2022 investing thread

[URGatorBait]

Homebuyers are canceling deals at the highest rate since the start of the pandemic

Higher mortgage rates and overall inflation are causing potential homebuyers to reconsider their purchases.

www.cnbc.com

 

[Egor's Assistant]

 

[Concrete Helmet]

A lot of movement in the investment side of resale right now but dumb money is still buying them up. We are even seeing people leverage their primary residences to grab stuff at current market value and higher rates .....hang in there as I think we'll retrace to about 30-40% down before the dipsh!ts at the Fed realize they've broken not only the stock and bond market but the housing market too.....oh and don't jump too quickly when you move because this time around I think we'll see a double or even triple dip recession.....

 

[Egor's Assistant]

 

[FireFoley]

Homebuilder sentiment plunges in July as buyers pull back

Homebuilder sentiment fell dramatically in July, as both builders and buyers contend with sky-high inflation.

www.cnbc.com

 

[Concrete Helmet]

Homebuilder sentiment plunges in July as buyers pull back

Homebuilder sentiment fell dramatically in July, as both builders and buyers contend with sky-high inflation.

www.cnbc.com

Not shocking. Remember this is "builders" not existing homes. There has been a glut of investor sell offs in the last 8 months or so making purchases "immediate" rather than waiting 1-2 years on materials to finish your new home. Were still due a drop in prices but the FED will start buying MBS again around the end of this year or beginning of next IMO.

 

[FireFoley]

Not disagreeing with you and I understand but you have to start somewhere. If you have been following the news, builders are dropping the agreed upon price on many new homes trying to stop the higher number of cancellations. Regarding existing homes, I am seeing 15+% price drops, yes from ridiculous prices and after the drop they are still ridiculous but remember for 18+ straight months sellers were getting those prices, not questions asked, no inspections and getting those prices that day.

Regarding the FED they erred in buying MBS from the start. The market was never frozen. The only way to see what the "market" truly is is to step away. But I agree with you, they will stop the BS runoff before it ends and will probably begin building it up again.

 

[Egor's Assistant]

 

[Egor's Assistant]

 

[Concrete Helmet]

Interesting data here and I can corroborate being in the field. Key takeaways.....people doing what sellors LAST YEAR were doing are "reducing" their prices.......HOWEVER VALUES have not begun to fall. In other words people got in a habit of asking too much.....houses are still selling fast as ever and although inventories are up thet STILL are not near NORMAL levels.

My advice better get in now(you can always refi later) because in about 6 months when the "pivot" happens and the builders have packed it up which they are almost done now you will be seeing the average 3/2 in Florida at 475-525K just like in other sh!thole states.
Skip to the 4.20 mark for the relevant info and charts. Key takeaways...
June saw the LOWEST number of days on the market...14 that's lower than 1 year ago
Highest median value EVER....416K

 

[Detroitgator]

Interesting data here and I can corroborate being in the field. Key takeaways.....people doing what sellors LAST YEAR were doing are "reducing" their prices.......HOWEVER VALUES have not begun to fall. In other words people got in a habit of asking too much.....houses are still selling fast as ever and although inventories are up thet STILL are not near NORMAL levels.

My advice better get in now(you can always refi later) because in about 6 months when the "pivot" happens and the builders have packed it up which they are almost done now you will be seeing the average 3/2 in Florida at 475-525K just like in other sh!thole states.
Skip to the 4.20 mark for the relevant info and charts. Key takeaways...
June saw the LOWEST number of days on the market...14 that's lower than 1 year ago
Highest median value EVER....416K

Thanks Crete... serious question: isn't the real question going to be "how much can the average person borrow for an average 3/2" regardless of demand, or are you saying that lenders will yet again find creative ways to let people borrow away? I agree completely with your post on the supply/demand price action, but is that not taking into account interest rates/borrowing power? They get a say in price action too, right?

Watching the video now. One thing the price vs int rate chart does show is kinda the same thing as student loans: cheap money drives price of the commodity (whether house or education or whatever) UP

 

[Concrete Helmet]

serious question: isn't the real question going to be "how much can the average person borrow for an average 3/2" regardless of demand, or are you saying that lenders will yet again find creative ways to let people borrow away? I agree completely with your post on the supply/demand price action, but is that not taking into account interest rates/borrowing power? They get a say in price action too, right?

