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Thread: Frozen Housing Market

post 1686860553 07-20-2023, 09:26 AM
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Frozen Housing Market

I know we had some miscers calling for a large drop in prices, but there simply isn't the volume of sales to support it.



https://www.zerohedge.com/personal-f...ne-most-nov-22




https://www.zerohedge.com/economics/...t-share-record
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post 1686860643 07-20-2023, 09:28 AM
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Value won’t go down much cuz inflation but no one signing up for mortgages and those that do are being forced to with plans of refinancing.

Pretty much what I expected to happen
post 1686860663 07-20-2023, 09:29 AM
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Why would prices drop just because people aren't selling?

Why would prices drop just because people aren't buying?

Homes are not commodities.

Repeat after me:

Homes are not commodities.
post 1686860703 07-20-2023, 09:29 AM
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The high prices will continue until morale improves.
post 1686861043 07-20-2023, 09:34 AM
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I've said it before: a lot of areas across the country just aren't building many new houses. I know in my area new home construction has been non-existent for years, and from what I hear it's local and state politicians behind it. They would rather everyone live in dense residential like apartments and the like, it seems.

Imo prices won't go anywhere lower unless a lot of new construction goes underway
post 1686861063 07-20-2023, 09:34 AM
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Originally Posted By Rajc⏩
>source: zerohedge

kek'd
I mean they mainly just share excerpts and posts from other sources though.
Overnight, real-estate brokerage Redfin calculated just how widespread said paralysis is: it found that just 14 of every 1,000 U.S. homes changed hands during the first six months of 2023. That’s down from 19 of every 1,000 during the same period of 2019 and the lowest turnover rate in at least a decade, since Redfin's records started. That means prospective homebuyers have 28% fewer homes to choose from than they did before the pandemic upended the U.S. housing market.



As Redfin adds, the wild pandemic-era housing market has intensified an existing shortage of homes for sale and led to this year’s low turnover rate. In 2018, Freddie Mac estimated that about 2.5 million more homes needed to be built to meet demand, with the shortfall mainly due to a lack of construction of single-family homes. The homebuying boom of late 2020 and 2021, driven by record-low mortgage rates, remote work and a surge in investor purchases, depleted already low inventory levels. Finally, 2022’s soaring mortgage rates–average rates nearly doubled from January to June–exacerbated the shortage by handcuffing homeowners to their comparatively low rates. Some homeowners have opted to renovate their current home, and some are buying another home but hanging onto their first one and renting it out to either a longterm tenant or short-term vacationers. Now, the supply of homes for sale is at a record low.

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post 1686861123 07-20-2023, 09:36 AM
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post 1686861133 07-20-2023, 09:36 AM
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Originally Posted By DolphinPilot⏩
I've said it before: a lot of areas across the country just aren't building many new houses. I know in my area new home construction has been non-existent for years, and from what I hear it's local and state politicians behind it. They would rather everyone live in dense residential like apartments and the like, it seems.

Imo prices won't go anywhere lower unless a lot of new construction goes underway
True.

There is a TON of housing construction, but the thing is, it's not mostly new houses getting built. It's apartment complexes and condos that landlords are renting out.
post 1686861303 07-20-2023, 09:39 AM
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Originally Posted By ALinkToThePast⏩
True.

There is a TON of housing construction, but the thing is, it's not mostly new houses getting built. It's apartment complexes and condos that landlords are renting out.
Yeah the only new housing projects I have seen around me the last several years were some oversized houses starting at 750k... And it was in a suburb or almost rural area so you'd have probably close to an hour commute to work in most cases
post 1686861383 07-20-2023, 09:41 AM
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Originally Posted By ALinkToThePast⏩
Everyone I know who didn't buy a home pre-2019/2020 has been bragging about how housing prices will tank within a year for the past 3 years.
Almost everyone I know that bought pre-covid thinks they're some sort of financial genius now, even though no one saw this coming, and they only bought because they needed somewhere to live.
Originally Posted By DolphinPilot⏩
I've said it before: a lot of areas across the country just aren't building many new houses. I know in my area new home construction has been non-existent for years, and from what I hear it's local and state politicians behind it. They would rather everyone live in dense residential like apartments and the like, it seems.

