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  1. #20901
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    I was impressed when our roofers came back to clean up 2 errant nail strips that fell into a tree next to the house 6 days after the job. I had just been to lazy to fish them out and one of the crew drove by with a stepladder to grab em.

  2. #20902
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    Quote Originally Posted by Kevo View Post
    Mortgage rates today make a $500k loan balance $800/month more expensive than it was at the end of last summer. That's significant money to the average American family. That's what- a car payment or an extra couple bananas at the grocery store?

    Pure speculative predictions on where we go from here-

    -Demand cools off this summer as mortgage rates melt upward and people get priced out. News stories will read something about the "market reaching equilibrium" as days on the market go up across the county. There will be quotes from experts about how things are fine because the buyers in the past couple years have been so well qualified.

    -later in the year, non-profitable companies with high burn rates (pretty much every early to mid stage "growth" company) start to run out of runway. These companies have been fueled by cheap money and haven't had to worry at all about profitability. With interest rates high, money from private and public markets is running dry. Companies are forced to cut costs. Layoffs ensue. Some companies fail. The pool of qualified buyers is reduced.

    - Q3 and Q4- Commodity markets are still fucked. High fertilizer costs and climate change induced drought causes crop production globally to go down. Poor countries go hungry. Inflation is still running high. The federal reserve can't quickly lower rates to help shore up the employment rate or inflation will really take off.

    -Q1 and Q2 2023- Builders who built mediocre houses in 2nd and 3rd tier metros at $500 or $600 per square foot can't find qualified buyers at 7% 30 year interest rates. Bankruptcies ensue. Layoffs continue. Unemployment goes up. Days on the market goes up. Renters start to fall behind. "Is there a real estate slowdown?" news stories start to become more prevalent.

    -Q3/Q4 2023- New "first time buyer tax credit" get bounced around in congress?
    So, therefore there's going to be a ton of people underwater or near underwater for at least a decade.

  3. #20903
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    Quote Originally Posted by dan_pdx View Post
    You forgot to add: Q1 2024, dan_pdx buys a fucking house in Bellingham for 15% less than owners paid (in cash) in summer 2021, thank you very much
    Fuck yeah. Can't wait to see all these underwater stupid fucksticks trying like mad to sell sell sell.

  4. #20904
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    Quote Originally Posted by Benny Profane View Post
    So, therefore there's going to be a ton of people underwater or near underwater for at least a decade.
    Too bad so sad.

  5. #20905
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    Quote Originally Posted by Benny Profane View Post
    So, therefore there's going to be a ton of people underwater or near underwater for at least a decade.
    Well since you (and probably 10 million other people) are sitting on a bunch of cash ready to buy that place in Breck "on the cheap["....probably won't happen.

  6. #20906
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    Quote Originally Posted by RootSkier View Post
    Yeah, tell me when the Rootskier family picks back up the cast-off architectural plans that they paid out the ass for and then abandoned when everything went crazy and the estimates went up by over 75%.
    the bottom really needs to fall out to see construction prices drop like black hole bottom fall out
    I mean in some places there will be shitty trades people "looking for work" you get what you pay for
    lumber may come down but hey it was around 25 for osb in sept oct now it's 50 a sheet they are going to squeeze what they can and make people pay so it'll be 80 by july

    manufactured lumber products like I joists lvl glu lams windows etc will never come down unless a black hole occurs
    steel? let me know how bringing back those real tough guy american jobs is working out for everyone country music may sing about bailing hey and working on the farm but white men don't want to do hard work

    labor will never drop where I live labor is so fucked no one with any basic skills will lower their rates but hey the guys driving over an hour from some sorry far away mess of town might drop their rates

  7. #20907
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    Quote Originally Posted by liv2ski View Post
    Not sure about a 7% 30 year fixed, as I doubt Powell will go full Volcker on inflation. If anything I am suggesting to clients that a recession is likely this year and likely lower rates down the road, so get a low cost loan today and refi when rates are lower.
    How much of mortgage rare rises are due to the federal funds rate going up and how much are due to the federal reserve stopping the purchase of MBS?

