Lender · San Diego, CA · Member since 2022 · 137 posts · 96 votes
WOW, it is crazy how divided articles, economist, housing experts and the media are so split on this TOPIC? I am seeing people that I know or follow that study data say "it is a buyers market". I am also seeing articles, news, etc. from smart people say we are going to have a 2008 like CRASH is some markets? They seem to be talking about a hypothetical future based on guessing because I do NOT see the data supporting a housing crash.
What do you THINK?
Lets look at the DATA:
Properties on the market. As of Dec 2022 it was 970K and about 200K + were in escrow
Borrower profile: The higher the number below the easier it is to get a MORTGAGE, so HIGH is BAD.
ARM products: Many ARM loan were option arms, neg amortization loans, had teaser rates for 1 or 2 years.
Real Estate Agent · San Diego, CA · Member since 2015 · 190 posts · 77 votes
3y
We have no where near the enough supply at least here in San Diego for there to be a crash let alone a massive correction. I submitted two offers for the same client last week and both places had 5+ offers on them. The recent drop in rates has caused a lot of buyer activity recently and I think were going to be heading back to a 2021 at least here in San Diego if this continues with these rates in the mid 5s. I can't speak on other markets but this is what I'm seeing here in San Diego.
Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
3y
Here in the Midwest(KC) we are still seeing prices go up. DOM and inventory ticked up but that's changing a little. I have seen activity pick up, seems like end of Feb it'll be a competitive market. Only time will tell
Realtor · Providence, RI · Member since 2022 · 404 posts · 262 votes
3y
I see a sellers market, inventory issue not an easy fix and likely to be long and variable. Hard to see it as a buyers if demand doesn't completely disintegrate somehow.
We have no where near the enough supply at least here in San Diego for there to be a crash let alone a massive correction. I submitted two offers for the same client last week and both places had 5+ offers on them. The recent drop in rates has caused a lot of buyer activity recently and I think were going to be heading back to a 2021 at least here in San Diego if this continues with these rates in the mid 5s. I can't speak on other markets but this is what I'm seeing here in San Diego.
I think we will see corrections in certain markets where lots of units are about to come on the market. Phoenix comes to mind from what I've heard, but I haven't looked up data for that since I don't invest there.
Everyone I talk to in Northern California, from the bay area to Redding will still tell you there's a shortage. maybe a correction in Phoenix will calm the SoCal market, but I doubt it will create a correction there.
Real Estate Agent · Boise, ID · Member since 2016 · 1k+ posts · 888 votes
3y
@Kenny Simpson I am seeing a correction. Entry level housing in the markets I am active in is seeing an uptick and back to multiple offers. Now the fed can change all that quickly, but the recent rate drop is definitely helping both buyers and sellers. But the inventory issue is real. Could there be a crash... yes... but I don't think it is probable given the increase in monetary supply and the lack of inventory.
End of the day it all depends on the market and markets inside the market IMO.
Investor · Member since 2022 · 3k+ posts · 3k+ votes
3y
Market's still net short. Phoenix, SD, Austin, Vegas will correct a little due to investors needing to tap out. But market's short and getting shorter.
I'm getting beat on my bids for properties. Tried scooping up 2 this past weekend, and lost.
Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
3y
The only properties sitting more than 2 weeks in vegas are the properties that were listed 6 months ago and never price corrected. I keep dreaming about price drops on new listings and instead they are pending/contingent. Inventory is dropping fast. I assume only investors and death/divorce sales. Unless you’re leaving the valley why would you sell? If you have a 3% mortgage and have to pay 6% now, you have to buy something 30% cheaper just to keep the payments the same.
I'm here in Boise and it's one of those markets that has been hit harder by the "correction" But our market is seeing an uptick in buyers and we still have fairly low inventory. Anything under the $300k price point is getting picked off right now.
I think we may have more inventory come spring, but I think we are going to flow through this year with a fairly balanced market. I don't foresee a "crash"
WOW, it is crazy how divided articles, economist, housing experts and the media are so split on this TOPIC? I am seeing people that I know or follow that study data say "it is a buyers market". I am also seeing articles, news, etc. from smart people say we are going to have a 2008 like CRASH is some markets? They seem to be talking about a hypothetical future based on guessing because I do NOT see the data supporting a housing crash.
What do you THINK?
Lets look at the DATA:
Properties on the market. As of Dec 2022 it was 970K and about 200K + were in escrow
Borrower profile: The higher the number below the easier it is to get a MORTGAGE, so HIGH is BAD.
