Major housing crash coming this winter or sooner

[Shirley]

tough market with house prices already inflated to their current levels.



The catch is, the housing market can't crash really. There's tons of people sitting and waiting....as soon as interest drop at all again the demand is going to sky rocket and cause prices to increase...again. It's a tough road ahoe without a real great, gentle exit ramp back to balance.

Tomorrow morning's jobs report is being watched very closely because of what it might portend about what the Fed will do next. If the nation has created more jobs than the predicted ~ 170,000, it would suggest that the economy is continuing to grow despite the Fed having already raised interest rates by 5.25-5.50% in roughly the last year and a half. Which would mean the Fed is more likely to raise interest rates again in yet another attempt to cool the economy down, which should result in weaker job creation and decrease consumer demand, in hopes that inflation will continue to fall.

A jobs report higher than expected would likely also lead to a drop in the stock market, because interest rates would likely rise again, incentivizing investors to sell stocks and buy US Treasuries and get a "risk-free" guaranteed 5-6% return, rather than keep their money in the stock market where they risk not making anything, or even losing money.

So, despite the fact that we would all theoretically like the US economy to continue to be strong and resilient, be careful what you wish for, unless you don't mind paying even higher interest rates in the near future.



"We're gonna win so much, you may even get tired of winning. And you'll say, 'Please, please. It's too much winning. We can't take it anymore. Mr. President, it's too much.

[Shirley]

"If the nation has created more jobs than the predicted ~ 170,000, it would suggest that the economy is continuing to grow despite the Fed having already raised interest rates by 5.25-5.50% in roughly the last year and a half. Which would mean the Fed is more likely to raise interest rates again in yet another attempt to cool the economy down, which should result in weaker job creation and decrease consumer demand, in hopes that inflation will continue to fall.

A jobs report higher than expected would likely also lead to a drop in the stock market..."

Holy cow!

170k jobs was the estimate

336k new jobs

Nearly twice as many jobs created as expected.

July and August numbers were revised UP, meaning "Bidenomics" has created almost 300,000 jobs per month, for those 3 months.

As expected:

The DOW is down over 200 points

The 10-year T-note is up > 4.8%

With interest rates increasing on their own, discouraging investment and spending, maybe the Fed won't have to raise them again to tame inflation? But I'd be surprised if they don't.

[ousdahl]

There’s lots for sale in the new development in downtown WP. About a quarter acre apiece, on what used to be some lovely riparian meadows along the Fraser river.

Apparently the prices are coming down, cuz I heard they’re asking “only” $875k now, which apparently is less than it was.

Of course, on these lots are 4-5+ bedroom, 6000+ square foot homes that oil exec Texans refer to as their “cute little cabin in the mountains,” def a second (if not third or fourth) home, at which they spend 10 nights a year tops, and/or fill a couple bedrooms plus like a loft area with bunk beds and throw it on Airbnb marketing it as “sleeps up to 28!”

One owner was bragging about her wine room, and yoga room, and study, and guest suite, and media room.

To that I replied, “you know, my roommate beav and I have all those rooms too. It’s called our living room.”

[Shirley]

Are those the people fly fishing guides refer to as "customers"?

[japhy]

"If the nation has created more jobs than the predicted ~ 170,000, it would suggest that the economy is continuing to grow despite the Fed having already raised interest rates by 5.25-5.50% in roughly the last year and a half. Which would mean the Fed is more likely to raise interest rates again in yet another attempt to cool the economy down, which should result in weaker job creation and decrease consumer demand, in hopes that inflation will continue to fall.

A jobs report higher than expected would likely also lead to a drop in the stock market..."

Holy cow!

170k jobs was the estimate

336k new jobs

Nearly twice as many jobs created as expected.

July and August numbers were revised UP, meaning "Bidenomics" has created almost 300,000 jobs per month, for those 3 months.

As expected:

The DOW is down over 200 points

The 10-year T-note is up > 4.8%

With interest rates increasing on their own, discouraging investment and spending, maybe the Fed won't have to raise them again to tame inflation? But I'd be surprised if they don't.

I am part of the problem. The shortage of engineers in the US has started us looking to import Canadiens to employ. We are opening a Chicago office because rather than have 3 new engineers working remote, we will bring a small office to them. You can all stop consuming cheap imported goods, but without infrastructure everything stops. Maintaining and modernizing the infrastructure is a never going to end.

Send your kids to engineering school. No matter what the future brings, their jobs will be considered "essential business".

