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

[NotInRHouse]

I know people in real estate in both NYC and NJ and they've all had banner years.

There is no doubt that certain retailers (Acme and Trader Joe's two biggies I have seen) and fast food joint raised their prices.

There is also no doubt that is because you have like 3-4 chicken sellers (among other similar situations) nationally that raised their prices because they knew people were sitting on money,

But the idea that inflation is 30% or raised the price of everything is just a joke. I flew RT to Europe for under $400 this year. Gas is cheaper than it was in 2008. I regularly go to restaurants and bars with the same prices. And most of us here lived through an actual recession where people were laid off constantly. So yeah it is absolute the media and worse yet social media squealing over McDonald's receipts that put seeds in people's heads.

 

[NotInRHouse]

There are also the boomers that already paid off their mortgage and are ready to move South for retirement. However, because houses in Florida, Texas and North Carolina have already doubled in the last four years and other costs like insurance have tripled the couple of hundred thousand profit disappears from a couple of years ago. I always looks at these markets and don’t see financially that it makes sense any more.

I have friends with boomer parents who refuse to sell larger suburban homes with stairs. They don't want to move even to a retirement community for a variety of reasons. I would in fact say most millennials I know have parents in this category.

People don't realize that the "generational transfer" or the refusal in some cases is a big part of the current market.

 

[jtung230]

I know people in real estate in both NYC and NJ and they've all had banner years.

There is no doubt that certain retailers (Acme and Trader Joe's two biggies I have seen) and fast food joint raised their prices.

There is also no doubt that is because you have like 3-4 chicken sellers (among other similar situations) nationally that raised their prices because they knew people were sitting on money,

But the idea that inflation is 30% or raised the price of everything is just a joke. I flew RT to Europe for under $400 this year. Gas is cheaper than it was in 2008. I regularly go to restaurants and bars with the same prices. And most of us here lived through an actual recession where people were laid off constantly. So yeah it is absolute the media and worse yet social media squealing over McDonald's receipts that put seeds in people's heads.

What do they do in real estate?

 

[NotInRHouse]

What do they do in real estate?

I know a good number of realtors as well as attorneys in some aspects of real estate.

 

[jtung230]

I know a good number of realtors as well as attorneys in some aspects of real estate.

Based on the sales data, they are not the norm.

 

[RUBOB72]

By 1980 mortgage rates were much higher. Inflation from Ford, Carter and Reagan was much higher than it is now. And that was a much longer period.

Hey I know that from a personal POV . 8.5% yet I was happy to just get a decent home in the area I knew was safe, great schools and offered me a close commute to work , shopping , medical tops .It was fortunate we were able to refinance mid 80’s at 4.5% So honestly in a way it’s quite similar. It was during Ford ‘s time inflation went up to 12% … before leaving it went down just under 9%…Carter saw inflation rise from 6%_13% …during Reagan inflation fell from 13.6 % to 4.1%… think you should fact check yourself what actually occurred. .

 

[NotInRHouse]

Based on the sales data, they are not the norm.

I live in Hudson County. Things here kind of sell themselves. But the shore region is pretty wild as well because I'm looking for an investment property and things that IMO seem not very special disappear off the market in days for over ask.

 

[jtung230]

I live in Hudson County. Things here kind of sell themselves. But the shore region is pretty wild as well because I'm looking for an investment property and things that IMO seem not very special disappear off the market in days for over ask.

Yes, it’s strange times. People would love to sell at these levels but can’t let go the cheap rates. A lateral move (price wise) could cost you 50+% increase in monthly payments.

 

[RUBOB72]

Where possible, they need to re-zone some commercial to apartments. There is a need for mid-priced homes in most cities.

If you put more apartments in there will not be enough single family homes being built.Now landlords can raise prices to whatever they wish. Not a good thing… that’s why places such as San Francisco forced people out. The inability to pay rents …4 K - 5K and upwards. I had family members who ran into that mess.

 

[tom1944]

Hey I know that from a personal POV . 8.5% yet I was happy to just get a decent home in the area I knew was safe, great schools and offered me a close commute to work , shopping , medical tops .It was fortunate we were able to refinance mid 80’s at 4.5% So honestly in a way it’s quite similar. It was during Ford ‘s time inflation went up to 12% … before leaving it went down just under 9%…Carter saw inflation rise from 6%_13% …during Reagan inflation fell from 13.6 % to 4.1%… think you should fact check yourself what actually occurred. .

I looked up the inflation numbers as well as the fed funds rate yesterday. Early in Reagan’s term inflation was very high.

It took Volker a long time to break inflation.