ARM products: Many ARM loan were option arms, neg amortization loans, had teaser rates for 1 or 2 years.
Debt to income:
Foreclosures and short sales:
My belief is you’re looking at the wrong stats. The stats that depict increasing risk of decline are the commercial MF. If they fall non commercial residential will be impacted.
Why do I have fear about commercial Mf. It is because they have shorter terms. Any one year a significant percentage of MF need to get new financing. With current rates, the existing low cap rates result in negative cash flow. This is not the negative cash flow of a SFR. a 100 unit property could have huge negative cash flow with the new financing. Who wants to buy such a property? Someone with big financial pockets that can handle this large negative until rates decline or rents increase enough to alleviate the increase in interest rates.
As for San Diego, the last numbers I saw show prices down 8% from high but winter months have a natural decline so I will use 5% decline (let’s wait to May numbers to see reality). However in high end homes, the decline is greater. I am leery of small sample size but I know of a seller that turned down $2.4m ~1 year ago that just closed at $1.65m. The high end homes have fallen significantly, but the entry homes are holding their value better.
I'm here in Boise and it's one of those markets that has been hit harder by the "correction" But our market is seeing an uptick in buyers and we still have fairly low inventory. Anything under the $300k price point is getting picked off right now.
I think we may have more inventory come spring, but I think we are going to flow through this year with a fairly balanced market. I don't foresee a "crash"
I definitely echo what Tracy has to say bout the Boise Market, however there is movement in other areas. Prices seems to be somewhat stable (at this point) but sales volume is way down. Typically the Boise market sees a seasonal slowdown of around 40% (as measured in sold volume for canyon and ada county), but from what I have been measuring, we are off the seasonal average by roughly 27%. Meaning volume is down 27% for the winter months when compared to a typical year. In fact, the last time we saw numbers this low was in 2015 and before that 2009. Is this a major concern? Only spring time will tell. What is interesting though, is the huge transition we are seeing in the employment sector. Firms are cutting costs in numerous ways including hiring freezes, "restructuring" aka layoffs, overall work week hour reductions, etc. We have had some major employers in the MSA announce large layoffs and the real estate sector is experiencing some pretty drastic movement (lenders, agents, builders, title officers, etc.) leaving the industry or getting laid off.
This observation is at a local level though, national economics are seeing similar trends, but there is some other turbulence in the form of credit default rates and rising credit card debt levels. I don't think we are in for a "crash" in the single family real estate world. I think we will see correction/ flatline in 2023 as long as unemployment remains relatively low. If we start to roll those dominoes over, we could see some more drastic changes.
Its still not a good reason to not be investing. Consumer sentiment is down, which means opportunities are ripe. Im just advising clients to be cautious when underwriting deals and plan on playing the long game at this point.
Lender · Fort Mill, SCinstal · Member since 2016 · 68 posts · 64 votes
3y
In NC/SC, I see it as leveling. It is a house by house situation. We see houses going relatively fast if priced well and sitting/price reductions if not. I am on the lending side and typically tell my customers that if it has been on the market for 2 weeks, they will make you a deal. We see those deals often now in seller credit and not in price reductions (unless poorly priced). Good conversation though, fun read.
here in Bay Area California price is starting seeing an uptick again, multiple bids everywhere, and the price increased not reduced.
Ask the master here @James Hamling for his commentary and deep analysis LOL
Lol, ok, "master" may be going a bit too far even for my ego.......
Bay Area CA back on the rise....... wow, just wow.
So here is an early look at my next forecast I am working on; the coming REAL "CRASH". Yup, that's right, I DO have a R.E. market CRASH forecast coming, bet ya didn't see that coming did ya.
It all hinges on Federal action in housing in coming weeks.
It's very possible that the Fed Gov is going to do the most idiotic actions in economic history. Taking this market and pumping mass $ injection. A major broad based stimulus to "fix" the housing crisis. Just wait, that will be the label "housing crisis".
It's looking possible that they could pump billions in capital injection. Now what those sock-puppets forget is Real Estate works on leveraged funds. So injecting a few hundred billion turns into trillions in economic action, and INFLATION dollars via fractional lending.
If they do this in a broad based base-line consumer action, it's done folks, D-O-N-E.
Inflation will come back at a force factor multiplier of what it just was. The same sock-puppets will then start playing wack-a-mole with trying to force vendors to stop raising prices, and it will fail miserably. Actually it will stock other vendors to press maximum increases to defend over fears of "do it now or loose it" because there COG's keep going up.
