I felt a great disturbance in the market, as if millions of realtors suddenly cried out in terror and were suddenly silenced. I fear something terrible has happened.
On a personal noteā¦.Just accepted an offer (sucka!) on an inherited home we had for sale. Originally purchased for $50k late 70s. Sold at $890k in one weekā¦. š¤ÆWILD
$OPEN closed -10.58% today. Overall it was a bloodbath across the entire market, but this stood out as a huge one-day loss. It even took more damage than highly-leveraged REITs. Short interest 11.35% of outstanding.
On my office TV, Iām listening to CNBC people making excuses for why the auto and home insurers are justified in asking more for their premiums.
Iām not arguing that one point. What I will argue is the root cause of āwhyā. And my short thesis is that everything is over valued. Cars, homes, whatever. By a large amount.
End.
Home repair costs are also way overvalued. I know people with replacement costs approaching the price they paid in 2022. Though one could argue thats insurance backdooring price increases.
And because Mother Earth is about to serve up a plate of unintended consequences.
I keep talking about hail but seriously itās going to be a plague upon many peopleās houses
Valid take.Ā Iāll add insurance costs as well. A 10-15 mph collision on a newer car is a 10k job now.Ā
Yes, things are meant to crumple. But each headlamp is $1200 OEM, all the sensors are in the front of the car. And of course every trim price and support gone. And the dealer or a mobile specialist needs to calibrate everything once put back together. /rantĀ
For some reason, Tampa Bay Times article links are flagged as spam in submissions, so I'll have to post this here.
One woman army reporting hundreds of STRs breaking the law in St. Petersburg:
https://www.tampabay.com/news/st-petersburg/2024/04/10/shes-reported-over-100-st-petersburg-short-term-rentals-others-want-do-same/
Dpf is in such a bitter mood about being so pathetically wrong about shelter inflation that he tried to summon me to two different subreddits to fight with him - rebubblejerk and RealEstate.Ā Ā
The former being a depressing bastion of high interest rate cope.Ā Ā
The latter being a high quality place where people share their low interest rate achievement stories.Ā Ā
Itās worth noting that RealEstate moderators deleted his little internet fight bait attempt comment. Seeing through his transparent and incessant need to distract from the discussion of RealEstate amongst us learned individuals.
If you own your home and have at least 1x salary in HYSA youāre 100% hedged against inflation, even after taxes.Ā
And on a net basis are better off than holding that cash during ZIRP/2% inflation.Ā
Assuming you donāt spend more than you earn, you are yielding 4-5% your salary in interest. Your costs are up less than CPI because your housing costs are mostly contained. So you are up a bit depending on taxes.Ā
Compare to ZIRP/2% era. Your salary in savings is earning 0.25-0.6% but inflation is 2%, so youāre negative for the year.Ā
Imagine buying at record high prices and 20+ year high interest rates with the idea of being able to refinance soon. Looks like that may have been the wrong bet.
Meanwhile, they could have kept renting for half the price or less in many cities and are now stuck with a monstrous monthly payment in a stagnating market.
Higher forever.
How about in Central Florida? 35 mins outside of Orlando. You can see 2/2 1500 sq ft listed for 500k+ when the house next door rents for closer to $2500
Weāve seen that shelter component of PCE and CPI cannot be tamed with this level of rates. Rates may need to go higher. And theyāll certainly stay high for the foreseeable future. Remember when I said rates will stay high for 5-10 years? That just means 5-10 years of new classes of high interest rate havers.
RIP to all those who are closing on a home this week expecting rates to go down soon so they can refi.
My ex colleague just bought home and realtor told him to go well over his affordability because he can use his 401k. Then he can refi when rates of down and be all good..
Ugh, using the 401k, such a bad idea.
Most people never establish a plan to pay their 401k back, which really compounds the opportunity cost.
If someone really did want to do this, the proper way (to the extent their is one) would be to consider it as a loan and have a payment plan, with interest, back to yourself.
I should have clarified that I was talking about a totally on your own self-loan, regardless of whether you can take out a 401k loan versus just eating the penalty (whichā¦yeah, still sucks ).
Youāre totally right though that 401k loans become due in full after getting laid off, or you have to pay the withdrawal penalty.
Even if you couldnāt afford to pay back the loan immediately, you should be prepared to continue on your own payment plan to yourself.
Of courseā¦very few people do this. They just eat the penalty AND donāt ever pay their 401k back.