[ousdahl]

Man, I wish I went to engineering school. I just didn’t know any better.

And by didn’t know any better I mean, my parents basically coerced me into business school. 18 year old ous didn’t feel like he had a choice.

I actually meant to ask you more about that Japhy

[TDub]

https://youtu.be/zHamgwlQ1yo?si=9WljCznvvRXEcb9U

always somebody else's fault.

[japhy]

Man, I wish I went to engineering school. I just didn’t know any better.

And by didn’t know any better I mean, my parents basically coerced me into business school. 18 year old ous didn’t feel like he had a choice.

I actually meant to ask you more about that Japhy

I have a friend, you met him at Solstice 1. His wife is Eileen-"it's-not-a-party-until-Eileen-gets-here". He was the first full time employee I hired at my office in 1995. He was a 40 year old new graduate from KU with a degree in Civil Eng - structural emphasis. He had quit his dead end job in Denver and put himself through Eng school. He worked at our office until he retired, a year or two before Solstice 1.

I saw Mike and Eileen last night. I think they will be coming to the Empire for Solstice 4. It's a conversation you should have with him directly. He lived that career story. I "knew" what I was going to be when I was 12. My version is much different.

[ousdahl]

‘Unconscionable’: American baby boomers are now becoming homeless at a rate ‘not seen since the Great Depression’ — here’s what's driving this terrible trend

https://finance.yahoo.com/news/unconsci ... 00310.html

[JKLivin]

‘Unconscionable’: American baby boomers are now becoming homeless at a rate ‘not seen since the Great Depression’ — here’s what's driving this terrible trend

https://finance.yahoo.com/news/unconsci ... 00310.html

Thanks, Brandon.

Four more years! Four more years!

[Shirley]

‘Unconscionable’: American baby boomers are now becoming homeless at a rate ‘not seen since the Great Depression’ — here’s what's driving this terrible trend

https://finance.yahoo.com/news/unconsci ... 00310.html

All the more reason to cut Social Security and Medicare, keep the minimum wage at $7.50/hour, and give the already filthy rich yet another tax cut, by defunding the IRS. The fact that taxes are essentially the only "profit center" the US government has to fund its programs, is merely an inconvenient detail.

Yours truly,

Republicans

[ousdahl]

I can’t believe them boomers think that just cuz they spent their entire lives working that means they shouldn’t have to spend their old age freezing on the streets.

Talk about an entitled generation!

They should pick themselves up by their own bootstraps, and go get a job as a greeter at the Walmart on Colfax.

[japhy]

So what is your solution? Is the homelessness in the boomers new? What part does mental health play in this situation?

The faces behind the trend lines include the chronically homeless from the younger half of the boomer generation, long the dominant group among unhoused adults. In 1990, on average they were 30 years old; today their average age is 62. ​

The new report estimates that 6.7 million people 65 and older are living with Alzheimer’s dementia, one of the costliest conditions to society. This year, the national cost of caring for individuals living with Alzheimer’s or other dementias is projected to reach $345 billion — a $24 billion increase from a year ago.

In 2022, more than 11 million caregivers provided unpaid care for people with Alzheimer’s or other dementias, providing an estimated 18 billion hours of unpaid assistance — a contribution valued at $339.5 billion.

Caring for those living with Alzheimer’s or other dementias poses special challenges. As dementia symptoms worsen, caregivers can experience increased emotional stress (59%), depression, anxiety, chronic stress, and new or exacerbated health problems. Additionally, caregivers often experience depleted income and finances due to disruptions in employment, paying for health care or other services for both themselves and those with dementia.

I just had my biannual review with my admin. She is 52 and her mom is 83. Mom lives with her and is alone all day while admin is at work. Admin is on her cell phone most of the day answering crazy questions from mom. She takes about one day a week off to take care of something with mom. My partners want to fire her and want to freeze her pay. She makes $27/hr plus a 3% 401K contribution plus health benefits, she can't afford to give the job up. She misses little things when doing work for myself or other partners. She is distracted and understandably so. In her review I gave her a raise and told her that her job was secure, we would work through this. She broke down. Says she can't believe she hasn't been fired, she knows things are fucked up but she really likes her job (and needs it) and likes the people she works with. Mom will have to live in a nursing home at some point or admin will have to quit her job. In three years I retire and will not be there to override anyone's decision to fire her. The clock is ticking.