And when that "stimulus" get's spent, the music stops. The music stops with another 38% inflation hit to all the costs of life. The $12 coffee, $18 Big Mac's. And when that music stops, consumer goes BANKRUPT, in a scale never seen before. As the Debt bomb explodes, corporate interests sound all alarms and start locking down to weather the storm. They stop buying inventory to cycle inventory down. manufacturer orders crash. The feed-back-loop starts. The "efficiency consultants" come out in mass and so do layoff's, in the hundreds of thousands monthly. The feed-back-loop is super charged.
The F.Gov goes into emergency meetings. The Fed starts flailing, do they issue a 400 basis point INCREASE to stem inflation, or a 400 bpt DROP to stock economy AND in that supercharge inflation? There stuck! Hyperinflation becomes a word the Fed Chair starts calmly mentioning, and within minutes the DOW is stopped 4 times from it's free fall before closing early to stop the complete collapse.
The Sock-Puppets talk MORE stimulus, to stave off job losses and restore confidence but, with what $? China is not coming to the rescue this time. Treasury bonds are not only not being sold, but nations start seeking how to unload them for near junk status.
All because some sock-puppets thought pumping a few hundred billion to pump up voter base was a good idea hot on the heels of mass inflation. ignoring $ injection into a mass shortage market that has a major delay in production of units does NOT grow unit production over-night, it grows PRICE. because they gave it at base-line consumers, who were hot potato to spend it.
I pray I am proven wrong, that our political elite are smart, forward thinking, careful, citizen based thinkers. Or in a simpler term, the exact opposite of what they have done over and over and over and over again.
If they act like sock-puppet idiots with a nuclear football, we just may all have front row seats to the greatest economic fireworks of human history.
But hey, it's all just a lynch-pin theory for now.
What could they do SMART? Pump the housing stimulus via TOP LINE, to housing developers NOT housing BUYERS and renters. Give it to local government to use in development actions. An action that grows supply, NOT consumer spending.
WOW, it is crazy how divided articles, economist, housing experts and the media are so split on this TOPIC? I am seeing people that I know or follow that study data say "it is a buyers market". I am also seeing articles, news, etc. from smart people say we are going to have a 2008 like CRASH is some markets? They seem to be talking about a hypothetical future based on guessing because I do NOT see the data supporting a housing crash.
What do you THINK?
Lets look at the DATA:
Properties on the market. As of Dec 2022 it was 970K and about 200K + were in escrow
Borrower profile: The higher the number below the easier it is to get a MORTGAGE, so HIGH is BAD.
ARM products: Many ARM loan were option arms, neg amortization loans, had teaser rates for 1 or 2 years.
Debt to income:
Foreclosures and short sales:
My belief is you’re looking at the wrong stats. The stats that depict increasing risk of decline are the commercial MF. If they fall non commercial residential will be impacted.
Why do I have fear about commercial Mf. It is because they have shorter terms. Any one year a significant percentage of MF need to get new financing. With current rates, the existing low cap rates result in negative cash flow. This is not the negative cash flow of a SFR. a 100 unit property could have huge negative cash flow with the new financing. Who wants to buy such a property? Someone with big financial pockets that can handle this large negative until rates decline or rents increase enough to alleviate the increase in interest rates.
As for San Diego, the last numbers I saw show prices down 8% from high but winter months have a natural decline so I will use 5% decline (let’s wait to May numbers to see reality). However in high end homes, the decline is greater. I am leery of small sample size but I know of a seller that turned down $2.4m ~1 year ago that just closed at $1.65m. The high end homes have fallen significantly, but the entry homes are holding their value better.
Hill street blues: Let’s be careful out there.
I am talking about 1 to 4 units, I DO agree the high end in SD has seen a decline, but what I am as you can see many other are seeing a pick up demand from buyers, rates headed lower and inflation as well. Inventory is very low as well. The market overall is seeing homes that were recently listed priced to sell, buyers see this and that is why we are seeing 5,10,15 + offers on deals. I see it everyday with my clients, agents I know and agents around the country. Time will tell for the 1 to 4 space.
I agree with you on the MF, the debt market for MF is terrible, so many banks NOT lending at all and if they do, they don't want to lend. They are confused by what is a building worth, are rents flat or declining, lots of syndicators did bridge loans that are coming due on top of just normal loans that will come due. Banks can park money with the FED and make 5% to 6% with ZERO risk.
I do not understand how it's a supply issue over the past 2 years.