 

[tom1944]

This is not going away anytime soon. Only way it does is a devastating economic collapse or…,;world war.

That is not what I am seeing among my immediate family, close friends and my neighbors.

What I am seeing is people doing very well.

 

[RUBOB72]

I looked up the inflation numbers as well as the fed funds rate yesterday. Early in Reagan’s term inflation was very high.

It took Volker a long time to break inflation.

And who was president before Ronald Reagan?

 

[RUBOB72]

That is not what I am seeing among my immediate family, close friends and my neighbors.

What I am seeing is people doing very well.

Then you’re the exception not the rule. Time will tell… all I’m saying is complacency and believing the bottom won’t collapse is being foolish. It will only take a major war or disaster to change the dynamic. Credit card debt is real and big issue. Most of your contacts better keep an eye on that . The sad part is people will not want to pay that debt back… similar to those not paying back their student debt. It has a very good chance of happening. People you know have probably two incomes and maybe more in this era. Do you honestly believe your neighbors are truthful? Some yes but most are over their heads in debt. The statistics are there … do you believe banks and financial leaders are lying about our debt issues?

 

[RUskoolie]

I live in Hudson County. Things here kind of sell themselves. But the shore region is pretty wild as well because I'm looking for an investment property and things that IMO seem not very special disappear off the market in days for over ask.

Shore region and investment property are an oxymoron unless you're buying in a high crime area with a fat cap rate but it's fat for a reason.

You don't buy down there because it makes financial sense. You buy on emotion and anticipate continued appreciation because it will likely happen anyway.

 

[RUskoolie]

I know people in real estate in both NYC and NJ and they've all had banner years.

There is no doubt that certain retailers (Acme and Trader Joe's two biggies I have seen) and fast food joint raised their prices.

There is also no doubt that is because you have like 3-4 chicken sellers (among other similar situations) nationally that raised their prices because they knew people were sitting on money,

But the idea that inflation is 30% or raised the price of everything is just a joke. I flew RT to Europe for under $400 this year. Gas is cheaper than it was in 2008. I regularly go to restaurants and bars with the same prices. And most of us here lived through an actual recession where people were laid off constantly. So yeah it is absolute the media and worse yet social media squealing over McDonald's receipts that put seeds in people's heads.

I'm sorry but I can't let this go, no matter how many people keep denying it. It absolutely is 30% in multiple sectors and it's why the consumer is so down on the economy. You must live in some bubble as an attorney not see hear/this. Hell I got jumbo toilet paper, jumbo paper towels and garbage bags last week and it was $71. I was floored. Shoulda kept the receipt. We stopped getting Mexican takeout because for 2 adults and 2 young kids it was nearly $75, just stupid high pricing. I can give you example after example after example. I see it in New Brunswick. my dear Banana Flips at Hansel are like $9 now, were $6 a couple years ago.

 

[RUBOB72]

People are quite aware of the distinct possibility of a severe recession or worse.

 

[tom1944]

And who was president before Ronald Reagan?

Didn’t I list him

 

[RUBOB72]

Didn’t I list him

Didn’t I list him

jimmy Carter… 😂

 

[KK1827]

They are saying the same thing. In yessir’s case is that he works for a home builder that produced inventory to sell vs KK or agents that need to find inventory to sell.

This. @yessir321 works for a homebuilder. Totally different and separate from the real estate industry. If you create inventory when theres no inventory to sell of course youre gonna do good haha

 

[KK1827]

@yessir321 my question is really more on the delivery side of your company. Is the pipeline as strong for 2024?

All time high deliveries are due in 2024. Then tapers of 2H 2024 and really drops heading into latter half 2025-2026.

Its VERY easy to make money when you can

A) create inventory
B) buy down rates and offer buyers rates that are 150-200bps below market

You just need to sit in a sales office and the leads come to you in @yessir321 case. And its not me downplaying his salesmanship abilities (which I have no idea of) it’s just the truth.

Brand new home, at 5% rates or 60 year old home at 7% rates? Not a hard sell.

 

[KK1827]

Because what you are saying is not correct... I'll explain

What defines "the industry"? If you are defining "the industry" as individual real estate agents personal income levels, then sure the "industry" is down, it's oversaturated... I've said this at least 4 times at this point. I've also made it very clear there is an inventory shortage with no end in sight as many folks will never leave their 3% rate and currently 62% of current fixed mortgages are locked in at sub 4% (source below) so in other words 2/3rds almost of the current occupied houses in america are not actively or even passively looking to move.

