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

[RUBlackout]

I don’t think housing prices come down much as many people will just stay where they are if they have low rates and don’t need to sell for any reason. A lot of great buying opprtunities and low rates created this the last few years.

that said, it will be those people who leveraged themselves into ARMs who will be faced with the reality of having to sell or refinance and much higher rates. When they go to sell and price is too high that will create issues

 

[RU_DIO]

Where you bartend?

Molly Pitcher

 

[WhiteBus]

Molly Pitcher

Very, very nice place!!

 

[Section124]

Is there a housing shortage? Yes. Are rentals in demand because people can't afford/find a house? Yes. What people are not discussing is if inflation and uncertainty in business continues, there will be layoffs. It's already started in some industries. People will not be able to afford those mortgages and high rents. That is when the housing market crashes. I hope it doesn't happen but that possibility is out there. Be ready. I am.

 

[jtung230]

30 year rate now at 5.85%

Glad I refi at 2.5% 😀

 

[anon_0k9zlfz6lz9oy]

I don’t think housing prices come down much as many people will just stay where they are if they have low rates and don’t need to sell for any reason. A lot of great buying opprtunities and low rates created this the last few years.

that said, it will be those people who leveraged themselves into ARMs who will be faced with the reality of having to sell or refinance and much higher rates. When they go to sell and price is too high that will create issues

 

[anon_0k9zlfz6lz9oy]

I don’t think housing prices come down much as many people will just stay where they are if they have low rates and don’t need to sell for any reason. A lot of great buying opprtunities and low rates created this the last few years.

that said, it will be those people who leveraged themselves into ARMs who will be faced with the reality of having to sell or refinance and much higher rates. When they go to sell and price is too high that will create issues

By the times arm’s adjust those people will have refi’d into low rate fixed rate debt. Average arm is 7 years fixed before adjusting

 

[SleepingGiantIsAwake]

I don’t think there’ll be a crash. However as people start losing their jobs (the “10%” cuts have started) + rising rates + needing more $ to live on because of inflation, and a bunch of new construction especially down south, can’t see how housing prices can possibly go higher.

 

[anon_0k9zlfz6lz9oy]

30 year rate now at 5.85%

For loans over $625K-ish with bad credit.

Freddie says 5.23. Theyre peaking. Good piece here

30-Year Mortgage Rates increase to 5.85%

Goldman: "The median monthly payment of a 30-year mortgage is up 56% year-over-year"

calculatedrisk.substack.com

“The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40 percent from 5.33 percent, with points increasing to 0.60 from 0.51 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.”

 

[RUBlackout]

By the times arm’s adjust those people will have refi’d into low rate fixed rate debt. Average arm is 7 years fixed before adjusting

we shall see but rates are only on the rise and that equity will not remain

 

[anon_0k9zlfz6lz9oy]

we shall see but rates are only on the rise and that equity will not remain

I dont think many realize the data. You should watch the video in OP. If youre making the case that rates continuing rising long, you are making the case the economy is on fire with duration.

average homeowner has 70% equity/30% debt. Hard to make a serious case on this vanishing

 

[brgRC90]

I didnt argue. I showed facts, figures and data regarding the people who keep saying bubble (theyve said bubble for a decade fyi lol). Heres a timeline of what the bubble boys have said every year for a decade https://t.co/Gd7tbnl3v3

And every time there has been a bubble there have been people with facts to show there isn't a bubble. I saw it with the dot com bubble and the sub prime meltdown. They did it in 1929. Bubble or simply perennially overpriced there are many markets in America where prices can't go much higher and will probably fall soon. Call it a bear market for housing.

 

[mdk01]

I don’t think housing prices come down much as many people will just stay where they are if they have low rates and don’t need to sell for any reason. A lot of great buying opprtunities and low rates created this the last few years.

that said, it will be those people who leveraged themselves into ARMs who will be faced with the reality of having to sell or refinance and much higher rates. When they go to sell and price is too high that will create issues

Query from some who hasn't been in the market for a couple of decades, but who on earth in the last 5 years took out an ARM? My initial reaction is someone who's buying more house than they should.

 

[jtung230]

Query from some who hasn't been in the market for a couple of decades, but who on earth in the last 5 years took out an ARM? My initial reaction is someone who's buying more house than they should.

Libor loan also gain popularity

 

[anon_0k9zlfz6lz9oy]

And every time there has been a bubble there have been people with facts to show there isn't a bubble. I saw it with the dot com bubble and the sub prime meltdown. They did it in 1929. Bubble or simply perennially overpriced there are many markets in America where prices can't go much higher and will probably fall soon. Call it a bear market for housing.

Real estate isnt the stock market. Sooner people realize that the better.

