Housing Bubble?

[jethreauxdawg]

Teeing this up for @PooPopsBaldHead

https://www.wsj.com/opinion/bidens-mortgage-relief-fuels-higher-housing-prices-policy-loans-risk-cb0a1974?st=TyDHo9&reflink=article_copyURL_share

In case this requires a subscription, the jethreaux summary is that the federal government has been basically making the minimum payment for people’s mortgage while the homeowners continue to fall further behind in debt to equity. The ball is now in Orangeman’s court to continue funding it with taxpayer dollars or let it collapse and take the blame.

 

[OG Goat Holder]

The housing price rise came along after COVID. The reason prices are still high even with high interest rate is because demand still outpaces supply by a long shot.

This is just another MAGA talking point. Heck half the people who created the rise were probably paying cash.

 

[aspendawg]

Allowing private equity and banks to buy massive tranches of consumer real estate (mainly speaking to houses - not condos and apartments) with all cash offers is also part of the problem.

 

[PooPopsBaldHead]

Teeing this up for @PooPopsBaldHead

https://www.wsj.com/opinion/bidens-mortgage-relief-fuels-higher-housing-prices-policy-loans-risk-cb0a1974?st=TyDHo9&reflink=article_copyURL_share

In case this requires a subscription, the jethreaux summary is that the federal government has been basically making the minimum payment for people’s mortgage while the homeowners continue to fall further behind in debt to equity. The ball is now in Orangeman’s court to continue funding it with taxpayer dollars or let it collapse and take the blame.

Busy day today, buy my short answer is end it yesterday. It's going to ruin some lives, but not hurt overall housing. Those lower income homes are the exact ones that will be scooped up by investors and rented out. That's how the free market does a better job of things than the gubment.

Miss your rent and you are out in 60 days. Miss your mortgage, Uncle Sam is going to bail you out with federal debt and add the debt onto your mortgage making you upside down on a home you can't afford.


Hopefully we fix the real issue with housing. All the red tape and regulation that adds ridiculous expense to building. Cities, counties, states, and Feds all get their pound of flesh and keep moving the goalposts on what meets the current code. Until we solve that, we'll never truly have affordable housing in this country again.

 

[BoDawg.sixpack]

I keep getting these fliers in the mail:

''Let me buy your house! Fast transactions and fair prices!' Call now!''

 

[Curby]

Is Black Rock still swooping in with all cash offers significantly above list price on homes still a thing?

So many people (including a lot of first-time home-buyers) got shafted by this trend. The dream of home ownership has been a struggle for some people that just want to get out of ridiculously high apartment rentals and start building up some equity.

 

[StillTbonewannabe]

Allowing private equity and banks to buy massive tranches of consumer real estate (mainly speaking to houses - not condos and apartments) with all cash offers is also part of the problem.

That is probably the biggest problem. Blackrock is buying roughly 30 percent of residential houses right now. They buy up a lot in the neighborhood and can inflate the average house price which then pushes up the value of all of the homes they own.

Imagine if you could buy 10 houses for $200k then over pay for 3 houses at $350k. Now all 10 houses are worth $350k. This is what they are doing.

 

[PooPopsBaldHead]

Allowing private equity and banks to buy massive tranches of consumer real estate (mainly speaking to houses - not condos and apartments) with all cash offers is also part of the problem.

It is a very tiny portion of the market. I do understand they target specific suburbs and exurbs in the south that make it feel bigger, but nationally institutional buyers are miniscule.

 

[GloryDawg]

Sell your home on the high end and buy a single wide. ****

 

[retire the banner]

The housing price rise came along after COVID. The reason prices are still high even with high interest rate is because demand still outpaces supply by a long shot.

This is just another MAGA talking point. Heck half the people who created the rise were probably paying cash.

/provides evidence Liberal Administrations have been funding citizen’s mortgage payments

Goat: this is just a MAGA talking point!!

uh.. no sh i t?!

 

[BigHarryBolz]

The housing price rise came along after COVID. The reason prices are still high even with high interest rate is because demand still outpaces supply by a long shot.

This is just another MAGA talking point. Heck half the people who created the rise were probably paying cash.

You poor thing

 

[BigHarryBolz]

Is Black Rock still swooping in with all cash offers significantly above list price on homes still a thing?

So many people (including a lot of first-time home-buyers) got shafted by this trend. The dream of home ownership has been a struggle for some people that just want to get out of ridiculously high apartment rentals and start building up some equity.

Wait can black rock shaft me?

