OT: Why the real estate market is not in a bubble: Q1 2023 update video added to OP

[anon_0k9zlfz6lz9oy]

Right on cue.....

It looks a lot like a housing bubble. How your local housing market compares to 2007, as told by 4 interactive charts

Among the nation’s largest housing markets, Moody’s Analytics finds 344 are “overvalued” by more than 10%. Back in 2007, 261 markets were “overvalued” by 10% or more.

www.yahoo.com

Did you even read this? The economists base case is 0% price growth YOY. As ive said I expect 0-3% YOY. His worst case is 5% price reduction. Hardly a bubble. Headlines sell tho

 

[Joey Bags]

My theory is that the maximum extent of a “crash” would be prices declining to where we would have been if we applied the nominal annual real estate inflation run rate to 2020-2022. I just don’t see prices dropping to even jan or feb 2020 levels, the demand is crazy. The 28-35 cohort are in their house buying years right now and were outbid by people fleeing NYC so the demand is still there.

 

[Morrischiano]

Correct. So if we use an objective metric, the natural one always cited is the case shiller index. March 1 2020 case shiller shows 216.60, March 1 2022 case shiller shows 296.27. So my bet is that prices DO NOT drop by 26.89% 2024. I'll give you 5 to 1. Down?

OKAY So a decline of less than 26.9% over a 4 year period is not a bubble pop.
You DO realize that the Case Shiller declined from 184 at top in Sept 2006 to 144 in Sept 2010- a decline of 21%.
I don’t think anyone would dispute that period as a bubble deflation. Seems like you are looking for another 5% decline to be a bubble. Incredible!

 

[anon_0k9zlfz6lz9oy]

My theory is that the maximum extent of a “crash” would be prices declining to where we would have been if we applied the nominal annual real estate inflation run rate to 2020-2022. I just don’t see prices dropping to even jan or feb 2020 levels, the demand is crazy. The 28-35 cohort are in their house buying years right now and were outbid by people fleeing NYC so the demand is still there.

Prices have risen 37% from march 2020 to march 2022. Theres serious room to run on rents nationally still as well which frankly I care more about as a real estate investor.

im actually in Houston right now as were buying a 289 unit complex in Sugar Land.




good new book regarding why globalization is trending down and wage inflation going to be higher than recent history. Amazon product ASIN 006323047X

 

[anon_0k9zlfz6lz9oy]

OKAY So a decline of less than 26.9% over a 4 year period is not a bubble pop.
You DO realize that the Case Shiller declined from 184 at top in Sept 2006 to 144 in Sept 2010- a decline of 21%.
I don’t think anyone would dispute that period as a bubble deflation. Seems like you are looking for another 5% decline to be a bubble. Incredible!

Haha so what do you define as a bubble? Because technical definition of a bubble is prices drop down to where they ran up from which in this case would be 2012 prices. Im being generous and only making it 2 years. I see youre coming off your position :)

 

[NotInRHouse]

I know a lot of people want to claim the economy is "terrible" but there are a TON of people sitting on massive cash reserves at the moment.

There is a very large number of people who:

- Had their incomes surge in the past few years with low unemployment via job hopping and/or leveraging job offers

- Who spent less on leisure from March 20-May 21 if not beyond depending on their circumstances

- Due to a surge in WFH are looking to move or purchase a second home

Restaurants are packed. Planes are packed. Hotels are packed. People are spending money. While the cost of certain things may have gone up, plenty of people make it work and then some.

 

[anon_0k9zlfz6lz9oy]

I know a lot of people want to claim the economy is "terrible" but there are a TON of people sitting on massive cash reserves at the moment.

There is a very large number of people who:

- Had their incomes surge in the past few years with low unemployment via job hopping and/or leveraging job offers

- Who spent less on leisure from March 20-May 21 if not beyond depending on their circumstances

- Due to a surge in WFH are looking to move or purchase a second home

Restaurants are packed. Planes are packed. Hotels are packed. People are spending money. While the cost of certain things may have gone up, plenty of people make it work and then some.

Bingo

 

[fg7321]

Did you even read this? The economists base case is 0% price growth YOY. As ive said I expect 0-3% YOY. His worst case is 5% price reduction. Hardly a bubble. Headlines sell tho

Just the beginning and here is more and this is before the recent rate hikes

U.S. existing home sales drop to two-year low in May

U.S. existing home sales tumbled to a two-year low in May as prices jumped to a record high - topping the $400,000 mark for the first time - and as mortgage interest rates increased further, sidelining first-time buyers from the market. Existing home sales fell 3.4% to a seasonally adjusted...

www.yahoo.com

 

[Morrischiano]

Haha so what do you define as a bubble? Because technical definition of a bubble is prices drop down to where they ran up from which in this case would be 2012 prices. Im being generous and only making it 2 years. I see youre coming off your position :)

20% decline in asset prices.

