All Forum Posts by: Greg R.

Quote from @Jace Holt:

When I see low skill jobs like fast food have doubled in wage over the last 8 or so years and are now paying $15/hour, then it seems completely normal to me that food should be double, cars should be double, clothing should be double, rent should be double, and home prices should be double. There is no gigantic correction coming of the price is not fundamentally incorrect. The government is deciding to panic raise the interest rates while still promoting inflation in lots of other ways.

Wages aren't doubling. My W2 pay certainly hasn't doubled. In CA minimum wages/ professions (which are some of the highest paid in the nation) have increased significantly but not doubled. State minimum wage is $14 per hour, I see McDonalds starting at $17-18 (about a 25% increase above minimum wage). In mid-level professions there certainly hasn't been a doubling of wages. Normal "middle class" people are being choked out by prices of goods and services, e.g., gas, food, rents, services, etc. Most Americans are drowning in debt and living check to check. Homelessness is growing at an alarming rate with rents at an all-time high. This might be hard to see for successful investors, but the biggest segment of our society is not doing well financially. 

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Just a question... are the ones who are most fervently defending this market and insisting that it can't crash the same ones that would be hurt the most if it did? Realtors, lenders, etc.?

If we accept that the market is grossly inflated and that the country is in a very bad place economically/ financially, that could cause a shift in public opinion and start the inevitable downturn. Denying it is likely swaying public opinion and postponing the inevitable.

 Great question actually, Greg! Let's talk about "defending the market". 

My team closed 95 transactions last year and we would very much prefer for the market to slow down! Here is why:

It is tough for buyers agents to write offers on deals when you compete against 15 offers! You did all the work, but 14 agents did not get paid. Also not fun when I am on the listing side: 15 offers x 25 pages = 375 pages to print, read, mark up and present to the seller. I'd much rather have 2 offers to present!

So no, I have no benefit in pouring gas on the fire. As an active buy and hold investor I would also like to see the market slow down. I pay literally twice for the same house what I have paid 10 years ago. We buy several houses every year.

And no end in sight. Milwaukee has a housing shortage - we have 300,000 Millennials, who have aged into home buying years (the oldest are 39 now, married, kids) - we have a market of about 10,000 SF homes per year. Tell me how that is going to work! And Millennials are not the only buyers!

We do have new construction; 1678 units last year. That is a drop in the bucket. Plus, these new houses are all 500-700k and up compared to our 250k median. Not much help!

My hope is that rising interest rates slow down the market eventually; so far not much. We have about 60 active buyers and not one has thrown in the towel as far as we know. I'll be the first to post when I see things slowing down!

@Marcus Auerbach what you are describing is a good problem to have. That's like investors complaining because managing their huge portfolio is a so much work, and they need to pay accountants, attorneys, etc. Never mind the fact that they amassed a huge portfolio and established generational wealth. Similarly, you are slammed with work because a million people want to buy your listings for "x" over list price, and your sellers are throwing caution to the wind and offering "x" over list price to get a home amongst the rat race. With record home prices I'm sure commissions have been quite nice. And that's great, you are working hard and being rewarded for your hard work.

I remember a time when there were famines/ droughts among realtors & lenders. I certainly don't wish that on anyone. Just remembering a time when the market was not so kind for those in the industry. 

Perhaps explain to the management co that you never received either notice and ask if they have a tracking number for the one that was mailed. If not, they may agree to postpone the increase by one more month.

Also, if you're a landlord you know that verbal agreements are not binding. Without a new signed lease you're subject to the terms in the current lease. 

I would definitely talk to some other lenders. If you aren't pulling cash out and you have good credit and good equity, not sure why rates would be 6. * At least not now, maybe in a few weeks. https://www.mortgagenewsdaily....

So the two beach cottages are at 6.75? Even with high rates you can probably refi down into the low 5's and instantly increase your cash flow. That would be first order of business for me if I was in a 6.75.

Must be a good friend to lose $7-8k a year on him.

Great point @Matt M. 

@Caleb Smith not sure about the market in KC but this could be an opportunity to get a better tenant who isn't going to complain & be petty, and also increase rents. 

@Tom O. what makes you so confident that supply won't increase? Is your position that the current inventory levels are going to stay where they are permanently? If not, when do you suppose they'll increase?

It's well within the realm of possibilities that sales will slow due to rates in the 5's and creeping to the 6's. Historically inventory levels increase in the spring/ summer months. A vast majority of home sales are through financing, not cash. Therefore, if financing becomes difficult/ impossible for some, that could have a significant impact on buying power of the purchasers. 

Do you think that people having life changing events that force them to sell is all of a sudden going to stop? 

Just a question... are the ones who are most fervently defending this market and insisting that it can't crash the same ones that would be hurt the most if it did? Realtors, lenders, etc.?

If we accept that the market is grossly inflated and that the country is in a very bad place economically/ financially, that could cause a shift in public opinion and start the inevitable downturn. Denying it is likely swaying public opinion and postponing the inevitable.

Thanks @Jim K.. Appreciate you touching on the substance of the video/ Steve's argument. 

Who is Steve Van Metre? Steve Van Metre is a notable financial planner and macro manager that specializes in retirement income strategies and the direct management of client assets. In addition to managing portfolios, he is also one of the top annuity agents in the United States. Van Metre is sought by peers for advice and conducts webinars to educate other advisors on annuities and real-world expectations from them. He has coached thousands of people through to a completely successful retirement. He regularly follows a range of economists to keep pace with changes in the marketplace. His insightful advice has been featured in print and on local radio and television. 

THIS Will Crash the Housing Market... - YouTube

About a week ago Steve Van Metre made his case for why the housing market is going to crash. Please watch the video and look at the evidence/ historical data that he's citing before commenting.