Quote from @Greg R.:
Quote from @Carlos Ptriawan:
Quote from @Joe Bertolino:
Quote from @John Carbone:
However, the major crash scenario may occur when tech companies started laying off people, simply they can't pay mortgages hence they're forced to move outside CA. That's one scenario for CA.' CA economy is extremely sensitive to the tech economy and the tech economy has reliant on the cheap money policy.
Tech co. can't sell products if the dollar is too high.
This is what I've been saying. The housing market is not in it's own disaggregated economy. It's a part of the larger macro economy. There are obviously nuances and specific variables that apply to different sectors, states, cities, and localities. However, we need to look at housing through the macro lens and evaluate all of the economical variables that impact housing.
There are a few things that I'm keeping a close eye on.
1) Foreclosures. I was reading that 16% of home owners used mortgage forbearance due to covid. A lot of people just came off, and others are still just coming off covid forbearance. For these folks there are generally three main options. The first is a repayment plan... so if someone missed 18 payments, they would divide those into 12 portions. The individual would need to pay not only their regular mortgage, but also the repayment. The second is lump sum, which really makes no sense. If someone was unable to make their normal payment for "x" months, how would they be able to repay it all in one shot? The third I believe is loan modification. According to Freddie the loan modification interest rate is 5.5%. Assuming someone went on forbearance with a 3.5 or 4% rate, their loan mod is going to add on all of the missed payments in terms of principal balance, and also shoot their rate up quite a bit.
- In short, I think there are going to be a lot of foreclosures in the coming months, years.
Student loans. Studnet loans have been "paused" due to covid, and are set to restart Jan 1, 2023. This is significant and can't be ignored.
Rents. This one is obviously local, but despite high rents pretty much across the board, there are a lot of areas where it's still cheaper to rent than buy. The top 10 on that list are San Francisco, Oakland, LA, San Jose, NYC, Long Beach, Seattle, DC, San Diego, and Boston.
Inflation. This one is major, as costs for basic necessities continue to shoot through the roof. There is ample info out there about the impact of inflation, how it's draining savings accounts, running up credit card debt, etc.
Stock Market. As the stock market continues to crash (Dow currently down to $29.417), this signals bad news since the stock market is generally see as a vote of confidence for the economy. This also means less $$ for businesses, cutting expenses, hiring freezes, layoffs, impacts on pension funds, reduced funding for expansion and R&D, etc.
Unemployment. For those still in denial about this one, Powell cautioned that a sharp rise in unemployment may be coming as the fed hikes interest rates at the fastest pace in a quarter-century. We're already seeing a significant slowing in private sector new jobs created. Tech sector is going to be hit hard as well as many publicly traded fortune 500 companies. There's a lot here and this can certainly be argued, but I believe that the signs/ indicators point to unemployment rising at a pretty significant pace over the upcoming months/ years.
Foreclosures - I am so exhausted of hearing about this twisting of the narrative. We have had post after post for nearly 2 years on B.P. how there is this giant foreclosure "mass" that's "just about to it". No, no there is not, just as nothing has come of it for the last 2 years. It's grabbing a few data points and building a pre-determined narrative with selective data. The lion's share of these deferments where at request and direction of banks and media to take them "just in case". Millions, and I do mean MILLIONS had no need, but took them "just in case" because there was unknowns and that was the directives given of no negative potential if taken. Also, the prevailing construct is missed payments are just added onto the end of the mortgage. Banks are not setting up REO system like 20-teens era, that is the first and biggest signal to watch for, it's very telling. It will matter when actual foreclosure fillings move forward, until then forbearance is a pointless metric unless it's to pump views on your YT channel.
Student Loans - Yeah, exactly, what will the effect be of BILLIONS in Student Loans being whipped out? What will be the effect of all those people having that ADDED $$$$ in hand thanks to that? Or, how about the added inflation from such. Yes, payments restart, with many accounts now at $0, or a lot less then they were before. They serviced them pre-covid, how will it magically become a collapse today?
Inflation - Inflation does not only increase consumer costs, it hit's everything. We are now seeing the start of wage increase "wave" of inflationary cycle.
Stock Market - Yes, this does matter much as regularly just after inspection is completed, pre-closing we do have that Stock Market check to complete closing.......... Ok, there is some relation but reality is housing costs and activity does not follow the fluctuations and movement of the Stock Market. And actually, a bad stock market is good for housing, it helps promote the sale of various bonds. Covid start the stocks went into free-fall, did housing?
Unemployment - Tech, tech, Tech, f-n TECH....... So exhausted from yammering on Tech likes it's all there is. Look, how do you get food on your plate? Did Tech bring that to the store? Tech is just a part, a PART, of everything that happens. We have such a demand for workers in everything else today, because the countless masses have been tech obsessed and all trying to get into tech vs a trade school to be an electrician, plumber, CNC machinist, truck driver, millwright, on and on. There is this whole universe NOT tech that brings only about 95% of everything in your life. Tech is integrated into a lot, but integration does NOT make it the whole. This is a hijack mindset. I say GOOD, fire a million tech workers, thank God, less tech would be AMAZING! Maybe things would actually reliably work for a bit, lol. All the various industries starving for skilled workers would suck them up in a blink. U.S. manufacturing is absolutely starving for people. On that end I say don't tease me with a good time! When I review a new tenant know what I think, I see a tech job I think "meah" but I see Electrician, Iron Worker, Nurse, I am jumping for joy because those are REAL and secured incomes, big time. Check any trade school, they will say "yes please, bring the people, we got jobs NOW". Bridges don't care what the DOW says, the ageing population don't stop growing and, ageing. A shift would be amazing, and speed the economic recovery into a bull-run.
The BEST thing that could come out of all this is smashing this mirage of global dependance, which the U.S. got wayyyy out of wack on, and a balanced move of production WHICH MEANS a renaissance in U.S. domestic production, and innovations that come with such.