 

[anon_0k9zlfz6lz9oy]

20% decline in asset prices.

Ill even lower the bar. 5 to 1. You in? Real estate Prices via case shiller have to drop by 20% by 2024. They dont I get $2,000. They do, you get $10,000

 

[anon_0k9zlfz6lz9oy]

Just the beginning and here is more and this is before the recent rate hikes

U.S. existing home sales drop to two-year low in May

U.S. existing home sales tumbled to a two-year low in May as prices jumped to a record high - topping the $400,000 mark for the first time - and as mortgage interest rates increased further, sidelining first-time buyers from the market. Existing home sales fell 3.4% to a seasonally adjusted...

www.yahoo.com

So how far do you see prices falling and how much are you willing to wager on your call?

 

[Morrischiano]

Ill even lower the bar. 5 to 1. You in? Real estate Prices via case shiller have to drop by 20% by 2024. They dont I get $2,000. They do, you get $10,000

I think so. May 2022 data through any point before May 2026.

 

[anon_0k9zlfz6lz9oy]

I think so. May 2022 data through any point before May 2026.

Dm me name and phone number

 

[Postman_1]

Dont trust the media when it comes to the housing market. All fake news

 

[theRU]

Ill even lower the bar. 5 to 1. You in? Real estate Prices via case shiller have to drop by 20% by 2024. They dont I get $2,000. They do, you get $10,000

I'll wager for Rutgers - $100 bucks to $500 bucks. Winner picks the program

 

[yesrutgers01]

yeah they probably bought their house for $150,000--- not $1,000,000 like homes today.

My parents had about 4% in 1952- bought our house for 35k put 15k down. Payment just under 200. Dad was most likely making about 20k back then with Mom bringing in another 5k or so.
myself- first house 1987 was 108k carried a 99k mortgage- 16% and if I remember correctly- about 1100 per month. Was making about 28k

they had it 5x easier than I did.

that said, you can carry double the mortgage or more for the same payment today.

 

[mdk01]

My parents had about 4% in 1952- bought our house for 35k put 15k down. Payment just under 200. Dad was most likely making about 20k back then with Mom bringing in another 5k or so.
myself- first house 1987 was 108k carried a 99k mortgage- 16% and if I remember correctly- about 1100 per month. Was making about 28k

they had it 5x easier than I did.

that said, you can carry double the mortgage or more for the same payment today.

20k was big money in 1952

 

[rurichdog]

20k was big money in 1952

And $35,000 bought a lot of house in 1952. This is the era of $8000 Levitt houses.

 

[yesrutgers01]

20k was big money in 1952

And $35,000 bought a lot of house in 1952. This is the era of $8000 Levitt houses.

Nice house with an acre in upstate NY- Hyde Park. About 10 years later, he bought the house next to us for his parents and moved them out of Flatbush.
Dad wasn’t rich but made good money as a butcher.

 

[fg7321]

More and it looks like NJ is leading this

NJ Most 'Vulnerable' Housing Market In The Nation: Report

Much of the state's housing market is vulnerable to declines, with high rates of foreclosures throughout, according to data from ATTOM.

patch.com

 

[fg7321]

More and it looks like NJ is leading this

NJ Most 'Vulnerable' Housing Market In The Nation: Report

Much of the state's housing market is vulnerable to declines, with high rates of foreclosures throughout, according to data from ATTOM.

patch.com

read the full report here

New Jersey, Illinois and California Have Highest Concentration of Vulnerable Housing Markets

ATTOM's Q1 2022 Special Housing Risk Report shows that New Jersey, Illinois, and inland California had the most at-risk markets in Q1 2022.

www.attomdata.com

 

[anon_0k9zlfz6lz9oy]

Lol

 

[Wolv RU]

Lol

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Nominal terms are pretty much meaningless. If inflation is 20%, going up 5% is a huge loss.

Post the inflation adjusted charts for some actual meaning.

 

[Wolv RU]

And $35,000 bought a lot of house in 1952. This is the era of $8000 Levitt houses.

According to some RE advocates, that 35k house in 1952 would have increased by 1000% if it is worth 350k today, when in actuality it declined in value.

 

[anon_0k9zlfz6lz9oy]

Nominal terms are pretty much meaningless. If inflation is 20%, going up 5% is a huge loss.

Post the inflation adjusted charts for some actual meaning.