Watching the video now. One thing the price vs int rate chart does show is kinda the same thing as student loans: cheap money drives price of the commodity (whether house or education or whatever) UP

Yes for now. Qualifications are tight on lending and some buyers are being forced out by the "monthly cost"....On the other hand look at rental rates on a 3/2 your area .....A 3/2 rental in the Orlando and surrounding area is around 2100-2500 monthly right now. And that's nothing special maybe 1400 sqft. Are you better off renting at that rate or purchasing at a higher price then refinancing 6-8 months from now when rates drop which will put more upward pressure on prices?

RE prices in Florida have always been historically low but as the state grows in population everyday more people who are conditioned to 500K 3/2's are coming here. If banks lend money in those states why wouldn't they lend the same money here.....plus more and more of them have pockets full of cash from selling their 500k 3/2 in blue state hell. We are closing nearly 50% of our purchases in cash over the last year and it has actually picked up over the last 2-3 months.

Out of state individual investors have been a consistent source for us. I believe many are taking money out of bonds and equities and parking it in something that is giving them both yield and tax shelter while the storm passes.

BTW look at that chart again(the one of interest rates and prices).....what other chart does it remind you of....hint it's a shiny yellowish metal used to make coins and bars It leads and lags slightly in the peaks and pullbacks but is very similar....

 

[BMF]

Yes for now. Qualifications are tight on lending and some buyers are being forced out by the "monthly cost"....On the other hand look at rental rates on a 3/2 your area .....A 3/2 rental in the Orlando and surrounding area is around 2100-2500 monthly right now. And that's nothing special maybe 1400 sqft. Are you better off renting at that rate or purchasing at a higher price then refinancing 6-8 months from now when rates drop which will put more upward pressure on prices?

RE prices in Florida have always been historically low but as the state grows in population everyday more people who are conditioned to 500K 3/2's are coming here. If banks lend money in those states why wouldn't they lend the same money here.....plus more and more of them have pockets full of cash from selling their 500k 3/2 in blue state hell. We are closing nearly 50% of our purchases in cash over the last year and it has actually picked up over the last 2-3 months.

Out of state individual investors have been a consistent source for us. I believe many are taking money out of bonds and equities and parking it in something that is giving them both yield and tax shelter while the storm passes.

BTW look at that chart again(the one of interest rates and prices).....what other chart does it remind you of....hint it's a shiny yellowish metal used to make coins and bars It leads and lags slightly in the peaks and pullbacks but is very similar....

Question on the cash buyers - what price range are most of the cash buyers coming in at? $400k, $600k? Or is it varied across all prices? I ask because I'm skeptical of the "cash buyer" line - mostly because I talk to my friends, family, former colleagues and they say "I hear there's mostly cash buyers here" (and this is all over the country: Florida, DC area, Tennessee, Texas, Georgia - not just Florida). There can only be so many 'cash buyers'. I put down over 40% when I bought last year, and I could have paid cash (but at 2.375% I figured I'd hang onto some cash for a rental property, which I still haven't bought), also the house we bought was under $450K, had we bought in our price range we would have gone $650k-$900k but decided not to do that because everything seemed overinflated. Anyhow, just curious about what price range the cash buyers tend to come in.

 

[FireFoley]

I agree with @BMF mostly. I agree in the video asking prices are dropping big time b/c they are so over priced. I also do not put much credence into the Median home price thing. Of course it is rising b/c home sales at 250K or less is almost zero. So of course the median price is going to rise. With the # of transactions dropping dramatically that will also keep the median price higher. I am convinced that everything this guy said adds up to 15 years of steady to slow drip lower of prices.

 

[FireFoley]

And another thing, since I am a very simple thinker, I took with great interest what both ATT and Verizon had to say on their earnings calls. Both companies said that their middle to lower end customers are taking longer to pay their bills. This surprised me a bit as I view the cell phone/internet as basically utilities and the customer will pay them for sure. But the fact that the customer is taking longer and even delinquencies are on the rise really struck me. Add that to the cover article of Barrons 4 or 6 weeks ago about the uptick in delinquent auto loans, and I am smelling credit card uptick in delinquencies next. Both the sub prime and even prime auto loans are seeing upticks in delinquencies with 90% of those loans made in 2020 and 2021. Like I said previously everyone who wanted to overpay for an auto or a home already has. How it shakes out is where the money will be made for those who get it right.

 

[Concrete Helmet]

Question on the cash buyers - what price range are most of the cash buyers coming in at? $400k, $600k? Or is it varied across all prices?

