right, but it's what I see in forecast. We could see another bull-run that pumps up median home prices another 24%+. At that point, that's were we get into a real bubble territory.
Because what else are they going to do? Seriously, what else? Are the politicians going to go into elections with a floundering economy? Political law 101 is if your an incumbent sitting on a bad economy, ya better start looking for a new job because your gonna loose. You have never heard a sitting politician say "I know things suck, and that's just how it is, there gonna suck a bit longer, remember to vote for me". That just doesn't happen ever.
So we can expect actions very soon here to start pumping things up. Or, they just give up, accept there fate, and do what's best for the country ignoring how it impacts there seat. Would be the 1st time in my lifetime but hey, maybe D.C. all grows a conscious.
- James Hamling
Quote from @John Carbone:
This is pretty amazing. Look at all that inventory in the pipeline.
Shelter is 1/3rd of CPI, fed won’t stop raising until CPI is “under control”. Rents will be dropping and virtually nobody will be buying now.
Builders aren't going to finish the unbuilt inventory if they cant sell their existing inventory, so that 306,000 units under construction can be misleading if your trying to include them as future completed homes for sale.
Quote from @Chris John:
I think the issue is the magnitude of a crash as much as whether there's a crash or not. In 2009, there were cheap houses EVERYWHERE. The number of cheap houses changing hands was IMMENSE.
Even if the market crashes now, I can't fathom it will be nearly the same. If prices drop, it will still be on a very small pool of available houses. If people's portfolios go upside down, they won't care as long as they can cashflow it every month. And, since most of us are locked in under 4%, that's a lot of houses that will NOT be hitting the market.
So, even if there is a "crash", it won't be anything like 2009 because:
1. The sheer number of houses will be minuscule in comparison.
2. There are a ton of buyers champing at the bit to get into this "crash". If/as prices drop, the new, lower prices will be met with more and more buyers.
Definitely seeing the prices decline and expect to continue to see that continue, but not holding my breathe on buying $60k houses in Cali again anytime soon...
Unless there would be a massive layoff everywhere so even a 2.8% mortgage would become unaffordable after a short while.
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @James Hamling:
And as time goes, there going to get hard pressed that they either accept Stagflation OR, they gotta inflate there way out of it. And that means Wage inflation. There going to have to try to do segregated inflation, by some wizardry, of measured wage inflation without it hitting housing or other sectors. Which I think will fail, miserably, but Stagflation is the execution of many things and they will do all kinds of gymnastics to avoid it.
Yea, perhaps "front running" the Fed is right statement. Why sell now if we know the mortgage rate would be 4-5% again in 2025 anyway. Right...
If there's no more inventory to sell like this month; there's no pressure for sellers to reduce their price except (perhaps) in a higher liquidity market.
Yeah, just look back at the bonkers bull-run of the last 24mnths, the sheer volume of transactions that happened. That was commerce compression. It wasn't that all those people were sitting the sidelines since 2017 and then just collectively decided "hey, let's buy a home", it was an un-natural event.
We had years of transaction happen in a very compressed window. And that means a volume drop going forward. Those people are not induced to sell. It makes for a volume drop across the board, less listings. So it nerf's the impact of reduction in buyers, because the economy was front-loaded to have less sellers. Thus, creating a net 0 impact right. Which helps hold home prices up, even though in a way they should be going down due to diminished buyer capacity, the seller volume is equally dropping.
It's a perfect storm, it is, change any 1 ingredient and results would be wildly different.
This is a truly once in a lifetime event, and the reverberations will continue for years.
Now, the big deal is, the political powers that be are going to "need" to strong running economy, and only way to get that now is by pumping it up, inflating it. Only way to inflate from here is leverage, epic leverage. I see us at the beginning of a massive inflation in housing prices. Lol, yeah, how nuts does that sound right, but it's what I see in forecast. We could see another bull-run that pumps up median home prices another 24%+. At that point, that's were we get into a real bubble territory.
Because what else are they going to do? Seriously, what else? Are the politicians going to go into elections with a floundering economy? Political law 101 is if your an incumbent sitting on a bad economy, ya better start looking for a new job because your gonna loose. You have never heard a sitting politician say "I know things suck, and that's just how it is, there gonna suck a bit longer, remember to vote for me". That just doesn't happen ever.
So we can expect actions very soon here to start pumping things up. Or, they just give up, accept there fate, and do what's best for the country ignoring how it impacts there seat. Would be the 1st time in my lifetime but hey, maybe D.C. all grows a conscious.
Long term though we are underestimating what so many people under 3.5% mortgage rates will do for housing. With more remote work (and it’s a massive trend) we’ll see less people selling the future than ever I suspect with those interest rates.
#1 Market Trends & Data Contributor
The way I know there's not much rent increase is thru some detective work :) LOL , maybe the Fed should follow my method instead.
- So I talk to the CEO of this Rental company okay, they give me a hundred addresses of their SFR inventory. I checked one by one, and most of their listing has rent price reduced, it's almost nationwide
- The way Fed method of gues-estimating OER is they do surveys thru interviews, this method is far from accurate as owner tend to overestimate rent, and even Zillow rent (called it ZORI )is overestimating rental growth, there's a lot of discussion on this in the financial blog.
- in CA for MF, rental owners can't increase rent for a certain percentage. There's lot of tenants still renting $3500 2022 rent price for only $2,500
- in my rental across US, only Indiana and Wisconsin have a slight increase, and that's not much. Alabama has no rent increase.