    I think there may be scenarios where the funds rate is at or below 2.5 percent and mortgage rates are north of 6%. In particular, I'd expect that a purely public MBS bond market during times of high inflation to diverge significantly from a historical correlation to a 10 year Treasury rate, even more so if the federal reserve starts to sell MBS that they currently hold on the balance shee. E.g. Fed funds rate recently went to 25 basis points while mortgage rates have almost doubled and the Fed hasn't even begun to sell MBS.

    There's a lot I don't know though. I have a casual interest in the bond market and I probably have a lot of blind spots in my understanding.

  8. #20908
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    Kevo, my memory sucks for stuff I really am not paying attention to, but I remember the 10 year T Bond at .50% and doing a 30 Year fixed at 2.50% with a rebate to the client for all costs, so likely was closer to 2.25% at par? Now the yield is about 2.50% and the 30 year fixed is about 4.75%, so the spread has widen from where it was. Maybe that is due to the slow down in MBS purchases? Bottom line, I do see a recession for a variety of reasons, so typically rates would go down, but we will see.
    Quote Originally Posted by leroy jenkins View Post
    I think you'd have an easier time understanding people if you remembered that 80% of them are fucking morons.
    That is why I like dogs, more than most people.

  9. #20909
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    Quote Originally Posted by fastfred View Post
    labor will never drop where I live labor is so fucked no one with any basic skills will lower their rates but hey the guys driving over an hour from some sorry far away mess of town might drop their rates
    I remember in 2009 and for awhile after when good carpenters couldn't find a job at $15/hour.

  10. #20910
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    The builders I know here could get a lot more work if they could get more people but there aren't any.

  11. #20911
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    Real Estate Crash thread

    As long as the ARM rate stays below 4 it won’t affect housing much. Currently at 3.75 or so APR.

    New homes could get a boost with builder rate incentives later this year.

  12. #20912
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    Quote Originally Posted by RootSkier View Post
    I remember in 2009 and for awhile after when good carpenters couldn't find a job at $15/hour.
    this in only my uneducated opinion and I could be really wrong but

    never will see that happen again people now have self worth that they didn't have ten years ago some monkey makes 6 figures a year hitting enter on the computer and clicking a mouse all day yet the poor sap working at the quikie mart makes 10 bucks an hour people aren't getting out of bed anymore for that shit and I don't blame them people are seeing this every day and they don't understand the difference in wages and they want good money too


    the trades have been decimated no immigration (legal or illegal) boomers jumping ship or retiring kids don't want to work hard deal with the hazing so they rather rack up student loan debt with no path to a solid job to pay them off just rather complain about all their student loan debt I can teach a kid skills for life that will pay well in a few years but they don't want that it's too hard and whats left are people like me once things slow down I'm out the door too not interested in lowering my rates not interested in making ends meet I have penty of other things I need to accomplish in life and even the most dirt bag inbred trades person is saying the same thing so good luck

    if all the people waiting in the wings for things to come crashing down to they can snap up prime property on the cheep and get the new house built for a lower price are just waiting around that means there is demand still and as long as there is demand prices won't adjust even alittle

  13. #20913
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    I’ll go down the street and tell the crew of illegals that the stoned poseur says they don’t exist and labor costs are never going down

  14. #20914
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    Quote Originally Posted by dunfree View Post
    I’ll go down the street and tell the crew of illegals that the stoned poseur says they don’t exist and labor costs are never going down
    how do you know they are illegal? just making assumptions?

    my point is we need a constant flow of illegal and legal immigration to help keep labor costs down for the consumer immigration is at an all time low for this country so the consumer is paying for those policies

    two guys I have known for twenty years now one just finished building his house in summit county and the other is building a house in texas right now they aren't big players or running crews just carpenters who goto work maybe you should check their immigration status if that makes you feel better

  15. #20915
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    Quote Originally Posted by ötzi View Post
    The builders I know here could get a lot more work if they could get more people but there aren't any.
    I just drove from western Montana to southern Utah and the idea that this country is full (apparently a Tucker Carlson talking point) has to be one of the stupidest ideas of all time.

  16. #20916
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    Quote Originally Posted by RootSkier View Post
    I just drove from western Montana to southern Utah and the idea that this country is full (apparently a Tucker Carlson talking point) has to be one of the stupidest ideas of all time.
    Grand illusion. Fill those places up with houses, and then try to supply water to all that.