My mom is 86 and in a nursing home in a nice area of St Louis so that it is convenient for my sisters to visit. She is in a memory care facility and the cost went up from $8K to $9K per month last year. If we couldn't afford the extra $1k a month she would have to leave. Annie's mom is 73 and she just went into a care facility due to a mental breakdown and her cost in Fargo ND is $4k per month. Location, location, location. Expect that in the future most of the "affordable" care facilities for aged parents to be in rural locations 4-6 hours from where you live.

If Annie's mom was still estranged from her offspring she would likely be living in her car right now.

When I talk to my mom, at least once a week in her lucid moments, she posits that she wishes she were dead. My dad and most of her friends are gone. Her mind is gone and is always making her miserable/frightened with wild anxiety and imagined threats. She feels like she has outlived the joy in her life. There is no cure and little relief for alzheimers. But our society and her religious beliefs do not allow for her to check out on her own terms. She tells me she prays every day for God to take her. I ask her if she has ever thought of taking a different approach. Instead of praying, just look up to the heavens and give that petty fucker both your middle fingers and tell him to "FUCK YOU, FUCK YOU!, FUCK YOU!". She looks at me in shock, "Ooh I couldn't do that, it would be bad". Me: "So wut's the worst that could happen? He sends down lightning bolts and blows you off the face of the earth? Afterwards you splain to St Peter that you have dementia and he can't take the shit you say seriously, he should let you into heaven based upon those mitigating circumstances." This makes her laugh every time, she has no recollection of how many times I have told her that plan.

And the corporation that owns the facility has a six figure annual revenue vested interest in keeping the paying body upright in spite of what her soul wants.

But back to the topic at hand.

Millenials can't afford to buy a house and GOD DAMN IT they deserve to own a house if they want to!

Housing should just be cheaper wherever they want to be!

AND all of this is Joe Biden's fault! Vote trump, he loves you and cares for you. He will solve this problem for everyone right after he gets done punishing everyone who was disloyal to him.

My millennial daughter just moved to SF. She knows she will likely never be able to afford a single family residence in the Bay Area in spite of her higher than average salary. But she didn't move to the Bay Area to own a home; she moved there for the lifestyle, the views, the people. She weighed all of the costs and benefits and is happy with her decision.

[jfish26]

So what is your solution? Is the homelessness in the boomers new? What part does mental health play in this situation?

The faces behind the trend lines include the chronically homeless from the younger half of the boomer generation, long the dominant group among unhoused adults. In 1990, on average they were 30 years old; today their average age is 62. ​

The new report estimates that 6.7 million people 65 and older are living with Alzheimer’s dementia, one of the costliest conditions to society. This year, the national cost of caring for individuals living with Alzheimer’s or other dementias is projected to reach $345 billion — a $24 billion increase from a year ago.

In 2022, more than 11 million caregivers provided unpaid care for people with Alzheimer’s or other dementias, providing an estimated 18 billion hours of unpaid assistance — a contribution valued at $339.5 billion.

Caring for those living with Alzheimer’s or other dementias poses special challenges. As dementia symptoms worsen, caregivers can experience increased emotional stress (59%), depression, anxiety, chronic stress, and new or exacerbated health problems. Additionally, caregivers often experience depleted income and finances due to disruptions in employment, paying for health care or other services for both themselves and those with dementia.

I just had my biannual review with my admin. She is 52 and her mom is 83. Mom lives with her and is alone all day while admin is at work. Admin is on her cell phone most of the day answering crazy questions from mom. She takes about one day a week off to take care of something with mom. My partners want to fire her and want to freeze her pay. She makes $27/hr plus a 3% 401K contribution plus health benefits, she can't afford to give the job up. She misses little things when doing work for myself or other partners. She is distracted and understandably so. In her review I gave her a raise and told her that her job was secure, we would work through this. She broke down. Says she can't believe she hasn't been fired, she knows things are fucked up but she really likes her job (and needs it) and likes the people she works with. Mom will have to live in a nursing home at some point or admin will have to quit her job. In three years I retire and will not be there to override anyone's decision to fire her. The clock is ticking.

My mom is 86 and in a nursing home in a nice area of St Louis so that it is convenient for my sisters to visit. She is in a memory care facility and the cost went up from $8K to $9K per month last year. If we couldn't afford the extra $1k a month she would have to leave. Annie's mom is 73 and she just went into a care facility due to a mental breakdown and her cost in Fargo ND is $4k per month. Location, location, location. Expect that in the future most of the "affordable" care facilities for aged parents to be in rural locations 4-6 hours from where you live.

If Annie's mom was still estranged from her offspring she would likely be living in her car right now.

