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Carlos Ptriawan#1 Market Trends & Data Contributor
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2023 Market activity = almost equal to 2022 market equity

Carlos Ptriawan#1 Market Trends & Data Contributor
Posted Jun 4 2023, 07:29

https://www.redfin.com/news/ho... 

Looking at various chart above, my impression is this 2023 market is still too strong , market is following 2022 price/inventory pattern except with even lower inventory than 2022 and pushing the price of May 2023 to be equal to May 2022. 

I guess SEC action to 'mini crash' the real estate failed miserably LOL It's just so strange that market is too strong that almost nobody willing to sell. 

Almost everyone that's predicting a crash in November 2022 is wrong, @James Hamling

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John Carbone
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Replied Jun 5 2023, 07:39
Quote from @James Hamling:
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @Carlos Ptriawan:
Quote from @John Carbone:
Quote from @Carlos Ptriawan:
Quote from @John Carbone:@James Hamling
A wonderful feature of this digital age we live in today is that a person can find absolutely no shortage of "supporting information" for very literally any position, thought, opinion one has no matter how ridiculous, ludicrous or just flat out incorrect that position, thought, idea is. 
For example, look things up on flat-earth. 

For 3 years now, 3-flippin-years, I have been on this platform combating the disinformation of various degrees shouting from as loudly as they can that "THE END IS NIGH" declaring for ___(insert the reasoning)___ real estate is going to '08' style collapse. 
And here we are yet again with this debate. 

Ever hear the term "the silence is deafening"? Notice how very applicable that is to every one of these doom-preachers on there list of false-predications these last 3 years? 

I have a hard time crediting any validity to a persons projections, calling for imminent calamity, who was calling for such previously, that clearly NEVER HAPPENED, is here yet again saying the same, with 0 mention of being so completely wrong previously. 

Any use of averaging out housing data to come up with a singular # to represent all housing, is going to be wrong, it will be a false read because it is garbage data. GIGO (Garbage In - Garbage Out). 

The one universal factor for the national market is volatility. How can one lump million+ luxury housing into same bucket as $100k+ entry level housing, and all items in between, and expect to get any accurate read of any kind? 
Real Estate has a wide variety of it's TYPE of asset class and price points, and just like the market for Lamborghini super-cars can be experiencing 1 thing and economy Nissan Altima a whole other, so is the same for different real estate classes. 

Market compression was seen a mile-away, I called this out many MANY times, and here we are living it today. The lower rung of "affordable homes" have demand far outstripping supply and thus inflating price, middle area of affordability pacing about flat, and the higher rung experiencing decline = market compression. 

Just to the point of things, skipping all the "noise" of the argument here is the take-away: 
Those who don't buy now WILL regret it
That is the reality of the situation. 
Persons WILL look back, just as they are looking back now to a few years ago and lamenting "why didn't I get in then?". 
The cost of entry has kept rising, and it WILL keep rising. 
Rates come crashing down guess what, PRICE will shoot up, duh!. Todays price REFLECTS TODAYS RATES. It's just that simple. 

There is no scenario where we get an '08' style housing collapse without the entire U.S. economic system completely burning to the ground. And in that event, no, you WON'T be buying up anything because there will be no financing to do such, you'll be in the streets fighting your neighbor for a loaf of bread and food for the day. Your dollars will be worthless as the USD goes to 0. Because that what it takes to burn Real Estate to an '08' style collapse, the ENTIRE system burns. 

And in that event guess what I will do, I will accept rent in chickens and cows.... Or Amero, DGC or whatever the prevailing currency is. 
Food, Water, Shelter, these are the fundamental NEEDS of human life, correct? So in great crisis what do you want, a bunch of "pocket art" of mini-paintings of dead presidents, or something people NEED? It's just not complicated. 

We have a giant % of home owners in exceptionally low rate locked mortgages. As I have said for a loooong time NO they won't sell there secured position to move into a volatile one, and without that how do you get an '08' level drop? We have net SHORTAGE, how do you get from here to net EXCESS? Crickets..... the doom=preachers never answer this simple fundamental point. 
There is only 1 way, burn the entire economy to the ground. In that fire only the Hiltons and Heinz's of the world will be buying things up. 

What's coming? 
More volatility in a net shortage environment with spy-high inflated costs pressing volume collapse in a protracted manner, better known as STAGFLATION


I didn’t realize citing govt data (the same I cited last year) was conspiracy theory. Or showing news article headlines from various regions showing both that new home builders are dropping price to sell homes, and that rental prices are declining. These aren’t articles from “the onion” as I said before there is unlimited land to build in the USA and with input costs so low it’s build build build time and sell at what the market will pay. Nobody under 40 wants the overpriced stuff built several decades ago. Housing is a good purchase for someone to live in, but as I said last year doesn’t make sense to buy for long term rentals, that gravy train is OVER. If you have properties bought 5 plus years ago, sure you will do well renting those out. 

It’s comical that you think real estate prices dropping back to anywhere close to levels 3 years ago will result in needing to be paid in chickens and cows with social unrest. You are really a conspiracy theorist. If you actually read what you write and you have an IQ that isn’t below average, you would clearly see it. 


This is a shining example of why BP need to add DOWN Votes..... You have ignored effectively everything I DID say, and laid out a running rant of things I DIDNT say.... Lol. 

I get it, your Trolling.... Well established and understood. Have fun as I ignore you going forward.

That’s odd. Last year we both agreed that we would use the median sale price metric from the fed to determine the drop in value. Now that I’m proving to be right on that, you and everyone else is now trying to disprove that metric after the fact. I get it, you and many on here make their living solely off of real estate, selling it, renting it, so of course replies like yours will happen. Real estate investing is just side money for me, so I can see it for what it is without the noise. Keep ignoring facts though and pile on more leverage at these sky high mortgage rates. You will do great king James 

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James Hamling#3 Real Estate News & Current Events Contributor
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Replied Jun 5 2023, 08:12
Quote from @Carlos Ptriawan:

https://www.redfin.com/news/ho... 

Looking at various chart above, my impression is this 2023 market is still too strong , market is following 2022 price/inventory pattern except with even lower inventory than 2022 and pushing the price of May 2023 to be equal to May 2022. 

I guess SEC action to 'mini crash' the real estate failed miserably LOL It's just so strange that market is too strong that almost nobody willing to sell. 

Almost everyone that's predicting a crash in November 2022 is wrong, @James Hamling


My market forecasts I made last fall/winter as other were calling for "crash" and I warned those were dead-flat-wrong was, as i said at the time, simply following the math. In that, I think they were easy forecasts. 

I have been doing speaking engagements as of recent where too often persons introduced me as a "genius of market trends and direction" and each time I sigh a bit, and correct that if anything I will accept I am a great listener, because that's all I really did, I listened to what the math was telling me.    The hard part is blocking out all the "noise" out there in the world today because we have mountains of skewed, bias "information" due to our content-4-profit age. 

First point Carlos is we have to consider was any of this done with intelligent design? Or happen-stance reactionary policy? 

If intelligent design, I'd say this follows a path of how to consolidate the U.S. economy into corporate domain. It has been a savage few years upon small business, savage. We are in an "everything inflation", real estate is just a part of that. And timing is brilliant, absolutely brilliant for such. Bring all production to a complete halt, wipe-out all stocks of things, than hit with inflation. It's a perfect design. Because the shortages are what empower the inflation to be enduring and shift from a inflationary event into a re-pricing one. 

But, can we really say this WAS intelligent design? It's some cloak and dagger stuff to say so, it feels very tinfoil-hat to say such right. It's possible, absolutely possible. The groups exist for such, but we want to hold to a concept that a plutocratic shadow-government does not run things. 

So ok, happenstance made possible by reactionary policy. This is very possible. COVID, oh-no, gonna kill all, ok, everyone stay at home for a time. Has a kind of sense. And then "uh-oh, how do people pay bills?" ok, give em $. "Uh-oh" now we created inflation because we literally showered $ on everyone. And, empowered accelerating depletion of all stocks of goods.    It's possible but, to be true we have to accept that our "leaders" are in effect morons who have vision of all but 10' in front of there face, the inability to think 2,3 steps ahead. Because any 3rd-grade "think-tank" would have seen it coming. Ok, everyone stay at home. how do people eat, get things? Oh, uh, ok, give em $. Ok, where does the stuff there buying come from, oh the warehouses. Ok, and where does the warehouse of stuff come from? Uh, nowhere, everyone is home. Ok, so, it will run out, then what? 

