All Forum Posts by: John Carbone

Quote from @Carlos Ptriawan:

Quote from @James Hamling:

And as time goes, there going to get hard pressed that they either accept Stagflation OR, they gotta inflate there way out of it. And that means Wage inflation.     There going to have to try to do segregated inflation, by some wizardry, of measured wage inflation without it hitting housing or other sectors. Which I think will fail, miserably, but Stagflation is the execution of many things and they will do all kinds of gymnastics to avoid it. 

Yea, perhaps "front running" the Fed is right statement. Why sell now if we know the mortgage rate would be 4-5% again in 2025 anyway. Right...

If there's no more inventory to sell like this month; there's no pressure for sellers to reduce their price except (perhaps) in a higher liquidity market.

 Yeah, just look back at the bonkers bull-run of the last 24mnths, the sheer volume of transactions that happened. That was commerce compression. It wasn't that all those people were sitting the sidelines since 2017 and then just collectively decided "hey, let's buy a home", it was an un-natural event. 

We had years of transaction happen in a very compressed window. And that means a volume drop going forward. Those people are not induced to sell. It makes for a volume drop across the board, less listings. So it nerf's the impact of reduction in buyers, because the economy was front-loaded to have less sellers. Thus, creating a net 0 impact right. Which helps hold home prices up, even though in a way they should be going down due to diminished buyer capacity, the seller volume is equally dropping. 

It's a perfect storm, it is, change any 1 ingredient and results would be wildly different. 

This is a truly once in a lifetime event, and the reverberations will continue for years. 

Now, the big deal is, the political powers that be are going to "need" to strong running economy, and only way to get that now is by pumping it up, inflating it. Only way to inflate from here is leverage, epic leverage. I see us at the beginning of a massive inflation in housing prices. Lol, yeah, how nuts does that sound right, but it's what I see in forecast. We could see another bull-run that pumps up median home prices another 24%+.    At that point, that's were we get into a real bubble territory. 

Because what else are they going to do? Seriously, what else? Are the politicians going to go into elections with a floundering economy? Political law 101 is if your an incumbent sitting on a bad economy, ya better start looking for a new job because your gonna loose. You have never heard a sitting politician say "I know things suck, and that's just how it is, there gonna suck a bit longer, remember to vote for me". That just doesn't happen ever. 

So we can expect actions very soon here to start pumping things up. Or, they just give up, accept there fate, and do what's best for the country ignoring how it impacts there seat. Would be the 1st time in my lifetime but hey, maybe D.C. all grows a conscious. 

This market really puzzled me, I never see a market so strong.

my neighbour:
Listing August $1,130,000
Reduced to       $900,000

SOLD FOR $1,070,000 just yesterday. 

James could be right, maybe housing is so strong it only adjusted -5% for one year.

We have negative new listing MoM now, even in Las Vegas, it seems all flippers already sold their houses.

Quote from @Michael Wooldridge:

Quote from @John Carbone:

This is pretty amazing. Look at all that inventory in the pipeline. 

Shelter is 1/3rd of CPI, fed won’t stop raising until CPI is “under control”. Rents will be dropping and virtually nobody will be buying now. 

 Rents will be dropping why? And when in history has that happened? 

https://ipropertymanagement.co...

OH right never. yes housing will slow down. Rents will stop going up. But dropping? you are kidding yourself. Especially when paired with inflation. 

BTw look at what inflation did too rents in the 80’s…… 

 I really think rent will be dropping.
Currently active inventory house is increased 2% YoY. The unsold goes to rent I think. 

The rent appreciation is too much in 2021, but that's my speculation.

Quote from @John Carbone:

Quote from @Michael Wooldridge:

Quote from @John Carbone:

Quote from @James Hamling:

Quote from @Michael Wooldridge:

Quote from @Peter Redmond:

The crash is here. Similar to 2008, most, including myself thought it would never happen. Then the home I purchased for $740k, resold for $450k & the condo I paid $250k for resold for $167k. The cheaper it is to borrow money the higher the prices, the more expensive it is to borrow money the lower the prices. We will have a wave of cash buyers, but they always want a cash discount. You will generally see folks offering incentives like free trips & upgrades before the prices reductions. 

I don;t know anybody in the industry in 2005-2008 who was surprised by the crash. Whether you were in investor, realtor, or lender, you could see what was happening when they basically stopped verifying income. You could outright lie and the lenders knew it. The crash back then was obvious. Granted Lehman going under made it worse but there were a whole hell of a lot of people who saw it coming.  

 We literally referenced the mortgages as a "Liar Loan" lol. 

My favorite was the “ninja” no income no job no assets loans, the offices used to pass out different trophies with Michelangelo, Leonardo, Donatello, and Raphael (from teenage mutant ninja turtles) to the brokers. 

nowadays, the joke is about the HELOC borrower who paid “cash” for a 2nd, 3rd, or 4th home. 

new bubble, same burst. 