When I talk to my mom, at least once a week in her lucid moments, she posits that she wishes she were dead. My dad and most of her friends are gone. Her mind is gone and is always making her miserable/frightened with wild anxiety and imagined threats. She feels like she has outlived the joy in her life. There is no cure and little relief for alzheimers. But our society and her religious beliefs do not allow for her to check out on her own terms. She tells me she prays every day for God to take her. I ask her if she has ever thought of taking a different approach. Instead of praying, just look up to the heavens and give that petty fucker both your middle fingers and tell him to "FUCK YOU, FUCK YOU!, FUCK YOU!". She looks at me in shock, "Ooh I couldn't do that, it would be bad". Me: "So wut's the worst that could happen? He sends down lightning bolts and blows you off the face of the earth? Afterwards you splain to St Peter that you have dementia and he can't take the shit you say seriously, he should let you into heaven based upon those mitigating circumstances." This makes her laugh every time, she has no recollection of how many times I have told her that plan.

And the corporation that owns the facility has a six figure annual revenue vested interest in keeping the paying body upright in spite of what her soul wants.

But back to the topic at hand.

Millenials can't afford to buy a house and GOD DAMN IT they deserve to own a house if they want to!

Housing should just be cheaper wherever they want to be!

AND all of this is Joe Biden's fault! Vote trump, he loves you and cares for you. He will solve this problem for everyone right after he gets done punishing everyone who was disloyal to him.

My millennial daughter just moved to SF. She knows she will likely never be able to afford a single family residence in the Bay Area in spite of her higher than average salary. But she didn't move to the Bay Area to own a home; she moved there for the lifestyle, the views, the people. She weighed all of the costs and benefits and is happy with her decision.

Hard to put this moment in a smaller box with a tighter bow.

So, thanks, jackass.

[japhy]

I do what I can.

[japhy]

Evil corporation doing what evil does, adapting.

PHOENIX - With home interest rates hovering at around 7.5%, home sales are slowing.

However, new home builders are booming in the Phoenix area, as they try to appeal to buyers priced out by high interest rates they face when buying existing homes.

"It's something that I never thought would happen so soon, especially right now," said new homebuyer Natalia Piñon.

At 29, Piñon bought a new home in March with her fiancé at Marabella Ranch in Glendale.

The price for the roughly 1,400 square foot home? $376,000

Piñon said Lennar Homes made the home affordable, and Alan Jones with the homebuilder said that is their goal.

"So, if we can get the payments down close to what rents are, if we can get payments down, we're finding tremendous amount of individuals that want to buy homes from us," said Jones.

Piñon said Lennar made an offer they couldn’t refuse: an interest rate of 3.99%, for the life of the 30-year loan. That put the couple's payment at about $2,500 a month.

"This is our first home, and when we got the estimate of the mortgage, we were like ‘that’s what were paying on both of our apartments. Easy peasy,'" said Piñon.

Jones said Lennar’s new homebuyer program offers 5.5% interest rate for those using Lennar mortgage. Jones also said what they lose in profit, they expect to make up for in volume of sales.

[jfish26]

Evil corporation doing what evil does, adapting.

PHOENIX - With home interest rates hovering at around 7.5%, home sales are slowing.

However, new home builders are booming in the Phoenix area, as they try to appeal to buyers priced out by high interest rates they face when buying existing homes.

"It's something that I never thought would happen so soon, especially right now," said new homebuyer Natalia Piñon.

At 29, Piñon bought a new home in March with her fiancé at Marabella Ranch in Glendale.

The price for the roughly 1,400 square foot home? $376,000

Piñon said Lennar Homes made the home affordable, and Alan Jones with the homebuilder said that is their goal.

"So, if we can get the payments down close to what rents are, if we can get payments down, we're finding tremendous amount of individuals that want to buy homes from us," said Jones.

Piñon said Lennar made an offer they couldn’t refuse: an interest rate of 3.99%, for the life of the 30-year loan. That put the couple's payment at about $2,500 a month.

"This is our first home, and when we got the estimate of the mortgage, we were like ‘that’s what were paying on both of our apartments. Easy peasy,'" said Piñon.

Jones said Lennar’s new homebuyer program offers 5.5% interest rate for those using Lennar mortgage. Jones also said what they lose in profit, they expect to make up for in volume of sales.

Buy-here, pay-here but for home sales.

Honestly, I don't really see that big of an issue here...except that I'd hope it occurs to prospective buyers in this program that they're highly exposed to systemic rot. Aside from some tax benefits, the whole thing about buying as opposed to renting is that you're building up something of value, particularly in the case things go south for you.

