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US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

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Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#91

Post by randysavage »

alexibm wrote: post #64
seanmcdirmid wrote: post #59

Earlier quoted context omitted.

Right, flippers aren’t taking conventional housing loans on the properties they are flipping. They are getting short term lines of credit instead because they don’t expect to have the house for more than a few months.

I'm not sure what kind of flippers you are referring, but usually there are no loans. Cash purchases - 100% for the entire value of the property. Source: my parents are prof. flippers.

This is pretty unusual for anyone doing it seriously. I've "flipped" (not exactly -- mostly major additions and teardowns that we hold for 6-12 months) the past 5 years and haven't met anyone who exclusively uses their own cash. We use some of our own cash, but you have to look at the opportunity cost.

The interesting part has been the interest rates. We started out borrowing hard money at 14% and are down to 7-8% now depending on the lender. Lots of cash out there chasing returns.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#92

Post by jsoc815 »

danjoc wrote: post #7
ChuckMcM wrote: post #5

There are all sorts of reasons that house sales slow down, not the least of which are reduced tax benefits, higher interest rates, and a general market forces. The interesting thing to watch for is the flipper sales. Which is to say if a significant chunk of the market in your area is actually being held by people who bought the house just to flip it, then when you get two or three months of flat to downward pressure…

That's not really what happened in the last crash though. The people who bought, held. The only people who got hurt were home owners who go underwater and then lose a job. They can't afford to wait it out, they can't afford to make the payment, so they end up in foreclosure. Then the bank holds and it ends up as a zombie home.[1] The zombie falls to pieces, so the bank gets a bail out, the home is written off, and th…

> Then the bank holds... gets a bail out, the home is written off, and the market is just as tight as it ever was.

This! I've been talking to people about this for years. Most don't believe me when I say it. In fact, I've only had one person, a banking official, acknowledge that this was standard practice, but he assured me that it was coming to an end (two years ago).

But yes, what you've written is totally the case. In fact, I just checked on a house that I know to have been abandoned by its "owners" in early 2011, but is still recorded as in their possession. Those folks sent the bank jingle mail, which the bank kindly sent back! (LOL)

[edit 1: I also don't think that many of the low- & no-money down portfolio sales that Fannie and Freddie did to clear their books helped matters.]

It's almost like Japan (from the little that I've read) was a blueprint for the U.S. etc., and the U.S., I suspect, will be an further example for other markets.

[edit 2: Book recommendation Chain of Title by David Dayen]

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#93

Post by toast0 »

danjoc wrote: post #13
ChuckMcM wrote: post #10

Earlier quoted context omitted.

All true, I was thinking about the 'home price recessions' that happen periodically as opposed to the mortgage crisis which was precipitated in part by synthetic CDOs masking poor lending processes.

Ah, understood. I remember shopping for houses after the crash, and it seemed everything was either a trash heap, or in foreclosure. The bank wouldn't take an offer, preferring to cash auction to investors at the starting price of the highest offer they had. No cash, no house, no matter how good the credit rating. The cheap house thing was basically a myth from my vantage point.

I bought in Feb 2009. Almost everything we looked at was bank owned; some of them were pretty terrible, most were ok, the one we made an offer on was accepted the day after, but the bank did run our credit to confirm we were financiable.

I purchased a new home out of the area recently, it's a lot different looking at homes that aren't vacant, and dealing with the previous owner not getting all their stuff out on time.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#94

Post by monkmartinez »

debacle wrote: post #32
mortenjorck wrote: post #15

The Case-Shiller Index currently has home prices rising at 2-3x inflation: https://www.housingwire.com/articles/46307-case-shiller-home... That would certainly seem to be unsustainable.

We're still post-crash, and China is putting a lot of money into American real estate.

"is == were" from what I understand

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#95

Post by jsoc815 »

mark212 wrote: post #84
astura wrote: post #41

Earlier quoted context omitted.

I'm a homeowner and I think it's an absolute crime my mortgage interest is tax deductible yet rent isn't. If we believe, at a philosophical level, that interest payments should be tax deductible, ok, then make ALL interest paid tax deductible - credit cards, personal loans, auto loans, payday loans, etc. It's shameful. That being said, with the new tax bill, 90+% of both owners and renters will be taking the standard…

The entire (expressly stared) reason to make mortgage interest deductable was to encourage more home ownership. You may disagree that that’s a desirable policy goal (and I might agree with you), but comparing it to some other payment that isn’t deductable misses the point entirely. Especially rent. Congress wanted to create an economic dis-incentive to being a renter and push people to own the homes they live in.

> The entire (expressly stared) reason to make mortgage interest deductable was to encourage more home ownership.

IIRC it was actually to encourage more borrowing so that the banks could securitize and sell off the loans. Increased home "ownership" was/is the altruistic reason presented to the public so that they feel good about the whole thing. Not looking to start an argument here, but there are plenty of other ways to encourage "ownership" that don't require encouraging debt peonage and market inflation.

Also when credit cards were first becoming a mainstream thing, the interest on that was also tax deductible. I forget the specifics about why it was deemed acceptable to dispense w/that tax break.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#98

Post by farnsworth »

shoo wrote: post #80
farnsworth wrote: post #67

I closed on a condo in Seattle literally this morning. Did I buy at the exact worst possible time?

It depends why you were buying it. Were you buying to flip it as a short term investment, or a place to live in for the next 5-10-20+ years? the market price only matters if you're forced to sell or forced to buy. if you dont need to sell or dont need to buy, you can ignore it

A few downsides from my perspective

- I plan to rent out the second bedroom, and rents are dropping. And I plan to rent out the whole place within a few years

- I miss out on cheaper rent in nicer buildings (also because rents are dropping) or on buying a cheaper or nicer condo

I'm fortunate enough that I can am more or less comfortable paying for it as long as I have my job but if I can't find a renter at a decent price, I'm going to be hurting a little bit.

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#99

Post by matheweis »

danjoc wrote: post #9
CamTin wrote: post #8

Just today (in Austin) I saw a banner by the road outside a bank offering "100% financing" for homebuyers. If banks breathlessly pitching to lend buyers the entirety of a home's price is not a sign of an overheated debt-led housing market, I don't know what is.

It gets worse than that, https://www.lendingtree.com/home/mortgage/interest-only-mort...

“Adjustable-rate interest-only mortgage“ ... how is that even legal?

Re: US housing market hit a ‘significant slowdown’ in recent weeks, Redfin CEO says

#100

Post by ummonk »

mjevans wrote: post #38

Housing is only an 'investment' because of how expensive it inherently is. However, my opinion has been that housing /has been/ in a bubble since at least the mid 2000s (pre recession); and it didn't actually deflate (at least in the area I live in) /during/ that recession. It would really be nice if some way of fixing this bubble chasing nonsense happened. Maybe if healthcare and retirement were fully socialized thi…

Well, Prop 13 in California particularly incentivizes housing bubble chasing.
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