Imo prices won't go anywhere lower unless a lot of new construction goes underway
There's a TON of new construction where I live and prices just keep going up. I don't understand the people buying. I know it's a meme on here, but at these prices it actually makes more sense to rent, imo. There's no actual shortage of homes, the government just broke the market with almost free money, so no one's swapping out their insanely low rate when homes are listing for 3x what they were in 2020 and rates are no longer 3%. Those low rates are what caused prices to skyrocket, because most people stupidly shop by monthly payment, not price.
post 1686861493 07-20-2023, 09:43 AM
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People don't want to sell their home because new mortgage is more expensive = Low inventory for sale

People don't want to buy a home because mortgages are more expensive = low inventory of buyers.

=stagnate.

You either need more sellers than buyers = prices drop, or
more buyers than sellers = prices rise
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post 1686861573 07-20-2023, 09:44 AM
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Originally Posted By coast2coastam⏩
Almost everyone I know that bought pre-covid thinks they're some sort of financial genius now, even though no one saw this coming, and they only bought because they needed somewhere to live.
There's a TON of new construction where I live and prices just keep going up. I don't understand the people buying. I know it's a meme on here, but at these prices it actually makes more sense to rent, imo. There's no actual shortage of homes, the government just broke the market with almost free money, so no one's swapping out their insanely low rate when homes are listing for 3x what they were in 2020 and rates are no longer 3%.
See, the thing is everybody needs shelter. Just like you need food, water, clothing and energy. You will die without those things. It is a foregone conclusion that you will spend money on those things. So you can rent or buy a home. If one can afford to buy a home they will, because renting sucks.
post 1686861663 07-20-2023, 09:47 AM
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Originally Posted By saltypits⏩
See, the thing is everybody needs shelter. Just like you need food, water, clothing and energy. You will die without those things. It is a foregone conclusion that you will spend money on those things. So you can rent or buy a home. If one can afford to buy a home they will, because renting sucks.
I've watched houses sit on the market for a year at $180k, then covid and the low rates rolled in and people were fighting to get them for $500k. I've been saying it for way too long, but none of this feels sustainable long term, and if I were a betting man over the length of a standard mortgage (30 years), I would wager the people that paid $500k for those homes are going to be underwater on their loans at some point.
post 1686861733 07-20-2023, 09:48 AM
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Originally Posted By coast2coastam⏩
I've watched houses sit on the market for a year at $180k, then covid and the low rates rolled in and people were fighting to get them for $500k. I've been saying it for way too long, but none of this feels sustainable long term, and if I were a betting man over the length of a standard mortgage (30 years), I would wager the people that paid $500k for those homes are going to be underwater on their loans at some point.
Sure. Who knows. In 30 years even @ 2% inflation they might not make any back. So what? Should your primary home be an investment? Should it make money?

Do you rent? Have you ever rented?
post 1686861803 07-20-2023, 09:50 AM
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Originally Posted By coast2coastam⏩
I've watched houses sit on the market for a year at $180k, then covid and the low rates rolled in and people were fighting to get them for $500k. I've been saying it for way too long, but none of this feels sustainable long term, and if I were a betting man over the length of a standard mortgage (30 years), I would wager the people that paid $500k for those homes are going to be underwater on their loans at some point.
Why though? 30 years ago people bought houses for $50,000 and now they are worth 10x that. Why will the next 30 years be different?
post 1686861833 07-20-2023, 09:50 AM
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Originally Posted By saltypits⏩
Sure. Who knows. In 30 years even @ 2% inflation they might not make any back. So what? Should your primary home be an investment? Should it make money?
I mean whether you look at it as an investment doesn't matter, you're on the hook for $500k in an area where all your neighbors paid under $200k for the same thing. You just got hosed out of $300k. If there's no correction I guess you're better off buying even at $500k, but that's crazy.
post 1686861883 07-20-2023, 09:51 AM
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Originally Posted By Retoaded⏩
Why though? 30 years ago people bought houses for $50,000 and now they are worth 10x that. Why will the next 30 years be different?
There's only a handful of places like that. Coastal California? And even that area had a huge correction following 2008.
post 1686861943 07-20-2023, 09:52 AM
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I sell homeowner's insurance and usually have to coordinate with mortgage lenders in the process of writing a new policy. Actually just heard yesterday there's a local broker who is writing ARMs left and right. They have a guaranteed low (relative) rate locked in for 5 years and after that, it's off to the races. Things I've noticed during lockdowns were families using equity to upgrade to new houses and leaving their entry level homes all at the same time. That jacked up the price of entry level homes and I'm guessing people are having to stretch now to pay for them, thus the ARMs. This is just in my local area which is relatively stable from slumps. But I can't imagine the long term outcome will be good.
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post 1686861963 07-20-2023, 09:53 AM
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post 1686861993 07-20-2023, 09:53 AM
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People were complaining about house prices before the pandemic too and now look at where they are