The HELOC won't be an issue though, If they are investing they are still making their money (equity) make money, And if there rate is locked they could be in a pretty nice position to be honest with 30 year fixed at 7%

 

That is only going to go higher. Even higher income people (a good portion likely with multiple homes), are also barely scraping by. 

this is 3 months old data too and strongest jobs market likely in history.

the Fed is quickly peeling back the onion. The first domino has already fallen. 

Well aware and not a new phenomena: https://www.bloomberg.com/news.... 

1/3 rd of people making $250k live paycheck to paycheck and to be in $250k you are roughly in top 5% of America. 

Not sure why that means they are suddenly going to lose money on their HELOC rental properties they bought with low interest.

 

Quote from @John Carbone:

Quote from @James Hamling:

Quote from @Michael Wooldridge:

Quote from @Peter Redmond:

The crash is here. Similar to 2008, most, including myself thought it would never happen. Then the home I purchased for $740k, resold for $450k & the condo I paid $250k for resold for $167k. The cheaper it is to borrow money the higher the prices, the more expensive it is to borrow money the lower the prices. We will have a wave of cash buyers, but they always want a cash discount. You will generally see folks offering incentives like free trips & upgrades before the prices reductions. 

I don;t know anybody in the industry in 2005-2008 who was surprised by the crash. Whether you were in investor, realtor, or lender, you could see what was happening when they basically stopped verifying income. You could outright lie and the lenders knew it. The crash back then was obvious. Granted Lehman going under made it worse but there were a whole hell of a lot of people who saw it coming.  

 We literally referenced the mortgages as a "Liar Loan" lol. 

My favorite was the “ninja” no income no job no assets loans, the offices used to pass out different trophies with Michelangelo, Leonardo, Donatello, and Raphael (from teenage mutant ninja turtles) to the brokers. 

nowadays, the joke is about the HELOC borrower who paid “cash” for a 2nd, 3rd, or 4th home. 

new bubble, same burst. 

The HELOC won't be an issue though, If they are investing they are still making their money (equity) make money, And if there rate is locked they could be in a pretty nice position to be honest with 30 year fixed at 7%

 

Quote from @Michael Wooldridge:

Quote from @Peter Redmond:

The crash is here. Similar to 2008, most, including myself thought it would never happen. Then the home I purchased for $740k, resold for $450k & the condo I paid $250k for resold for $167k. The cheaper it is to borrow money the higher the prices, the more expensive it is to borrow money the lower the prices. We will have a wave of cash buyers, but they always want a cash discount. You will generally see folks offering incentives like free trips & upgrades before the prices reductions. 

I don;t know anybody in the industry in 2005-2008 who was surprised by the crash. Whether you were in investor, realtor, or lender, you could see what was happening when they basically stopped verifying income. You could outright lie and the lenders knew it. The crash back then was obvious. Granted Lehman going under made it worse but there were a whole hell of a lot of people who saw it coming.  

 We literally referenced the mortgages as a "Liar Loan" lol. 

Quote from @John Carbone:

Quote from @Carlos Ptriawan:

Quote from @John Carbone:

Doesn’t look like there will be any fed slow down.

https://www.google.com/amp/s/f...

The scary part is, the only thing fed can really control to lower prices is real estate and car values. So yeah, unless something happens abroad, the further we will fall here. It’s unfortunate that the energy policies are what they are, there’s a zero percent chance there will be a reversal of that policy. Unfortunately, it’s going to mean lower home prices as that is only mechanism to lower inflation the fed can control.

https://www.cnbc.com/2022/10/1...
 

hahaha this is truly chicken and beef problem, there's no way the home price adjustment would be reflected in CPI lesser than 12 months. The data is so lagging, the data has an incorrect methodology of 1982 as well. If you see Fed chart during GFC , there's none showing of home crash in 2008. 

Their data is fake in 2022. This is so funny because this inflation is not as big as they displayed in the media, but the effect of policy changes would kill the econony of the world, no wonder UN amd IMF is so mad with the Fed.

Quote from @John Carbone:

Doesn’t look like there will be any fed slow down.

https://www.google.com/amp/s/f...

 There need to be exogenous events to happen for the Fed to slow down, several scenarios:
- if suddenly tomorrow the Ukraine conflict stopped and oil settled below production cost ($50), then inflation would be cut by half and Fed can reduce the rate
- or the effect of fed fund rate is very high that the unemployment rising from 2% to 6%
- leakeage somewhere , such a a collapse of institution or country in Europe, then as a result of that the contagion is so dramatic that another too big too fail bank in America has to be rescued (Like Chase/Lehman in 08)

What's funny is, the Europe is facing more extreme pressure due to Russia+Fed decision, while for us we can say it started to affect the real estate sector, gas is more expensive blablabla but we don't feel that much in labour market so far.