So we have in end the options that either (a) a plutocratic shadow-government is consolidating power, control and wealth to assure all serfs unto them.    Or (b) our leaders are a college of morons who are incapable of actual leadership or planning, simply reacting to whatever is at their door-step and thus, going forward, a roller-coaster ride of reactionary measures. 

Or in simplest terms: sh#t-burger or turd-sandwich, which are we eating, lol.... 

By the #'s we are well into a Neo-Stagflation

Demand with supply shortage presents a very protracted term of pricing to hold. Competition and efficiency revolutions lower price, and neither are presenting themselves so this would be a "new norm". 

New efficiencies in tech (ai advent) is in large part a nothing-burger, as it presents a shift action. Those removed from tech may shift into ai, or other under-employed sectors. 

Pricing is holding because it's a repricing event, not transitory inflation. I can't emphasis this point enough, without comprehension of this point one will be lost in comprehending everything else. 

The populous is shown to be well conditioned to live off credit now, the banks have won. So we will see this new economic cycle connected to banking. Meaning they can turn on and off the economy like a light switch to a degree well beyond anything prior, via metering the flow of credit. There has long been a sense of this connection but it's the degree of it's power today that is unique, it's now in command to a significant degree. 

I believe we are at the start of a neo-economy (new economy). Open spigot of credit, inflate pricing 15%, meter spigot down, consolidate back 5%, open for another 15% up, meter down to consolidate again, and on and on the "fun" goes. 

This presents a centralized control of the economy unlike anything ever before. I believe the Fed and others are well aware of this, and are playing with it today. 

I expect that in ~16 months time we will experience the next cycle in this, with the spigot opening, invigorating the economy just in time for election polling. Read the various bond chart's, they are all predicting this. I spent last weeks reading dozens, they are uniform in this, I don't find such uniformity happen-stance, it denotes knowledge. 

So call it a metered economy, very much as one would meter flow of water to yard sprinklers. The grass will drink, green and grow in exact proportion to the watering, similar to average consumer today storing none of that water just living for the moment. 

I don't believe it happen stance the drying up of savings, especially as those like J-pow have mentioned the "problem" is persons savings..... 

So, it's centralization. A power consolidation. Nothing on inducing a recession, not in manner most associate that thought, especially not a collapse which is most fertile ground for small business. no, it's a consolidating event, to "meter" the economy, putting a "control" on it all, and thus a very literally control center to adjust corporate profits on demand. 

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Account Closed
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Replied Jun 5 2023, 10:33

Until there's and index fund that allows you to buy the whole housing market, this discussion is pointless. To use a popular buzzword, real estate is hyperlocal. National averages mean little to nothing at all.

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Carlos Ptriawan#1 Market Trends & Data Contributor
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Replied Jun 5 2023, 17:36
Quote from @Account Closed:

Until there's and index fund that allows you to buy the whole housing market, this discussion is pointless. To use a popular buzzword, real estate is hyperlocal. National averages mean little to nothing at all.

The nationwide is actually mimicking west coast / east coast as price there is heavily influencing the index.

actyally in 2023 we saw more market hitting all new high , compare to 2022 , which is strange phenomenon.

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John Carbone
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Replied Jun 5 2023, 18:08
Quote from @James Hamling:
Quote from @Carlos Ptriawan:

https://www.redfin.com/news/ho... 

Looking at various chart above, my impression is this 2023 market is still too strong , market is following 2022 price/inventory pattern except with even lower inventory than 2022 and pushing the price of May 2023 to be equal to May 2022. 

I guess SEC action to 'mini crash' the real estate failed miserably LOL It's just so strange that market is too strong that almost nobody willing to sell. 

Almost everyone that's predicting a crash in November 2022 is wrong, @James Hamling


My market forecasts I made last fall/winter as other were calling for "crash" and I warned those were dead-flat-wrong was, as i said at the time, simply following the math. In that, I think they were easy forecasts. 

I have been doing speaking engagements as of recent where too often persons introduced me as a "genius of market trends and direction" and each time I sigh a bit, and correct that if anything I will accept I am a great listener, because that's all I really did, I listened to what the math was telling me.    The hard part is blocking out all the "noise" out there in the world today because we have mountains of skewed, bias "information" due to our content-4-profit age. 

First point Carlos is we have to consider was any of this done with intelligent design? Or happen-stance reactionary policy? 

If intelligent design, I'd say this follows a path of how to consolidate the U.S. economy into corporate domain. It has been a savage few years upon small business, savage. We are in an "everything inflation", real estate is just a part of that. And timing is brilliant, absolutely brilliant for such. Bring all production to a complete halt, wipe-out all stocks of things, than hit with inflation. It's a perfect design. Because the shortages are what empower the inflation to be enduring and shift from a inflationary event into a re-pricing one. 

But, can we really say this WAS intelligent design? It's some cloak and dagger stuff to say so, it feels very tinfoil-hat to say such right. It's possible, absolutely possible. The groups exist for such, but we want to hold to a concept that a plutocratic shadow-government does not run things. 

So ok, happenstance made possible by reactionary policy. This is very possible. COVID, oh-no, gonna kill all, ok, everyone stay at home for a time. Has a kind of sense. And then "uh-oh, how do people pay bills?" ok, give em $. "Uh-oh" now we created inflation because we literally showered $ on everyone. And, empowered accelerating depletion of all stocks of goods.    It's possible but, to be true we have to accept that our "leaders" are in effect morons who have vision of all but 10' in front of there face, the inability to think 2,3 steps ahead. Because any 3rd-grade "think-tank" would have seen it coming. Ok, everyone stay at home. how do people eat, get things? Oh, uh, ok, give em $. Ok, where does the stuff there buying come from, oh the warehouses. Ok, and where does the warehouse of stuff come from? Uh, nowhere, everyone is home. Ok, so, it will run out, then what? 

So we have in end the options that either (a) a plutocratic shadow-government is consolidating power, control and wealth to assure all serfs unto them.    Or (b) our leaders are a college of morons who are incapable of actual leadership or planning, simply reacting to whatever is at their door-step and thus, going forward, a roller-coaster ride of reactionary measures. 

Or in simplest terms: sh#t-burger or turd-sandwich, which are we eating, lol.... 

By the #'s we are well into a Neo-Stagflation

Demand with supply shortage presents a very protracted term of pricing to hold. Competition and efficiency revolutions lower price, and neither are presenting themselves so this would be a "new norm". 

New efficiencies in tech (ai advent) is in large part a nothing-burger, as it presents a shift action. Those removed from tech may shift into ai, or other under-employed sectors. 

Pricing is holding because it's a repricing event, not transitory inflation. I can't emphasis this point enough, without comprehension of this point one will be lost in comprehending everything else. 

The populous is shown to be well conditioned to live off credit now, the banks have won. So we will see this new economic cycle connected to banking. Meaning they can turn on and off the economy like a light switch to a degree well beyond anything prior, via metering the flow of credit. There has long been a sense of this connection but it's the degree of it's power today that is unique, it's now in command to a significant degree. 

I believe we are at the start of a neo-economy (new economy). Open spigot of credit, inflate pricing 15%, meter spigot down, consolidate back 5%, open for another 15% up, meter down to consolidate again, and on and on the "fun" goes. 

This presents a centralized control of the economy unlike anything ever before. I believe the Fed and others are well aware of this, and are playing with it today. 

I expect that in ~16 months time we will experience the next cycle in this, with the spigot opening, invigorating the economy just in time for election polling. Read the various bond chart's, they are all predicting this. I spent last weeks reading dozens, they are uniform in this, I don't find such uniformity happen-stance, it denotes knowledge. 

So call it a metered economy, very much as one would meter flow of water to yard sprinklers. The grass will drink, green and grow in exact proportion to the watering, similar to average consumer today storing none of that water just living for the moment. 

I don't believe it happen stance the drying up of savings, especially as those like J-pow have mentioned the "problem" is persons savings..... 

So, it's centralization. A power consolidation. Nothing on inducing a recession, not in manner most associate that thought, especially not a collapse which is most fertile ground for small business. no, it's a consolidating event, to "meter" the economy, putting a "control" on it all, and thus a very literally control center to adjust corporate profits on demand. 


 Great points james. It’s definitely (b), it’s not just in government but many corporations are also run this way.

