22 Blue - Looking ahead to the New (aka Fuck Summer (aka Tahoe Thread))

[lepistoir]

Don't worry, the recession and mini housing collapse (mini compared to 2008) is coming. Just wait it out.

I would make a bet with you, but this is hard to quantify. We don't have over-leveraged owners about to lose liquidity and go into foreclosure en masse so there's no Crash coming in real estate. I think it's more likely we see cash buyers swooping in and further constraining supply while turning more of us into lifelong renters. These developments are going to make things more expensive. Interest rates are never going back where they were last year. I don't see these "inflation-fighting" measures doing anything except slowing down RE for a year and disciplining labor, which is the real purpose.


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[gimpy]

I’ll agree with lepistoir here……there will not be a huge real estate collapse. The stock market is tanking and real estate is still the best place to store wealth. Anyone who can afford to hold on to their holdings will continue to do so…….especially now with interest rates going up it makes no sense to let go of any older all time low rates that were locked in the last few years until recently. I’ve been waiting on the sidelines myself and don’t see that changing anytime soon

Sooooo…..is electric now favorable to gas for heating? I was not aware of that if so.

[J. Barron DeJong]

I would make a bet with you, but this is hard to quantify. We don't have over-leveraged owners about to lose liquidity and go into foreclosure en masse so there's no Crash coming in real estate. I think it's more likely we see cash buyers swooping in and further constraining supply while turning more of us into lifelong renters. These developments are going to make things more expensive. Interest rates are never going back where they were last year. I don't see these "inflation-fighting" measures doing anything except slowing down RE for a year and disciplining labor, which is the real purpose.


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Calculated Risk blog is tracking South Lake market:



https://www.calculatedriskblog.com/2...oe-in.html?m=1

How are you defining crash?

Happy to act as an intermediary in your guys bet while it plays out. I’d invest the money in Bitcoin while we wait for it all to play out. That way there will be so much extra cash at the end that even the loser of the bet can be turned into a winner! (I’ll only take, say, 20% off the top for services. Not bad, really.)

[TahoeJ]

Well as a home owner in Truckee I don’t really want to bet on a downturn… seems like a poor way to hedge! I agree that the pricing of real estate pre pandemic is likely never coming back but I think we will see some corrective adjustment in the next few years.

[J. Barron DeJong]

seems like a poor way to hedge!

You must have skipped over the part about Bitcoin…

My guess is that prices come down significantly from the Covid high, but not below the pre-Covid prices (adjusted for inflation). Is that a crash?

Not betting though.

[lepistoir]

According to the graph, a correction is happening currently, but inventory is still super tight compared to previous seller's markets.

Now where are you seeing that Bitcoin is making a comeback???

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[lepistoir]

Well as a home owner in Truckee I don’t really want to bet on a downturn… seems like a poor way to hedge! I agree that the pricing of real estate pre pandemic is likely never coming back but I think we will see some corrective adjustment in the next few years.

Serious question here. As a hoe moaner, what effect does a downturn have on you? If you're not selling anytime soon, and don't live on credit from home equity loans, does a (assuming) 1-4 year downturn have any effect on your life?


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[J. Barron DeJong]

Now where are you seeing that Bitcoin is making a comeback???

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Heh. Nowhere. Hoping that crashes and burns once and for all.

Median sell price is still up from a year ago, but that looks likely to change soon. I assume median sell prices have started coming down already, but a little difficult to parse from that chart, and no link to the actual data.

[Truckee Joe]

What I learned from my rich friends. ‘Buy something of good value and never sell.’ Nothing is more valuable than clean water, air and open spaces. And of course deep POW.


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[shaft]

I’ll agree with lepistoir here……there will not be a huge real estate collapse. The stock market is tanking and real estate is still the best place to store wealth. Anyone who can afford to hold on to their holdings will continue to do so…….especially now with interest rates going up it makes no sense to let go of any older all time low rates that were locked in the last few years until recently. I’ve been waiting on the sidelines myself and don’t see that changing anytime soon

On real estate, especially in the mountains, I tend to agree. There is no inventory, and making loans harder won't magically create inventory. Since 2008, we never started building at pre-crash levels. The AirBnB impact on mountain towns is stark, and the WFH impact, which has been looming, hit all at once. Not sure about prices, but the housing crisis looks like it will continue.

Sooooo…..is electric now favorable to gas for heating? I was not aware of that if so.

Yes. The Inflation Reduction Act is the first federal statement on this - but there has been general consensus in the climate action community slowly building since the mid 2010s.

