Kira - would be nice to see an article or possibly a Q&A with QTR about things to look for (or avoid) in a real estate agent. Have figured out a few based on trial and error over my time on this rock but any boost for an agent that seems to have their head screwed on straight would be appreciated.
Before the GFC meltdown 2% of loans were subprime. 350 billion out of a 17 trillion dollar total. It wasn’t really the subprime loans that cause the meltdown, it was the derivatives tied to those loans, and the re-hypothecation of those derivatives.
Today, NQM loans represent 4% of the total. Double what it was in GFC. And the bulk of those have been written in the past 2 years. What we don’t know is the extent of the derivatives and credit swaps behind those NQM loans.
In my view, the answer to that question is going to determine whether real estate prices drift slowly downward as layoffs begin and the economy worsens. Or crashes hard as those things happen and the derivative market turns out to be a repeat of the GFC.
Lastly, in the GFC prices peaked (national average) in September 2005, the FED did not began to lower rates until late 2007, the stock market crashed in September 2008, and again in March 2009, and again in May 2010. Housing prices started to recover in late 2010 to mid 2011, 4-5 years after peaking (depending on geography).
Based on the last crash, and a lot of historical data going back at least 130 years, my opinion is we have a long way to go before the bottom is in sight. (I know there are counter arguments that have many valid points. I just think they are wrong. Time will tell).
"What can we expect to see once today’s record number of homes under construction hit the market?" - like watching a train wreck in slow motion....this is what I think I'm seeing on the Carolina coast; people and builders are still getting on the back of the train while the engine is going off the rails. Looking locally in my 'hot neighborhood', I've seen one of the limited supply of existing homes has slipped it's price and missed one contract closing over the past 4 months. This was a house previously purchased in summer '21 and renovated. I've got 2 neighbors who have sold recently with success (exact terms unknown), but they are long term owners (recent widows) who are (probably but unverified) deep in the black and moving into less home closer to family.
I have a buddy here in Nashville that just closed a deal to buy 300 homes (Mid 300’s) in the Carolina’s from a National builder….. the builder was willing to take a 75K markdown per home…. The buyer is going to turn them into rentals - 5br homes in the $2K + range….. his plan is to rent them for a couple of years and then turn the around when the market starts to recover
thankyou for this article which i found very interesting indeed.......i sold a house in Dec 15/2021......it was on the market only 3 days and sold for a 100K over the asking price.....it was an older home with lots of fixing up to do......the big thing that sold the house was it had a big back yard which we kept well mowed and tidy otherwise the house...like i say...was an older home...needing upgrade.......forward now a yr later i believe if we were still trying to sell it ...it would have been a headache........we might have waited a very long time before it sold......
I think You are not idiot.very thoughtful.My guess going forward is that it will be fixed.I don't think the deflationary spiral will improve.Japan expects Santa Claus not to come.Stay healthy all my friend
What bothers me about this article is real estate has always been one of the ways to diversify away from the dollar (i.e. gold, etc.) and what I am reading is real estate is going to get completely buried under. With inflation and the upcoming depression...there are not very many alternative investment options and real estate is probably off the table for now....
e.g. north vancouver rent hits $2400 for 1 bed unfurnished.
so, do the math - if you go to smaller markets next vancouver you can get a decent house north of Victoria, van island for 800k.
via ferry you can still commute to Vancouver.
for rent in vancouver for 2,3 or 4 beds you pay close to or over 4 k per month, that is almost 50K per annum on rent + utilities
People having wishful thinking that market will crash and they will do better; perhaps somewhat they will, but look at greater picture
even if 800k house comes to 600K or lower (why would government allow it to fall lower when their tax koffers depend entirely on taxing real estate??) , wait for this for 2 years will cost you 100K in rental cost, for 3 years 150K on rent.
The bottomline is, this system is ripping off everyone, renter or investor, for people to understand.
First Central bunks pump the money supply by 40% in 1 year and then jack the interest rotes, ??
Who wins, renter or buyer? - do the math for yourself; I think many people are struggling if to sell or rent out. If you sell your only option is going rural, if you do not want to pay sky high rent...
if prices in 2 or 3 years correct back up again, who will be able to buy then??
So again, inflation 10% per annum -> in 3 years this will in theory eat 30% of real price of your property.
