Real Estate Crash thread

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Originally Posted by Kevo

<snip> whether doing so will throw off their STR cash flow.

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It absolutely will...

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Originally Posted by Kevo

Hearing rumblings that a lot of people with construction loans are screwed because either they won't be able to close on a mortgage following the completion of the house or that closing on a mortgage will be way more expensive and burdensome.

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I think I have mentioned this but we were scheduled for a major, move-out-for-9-months style remodel starting right about now. We pulled the plug in December or January due to constantly escalating prices and a growing concern that it wouldn't get done in that time period due to supply chain issues, and I feel like I have the greatest foresight of all time.

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Originally Posted by Kevo

Hearing rumblings that a lot of people with construction loans are screwed because either they won't be able to close on a mortgage following the completion of the house or that closing on a mortgage will be way more expensive and burdensome.

This Reddit post seems to confirm that- "I started building a house when rates were 3%. Now they're 6% and my monthly payment is over $800 more each month."

A custom house is being built next door to me. The couple building are $1.2MM deep in construction loans and made the decision to move forward when interest rates were sub-3%. They told me they plan to be here a couple months a year and AirBnB the rest of the year. A comparable house down the street came on the market 45 days ago and just reduced their asking price below $900k.

I really wonder if the couple building next door will be able to close at >6% interest and whether doing so will throw off their STR cash flow. Glad it isn't my problem.

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Teton Valley was one of, if not the worst hit, community during the last housing crash. Like 50-80% decreases in value. I was there, it was fucking wild. It happened at least 3x prior to that in the 100ish year history of the Valley.

I hope you like your house because there is a very high likelihood of that happening again. Maybe not 80% but it is going to be messy. TV is a cool place to live, but the vast majority of property is held by people who don't live there full time. They are going to walk if the STR revenue doesn't work. A lot of the full timers are also exclusively tied to the construction industry. They are going to walk if there is no building going on.

A lot of things working against the STRs these days could cause many to take a dive and the owners to sell or go under water. Places like Teton Valley that are far from airports and population centers will be hit harder for sure. If people are dependent on income from these properties to pay their mortgages, they'll be flooding the market. Housing markets might come back down to reasonable levels. Should be interesting. STRs could be the housing bubble everyone has been waiting for.

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Originally Posted by Kevo

A custom house is being built next door to me. The couple building are $1.2MM deep in construction loans and made the decision to move forward when interest rates were sub-3%. They told me they plan to be here a couple months a year and AirBnB the rest of the year.

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Smart money right here

very excited to watch this all unfold
it's gonna be like a great sporting event whose got their pants down around their ankles

on the other hand have plenty of projects booked for 23 still

we can keep looking into the past to find answers but they aint there so look to the future
and if I hear one more boomer telling me how their retirment is tanking my crocodile tears will over flow a tea cup

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Originally Posted by fastfred

<snip> if I hear one more boomer telling me how their retirment is tanking my crocodile tears will over flow a tea cup

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Are they using it as a negotiating tactic? I hope they are... :D

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Originally Posted by AdironRider

Teton Valley was one of, if not the worst hit, community during the last housing crash. Like 50-80% decreases in value. I was there, it was fucking wild. It happened at least 3x prior to that in the 100ish year history of the Valley.

I hope you like your house because there is a very high likelihood of that happening again. Maybe not 80% but it is going to be messy. TV is a cool place to live, but the vast majority of property is held by people who don't live there full time. They are going to walk if the STR revenue doesn't work. A lot of the full timers are also exclusively tied to the construction industry. They are going to walk if there is no building going on.

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Yeah, it's crazy riding my bike around the valley and still seeing dozens of zombie subdivisions from the last crash with 0 or 1 or 3 houses built. I read a Master's thesis that someone pursuing a master's in planning wrote about the housing issues caused by the last crash before buying here. The history is pretty wild.

Luckily I do like my house. It could take a 50% reduction in value before it would be underwater. Who knows though, it could end up underwater.

If a crash does happen I'll be looking to the WY side of the valley for a next home and I'll turn this one into a rental.

I sometimes kick myself for not buying in Alta, but I can't complain too much.

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Originally Posted by Kevo

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If a crash does happen I'll be looking to the WY side of the valley for a next home and I'll turn this one into a rental.

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Talk to @rideit.

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Originally Posted by skaredshtles

Talk to @rideit.