However, that something of value may not be what you want it to be if things go south for you, because the same pressures that cause things to go south for you might be happening to your literal neighbors (who bought their homes at the buy-here, pay-here lot, just like you did and for the same reasons you did, and whose assets' value directly affect the value of yours).

[japhy]

One of the things that will limit this will be the fact that 80% of home construction is done by small independent contractors. They don't have a finance branch like Lennar. The investment security is in the fact that Lennar builds out a whole neighborhood at a time and builds in amenities like parks in their developments. I think during the post war housing boom there were big companies that did these things. And they are building smaller homes. As banks lose market share for mortgages they will get creative in response.

I think looking back at some of these older models for residential construction industry will be a thing in the near term. I know of one developer who is looking to building garden homes that back onto shared backyard space with 1,000 sf units that are geared towards multigenerational cohabitation. To keep the cost down they will use off the shelf metal building construction door the shell. Two workers can "frame" the house shell in two days.

Not many of the millennials saw the worst of the last recession. Annie owned a house in midtown KC. At one point half of the homes on her block were in foreclosure, and two of those had been abandoned. In the addition to that she lost her job and started waitressing on the Plaza and took in a roommate to pay her bills. Her life savings were tied up in an asset that had no value. She is acutely aware of the fragility of home value and approaches purchasing with a lot of research.

In the six years since my daughter graduated from college she has lived in Denver, Chicago and now SF. She has no interest in owning a home. It would tie her down and restrict some choices. She invests her money in something other than real estate. Her life seems pretty good and she seems happy. At her age I owned a fixer upper in the hood and spent my weekends rebuilding the place and trying to find ways to keep the neighbors from breaking in and stealing my tools while I was at work. She is spending her weekends hiking in the Presidio and the redwoods. And she likely has a lot more money in the bank (adjusted for inflation) than I did back then.

Values change, expectations change. There is a lot nostalgia for the "good old days", much of which didn't exist. The trumpers and the Bernie bros are both guilty of it, they just have different memories of what that consists of.

[jfish26]

One of the things that will limit this will be the fact that 80% of home construction is done by small independent contractors. They don't have a finance branch like Lennar. The investment security is in the fact that Lennar builds out a whole neighborhood at a time and builds in amenities like parks in their developments. I think during the post war housing boom there were big companies that did these things. And they are building smaller homes. As banks lose market share for mortgages they will get creative in response.

I think looking back at some of these older models for residential construction industry will be a thing in the near term. I know of one developer who is looking to building garden homes that back onto shared backyard space with 1,000 sf units that are geared towards multigenerational cohabitation. To keep the cost down they will use off the shelf metal building construction door the shell. Two workers can "frame" the house shell in two days.

Not many of the millennials saw the worst of the last recession. Annie owned a house in midtown KC. At one point half of the homes on her block were in foreclosure, and two of those had been abandoned. In the addition to that she lost her job and started waitressing on the Plaza and took in a roommate to pay her bills. Her life savings were tied up in an asset that had no value. She is acutely aware of the fragility of home value and approaches purchasing with a lot of research.

In the six years since my daughter graduated from college she has lived in Denver, Chicago and now SF. She has no interest in owning a home. It would tie her down and restrict some choices. She invests her money in something other than real estate. Her life seems pretty good and she seems happy. At her age I owned a fixer upper in the hood and spent my weekends rebuilding the place and trying to find ways to keep the neighbors from breaking in and stealing my tools while I was at work. She is spending her weekends hiking in the Presidio and the redwoods. And she likely has a lot more money in the bank (adjusted for inflation) than I did back then.

Values change, expectations change. There is a lot nostalgia for the "good old days", much of which didn't exist. The trumpers and the Bernie bros are both guilty of it, they just have different memories of what that consists of.

I do think some bank is going to figure out how to win market share in an environment like this one by doing purchase financings in a two-note structure. One at a principal amount equal to the amount outstanding under a buyer's existing note (and at that existing note's rate), and the other at a principal amount equal to the balance of the new purchase (at market rate).

For example, say I owe $250k on my existing note at 3%, and want to borrow a total of $400k to buy a new house. Someone is going to figure out how to roll that $250k forward at 3%, and have a second (sister) note for $150k at 7%. The same mortgage would cover both notes. Or there could be two mortgages. Whatever.

The point is that a bank that figures this out would OWN this present sort of environment.

[japhy]

I think the assumable loan would be a crowd pleaser.