Nearly 92% of homeowners now have a mortgage rate below 6%

The vast majority of United States homeowners boast a mortgage rate below the current average of 6.71 percent, according to new Redfin data.

www.inman.com

If you define "The Industry" as the "demand" in the real estate market in you couldn't be further from the truth (Demand has a FAAAAR greater effect on house prices than realtor income levels so I'll let you decide which is the priority in defining what "the industry" is). Demand for real estate is ridiculously high, not Covid levels high but compared to say 2014-2019? It's WELL above those years with next year looking to be even more competitive.

I will say it for the 5th time now, the Real Estate PROFESSION is completely oversaturated. There's less houses to sell and more agents to sell them, what do you think is gonna happen to their personal income in that case? What you are missing is that has NOTHING to do with the actual market which has been sustainably strong all year

If youre saying the market is strong and prices are appreciating, you are correct and i think thats what youre saying.

Every piece of available data is saying the industry took it on the chin in 2023. You really have to have your head buried in the sand to say otherwise

 

[RUskoolie]

If youre saying the market is strong and prices are appreciating, you are correct and i think thats what youre saying.

Every piece of available data is saying the industry took it on the chin in 2023. You really have to have your bead buried in the sand to say otherwise

This whole thread is filled with people doing that

 

[Knight Shift]

I have friends with boomer parents who refuse to sell larger suburban homes with stairs. They don't want to move even to a retirement community for a variety of reasons. I would in fact say most millennials I know have parents in this category.

People don't realize that the "generational transfer" or the refusal in some cases is a big part of the current market.

Wondering why the not wanting to sell houses with stairs is such a thing? Or is it just selling a house? Can understand not wanting to move to a retirement community- chief among them, the HOA fees are highway robbery, and then you have to deal with the HOA itself, which is often run by a bunch of power-hungry cranky people.

 

[Knight Shift]

Based on the sales data, they are not the norm.

In our business, we tend to look at 3-5 year averages. We have had boom years followed by what some might call "bust" years, but if you look at an overall short term trend, or average of the past few years, it is easier to handle a year that is down after a boom year. The problem with some people in real estate (and other industries) is they think one or two boom years will continue to repeat. The last few years have been insanely good. The party had to end sooner or later.

 

[tom1944]

In our business, we tend to look at 3-5 year averages. We have had boom years followed by what some might call "bust" years, but if you look at an overall short term trend, or average of the past few years, it is easier to handle a year that is down after a boom year. The problem with some people in real estate (and other industries) is they think one or two boom years will continue to repeat. The last few years have been insanely good. The party had to end sooner or later.

Is GDP a good indication of the strength of the overall economy? It would seem to both capture the segment of the economy that is struggling as well as the areas that are strong.

https://www.bea.gov/data/gdp/gross-domestic-product

 

[yessir321]

If youre saying the market is strong and prices are appreciating, you are correct and i think thats what youre saying.

Every piece of available data is saying the industry took it on the chin in 2023. You really have to have your head buried in the sand to say otherwise

Your last sentence is incorrect, simply based on prices which rule all other factors

There is an inventory shortage, absolutely. That does not mean that the real estate market is in a bubble which was the title of this post.

 

[yessir321]

I am including title companies, lenders, paralegals and home inspectors. Not the suburban house wife who got her license part time and never closed a deal. I don't know why you're conflating everything. You are stuck on the random realtor who doesn't do business to begin with.

Just talk to people and ask. That's all I have done the last quarter is asking people in all of those fields.

It’s oversaturated! That’s what you aren’t grasping. We saw a 60% increase in new agents from 2021.. 60%! Other fields saw similar growth in terms of umber of people entering the market.

Everyone and there mom moved or re-financed during Covid, there was PLENTY to go around. Now it’s back to pre-Covid levels with far more professionals in the field. I say now for the 6th time, the real estate profession is completely oversaturated

 

[yessir321]

That is not what I am seeing among my immediate family, close friends and my neighbors.

What I am seeing is people doing very well.

Some people never turn off Fox News… they tend to be convinced the world is constantly on edge of falling apart.

 

[rutgersdave]

Some people never turn off Fox News… they tend to be convinced the world is constantly on edge of falling apart.

That has to take a few years off your life.

 

[RUskoolie]

It’s oversaturated! That’s what you aren’t grasping. We saw a 60% increase in new agents from 2021.. 60%! Other fields saw similar growth in terms of umber of people entering the market.

Everyone and there mom moved or re-financed during Covid, there was PLENTY to go around. Now it’s back to pre-Covid levels with far more professionals in the field. I say now for the 6th time, the real estate profession is completely oversaturated

Realtors? Yes.

Lenders, title companies, appraisers, paralegals and home inspectors too? No.