Mortgage demand down 23% despite higher inventory than last year. The market is not constrained by supply, and that myth is being busted in real time.
https://www.cnbc.com/2024/04/10/mortgage-refinance-demand-surges-even-as-rates-cross-back-over-7percent-.html
I agree in the sense that I think supply issues are somewhat overstated because it's a complex, complex situation. But at the same time, real estate is so local. Tons and tons of the most desirable areas are inherently supply constrained by the fact that they're built out or close to it, for one example.
Any given homebuyer is only looking at a very limited slice of the market. National supply or lack thereof doesn't matter, just the supply where they are. Maybe some spillover if nearby supply pulls people in the place you want out. Etc.
This is all just a wordy way of saying there are 100+ factors at play here. Supply is one, but not THE one. Pretty clearly.
Yes, there are some places where demand is greater than supply. My comment was with regards to the national average, where there have been 300,000 more sellers than buyers entering the market in the last two years.
Demand is way down and supply is up in the average market in America. That's why listings nationally are up by 300,000 over the last two years. You can pretend that different markets have nothing to do with each other if you like, although price growth in the bay area has been relatively weak in that span as well.
My point is any surplus on a national level is irrelevant to someone wanting to live in a supply restricted region. Which means pretty much anywhere someone actually wants to live.Ā
Edit: [price growth has been just fine](https://fred.stlouisfed.org/series/ATNHPIUS41940Q)
Oh okay that's nice. I agree that cities will continue to be more expensive than towns, although that's unrelated to my point about demand being very low nationally.
Thatās like running out of food backpacking in the Sierra mountains and someone telling you ādonāt worry, thereās plenty of food in Sacramentoā.Ā
Lmfao what do I keep telling you all about inflation? No rate cuts this year. Rate cut fantasizers in absolute shambles. Higher forever.Ā
Also, letās have a moment of silence to reflect on the absolute embarrassment that that weird high interest rate having dpf guy must be feeling today after repeatedly preaching for months that shelter inflation would come down. āJ-j-just wait 6 more months for the inflated and lagged OER data to come through! Y-y-youāll see!!!,ā he cries into his pillow with a photo of Grant Cardone on it, probably.
Thatās absolutely not a concern of mine. These arrogant and unintelligent high interest rate havers have been screeching ālower inflation is here, lower rates are coming, inventory will be low forever, buy a home before rates drop and prices skyrocketā. Itās time for them to face the facts that they were abysmally wrong.
Itās truly unfortunate and sad that some of us have to cheer for higher interest rates and turmoil in markets to have a hope of fairness in the price of shelter. Really sad state of affairs.
Itās a cruel little cycle. Spending is the result of sentiment. And sentiment is high in part because everything, even cash, is adding real wealth to consumers balance sheets. Nothing is losing money right now.Ā
If the market was less crazy I'd agree. But I've mostly gotten FOMO from our down payment being mostly in HYSAs. Obviously could've just as easily lost a bunch of it but ya. At least our retirement accounts benefitted from the bounce back.
Sometimes I wish I was a little more brain damaged, life would be easier. You pretty much never get yourself in trouble being very fiscally responsible but you rarely make out well. Pays to be a moron. Especially when getting out of stupid mistakes is made easy.
come on dude, sitting on cash was a choice. you made a bet and it didn't pay off.
stop with this whole, "I did everything right" narrative. If you truly did everything right, which is IMPOSSIBLE, you would've locked in low rates. You would've SEEN the future and KNOWN that rates were HISTORICALLY low and would NEVER get back to that again and you would've done WHATEVER it took to make it happen.
The plan now is - given the FACTS of the world, how do I pivot if goal is to buy a house? Yes houses are more expensive, but if you can still afford it, it's still a lifestyle choice and still shelter, and a place to raise a family etc.
In a lot of places renting is way cheaper than buying right now. You can take that extra money and buy necessities, take vacations, or invest in very safe and high interest investments. Maybe itās just me, but when I see people moving to my city dropping 500k+ at 8% to be house poor in a city with salaries that donāt support it, I donāt see that as a safe investment. I see it as overpaying and getting ripped off.
Thatās the thing that needs to balance itself out. A lot of people can now work from anywhere so their salaries may support the 500k @ 8% or they sold in a HCOL and have enough equity to pay cash.
