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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

#161

Post by chiph »

r00fus wrote: post #21
seanmcdirmid wrote: post #12

Earlier quoted context omitted.

Flippers are like canaries in the mine. They are usually leveraged like crazy on short term loans, not flipping the house quickly can be fatal to them. Rental won’t let them pay off there loans when they come due in a couple of months.

Cant rental (ie, passive) income be used to secure additional funding? I know that was the case when I considered buying property to rent back before the 2008 crash (I ended up not doing that, luckily).

Notwithstanding what others have said here - I think it depends on the market and the lender. When I looked to add a second property, the lender refused to consider the rent being earned from the first property, saying "Your tenant could move out at any moment, so we don't include that as part of a borrower's income in making our decision."

What I suspect happens is that once you reach some number of properties, you become a commercial borrower, and different rules apply. A former coworker owned most of a street of duplexes at one time, and he had no problems getting loans.

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

#162

Post by gnicholas »

pound wrote: post #160
gnicholas wrote: post #156

Earlier quoted context omitted.

No one has 30-year old property tax assessments and kids in school. This would require inheriting from 80-year old grandparents and having your parents pre-decease your grandparents.

prop13 taxes can be passed to grandchildren "In 1986 and 1996 respectively, California voters passed Propositions 58 and 193, which extended Prop 13 to exclude from reassessment property transfers between parents and children (58) and grandparents and grandchildren (193). As a result, when you inherit a home in California, you inherit its tax assessment as well"

It can only be passed to grandchildren when the children (the parents of the grandchildren, and all of their siblings) are all dead already. This rarely happens, which is why property tax inheritance almost never ends up going to someone with young children.

https://www.avvo.com/legal-guides/ugc/prop-13-transfers-to-g...

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

#163

Post by pound »

gnicholas wrote: post #162
pound wrote: post #160

Earlier quoted context omitted.

prop13 taxes can be passed to grandchildren "In 1986 and 1996 respectively, California voters passed Propositions 58 and 193, which extended Prop 13 to exclude from reassessment property transfers between parents and children (58) and grandparents and grandchildren (193). As a result, when you inherit a home in California, you inherit its tax assessment as well"

It can only be passed to grandchildren when the children (the parents of the grandchildren, and all of their siblings) are all dead already. This rarely happens, which is why property tax inheritance almost never ends up going to someone with young children. https://www.avvo.com/legal-guides/ugc/prop-13-transfers-to-g...

Thanks, I didn't know that.

But back to taxes in general - if we want to have schools funded only by current parents contributions those are private schools.

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

#164

Post by refurb »

posixplz wrote: post #141
refurb wrote: post #86

Earlier quoted context omitted.

Meh... even in super hot markets like Vancouver, foreign purchases were 10% of transactions. And a lot of it was in the very expensive houses. It’s locals who are driving most of the price appreciations (and flippers).

10% more overall transaction volume is huge , especially for something as illiquid as real estate.

Foreigners have been buying property in Vancouver for a long time. Problem is, the volume was never measured so we don’t know what the increase was.

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

#165

Post by perl4ever »

all_blue_chucks wrote: post #150
lottin wrote: post #128

Earlier quoted context omitted.

You're talking about unrealised profits. In order for the profits to be realised you need to sell the house. So what happens then? Either you keep the profits and are left without a house, or you buy another house and are left without a profit. Because, you see, it's not only your particular house that has appreciated, all houses have.

What you say is true only if you never downsize and never leave a hot market. Realistically most people will book those profits when they no longer need to live next to a job center. When you don't need that downtown job anymore you can sell a million dollar house in a big city and buy a nicer house for half that elsewhere, pocketing the other half million as pure, tax-free profit.

"What you say is true only if you never downsize and never leave a hot market."

What you say is true only if you know exactly when to downsize and leave a hot market.

It can be the case that housing will always be more valuable in one place than another. But it can't be the case that the rate of increase will always be dramatically higher, because that will lead to a runaway differential. Therefore you have to expect a correction at a time that is uncertain.

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

#166

Post by perl4ever »

AnimalMuppet wrote: post #149
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.

I was in a bank yesterday, and saw the same thing. They had a person from their mortgage department approaching customers and informing them that they had 0 down loans available. This I take to be a bad sign. We're in "this time it's different" territory.

A stranger on LinkedIn sent a connection request to me within the last couple of days, and it was not a recruiter (the usual), but a real estate agent. First time that's happened. And I haven't been looking to buy a house, nor given anyone any indication that I'm interested, that I'm aware of. Probably nothing, but now I'm wondering if it's an indication people are getting hungrier.

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

#167

Post by jsoc815 »

jsoc815 wrote: post #92
danjoc wrote: post #7

Earlier quoted context omitted.

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…

What exactly is the problem w/this post?

As someone already mentioned, "zombie houses," which as far as I'm concerned qualify as shadow inventory, have existed for some time.

The portfolio sales did not help the average person buy a house. They did provide the GSEs an out with respect to clearing their books. The terms of sale that I've seen for a few of those transactions were incredibly generous; basically "pay us if, and when, you can."

Please do correct me where I'm wrong.

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

#168

Post by perl4ever »

matheweis wrote: post #99
danjoc wrote: post #9

Earlier quoted context omitted.

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

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

I don't know exactly how they work, but hasn't everybody heard about "NINJA" loans? "No Income, No Job, (no) Assets"

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

#169

Post by perl4ever »

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.

I've never understood how stock market returns can exceed inflation in the long run either...it seems inescapable logically that if you can come up with an asset with a guaranteed return, people will flock to it until the real return equals approximately zero.

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

#170

Post by jsoc815 »

tzs wrote: post #116
jsoc815 wrote: post #95

Earlier quoted context omitted.

> 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 wa…

Both that and the encourage home ownership theory seem unlikely when it comes to why it was deductible in the first place. It became deductible in 1913, but simply because in 1913 all interest became deductible. The first $3k ($4k married) was excluded. Only the top 1% paid enough interest to take any deduction, and very little of that would have been mortgage interest because they usually bought their homes outright…

I appreciate your digging into this. The 1913 tidbit is an interesting wrinkle.

I'd say, based on experience and conversations w/ elected officials, at the end of the day "encourage home ownership" is less likely to be a driver, but more so a selling point to the public.

I also seem to remember reading in a number of sources, one of Michael Lewis' books comes to mind, is that Lew Ranieri (and friends) is a probable reason for the deduction's survival if, as you suggest, there was any real discussion about cutting the MI deduction.

I can also tell you that NAR, for the more recent discussion about cutting the MI and SALT deductions would have been (and were) a significant factor in lobbying against changes that they would expect to slow sales.

Externally, lobbying is talked about as some sort of corrupting force to be excised. Internally, it's simply considered to be an integral part of the legislative process. IMHO, people should attribute less to altruism decisions that are likely linked to someone's lobbying efforts.

Thanks again.

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