Again, all these people that I just listed, most of them who have been productive have had a very down year.

 

[yessir321]

This. @yessir321 works for a homebuilder. Totally different and separate from the real estate industry. If you create inventory when theres no inventory to sell of course youre gonna do good haha

With all due respect I say this, you’re foolish to believe the industries are ‘totally separate’.

I was an ann independent agent for 7 years prior to joining my builder, I write real estate contracts every week.

New construction IS real estate, I just


I saw what was happening even 4 years ago in terms of inventory shortages, was offered the right gig and took it.

No need to get upset that you’re competing with 75 other agents now in a 30 mile radius while I hold exclusivity as the listing agent for 6 separate communities

 

[yessir321]

Realtors? Yes.

Lenders, title companies, appraisers, paralegals and home inspectors too? No.

Again, all these people that I just listed, most of them who have been productive have had a very down year.

Are you crazy? Do you have any clue how many people became lenders during Covid when everyone was re-financing? (This was particularly common among former car dealership F&I managers) Same thing with appraisers, there’s TWICE as many appraisers in my area now than in 2019.

Now again I emphasize, compared to 2021? Yea the market was WAY down, compared to pre-Covid, it was still actually a better market.

In conclusion, the real estate market was never a ‘Bubble’ about to burst. 2008 did not happen the way many people on this thread predicted

 

[KK1827]

Your last sentence is incorrect, simply based on prices which rule all other factors

There is an inventory shortage, absolutely. That does not mean that the real estate market is in a bubble which was the title of this post.

I STARTED THIS THREAD! THE MARKET IS NOT IN A BUBBLE!!!

Are you slow? Haha. Ive said numerous times, prices are strong, no signs of a drop or “bubble bursting”. But the industry is in the shitter for the professionals who service the industry. It’s just not debatable, every piece of data confirms this. You keep saying “oh its because theres too many realtors”. Are there too many mortgage brokers? Too many title agents? Too many real estate attorneys? Transaction volume is at all time lows when adjusted for population. Again, not a debate but rather sharing an objective fact.

 

[KK1827]

It’s oversaturated! That’s what you aren’t grasping. We saw a 60% increase in new agents from 2021.. 60%! Other fields saw similar growth in terms of umber of people entering the market.

Everyone and there mom moved or re-financed during Covid, there was PLENTY to go around. Now it’s back to pre-Covid levels with far more professionals in the field. I say now for the 6th time, the real estate profession is completely oversaturated

This is just wrong. I am here to correct the record. It went up 11.6% at PEAK. 60% is laughably off. https://www.axios.com/2023/05/26/realtor-nar-real-estate-jobs#

• The number of Realtors went from 1.372 million in March 2020 to 1.463 million in March 2021, and 1.531 million in March 2022.

 

[KK1827]

With all due respect I say this, you’re foolish to believe the industries are ‘totally separate’.

I was an ann independent agent for 7 years prior to joining my builder, I write real estate contracts every week.

New construction IS real estate, I just


I saw what was happening even 4 years ago in terms of inventory shortages, was offered the right gig and took it.

No need to get upset that you’re competing with 75 other agents now in a 30 mile radius while I hold exclusivity as the listing agent for 6 separate communities

You do realize every data set separates the new home sales data va existing home sales data for a reason, yes?

Theyre two totally separate industries.

I say this however you want to take it but its obvious you dont really follow the market, which honestly you dont need to when you sit at a community of new homes and just sell new product at low rates. Youre failing to comprehend the most remedial of data sets and unable to follow a conversation. Lets hop on a call so I can explain. Dm me your number.

 

[yessir321]

I STARTED THIS THREAD! THE MARKET IS NOT IN A BUBBLE!!!

Are you slow? Haha. Ive said numerous times, prices are strong, no signs of a drop or “bubble bursting”. But the industry is in the shitter for the professionals who service the industry. It’s just not debatable, every piece of data confirms this. You keep saying “oh its because theres too many realtors”. Are there too many mortgage brokers? Too many title agents? Too many real estate attorneys? Transaction volume is at all time lows when adjusted for population. Again, not a debate but rather sharing an objective fact.

Is the entire industry over saturated? Absolutely! Was the market shocked by increased rates? Sure! Was there still a TON of opportunity? Absolutely!

You’re in the business, how many new realtors have you encountered in the last 3 years? How many of them actually have a clue? I’m not trying to be mean here but it’s just reality, you’ve got so much oversaturation by people who have no clue how to sell.

