Housing crash deniers ???
Most Popular Reply
Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votesThe market may correct, but I firmly believe there won't be a crash. The reason is simple, equity.
Before 2008 people with no income could get liars loans and buy much more real estate than they could afford. We heard stories of cleaning ladies buying multiple million dollar homes. When home prices starting falling, the whole thing collapses like a house of cards because nobody had any equity. They couldn't sell and get out. We had cascading foreclosures creating a downward spiral.
Recently, prices have been surging. Given the laws passed after the Great Recession, appraisals and lending is highly restricted. Appraisals have not been keeping up with prices and lenders won't lend above appraised value. We sold a house in 2021 and in one day had 20 offers. Several of them had acceleration clauses stating they would pay more than anyone else up to $X. Both of them waived any financing contingency because they KNEW the house wouldn't appraise for what they were offering. They had to make up the difference with cash. Those people have a ton of equity in their homes. If they had to sell, they might take a haircut, but they aren't going to get foreclosed.
There is no house of cards here to come tumbling down.
2904 Replies
- 4yNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
@John Carbone I have been trying to keep up with this thread...and I don't think many people are saying "home values can't drop back to 2020 levels." That's kind of a straw man. I guess we've settled on one 'side' saying "a crash isn't likely," whatever that means, and another 'side' saying something like:
"over the next 12-18 months, home prices in some markets may decrease 15-20% from their 2021 peak."
Well OK! I am not sure, about the latter, ( A ) how bold of a prediction it is, or ( B ) if that would even drop them to 2020 levels. But if that's the "crash," I certainly consider that not impossible, and within the range of potential outcomes.
I've tried to use the stock market as an analogy. Microsoft was trading at $25 a share until 2012. It then hit $350, but has dropped to $228. I guess that's a crash? I wasn't betting my life that it would stay at $350. And it's still >9x what it was just 10 years ago. I think that's astonishing. I am astonished by it.
I am astonished by this thread!
- Member since 2019 · 7k+ posts · 4k+ votes4y
Because the question is wrongly described.
If the question is rephrassed into "What the Fed wants".
Then everything is easy to be understood.
Thing is, this is not someone in Midwest or Minnesota fault, this is entirely the mistake of realtors in California asking their FOMO buyers to overbid every single ugly house for $300K. That IS the real CAUSE of inflation other than the other guy named Vladimir in other part of the world. - Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes4y
"crash" as defined as a sudden drop to national median home sale/value price of 30% or more.
@James Hamling if we are talking about technical terms and definitions, then you are right housing won’t “crash” suddenly 30 percent. You are right about that. It will “correct” 20-30 percent by end of 2023 though, and as I said before homeowners now won’t care that it happened over a longer time horizon, as opposed to “suddenly”.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes4y
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Agreed James! Good to finally have something we agree on.Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Not to mention U.S. steps up production and export, this helps stabilize Europe energy sector, not fix but would be a help, and that could help calmer heads to prevail. Maybe, just maybe starting a cycle of calming, and getting to work of solutions vs freaking out over problems.
Or, just keep letting Rus fill that void, use the influence from such, and all just stays contentious.
I am 20000% agree with this too.
Btw the rig active count in the US now is better than in 2020, but still much less than in 2014, there're still a lot of rigs that can be activated.
What the US gov and Fed must do is sell those treasury and use the money short the oil futures :)
Ever hear of the Bakken Formation? Most don't know this, but have heard of the North Dakota "oil rush" of a few years back, that's was in association with the Bakken Formation.
Having personally known some of the guys up there doing exploration, I also know from 1st hand knowledge that they stumbled upon what looks to be even bigger untapped potentials. The biggest issue is transportation, after the obvious of permits to drill.
The Bakken and Three Forks formation has billions, literally BILLIONS of barrels in recoverable oil, and that's just what we know of today. Much of the area has not been thoroughly researched because there is no point at the moment because were not able to fully utilize the Bakken alone as of yet.
The entire U.S. strategic oil reserve was about 700m barrels. Of which we have now 416m. We did NOT need to tap strategic reserves, all that needed, and NEEDS to be done, is UNLEASH THE BAKKEN.