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Yes, the rideit plan except that I want to be in WY on this side of the pass and not the Jackson side.

Meant to also respond to rootskier. Pretty incredible timing there. Bet you are glad you walked away from that remodel.

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Originally Posted by Kevo

Yeah, it's crazy riding my bike around the valley and still seeing dozens of zombie subdivisions from the last crash with 0 or 1 or 3 houses built. I read a Master's thesis that someone pursuing a master's in planning wrote about the housing issues caused by the last crash before buying here. The history is pretty wild.

Luckily I do like my house. It could take a 50% reduction in value before it would be underwater. Who knows though, it could end up underwater.

If a crash does happen I'll be looking to the WY side of the valley for a next home and I'll turn this one into a rental.

I sometimes kick myself for not buying in Alta, but I can't complain too much.

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Kevo, the only things that have caused crashes in my 63 years are major unemployment events and the Liar Loan BS of the early 2000's. It is doubtful enough WFH, construction peeps or what ever walk from their homes to cause a crash like 2007. That leaves an unemployment event. With the unemployment rate at about 3.6%, I don't see a recession being bad enough to really effect housing like the demise of the Defense Industry in San Diego when Clinton was elected. We will see what happens in 2023 as in no more 18% gains YOY but flat to maybe plus 3+.

If you think Unemployment is going to stay at 3.x%, I have an STR in Phoenix to sell you. Even the biggest companies are slowing/stopping hiring. Every company is cutting cash outlays and all expenses which will eventually hit employment figures.

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Originally Posted by phatty

If you think Unemployment is going to stay at 3.x%, I have an STR in Phoenix to sell you. Even the biggest companies are slowing/stopping hiring. Every company is cutting cash outlays and all expenses which will eventually hit employment figures.

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That is not what I said, but thanks for playing.

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Originally Posted by Name Redacted

STRs could be the housing bubble everyone has been waiting for.

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Please this. Fuck those STR dipshits.

lol

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Originally Posted by Kevo

I sometimes kick myself for not buying in Alta, but I can't complain too much.

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What do kids do for middle/high school in Alta? Guessing they can't attend a public school in Driggs since they're not paying any Idaho taxes. Private school?

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Originally Posted by yeahman

Please this. Fuck those STR dipshits.

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Tell us how you REALLY feel.

Agreed. I won't shed a single tear for the folks who bought houses for inflated prices with the sole intent of STR. The can all go bankrupt.

As new home starts crater and mobility and sales decrease this should be long term bullish for house prices (in certain markets) for the same reason (lack of supply) that drove the latest boom.

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Originally Posted by climberevan

Agreed. I won't shed a single tear for the folks who bought houses for inflated prices with the sole intent of STR. The can all go bankrupt.

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Agreed. There’s so much STR pressure here. Rent three months. Otherwise vacant. It’s fubar

Mammoth is STR central. It would warm my cold dark heart to see that stuff implode.

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Originally Posted by ColMan

What do kids do for middle/high school in Alta? Guessing they can't attend a public school in Driggs since they're not paying any Idaho taxes. Private school?

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They have the choice of attending school in Driggs or they can elect to attend schools in Jackson.

Most attend school in Driggs, a few in Jackson and few get shipped off to boarding schools.

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Originally Posted by MCS5280

Smart money right here

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When we built our house in 2018, we locked in our construction and perm rate before we ever broke ground.

Sent from my SM-G998U using Tapatalk

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Originally Posted by Kevo

They have the choice of attending school in Driggs or they can elect to attend schools in Jackson.

Most attend school in Driggs, a few in Jackson and few get shipped off to boarding schools.

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And some home-schoolin’.

I don't think too many people will loose too much sleep if the greasy hustle known as highly leveraged STR gets their house of cards knocked down. Stereotypically, these people are so entitled. They think they are savy business people but when they open their mouths you realize that they never even consider downside risk.

They love to say things like, "you can't do that"...um, yeah we can. Just in the last week I've heard that, "the voluntary watering restrictions affect my curb appeal and cash flow" and "the parking regulations prohibiting street parking are not compatible with my business model" and "I don't think I should have to pay the overage fees on my water bill because it was my renters and I can't control them".

Don't let the door hit you in the ass. And this construction loan mess...what about the Einstein's that are getting a new fancy house build that needs to be paid for by one they have to sell? I know the banks don't want any REO. We will see what happens to the "excess demand".