Current mortgage rates are at about the historical average, they're not even high. If you want to see high interest rates, go back to The Great Inflation of the '80s where they were legit 20% at times. What was unusual was the ultra low rates we had experienced for the last decade, and those might not return again or not for a very long time unless we experience economic catastrophe like 2008/2009.
post 1686862053 07-20-2023, 09:54 AM
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Originally Posted By coast2coastam⏩
There's only a handful of places like that. Coastal California? And even that area had a huge correction following 2008.
I definitely don't think the rate of increase is sustainable. But the fact that houses are going to appreciate over time in the long run is definitely sustainable.

Yeah not talking about coastal areas that fluctuate wildly depending on market/economic conditions, but just the average home in the average city in the US.

I live in SC and the coastal areas are outrageously priced right now and definitely will come down at some point in the next couple years, agree with that. Should have bought a beach house in 2010 when they were practically giving them away.
post 1686862083 07-20-2023, 09:55 AM
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Originally Posted By coast2coastam⏩
I mean whether you look at it as an investment doesn't matter, you're on the hook for $500k in an area where all your neighbors paid under $200k for the same thing. You just got hosed out of $300k. If there's no correction I guess you're better off buying even at $500k, but that's crazy.
So?

I can tell you one thing with absolute certainty: Renting always tracks inflation. Always. Ever since inflation was understood.
post 1686862133 07-20-2023, 09:55 AM
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Originally Posted By jamalfudge⏩
I sell homeowner's insurance and usually have to coordinate with mortgage lenders in the process of writing a new policy. Actually just heard yesterday there's a local broker who is writing ARMs left and right. They have a guaranteed low (relative) rate locked in for 5 years and after that, it's off to the races. Things I've noticed during lockdowns were families using equity to upgrade to new houses and leaving their entry level homes all at the same time. That jacked up the price of entry level homes and I'm guessing people are having to stretch now to pay for them, thus the ARMs. This is just in my local area which is relatively stable from slumps. But I can't imagine the long term outcome will be good.
The ARMS here are right around what the 30 year rates are, which is crazy.
post 1686862163 07-20-2023, 09:56 AM
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Originally Posted By litljay⏩
People don't want to sell their home because new mortgage is more expensive = Low inventory for sale

People don't want to buy a home because mortgages are more expensive = low inventory of buyers.

=stagnate.

You either need more sellers than buyers = prices drop, or
more buyers than sellers = prices rise
This.

People sitting on a low-mortgage back when houses were cheap have absolutely no incentive to put their house on the market.

New housing construction has slowed greatly. It hasn't stopped, but it's slowed. A lot of potential new buyers simply dropped out of the market due to current cost of houses AND interest rates = high cost of mortgage. They are simply priced-out now.

Developers see that demand has dropped significantly and they aren't investing in new homes without buyers putting money upfront first.
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post 1686862183 07-20-2023, 09:57 AM
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Originally Posted By Destor⏩
People were complaining about house prices before the pandemic too and now look at where they are

Current mortgage rates are at about the historical average, they're not even high. If you want to see high interest rates, go back to The Great Inflation of the '80s where they were legit 20% at times. What was unusual was the ultra low rates we had experienced for the last decade, and those might not return again or not for a very long time unless we experience economic catastrophe like 2008/2009.
Difference being the lended amount is much, much higher. Ah well.
post 1686862273 07-20-2023, 09:58 AM
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Originally Posted By Retoaded⏩
I definitely don't think the rate of increase is sustainable.But the fact that houses are going to appreciate over time in the long run is definitely sustainable.