Or, how about the below fun-fact:
On January 18, 2018, TransCanada announced they had secured commitments to ship 500,000 barrels (79,000 m3) per day for 20 years. On January 20, 2021, President Joe Biden revoked the permit for the pipeline on his first day in office. On June 9, 2021, the project was abandoned by TC Energy.
Now, for those not savy on math, the CUTTING of that oil supply, when cross referenced by what oil has been issued out by EMERGENCY order from the U.S. strategic oil reserves, = 600 days. Ain't that just a coincidence, on what has need to be released all but perfectly matches with the cut, huhhh....... If they simply UN-blocked that existing energy source they cut, in 600 days it would deliver the entire amount this strategic release has pumped out. Which goes to show, by the math of it, there basically REPLACING this oil they CUT with OUR OIL, the tax payers oil, because that's what the U.S. strategic reserve is, it's OUR oil, that's supposed to be in storage for emergencies NOT replacing CUTTING sources.So, the summary is why do we have inflation and the inflation risks we do, because of idiot actions, AND continued idiotic actions. Done at the peoples expense, in full daylight, covered up with lies, distortions and BS to lull we-the-people to infighting over who's talking points and slogans are more "right".
When you CUT 500,000 barrels PER DAY of oil, a 3rd grader can figure out that all oil related items will go UP in cost, and shortages will happen. It's not complicated. AND as the strategic reserves runs out, which it is now, it's running out, the reality of that cut supply and it's hike on all prices will come to be.
When that happens, WHEN not if, WHEN you will experience yet another spike in inflation. Fuel prices will again surge, transport costs will surge, and everything will again surge in price. And the ONLY action left will be WAGE INFLATION.
Or, or they turn the tap's back on. But if there that smart, why have they not done it yet?
See, politics IS a Siamese twin too money and the economy. One does NOT live in a bubble exclusive to the other.
- Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @John Carbone:
"crash" as defined as a sudden drop to national median home sale/value price of 30% or more.
@James Hamling if we are talking about technical terms and definitions, then you are right housing won’t “crash” suddenly 30 percent. You are right about that. It will “correct” 20-30 percent by end of 2023 though, and as I said before homeowners now won’t care that it happened over a longer time horizon, as opposed to “suddenly”.
... What Fed really wants............. is to duplicate this QT/Reverse Repo project back in the 2004-2006 financial regime, it's not hard to understand. We are 12 months from Pivot. It's the same 2008 Cycle as John accurately described: inflate,top,deflate, and then inflate again in the future.
It takes 22 years to have this cycle to be restarted. It's not coincidence I think that sticky CPI less shelter is somewhat similar to 2008 condition.
- Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes4yValid point james, but your missing the component of demand. When the the high rates grinds the economy to a halt, there will be less demand for oil. That is the playbook being deployed now.
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Agreed James! Good to finally have something we agree on.Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Not to mention U.S. steps up production and export, this helps stabilize Europe energy sector, not fix but would be a help, and that could help calmer heads to prevail. Maybe, just maybe starting a cycle of calming, and getting to work of solutions vs freaking out over problems.
Or, just keep letting Rus fill that void, use the influence from such, and all just stays contentious.
I am 20000% agree with this too.
Btw the rig active count in the US now is better than in 2020, but still much less than in 2014, there're still a lot of rigs that can be activated.
What the US gov and Fed must do is sell those treasury and use the money short the oil futures :)
Ever hear of the Bakken Formation? Most don't know this, but have heard of the North Dakota "oil rush" of a few years back, that's was in association with the Bakken Formation.
Having personally known some of the guys up there doing exploration, I also know from 1st hand knowledge that they stumbled upon what looks to be even bigger untapped potentials. The biggest issue is transportation, after the obvious of permits to drill.
The Bakken and Three Forks formation has billions, literally BILLIONS of barrels in recoverable oil, and that's just what we know of today. Much of the area has not been thoroughly researched because there is no point at the moment because were not able to fully utilize the Bakken alone as of yet.
