While real estate is always supply and demand but the purchase of such supply also largely depends on rates which are affected by the stock market. So, they sort of do rely on both.
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anon_0k9zlfz6lz9oy
Guest
Another month and yet another record for ALL TIME LOW delinquency rates. But guys, yeah, its a bubble, its all about to blow up!!!!
Will be interesting to see. The supply/demand argument will come into play for many areas on this topic as well. LBI typically averages around 900 new listings a year. That was down to 600 to 2021. It’s below 200 ytd.
This is a bad metric to use. Of course the delinquency rates are low because interest rate on those mortgages are low and employment numbers are strong. Everyone said this isn’t the GFC. The problem is demand will be down because it’s less affordable. People that don’t need to sell will ride it out. But if people need to sell will take a hit.
And tracking sales in at least Sedona, saw a lot of the purchases were with CASH. Don't have hard data, but have to guess that a lot of that cash was from stock market gains in the extended bull market. Again, that's just a guess. With people's net worth/wealth and retirement nest eggs shrinking, people may not be inclined or have the funds to purchase real estate.
On the other hand (was going to use OTOH!!), I was watching a segment on Newsnation last night (fantastic and fairly unbiased news channel) where some "expert" was extolling the benefits of owning real estate for the long haul, especially rental property, because rents never go down. In our personal experience, that is correct, and the best investments we own are rental properties. We will be living off the cash flows from rents in retirement and may not need to hit our 401K savings. We shall see how that works out.
My wife gets a lot of buyers who are making “cash” offers. But this is to bypass the appraisal as they are planning to pay over value.
but they still end up getting a mortgage after. They just lose their protection on the contract if they wanted to back out.
Wonder if that is similar there. Cash offers but still get a mortgage
I mean - were like in the stage where we just made contact with the iceberg.
Band will be playing on deck for a while before this thing goes down imo.
Do you notice *any* changes to consumer behavior in your day to day life?
The last time I went into a restaurant, bar, casino, hotel, big box store, mall etc and it wasn't packed was 2019.
Nearly everyone I know switched jobs or got a big raise the last two years. People are looking at their increased paycheck which is over the rate of inflation...not their portfolio. At least what I see.
No. I get a report of closed sales, and they are listed as cash. But I never pressed my realtor if the "cash" refers to the offer or the closed deal. I assume it is the closed deal? I think this is from MLS data, so maybe your wife knows if "cash" offers that change to financing remain classified as "cash" after closing.
Ffs
Listen to what I'm saying
Consumer credit card debt is now at all time highs. Translation: while times were good people started to spend again, they've now drawn their debt from recent lows to all time highs. That add heat into the economy and also drives inflation.
Savings rates are now back to lows. Translation: that positive cash flow which enables spending/saving is gone
Retail inventories are also at highs as are inventory in most businesses. Translation: for some it's according to plan to avoid JIT inventory to avoid the supply crisis. For retailers it's bad if. People stop buying. For SCM individuals like me it's an expected part of the whipsaw effect.
Employment: everyone who got hired due to record demand (the demand I mentioned earlier due to the pipeline fill effect of moving away from JIT ) will result in layoffs and higher unemployment as we start to stabilize supply and demand.
Again My thesis: based on whipsaw effect I think many businesses are going to be on hard times as their inventories are high, consumer confidence is dipping, inflation is being tamed by fed leading to a crunch at consumer level. The timing of this will result in lost business for many who are already flush with inventory. Energy costs will remain high, consumers will suffer. Business will have to fire sale inventory or declare bankruptcy. While this will also impact stock markets, my posts have nothing to do with equities tying into real estate. However, all of this said reduction in stock market,and crypto markets will feed a cycle of decline which allowed for record inflation. There will be a correction, and Im betting we'll see this globally and in real estate. Bubble bursting.
Yes I see an extreme bearish scenario forming.
We continued to scrupulously save, as we always have, and we always will. But both of us were raised by Depression-era parents, and we live well below our means and save as much as we can. But we are certainly an exception to most people we know. Only difference on spending for us is two kids in college at the same time--but we planned for that too--both kids have more money in "their" college savings accounts than needed to pay their tuition. Our oldest has cost us less than community college after all of the scholarships at RU Honors College and 3 semesters of living at home, where we actually received payments for those semesters.
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I think most of the posters if not all are conservative financially and will survive any financial downturn. The people that will be hurting are people earning 50-60k and below. Hand to mouth. When I see rent going for $2,000 mth, I wonder how they can save anything in their future unless they have have an above average job. If you are below the 70%, you will be hurting in the future.
You don’t have to worry, you’re probably in the top 5% in assets that post.
Even at 100k- how does someone save anything meaningful for their future.
I'm not worried, regardless of my asset/worth, which I prefer not to discuss/reveal, but people can draw conclusions if they wish. In my own experience and personal observation, I see people earning the least spending the most. As an example, I see some folks who have the least money upgrading their mobile phone every 18-24 months to have the latest technology. I keep my phones until they don't work anymore. Several years ago, we were on a road trip to Las Vegas from Arizona, and my phone battery on my six plus year old phone started expanding and getting warm. Being the cheapo that I am, I debated with my better half about the need to get a new phone. I loved that phone. I caved, and I get a Samsung phone that I hated. My better half was correct that we probably needed to abandon that old phone before it caught on fire while charging.
I see this in other areas- buying more expensive cars that people can afford, getting the upper range model with leather/leatherette seats and stuff that is not needed. Sometimes, we take our cheapness to ridiculous extremes on purchasing items that we should just buy instead of wasting time shopping to save a few extra dollars, but that is how we were wired. It has served us well.