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V.G Jason
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Replied Jun 5 2023, 18:43
Quote from @Carlos Ptriawan:
Quote from @Account Closed:

Until there's and index fund that allows you to buy the whole housing market, this discussion is pointless. To use a popular buzzword, real estate is hyperlocal. National averages mean little to nothing at all.

The nationwide is actually mimicking west coast / east coast as price there is heavily influencing the index.

actyally in 2023 we saw more market hitting all new high , compare to 2022 , which is strange phenomenon.

 During the run up it was sunbelt + west coast driving. Now it's extreme shortages in MW + NE that is going to cause it. It is extremely hyperlocal. I think though the reach is far, I am in an area where 2/2's were sub 300 that were full turnkey. Now, there's 2/1s 40% sq ft less going, full turnkey going $350 list. Not sure they'll get it, but that's the pricing float they're taking. A popular and bidding war area in end of q1/early part of Q2 is now stagnating here towards the end of Q2. A 4/2 turnkey went $350k in April(closed in april so bid mid march), now a 5/3 turnkey went list $360 top of May and has had to take list down to $335k. I am confident they'd hit a $320k bid. 

I think Q4 22 was likely the bottom of house prices, you'll see some late Feb23 pricing in some areas here in Q4 23 for people that just got hosed. I see some flippers just playing a slippery slope. Every area is different, but the areas I am in I see plenty of institutional and family run investment shops going hard. It's a war among us and the residential fella seems to be left out.

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James Hamling#3 Real Estate News & Current Events Contributor
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James Hamling#3 Real Estate News & Current Events Contributor
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Replied Jun 6 2023, 08:38
Quote from @Carlos Ptriawan:
Quote from @Account Closed:

Until there's and index fund that allows you to buy the whole housing market, this discussion is pointless. To use a popular buzzword, real estate is hyperlocal. National averages mean little to nothing at all.

The nationwide is actually mimicking west coast / east coast as price there is heavily influencing the index.

actyally in 2023 we saw more market hitting all new high , compare to 2022 , which is strange phenomenon.

As Anish points out, those in MT are experiencing a VERY different world from this in Chicago-land, Seattle, L.A., Charlotte, Miami, New Jersey, Detroit, Dallas, Las Vegas..... Take all these places and throw em in a blender to get a "read" all your going to get is something not accurate for most. 

A simple gauge to find just how inaccurate any generalization for an area would be, take a look at the median home price vs another area. Median home price in Seattle/L.A. is so vastly different than Huntsville or DesMoines, how, how can one ever get any kind of "general" anything from a blender of those mixed? 

No, the maximum segment size any could dare to use is a regional read. Even then, not going to be very accurate. Hence why we do market reads. 

Now here is the thing, it's really only ever the "Doom-Preachers" who use such generalizations as a national "whole" of R.E. market. That should sniff out the accuracy of their data right there. 

When we talk a bull-market in real estate, we talk exactly that, MARKET. For example, Dallas. And even then, without doubt there is persons within that market who said "hog-wash, things suck in my area of Dallas" and they'd be right, because not EVERY block, every suburb, every city segment moves identical. 

Real Estate consists of factors within factors within factors within factors. 

The only correct market-wide generalization of the real estate industry as a whole is "Real Estate prices go up over time.". 

Let's get back to root of this conversation. On one side we have those of questioning HOW MUCH the increase will be, in exactly what time scale.    On the other side, I call them "the fools" because that's just the blunt truth of it because what they "forecast" is an event that's happened a grand total of once, or twice, in the U.S. history of real estate, EVER. Yet frame it as it's some kind of cyclical event.... Sure, if you also consider World War a cyclical event, ice ages, or extinction level asteroids....  

The recipe for a decline in prices is: MORE supply than demand, less demand than supply. Do we live in that world? What world do we live in? It's simple math to forecast. 

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Replied Jun 6 2023, 08:55

@John Carbone

@Bill Brandt

i saw this thread... and I thought you guys started out having a really thoughtful discussion... and I was hoping it would stay that way.  i benefit from posts of both of yours.  neither one of you is being unreasonable.  please stay =)

one interesting thing though is affordability.  a lot of people i talk to who AREN'T investors say "you would have thought prices would have come down more as interest rates went up.  but seems like they didn't."

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Replied Jun 6 2023, 09:45

I have been bullish to date and an active buyer but all bets are off if the debt markets tighten up significantly. SFR has different funding but residential would not be immune to an economic recession caused by tight consumer and commercial lending. I stay out of all the back and forth on the economy...until the debt markets are threatened. And the Fed has their bazooka pointed at them.

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Replied Jun 6 2023, 10:01
Quote from @Nicholas L.:

@John Carbone

@Bill Brandt

i saw this thread... and I thought you guys started out having a really thoughtful discussion... and I was hoping it would stay that way.  i benefit from posts of both of yours.  neither one of you is being unreasonable.  please stay =)

one interesting thing though is affordability.  a lot of people i talk to who AREN'T investors say "you would have thought prices would have come down more as interest rates went up.  but seems like they didn't."

The fact is for the last 12 months, rents are on the decline, prices are stagnating and down in many many areas despite the record low inventory. Real estate has not been a good investment during this period, and it’s falling way short of beating inflation. An investor 12 months ago with a stockpile of cash would have been much much better off parking in short term treasuries. @James Hamling won’t share his current rental listings that are producing 2k gross (and down from asking prices) on properties that sold above 300k. I own real estate with some leverage, but my interest rates are effectively below 4 percent so I hold. But I understand this is bp and people won’t make money unless people continue to always buy regardless of what’s going on in the world. James did finally admit last year it was consolidating in the market, which is true, but if you know the market will be consolidating you put your money in treasuries for a year or two and step back in to buy. You don’t sell due to transaction costs and losing out on low interest rate loans though. 

@James Hamling please put me in my place by showing me how a portfolio of real estate bought 12 months ago with leverage at the prevailing 7 percent rate with executed rental contracts beating short term treasuries. This is not a troll post, please enlighten us with your expertise, I really do want to be wrong, but I need to see it in the data with numbers. 


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Replied Jun 6 2023, 10:18

@John Carbone

I think you're right that some people that started investing at, and bought at, and only bought at, the absolute peak might be stuck, and might have been better not buying and doing something else with their cash.  But isn't that a small fraction of investors?  

And, if you listen to the latest BP podcast, David Greene really hammers on how it is really, really tough to replace W2 income with rental cash flow.  And I would agree that that advice is probably about 2 years late... BP seems to be pivoting now after it's already happened.

BUT, a lot the folks in this thread weren't saying "invest your life savings in real estate in May 2022," they were just saying "keep buying, and make sure you're buying good deals."

...right?

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Replied Jun 6 2023, 10:26
Quote from @Nicholas L.:

@John Carbone

I think you're right that some people that started investing at, and bought at, and only bought at, the absolute peak might be stuck, and might have been better not buying and doing something else with their cash.  But isn't that a small fraction of investors?  

And, if you listen to the latest BP podcast, David Greene really hammers on how it is really, really tough to replace W2 income with rental cash flow.  And I would agree that that advice is probably about 2 years late... BP seems to be pivoting now after it's already happened.

BUT, a lot the folks in this thread weren't saying "invest your life savings in real estate in May 2022," they were just saying "keep buying, and make sure you're buying good deals."

...right?

 I didn’t see that episode. To James hamling credit, he doesn’t sell a get rich quick scheme.my whole point 12 months ago was, the interest rate subsidy we all had for a decade is over now, why try to find a deal just to make something work when there are other options to invest in short term until we have more clarity. Real estate is full of a lot of people with an ego, who feel like you always need to be growing your portfolio and they get crafty and expose themselves to unnecessary risk. It’s okay, to step back when market imbalances on the other side. I never told anyone buying real estate was a bad idea when you could borrow below 4 percent. At 7 percent and higher, I’m seeing 8 now for investment property, it just doesn’t make sense. No reason to fight the fed here, prices aren’t going to skyrocket and they likely will continue to not beat inflation until rates collapse. 

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Nicholas L.
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Replied Jun 6 2023, 10:33

great post.  everyone stay constructive!

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James Hamling#3 Real Estate News & Current Events Contributor
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Replied Jun 6 2023, 11:35
Quote from @Nicholas L.:

@John Carbone

I think you're right that some people that started investing at, and bought at, and only bought at, the absolute peak might be stuck, and might have been better not buying and doing something else with their cash.  But isn't that a small fraction of investors?  