  17. #20917
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    Quote Originally Posted by fastfred View Post
    how do you know they are illegal? just making assumptions?
    I think we can all guess how he knows they are "illegal".

    Fred has it right: we need more people to do work more than anything. The bottleneck in the system is skilled people, and we're simply not increasing their ranks. I'm routinely the youngest person on a jobsite at 45. We need to allow people who want to work to do so, whether they come from Georgia or Guatemala. Why the fuck wouldn't we? Why is where someone is born such a big deal?

    Oh, and for those who might chime in with the chant of "People need to go through the proper channels / immigrate the right way / do it legally / etc" . Let me say this clearly: THERE IS NO PATH FOR THOSE PEOPLE. There simply is no way for a carpenter from Guatemala to gain a work perrmit in the US, even if I or Fred would happily hire him in a second for $25/hr. Asylum is a joke that requires such an unbelievable burden of proof that it's incredibly rare. If you want there to be a legit path to residency/work for immigrants in the US, call your congressperson.

    He also has it right WRT demand. There are so many people "waiting for things to calm down". These people (and I'm one of them, to some extent), are poised to invest in properties or projects once they perceive the costs to decline a bit, but the only way costs will decline is if all of the "whatever it takes" people let off of the gas for a while and the "waiting" people stay out of the market long enough for us to all get hungry. If the second group just rushes to fill the vacuum, costs won't decline, and material shortages will continue. This is a problem we've been building for decades.

    I'm not sure that I agree that everyone will hold their rates high no matter what. I and many others were making really good money in 2007, and we found our way to doing baseboard or whatever for less in 2010 once we really got hungry. Unfortunately there has to be a lot of pain for that to happen again, and it would do significant long term damage to the industry, just like it did then.

    Boom-and-bust isn't a sustainable pattern for any industry. But rather than really changing the system we always want to go right back to fantasy land as quickly as possible. It happened in 2008-10 and it happened recently with CV, which could have been an opportunity to rethink some things.
    ride bikes, climb, ski, travel, cook, work to fund former, repeat.

  18. #20918
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    ^^ Good post. If you were around here, I'd hire you to do my remodel for sure.

  19. #20919
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    Quote Originally Posted by liv2ski View Post
    Kevo, my memory sucks for stuff I really am not paying attention to, but I remember the 10 year T Bond at .50% and doing a 30 Year fixed at 2.50% with a rebate to the client for all costs, so likely was closer to 2.25% at par? Now the yield is about 2.50% and the 30 year fixed is about 4.75%, so the spread has widen from where it was. Maybe that is due to the slow down in MBS purchases? Bottom line, I do see a recession for a variety of reasons, so typically rates would go down, but we will see.
    Thanks. My understanding is that the fed recently stopped purchasing MBS but that they hold nearly 3 trillion dollars worth of MBS on their books, with a plan to offload those MBS in the future.

    Details here- https://fred.stlouisfed.org/series/WSHOMCB

    So, my hypothesis (admittedly, based on a casual interest and no real expertise) is that there is room for more divergence between the federal funds rate and the 10 year treasury rate and the 30 year fixed rate mortgage rate. Should the fed actually start selling MBS, bond prices would be further suppressed and mortgage rates would further rise.

    My understanding is that the fed started buying MBS after 2008 as a way to prop up the real estate market and prevent a free market apocalypse. Money was tight and private investors would have demanded a much high premium for MBS, which would have spiked mortgage rates and further tanked the real estate market.

    I honestly don't understand the reasoning behind the fed more than doubling their position in MBS starting in March 2020. They went from holding $1.3 trillion in MBS at that time to $2.8 trillion today. That buying frenzy is how we got such drastically low mortgage rates and also a major driving factor in the real estate boom of the past two years that no one seems to be talking about.

    It's exceptionally bad public policy IMHO. Deferral programs made it so no one needed to sell their homes for two years, artificially reducing the supply of housing. At the same time, the federal reserve injected $1.5 trillion directly into the mortgage market and hundreds of billions more indirectly into the housing market through the purchase of corporate bonds and equities that turned into real estate purchases for institutional investors. So, you had actual home buyers (who mostly were qualified) being incentivized to take huge risks with cheap money, competing against institutional investors being incentivized to become corporate landlords all at a time with artificially reduced supply.