I’ll even sell to them under what my realtor said a market value is

 

[BoDawg.sixpack]

Well you would think as boomers continue to croak, there's going to be more and more housing availability. I just can't see how prices can continue the year over year gains that we've seen in the last decade. Really this has been going on since 2011.

 

[BigHarryBolz]

That is probably the biggest problem. Blackrock is buying roughly 30 percent of residential houses right now. They buy up a lot in the neighborhood and can inflate the average house price which then pushes up the value of all of the homes they own.

Imagine if you could buy 10 houses for $200k then over pay for 3 houses at $350k. Now all 10 houses are worth $350k. This is what they are doing.

I’m fairly certain in this scenario the houses are only really worth about $240,000 each.

Now I guess they are actually worth what someone will pay for them.

 

[57stratdawg]

I don’t think we really have a delinquent mortgage issue in the country at the moment.

 

[BigHarryBolz]

Sell your home on the high end and buy a single wide. ****

It’s a joke but people have a really hard time understanding the difference between need and want.

 

[johnson86-1]

Well you would think as boomers continue to croak, there's going to be more and more housing availability. I just can't see how prices can continue the year over year gains that we've seen in the last decade. Really this has been going on since 2011.

It probably can't continue the gains we've seen over the last decade, but as long as we restrict supply and subsidize demand, it can continue to get more expensive.

There are a few places that are actually trying to ease restrictions on supply in a meaningful way. Cambridge Massachusetts I think just moved to a zoning ordinance where you can build by right as long as you fit within the guidelines. No more single family zoning. And supposedly they have done it without including a bunch of poison pills that other places that ease zoning restrictions like to do (like low income requirements for anything above a 4-plex). Going to be interesting to see how it turns out. If everywhere went to this, it would be a huge boon to the country by reducing the cost of housing in a lot of expensive places. But if just one municipality in an area does this, they likely will develop in a way that people don't like and make it harder to do in nearby areas.

 

[ETK99]

Well, Homesteading 2.0 out west is something to look at too if you've never seen it, it's interesting stuff.

 

[johnson86-1]

Teeing this up for @PooPopsBaldHead

https://www.wsj.com/opinion/bidens-mortgage-relief-fuels-higher-housing-prices-policy-loans-risk-cb0a1974?st=TyDHo9&reflink=article_copyURL_share

In case this requires a subscription, the jethreaux summary is that the federal government has been basically making the minimum payment for people’s mortgage while the homeowners continue to fall further behind in debt to equity. The ball is now in Orangeman’s court to continue funding it with taxpayer dollars or let it collapse and take the blame.

I did not realize how extensive this was now. Makes it look like 50,000 foreclosures that did not take place because of this program last year? That's pretty massive considering a "normal" year has 500k to 1M foreclosure filings (not actual foreclosures, but lots of those 50k probably wouldn't have ultimately have had a foreclosure completed; normal in quotes because the great recession + housing bubble and then COVID make it hard to tell what is actually normal and healthy).


Not sure how much downward pressure would be put on pricing by another 50,000 foreclosures in a year, but certainly couldn't hurt. And would certainly make it easier on the people trying to save up enough to get into a house responsibly.

 

[retire the banner]

I don’t think we really have a delinquent mortgage issue in the country at the moment.

A jump in delinquencies in a corner of the mortgage market suggests first-time homebuyers may be struggling

"Conventional delinquencies remain near historical lows, but FHA and VA delinquencies are increasing at a faster pace," the MBA said.

www.businessinsider.com

Mortgage Delinquencies Increase in the Fourth Quarter of 2024

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.98 percent of all loans outstanding at the end of the fourth quarter of 2024, according to MBA's National Delinquency Survey.

www.mba.org

https://nationalmortgageprofessional.com/news/serious-mortgage-delinquencies-hit-17-month-high

https://finance.yahoo.com/news/more-americans-with-government-loans-are-falling-behind-on-their-mortgages-a-warning-sign-for-consumer-health-132508489.html

 

[BigHarryBolz]

It probably can't continue the gains we've seen over the last decade, but as long as we restrict supply and subsidize demand, it can continue to get more expensive.

There are a few places that are actually trying to ease restrictions on supply in a meaningful way. Cambridge Massachusetts I think just moved to a zoning ordinance where you can build by right as long as you fit within the guidelines. No more single family zoning. And supposedly they have done it without including a bunch of poison pills that other places that ease zoning restrictions like to do (like low income requirements for anything above a 4-plex). Going to be interesting to see how it turns out. If everywhere went to this, it would be a huge boon to the country by reducing the cost of housing in a lot of expensive places. But if just one municipality in an area does this, they likely will develop in a way that people don't like and make it harder to do in nearby areas.