And, if you listen to the latest BP podcast, David Greene really hammers on how it is really, really tough to replace W2 income with rental cash flow.  And I would agree that that advice is probably about 2 years late... BP seems to be pivoting now after it's already happened.

BUT, a lot the folks in this thread weren't saying "invest your life savings in real estate in May 2022," they were just saying "keep buying, and make sure you're buying good deals."

...right?

I have this long-time investor friend, and in '09' as I was cranking away at flips he came to me sweating bullets asking advice as to what I am forecasting and his situation of what he should do. 

This friend had the joy and pleasure of closing on a duplex 1 week before the bottom fell-out. With all the fear in the media, he was falling to the media fear-mongering. 

He had a tenant, was clearing little, maybe $50 net monthly during occupancy. But freaking out because on paper, if he was to sell, he would loose $100k. He asked, what should he do, he's "lost" $100k, and fears it getting worse, that he keeps "loosing" more and more week by week. 

I laughed, seriously. 

I told him he needed to take a TV vacation. Turn it off, just turn it off for a month, see how much it improves his life. The answer is simple, selling looses $ so, DON'T sell, because he hasn't lost anything, he ONLY looses if he sells for a lose. So, DON'T sell. 

We spoke a few more time son it and he chilled, and after a tv vacation he realized that yeah, why would he, he's got tenants, and there is only more and more tenants, rental rates going up due to increase in demand so yeah, why be dumb. 

Last summer I sold that property for him. We had a great laugh about it all recounting how freaked out he once was. Because end of day, he accrued many many thousands in equity from tenant paydown, had pocketed many more thousands in net from rents over the years, and cleared a 6 figure profit on the sale. 

All he did was not sell when selling was dumb. That's it, simple. Rents went up considerably, and that property bought at the very peak, was a cash-cow in rather short order. 

Those seeking confirmation-bias of there fear-porn dooms-day scenarios will always grab to "well, well, what if you buy at this exact time, and sell at this exact time" lol, well DUH! If i go buy a car for $10k and sell it a day later at $5k I'd loose $ to, but it's obviously DUMB. Do we really need to point out the blatantly obvious "Don't Do's"? Ok, don't bludgeon yourself in the head with a hammer, use it to hit nails. Don't drink bleach. Don't use 60-grit sandpaper for underwear. Any other obvious don'ts we need to cover? 

I can buy any property at any "high" price and make profits, with 1 magic ingredient; TIME

Arguing bought in May '22', why would you be selling 1yr later? Duh, one SHOULD loose $, unless it's a flip, and flips DONT make $ on market movement, a flip is BUILDING equity, you CREATE the equity via taking the ugliest home and making it a gem. I know, I have done a great-many. 

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Replied Jun 6 2023, 12:04
Quote from @James Hamling:
Quote from @Nicholas L.:

@John Carbone

I think you're right that some people that started investing at, and bought at, and only bought at, the absolute peak might be stuck, and might have been better not buying and doing something else with their cash.  But isn't that a small fraction of investors?  

And, if you listen to the latest BP podcast, David Greene really hammers on how it is really, really tough to replace W2 income with rental cash flow.  And I would agree that that advice is probably about 2 years late... BP seems to be pivoting now after it's already happened.

BUT, a lot the folks in this thread weren't saying "invest your life savings in real estate in May 2022," they were just saying "keep buying, and make sure you're buying good deals."

...right?

I have this long-time investor friend, and in '09' as I was cranking away at flips he came to me sweating bullets asking advice as to what I am forecasting and his situation of what he should do. 

This friend had the joy and pleasure of closing on a duplex 1 week before the bottom fell-out. With all the fear in the media, he was falling to the media fear-mongering. 

He had a tenant, was clearing little, maybe $50 net monthly during occupancy. But freaking out because on paper, if he was to sell, he would loose $100k. He asked, what should he do, he's "lost" $100k, and fears it getting worse, that he keeps "loosing" more and more week by week. 

I laughed, seriously. 

I told him he needed to take a TV vacation. Turn it off, just turn it off for a month, see how much it improves his life. The answer is simple, selling looses $ so, DON'T sell, because he hasn't lost anything, he ONLY looses if he sells for a lose. So, DON'T sell. 

We spoke a few more time son it and he chilled, and after a tv vacation he realized that yeah, why would he, he's got tenants, and there is only more and more tenants, rental rates going up due to increase in demand so yeah, why be dumb. 

Last summer I sold that property for him. We had a great laugh about it all recounting how freaked out he once was. Because end of day, he accrued many many thousands in equity from tenant paydown, had pocketed many more thousands in net from rents over the years, and cleared a 6 figure profit on the sale. 

All he did was not sell when selling was dumb. That's it, simple. Rents went up considerably, and that property bought at the very peak, was a cash-cow in rather short order. 

Those seeking confirmation-bias of there fear-porn dooms-day scenarios will always grab to "well, well, what if you buy at this exact time, and sell at this exact time" lol, well DUH! If i go buy a car for $10k and sell it a day later at $5k I'd loose $ to, but it's obviously DUMB. Do we really need to point out the blatantly obvious "Don't Do's"? Ok, don't bludgeon yourself in the head with a hammer, use it to hit nails. Don't drink bleach. Don't use 60-grit sandpaper for underwear. Any other obvious don'ts we need to cover? 

I can buy any property at any "high" price and make profits, with 1 magic ingredient; TIME

Arguing bought in May '22', why would you be selling 1yr later? Duh, one SHOULD loose $, unless it's a flip, and flips DONT make $ on market movement, a flip is BUILDING equity, you CREATE the equity via taking the ugliest home and making it a gem. I know, I have done a great-many. 

 This is a good point you make, and why I personally invest in real estate. He made a bad purchase at the time, had he waited a few years he could have gotten a better deal in 2011-2012 era when I began to buy into real estate. Smart idea to sell last year, as it is now confirmed that he sold at the peak, so I’m sure you and him had a good laugh. It’s also wise to never sell until you are ready to cash out all great advice. 

Did this guy redeploy the profits into several other properties last year? I don’t think anyone on here questions that real estate is a great wealth builder. But when the financials don’t look good and you can get 5 percent tbills nobody is going to look back at 2022-2023 and say I wish I bought more leveraged real estate at 8 percent. I do agree that 18 months from now around election time you will see an uptick, my whole point since last fall was take 1-2 years, accumulate money and be prepared to buy up some real estate. I also never called for a real estate crash

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Replied Jun 6 2023, 12:04
Quote from @John Carbone:
Quote from @Nicholas L.:

@John Carbone

I think you're right that some people that started investing at, and bought at, and only bought at, the absolute peak might be stuck, and might have been better not buying and doing something else with their cash.  But isn't that a small fraction of investors?  

And, if you listen to the latest BP podcast, David Greene really hammers on how it is really, really tough to replace W2 income with rental cash flow.  And I would agree that that advice is probably about 2 years late... BP seems to be pivoting now after it's already happened.

BUT, a lot the folks in this thread weren't saying "invest your life savings in real estate in May 2022," they were just saying "keep buying, and make sure you're buying good deals."

...right?

 I didn’t see that episode. To James hamling credit, he doesn’t sell a get rich quick scheme.my whole point 12 months ago was, the interest rate subsidy we all had for a decade is over now, why try to find a deal just to make something work when there are other options to invest in short term until we have more clarity. Real estate is full of a lot of people with an ego, who feel like you always need to be growing your portfolio and they get crafty and expose themselves to unnecessary risk. It’s okay, to step back when market imbalances on the other side. I never told anyone buying real estate was a bad idea when you could borrow below 4 percent. At 7 percent and higher, I’m seeing 8 now for investment property, it just doesn’t make sense. No reason to fight the fed here, prices aren’t going to skyrocket and they likely will continue to not beat inflation until rates collapse. 


Rates will, at some time, have to come down, it's a mathematical fact UNLESS the powers that be change the fundaments of the math (example, 40/50yr debt terms). 

Here is what those who preach to sit sidelines and wait for lower rates keep missing. Todays PRICES, reflect todays RATES.     Again; TODAYS PRICES, REFLECT TODAYS RATES. 

When pricing is consolidated at a rate level, as it is today, when you change the rates, the price will change in relation and amplitude of the rate change. Again, changing the rates WILL change the prices when in an environment as most are in today. 