    Average, middle class people got fucked because they either couldn't compete with the big money institutional investors or they are about to get fucked because they took too much risk and the tide very much seems to be going out.

  20. #20920
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    Quote Originally Posted by Kevo View Post
    Thanks. My understanding is that the fed recently stopped purchasing MBS but that they hold nearly 3 trillion dollars worth of MBS on their books, with a plan to offload those MBS in the future.
    If you look at duration Fed can simply not rollover maturing proceeds (return to Treasury) and the balance sheet will gradually decline. Active QT will be very gradual unless they decide to get aggressive. That doesn't mean that the bond market won't have a fit regardless.

    The balance sheet is still increasing as of last week.

  21. #20921
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    Quote Originally Posted by climberevan View Post
    I think we can all guess how he knows they are "illegal".

    Fred has it right: we need more people to do work more than anything. The bottleneck in the system is skilled people, and we're simply not increasing their ranks. I'm routinely the youngest person on a jobsite at 45. We need to allow people who want to work to do so, whether they come from Georgia or Guatemala. Why the fuck wouldn't we? Why is where someone is born such a big deal?

    Oh, and for those who might chime in with the chant of "People need to go through the proper channels / immigrate the right way / do it legally / etc" . Let me say this clearly: THERE IS NO PATH FOR THOSE PEOPLE. There simply is no way for a carpenter from Guatemala to gain a work perrmit in the US, even if I or Fred would happily hire him in a second for $25/hr. Asylum is a joke that requires such an unbelievable burden of proof that it's incredibly rare. If you want there to be a legit path to residency/work for immigrants in the US, call your congressperson.

    He also has it right WRT demand. There are so many people "waiting for things to calm down". These people (and I'm one of them, to some extent), are poised to invest in properties or projects once they perceive the costs to decline a bit, but the only way costs will decline is if all of the "whatever it takes" people let off of the gas for a while and the "waiting" people stay out of the market long enough for us to all get hungry. If the second group just rushes to fill the vacuum, costs won't decline, and material shortages will continue. This is a problem we've been building for decades.

    I'm not sure that I agree that everyone will hold their rates high no matter what. I and many others were making really good money in 2007, and we found our way to doing baseboard or whatever for less in 2010 once we really got hungry. Unfortunately there has to be a lot of pain for that to happen again, and it would do significant long term damage to the industry, just like it did then.

    Boom-and-bust isn't a sustainable pattern for any industry. But rather than really changing the system we always want to go right back to fantasy land as quickly as possible. It happened in 2008-10 and it happened recently with CV, which could have been an opportunity to rethink some things.
    no assumption on my part, they work hard and contribute. Politically in the usa the places where immigrants would be the most beneficial are where they are least welcome.

  22. #20922
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    Mar 2005
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    Quote Originally Posted by MCS5280 View Post
    You can import all the undocumented labor you want and it won't make a dent when the fed is recklessly printing trillions to prop up a broken, overleveraged system
    Yep.

    It all comes back to the Not federal reserve

    Brrrrrrrrrrrrr
    . . .

  23. #20923
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    Went through 2001 dot com bustn no problem had plenty of people stopping by the houses I was framing looking for work but I kept busy 2008 was a shock like the start of covid was work didn't start running real dry till fall of 2009 by spring of 2010 it was balls to the wall

    It's been like that for 12 years already looking at 2023 projects no end in site

  24. #20924
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    There is now a way to take out a loan before you buy a property so that you can make what looks like a cash offer. When it closes, the amount is just rolled into a mortgage. It is basically the only way some people can even come close to being competitive in this market. What could go wrong? Ugh.

  25. #20925
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    Quote Originally Posted by Name Redacted View Post
    There is now a way to take out a loan before you buy a property so that you can make what looks like a cash offer. When it closes, the amount is just rolled into a mortgage. It is basically the only way some people can even come close to being competitive in this market. What could go wrong? Ugh.
    The seller will know the source of funds so I don’t see a problem with this. It’s same as private mortgage risk.

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