The housing market just slid into a full-blown correction

[GnauzBookOfRhymes]

People paying 2x on their monthly mortgage today vs 2 years ago is certainly a big factor, if not the biggest.

What do you mean 2x their monthly mortgage?

Most local market slowdowns will be due to:

1. First time homebuyers that can afford to buy but are just much more financially self conscious. These are your young couples who might live in a condo and only have one kid. Yes they want a house and the extra space, but they actually like where they live and another year or two doesn't bother them.

2. People who were looking to sell but are now spooked by all of the news about a coming downturn and decided they don't want to deal with the hassle of getting the house ready to sell etc.


That being said, for people in #1 if the right house comes along they will absolutely pull the trigger. Higher interest rates don't affect your mortgage payments as much as some people may assume over the short term. And again, once rates go down people will just refinance.

 

[Jcotton1]

on some real shyt there is so much livable land in America it’s crazy. From places like Gary Indiana to the middle of no where Montana. All these places are livable..

Montana and Idaho are dope places. I like the outdoors and I don't mind being the only breh around. Thing is folk wanna take Detroit, Newark , Chicago etc etc culture and bring it there. Why cry about living in a place yet u move and bring that same attitude, ways of living with you and throw off the balance of the new place.


If people can't afford better they should stay out in whatever housing they have.

 

[ogc163]

Outside of the housing bubble that led to the GFC, this is the worst affordability since 1991. That’s according to Bill McBride, who shares this terrific yet awful chart on his substack.

With prices surging alongside interest rates, we’re finally starting to see some relief out there. Mike Simonsen shows that for the last six weeks, we had fewer percent of listings as immediate sales; down to 23%, from a peak of 33% towards the end of last year. As Mike said, “the real estate frenzy is over.”

Things are still wild out there, but they’re no longer insane. We used to have 50 bidders for every asking price, now it’s down to just 5.

Finally, we’re seeing price drops in what were some of the hottest housing markets last year. In Boise, where home prices rose 62% in the past two years, 41% of sellers dropped their price in April. Nationally, 5% of homes have dropped their price on average over the last four weeks, which is the highest pace of cuts since 2019.

My friend Logan Mohtashami has been calling this the savagely unhealthy housing market for a couple of months. We’re still red hot, but we’re no longer scalding. It’s a start.

The Real Estate Frenzy is Over - The Irrelevant Investor

Finally, some relief in the housing market

theirrelevantinvestor.com

 

[dora_da_destroyer]

on some real shyt there is so much livable land in America it’s crazy. From places like Gary Indiana to the middle of no where Montana. All these places are livable..

it's not economically nor environmentally viable to simply just sprawl into every inch of "livable" space - where are the jobs for this new town of 6,000 people? how much does building infrastructure and connecting utilities to middle of no where montana cost? what's the environmental impact of tearing down forests or invading into wild life spaces? how do you provide water to these new towns with the smallest waste? if it were as simple as build a new town in bum fukk no where, we wouldn't have a housing shortage

 

[Serious]

We got plenty of room here in TX, only liberals need apply

@TEXAS IS FULL

 

[Voice of Reason]

is?

 

[ill]

What do you mean 2x their monthly mortgage?

Most local market slowdowns will be due to:

1. First time homebuyers that can afford to buy but are just much more financially self conscious. These are your young couples who might live in a condo and only have one kid. Yes they want a house and the extra space, but they actually like where they live and another year or two doesn't bother them.

2. People who were looking to sell but are now spooked by all of the news about a coming downturn and decided they don't want to deal with the hassle of getting the house ready to sell etc.


That being said, for people in #1 if the right house comes along they will absolutely pull the trigger. Higher interest rates don't affect your mortgage payments as much as some people may assume over the short term. And again, once rates go down people will just refinance.

I was basing my 2x off an article I read but i just went back and double checked the numbers on a mortgage calculator and the interest rate increase is adding 15-25% to monthly mortgages, not 2x. I think the 2x figure came in when comparing the same home two years ago to buying it in todays market but could be misremembering it.


As far as your last line, interest rates aren't guaranteed to go down and the previous decade or two of extremely low interest rates was unprecedented.

 

[Sir Richard Spirit]

These places don't have amenities, adequate transportation, and culture.

You are absolutely right..So what? That’s why you develop a town no? That’s why towns draw up master plans. To reach those goals.

You've obviously never been to Gary, Indiana or the middle of nowhere in Montana.

I actually was in Gary last weekend.

Montana and Idaho are dope places. I like the outdoors and I don't mind being the only breh around. Thing is folk wanna take Detroit, Newark , Chicago etc etc culture and bring it there. Why cry about living in a place yet u move and bring that same attitude, ways of living with you and throw off the balance of the new place.


If people can't afford better they should stay out in whatever housing they have.

it's not economically nor environmentally viable to simply just sprawl into every inch of "livable" space - where are the jobs for this new town of 6,000 people? how much does building infrastructure and connecting utilities to middle of no where montana cost? what's the environmental impact of tearing down forests or invading into wild life spaces? how do you provide water to these new towns with the smallest waste? if it were as simple as build a new town in bum fukk no where, we wouldn't have a housing shortage

What you’re saying has nothing to do with what I said. I said there was livable land all over America. It’s up to governments and developers to handle the rest. If Facebook builds a data center in some random place in Montana the city would explode.