Was the market down compared to 2021? Sure! Compared to pre-Covid? It was a very healthy market. Just too many hands reaching in for a piece of the pie. The key is to find a unique spot where you have a leg up on your competition. 2023 was a hell of a year for top producers, and yes I 100% have the payslips to back that claim up.

And before you mention how I don’t work in real estate, I am the exclusive listing agent for 6 different communities, I wrote over 60 real estate contracts in 2023 alone…. I’ve schedule more appraisals, inspections, title escrows and other ancillary garbage than an individual agent could dream of. When agents bring me a client, I do their job for them and still pay them a cut, they do nothing, literally sign their name 3 times and get paid their co-op.

Reality is real estate agents in general have gotten weak as sh*t the last 3 years. They all became ‘order takers’, there was no skill involved, no one to actually press people to up that offer and make sure you get you’re house, no one with the ability to payment close. It’s like going to Marshall’s these days.. “would you like to try that on?’

I’ll say out loud what a lot of people in real estate know, they just won’t say out loud…. There’s VERY few true closers in real estate anymore, if you can close, holy Christ you can kill it in this. The competition is weak as hell

 

[yessir321]

This is just wrong. I am here to correct the record. It went up 11.6% at PEAK. 60% is laughably off. https://www.axios.com/2023/05/26/realtor-nar-real-estate-jobs#

• The number of Realtors went from 1.372 million in March 2020 to 1.463 million in March 2021, and 1.531 million in March 2022.

60% was an exaggeration but the point remains, there’s more realtors and less inventory, therefor income levels in that field go down. It just numbers, that’s all.

I’m not sure what we’re arguing about here, the market is strong and only about to get better.

I do not equate individuals income levels to the health of the real estate market, they are seperate entities

 

[KK1827]

60% was an exaggeration but the point remains, there’s more realtors and less inventory, therefor income levels in that field go down. It just numbers, that’s all.

I’m not sure what we’re arguing about here, the market is strong and only about to get better.

I do not equate individuals income levels to the health of the real estate market, they are seperate entities

The real estate market is healthy price wise, weve never argued that. Youre seemingly, inexplicably arguing that THOSE WHO WORK IN THE INDUSTRY AND SERVE THE INDUSTRY should be having their best years ever.

You work in a totally separate side of the industry. Your subset literally has its own datasets for a reason. It aint hard to sell brand new homes in a near all time low inventory environment, paired with mortgage rate buydowns. I think you do realize this

 

[yessir321]

You do realize every data set separates the new home sales data va existing home sales data for a reason, yes?

Theyre two totally separate industries.

I say this however you want to take it but its obvious you dont really follow the market, which honestly you dont need to when you sit at a community of new homes and just sell new product at low rates. Youre failing to comprehend the most remedial of data sets and unable to follow a conversation. Lets hop on a call so I can explain. Dm me your number.

Oh I realize how it works, I also realize whether it’s new construction or re-sale an agent is still paid a co-op. YOU are missing the bigger picture that it’s foolish to separate the two. I understand it’s been done that way forever however it’s stupid from a sales standpoint. You go where the inventory is, that simple. Who cares where it comes from? Watch what happens when you simplify things and stop focusing on ‘new’ vs ‘pre-existing’ your commission won’t spend any differently👍

I recognize fully the re-sale market simply does not have the inventory right now and with 62% of mortgages locked in at sub 4% that’s not likely to change much in the next few years. That also does not take away from the demand and health of the market though, it simply takes away from the total number of deals possible as there’s simply not enough inventory. Demand is the driving factor in price, prices have not gone down, there wasn't a crash. Again I emphasize, individuals who work in the fields' income levels is not an indicator of the overall market. It's an indicator that there's too many hands in the field. You cannot possibly deny the massive influx of new agents we've seen since covid, you're smarter than that

I have a walkthrough at 11 and loan meeting at 1, we can chat tomorrow though and I’ll be happy to discuss the current market and how to take advantage of it. Not sure how to dm on rivals

 

[yessir321]

The real estate market is healthy price wise, weve never argued that. Youre seemingly, inexplicably arguing that THOSE WHO WORK IN THE INDUSTRY AND SERVE THE INDUSTRY should be having their best years ever.

You work in a totally separate side of the industry. Your subset literally has its own datasets for a reason. It aint hard to sell brand new homes in a near all time low inventory environment, paired with mortgage rate buydowns. I think you do realize this

Because they SHOULD be having amazing years if they thought outside the box. It is absolutely silly to believe new construction is not real estate. Do you not have the ability to represent buyers who purchase a new construction? Are you not paid a co-op?

Realtors who thought outside the box absolutely had phenomenal years in 2023, coming from a licensed real estate agent who’se held an active license since 2011