Everywhere from 200K land deals up to 3.5 million....

 

[Concrete Helmet]

I am convinced that everything this guy said adds up to 15 years of steady to slow drip lower of prices.

Really.....Think about this for a second. Remember when gas was NEVER over $1.00 a gallon and then it was? Then it went back under a dollar for maybe a year or so then went back over a dollar.....Then remember when gas was NEVER over $2.00 a gallon and then it was? Then it went back under $2.00 a gallon and stayed there for 6-12 months.....Then remember when gas was never $3.00 a gallon and then it was? And then it went back under $3.00 a gallon for a while and then went back over......rinse and repeat....it's called conditioning.

If 500k POS 3/2 houses are the going rate in blue hell states for decades then why not here where taxes are 50% lower that NY, CA, ILL......think about those factors.....You'll never be able to buy a brand new car for less than $20K again either....nor buy gold for $300 an ounce either.....Ask yourself if the house, car, gallon of gas or ounce of gold serve any more "value" in the present as they did in the past?

Of course not.....they have not changed in function but the "value" of the dollar will continue to go down against them.

 

[Concrete Helmet]

I ask because I'm skeptical of the "cash buyer" line - mostly because I talk to my friends, family, former colleagues and they say "I hear there's mostly cash buyers here" (and this is all over the country: Florida, DC area, Tennessee, Texas, Georgia - not just Florida). There can only be so many 'cash buyers'.

Are you saying your friends and I are lying to you? Sorry dude but you're not the only cowboy with a pocket full of cash around .....there are tons of foreign buyers, individual investors, and people who are smart enough to pull their money out of bonds and equities and park them in something that gives off a $2500-3000 a month yield or more, is a tax write off, and they can turn liquid if the stock market turns around.......We have single mothers who have moved down here from overpriced northern states with 50-60k jobs and pay cash for 450K homes with the proceeds from their old house.....the value is still there at least to them and the masses either needing a home, wanting an investment or just getting out of hell.

Something else you guys might be forgetting is the aging demo is dying off rapidly(mostly because they got the clot shot).....In other words millennials are inheriting piles of cash and have been wanting houses worse than any generation before them.

 

[BMF]

Are you saying your friends and I are lying to you? Sorry dude but you're not the only cowboy with a pocket full of cash around .....there are tons of foreign buyers, individual investors, and people who are smart enough to pull their money out of bonds and equities and park them in something that gives off a $2500-3000 a month yield or more, is a tax write off, and they can turn liquid if the stock market turns around.......We have single mothers who have moved down here from overpriced northern states with 50-60k jobs and pay cash for 450K homes with the proceeds from their old house.....the value is still there at least to them and the masses either needing a home, wanting an investment or just getting out of hell.

Something else you guys might be forgetting is the aging demo is dying off rapidly(mostly because they got the clot shot).....In other words millennials are inheriting piles of cash and have been wanting houses worse than any generation before them.

Settle down. I asked a question. I just find it hard that every home you see flying off the market is being bought by "cash buyers". I seriously don't know one person who has bought a home in the last two years that paid cash. So I asked the question - I mostly wanted to know what price range they're buying in (with cash). I didn't say I don't believe you anyone else. I just hear people say all the time "It's the cash buyers, dammit!!" And I don't know a single person who's paid cash over the last two years. I financed my house - so there's one non-cash buyer for you.

 

[Concrete Helmet]

Settle down. I asked a question. I just find it hard that every home you see flying off the market is being bought by "cash buyers". I seriously don't know one person who has bought a home in the last two years that paid cash. So I asked the question - I mostly wanted to know what price range they're buying in (with cash). I didn't say I don't believe you anyone else. I just hear people say all the time "It's the cash buyers, dammit!!" And I don't know a single person who's paid cash over the last two years. I financed my house - so there's one non-cash buyer for you.

I'm just telling you what I see on a daily basis. Trust me I have been one of the biggest bears when it came to RE holding up but I'm living this sh!t everyday and I mmmaaa.....mmmmaaaa....may have been wrong(damned that was hard)

Besides all the types I listed in my previous post here are 2 more SHOCKING things I've realized over the last 3 months. We've closed over 200 refi's a month(almost all HELOC's)and about 30-35% of them are paid off free and clear....Yup and of that same pool of borrowers about 35-40% have multiple properties.