They run utilities on the Ocean floor. You worried about how they going to get them to Montana?

 

[dora_da_destroyer]

You are absolutely right..So what? That’s why you develop a town no? That’s why towns draw up master plans. To reach those goals.



I actually was in Gary last weekend.




What you’re saying has nothing to do with what I said. I said there was livable land all over America. It’s up to governments and developers to handle the rest. If Facebook builds a data center in some random place in Montana the city would explode.


They run utilities on the Ocean floor. You worried about how they going to get them to Montana?

do you think the things i just named aren't the issues govt and developers have to overcome to create a town out of no where?

and i don't think you know what a datacenter is, at most it's a ~100 humans needed for it and they are serviced by people who live in existing small towns, this is not creating a boom town

and let's see, laying pipes/wires across an ocean floor is no where near the same as what's need to run these projects over land - keystone pipeline ring a bell?

 

[ogc163]

You are absolutely right..So what? That’s why you develop a town no? That’s why towns draw up master plans. To reach those goals.



I actually was in Gary last weekend.




What you’re saying has nothing to do with what I said. I said there was livable land all over America. It’s up to governments and developers to handle the rest. If Facebook builds a data center in some random place in Montana the city would explode.


They run utilities on the Ocean floor. You worried about how they going to get them to Montana?

There are obvious and considerable constraints and nothing you wrote provides probable solutions to those constraints. And so you basically came through with a shallow hot take.

 

[Sir Richard Spirit]

do you think the things i just named aren't the issues govt and developers have to overcome to create a town out of no where?

and i don't think you know what a datacenter is, at most it's a ~100 humans needed for it and they are serviced by people who live in existing small towns, this is not creating a boom town

and let's see, laying pipes/wires across an ocean floor is no where near the same as what's need to run these projects over land - keystone pipeline ring a bell?

I’m confused… I was talking about livable land.. I’m not sure what’s the confusion? You think the government and developers can’t develop what they want? You think the government of American can’t get running water or electricity all through Montana? Is this a joke? I’m talking about livable land.. meaning places that people CAN live on. You CAN live in Montana. It’s up to the government and developers to make it happen.


Why you so stuck on Montana? I also said Gary.


Do you just want to argue?

 

[GnauzBookOfRhymes]

I was basing my 2x off an article I read but i just went back and double checked the numbers on a mortgage calculator and the interest rate increase is adding 15-25% to monthly mortgages, not 2x. I think the 2x figure came in when comparing the same home two years ago to buying it in todays market but could be misremembering it.


As far as your last line, interest rates aren't guaranteed to go down and the previous decade or two of extremely low interest rates was unprecedented.

Interest rate policy is usually determined by politics. The most recent increases happened only bc inflation was seen as the bigger problem. At some point the rates will go down.

 

[Kenny West]

1. Defaults are not from ppl who have been buying in last couple years (when market heated up). These are people who were struggling even before pandemic.

2. The people in the market nowadays generally have money/good jobs/great credit etc. They won't have trouble getting financing.

3. To me, interest rates, when it comes to houses, aren't really fundamental to the question of whether a family wants to buy a home. It is definitely a factor. But fundamentals to me are things that affect the underlying activity - something that will make people no longer want to live in their own home. For a few years after the crash many ppl thought that the market was forever changed bc of a fundamental shift in people's desire to own a home. In retrospect even that wasn't a fundamental change - it was moreso a reflection of people's belief that 1) homes were not foolproof investments and 2) that they may never actually be able to buy a home (this one is very prevalent today).

1. Aka investing firms. Regular people (aka the majority of the market by number) are already starting to buckle in these economic condtions, many with debts still deferred. Who will be buying from the firms for them to be making profit? Ask zillow how that works. They smashed against the ceiling and the market only inflated more afterward.

I mean unless you think they're going full throttle with this nation of renters shyt this aint sustainable

2. These are a shrinking minority of americans you expect to carry the market through a likely recession? Their credit wont be the problem, it will be the not willing to lend due to market conditions.

3. I mean fundamentally everyone needs a place to live so there will always be demand from that alone but idk how that gets reconciled with how much this market is being propped up by money market bullshyt that will inevitably implode again

 

[KingofthePenguins]

Montana and Idaho are dope places. I like the outdoors and I don't mind being the only breh around. Thing is folk wanna take Detroit, Newark , Chicago etc etc culture and bring it there. Why cry about living in a place yet u move and bring that same attitude, ways of living with you and throw off the balance of the new place.


If people can't afford better they should stay out in whatever housing they have.

Sounds as if you were raised in the gutter

 

[ItsPeople]

You are absolutely right..So what? That’s why you develop a town no? That’s why towns draw up master plans. To reach those goals.



I actually was in Gary last weekend.




What you’re saying has nothing to do with what I said. I said there was livable land all over America. It’s up to governments and developers to handle the rest. If Facebook builds a data center in some random place in Montana the city would explode.


They run utilities on the Ocean floor. You worried about how they going to get them to Montana?

99% of towns were built to service railway expansion back in the day. There has to be some kind of industry to warrant people to live there like your example with Facebook.

Unless you’re going to build a work from home city or an exclusive city for the rich, random subdivisions aren’t going to appear out of thin air.