Why are so many institutional buyers going gung-ho at what many novices are saying is "dumb prices" today? Do you really think those commanding hundreds of millions in capital are "dumb"? They "get-it", they know what's to come next and they are buying on FUTURE VALUE.    They know this rate environment is unsustainable in any enduring stance. And they know the math CLEARLY says as rates cut, activity will increase, and that means more people bidding for the finite inventory, with more purchasing power via rate cuts, making for HIGHER prices. 

It is coming, with absolute certainty. The only question is when, and in what amplitude. What do you think would happen if rates went to 4% tomorrow? It would be headlines of properties going into multiples in minutes of listing, yet again.     Because this phase we are in right now today, this very minute, is building pent-up-demand. 

Ask any PM how many times a day they hear from applicants "we were going to buy, but....". That is pent-up-demand creation. 

How many on BP here are saying WHEN ____ there going to be back in it? Again, pent-up-demand. 

As one loads tension on a rubber band, the more load goes into it the stronger the force against that loading force. The more pent-up-demand is created the sooner and sooner it comes to time that force factor will start pressing out like steam building in a kettle. At some point that force will start moving free to an extent "the lid blows" and FOMO comes into play. THATS where bubbles get made, in that rush. 

It's coming, and smart $ knows this that this, today, is THE time to buy. BUT..... but, but, but, strategically. No, one should NOT just buy something to buy something, that's a setup for failure. 

Is it a more complex market, 1,000%. Strategy and insight matters leagues beyond what it has the last 10 years. But make no mistake, fortunes are being "bought" today, in preparation for the reaping to come. 

In markets that have found and proven bottom from this recent consolidation, it's GO-time. Some markets are still in consolidation, some are in uptick, market specific variations matter and exist.     But make no doubt, we are in pressure building for pent-up-demand and all they have to do is open spigot of financing through any number of actions, and the moves normalizing 40yr mortgage shows the direction of things to come. 

Those awaiting a big recession will be sorely regretful. Name a time that in election cycles for POTUS the administration has allowed a recession to begin? You won't find even 1, not in a re-election bid. 

It's ok to sit the sidelines and watch but don't fool yourself, when the lid blows, your complaint will move from rates too one of prices soaring, yet again, and your $ buying less. 

Again-again; Todays prices reflect TODAYS rates.    Slash those rates down, price WILL move up AND the amplitude of that pent-up-demand entering market will super-charge the price increase disproportionately to the rate decrease. 

Save this post, come back to it in 18 months, test me. I called it in Q3 '22', I called it Q1 '22', I called it "21", "20".... As luck has it, betting against my forecasts doesn't fare too well. I am fallible, I am just a human, but man-alive I seem to have a knack for seeing what the math is saying. 

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Replied Jun 6 2023, 12:28
Quote from @James Hamling:
Quote from @John Carbone:
Quote from @Nicholas L.:

@John Carbone

I think you're right that some people that started investing at, and bought at, and only bought at, the absolute peak might be stuck, and might have been better not buying and doing something else with their cash.  But isn't that a small fraction of investors?  

And, if you listen to the latest BP podcast, David Greene really hammers on how it is really, really tough to replace W2 income with rental cash flow.  And I would agree that that advice is probably about 2 years late... BP seems to be pivoting now after it's already happened.

BUT, a lot the folks in this thread weren't saying "invest your life savings in real estate in May 2022," they were just saying "keep buying, and make sure you're buying good deals."

...right?

 I didn’t see that episode. To James hamling credit, he doesn’t sell a get rich quick scheme.my whole point 12 months ago was, the interest rate subsidy we all had for a decade is over now, why try to find a deal just to make something work when there are other options to invest in short term until we have more clarity. Real estate is full of a lot of people with an ego, who feel like you always need to be growing your portfolio and they get crafty and expose themselves to unnecessary risk. It’s okay, to step back when market imbalances on the other side. I never told anyone buying real estate was a bad idea when you could borrow below 4 percent. At 7 percent and higher, I’m seeing 8 now for investment property, it just doesn’t make sense. No reason to fight the fed here, prices aren’t going to skyrocket and they likely will continue to not beat inflation until rates collapse. 


Rates will, at some time, have to come down, it's a mathematical fact UNLESS the powers that be change the fundaments of the math (example, 40/50yr debt terms). 

Here is what those who preach to sit sidelines and wait for lower rates keep missing. Todays PRICES, reflect todays RATES.     Again; TODAYS PRICES, REFLECT TODAYS RATES. 

When pricing is consolidated at a rate level, as it is today, when you change the rates, the price will change in relation and amplitude of the rate change. Again, changing the rates WILL change the prices when in an environment as most are in today. 

Why are so many institutional buyers going gung-ho at what many novices are saying is "dumb prices" today? Do you really think those commanding hundreds of millions in capital are "dumb"? They "get-it", they know what's to come next and they are buying on FUTURE VALUE.    They know this rate environment is unsustainable in any enduring stance. And they know the math CLEARLY says as rates cut, activity will increase, and that means more people bidding for the finite inventory, with more purchasing power via rate cuts, making for HIGHER prices. 

It is coming, with absolute certainty. The only question is when, and in what amplitude. What do you think would happen if rates went to 4% tomorrow? It would be headlines of properties going into multiples in minutes of listing, yet again.     Because this phase we are in right now today, this very minute, is building pent-up-demand. 

Ask any PM how many times a day they hear from applicants "we were going to buy, but....". That is pent-up-demand creation. 

How many on BP here are saying WHEN ____ there going to be back in it? Again, pent-up-demand. 

As one loads tension on a rubber band, the more load goes into it the stronger the force against that loading force. The more pent-up-demand is created the sooner and sooner it comes to time that force factor will start pressing out like steam building in a kettle. At some point that force will start moving free to an extent "the lid blows" and FOMO comes into play. THATS where bubbles get made, in that rush. 

It's coming, and smart $ knows this that this, today, is THE time to buy. BUT..... but, but, but, strategically. No, one should NOT just buy something to buy something, that's a setup for failure. 

Is it a more complex market, 1,000%. Strategy and insight matters leagues beyond what it has the last 10 years. But make no mistake, fortunes are being "bought" today, in preparation for the reaping to come. 

In markets that have found and proven bottom from this recent consolidation, it's GO-time. Some markets are still in consolidation, some are in uptick, market specific variations matter and exist.     But make no doubt, we are in pressure building for pent-up-demand and all they have to do is open spigot of financing through any number of actions, and the moves normalizing 40yr mortgage shows the direction of things to come. 

Those awaiting a big recession will be sorely regretful. Name a time that in election cycles for POTUS the administration has allowed a recession to begin? You won't find even 1, not in a re-election bid. 

It's ok to sit the sidelines and watch but don't fool yourself, when the lid blows, your complaint will move from rates too one of prices soaring, yet again, and your $ buying less. 

Again-again; Todays prices reflect TODAYS rates.    Slash those rates down, price WILL move up AND the amplitude of that pent-up-demand entering market will super-charge the price increase disproportionately to the rate decrease. 

Save this post, come back to it in 18 months, test me. I called it in Q3 '22', I called it Q1 '22', I called it "21", "20".... As luck has it, betting against my forecasts doesn't fare too well. I am fallible, I am just a human, but man-alive I seem to have a knack for seeing what the math is saying. 

I don’t believe todays prices reflect todays rates. Rates went up from 3 to 7 percent in the last 12 months. Prices have consolidated lower like you said. The market is stuck in a pattern of waiting to see what happens. Market definitely seems to be pricing in that the rates being this high is temporary which is creating a bid on real estate with investors speculating that rates will drop in the near future with the ability to refinance lower. I agree the likelihood going into an election year if there being a recession next year is not likely, but the fed is still talking tough on keeping rates higher for longer. Your reasonings make sense, but I still think a 10 percent drop further is in the cards, but yes, if someone’s choice is to buy now vs rent their whole life then buy now there’s no question. Eventually real estate pays off it’s just a matter of time. I think new purchases made from 2022-2024 are better to be held off while building up cash, but 10-20 years from now nobody will regret buying now as long as they aren’t over leveraged and able to handle a slow down. 

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James Hamling#3 Real Estate News & Current Events Contributor
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Replied Jun 6 2023, 13:50
Quote from @John Carbone:
I don’t believe todays prices reflect todays rates. 

How can you think such? Todays prices absolutely reflect today's rates. How can they do anything but? Ones financing is with todays rate is it not? Approvals are on todays rates. 

