All Forum Posts by: Joe Bertolino

 Unemployment is 3.7% and roughly 10% of the population is useless.  12% of the people that take the ASVAB fail and are deemed completely useless by the US military.   They are not qualified to peel potatoes or reconstitute food.  The upside I guess is that very few of these folks are homeowners.   Unemployment jumping to normal levels will not come from the top 50%.  My 14-year-old daughter started putting in applications for her first job and had 9 interviews scheduled within 3 days. Her phone blew up.  Pay is starting at $15/hr.  

I predict you will see a bunch of 2-1 buydown products securing 4% rates for 2 years and then in 2024/2025 people will refi.  You will also see a lot more seller financing and subject 2 deals with actual cash coming into the deal.  Not everyone makes decisions like those of us on BP.  Some people want a certain house in a certain area and they don't really care about the details.   They have the income to where a $1500 bump in payment doesn't move the needle for them.  Rates may go up or may go down but they want to be living where they want to be living while it happens.  

We are talking about homes, where people live. Not strictly investments. It is not like you can rent for much less than the mortgage payment in most desirable markets. A huge chunk of the SFR rental market was sold off over the past few years. Many Landlords have cashed out and sold to homeowners. That rental housing stock is not coming back on the market. It's not like 15 years ago when the market was flooded with housing. Boomers are not going to flood the market as they downsize because they have 2% rates. They are just going to stay in their larger homes. We didn't build very much housing from 2009-2019. And homebuilders barely got things cranked up and then covid hit and supply chain issues put the brakes on it. Inventory is 3.7 months in my market. I went to the caravan last week and there were 3 houses coming on. Anything decent still gets snapped up in a few days.

 where is it priced compared to the last closed comp.  Or the comps from 12 months ago?  

 Which subdivisions and builders in Dallas have hundreds if not thousands of homes sitting right now?

 Time will tell but I am not seeing significant year over year decreases.  I think most of those that bought at the peak will be fine as they likely sold their prior home at the peak and locked in very low rates.  Very few were stretched to make the deal happen.  Weak buyers were not winning those bidding wars.  Those that take action typically do better than those who think they can time the market.  I know buyers have been waiting “for the crash” since 2014.   We still don’t have enough inventory.  There was very little new construction from 2009-2019 and now builders are slowing down for supply chain issues to avoid any sitting inventory.  They are not slowing due to a lack of buyers.  They are still buying down rate and selling houses,  just an an intentionally slower pace.  

When gas went from $3 a gallon to $6 a gallon and then back down to $4 per gallon did we say that the oil and gas market has collapsed and the sky is falling?    If you wanted to cherry-pick statistics you would make that argument and come up with some amazing clickbait.  Same with lumber.  Should we use historical data or should we focus on the short-term trends after a freak event that drove pricing through the roof temporarily.  Softwood lumber decreased 23% in June... does that mean the Lumber market has collapsed and the entire industry is in chaos?   

If you want to find data suggesting the real estate market is healthy and we are seeing the normal fall/winter slow down combined with the rate increase then you can find that.   If you want to dig for negative stats and sensationalize them (The Biggest drop since 2011!!!!) then you can find those.   

The market is already adjusting to rate issues.   There are seller financing classes everywhere popping up and mortgage companies are offering 2-1 buy downs so you are paying 4% for the next two years (with hopes rates trickle back down).  I think as the lending market adjusts you will see prices stabilize.  There is still not enough housing.  Rents are quite high.  The recipe for what I consider a crash isn't there.   

 Sacramento is in the middle of building or expanding a handful of hospitals and medical school campus’ employing something like 4500 new doctors.  

I think the most important question is what you would do with the roughly $250k you would net. If you sell soon you avoid cap gains.  Typically higher end rentals like that don’t cash flow well. I don’t foresee the older parts of Folsom appreciating as quickly as they have with all of the new construction taking place south of Hwy 50.