Yeah not talking about coastal areas that fluctuate wildly depending on market/economic conditions, but just the average home in the average city in the US.

I live in SC and the coastal areas are outrageously priced right now and definitely will come down at some point in the next couple years, agree with that. Should have bought a beach house in 2010 when they were practically giving them away.
I'd agree if it wasn't for the fact that housing appreciated so much so quickly. People can't realistically afford housing prices now, they're propped up by the lack of inventory due to everyone sitting on insanely low refinanced rates.
post 1686862353 07-20-2023, 10:00 AM
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Originally Posted By saltypits⏩
So?

I can tell you one thing with absolute certainty: Renting always tracks inflation. Always. Ever since inflation was understood.
You can rent for a lot less than a mortgage would be at current housing prices where I live. Renting sucks, but buying a house is becoming something that's impossible for a lot of people at these prices. I would think that something's gotta give at some point.
post 1686862453 07-20-2023, 10:02 AM
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Originally Posted By coast2coastam⏩
I'd agree if it wasn't for the fact that housing appreciated so much so quickly. People can't realistically afford housing prices now, they're propped up by the lack of inventory due to everyone sitting on insanely low refinanced rates.
I am in the middle of buying a house and selling 2, so right in the middle of it lol. 1 house bought, 1 house sold, 1 more to go. The house I bought at 6.5 with no points and feel lucky on that, the first one I sold had 2 offers in 24 hours, 1 cash for asking price, close in 8 days, 1 about 10% over asking price but contingent on the buyer financing/etc, took the cash offer and got a fat check wired to me like 6 or 7 days later. the 1 I am about to sell I am in the middle of fixing up, and getting offers just from people hearing that I will be selling it soon. Its the wild west right now. been sorta exciting honestly, but only because I am going to come out of this with a lot of money. If I was having to buy with nothing to sell I would not be so happy about it lol.
post 1686862573 07-20-2023, 10:05 AM
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Originally Posted By coast2coastam⏩
You can rent for a lot less than a mortgage would be at current housing prices where I live. Renting sucks, but buying a house is becoming something that's impossible for a lot of people at these prices. I would think that something's gotta give at some point.
You're able to rent for less for now. I guarantee you that arbitrage situation will not last.

It certainly does take time, because as I have stated over and over and over again, homes are not commodities.
post 1686862583 07-20-2023, 10:06 AM
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Originally Posted By Retoaded⏩
I am in the middle of buying a house and selling 2, so right in the middle of it lol. 1 house bought, 1 house sold, 1 more to go. The house I bought at 6.5 with no points and feel lucky on that, the first one I sold had 2 offers in 24 hours, 1 cash for asking price, close in 8 days, 1 about 10% over asking price but contingent on the buyer financing/etc, took the cash offer and got a fat check wired to me like 6 or 7 days later. the 1 I am about to sell I am in the middle of fixing up, and getting offers just from people hearing that I will be selling it soon. Its the wild west right now. been sorta exciting honestly, but only because I am going to come out of this with a lot of money. If I was having to buy with nothing to sell I would not be so happy about it lol.
Yeah it is like the wild west, I honestly don't understand anyone that's buying unless they've sold for a great price. I also don't understand the actual prices, even given situation, the lack of inventory. It seems like people are just making up absurd numbers and someone's paying. It's wild. There's a house down that street that was $300k in like 2016, sold for $600k in 2021, and now it's listed for $800k. I don't understand the person that's paying $800k for that thing, assuming it sells. Idk where all this money is coming from.

Also, in 2021 rates were super low so people could afford the price doubling, I don't understand how anyone is affording another $200k bump in price and rates are no longer at historic lows.

I would say there HAS to be a crash, logically, but I've been so wrong so far lol
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