It really is a simple concept.

the more the government guarantees something, the higher the cost are.

education
Health insurance
Housing

what else can we name?

 

[jethreauxdawg]

I don’t think we really have a delinquent mortgage issue in the country at the moment.

I guess “issue” is up to interpretation

 

[Bulldog45]

Sell your home on the high end and buy a single wide. ****

Too early in the season to be predicting a trip to Omaha

 

[johnson86-1]

Busy day today, buy my short answer is end it yesterday. It's going to ruin some lives, but not hurt overall housing. Those lower income homes are the exact ones that will be scooped up by investors and rented out. That's how the free market does a better job of things than the gubment.

Miss your rent and you are out in 60 days. Miss your mortgage, Uncle Sam is going to bail you out with federal debt and add the debt onto your mortgage making you upside down on a home you can't afford.


Hopefully we fix the real issue with housing. All the red tape and regulation that adds ridiculous expense to building. Cities, counties, states, and Feds all get their pound of flesh and keep moving the goalposts on what meets the current code. Until we solve that, we'll never truly have affordable housing in this country again.

Do any of the organizations involved in updating codes actually look at cost effectiveness of new code requirements?

Once you get past knob and tube wiring and aluminum wiring, how much less likely are houses to burn down if they are made with today's code versus 1970s? Seems like it'd be hard to justify a code change that makes housing even $1k more expensive when it comes to electrical components.

Especially since it seems like most areas have risks that dwarf fire risks, whether it be hurricanes, flood, wild fires, etc. Seems like we have a lot of code provisions aimed at making houses safe for 100 years instead of 75 when insurance is getting priced like there's going to be a total loss in under 30 anyway.

 

[57stratdawg]

A jump in delinquencies in a corner of the mortgage market suggests first-time homebuyers may be struggling

"Conventional delinquencies remain near historical lows, but FHA and VA delinquencies are increasing at a faster pace," the MBA said.

www.businessinsider.com

Mortgage Delinquencies Increase in the Fourth Quarter of 2024

The delinquency rate for mortgage loans on one-to-four-unit residential properties increased to a seasonally adjusted rate of 3.98 percent of all loans outstanding at the end of the fourth quarter of 2024, according to MBA's National Delinquency Survey.

www.mba.org

https://nationalmortgageprofessional.com/news/serious-mortgage-delinquencies-hit-17-month-high

https://finance.yahoo.com/news/more-americans-with-government-loans-are-falling-behind-on-their-mortgages-a-warning-sign-for-consumer-health-132508489.html

I don’t live and breathe this data, but these don’t really look bad to me.

The first sentence in your first link says “however foreclosures remain at historic lows”. I get it - we would see rising delinquencies before foreclosures, but still.

 

[PooPopsBaldHead]

Do any of the organizations involved in updating codes actually look at cost effectiveness of new code requirements?

Once you get past knob and tube wiring and aluminum wiring, how much less likely are houses to burn down if they are made with today's code versus 1970s? Seems like it'd be hard to justify a code change that makes housing even $1k more expensive when it comes to electrical components.

Especially since it seems like most areas have risks that dwarf fire risks, whether it be hurricanes, flood, wild fires, etc. Seems like we have a lot of code provisions aimed at making houses safe for 100 years instead of 75 when insurance is getting priced like there's going to be a total loss in under 30 anyway.

I sure as hell hope they aren't, because if they are they suck a big one. NTTAWT.

I have run through it before, but you're basically looking at 25-30% more to build a 2 story 2600 sf slab on grade home with a 2 car garage to 2021 IRC/IECC code vs 2006 in DFW. So a $550 k new construction home in a production built neighborhood could theoretically come in under $400k.

Ironically, in all the 17ing codes, they allow cardboard sheathing (Thermoply.) The worst dog shìt building product ever. If you have it on your home, sell it tomorrow before the big bad wolf blows your house down. Here's a video from my buddy Matt to explain:

 

[retire the banner]

I don’t live and breathe this data, but these don’t really look bad to me.

This is quite the take.

 

[Leeshouldveflanked]

 

[PooPopsBaldHead]

I don’t live and breathe this data, but these don’t really look bad to me.

The first sentence in your first link says “however foreclosures remain at historic lows”. I get it - we would see rising delinquencies before foreclosures, but still.

Here's a better way of looking at it than reading click bait poorly written stuff. Statements like "first time homebuyers delinquency rates rise 70 basis points" can sound scary if you don't understand what a basis point is or the normal amount of delinquency rates for first time homebuyers.