The entire U.S. strategic oil reserve was about 700m barrels. Of which we have now 416m. We did NOT need to tap strategic reserves, all that needed, and NEEDS to be done, is UNLEASH THE BAKKEN.
Or, how about the below fun-fact:
On January 18, 2018, TransCanada announced they had secured commitments to ship 500,000 barrels (79,000 m3) per day for 20 years. On January 20, 2021, President Joe Biden revoked the permit for the pipeline on his first day in office. On June 9, 2021, the project was abandoned by TC Energy.
Now, for those not savy on math, the CUTTING of that oil supply, when cross referenced by what oil has been issued out by EMERGENCY order from the U.S. strategic oil reserves, = 600 days. Ain't that just a coincidence, on what has need to be released all but perfectly matches with the cut, huhhh....... If they simply UN-blocked that existing energy source they cut, in 600 days it would deliver the entire amount this strategic release has pumped out. Which goes to show, by the math of it, there basically REPLACING this oil they CUT with OUR OIL, the tax payers oil, because that's what the U.S. strategic reserve is, it's OUR oil, that's supposed to be in storage for emergencies NOT replacing CUTTING sources.So, the summary is why do we have inflation and the inflation risks we do, because of idiot actions, AND continued idiotic actions. Done at the peoples expense, in full daylight, covered up with lies, distortions and BS to lull we-the-people to infighting over who's talking points and slogans are more "right".
When you CUT 500,000 barrels PER DAY of oil, a 3rd grader can figure out that all oil related items will go UP in cost, and shortages will happen. It's not complicated. AND as the strategic reserves runs out, which it is now, it's running out, the reality of that cut supply and it's hike on all prices will come to be.
When that happens, WHEN not if, WHEN you will experience yet another spike in inflation. Fuel prices will again surge, transport costs will surge, and everything will again surge in price. And the ONLY action left will be WAGE INFLATION.
Or, or they turn the tap's back on. But if there that smart, why have they not done it yet?
See, politics IS a Siamese twin too money and the economy. One does NOT live in a bubble exclusive to the other.
- Member since 2022 · 485 posts · 216 votes4y
Quote from @John Carbone:
Valid point james, but your missing the component of demand. When the the high rates grinds the economy to a halt, there will be less demand for oil. That is the playbook being deployed now.Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Agreed James! Good to finally have something we agree on.Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Not to mention U.S. steps up production and export, this helps stabilize Europe energy sector, not fix but would be a help, and that could help calmer heads to prevail. Maybe, just maybe starting a cycle of calming, and getting to work of solutions vs freaking out over problems.
Or, just keep letting Rus fill that void, use the influence from such, and all just stays contentious.
I am 20000% agree with this too.
Btw the rig active count in the US now is better than in 2020, but still much less than in 2014, there're still a lot of rigs that can be activated.
What the US gov and Fed must do is sell those treasury and use the money short the oil futures :)
Ever hear of the Bakken Formation? Most don't know this, but have heard of the North Dakota "oil rush" of a few years back, that's was in association with the Bakken Formation.
Having personally known some of the guys up there doing exploration, I also know from 1st hand knowledge that they stumbled upon what looks to be even bigger untapped potentials. The biggest issue is transportation, after the obvious of permits to drill.
The Bakken and Three Forks formation has billions, literally BILLIONS of barrels in recoverable oil, and that's just what we know of today. Much of the area has not been thoroughly researched because there is no point at the moment because were not able to fully utilize the Bakken alone as of yet.
The entire U.S. strategic oil reserve was about 700m barrels. Of which we have now 416m. We did NOT need to tap strategic reserves, all that needed, and NEEDS to be done, is UNLEASH THE BAKKEN.
Or, how about the below fun-fact:
On January 18, 2018, TransCanada announced they had secured commitments to ship 500,000 barrels (79,000 m3) per day for 20 years. On January 20, 2021, President Joe Biden revoked the permit for the pipeline on his first day in office. On June 9, 2021, the project was abandoned by TC Energy.