Thats fine, then post inflation adjusted returns for every other asset class and show me whats better than real estate. 1970’s the decade of inflation? Median home value went up 128%. Stocks from 1970 through 1979? Went up 12%, TOTAL. 1.2% annualized

 

[anon_0k9zlfz6lz9oy]

 

[mdk01]

Thats fine, then post inflation adjusted returns for every other asset class and show me whats better than real estate. 1970’s the decade of inflation? Median home value went up 128%. Stocks from 1970 through 1979? Went up 12%, TOTAL. 1.2% annualized

Let's not cherry pick. That was a unique period of stagnation for stocks and partially related to the gains in the mid-late 60s to groups such as the "Nifty Fifty", many of whom got clobbered in the 70s.

 

[anon_0k9zlfz6lz9oy]

Let's not cherry pick. That was a unique period of stagnation for stocks and partially related to the gains in the mid-late 60s to groups such as the "Nifty Fifty", many of whom got clobbered in the 70s.

Cherry pick? I mean the late 70’s and today almost mirror one another. Go ahead throughout time and be my guess. Wolf man asked about high inflation and do inflation adjusted returns. I literally found the decade of highest inflation

 

[mdk01]

Cherry pick? I mean the late 70’s and today almost mirror one another. Go ahead throughout time and be my guess. Wolf man asked about high inflation and do inflation adjusted returns. I literally found the decade of highest inflation

No they don't. Stocks had been in a funk for years before the late 70s.

 

[anon_0k9zlfz6lz9oy]

No they don't. Stocks had been in a funk for years before the late 70s.

Yes they do. Inflation, interest rates, oil, disaster stop gap president. Heres some color on that. https://calculatedrisk.substack.com...=cm5bo&s=r&utm_campaign=post&utm_medium=email

 

[theRU]

Well .. credit card debt at all time highs, savings rate is at the lowest since 2008. Consumer behavior will change, it has to. When it does, it will impact sales and services which will impact employment rates. Those dominos start to fall, I think we'll see the bubble burst.

 

[anon_0k9zlfz6lz9oy]

Well .. credit card debt at all time highs, savings rate is at the lowest since 2008. Consumer behavior will change, it has to. When it does, it will impact sales and services which will impact employment rates. Those dominos start to fall, I think we'll see the bubble burst.

What do you define as “the bubble bursting”. Because the market is calling powell’s bluff right now

 

[anon_0k9zlfz6lz9oy]

These two intrigued me

 

[yesrutgers01]

These two intrigued me

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The first one is interesting. My wife is a mortgage advisor in 20 states. She has actually closed more loans in June then she had in the previous 2 months. She has also taken many applications.
But while taking applications, she is not getting locks. It would be more interesting to see how many loans are being locked and what the terms are.

 

[theRU]

What do you define as “the bubble bursting”. Because the market is calling powell’s bluff right now

View embedded media

We've been through this, I've defined it for you already.

I'm just looking over the latest commodity reports and summary our analysts provide us. Demand destruction is happening. High probability of recession. Question is how deep and painful. Combine that with high rates it's not good for housing. Question again will be how extreme.

 

[anon_0k9zlfz6lz9oy]

We've been through this, I've defined it for you already.

I'm just looking over the latest commodity reports and summary our analysts provide us. Demand destruction is happening. High probability of recession. Question is how deep and painful. Combine that with high rates it's not good for housing. Question again will be how extreme.

Real estate/housing is not the stock market. Not sure how many times i have to say this

 

[theRU]

Real estate/housing is not the stock market. Not sure how many times i have to say this

Why do you keep mentioning the stock market?

 

[anon_0k9zlfz6lz9oy]

Why do you keep mentioning the stock market?

Alot of what you post is largely irrelevant for real estate, thats why. Real estate is a simple game. Supply and demand. We have bear all time low supply and all time high demand. We have the largest demographic patch in US history hitting peak home buying age. Higher rates are hitting the demand side but you keep pumping that not only is there a “bubble” but that “its gonna burst”. So put your money where you mouth is and bet me

 

[theRU]

Alot of what you post is largely irrelevant for real estate, thats why. Real estate is a simple game. Supply and demand. We have bear all time low supply and all time high demand. We have the largest demographic patch in US history hitting peak home buying age. Higher rates are hitting the demand side but you keep pumping that not only is there a “bubble” but that “its gonna burst”. So put your money where you mouth is and bet me

I've already replied to you about a wager.

I'm betting that an economic collapse, unemployment, and global conflict will impact demand relative to supply. It's quite simple really. I don't know how soon, or how deep, or how rapid - if I did I wouldn't be on here talking to you.

Lots of key indicators pointing to bad times ahead

 

[RUAldo]

I don’t know if primary residential homes will take a huge hit, but I’d bet that secondary vacation homes get crushed the next few years.