If inferring that investor purchases, are on future value play, ok, but be clear on that and let's detail that investor purchases denote "as much as" 7% of SFH transactions, at best. And one can't argue 100% of investor purchases are of the 1 mindset, so what "as much as" 50% are, so we are talking at best 3.5%?

That leaves 96.5% or more, of real estate transactions today, price reflecting todays rates. 

Rates did not move from 4 last month, this has been a long road to where rates are today. We are many months into this, it is a fact that todays prices are based upon todays rates. 

AND I will note, that 10% decline has not happened all places. Many markets have not had a 10% decline, some, many, have held flat OR even gone UP. Not to mention if your picking specific months to infer a drop, is it an actual drop or seasonal adjustment? 

Below is a data read; one showing 12mnth read variation, the other monthly that reflect seasonal variations. As one can see, seasonally adjusted clearly shows record highs, still, and continuing. 

While I don't argue there is markets out there that have had a decline, some expectedly so, it's FAR from a truth of the market as a whole or everywhere. Seems that you've got tunnel vision due to your local market actions. 

Inventory holding in historic lows/shortage

And even digging to find anything to argue a decline, going to price per sqft, even that holding at historic new highs. 

This is direct data from the MLS itself, 0-filtering 0-manipulation. No 2nd/3-rd hand takes, direct from the source itself. And it CLEARLY shows no-decline of 10% your consistently referencing, in a major national market.

If I had the direct data feed from others I'd add those. Maybe other Brokers with similar access would like to jump in to help clarify the actual data from the opinions, feeling, thoughts. 

I get it if you have a feeling of prices going down, the media has sure tried pumping that narrative. But reality on the ground simply isn't so. 

And if you feel it is, ok then, it's just a statement that I have the #1 best market in the U.S. under my thumb and without doubt where all should be investing, right? because the data clearly shows, not only no 10% decline, but INCREASE in same timeframe, right. 

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Replied Jun 6 2023, 14:04
Quote from @James Hamling:
Quote from @John Carbone:
I don’t believe todays prices reflect todays rates. 

How can you think such? Todays prices absolutely reflect today's rates. How can they do anything but? Ones financing is with todays rate is it not? Approvals are on todays rates. 

If inferring that investor purchases, are on future value play, ok, but be clear on that and let's detail that investor purchases denote "as much as" 7% of SFH transactions, at best. And one can't argue 100% of investor purchases are of the 1 mindset, so what "as much as" 50% are, so we are talking at best 3.5%?

That leaves 96.5% or more, of real estate transactions today, price reflecting todays rates. 

Rates did not move from 4 last month, this has been a long road to where rates are today. We are many months into this, it is a fact that todays prices are based upon todays rates. 

AND I will note, that 10% decline has not happened all places. Many markets have not had a 10% decline, some, many, have held flat OR even gone UP. Not to mention if your picking specific months to infer a drop, is it an actual drop or seasonal adjustment? 

Below is a 12mnt data read and one showing the monthly that reflect seasonal variations. As one can see, seasonally adjusted clearly shows record highs, still, and continuing. 

While I don't argue there is markets out there that have had a decline, some expectedly so, it's FAR from a truth of the market as a whole or everywhere. Seems that you've got tunnel vision due to your local market actions. 

Inventory holding in historic lows/shortage

And even digging to find anything to argue a decline, going to price per sqft, even that holding at historic new highs. 

This is direct data from the MLS itself, 0-filtering 0-manipulation. No 2nd/3-rd hand takes, direct from the source itself. And it CLEARLY shows no-decline of 10% your consistently referencing, in a major national market.

If I had the direct data feed from others I'd add those. Maybe other Brokers with similar access would like to jump in to help clarify the actual data from the opinions, feeling, thoughts. 

I get it if you have a feeling of prices going down, the media has sure tried pumping that narrative. But reality on the ground simply isn't so. 

And if you feel it is, ok then, it's just a statement that I have the #1 best market in the U.S. under my thumb and without doubt where all should be investing, right? because the data clearly shows, not only no 10% decline, but INCREASE in same timeframe, right. 

Just because people are paying more for housing now doesn’t necessarily mean it reflect todays prices. It’s possible and probable people are overpaying now betting on the future that they will refinance to a lower rate later on. John Q and his wife need a home, they figure they will extend themselves a little by paying $600 more a month due to higher rates (maybe they keep their vehicle longer than expected), their new home builder gave them a rate buy down and they had their closing costs covered etc etc and the homebuyer feels good about their purchase. If rates do drop in the next 1-2 years then they will feel great about their decision. If their buydowns expires and rates aren’t down and their payment goes up another $500….and that old car they have been holding on to breaks down and they need a new car and now a new car payment is $700 because rates in autos are 6-7 percent…I mean Americans always used to live paycheck to paycheck there isn’t much slack for most to absorb. 

this economy isn’t built on high rates for long durations. Looking at the auto industry now they are stockpiling inventory. The Covid stimulus is running thin right now. I think anyone who could afford a house at current rates already has one, some investors are still buying, but these institutions get insider deals and terms to make it worth their while to still be investing. Powell could surprise and keep rates high for all of this year and next year, if that happens it definitely will be trouble for housing market. Your reasoning for them cutting makes sense and that’s what the market is pricing in too (which is reflective in the housing values having a support floor). I never said twin cities prices are dropping in value, in many markets prices are down up to 10 percent though, your charts seem to show twin cities. Still though, even in twin cities housing didn’t beat inflation or 5 percent treasuries in terms of appreciation so the past 12 months there has been a risk free method to beat housing which is a first in many years. 

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Luka Milicevic
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Replied Jun 6 2023, 16:51

The best part of this post was that @James Hamling was tagged.

I actually laughed out loud when I saw that. 

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Replied Jun 6 2023, 18:13
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @John Carbone:
I don’t believe todays prices reflect todays rates. 

How can you think such? Todays prices absolutely reflect today's rates. How can they do anything but? Ones financing is with todays rate is it not? Approvals are on todays rates. 

If inferring that investor purchases, are on future value play, ok, but be clear on that and let's detail that investor purchases denote "as much as" 7% of SFH transactions, at best. And one can't argue 100% of investor purchases are of the 1 mindset, so what "as much as" 50% are, so we are talking at best 3.5%?

That leaves 96.5% or more, of real estate transactions today, price reflecting todays rates. 

Rates did not move from 4 last month, this has been a long road to where rates are today. We are many months into this, it is a fact that todays prices are based upon todays rates. 

AND I will note, that 10% decline has not happened all places. Many markets have not had a 10% decline, some, many, have held flat OR even gone UP. Not to mention if your picking specific months to infer a drop, is it an actual drop or seasonal adjustment? 

Below is a 12mnt data read and one showing the monthly that reflect seasonal variations. As one can see, seasonally adjusted clearly shows record highs, still, and continuing. 

While I don't argue there is markets out there that have had a decline, some expectedly so, it's FAR from a truth of the market as a whole or everywhere. Seems that you've got tunnel vision due to your local market actions. 

Inventory holding in historic lows/shortage

And even digging to find anything to argue a decline, going to price per sqft, even that holding at historic new highs. 

This is direct data from the MLS itself, 0-filtering 0-manipulation. No 2nd/3-rd hand takes, direct from the source itself. And it CLEARLY shows no-decline of 10% your consistently referencing, in a major national market.

If I had the direct data feed from others I'd add those. Maybe other Brokers with similar access would like to jump in to help clarify the actual data from the opinions, feeling, thoughts. 

I get it if you have a feeling of prices going down, the media has sure tried pumping that narrative. But reality on the ground simply isn't so. 

And if you feel it is, ok then, it's just a statement that I have the #1 best market in the U.S. under my thumb and without doubt where all should be investing, right? because the data clearly shows, not only no 10% decline, but INCREASE in same timeframe, right. 