Now, for those not savy on math, the CUTTING of that oil supply, when cross referenced by what oil has been issued out by EMERGENCY order from the U.S. strategic oil reserves, = 600 days. Ain't that just a coincidence, on what has need to be released all but perfectly matches with the cut, huhhh....... If they simply UN-blocked that existing energy source they cut, in 600 days it would deliver the entire amount this strategic release has pumped out. Which goes to show, by the math of it, there basically REPLACING this oil they CUT with OUR OIL, the tax payers oil, because that's what the U.S. strategic reserve is, it's OUR oil, that's supposed to be in storage for emergencies NOT replacing CUTTING sources.So, the summary is why do we have inflation and the inflation risks we do, because of idiot actions, AND continued idiotic actions. Done at the peoples expense, in full daylight, covered up with lies, distortions and BS to lull we-the-people to infighting over who's talking points and slogans are more "right".
When you CUT 500,000 barrels PER DAY of oil, a 3rd grader can figure out that all oil related items will go UP in cost, and shortages will happen. It's not complicated. AND as the strategic reserves runs out, which it is now, it's running out, the reality of that cut supply and it's hike on all prices will come to be.
When that happens, WHEN not if, WHEN you will experience yet another spike in inflation. Fuel prices will again surge, transport costs will surge, and everything will again surge in price. And the ONLY action left will be WAGE INFLATION.
Or, or they turn the tap's back on. But if there that smart, why have they not done it yet?
See, politics IS a Siamese twin too money and the economy. One does NOT live in a bubble exclusive to the other.
Oil has been trading all over the places and no where near historic highs. It’s far more complicated than the demand/price per barrrel. Last time I looked refining was a bigger hit than anything.
Regardless: https://tradingeconomics.com/c...Per-barrel costs are not even that bad, even with the Sept spike.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes4y
Quote from @Michael Wooldridge:
Quote from @John Carbone:
Valid point james, but your missing the component of demand. When the the high rates grinds the economy to a halt, there will be less demand for oil. That is the playbook being deployed now.Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @Greg R.:
Agreed James! Good to finally have something we agree on.Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Not to mention U.S. steps up production and export, this helps stabilize Europe energy sector, not fix but would be a help, and that could help calmer heads to prevail. Maybe, just maybe starting a cycle of calming, and getting to work of solutions vs freaking out over problems.
Or, just keep letting Rus fill that void, use the influence from such, and all just stays contentious.
I am 20000% agree with this too.
Btw the rig active count in the US now is better than in 2020, but still much less than in 2014, there're still a lot of rigs that can be activated.
What the US gov and Fed must do is sell those treasury and use the money short the oil futures :)
Ever hear of the Bakken Formation? Most don't know this, but have heard of the North Dakota "oil rush" of a few years back, that's was in association with the Bakken Formation.
Having personally known some of the guys up there doing exploration, I also know from 1st hand knowledge that they stumbled upon what looks to be even bigger untapped potentials. The biggest issue is transportation, after the obvious of permits to drill.
The Bakken and Three Forks formation has billions, literally BILLIONS of barrels in recoverable oil, and that's just what we know of today. Much of the area has not been thoroughly researched because there is no point at the moment because were not able to fully utilize the Bakken alone as of yet.
The entire U.S. strategic oil reserve was about 700m barrels. Of which we have now 416m. We did NOT need to tap strategic reserves, all that needed, and NEEDS to be done, is UNLEASH THE BAKKEN.
Or, how about the below fun-fact:
On January 18, 2018, TransCanada announced they had secured commitments to ship 500,000 barrels (79,000 m3) per day for 20 years. On January 20, 2021, President Joe Biden revoked the permit for the pipeline on his first day in office. On June 9, 2021, the project was abandoned by TC Energy.
Now, for those not savy on math, the CUTTING of that oil supply, when cross referenced by what oil has been issued out by EMERGENCY order from the U.S. strategic oil reserves, = 600 days. Ain't that just a coincidence, on what has need to be released all but perfectly matches with the cut, huhhh....... If they simply UN-blocked that existing energy source they cut, in 600 days it would deliver the entire amount this strategic release has pumped out. Which goes to show, by the math of it, there basically REPLACING this oil they CUT with OUR OIL, the tax payers oil, because that's what the U.S. strategic reserve is, it's OUR oil, that's supposed to be in storage for emergencies NOT replacing CUTTING sources.So, the summary is why do we have inflation and the inflation risks we do, because of idiot actions, AND continued idiotic actions. Done at the peoples expense, in full daylight, covered up with lies, distortions and BS to lull we-the-people to infighting over who's talking points and slogans are more "right".