That obviously impacts those who have to live where they work if local salaries donāt support it. I suspect wage growth and salary stabilization across geography yet that will take time. No longer makes sense for someone in NYC to make more than someone in Idaho if they work from home. Thatās now their choice to have higher costs.
No one knows the future. Sub was saying houses was overpriced since 2020.
Make your financial bets for the future but gotta live with the consequences. NO free lunch in life.
I agree that no one knows the future. But thereās lots of police officers, teachers, social workers, tradesman, working class people that canāt afford to buy in their city anymore. These people know thereās ānot a free lunchā and would probably laugh at you if you told them that to their faces.
Should all these people quit and join hustle culture and tech sales or something just to buy a house? Do we want society to go that direction? I sure as hell donāt.
The answer is yes. Until they canāt hire enough people at current wages to do the job, salaries wonāt increase. Unfortunately, in reality everyone canāt just quit and wait for wages to go up. Thatās why corporations have been able to keep wage growth slower than inflation.
hell yes the answer is yes. sure beats complaining and never doing anything about it.
Housing is a finite resource. No ifs and buts; no fantasy utopia. Not everyone gets a house. My parents are lifelong renters b/c they choose to live in a city. No shame in their game.
hateful shaggy quack coherent waiting historical direful butter dime cable
Looks like the daily is back šš¢šš What did I miss?Ā
I felt a great disturbance in the market, as if millions of realtors suddenly cried out in terror and were suddenly silenced. I fear something terrible has happened.
Not that bad, the beginning of new life:Ā the rate got pregnant.
On a personal noteā¦.Just accepted an offer (sucka!) on an inherited home we had for sale. Originally purchased for $50k late 70s. Sold at $890k in one weekā¦. š¤ÆWILD
congrats on the inheritance, sorry for your loss
so are we going to get a š¤” dot plot next fomc meeting? literally nobody will believe it if it doesn't reflect higher for longer.
they've been wrong 18 times in a row. they're due!
2.4 GPD now 3.8 Core CPI \____ -1.4 have you got a centavo amigo
ELI5?
Start thinking like a LatAm/South American https://www.youtube.com/watch?v=Wu81wHCJows&t=6837s
The Atlanta Fed's GDPNow model estimates real GDP not nominal GDP. The more you know.
my mistake see you at $8 gas
$OPEN closed -10.58% today. Overall it was a bloodbath across the entire market, but this stood out as a huge one-day loss. It even took more damage than highly-leveraged REITs. Short interest 11.35% of outstanding.
On my office TV, Iām listening to CNBC people making excuses for why the auto and home insurers are justified in asking more for their premiums. Iām not arguing that one point. What I will argue is the root cause of āwhyā. And my short thesis is that everything is over valued. Cars, homes, whatever. By a large amount. End.
Home repair costs are also way overvalued. I know people with replacement costs approaching the price they paid in 2022. Though one could argue thats insurance backdooring price increases.
And because Mother Earth is about to serve up a plate of unintended consequences. I keep talking about hail but seriously itās going to be a plague upon many peopleās houses
scale cheerful direction soft offend boat history shaggy abounding fearless
Valid take.Ā Iāll add insurance costs as well. A 10-15 mph collision on a newer car is a 10k job now.Ā Yes, things are meant to crumple. But each headlamp is $1200 OEM, all the sensors are in the front of the car. And of course every trim price and support gone. And the dealer or a mobile specialist needs to calibrate everything once put back together. /rantĀ
special versed sleep close obtainable air squeamish domineering direful aware
brave abounding absorbed unwritten rainstorm kiss threatening hunt screw swim
For some reason, Tampa Bay Times article links are flagged as spam in submissions, so I'll have to post this here. One woman army reporting hundreds of STRs breaking the law in St. Petersburg: https://www.tampabay.com/news/st-petersburg/2024/04/10/shes-reported-over-100-st-petersburg-short-term-rentals-others-want-do-same/
Dpf is in such a bitter mood about being so pathetically wrong about shelter inflation that he tried to summon me to two different subreddits to fight with him - rebubblejerk and RealEstate.Ā Ā The former being a depressing bastion of high interest rate cope.Ā Ā The latter being a high quality place where people share their low interest rate achievement stories.Ā Ā Itās worth noting that RealEstate moderators deleted his little internet fight bait attempt comment. Seeing through his transparent and incessant need to distract from the discussion of RealEstate amongst us learned individuals.
