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Thread: Real Estate Crash thread
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10-08-2021, 11:22 AM #18476
Did someone say peak?
https://www.redfin.com/WA/Bellingham.../home/15837904
The owners died from Mesothelioma
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10-08-2021, 11:24 AM #18477
I think it's a valid question. The responses you have received are "that's the data we have available" and "it shows how housing is unaffordable for most people". And both those responses are true. But they don't go to your point, how this is different than 2008. Housing may be unaffordable and we may reach some sort of bubble/downturn because of that, but what that might look like isn't answered at all by 2008. In 2008, housing was unaffordable for the people owning the homes, such that when housing values took a dive and unemployment rose, people couldn't afford their homes and foreclosures went wild, and things spiraled down.
Now, even if the economy takes a downturn, or housing prices go down, the people owning homes are much more secure in those homes. So sure, we could see a downturn, values could go down, but we won't see anything like the fast spiral downward in 2008. Because when you buy a house for $800k in cash, it doesn't much matter in the short term if it is now only worth $700k, and it doesn't much matter if you get laid off from your tech-bro job."fuck off you asshat gaper shit for brains fucktard wanker." - Jesus Christ
"She was tossing her bean salad with the vigor of a Drunken Pop princess so I walked out of the corner and said.... "need a hand?"" - Odin
"everybody's got their hooks into you, fuck em....forge on motherfuckers, drag all those bitches across the goal line with you." - (not so) ill-advised strategy
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10-08-2021, 11:24 AM #18478
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10-08-2021, 11:31 AM #18479______
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I think Kevo has been sort of getting at this point, which is that home ownership is running away from the average Joe and perma-renting is possibly the future.
I think income inequality plays into this run up in real estate more than we want to admit.
Monthly cost of housing versus income is a valid tool to look at housing affordability, but perhaps not ownership. I think we already know home ownership isn’t affordable for the average or median Joe and it wasn’t before COVID either.
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10-08-2021, 11:32 AM #18480Registered User
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10-08-2021, 11:44 AM #18481
Nah, it was just a poor taste joke way of saying that there's a lot of asbestos there: the siding, the ceilings, the floors...
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10-08-2021, 11:45 AM #18482Registered User
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I wonder about that - I suspect that a reasonable chunk of homes that are cash sales are subsequently refinanced and have a mortgage on them. I think there are buyers who can scrape together $800k for a month or two but don't necessarily have $800k sitting around in cash. Flyhomes works like this too - they pay cash for your house, then you get a mortgage to buy it from them. So maybe there's a little more potential for a fast/big crash than seems apparent.
Holy shit, that's terrifying. No requirement to disclose, I guess?Last edited by dan_pdx; 10-08-2021 at 12:08 PM.
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10-08-2021, 11:54 AM #18483Registered User
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10-08-2021, 11:56 AM #18484
Like I said, bad joke, but they could duck the disclosure items fairly easily by ticking the "don't know" box.
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10-08-2021, 12:05 PM #18485Registered User
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I bummed $ off my family so I could make a cash offer on some land. Wanted to do a 7 day close, all cash to ensure I could scoop it up. Paid everyone back with interest pretty quick. I've offered to do the same for other family members. I keep a Line of Credit on my stocks to have access to about 60% of their value in 48 hrs and a HELOC on my house for the same reason. Trick is not to pull $ out of these unless it's worthwhile.
If somehting pops up, always better to be able to make a cash offer vs a financing contingency even if you have no intention of actually closing w cash or keeping the cash in there long term.
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10-08-2021, 12:07 PM #18486
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10-08-2021, 12:09 PM #18487
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10-08-2021, 12:14 PM #18488
As you all know, first prize is a Cadillac El Dorado. Anyone want to see second prize? Second prize is a set of steak knives. Third prize is you’re fired. You get the picture?