When you CUT 500,000 barrels PER DAY of oil, a 3rd grader can figure out that all oil related items will go UP in cost, and shortages will happen. It's not complicated. AND as the strategic reserves runs out, which it is now, it's running out, the reality of that cut supply and it's hike on all prices will come to be.
When that happens, WHEN not if, WHEN you will experience yet another spike in inflation. Fuel prices will again surge, transport costs will surge, and everything will again surge in price. And the ONLY action left will be WAGE INFLATION.
Or, or they turn the tap's back on. But if there that smart, why have they not done it yet?
See, politics IS a Siamese twin too money and the economy. One does NOT live in a bubble exclusive to the other.
Oil has been trading all over the places and no where near historic highs. It’s far more complicated than the demand/price per barrrel. Last time I looked refining was a bigger hit than anything.
Regardless: https://tradingeconomics.com/c...Per-barrel costs are not even that bad, even with the Sept spike.
The point is in where the oil is coming from, where it's originating. AND, oil is not all that high today BECAUSE we are pumping from the U.S. strategic reserve, right now today, at this moment. That's what brought down the price, and holds it down.
Stop pumping from strategic reserve, yes oil will shoot up, instantaneously.
The oil is now net import in U.S., and we could be net export. When your a net exporter of oil, you have influence on the oil prices.
Look, today, Puddy-Putin is out cheering Saudis and the reduction of oil production, why do you think that is? Think it's a good thing for the rest of the world? Because it's making Rus crazy rich.
- Member since 2019 · 7k+ posts · 4k+ votes4y
You are very right on this one. The easiest easiest way to stop the bloody war and inflation are to print more oil, which means more drilling.
Your analysis is pretty much correct on this one. - Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes4y
Quote from @Carlos Ptriawan:
You are very right on this one. The easiest easiest way to stop the bloody war and inflation are to print more oil, which means more drilling.
Your analysis is pretty much correct on this one.He is also right that there won’t be what he defines as a “crash” in housing. Real estate can’t “crash” overnight. I also believe he now thinks a 20-30 percent drop over 18 months is possible, and probable at this point .I think we all had a misunderstanding with James.
- Member since 2019 · 7k+ posts · 4k+ votes4y
Btw you guys read the news? The French, and German (UK too) already announced their bailout plan to save the citizens (aka printing more money) to defend against local energy inflation.
Yup you got it right, it seems French and Germany is learning from Mister Erdogan :) LOL
This is really a history book in the making. - Member since 2022 · 2 posts · 2 votes4y
@Greg R. There’s a lot of people commenting for/against, and as a lender, I have to say I’m seeing both sides. There is going to be a market “correction.” That’s pretty well inevitable. People want to spend money right now. There are more millennials right now capable of buying a house. The govt is trying to slow inflation and put us in a recession to stop it by increasing rates. Rising rates ar pushing people out of the market, and having houses stay on the market longer. Many people are getting offers accepted below asking price. But they all have equity and almost all are looking to buy another home.
Now picture this. Rates are currently averaging around 7% or higher most of the time right now (insert disclosures about creditworthiness, etc. here). The most renown bankers are expecting to see 8% at the highest by the end of the year. It should slow the market down enough as people cannot afford what they could last year. Rates should then start to come down, and most people are expecting to see high 4’s to low 5’s by 2024-ish. All of the sudden, the people that got pushed out of the market due to rates are back in. I won’t say a bidding war will happen, but people will start buying houses again, and we will continue to see home prices rise as the competition gets a little tougher.
Housing market correction? Yes. Crash? No. Rebound? Most likely. Still worth it to stick with it. Look at historical rate and home prices, take into consideration all of the lending laws and practices that make it harder to write a bad loan, and we can assume that everything should be okay.