It is a demand issue due to monetary supply and low interest rates.
Demand moves much faster than supply
Not really, unless you reduce population in the US!
Monetary supply and low rates amplify demand, but demand is largely from the desire to own a home and that is a demographic trend. Millennials have real estate PTSD as they grew up in the 2008 years, so they fooled the industry into believing they were a renter generation.
Turns out that when they approach 35 or 40, have a spouse and kids they want to buy. That decision stands, weather rates are high or low. Many have paused in sticker shock after rates hit 7%, but we see them coming back already. It may take them longer to save up a down payment, but they will not go back to mom's basement and they will quit renting as soon as they can.
It's over, at least in my market. We have seen a buying opportunity in fall of last year while rates went 7%+ but we are already back in multiple offer land. Redfin is predicting that Milwaukee will be in the top 3 most competitive markets in 2023. Almost 60% of all deals in Milwaukee close at or over list price, only about 40% below. And as every year, sellers get confident in spring and price homes just a little higher. And with 5 to 10 offers on a nice listing we see the winning bid 5% to 10% over asking, often waiving inspection, potentially also appraisal. This will continue to push prices up, even against a nation trend of flat or even correcting prices. And that's the confusing part, the news is talking market correction, meanwhile in our local market (and many other Midwest metros) it's just the opposite.
Monetary supply and low rates amplify demand, but demand is largely from the desire to own a home and that is a demographic trend. Millennials have real estate PTSD as they grew up in the 2008 years, so they fooled the industry into believing they were a renter generation.
Turns out that when they approach 35 or 40, have a spouse and kids they want to buy. That decision stands, weather rates are high or low. Many have paused in sticker shock after rates hit 7%, but we see them coming back already. It may take them longer to save up a down payment, but they will not go back to mom's basement and they will quit renting as soon as they can.
Well we know there's a demographic trend, but that did not change substantially over the last 2 years to create the increase in prices we saw the last 2 years. If that were the case prices would have been increasing prior to 2021 and would still be increasing today at the same rate. We don't see that happening. We see prices, in a lot of places, coming down from 2021 levels. Did the millennials suddenly lose the urge to own a home? If demand were not tied to interest rates we wouldn't be seeing longer DOM, higher inventory and price drops. We'd continue to see fewer DOM, lower inventory and price increases. So the demand has decreased the last 6 months. Is it due to the millennials losing their urge? Or interest rates?
I'd bet it's interest rates. (Interest rates are again why you saw the "pause" when they hit 7%. The 7% rate decreased demand, just like a 3% rate increases demand)
Now as far as supply goes - there wasn't a meteor that crashed and destroyed 5 million homes suddenly lessening the supply. There was no substantial supply change in the last 2 years relative to years prior. What happened was a decrease in rate created a increase in demand. We see demand can change rapidly over a year, supply cannot.
At least this is what I'm seeing in my area. RE is local so maybe yours is different than the rest of the nation.
Real Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
3y
Real estate is currently in a sellers market, and the inventory issue is not an easy fix - it's likely to be long and variable. It's hard to see this as a buyers market unless there is some sort of dramatic decrease in demand. Real estate markets can be unpredictable, so investors should tread carefully when making decisions. The current situation may not be ideal for buyers, but it could open up great opportunities for those looking to sell or invest in real estate.
It's over, at least in my market. We have seen a buying opportunity in fall of last year while rates went 7%+ but we are already back in multiple offer land. Redfin is predicting that Milwaukee will be in the top 3 most competitive markets in 2023. Almost 60% of all deals in Milwaukee close at or over list price, only about 40% below. And as every year, sellers get confident in spring and price homes just a little higher. And with 5 to 10 offers on a nice listing we see the winning bid 5% to 10% over asking, often waiving inspection, potentially also appraisal. This will continue to push prices up, even against a nation trend of flat or even correcting prices. And that's the confusing part, the news is talking market correction, meanwhile in our local market (and many other Midwest metros) it's just the opposite.
Milwaukee is amazing. It's top market last year with 20% appreciation.
Over here, house is gone too. Below one mil in one zip code is common in November, now it's gone.
Too late my friend, while some of the folks debating market crash or not lol price is seeing uptick now.
Rental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
3y
It’s all about supply and demand like everything else. The good thing about RE is it’s not rocket science. Anyone can figure it out. We have very low inventory which won’t change for a decade or more for a number of reasons. And demand for housing is very high. It’s a good time to be an investor. Not a good time to be a renter due to higher and higher rents with limited inventory.
