Major housing crash coming this winter or sooner

[TDub]

may I suggest against Carpet tiles tho? maybe a vinyl plank if you need a covering at all.....easier to clean, more durable, not s ton more expensive. Theyre not fancy, but better than anything carpet related....

[TDub]

quicker and easier install than carpet too and much easier to replace should you have the need.

[Overlander]

My life goal is to one day own that giant blue couch.

Unfortunately, it seems to be a dream fulfilled for Japhy.

That Fucker has to be seen in person to be believed. The couch, that is

[KUTradition]

woah…red light district

I bought those years ago at Sammy Davis Jr's estate sale, they were in his penthouse suite in Vegas. They emit a very spiritually flamboyant light. It's the little touches that make a house a home.

i’m not entirely sure exactly what that means, but i think i like it

[japhy]

Don't know when you took our picture, is that your new CC cam? Personally, my favorite part of the Spud Lounge was the beachball basketball game we played. It's easier for me to dunk with the hoop at 40 in.

What Defix is alluding to is the Church Rec League beachbasketball court. We play for the coveted Aquafresh Triple Protection Trophy. His wife's shot looks like she is trying to launch a bowling ball to the moon, and yet her accuracy is unquestionable. She is the Steph Curry of the Empire. And yes, Defix can put the hammer down on those rims.

[japhy]

may I suggest against Carpet tiles tho? maybe a vinyl plank if you need a covering at all.....easier to clean, more durable, not s ton more expensive. Theyre not fancy, but better than anything carpet related....

We will probably end up with plank of some sort in the living/dining/kitchen room. It will be a big space, mostly cuz we bought a big building and the spacer is there. With every other floor surface being old hardwood floors we will want something in the bedroom suite that feels softish on the foot when we get up in the morning. And the tiles are recycled, it is a mix of colors from a large office remodel in Denver and we bought the unused extra tiles for cheap.

[TDub]

preacher man says its the end of time
and the Colorado River, shes a goin dry
interest is up and the stock markets down
you only get shot when ya go downtown

[japhy]

Just an FYI, for anyone trying to sell, now is the time. Lots of instability already happening in the housing market, and the interest rate cut in September is only going to make things worse. It will be a great time to buy though.

To think it was just 2 1/2 years ago that the "crash" was imminent. Squirt was so close to achieving Nostradamus ( or maybe Michael Burry ) status.

"MARKET DATA + TRENDS
The Housing Market Is Showing Early Signs of a Correction, Experts Say
Record-high housing prices won't be the norm for much longer, according to market experts reporting a slowdown in nationwide home sales

MAY 24, 2022

Home sales are slowing, fewer buyers are seeking mortgages, and bidding wars appear to be cooling in response to a series of interest rate hikes initiated by the Fed’s aggressive inflation control methods, leading some experts to believe that a housing correction is underway. Median home list prices across the U.S. reached a record high $425,000 in April, a 14.2% year-over-year increase accompanied by a 75% jump in average mortgage interest rates, which climbed to 5.25% during the week ending May 19, according to Realtor.com.

That costly duo is causing a growing number of buyers to reconsider their purchasing decisions, and a subsequent drop in demand is slowly leading to price corrections after years of waning affordability. Still, median list prices are likely to remain elevated for the foreseeable future as the market eases into an adjustment period.

“There’s no way that enormous jump in housing costs isn’t going to affect buyer demand,” says Patrick Carlisle, chief market analyst in the San Francisco Bay Area for the real estate brokerage Compass. “It’s also coupled with the highest prices in history. That can’t not have an impact.”

“The market is definitely shifting and becoming cooler, and that’s becoming clearer day by day,” says Carlisle. “There are fewer buyers at open houses, there are fewer offers on new listings, and sometimes no offers. Price reductions are just beginning to creep up.”

In his defense, interest rates are mentioned in the article. We will see what happens next.