Should. Probably. Maybe. All of the above.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes4y
Quote from @Carlos Ptriawan:
Btw you guys read the news? The French, and German (UK too) already announced their bailout plan to save the citizens (aka printing more money) to defend against local energy inflation.
Yup you got it right, it seems French and Germany is learning from Mister Erdogan :) LOL
This is really a history book in the making.And this is Wage Inflation, is it not?
It does nothing to reduce prices, it actually does everything to support high prices.
- Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes4y
Quote from @Mike DeKuiper:
@Greg R. There’s a lot of people commenting for/against, and as a lender, I have to say I’m seeing both sides. There is going to be a market “correction.” That’s pretty well inevitable. People want to spend money right now. There are more millennials right now capable of buying a house. The govt is trying to slow inflation and put us in a recession to stop it by increasing rates. Rising rates ar pushing people out of the market, and having houses stay on the market longer. Many people are getting offers accepted below asking price. But they all have equity and almost all are looking to buy another home.
Now picture this. Rates are currently averaging around 7% or higher most of the time right now (insert disclosures about creditworthiness, etc. here). The most renown bankers are expecting to see 8% at the highest by the end of the year. It should slow the market down enough as people cannot afford what they could last year. Rates should then start to come down, and most people are expecting to see high 4’s to low 5’s by 2024-ish. All of the sudden, the people that got pushed out of the market due to rates are back in. I won’t say a bidding war will happen, but people will start buying houses again, and we will continue to see home prices rise as the competition gets a little tougher.
Housing market correction? Yes. Crash? No. Rebound? Most likely. Still worth it to stick with it. Look at historical rate and home prices, take into consideration all of the lending laws and practices that make it harder to write a bad loan, and we can assume that everything should be okay.
Should. Probably. Maybe. All of the above.
As a Lender, question:
What would you see happening if Fannie/Freddie "normalized" 40/50yr mortgages?
- Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Btw you guys read the news? The French, and German (UK too) already announced their bailout plan to save the citizens (aka printing more money) to defend against local energy inflation.
Yup you got it right, it seems French and Germany is learning from Mister Erdogan :) LOL
This is really a history book in the making.And this is Wage Inflation, is it not?
It does nothing to reduce prices, it actually does everything to support high prices.
Yep, so we have two theories in the financial world:
Classical Powell's theory: to reduce the inflation you must burn the money
Erdogan theory: to reduce the inflation (as it's output and not input) you must print more money (followed by German, UK and French now)
This is exactly what I've been saying from three weeks ago, even in the financial world , nobody knows which theory is correct. - Member since 2022 · 485 posts · 216 votes4y
Quote from @James Hamling:
Quote from @Mike DeKuiper:
@Greg R. There’s a lot of people commenting for/against, and as a lender, I have to say I’m seeing both sides. There is going to be a market “correction.” That’s pretty well inevitable. People want to spend money right now. There are more millennials right now capable of buying a house. The govt is trying to slow inflation and put us in a recession to stop it by increasing rates. Rising rates ar pushing people out of the market, and having houses stay on the market longer. Many people are getting offers accepted below asking price. But they all have equity and almost all are looking to buy another home.
Now picture this. Rates are currently averaging around 7% or higher most of the time right now (insert disclosures about creditworthiness, etc. here). The most renown bankers are expecting to see 8% at the highest by the end of the year. It should slow the market down enough as people cannot afford what they could last year. Rates should then start to come down, and most people are expecting to see high 4’s to low 5’s by 2024-ish. All of the sudden, the people that got pushed out of the market due to rates are back in. I won’t say a bidding war will happen, but people will start buying houses again, and we will continue to see home prices rise as the competition gets a little tougher.
Housing market correction? Yes. Crash? No. Rebound? Most likely. Still worth it to stick with it. Look at historical rate and home prices, take into consideration all of the lending laws and practices that make it harder to write a bad loan, and we can assume that everything should be okay.
Should. Probably. Maybe. All of the above.
As a Lender, question:
What would you see happening if Fannie/Freddie "normalized" 40/50yr mortgages?
Have you seen anywhere stating that fannie and freddie would do that?