I get those numbers. I don't think they're accounting for segments of society that have piled on savings, that are working from home permanently, and that are spending like it's going out of style while not incurring debt.
That is who is buying in NJ. I am confident it's the same in CA just based on prices in both places.
I am looking to buy a second house. A 2 bedroom townhome I was tracking sold for 3 days for 535k- no basement, 1400 sqft where you'd have to bike or drive to the beach unless you were super intrepid, in a town with meh schools by NJ standards. That was this month.
Yeah there's people pushed but kinda like the 2020 recession it's not very even.
CNBC’s Jim Cramer tells Gen Z to ‘learn to be more frugal’
CNBC financial analyst Jim Cramer thinks Gen Z millennials are spending too much on discretionary items.
nypost.com
Dad born in 1925 Flatbush to first generation immigrants.
what does that have to do with my comment?
Isn't the time period of the Great Depression generally accepted as 1929-1939?
Your Dad would have been 13 or 14 at the end, and he certainly would have had memories of living frugally and doing less with more, unless his family was wealthy?
Yep…that was my point. And it has nothing to do with $100 k in 2022 and hard to really save for a future in NJ on it.
yes, a family can live nicely and not paycheck to paycheck but if you figure in mortgage plus property tax, cars, college etc…what is really being saved for retirement? Not everyone gets a pension.
a family at 100k hopes on their 401k and maybe what ends up to averaging out at 5-10k a year savings.
While that is living nice but also very tight.
You can close cash and finance after. Know a few people helped their kids buy homes that way. Short bridge loan from mom and dad.
The whole cash then loan later thing always seemed like a ticking time bomb to me
Not if its mom and pop backstopping you. Also think it gets the appraisal value up.
No need for appraisal and that is what excites the seller Downfall, is that buyer has no protection.
mid you have a mortgage contingency- and the house doesn’t appraise, you can back out. Cash offer, even if you go for the mortgage, there is no backing out.
Mini-thread hijack! What are you plans for that extra 529 money? I'm pretty sure we overshot as well. We started to pull out $10k a year for private K-12 ahead of schedule, but this likely won't close the entire gap.
As I understand it, only the earnings of 529 plans are taxed when not used for qualified education expenses (QEE--note that I defined my acronym before just tossing it out there!). Some guidance here, and we are still trying to figure it out.
A Penalty-Free Way to Get 529 Money Back
If you use your 529 college savings plan for non-qualified educational expenses, you could be charged a 10% penalty and income tax. While the tax is fairly standard, you can avoid the penalty by using these tactics.
www.investopedia.com
That's a good resource. I wish the K-12 limit was raised or eliminated. That would give us the needed flexibility.As I understand it, only the earnings of 529 plans are taxed when not used for qualified education expenses (QEE--note that I defined my acronym before just tossing it out there!). Some guidance here, and we are still trying to figure it out.
A Penalty-Free Way to Get 529 Money Back
If you use your 529 college savings plan for non-qualified educational expenses, you could be charged a 10% penalty and income tax. While the tax is fairly standard, you can avoid the penalty by using these tactics.www.investopedia.com
We will probably expend all (or perhaps exceed) our youngest kid's account, who is in a six year program at a private university. For the oldest kid, we will have excess for undergrad, and while probably not going to grad school right away, that may happen after working for a couple of years. That is the other part we have to figure out.
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Holding money for grad school is an option. Obviously, you can play the long game and hold a small amount of leftover money in an account and then assign it to grandkids as them come along.
Eugene Xu said that the housing market is cooling down a bit but it’s very unlikely to see a 10%+ pullback.
True but in this market you won’t have an offer considered unless you waive the appraisal so it’s a moot point anyway. And in a 50/50 market you probably wouldn’t need the whole close cash then mortgage stunt.
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anon_0k9zlfz6lz9oy
Guest
Interesting enough, my wife has had a couple of clients back out of their deals for various reasons this past couple of weeks and were willing to lose their down payments.
Maybe FOLM (fear of losing money)>>>FOMO (fear of missing out) has set in for a lot of people. Don't think that people doing well understand how hard the inflationary environment is on a lot of people. This was a very sobering read of people living on the edge:
No movies, less meat, more stress: How these NJ residents cope with inflation
Families across the country are feeling squeezed as inflation reached a new 40-year high. Here's how five New Jersey families are trying to cope.
www.app.com
Is this possibly true?Maybe FOLM (fear of losing money)>>>FOMO (fear of missing out) has set in for a lot of people. Don't think that people doing well understand how hard the inflationary environment is on a lot of people. This was a very sobering read of people living on the edge:
No movies, less meat, more stress: How these NJ residents cope with inflation
Families across the country are feeling squeezed as inflation reached a new 40-year high. Here's how five New Jersey families are trying to cope.www.app.com
"What Holly Schepisi earns in a day as a state senator no longer covers the cost to drive from her home in River Vale to Trenton and back. Between rising gas prices and tolls, a round trip rings up to around $170, compared to the $135 a day she makes as a legislator representing parts of Bergen and Passaic counties."
Wikipedia says (assuming it is correct), state legislators make $49,000/year. Divide that by 365, and it is actually $134.25/day.
But that is a bit deceiving--is she driving to Trenton every day? I thought that being an assemblyperson is a part-time job? Looking at the calendar, there will be 27 days where the assembly is in session through the end of June. Taking that number, aren't assembly members only going to Trenton about 50-60 times per year? It's definitely not 365 days a year, so her point is a bit disingenuous?
New Jersey General Assembly - Wikipedia
en.wikipedia.org
Session Schedules | NJ Legislature
Listing of current, upcoming and past NJ Senate and General Assembly sessions with ability to add to your calendar and view archived proceedings from past sessions
www.njleg.state.nj.us