Why electric is the only path: Burning fossil fuels is not a path on the end of fossil fuel use. Electric plus carbon free (the Norweigan model) is a path to zero carbon. Gas, quite simply, is not.

The grid is getting greener faster than you think: A handful of countries and hundreds of cities are already zero carbon electricity. I've been in the green building and cities space for 15 years, and the renewable supply is actually kicking ass. Many markets are a decade ahead of their earlier targets. I just saw a presentation on 24/7 carbon free electricity (every hour of the year matched to supply,) that blew my mind. It's not that expensive to get to 99% of hours matching. Like up to 2% extra cost - maybe zero. Some will be there by 2025. I can share if you're really interested.

Emissions from gas have been historically undercounted: We are finding that methane leaks leaks upstream, especially during extraction, mean that we have been underestimating the greenhouse gas emission impact of "natural" gas use by 30-200%. I give a range for two reasons:. Firstly, it depends if you use the 100-yr or 20-yr GWP of methane. Second, we only started seriously measuring the leakage over the last decade.

Electric is lower cost to operate: In order of cost to operate - Free wood is cheapest, followed by heat pumps, followed by gas, followed by old-school electric baseboard. The variation in cost depends on local market. The move to "cheaper gas" was mostly from old-school electric baseboard.

Big Oil tricked many people with good intentions: I see it every day, and I see it from leaders in the space - including many green building folks from 1990-2015. They have pretty much all come around, but acted as megaphones telling you to use gas based on misinformation. It was sort of always a dead end - but people bought it. The good thing about gas is the much lower (but non-zero) levels of NOx, SOx, and particulates. From a CO2e perspective it is very similar to coal/diesel, and worse when considering methane leakage. I apologize on behalf of those in my industry for misleading away from the obvious.

To put it simply, if you think electric cars make sense, then electric buildings are the same fkn thing.

[old goat]

IMO electric heat makes MORE sense than electric cars, unless you can figure out how to drive with really really really long extension cords. Hey, there's an idea--put wires along all the roads that people can connect to--like trolleys.

Shaft--where does heat pump hydronic fit in price and efficiency compared to heat pump forced air. And I guess if you have hydronic that's also your hot water?

[powdork]

IMO electric heat makes MORE sense than electric cars, unless you can figure out how to drive with really really really long extension cords. Hey, there's an idea--put wires along all the roads that people can connect to--like trolleys.

What was the range of the first ICE vehicles? How much has that improved in the last 114 years? It will not be long (in that sort of time frame) before the range of electric cars surpasses that of internal combustion.

[old goat]

What was the range of the first ICE vehicles? How much has that improved in the last 114 years? It will not be long (in that sort of time frame) before the range of electric cars surpasses that of internal combustion.

I don't have much time to wait.

[powdork]

How much more than 520 miles do you need (assuming you have a coll $180k to drop on a Lucid Air)?

[TahoeJ]

Serious question here. As a hoe moaner, what effect does a downturn have on you? If you're not selling anytime soon, and don't live on credit from home equity loans, does a (assuming) 1-4 year downturn have any effect on your life?

The specific details are way too complicated to explain in detail here as there was a divorce involved, my ex buying me out of our other home and so forth. But put simply, yes and no. The value there compared to the outstanding mortgage balance and having the ability to borrow against it in a pinch or just carry an equity line because the nature of my primary income is sporadic and there are cash flow issues at times... stuff like that. Hopefully it wouldn't matter but it's one aspect of a safety net, especially with three kids who will be going to college sooner than later. But yeah, I have no interest in selling the home anytime soon because I love the location so for the most part it's irrelevant in the relative short term.

[powdork]

Some folks may have variable rate mortgages and higher rates combined with less income for 4 years could force a sale at unfavorable terms.

Rentals are expensive but there are many available. I just signed a lease on the west shore which would have been nearly impossible last year.

[shaft]

Some folks may have variable rate mortgages and higher rates combined with less income for 4 years could force a sale at unfavorable terms.

Rentals are expensive but there are many available. I just signed a lease on the west shore which would have been nearly impossible last year.

That's really good to hear. Congrats!

Shaft--where does heat pump hydronic fit in price and efficiency compared to heat pump forced air. And I guess if you have hydronic that's also your hot water?