I know people have speculated but I've not seen anything official anywhere even hinting at it. It would be a god damn nightmare in terms of rebuilding everything out again from debt ratios to risk factors. Literally it would push prices up further which is scary given how it happened with cars.
And actually as I think about it. You could in theory help push markets to further heights because an investor could leverage more cash flow faster, in theory anyway depending on if rates changes. But as they generate more cash flow to generate more properties they could end up with a scenario that allows them to appear to leverage higher ( but then pay off in 10-15 years with that extra cash flow. Just the benefit to investors alone could drive markets insane.
- Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @Mike DeKuiper:
@Greg R. There’s a lot of people commenting for/against, and as a lender, I have to say I’m seeing both sides. There is going to be a market
Now picture this. Rates are currently averaging around 7% or higher most of the time right now (insert disclosures about creditworthiness, etc. here). The most renown bankers are expecting to see 8% at the highest by the end of the year. It should slow the market down enough as people cannot afford what they could last year. Rates should then start to come down, and most people are expecting to see high 4’s to low 5’s by 2024-ish.
Same , this is our analysis too ,when The FFR return to 2.5, obviously 30YFRM would 4-5ish, this is a repeat of GFC 2005-2008 QT era from the Fed POV.
This going down cycle is pre-mediated by Fed and Fannie Mae since 2021. - Member since 2022 · 2 posts · 2 votes4y
@Michael Wooldridge
I think it would be extremely idiotic of them to do that, and I don’t foresee it happening. The biggest reason is risk. Yes, lower payment means less risk. But as you mentioned, there would have to be so many more changes.
Fannie and Freddie are government sponsored entities, or GSE’s. In a sense, they act as the government but are separate.
Lower payment = less risk, but longer term = more risk. Hence why you can get a better rate on a 10 year mortgage than you can a 30 (generally speaking). There are some banks that currently offer 40-year mortgages, knowing the home will be sold or refinanced during that time. But they do so at a higher rate to help reduce that risk.
Is it possible? Yes. Is it probable? Only if a democrat gets into office that is determined to control housing as well. And even then, the whole book would have to be written. The time after the most recent crash put all of these laws, restrictions, and guidelines in place to prevent another crash. The government can be dumb enough to repeat itself by making money cheap again, but I don’t see that coming in any aspect. They are trying to slow inflation, and since housing was one of the biggest points of inflation, I highly doubt they are going to make it easier to get.
- Realtor · Gatlinburg · Member since 2020 · 1k+ posts · 957 votes4y
Quote from @James Hamling:
Quote from @Mike DeKuiper:
@Greg R. There’s a lot of people commenting for/against, and as a lender, I have to say I’m seeing both sides. There is going to be a market “correction.” That’s pretty well inevitable. People want to spend money right now. There are more millennials right now capable of buying a house. The govt is trying to slow inflation and put us in a recession to stop it by increasing rates. Rising rates ar pushing people out of the market, and having houses stay on the market longer. Many people are getting offers accepted below asking price. But they all have equity and almost all are looking to buy another home.
Now picture this. Rates are currently averaging around 7% or higher most of the time right now (insert disclosures about creditworthiness, etc. here). The most renown bankers are expecting to see 8% at the highest by the end of the year. It should slow the market down enough as people cannot afford what they could last year. Rates should then start to come down, and most people are expecting to see high 4’s to low 5’s by 2024-ish. All of the sudden, the people that got pushed out of the market due to rates are back in. I won’t say a bidding war will happen, but people will start buying houses again, and we will continue to see home prices rise as the competition gets a little tougher.
Housing market correction? Yes. Crash? No. Rebound? Most likely. Still worth it to stick with it. Look at historical rate and home prices, take into consideration all of the lending laws and practices that make it harder to write a bad loan, and we can assume that everything should be okay.
Should. Probably. Maybe. All of the above.
As a Lender, question:
What would you see happening if Fannie/Freddie "normalized" 40/50yr mortgages?