All I know for sure is that the "spaceship house" we are working on that looks out onto the Grand Tetons seems to be getting bigger. It was sitting at a $12M budget ( this number does not include buying an existing 8,000 sf home and demolishing to make room for the new); but that budget was before the owner decided that a 24 foot x 24 foot wall of windows at the end of their living room might "constrict" their view of the mountains. I don't know how many of you have tried to view a mountain through a mere 24 foot x 24 foot portal, but you just can't see the entire horizon at once. So this "small" window became an undulating/sinusoidal wave height window wall, that varies between 24 foot tall and 12 foot tall and is 120 foot long. And THAT definitely feels spacious as fuck! It may push the budget to $20M, but it's only money. And if the little people aren't building houses, it will be easier for the wealthy to get materials for their projects again.

I don't think interest rates will have any effect on the viewing aspirations of these owners. And my fee is going up so that's a plus. And since I don't plan to sell my house in the Springs any time soon, I won't sweat it if the one year 50% increased in value drops a bit.

[Deleted User 863]

And since I don't plan to sell my house in the Springs any time soon, I won't sweat it if the one year 50% increased in value drops a bit.

Lots of people that bought houses in the last 12+ months with these ridiculous prices are going to be upside down if they maxed out financing on the property. Assuming they could get it to appraise out. We've seen buyers paying 15%+ over appraised value on some deals in my area.

[TDub]

at least the inflation running away will make the money for their locked in painfully high mortgages worth less.

[Overlander]

Even with the threat of an economic downturn, real estate is always going to be one of the wisest investments

[TDub]

long term yes. short term not always.

Depending on how the next 3 years go (I'm assuming a downturn is imminent at this point...debate is how significant) it may be a bit for the market to come back to where it has been....particularly considering the number of houses selling over market value. If you end up in a situation where you nees to get out of the property and can't hold it you may take it in the shorts.


if I had endless money I would've been buying as much land as possible. They don't make more of it and interest rates for raw land have been consistently ~7% for 125 years. You really can't lose on land provided it isn't full of toxic sludge or something.

[Deleted User 863]

Even with the threat of an economic downturn, real estate is always going to be one of the wisest investments

Long term, yes. Especially with a proper initial investment.

But the people who lock into 30yr loans, with the minimum down, and who don't plan to keep the house for more than 5yrs or so, are the ones I worry about. I mean, it's their own fault, so I guess they aren't hurting anyone but themselves. But in those situations even small down turns can crush them, because you're not paying down much principle in the early years of a long term note.

[TDub]

its kinda bullshit how mortgages are structured. top heavy interest before you get barely any principal down and equity built. Banks surely arent gonna risk their cut....but, that's the price you pay for getting their money and giving them the risk.

[Overlander]

its kinda bullshit how mortgages are structured. top heavy interest before you get barely any principal down and equity built. Banks surely arent gonna risk their cut....but, that's the price you pay for getting their money and giving them the risk.

Pay above the payment, it goes against principal if your loan is structured properly

[TDub]

its kinda bullshit how mortgages are structured. top heavy interest before you get barely any principal down and equity built. Banks surely arent gonna risk their cut....but, that's the price you pay for getting their money and giving them the risk.

Pay above the payment, it goes against principal if your loan is structured properly

yea I do as much as I am able. and I have it set up to pay every 2 weeks (they wouldn't let me go weekly) so I end up paying an extra month every year that goes strictly to principle.

[Cascadia]

its kinda bullshit how mortgages are structured. top heavy interest before you get barely any principal down and equity built. Banks surely arent gonna risk their cut....but, that's the price you pay for getting their money and giving them the risk.

Pay above the payment, it goes against principal if your loan is structured properly

Disagree. Take whatever “extra” you have and invest.

[Deleted User 863]

its kinda bullshit how mortgages are structured. top heavy interest before you get barely any principal down and equity built. Banks surely arent gonna risk their cut....but, that's the price you pay for getting their money and giving them the risk.