Delinquency rates were not a cause of the great recession, but a result. The delinquency rate was under 3% before the recession (grey area in chart) and over 11% by the end of the recession.

The cause was the collapse of financial institutions that were underwriting terrible loans. When they collapsed, it was almost impossible to get new mortgages, the entire homebuilding economy collapsed overnight, and unemployment sky rocketed.

There's nothing like that on the horizon in any form as of today. Housing will ebb and flow in regions based on supply and demand. But I would guess the vast majority of appreciation in real estate values for the 2020's happened from June of 2020 - January of 2023. It will be mostly flatish nationally the rest of the decade unless we say sub 4% mortgages again for some reason.


As I said before, kill this program propping up FHA buyers that are delinquent.

 

[Palmettodog]

Staying to the original question and post, no, I don't believe we have a housing bubble. I work as a Land Acquisition Mgr for a national home builder and I have never experienced such fierce competition for land, or regulatory restrictions trying to slow growth. I do believe there are areas of the country that will and are currently experiencing a slowdown and those are primarily northern cities or western cities with a higher crime, high taxes and typically liberal leadership. I'm not attempting to be political but it's easy to look at migrations throughout the US and determine where people are moving to and where people are moving from, or rather what they are moving from and to.

I live in SC and every city in the state is experiencing growth, and multiple cities in the top 10 for the US as a whole. I simply can't find land and build homes fast enough. Affordability comes down to price of land and demand, development and material costs, labor and mtg rates. Land prices are at an all-time high and rising, development costs are at an all-time high and rising, labor costs is stable but high, mtg rates are holding in the high 6's. That formula doesn't work for affordable housing. Currently, I can't buy land for the market price, develop it, build a house and sell for less than $250k. And I'm talking about a 2000 sq ft, vinyl sided two story home.

 

[Perd Hapley]

If the opinion of the author is that this is being driven by FHA first-time borrower risk, then I can guarantee you that’s not a bubble that’s going to affect the market as a whole.

You might have some defaults and some modest price declines in that starter home segment, but the folks on their 2nd / 3rd home, or those who have owned a house for at least 5-10 years are going to be totally unaffected. This is a nothingburger.

 

[Dawgg]

Here's a better way of looking at it than reading click bait poorly written stuff. Statements like "first time homebuyers delinquency rates rise 70 basis points" can sound scary if you don't understand what a basis point is or the normal amount of delinquency rates for first time homebuyers.

View attachment 763726
Delinquency rates were not a cause of the great recession, but a result. The delinquency rate was under 3% before the recession (grey area in chart) and over 11% by the end of the recession.

The cause was the collapse of financial institutions that were underwriting terrible loans. When they collapsed, it was almost impossible to get new mortgages, the entire homebuilding economy collapsed overnight, and unemployment sky rocketed.

There's nothing like that on the horizon in any form as of today. Housing will ebb and flow in regions based on supply and demand. But I would guess the vast majority of appreciation in real estate values for the 2020's happened from June of 2020 - January of 2023. It will be mostly flatish nationally the rest of the decade unless we say sub 4% mortgages again for some reason.


As I said before, kill this program propping up FHA buyers that are delinquent.

The Big Short really did a lot to help me understand what happened with the great recession:

 

[aTotal360]

It is a very tiny portion of the market. I do understand they target specific suburbs and exurbs in the south that make it feel bigger, but nationally institutional buyers are miniscule.

View attachment 763548

The problem with the Blackrock, Vanguard, State Street held properties is they are not likely "stock" since they mostly buy and hold (in my area anyway). They buy with cash, purposely not rent or sell them, and write off the losses and reap the tax benefit. They have the cash on hand to play that game. Then when the market picks up, they sell and enjoy the appreciation. It's almost a win/win scenario no matter what. Not to mention they can pull out the bonus depreciation if they wish. I know someone who is a CPA for BR. He spends every waking hour of his life doing cost segregations for the devil.

 

[dorndawg]

The problem with the Blackrock, Vanguard, State Street held properties is they are not likely "stock" since they mostly buy and hold (in my area anyway). They buy with cash, purposely not rent or sell them, and write off the losses and reap the tax benefit. They have the cash on hand to play that game. Then when the market picks up, they sell and enjoy the appreciation. It's almost a win/win scenario no matter what. Not to mention they can pull out the bonus depreciation if they wish. I know someone who is a CPA for BR. He spends every waking hour of his life doing cost segregations for the devil.