So in other words, if prices will decrease only 10% in real money, and inflation will be 10% for 3 years, after 3 years , the value will decrease by 40%. Do you get it volks? Yet taxes do not change. in order to afford the same you will 2x more taxes, and living standard will go down.... even without prices plunging too much!!!
in canada, I see people are pulling houses from the market, in BC in particular.
Then there is a difference in selling high home in exposed markets such as Vancouver or submarkets where prices are much lower on avarage and where once sellers complete have to flock (those markets are generally much smaller and have not high saturation. Then there is 1.5 mil. immigrants over next 3 years. creating the demand. The prices are declining, but only future will tell how much. It is possible most of the buyers will end up be forever renters!!
Just a yearly rent. I haven’t check lately because I have a professional team that operates my farm and the result is higher but more volatile too. But just a rent should yield 4% aprox. That is cash that you can spent, is a real rate. You don’t need to adjust for inflation, because the land appreciates with inflation. Not in a straight line but on average. You can buy a small piece of land and you will rent it to the farm next to you.
Instead of selling a home to a buyer, how about the seller loads up on loans and mortgages, dumps the key at the bank, takes the money and leaves the state?
That seems to be the only option in many cases, especially in dumpster fires like Portland and San Francisco.
A year from now - do you think rents will be higher or lower? Inflation is starting to eat into my RE cash flow margin - and although I have a fixed rate mortgage, I’m concerned I won’t be able to pass increasing costs onto my tenants if rents start coming down in the short term.
Do you think investors will be able to keep raising rents, or forced to take a haircut?
Thank you for this insight. I am curious about one thing. One of the tenants of fair housing is safe communities, and one of the mentions you made as to what your buyers are seeking is ““ nice neighborhoods, which most people will quantify as a low crime area. I am in Charlotte, North Carolina, and we are facing crime spikes just as many urban areas are. I am curious as to how the current high levels of crime and murder are impacting real estate in Philadelphia. In this climate, it certainly seems like there is an inflection point on many levels and crime is seldom considered in real estate analysis.
Kira - would be nice to see an article or possibly a Q&A with QTR about things to look for (or avoid) in a real estate agent. Have figured out a few based on trial and error over my time on this rock but any boost for an agent that seems to have their head screwed on straight would be appreciated.
Before the GFC meltdown 2% of loans were subprime. 350 billion out of a 17 trillion dollar total. It wasn’t really the subprime loans that cause the meltdown, it was the derivatives tied to those loans, and the re-hypothecation of those derivatives.
Today, NQM loans represent 4% of the total. Double what it was in GFC. And the bulk of those have been written in the past 2 years. What we don’t know is the extent of the derivatives and credit swaps behind those NQM loans.
In my view, the answer to that question is going to determine whether real estate prices drift slowly downward as layoffs begin and the economy worsens. Or crashes hard as those things happen and the derivative market turns out to be a repeat of the GFC.
Lastly, in the GFC prices peaked (national average) in September 2005, the FED did not began to lower rates until late 2007, the stock market crashed in September 2008, and again in March 2009, and again in May 2010. Housing prices started to recover in late 2010 to mid 2011, 4-5 years after peaking (depending on geography).
Based on the last crash, and a lot of historical data going back at least 130 years, my opinion is we have a long way to go before the bottom is in sight. (I know there are counter arguments that have many valid points. I just think they are wrong. Time will tell).
"What can we expect to see once today’s record number of homes under construction hit the market?" - like watching a train wreck in slow motion....this is what I think I'm seeing on the Carolina coast; people and builders are still getting on the back of the train while the engine is going off the rails. Looking locally in my 'hot neighborhood', I've seen one of the limited supply of existing homes has slipped it's price and missed one contract closing over the past 4 months. This was a house previously purchased in summer '21 and renovated. I've got 2 neighbors who have sold recently with success (exact terms unknown), but they are long term owners (recent widows) who are (probably but unverified) deep in the black and moving into less home closer to family.
I have a buddy here in Nashville that just closed a deal to buy 300 homes (Mid 300’s) in the Carolina’s from a National builder….. the builder was willing to take a 75K markdown per home…. The buyer is going to turn them into rentals - 5br homes in the $2K + range….. his plan is to rent them for a couple of years and then turn the around when the market starts to recover
thankyou for this article which i found very interesting indeed.......i sold a house in Dec 15/2021......it was on the market only 3 days and sold for a 100K over the asking price.....it was an older home with lots of fixing up to do......the big thing that sold the house was it had a big back yard which we kept well mowed and tidy otherwise the house...like i say...was an older home...needing upgrade.......forward now a yr later i believe if we were still trying to sell it ...it would have been a headache........we might have waited a very long time before it sold......