The fantasy of the 50 year mortgage will not save your home value James. Here is the math…
30 year, $3,659.16 payment
50 year, $3,309.29 payment
A whopping $350 a month for an extra 20 years of payments. Also, longer duration would likely be higher interest rates similar to how a 30 is higher than a 15 year etc, so you’d probably be looking at 1 tank of gas a month difference going to a 50 year.
next fantasy proposal please - Member since 2022 · 25 posts · 5 votes4y
I think the fed is hell bent on a recession and once housing market stops, it might take time to wake up.
- Member since 2022 · 485 posts · 216 votes4y
Here's the problem and something the fed are missing at the end of the day or at least not acknowledging. There is so much less give in the jobs markets because of so many reasons. Josh Bersin is one of the top talent experts in the industry and he describes some of what's been going on in this post: https://joshbersin.com/2022/10...
All the elements of the recession and pressure is accurate. But jobs are strong. Participation of working age is strong but there is just not enough people in future generations to phase out all the boomers leaving. And it's only going to get worse. Look at the baby boom and then fast forward. This is a trend that Japan experiences and we will be experiencing.
- Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @Michael Wooldridge:
Here's the problem and something the fed are missing at the end of the day or at least not acknowledging. There is so much less give in the jobs markets because of so many reasons. Josh Bersin is one of the top talent experts in the industry and he describes some of what's been going on in this post: https://joshbersin.com/2022/10...
The way I look at the Fed, is like all these grandpas are still having 1930-Depression era that they fanatically study without the ability to grasp today's dynamic generation of Crypto and Tiktok era. And then those grandpas telling those kids in their 20 " hey kids You don't know anything, you have to follow what I study back in the seventies ".
So in this strange world, we have ultra-conservatism in financial policy vs Cathie-Wood style that everything has to be automated.
Looking at these two very different paradigm making me a headache as I'm not sure that's the "correct path".
Maybe, in the future, Fed rules can be replaced by AI-ML algo robot. - Member since 2022 · 485 posts · 216 votes4y
Quote from @Carlos Ptriawan:
Quote from @Michael Wooldridge:
Here's the problem and something the fed are missing at the end of the day or at least not acknowledging. There is so much less give in the jobs markets because of so many reasons. Josh Bersin is one of the top talent experts in the industry and he describes some of what's been going on in this post: https://joshbersin.com/2022/10...
The way I look at the Fed, is like all these grandpas are still having 1930-Depression era that they fanatically study without the ability to grasp today's dynamic generation of Crypto and Tiktok era. And then those grandpas telling those kids in their 20 " hey kids You don't know anything, you have to follow what I study back in the seventies ".
So in this strange world, we have ultra-conservatism in financial policy vs Cathie-Wood style that everything has to be automated.
Looking at these two very different paradigm making me a headache as I'm not sure that's the "correct path".
Maybe, in the future, Fed rules can be replaced by AI-ML algo robot.
I don’t know if there is a a correct path. but there are elements to show it’s starting to turn. The Problem is the elasticity in the job market. Companies don’t want to cut people if they can avoid it right now. Talent has been a massive issue. So even the lay offs planned they are in 100% redundant jobs or the bare minimum.
Contrast that to 2008 and essentially companies took a flat % cut all of the business. Not going to happen this time so it sort of depends on how much they want to hit the jobs market. It’s going to take awhile to get over 5% or a hell of a lot more pain. - 4yBruce WoodruffPro MemberContractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
Get rid of the Fed and let the 'Free Market' do it's thing. Will bad things happen? Of course....but it will make the Goobermint much more careful when they no longer have the ability to bail themselves out over and over.
- Member since 2022 · 485 posts · 216 votes4y
Quote from @Bruce Woodruff:
Get rid of the Fed and let the 'Free Market' do it's thing. Will bad things happen? Of course....but it will make the Goobermint much more careful when they no longer have the ability to bail themselves out over and over.
We’ll see. Honestly I don’t have a problem with fed in theory. I have a problem if they try and bring inflation to a screeching halt. The whole world is experincing it not just us. So if they take it slower and it takes until Feb to hit 3-4% who cares? Better than not only crashing our own economy but also the worlds.
And then to your point after we get there free markets will stretch to fill the void.