 

[anon_0k9zlfz6lz9oy]

Query from some who hasn't been in the market for a couple of decades, but who on earth in the last 5 years took out an ARM? My initial reaction is someone who's buying more house than they should.

ARM’s have been gaining popularity past 3 months. Past few years, arm’s were non existent

 

[anon_0k9zlfz6lz9oy]

Libor loan also gain popularity

Sofr*. Libor is done

 

[brgRC90]

Real estate isnt the stock market. Sooner people realize that the better.

You mean real estate can't go into a bubble and then crash? I've seen it twice in my life, with commercial real estate in the 80s and homes in the late 2000s.

 

[anon_0k9zlfz6lz9oy]

You mean real estate can't go into a bubble and then crash? I've seen it twice in my life, with commercial real estate in the 80s and homes in the late 2000s.

It can but if youre claiming were in a bubble at least show your work. Anyone who says were in a bubble mysterious cannot show their work. I made this video as a rebut against everyone saying its a bubble for no other reason than “what goes up must come down”

 

[RUBlackout]

Query from some who hasn't been in the market for a couple of decades, but who on earth in the last 5 years took out an ARM? My initial reaction is someone who's buying more house than they should.

See that’s the thing..people have been buying more than they should and have used tools like ARMs to do it bc housing prices have only gone up so they get the appreciation value/equity.
I know people who have done this is the past 5yrs…smart? No. People just like leverage and it’s similar to using margin on the stock market.

 

[mdk01]

"Housing only goes up "

"Stocks only go up"

Rookies.

 

[brgRC90]

It can but if youre claiming were in a bubble at least show your work. Anyone who says were in a bubble mysterious cannot show their work. I made this video as a rebut against everyone saying its a bubble for no other reason than “what goes up must come down”

Are you buying real estate right now? You can quibble over terms all you want. Houses are definitely not cheap; affordability is low.

 

[Rutgers Chris]

For loans over $625K-ish with bad credit.

Freddie says 5.23. Theyre peaking. Good piece here

30-Year Mortgage Rates increase to 5.85%

Goldman: "The median monthly payment of a 30-year mortgage is up 56% year-over-year"

calculatedrisk.substack.com

“The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 5.40 percent from 5.33 percent, with points increasing to 0.60 from 0.51 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.”

I’m old enough to remember when my rate was 8.25 and I’m not really that old

 

[anon_0k9zlfz6lz9oy]

Are you buying real estate right now? You can quibble over terms all you want. Houses are definitely not cheap; affordability is low.

Im a net buyer this year. If youre not, youre not following the data imo

 

[LETSGORU91]

Well since we have a thread touting your own business then I want to let you know that I sell an inflation free product. Beer prices have not increased since last spring. 2021. I guess I should make a video on it too.

You make a good point on beer prices. I'm surprised they havent gone up. Hops prices pushed the pace leading up into last year and I would think the cost of transportation for supplies and product would continue to escalate the price, but it hasn't. Maybe soon as inflation and fuel prices are high, big and small brewers will feel the pinch and have to increase prices. I sure hope not.

https://capemaybrewery.com/beers/tan-limes I like this. We just started carrying it on tap at the place I bartend at during the weekends.

Great place to visit. I took the Mrs. there on a Saturday around noon in the winter and she made a comment as we pulled up and saw all the cars. "Why are all these people here on a Saturday this early?" As I had been there before, I said let's just go in and hang out a bit, then you tell me what you think. Within 30 minutes she loved the place for the family atmosphere and the good beers.

 

[Yeah Baby]

Well since we have a thread touting your own business then I want to let you know that I sell an inflation free product. Beer prices have not increased since last spring. 2021. I guess I should make a video on it too.

It depends on how much attention you need. This is all for attention. He may even like Pike.

 

[JayDogSmooth]

Well since we have a thread touting your own business then I want to let you know that I sell an inflation free product. Beer prices have not increased since last spring. 2021. I guess I should make a video on it too.

Bus are you seeing a spike in Ginger-beer (the kind w alcohol)?

I tried it recently and am hooked. That’s the drink of choice for me moving forward

 

[NickRU714]

Whenever people have to argue there isn't a bubble, there's a bubble. Sell now if possible.

Have no comment on bubble or no bubble but this made me think of the great Tywin line:

 

[MrsScrew]

I'm calling it a bubble. The rising interest rates, comtinued inflation, plus I predicy a drop in consumer confidence that is coming will bring prices down. Feel free to call me out next year at this time if I am wrong,

I had dinner with my brother last night. He's been doing real estate in Manhattan for 25 years. He agrees with you.