I think You are not idiot.very thoughtful.My guess going forward is that it will be fixed.I don't think the deflationary spiral will improve.Japan expects Santa Claus not to come.Stay healthy all my friend
What bothers me about this article is real estate has always been one of the ways to diversify away from the dollar (i.e. gold, etc.) and what I am reading is real estate is going to get completely buried under. With inflation and the upcoming depression...there are not very many alternative investment options and real estate is probably off the table for now....
e.g. north vancouver rent hits $2400 for 1 bed unfurnished.
so, do the math - if you go to smaller markets next vancouver you can get a decent house north of Victoria, van island for 800k.
via ferry you can still commute to Vancouver.
for rent in vancouver for 2,3 or 4 beds you pay close to or over 4 k per month, that is almost 50K per annum on rent + utilities
People having wishful thinking that market will crash and they will do better; perhaps somewhat they will, but look at greater picture
even if 800k house comes to 600K or lower (why would government allow it to fall lower when their tax koffers depend entirely on taxing real estate??) , wait for this for 2 years will cost you 100K in rental cost, for 3 years 150K on rent.
The bottomline is, this system is ripping off everyone, renter or investor, for people to understand.
First Central bunks pump the money supply by 40% in 1 year and then jack the interest rotes, ??
Who wins, renter or buyer? - do the math for yourself; I think many people are struggling if to sell or rent out. If you sell your only option is going rural, if you do not want to pay sky high rent...
if prices in 2 or 3 years correct back up again, who will be able to buy then??
So again, inflation 10% per annum -> in 3 years this will in theory eat 30% of real price of your property.
So in other words, if prices will decrease only 10% in real money, and inflation will be 10% for 3 years, after 3 years , the value will decrease by 40%. Do you get it volks? Yet taxes do not change. in order to afford the same you will 2x more taxes, and living standard will go down.... even without prices plunging too much!!!
in canada, I see people are pulling houses from the market, in BC in particular.
Then there is a difference in selling high home in exposed markets such as Vancouver or submarkets where prices are much lower on avarage and where once sellers complete have to flock (those markets are generally much smaller and have not high saturation. Then there is 1.5 mil. immigrants over next 3 years. creating the demand. The prices are declining, but only future will tell how much. It is possible most of the buyers will end up be forever renters!!
Here is my analysis.
Conclusion: Buying a home right now is a rip-off.
Comments: The monetary scam is distorting the real world in all kinds of ways.
Fun Reference: "Sometimes, I can't help the feeling that I'm living a life of illusion." - Joe Walsh
Just a yearly rent. I haven’t check lately because I have a professional team that operates my farm and the result is higher but more volatile too. But just a rent should yield 4% aprox. That is cash that you can spent, is a real rate. You don’t need to adjust for inflation, because the land appreciates with inflation. Not in a straight line but on average. You can buy a small piece of land and you will rent it to the farm next to you.
New construction will be the real barometer here. We are seeing 25% decreases in Southern AZ since June.
Instead of selling a home to a buyer, how about the seller loads up on loans and mortgages, dumps the key at the bank, takes the money and leaves the state?
That seems to be the only option in many cases, especially in dumpster fires like Portland and San Francisco.
We downsized 2018 missing the run up. Renting and comfortable wanting to buy but hoping for an EPIC crash sorry sellers.
A year from now - do you think rents will be higher or lower? Inflation is starting to eat into my RE cash flow margin - and although I have a fixed rate mortgage, I’m concerned I won’t be able to pass increasing costs onto my tenants if rents start coming down in the short term.
Do you think investors will be able to keep raising rents, or forced to take a haircut?
Thank you for this insight. I am curious about one thing. One of the tenants of fair housing is safe communities, and one of the mentions you made as to what your buyers are seeking is ““ nice neighborhoods, which most people will quantify as a low crime area. I am in Charlotte, North Carolina, and we are facing crime spikes just as many urban areas are. I am curious as to how the current high levels of crime and murder are impacting real estate in Philadelphia. In this climate, it certainly seems like there is an inflection point on many levels and crime is seldom considered in real estate analysis.