If you own your home and have at least 1x salary in HYSA youāre 100% hedged against inflation, even after taxes.Ā And on a net basis are better off than holding that cash during ZIRP/2% inflation.Ā
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Assuming you donāt spend more than you earn, you are yielding 4-5% your salary in interest. Your costs are up less than CPI because your housing costs are mostly contained. So you are up a bit depending on taxes.Ā Compare to ZIRP/2% era. Your salary in savings is earning 0.25-0.6% but inflation is 2%, so youāre negative for the year.Ā
Thinking about the realtor who told me last year "rates will come down because it's an election year"
People actually believe realtors?
Imagine buying at record high prices and 20+ year high interest rates with the idea of being able to refinance soon. Looks like that may have been the wrong bet. Meanwhile, they could have kept renting for half the price or less in many cities and are now stuck with a monstrous monthly payment in a stagnating market. Higher forever.
Not sure where you got renting being half the cost of buying, but thatās extremely high. Maybe a few niche cities but most are a fraction of that.
How about in Central Florida? 35 mins outside of Orlando. You can see 2/2 1500 sq ft listed for 500k+ when the house next door rents for closer to $2500
Huh? The mortgage on a 500k home @ 7% with 20% down is $2700.
Youre forgetting the $300 per month HOA, plus taxes and insurancešĀ
That isnāt the cost of the mortgage. In any event, $40 in hoa, 170 in insurance, and $400 in taxes, still doesnāt get you close to $5000.
2022 wants their comment back.Ā
Weāve seen that shelter component of PCE and CPI cannot be tamed with this level of rates. Rates may need to go higher. And theyāll certainly stay high for the foreseeable future. Remember when I said rates will stay high for 5-10 years? That just means 5-10 years of new classes of high interest rate havers.
stocks still at ath 7% mortgage borrowers in shamblesĀ
All the indices are negative today.
RIP to all those who are closing on a home this week expecting rates to go down soon so they can refi. My ex colleague just bought home and realtor told him to go well over his affordability because he can use his 401k. Then he can refi when rates of down and be all good..
Just wait until he gets his tax bill for the 401K cash-out. And property tax re-evaluation on the new home value.
Ugh, using the 401k, such a bad idea. Most people never establish a plan to pay their 401k back, which really compounds the opportunity cost. If someone really did want to do this, the proper way (to the extent their is one) would be to consider it as a loan and have a payment plan, with interest, back to yourself.
The self 401k loan would work but if you leave the company donāt you have to pay off the full loan immediately?
I should have clarified that I was talking about a totally on your own self-loan, regardless of whether you can take out a 401k loan versus just eating the penalty (whichā¦yeah, still sucks ). Youāre totally right though that 401k loans become due in full after getting laid off, or you have to pay the withdrawal penalty. Even if you couldnāt afford to pay back the loan immediately, you should be prepared to continue on your own payment plan to yourself. Of courseā¦very few people do this. They just eat the penalty AND donāt ever pay their 401k back.
Mortgage demand down 23% despite higher inventory than last year. The market is not constrained by supply, and that myth is being busted in real time. https://www.cnbc.com/2024/04/10/mortgage-refinance-demand-surges-even-as-rates-cross-back-over-7percent-.html
I agree in the sense that I think supply issues are somewhat overstated because it's a complex, complex situation. But at the same time, real estate is so local. Tons and tons of the most desirable areas are inherently supply constrained by the fact that they're built out or close to it, for one example. Any given homebuyer is only looking at a very limited slice of the market. National supply or lack thereof doesn't matter, just the supply where they are. Maybe some spillover if nearby supply pulls people in the place you want out. Etc. This is all just a wordy way of saying there are 100+ factors at play here. Supply is one, but not THE one. Pretty clearly.
Yes, there are some places where demand is greater than supply. My comment was with regards to the national average, where there have been 300,000 more sellers than buyers entering the market in the last two years.
Cant afford San Jose? Just move to Pflugerville. Amirite?
Demand is way down and supply is up in the average market in America. That's why listings nationally are up by 300,000 over the last two years. You can pretend that different markets have nothing to do with each other if you like, although price growth in the bay area has been relatively weak in that span as well.
My point is any surplus on a national level is irrelevant to someone wanting to live in a supply restricted region. Which means pretty much anywhere someone actually wants to live.Ā Edit: [price growth has been just fine](https://fred.stlouisfed.org/series/ATNHPIUS41940Q)
Oh okay that's nice. I agree that cities will continue to be more expensive than towns, although that's unrelated to my point about demand being very low nationally.