Just because people are paying more for housing now doesn’t necessarily mean it reflect todays prices. It’s possible and probable people are overpaying now betting on the future that they will refinance to a lower rate later on. John Q and his wife need a home, they figure they will extend themselves a little by paying $600 more a month due to higher rates (maybe they keep their vehicle longer than expected), their new home builder gave them a rate buy down and they had their closing costs covered etc etc and the homebuyer feels good about their purchase. If rates do drop in the next 1-2 years then they will feel great about their decision. If their buydowns expires and rates aren’t down and their payment goes up another $500….and that old car they have been holding on to breaks down and they need a new car and now a new car payment is $700 because rates in autos are 6-7 percent…I mean Americans always used to live paycheck to paycheck there isn’t much slack for most to absorb. 

this economy isn’t built on high rates for long durations. Looking at the auto industry now they are stockpiling inventory. The Covid stimulus is running thin right now. I think anyone who could afford a house at current rates already has one, some investors are still buying, but these institutions get insider deals and terms to make it worth their while to still be investing. Powell could surprise and keep rates high for all of this year and next year, if that happens it definitely will be trouble for housing market. Your reasoning for them cutting makes sense and that’s what the market is pricing in too (which is reflective in the housing values having a support floor). I never said twin cities prices are dropping in value, in many markets prices are down up to 10 percent though, your charts seem to show twin cities. Still though, even in twin cities housing didn’t beat inflation or 5 percent treasuries in terms of appreciation so the past 12 months there has been a risk free method to beat housing which is a first in many years. 

 https://finance.yahoo.com/news...

I think this proves my notion that housing is overvalued if this is the case. People buying at these high interest rates are speculating that rates will drop so they can refinance lower and make their money with a lower interest rate. 

If you lower interest rates back to 3-4 percent at current values it tips back to being cheaper to buy. Back in 2012 I was renting during the GFC and when I bought in 2012 I had a 2300 square foot 6 year old house that had the same payment as a 700 square foot 1 bedroom townhome. That was a no brainer purchase. 

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Nicholas L.
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Nicholas L.
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Replied Jun 7 2023, 06:16

@John Carbone

"People buying at these high interest rates are speculating that rates will drop so they can refinance lower and make their money with a lower interest rate."

Some are, for sure.  Although I think residential remains lower risk than commercial, would you agree?  As you basically said, if you're a homeowner that has to move for a job or whatever and you buy something you can just afford, and you hope rates will come down in a matter of months, you'll probably be disappointed.

Now, if you buy something you can't afford, and you're COUNTING on rates to come down... not good.  Don't do that.

But, again, it seems like a lot of the pain is in commercial.

Thoughts?

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John Morgan
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Replied Jun 7 2023, 07:52

Homes under the median price in the DFW area are in demand and selling quick. Just too much pent up demand from home buyers. The prices are too high to make them work as rentals. Way too much demand from homebuyers competing with each other causing prices to go up too high. But Texas has lots of job growth and a net population growth of 1,000 people a day, mostly Californians moving here. So I don’t see things slowing down unless CA stops taxing the crap out of people/businesses and get it’s act together.

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James Hamling#3 Real Estate News & Current Events Contributor
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James Hamling#3 Real Estate News & Current Events Contributor
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Replied Jun 7 2023, 09:42
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @John Carbone:
I don’t believe todays prices reflect todays rates. 

How can you think such? Todays prices absolutely reflect today's rates. How can they do anything but? Ones financing is with todays rate is it not? Approvals are on todays rates. 

If inferring that investor purchases, are on future value play, ok, but be clear on that and let's detail that investor purchases denote "as much as" 7% of SFH transactions, at best. And one can't argue 100% of investor purchases are of the 1 mindset, so what "as much as" 50% are, so we are talking at best 3.5%?

That leaves 96.5% or more, of real estate transactions today, price reflecting todays rates. 

Rates did not move from 4 last month, this has been a long road to where rates are today. We are many months into this, it is a fact that todays prices are based upon todays rates. 

AND I will note, that 10% decline has not happened all places. Many markets have not had a 10% decline, some, many, have held flat OR even gone UP. Not to mention if your picking specific months to infer a drop, is it an actual drop or seasonal adjustment? 

Below is a 12mnt data read and one showing the monthly that reflect seasonal variations. As one can see, seasonally adjusted clearly shows record highs, still, and continuing. 

While I don't argue there is markets out there that have had a decline, some expectedly so, it's FAR from a truth of the market as a whole or everywhere. Seems that you've got tunnel vision due to your local market actions. 

Inventory holding in historic lows/shortage

And even digging to find anything to argue a decline, going to price per sqft, even that holding at historic new highs. 

This is direct data from the MLS itself, 0-filtering 0-manipulation. No 2nd/3-rd hand takes, direct from the source itself. And it CLEARLY shows no-decline of 10% your consistently referencing, in a major national market.

If I had the direct data feed from others I'd add those. Maybe other Brokers with similar access would like to jump in to help clarify the actual data from the opinions, feeling, thoughts. 

I get it if you have a feeling of prices going down, the media has sure tried pumping that narrative. But reality on the ground simply isn't so. 

And if you feel it is, ok then, it's just a statement that I have the #1 best market in the U.S. under my thumb and without doubt where all should be investing, right? because the data clearly shows, not only no 10% decline, but INCREASE in same timeframe, right. 

Just because people are paying more for housing now doesn’t necessarily mean it reflect todays prices. It’s possible and probable people are overpaying now betting on the future that they will refinance to a lower rate later on. John Q and his wife need a home, they figure they will extend themselves a little by paying $600 more a month due to higher rates (maybe they keep their vehicle longer than expected), their new home builder gave them a rate buy down and they had their closing costs covered etc etc and the homebuyer feels good about their purchase. If rates do drop in the next 1-2 years then they will feel great about their decision. If their buydowns expires and rates aren’t down and their payment goes up another $500….and that old car they have been holding on to breaks down and they need a new car and now a new car payment is $700 because rates in autos are 6-7 percent…I mean Americans always used to live paycheck to paycheck there isn’t much slack for most to absorb. 

this economy isn’t built on high rates for long durations. Looking at the auto industry now they are stockpiling inventory. The Covid stimulus is running thin right now. I think anyone who could afford a house at current rates already has one, some investors are still buying, but these institutions get insider deals and terms to make it worth their while to still be investing. Powell could surprise and keep rates high for all of this year and next year, if that happens it definitely will be trouble for housing market. Your reasoning for them cutting makes sense and that’s what the market is pricing in too (which is reflective in the housing values having a support floor). I never said twin cities prices are dropping in value, in many markets prices are down up to 10 percent though, your charts seem to show twin cities. Still though, even in twin cities housing didn’t beat inflation or 5 percent treasuries in terms of appreciation so the past 12 months there has been a risk free method to beat housing which is a first in many years. 


John.... I feel like I'm talking to a brick wall here. 

Your ignoring half of what I am saying, most of the data I share, and all of the points. 

Your every argument John is assumptions, wrapped in a a box of assumption, with a bow of "I think"....    Do you not see how your stretching to try to make your assumed premise true? 

You say "oh, but but but, uhmmm, those buyers are, uhm-aaah, there only buying now with plans to refi, yeah, that's it, there ONLY doing it to refi" LMAO, really..... come-on-man. Ok, so a few hundred of thousand transactions a day, there all just doing it ignoring today, planning on a rapid refi....... Holly stretch-man.  

TODAYS PRICES REFLECT TODAYS RATES, period-full-stop-end-of-story.     I get how that 1 fact blows your entire assumptions out of the water. Now IF you were an investor, you'd stop there and go "Huh, wow James, I never thought of it like that. yeah, I see that, and the data, it really proves that. Huh, ok, so yeah, when rates shift, I get it, I GET IT NOW, yeah, prices will jump up". 

But no, you dig deep, and throw out the most ridiculous stretch "Uhmmmm, there all only buying now to refi tomorrow" lol....... 

Weren't you flipping out on me John last fall saying how certain you were real estate was going to collapse this past winter? Yes you did. You spammed and trolled my posts than, in a total tirade on how you were so correct, I was such an idiot in my THOUROUGH forecast for a volume collapse, with prices holding in many markets, market specific deviations, and a move UP in prices Q2.     Well here we are, what happened?

Come on John, I am calling you out: who was right? What did I forecast? What happened? What did you say would happen?      If there were an award for market forecasts I'd be with the Oscar in hand now. It's fleshed out EXACTLY as I forecasted, and that's because I follow the data NOT emotions. 

You went bananas for page after page on it, it's archived here on BP for all to find and review. It's how you earned your first block from me, remember that? 

But here you are again, so dang focused on being "right" vs accurate. 

When I forecast half of the crazy things I have, and nailed them I have said I hope I am wrong, and my economic forecast, yeah, I hope I am wrong, I do, because it's a sucky outlook, but I follow the math wherever it leads me. I am not the one making forecasts, the math is, I am just it's voice, a translator let's say. yeah, that feels most accurate, a data-translator. 