Pay above the payment, it goes against principal if your loan is structured properly

Disagree. Take whatever “extra” you have and invest.

If you're capable of paying extra each month then have a shoter amortization period. Do 20 or 25 years instead of 30.

Yes, you could also "invest", but the earlier in your amortization period you are the better your investment has to perform to outpace the loan interest rate. Capital gains might also need to be considered depending on what type of investment mechanism they are using.

If someone is talking about say only paying an extra hundred a month or something, then they'd probably be better off increasing their 401k contribution each paycheck instead.

[japhy]

Even with the threat of an economic downturn, real estate is always going to be one of the wisest investments

Long term, yes. Especially with a proper initial investment.

But the people who lock into 30yr loans, with the minimum down, and who don't plan to keep the house for more than 5yrs or so, are the ones I worry about. I mean, it's their own fault, so I guess they aren't hurting anyone but themselves. But in those situations even small down turns can crush them, because you're not paying down much principle in the early years of a long term note.

Every market is different but I haven't seen those buyers in the Front Range market for a few years. The average home price is near a half million. Supply is low so competition amongst buyers is strong. The way to win the bidding war is to 1) Say you can close in 30 days 2) Waive inspections 3) Waive appraisals. You can't do those with a minimum down, 30 year mortgage. If your offer came with the strings attached that come with a minimum down loan you weren't even in the game. Every offer is over asking. Because prices are rising so fast many appraisals come in under the offer price. For you to get a loan from a bank under those conditions your position with the bank has to be pretty strong. If you are putting 40-50% down on a house which has been common out there, or a full cash offer you aren't going to be under water without a major market upheaval and people aren't walking away with $250K of skin in the game. It's a different landscape than back in 2007-2008 in these markets. One market bubble was driven by easy loan applications and little down. This market rise has been driven by low supply and one of the most desirable locations in the country. Colorado Springs is not getting less desirable in the next decade and housing supply will be limited by the supply of water. I don't see the Front Range crashing, just leveling off. If you are in a less desirable market there might be reason for concern.

[Deleted User 863]

Even with the threat of an economic downturn, real estate is always going to be one of the wisest investments

Long term, yes. Especially with a proper initial investment.

But the people who lock into 30yr loans, with the minimum down, and who don't plan to keep the house for more than 5yrs or so, are the ones I worry about. I mean, it's their own fault, so I guess they aren't hurting anyone but themselves. But in those situations even small down turns can crush them, because you're not paying down much principle in the early years of a long term note.

Every market is different but I haven't seen those buyers in the Front Range market for a few years. The average home price is near a half million. Supply is low so competition amongst buyers is strong. The way to win the bidding war is to 1) Say you can close in 30 days 2) Waive inspections 3) Waive appraisals. You can't do those with a minimum down, 30 year mortgage. If your offer came with the strings attached that come with a minimum down loan you weren't even in the game. Every offer is over asking. Because prices are rising so fast many appraisals come in under the offer price. For you to get a loan from a bank under those conditions your position with the bank has to be pretty strong. If you are putting 40-50% down on a house which has been common out there, or a full cash offer you aren't going to be under water without a major market upheaval and people aren't walking away with $250K of skin in the game. It's a different landscape than back in 2007-2008 in these markets. One market bubble was driven by easy loan applications and little down. This market rise has been driven by low supply and one of the most desirable locations in the country. Colorado Springs is not getting less desirable in the next decade and housing supply will be limited by the supply of water. I don't see the Front Range crashing, just leveling off. If you are in a less desirable market there might be reason for concern.

We definitely see that same thing here with the medium high to high end homes.

With the medium to lower end people are having to make up the difference of appraisal to purchase price, but appraisals have a way of coming in close to purchase price frequently. Especially when there are recent sales above true market value to bump up the appraisal. Not to mention appraisals are as of an effective date they don't account for likely downturns in the market (which I know YOU know). Banks also let these borderline borrowers roll closing costs into their loan.