 

[horshack.sixpack]

Teeing this up for @PooPopsBaldHead

https://www.wsj.com/opinion/bidens-mortgage-relief-fuels-higher-housing-prices-policy-loans-risk-cb0a1974?st=TyDHo9&reflink=article_copyURL_share

In case this requires a subscription, the jethreaux summary is that the federal government has been basically making the minimum payment for people’s mortgage while the homeowners continue to fall further behind in debt to equity. The ball is now in Orangeman’s court to continue funding it with taxpayer dollars or let it collapse and take the blame.

As I understand it, the Homeowner Assistance Fund (HAF) provided funds to state, local, and tribal governments, which then distributed the assistance to eligible homeowners. It was started to help with COVID recovery. I'd say we are past that, with regards to companies shutting down because of it. I don't know all the details, but it seems like it might be time to re-evaluate and consider pulling the plug. Also, do these kinds of things prop up people or lenders more? Maybe even?

 

[leeinator]

Allowing private equity and banks to buy massive tranches of consumer real estate (mainly speaking to houses - not condos and apartments) with all cash offers is also part of the problem.

My son bought his first home for 167K and three years into a 30 year mortgage got offered by a private rental company 300K cash. Needless to say he jumped on it like white on rice. However, the neighborhood later went to shite as rental folk just didn't take care of their property like a homeowner would. However, he moved to a much nicer up-scale development and bought a much nicer home where no rental properties exist. Made out like a bandit !!

 

[horshack.sixpack]

Here's a better way of looking at it than reading click bait poorly written stuff. Statements like "first time homebuyers delinquency rates rise 70 basis points" can sound scary if you don't understand what a basis point is or the normal amount of delinquency rates for first time homebuyers.

^^^This is SPS. If you are planning for the future, the real question is how does real estate work in Russia? Does the state totally control it? Can I keep my house?

Don't worry though, we are on the right track, participating in Russian disinformation and voting with them at the UN. For some reason all of these former allies in Europe are calling out our alignment with Russia, using crazy terms like fascism to describe what is happening and their leaders have to stop and call Trump out on his lies about Ukraine. WE, the good ole USofA now vote with the empire of evil. Let that sink in.

How did all of our former allies suddenly get TDS? Is he making America great too fast for them? And why would they independently use such harsh terms to describe him just because he says and does everything to indicate that he means it?

I remember the good old days when "patriots" knew who Russia was and didn't fall for their ******** or side with them. Some of you have long forgotten the walks like a duck, quacks like a duck wisdom.

 

[retire the banner]

^^^This is SPS. If you are planning for the future, the real question is how does real estate work in Russia? Does the state totally control it? Can I keep my house?

Don't worry though, we are on the right track, participating in Russian disinformation and voting with them at the UN. For some reason all of these former allies in Europe are calling out our alignment with Russia, using crazy terms like fascism to describe what is happening and their leaders have to stop and call Trump out on his lies about Ukraine. WE, the good ole USofA now vote with the empire of evil. Let that sink in.

How did all of our former allies suddenly get TDS? Is he making America great too fast for them? And why would they independently use such harsh terms to describe him just because he says and does everything to indicate that he means it?

I remember the good old days when "patriots" knew who Russia was and didn't fall for their ******** or side with them. Some of you have long forgotten the walks like a duck, quacks like a duck wisdom.

r u okay

 

[johnson86-1]

r u okay

What do you mean? Is ranting about Russia in response to a discussion about first time homebuyer delinquency rates not something a mentally healthy person does?

 

[3dawgnight]

Here's a better way of looking at it than reading click bait poorly written stuff. Statements like "first time homebuyers delinquency rates rise 70 basis points" can sound scary if you don't understand what a basis point is or the normal amount of delinquency rates for first time homebuyers.

View attachment 763726
Delinquency rates were not a cause of the great recession, but a result. The delinquency rate was under 3% before the recession (grey area in chart) and over 11% by the end of the recession.

The cause was the collapse of financial institutions that were underwriting terrible loans. When they collapsed, it was almost impossible to get new mortgages, the entire homebuilding economy collapsed overnight, and unemployment sky rocketed.

There's nothing like that on the horizon in any form as of today. Housing will ebb and flow in regions based on supply and demand. But I would guess the vast majority of appreciation in real estate values for the 2020's happened from June of 2020 - January of 2023. It will be mostly flatish nationally the rest of the decade unless we say sub 4% mortgages again for some reason.


As I said before, kill this program propping up FHA buyers that are delinquent.

This is the really scary data…. Credit card debt has exploded and some have already started defaulting.