So for starters Philly is a crime ridden shit hole with an infamous DA who cant seem to wrap his head around incarceration so from that stand point i am not sure that Philly is necessarily an accurate litmus test for the rest of america..... but i can tell you that Lenore sold 300 spec homes to a buddy of mine at a 30% haircut in a specific region ...... they will be come rental properties for the next few years until they will be sold..... so larger companies are starting to bundle their spec homes for REITs specifically for rental purposes.... not to mention hedge funds are plowing billions into the rental market....
The pandemic triggered work from home anywhere meme plus stupid low interest rates triggered a rapid rise in home values. I have a 2.25% mortgage on my first home. Rates that low made no sense, and now were are going through a violent normalization. Mortgage spreads vs. the 10-year Treasury are much wider than historical levels. When interest rates find a new stabilization level, rates mortgage rates will also stabilize at what I suspect will be a lower rate.
I will close on another home in the next month. Not excited about the rate, but understand that refinancing is easy if rates fall. If they don't I am fortunate that I can pay off at least half the loan in the next five years, so would do that and refinance the stub for lower payments.
Both homes will be residences, and not rental properties.
Another good sharepost from Kira - thanks. I was speaking to a guy Monday night; he was finishing a renovation in Wilmington NC back in May and was sweating if he could get it done before he went into the red. Supply shortages were a big factor, and he was sweating the coming rate increase and the downturn in real estate. The property sold in June and he said after that sale it was the first time he could actually sleep through the night in 2 months. We laughed about trying to buy properties right now. That southern NC coast lit up in blood on the CorLogic Nov 2022 Analysis really got my attention.
Yes- this past summer was such a stressful time for developers. Savvy ones who could read the writing on the wall are in much better shape, but many haven't been so lucky. I'm seeing (and directly dealing with) a bunch of *very* anxious developers getting little to no attention on their listings, sitting on hard money loans with 12% rates. The question for many is: drop the price more and wait longer to sell? Or refi and rent?
If the rate environment is such that people will only list their homes if they absolutely must sell, then why would we expect to see the typical seasonal increase in inventory?
Great question. The way I see it, only a fraction of those "need to sell" homeowners have already put their homes on the market. Many who know they need to sell are waiting until after the holidays to list, which is a smart choice. Real estate is extremely seasonal in nature, and we have both fewer listings and way fewer buyers during the holidays. If a seller wants to sell their home in this environment of reduced demand, they should at least list during the season of greatest demand if they can afford to wait.
40K people laid off last month..... just in Silicon Valley ...... 1.6MM Air BnB homes..... may paid for with 10% down vacation home loans with HELOC $$’s..... as prices drop.... and interest rates rise.... helocs become more expensive while purchase prices drop..... not to mention depending on the structure of your HELOC and LTV ratios..... home owners could be facing Margin calls on the declining value of their collateral asset
Why do you think there will be defaults? This is not the same as 07-09 - most people locked in 3% or better rates and have very affordable mortgages.
What is happening now is now supply and high rates - very few transactions. The transactions that are happening are cash deals.
I'm in the process of building and even to get a construction loan - I went through more financial verification than my previous homes. Also the debt to equity ratio they said causing a lot of problems of people started building early this year and when rates doubled - they no longer qualify for a mortgage.
In 2009, you could purchase three homes on 3 specific arms-  in the last year you could take a HELOC, which is essentially an arm and by three rental houses with the money- - you see a difference .....it’s the same transaction
So for starters Philly is a crime ridden shit hole with an infamous DA who cant seem to wrap his head around incarceration so from that stand point i am not sure that Philly is necessarily an accurate litmus test for the rest of america..... but i can tell you that Lenore sold 300 spec homes to a buddy of mine at a 30% haircut in a specific region ...... they will be come rental properties for the next few years until they will be sold..... so larger companies are starting to bundle their spec homes for REITs specifically for rental purposes.... not to mention hedge funds are plowing billions into the rental market....
We sold our NoVA home in Oct '21, nick of time I guess.
