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The housing market is starting to crack – Sellers are cutting prices

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Re: The housing market is starting to crack – Sellers are cutting prices

#41

Post by nilespotter »

mnky9800n wrote: post #38
jeffreyrogers wrote: post #33

Unless the housing supply increases this will just be a temporary thing. As long as people are able to make their mortgage payments they typically won't sell their homes at a loss (even if their equity is negative). Some people will always be forced to sell due to life events and that's what will set current market comps. Since mortgage rates have recently spiked upwards people who need a mortgage to buy a home can a…

There should just be a pandemic or something that puts a lot of people out of work so that they have to sell at low prices so that large real estate companies can buy their houses and then rent them back to them. They can even have a reverse rental program that allows people to stay in their homes through the hard times and instead pay rent to the new owners.

Did that actually happen?

Re: The housing market is starting to crack – Sellers are cutting prices

#42

Post by lastofthemojito »

lenerdenator wrote: post #36

It won't matter for Millennials trying to buy their first homes. I'm seeing single-family houses going for $310k that should be going for maybe 2/3rds of that on a good day. Typically they're flipped houses. If you were to bring down the value of every single-family home in the US, that means accepting about 2/3rds the value of each of these mortgages, along with all of the securitized derivatives of them. That's a 2…

> I'm seeing single-family houses going for $310k that should be going for maybe 2/3rds of that on a good day.

I've been hearing a lot of "should be" talk like that recently - like folks complaining that people are paying $50k for a normal SUV that "should be" $30k or whatever.

What are we basing "should be" on? Some affordability metric? Our gut feeling about what a comparable thing cost a few years ago?

If I sold my house and someone told me I should have sold it for 2/3 of what I sold it for, I think I'd sit in stunned silence for a moment and then just laugh.

Re: The housing market is starting to crack – Sellers are cutting prices

#43

Post by quickthrowman »

wolverine876 wrote: post #37
bryanlarsen wrote: post #22

On CNBC today: Mortgage rates plunge and demand finally inches back https://www.cnbc.com/2023/11/08/mortgage-rates-plunge-and-de...

Unless the Fed cuts rates, how can mortgage rates plunge? Is CNBC doing it's old (and maybe continuing) cheerleading?

Mortgage rates mostly track the 10y yield, not the federal funds rate. As I understand it, avg US mortgage duration is 9-10y which is why mortgage rates track the US10Y yield.

The Fed doesn’t directly control the 10y yield like they do the federal funds rate

Re: The housing market is starting to crack – Sellers are cutting prices

#44

Post by carlosjobim »

glimshe wrote: post #26

Surprise, surprise. The historical housing bubble was caused by artificially low interest rates adopted worldwide. Ever-increasing housing prices is bad for people who own homes (higher property taxes, property tax distortions across cities, higher fees when changing houses) and those who don't own any. Low interest rates discourage saving and encourage unproductive speculation and house flipping. The people benefitt…

> Ever-increasing housing prices is bad for people who own homes

On the contrary, ever-increasing housing prices have allowed generations of home-owners to reap immense amounts of tax-free income by borrowing against their real estate. For large parts of the population, having a job is not the way they make a living. Borrowing money is how they make a living, having a job and even a career is just the ticket they need to be able to borrow as much money as possible. In many countries the majority of the population make a living by borrowing, while only a few by working.

The only people who actually make a living by working are the idiots, and that's why they remain broke their entire lives and have nothing to give their children after they pass away. Usually they don't even have children.

This system works as long as there's more money to borrow to keep real estate value going up and more idiots born to work for a living. And when the jig is over, all debts of the real estate owners will be forgiven, while the rest will be sent off to die in some war.

Re: The housing market is starting to crack – Sellers are cutting prices

#47

Post by Der_Einzige »

glimshe wrote: post #26

Surprise, surprise. The historical housing bubble was caused by artificially low interest rates adopted worldwide. Ever-increasing housing prices is bad for people who own homes (higher property taxes, property tax distortions across cities, higher fees when changing houses) and those who don't own any. Low interest rates discourage saving and encourage unproductive speculation and house flipping. The people benefitt…

GenAI is going to keep the economy good while interest rates stay high probably forever, meaning that housing availability won't actually drop significantly. We should not expect house prices to go down more than a trickle.

Re: The housing market is starting to crack – Sellers are cutting prices

#48

Post by jfengel »

jeffreyrogers wrote: post #33

Unless the housing supply increases this will just be a temporary thing. As long as people are able to make their mortgage payments they typically won't sell their homes at a loss (even if their equity is negative). Some people will always be forced to sell due to life events and that's what will set current market comps. Since mortgage rates have recently spiked upwards people who need a mortgage to buy a home can a…

I'm afraid I don't follow that. House-sellers are generally also house-buyers. They move out of one place into another. It's neutral with respect to supply.

If there's a glut of people owning houses but not living in them and not successfully renting them, then that does reduce supply, but they're also suffering opportunity cost. If they're willing to throw away money like that I don't think increasing supply would help -- they'd just buy up the new houses as well.

Re: The housing market is starting to crack – Sellers are cutting prices

#49

Post by res0nat0r »

lastofthemojito wrote: post #42
lenerdenator wrote: post #36

It won't matter for Millennials trying to buy their first homes. I'm seeing single-family houses going for $310k that should be going for maybe 2/3rds of that on a good day. Typically they're flipped houses. If you were to bring down the value of every single-family home in the US, that means accepting about 2/3rds the value of each of these mortgages, along with all of the securitized derivatives of them. That's a 2…

> I'm seeing single-family houses going for $310k that should be going for maybe 2/3rds of that on a good day. I've been hearing a lot of "should be" talk like that recently - like folks complaining that people are paying $50k for a normal SUV that "should be" $30k or whatever. What are we basing "should be" on? Some affordability metric? Our gut feeling about what a comparable thing cost a few years ago? If I sold m…

I'm guessing that is the case. Condos next door that cost $210k before covid now in the exact same spot three years alter asking for $630k is probably making people ask questions about the market.

Re: The housing market is starting to crack – Sellers are cutting prices

#50

Post by AnimalMuppet »

lenerdenator wrote: post #36

It won't matter for Millennials trying to buy their first homes. I'm seeing single-family houses going for $310k that should be going for maybe 2/3rds of that on a good day. Typically they're flipped houses. If you were to bring down the value of every single-family home in the US, that means accepting about 2/3rds the value of each of these mortgages, along with all of the securitized derivatives of them. That's a 2…

But see, the thing about flipped houses is that the people who own them don't actually want them. They want to sell them. For as much as they can get, sure, but also to sell them in a timely fashion.

So I don't see flippers as being the big deterrent to prices falling. If they haven't caved yet, they will in a few months.

> If you were to bring down the value of every single-family home in the US, that means accepting about 2/3rds the value of each of these mortgages, along with all of the securitized derivatives of them. That's a 2007-2009-level crash, which the banks just won't tolerate.

And how, specifically, do you think the banks are preventing this? Not just "it's a conspiracy - we all know it". OK, maybe so. What's the mechanism?

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