 

[RUScrew85]

30 year rate now at 5.85%

 

[anon_0k9zlfz6lz9oy]

 

[rurichdog]

Inflation is the highest it's been in over 40 years. Mortgage rates 40 years ago were in double digits, peaking around 18%. If the Fed starts fighting inflation with increasing the federal funds rate, the price of money will get shockingly high. If you think that won't hurt real estate prices..."sold to you". That would nuke the bottom tier of the market. Kill all the plankton and kill the whales.

 

[theRU]

As many of you know, im in real estate. And a question i keep getting bombarded with is, is this market a bubble. I did a webinar last night going over 50+ charts on why we are not and the data that backs it up. Posting here in case its of interest to anyone

View embedded media

Respectfully, everyone has assumptions and often times when people scream loud about something it's often contra to what is actually happening ie inflation. There are hundreds of factors to evaluate in terms of puts and calls that go into the overall supply,demand, affordability and desperation equations.

We are (likely) about to witness demand destruction on a level few have witnessed on this planet.

Some things to consider:

If you believe that foreign cash investment has been a big driver of housing demand. You may believe that is going to dry up as we potentially add an expanding global conflict. China money may stop flowing into the us.

Those who enjoyed low variable rates are about to be effed.

Savings are going down, credit balances are increasing

High gas prices continue to destroy disposable income for the masses who drive demand on most durable goods

As demand on durable goods continues to fall, all the supply backlog will clear, demand will crater, inventories will be high, orders will be canceled. jobs that were created to catch up from supply crisis will be lost.

Rates continue to rise which we all know will put downward pressure on prices.

Lot to be nervous about, make your own decisions

 

[anon_0k9zlfz6lz9oy]

Inflation is the highest it's been in over 40 years. Mortgage rates 40 years ago were in double digits, peaking around 18%. If the Fed starts fighting inflation with increasing the federal funds rate, the price of money will get shockingly high. If you think that won't hurt real estate prices..."sold to you". That would nuke the bottom tier of the market. Kill all the plankton and kill the whales.

Go to about 1:07 (1 hour and 7 minutes) into the video in OP. I actually studied how high rates + inflation effected real estate 40-50 years back.

 

[anon_0k9zlfz6lz9oy]

Respectfully, everyone has assumptions and often times when people scream loud about something it's often contra to what is actually happening ie inflation. There are hundreds of factors to evaluate in terms of puts and calls that go into the overall supply,demand, affordability and desperation equations.

We are (likely) about to witness demand destruction on a level few have witnessed on this planet.

Some things to consider:

If you believe that foreign cash investment has been a big driver of housing demand. You may believe that is going to dry up as we potentially add an expanding global conflict. China money may stop flowing into the us.

Those who enjoyed low variable rates are about to be effed.

Savings are going down, credit balances are increasing

High gas prices continue to destroy disposable income for the masses who drive demand on most durable goods

As demand on durable goods continues to fall, all the supply backlog will clear, demand will crater, inventories will be high, orders will be canceled. jobs that were created to catch up from supply crisis will be lost.

Rates continue to rise which we all know will put downward pressure on prices.

Lot to be nervous about, make your own decisions

Respectfully, I think you should watch the video in the OP. I made the video to answer alot of the questions/concerns you posed

 

[theRU]

I dont think many realize the data. You should watch the video in OP. If youre making the case that rates continuing rising long, you are making the case the economy is on fire with duration.

average homeowner has 70% equity/30% debt. Hard to make a serious case on this vanishing

View embedded media

The equity ratios are fueled by the unreasonable pricing surge is it not? That will come back down once prices Crater in my mind. The economy is not healthy right now - there will be lots of volatility

 

[theRU]

Respectfully, I think you should watch the video in the OP. I made the video to answer alot of the questions/concerns you posed

It's interesting because I see the same data but view it differently on how it will impact down stream. There are always bulls and bears.

I've got my position/thesis on what's going to occur influenced by what I know is about to happen through commodity outlooks, and the subsequent dominos that (I think)will fall. From there it's simply a matter of - are you right about various puts and calls and how they will or will not topple said dominos.

I'll be the first to say I have no idea what WILL happen. I can only say what I believe will happen.

 

[Zak57]

OP trying to boost his YouTube numbers by posting here.

 

[anon_0k9zlfz6lz9oy]

The equity ratios are fueled by the unreasonable pricing surge is it not? That will come back down once prices Crater in my mind. The economy is not healthy right now - there will be lots of volatility

Ill play along. I dont think we see prices drops nationally. Some markets yes, national avg nope.
But lets say prices come down 20%. The homeowner with a $500K house and $150K mortgage now has a $400K house and a $150K mortgage

 

[anon_0k9zlfz6lz9oy]

OP trying to boost his YouTube numbers by posting here.

LOL i have zero idea on how to make money on youtube. Made the video because its a hot topic many are interested in and I follow it closely