I actually think it's a rental, and this is just an 'if anyone is crazy enough to pay over a million, we'll sell it' situation.
re: tearing it down, in this county it's better not to because the new owner will be treated like a developer, and hit with all of the impact fees. If there's a house there, they can simply "remodel".
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10-08-2021, 12:17 PM #18489
Maybe so. Still, I don't know many median income folks who can pull $800k together for a sale, even if they end up financing it. And the reality is, even if they do subsequently finance, they are still a person with $800k lying around in the event of a big downturn. Which is exactly what wasn't the case in 2008.
Edit: reread your post and realize I have no idea what Flyhomes is or who widespread that is.
Not really, unless I'm not understanding your point. I didn't say a downturn in house prices or the job market would have zero effect. Of course those things are correlated, and a downturn in the job market and house prices would hit the overall market. My point is simply that we saw a crazy rapid downward spiral that fed on itself in 2008, and I don't see the recipe for that right now. That's not saying we won't have any downturn or there won't be any bubble bursting, just that if we see that, it will likely be much slower and less drastic."fuck off you asshat gaper shit for brains fucktard wanker." - Jesus Christ
"She was tossing her bean salad with the vigor of a Drunken Pop princess so I walked out of the corner and said.... "need a hand?"" - Odin
"everybody's got their hooks into you, fuck em....forge on motherfuckers, drag all those bitches across the goal line with you." - (not so) ill-advised strategy
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10-08-2021, 12:20 PM #18490
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10-08-2021, 12:20 PM #18491
I don't get this. How, suddenly, would people not be able to afford their homes in 08 if a bank said, cool, in 06? Fuck, they're underwater, but, whatever, they have a roof, if, they have a job. That was the problem. A severe recession, especially in housing and finance. And job loss.
But then you say we're immune today because of some sort of safeguards from a "downturn". In my book, a downturn is job loss on a large scale. What kind of downturn do you mean?
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10-08-2021, 12:22 PM #18492
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10-08-2021, 12:25 PM #18493
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10-08-2021, 12:28 PM #18494______
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Because they had adjustable rate mortgages that reset and turned something affordable into something unaffordable that they couldn’t sell because the market flooded with homes for sale and it triggered a recession.
Edit - some people got very very rich by identifying and placing large bets on this fact.
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10-08-2021, 12:33 PM #18495
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10-08-2021, 01:01 PM #18496
Oh, yeah, those.
But, if it was a fixed rate, what's the whoop?
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10-08-2021, 01:12 PM #18497
Does it turn into a jacuzzi during the spin cycle?
More insanity: https://www.redfin.com/WA/Bellingham.../home/15807830
That's a lot of money for that house on a 4400 sf lot in that neighborhood. "Downstairs mother-in-law" = code for illegal ADU.
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10-08-2021, 01:18 PM #18498
ARMs were a very large percentage of overall originations, IIRC. There was also the non-recourse aspect--a lot of people who put nothing or almost nothing down on non-recourse loans that became massively underwater just walked (which was smart). Those people had nothing to lose but their credit score, and the more their house was devalued the more likely they were to walk. People paying cash today have much more to lose, and the more the value drops the less likely they are to sell at a loss. I had not heard of Flyhomes before today, but there's no way a Flyhomes "cash" deal is non-recourse so those people are also far less likely to walk.
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10-08-2021, 01:27 PM #18499
I remember 5/1 being sold around here, meaning five years of just interest payments, but the rate was adjusted yearly. So five years in, you have zero equity, you're still on the hook for what you "paid" yet the current market won't support that number, and now your payments jump substantially due to the loan being amortized over a shorter period than a conventional.
That person would've been better off renting, and buying into the new lower market. (yeah, crystal ball, hindsight)
edit to add: And what Dan said. Many of the financial products pushed back then practically incentivized defaults.
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10-08-2021, 01:28 PM #18500Registered User
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People are using there homes as a piggy bank / atm lots of people are one of the many pieces of the puzzle
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