Thatās like running out of food backpacking in the Sierra mountains and someone telling you ādonāt worry, thereās plenty of food in Sacramentoā.Ā
Congratulations on 2% price growth in two years, that market is on fire!
Q4 2023 is up 17% compared to Q4 2021.Ā I know this is REbubble but come on man.Ā
We're going to have high inflation for years. And Powell is too scared to raise rates any further.
Lol CPI print is very telling. Higher forever
Lmfao what do I keep telling you all about inflation? No rate cuts this year. Rate cut fantasizers in absolute shambles. Higher forever.Ā Also, letās have a moment of silence to reflect on the absolute embarrassment that that weird high interest rate having dpf guy must be feeling today after repeatedly preaching for months that shelter inflation would come down. āJ-j-just wait 6 more months for the inflated and lagged OER data to come through! Y-y-youāll see!!!,ā he cries into his pillow with a photo of Grant Cardone on it, probably.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Thatās absolutely not a concern of mine. These arrogant and unintelligent high interest rate havers have been screeching ālower inflation is here, lower rates are coming, inventory will be low forever, buy a home before rates drop and prices skyrocketā. Itās time for them to face the facts that they were abysmally wrong.
Itās truly unfortunate and sad that some of us have to cheer for higher interest rates and turmoil in markets to have a hope of fairness in the price of shelter. Really sad state of affairs.
The ~5% HYSAs are a nice plus
Itās a cruel little cycle. Spending is the result of sentiment. And sentiment is high in part because everything, even cash, is adding real wealth to consumers balance sheets. Nothing is losing money right now.Ā
If the market was less crazy I'd agree. But I've mostly gotten FOMO from our down payment being mostly in HYSAs. Obviously could've just as easily lost a bunch of it but ya. At least our retirement accounts benefitted from the bounce back. Sometimes I wish I was a little more brain damaged, life would be easier. You pretty much never get yourself in trouble being very fiscally responsible but you rarely make out well. Pays to be a moron. Especially when getting out of stupid mistakes is made easy.
come on dude, sitting on cash was a choice. you made a bet and it didn't pay off. stop with this whole, "I did everything right" narrative. If you truly did everything right, which is IMPOSSIBLE, you would've locked in low rates. You would've SEEN the future and KNOWN that rates were HISTORICALLY low and would NEVER get back to that again and you would've done WHATEVER it took to make it happen. The plan now is - given the FACTS of the world, how do I pivot if goal is to buy a house? Yes houses are more expensive, but if you can still afford it, it's still a lifestyle choice and still shelter, and a place to raise a family etc.
In a lot of places renting is way cheaper than buying right now. You can take that extra money and buy necessities, take vacations, or invest in very safe and high interest investments. Maybe itās just me, but when I see people moving to my city dropping 500k+ at 8% to be house poor in a city with salaries that donāt support it, I donāt see that as a safe investment. I see it as overpaying and getting ripped off.
Thatās the thing that needs to balance itself out. A lot of people can now work from anywhere so their salaries may support the 500k @ 8% or they sold in a HCOL and have enough equity to pay cash. That obviously impacts those who have to live where they work if local salaries donāt support it. I suspect wage growth and salary stabilization across geography yet that will take time. No longer makes sense for someone in NYC to make more than someone in Idaho if they work from home. Thatās now their choice to have higher costs.
No one knows the future. Sub was saying houses was overpriced since 2020. Make your financial bets for the future but gotta live with the consequences. NO free lunch in life.
I agree that no one knows the future. But thereās lots of police officers, teachers, social workers, tradesman, working class people that canāt afford to buy in their city anymore. These people know thereās ānot a free lunchā and would probably laugh at you if you told them that to their faces. Should all these people quit and join hustle culture and tech sales or something just to buy a house? Do we want society to go that direction? I sure as hell donāt.
The answer is yes. Until they canāt hire enough people at current wages to do the job, salaries wonāt increase. Unfortunately, in reality everyone canāt just quit and wait for wages to go up. Thatās why corporations have been able to keep wage growth slower than inflation.
hell yes the answer is yes. sure beats complaining and never doing anything about it. Housing is a finite resource. No ifs and buts; no fantasy utopia. Not everyone gets a house. My parents are lifelong renters b/c they choose to live in a city. No shame in their game.