So get as pissy as you want with me, it matter not, the data and math says what it says regardless of your freak-out's on me, I'm just the dang translator. 

Now, today is a TIME TO BUY, because the unleashing of the buyers is just a few steps down the road. Exact day, I don't know, math/data isn't telling me that, but it's saying it's within next 16-18 months. It could be as soon as 14. 

Check bond and CD charts, the data/math is singing away there, just listen. 

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Replied Jun 7 2023, 13:13
Quote from @James Hamling:
Quote from @John Carbone:
Quote from @James Hamling:
Quote from @John Carbone:
I don’t believe todays prices reflect todays rates. 

How can you think such? Todays prices absolutely reflect today's rates. How can they do anything but? Ones financing is with todays rate is it not? Approvals are on todays rates. 

If inferring that investor purchases, are on future value play, ok, but be clear on that and let's detail that investor purchases denote "as much as" 7% of SFH transactions, at best. And one can't argue 100% of investor purchases are of the 1 mindset, so what "as much as" 50% are, so we are talking at best 3.5%?

That leaves 96.5% or more, of real estate transactions today, price reflecting todays rates. 

Rates did not move from 4 last month, this has been a long road to where rates are today. We are many months into this, it is a fact that todays prices are based upon todays rates. 

AND I will note, that 10% decline has not happened all places. Many markets have not had a 10% decline, some, many, have held flat OR even gone UP. Not to mention if your picking specific months to infer a drop, is it an actual drop or seasonal adjustment? 

Below is a 12mnt data read and one showing the monthly that reflect seasonal variations. As one can see, seasonally adjusted clearly shows record highs, still, and continuing. 

While I don't argue there is markets out there that have had a decline, some expectedly so, it's FAR from a truth of the market as a whole or everywhere. Seems that you've got tunnel vision due to your local market actions. 

Inventory holding in historic lows/shortage

And even digging to find anything to argue a decline, going to price per sqft, even that holding at historic new highs. 

This is direct data from the MLS itself, 0-filtering 0-manipulation. No 2nd/3-rd hand takes, direct from the source itself. And it CLEARLY shows no-decline of 10% your consistently referencing, in a major national market.

If I had the direct data feed from others I'd add those. Maybe other Brokers with similar access would like to jump in to help clarify the actual data from the opinions, feeling, thoughts. 

I get it if you have a feeling of prices going down, the media has sure tried pumping that narrative. But reality on the ground simply isn't so. 

And if you feel it is, ok then, it's just a statement that I have the #1 best market in the U.S. under my thumb and without doubt where all should be investing, right? because the data clearly shows, not only no 10% decline, but INCREASE in same timeframe, right. 

Just because people are paying more for housing now doesn’t necessarily mean it reflect todays prices. It’s possible and probable people are overpaying now betting on the future that they will refinance to a lower rate later on. John Q and his wife need a home, they figure they will extend themselves a little by paying $600 more a month due to higher rates (maybe they keep their vehicle longer than expected), their new home builder gave them a rate buy down and they had their closing costs covered etc etc and the homebuyer feels good about their purchase. If rates do drop in the next 1-2 years then they will feel great about their decision. If their buydowns expires and rates aren’t down and their payment goes up another $500….and that old car they have been holding on to breaks down and they need a new car and now a new car payment is $700 because rates in autos are 6-7 percent…I mean Americans always used to live paycheck to paycheck there isn’t much slack for most to absorb. 

this economy isn’t built on high rates for long durations. Looking at the auto industry now they are stockpiling inventory. The Covid stimulus is running thin right now. I think anyone who could afford a house at current rates already has one, some investors are still buying, but these institutions get insider deals and terms to make it worth their while to still be investing. Powell could surprise and keep rates high for all of this year and next year, if that happens it definitely will be trouble for housing market. Your reasoning for them cutting makes sense and that’s what the market is pricing in too (which is reflective in the housing values having a support floor). I never said twin cities prices are dropping in value, in many markets prices are down up to 10 percent though, your charts seem to show twin cities. Still though, even in twin cities housing didn’t beat inflation or 5 percent treasuries in terms of appreciation so the past 12 months there has been a risk free method to beat housing which is a first in many years. 


John.... I feel like I'm talking to a brick wall here. 

Your ignoring half of what I am saying, most of the data I share, and all of the points. 

Your every argument John is assumptions, wrapped in a a box of assumption, with a bow of "I think"....    Do you not see how your stretching to try to make your assumed premise true? 

You say "oh, but but but, uhmmm, those buyers are, uhm-aaah, there only buying now with plans to refi, yeah, that's it, there ONLY doing it to refi" LMAO, really..... come-on-man. Ok, so a few hundred of thousand transactions a day, there all just doing it ignoring today, planning on a rapid refi....... Holly stretch-man.  

TODAYS PRICES REFLECT TODAYS RATES, period-full-stop-end-of-story.     I get how that 1 fact blows your entire assumptions out of the water. Now IF you were an investor, you'd stop there and go "Huh, wow James, I never thought of it like that. yeah, I see that, and the data, it really proves that. Huh, ok, so yeah, when rates shift, I get it, I GET IT NOW, yeah, prices will jump up". 

But no, you dig deep, and throw out the most ridiculous stretch "Uhmmmm, there all only buying now to refi tomorrow" lol....... 

Weren't you flipping out on me John last fall saying how certain you were real estate was going to collapse this past winter? Yes you did. You spammed and trolled my posts than, in a total tirade on how you were so correct, I was such an idiot in my THOUROUGH forecast for a volume collapse, with prices holding in many markets, market specific deviations, and a move UP in prices Q2.     Well here we are, what happened?

Come on John, I am calling you out: who was right? What did I forecast? What happened? What did you say would happen?      If there were an award for market forecasts I'd be with the Oscar in hand now. It's fleshed out EXACTLY as I forecasted, and that's because I follow the data NOT emotions. 

You went bananas for page after page on it, it's archived here on BP for all to find and review. It's how you earned your first block from me, remember that? 

But here you are again, so dang focused on being "right" vs accurate. 

When I forecast half of the crazy things I have, and nailed them I have said I hope I am wrong, and my economic forecast, yeah, I hope I am wrong, I do, because it's a sucky outlook, but I follow the math wherever it leads me. I am not the one making forecasts, the math is, I am just it's voice, a translator let's say. yeah, that feels most accurate, a data-translator. 

So get as pissy as you want with me, it matter not, the data and math says what it says regardless of your freak-out's on me, I'm just the dang translator. 

Now, today is a TIME TO BUY, because the unleashing of the buyers is just a few steps down the road. Exact day, I don't know, math/data isn't telling me that, but it's saying it's within next 16-18 months. It could be as soon as 14. 

Check bond and CD charts, the data/math is singing away there, just listen. 

Rate buy downs James. Last year you were talking them up as a way to get lower mortgage payments. You definitely nailed this and this has happened. When you buy a home with a rate buy down what does it do? It artificially lowers the payment for the homebuyer so that they can afford a higher purchase price. It's very similar to the teaser rates in early 2000s, but not nearly as bad this time around. So what happens james is, by default, with SFH purchased by rate buy down homeowners they have a year or two until higher payments kick in. Developer or realtor doesn't care though once the closing happens. Everyone is predicting rates will drop in a year or two, possibly will happen, but since everyone believes it real estate values haven't dropped as much because the feel like they have the FED floor beneath them. So yes, the prices people are paying now are real (they are still down double digits in many markets). But it is reflective in what is priced into the markets (ie, lower rates in a year) which is also why equities are doing so well. The fed is a genius pulling this off. They raise rates and the market doesn't believe them, so they get to slow down inflation without a crash because people like you James and everyone else believes it's temporary. Powell really is a genius.

I never said real estate was going to crash. I said a 20-30 percent drawdown by end of 2023 on the median sales price. I think it’s still trending towards that if fed doesn’t cut rates which has always been my position.

lastly, my main point last year was that it was wise to take off a year or two from real estate and invest in other risk free alternatives. I don’t know ANYBODY without a bias or agenda who has said “John…I wish I had bought Q3/Q4 2022 I missed the boat”… Why won’t you admit that real estate is down the last 12 months adjusted for inflation and investing in 5 percent treasuries is a better position. This is the first time in over a decade where this has been the case. 

18 months from now we will agree on everything.