- Rental data is all over the place man, it's very messy. Only MF Class A+ has an absolute rental increase.
- Northeast may be strong in large rent growth. But if you look at this chart, the diff between 2019 to 2022 August rent is only 5% as there's huge rent decrease during covid. It's hardly noticeable.
https://www.realtor.com/resear...
Quote from @Carlos Ptriawan:
The way I know there's not much rent increase is thru some detective work :) LOL , maybe the Fed should follow my method instead.
- So I talk to the CEO of this Rental company okay, they give me a hundred addresses of their SFR inventory. I checked one by one, and most of their listing has rent price reduced, it's almost nationwide
- The way Fed method of gues-estimating OER is they do surveys thru interviews, this method is far from accurate as owner tend to overestimate rent, and even Zillow rent (called it ZORI )is overestimating rental growth, there's a lot of discussion on this in the financial blog.
- in CA for MF, rental owners can't increase rent for a certain percentage. There's lot of tenants still renting $3500 2022 rent price for only $2,500
- in my rental across US, only Indiana and Wisconsin have a slight increase, and that's not much. Alabama has no rent increase.
- Rental data is all over the place man, it's very messy. Only MF Class A+ has an absolute rental increase.
- Northeast may be strong in large rent growth. But if you look at this chart, the diff between 2019 to 2022 August rent is only 5% as there's huge rent decrease during covid. It's hardly noticeable.
https://www.realtor.com/resear...
So lets ignore Bay Area. So many ups downs. The rest of your post are you trying to say that rent growth is down? No argument from me. It’s absolutely slowing. Nationally though we will not see a median drop to rent. Rent more than anything will be FAR more consistent than housing prices so outside of select markets Bay Area, we won’t see reductions.
So yes no argument rent isn’t growing more. I never said it would. I just said it wouldn’t reduce. It’s never happened since 1940. And again high inflation will fix it alone. Even if “rent” does not go down in actual $ year over year it will still be cheaper thanks to inflation/wage growth.
#1 Market Trends & Data Contributor
| Birmingham-Hoover, AL | 9.60% | 965 | -9.80% | 1,137 | 8.10% | 1,230 | 10.20% | |
| Sacramento–Roseville–Arden-Arcade, CA | 3.20% | 1,550 | -7.20% | 1,788 | 1.30% | 2,065 | 3.40% | |
| Riverside-San Bernardino-Ontario, CA | 0.10% | 1,321 | -6.20% | 1,905 | 1.10% | 2,401 | 0.80% | |
| Minneapolis-St. Paul-Bloomington, MN-WI | 3.10% | 1,203 | 0.30% | 1,459 | 1.90% | 1,850 | 1.40% | |
| San Antonio-New Braunfels, TX | 9.80% | 1,041 | 0.40% | 1,216 | 10.60% | 1,466 | 8.50% |
If you focus on Midwest-low cap , there's absolutely almost no significant raise (the diff between 2022 to 2021 affordability is like lower than 1% which is insignificant.
Rent reduction is very possible.
#1 Market Trends & Data Contributor
This is my full argumentation why Rental prices will fall from 2022-2024 [ I really like this subject LOL ]
- We know now that in 2021, 1 out 5 homes are not owner occupants, so if nationwide we have 100 houses, 20 are rental property
- We also know that inventory for home sales is now similar to 2020 level, the active inventory is increasing 2-5% per month,unsold houses will be converted to SFR
- This will increase active SFR inventory and will reduce the rent/rent growth
- Not to mention, there are too many MF buildings esp. in south/midwest that will be completed in 2023. This will increase supply as well and will reduce rent.
Quote from @Carlos Ptriawan:
This is my full argumentation why Rental prices will fall from 2022-2024 [ I really like this subject LOL ]
- We know now that in 2021, 1 out 5 homes are not owner occupants, so if nationwide we have 100 houses, 20 are rental property
- We also know that inventory for home sales is now similar to 2020 level, the active inventory is increasing 2-5% per month,unsold houses will be converted to SFR
- This will increase active SFR inventory and will reduce the rent/rent growth
- Not to mention, there are too many MF buildings esp. in south/midwest that will be completed in 2023. This will increase supply as well and will reduce rent.
So i want to take a moment that we should acknowledge how screwed up the economy is right now. For example we’ve been arguing over housing valuations (well to an extent you and I maybe a bit less so) and while housing values should drop with rates up high overall monthly spend should be up.
If that is true than rents in theory should hold strong if not go up because home affordability is down and even if inventory is up it’s still low. It’s just funny that shows how messed up and yo-yo so many items in the economy are.
Now as to rents and your post. There's a problem in your math. You haven't accounted for STR. We know STR for example in Florida is up a lot. so yes 1 in 5 homes aren't owner occupied but how many are in a new market which was traditionally hotels? I don't think there is enough data out there ot try and roll that into your data on while it should drop.
Nationally we’ve never had rents drop in the last 80 years. I’m willing to say it’s a crazy enough market that in theory we could have a national decline of less than 1% in some whacked out world. But as you said 1% is really meaningless.
Long story short I don’t think we’ll have any meaningful swings down on rent that matters to the landlords. Too much inflation and too much has changed. And again jobs are strong so most people won’t magically be unable to afford rent.