I would say hydronic heat pump space heating is going to come out slightly more expensive. A good price, in Tahoe for the 'standard' system types might be:

• Central, cold climate, heat pump space heating - $25k if you are replacing your existing central furnace and re-using ductwork. This would be for a system that doesn't ever use gas. For $20k, you could add a heat pump that switches to gas when it is 40F or below outside. You get a $3k rebate from the state. That will sunset when it runs out, but SW Gas territory still has money in the coffers.
• Heat pump hot water - you are looking at $6-8k depending on location and electrical. you can offset that cost almost entirely between Truckee's $3k rebate and the state's $3k rebate.
• Total - $31k. $22k after current rebates.

Hydronic could either mean you use water in the coil in your air system, or water in the floor. Honestly, the efficiencies are going to be fairly similar to the other type of system. Systems like Space-pak, Harvest Thermal, and Chilltrex all offer combined hot water and space heating. Space-pak is installed locally and works down to low temps. I don't have a price, but I bet it's like $30-40k up here depending how they get it in your floor if you are going underfloor. They will do cooling, water heating, and space heating all on one outdoor unit. You can probably access all rebates listed above. Total, $9k

Hydronic vs. Air-side? I love hydronic heat and cooling, and have designed many buildings using that system type. If I had endless money and was building a new house, that's what I would build just to walk barefoot on a warm floor. However, my general design ethos is to keep systems simple and off most of the time. Spend the other dough on solar and insulation, etc. When I design net zero buildings, that's my usual approach. The crazy shit is hard to maintain. Tahoe is unique in that many people can maintain hydronics here. That's a rare circumstance.

I want to say I have seen A LOT of data statewide on costs. I've seen maybe 5 quotes on heat pump space or water heating up in Tahoe. Definitely the most expensive installed system prices I have ever seen...and coastal cal is already way more expensive than the EC. This whole effort to electrify is going to be a total pain in the ass. Tax. The. Rich.

[old goat]

Don't tax you. Don't tax me. Tax that guy behind the tree.

I suspect that one reason for high prices here is that contractors have all the work they can handle and would rather install what they've been doing for years. For the most part contractors here will learn new stuff when they have no choice.

[mogul5480]

Prices ain't going down meaningfully any time soon. It will be easier to buy if you have all cash, thanks to higher rates, but the only thing that makes price go down is more supply (nope) or less demand (maybe - if we unwind remote work - also nope). Also, rents will continue to rise, but moreso in affordable large markets than luxury spots like Tahoe.

[J. Barron DeJong]

Prices ain't going down meaningfully any time soon. It will be easier to buy if you have all cash, thanks to higher rates, but the only thing that makes price go down is more supply (nope) or less demand (maybe - if we unwind remote work - also nope). Also, rents will continue to rise, but moreso in affordable large markets than luxury spots like Tahoe.

The fact that ‘active inventory’ in South Lake is 5x the pandemic low suggests some combination of increased supply/reduced demand, and prices are on a downward trajectory. How far they’ll they go is TBD…

Also, rents nationally have been going down for a while now.

[old goat]

There has been a lot of multifamily housing built around Truckee in the last few years compared to years past. It certainly has been visible. OTOH a lot of luxury housing in places like Martis Camp has been built and isn't visible unless you can get through the gate.

[mogul5480]

Definitely tech(nical analysis) talk situation here, so sorry for the thread diversion, but that chart is of the change in rent, not it's level. That's not rent going down, it's the rise of rent decelerating.

In other words, rent is still rising, just doing so more slowly.

[J. Barron DeJong]

Definitely tech(nical analysis) talk situation here, so sorry for the thread diversion, but that chart is of the change in rent, not it's level. That's not rent going down, it's the rise of rent decelerating.

In other words, rent is still rising, just doing so more slowly.

Shit. My bad.

Rents apparently did start going down in September though:

[mogul5480]

Yes that is true. It's also pretty normal due to seasonality. As you can see from that chart, last year was actually the anomaly, because rent did NOT go down in September (you can see rents went lower Sept - Jan all the other years). Prices go down seasonally too. It's just a function of the main selling season being over bc families get locked into school districts and then the holidays start.

Now that said, what you're suggesting (that rents are actually going to go backwards a bit BEYOND just what seasonality indicates) may still be true. Rents have run so far so fast recently that it's entirely possible that they are overdue for a breather. Rent is not supposed to grow this fast, and all things must come to an end. Especially if we get a hard recession soon.

We won't know until next summer though whether that's true, and my personal opinion, for whatever that's worth, is that any decline in rent will be short-lived.

[PB]

Enough talk of the future and its potential problems, time to return to the glory that is now.
Shirley y'all must be experiencing a spectacular Fall up there, as it's the best one we've had in the Valley in many years: good air quality, perfect temps, etc. That early rain really set the tone. Haven't enjoyed Fall this much in it seems like forever.