The pandemic triggered work from home anywhere meme plus stupid low interest rates triggered a rapid rise in home values. I have a 2.25% mortgage on my first home. Rates that low made no sense, and now were are going through a violent normalization. Mortgage spreads vs. the 10-year Treasury are much wider than historical levels. When interest rates find a new stabilization level, rates mortgage rates will also stabilize at what I suspect will be a lower rate.
I will close on another home in the next month. Not excited about the rate, but understand that refinancing is easy if rates fall. If they don't I am fortunate that I can pay off at least half the loan in the next five years, so would do that and refinance the stub for lower payments.
Both homes will be residences, and not rental properties.
Another good sharepost from Kira - thanks. I was speaking to a guy Monday night; he was finishing a renovation in Wilmington NC back in May and was sweating if he could get it done before he went into the red. Supply shortages were a big factor, and he was sweating the coming rate increase and the downturn in real estate. The property sold in June and he said after that sale it was the first time he could actually sleep through the night in 2 months. We laughed about trying to buy properties right now. That southern NC coast lit up in blood on the CorLogic Nov 2022 Analysis really got my attention.
Yes- this past summer was such a stressful time for developers. Savvy ones who could read the writing on the wall are in much better shape, but many haven't been so lucky. I'm seeing (and directly dealing with) a bunch of *very* anxious developers getting little to no attention on their listings, sitting on hard money loans with 12% rates. The question for many is: drop the price more and wait longer to sell? Or refi and rent?
Wonder how the implosion of SVB will affect the industry now. . .
A few issues: prices still up; no one will sell unless they must; smart buyers getting 5 year fixed then adjustable rate loans around 5.5%
Thanks for sharing your insights. Much appreciated.
completely missing from most analysis is the death of robot buying.
my wife and I would see a listing in morning, call agent only to be informed it's under contract.
the death of ai flipping algos has hidden true demand inmho.
now we are seeing real demand that yes , is also being crushed by interest rates. I
how does someone with 2 years experience being a real estate agent come on the internet and write articles and answer questions about real estate?
what kind of fool actually thinks they are qualified to do that?
how many properties has this gal ever owned, rehabbed or bought/sold for HERSELF?
she selling information and taking ZERO RISK
probably would be a better used car salesman
What are the points in her article where you see gaps or outright wrong information?
If the rate environment is such that people will only list their homes if they absolutely must sell, then why would we expect to see the typical seasonal increase in inventory?
Great question. The way I see it, only a fraction of those "need to sell" homeowners have already put their homes on the market. Many who know they need to sell are waiting until after the holidays to list, which is a smart choice. Real estate is extremely seasonal in nature, and we have both fewer listings and way fewer buyers during the holidays. If a seller wants to sell their home in this environment of reduced demand, they should at least list during the season of greatest demand if they can afford to wait.
40K people laid off last month..... just in Silicon Valley ...... 1.6MM Air BnB homes..... may paid for with 10% down vacation home loans with HELOC $$’s..... as prices drop.... and interest rates rise.... helocs become more expensive while purchase prices drop..... not to mention depending on the structure of your HELOC and LTV ratios..... home owners could be facing Margin calls on the declining value of their collateral asset
Wait until the defaults on mortgages commence with a vengeance. . .
Even if they don't, not to worry- we'll still have plenty to complain about.
Why do you think there will be defaults? This is not the same as 07-09 - most people locked in 3% or better rates and have very affordable mortgages.
What is happening now is now supply and high rates - very few transactions. The transactions that are happening are cash deals.
I'm in the process of building and even to get a construction loan - I went through more financial verification than my previous homes. Also the debt to equity ratio they said causing a lot of problems of people started building early this year and when rates doubled - they no longer qualify for a mortgage.
Cash sales are up, but financed sales are still the majority. Everyone would be a cash buyer right now if they could, but most don't have the luxury.
In 2009, you could purchase three homes on 3 specific arms-  in the last year you could take a HELOC, which is essentially an arm and by three rental houses with the money- - you see a difference .....it’s the same transaction