Real Estate Crash thread

[dunfree]

https://www.nber.org/papers/w30041

What explains record U.S. house price growth since late 2019? We show that the shift to remote work explains over one half of the 23.8 percent national house price increase over this period.

probably higher in some areas

[liv2ski]

https://www.nber.org/papers/w30041


probably higher in some areas

Yup, Mammoth up about 100% since 2019. WFH is the only explanation i can see

[yeahman]

So why aren't prices going down wherever all these WFH people are moving away from? Something seems out of balance.

[dunfree]

So why aren't prices going down wherever all these WFH people are moving away from? Something seems out of balance.

rents dropped a lot in a bunch of big city’s - they are heading up now though. Think of it as shifting the home demand curve forward

[sirbumpsalot]

So why aren't prices going down wherever all these WFH people are moving away from? Something seems out of balance.

One man's trash is another man's treasure....

[phatty]

One explanation I recently read was that with WFH, people are less willing to live with roommates. As those split up, there's more people fighting for the same number of places. Not sure this has an outsized impact, but I know of multiple people who moved to solo places so they could have room to work.

[J. Barron DeJong]

One explanation I recently read was that with WFH, people are less willing to live with roommates. As those split up, there's more people fighting for the same number of places. Not sure this has an outsized impact, but I know of multiple people who moved to solo places so they could have room to work.

In contrast, over the past year and a half there has been a remarkable rebound in the headship rate, driven in large part by a return to the pre-pandemic rates at which younger adults lived with parents or older family members. This rebound has been an important contributor to a huge increase in housing demand.

https://www.calculatedriskblog.com/2...rt-ii.html?m=1

[rideit]

You know what’s risky? Posting in any color but white when 90% of us old farts read this on the dark blue background.

[XXX-er]

its anoying so try L click & mouse on the text to highlight it in white

[Ted Striker]

You know what’s risky? Posting in any color but white when 90% of us old farts read this on the dark blue background.

Plus I and I'm assuming other android users read it on a black background.

[pepperdawg]

You know what’s risky? Posting in any color but white when 90% of us old farts read this on the dark blue background.

this

[Bronco]

Looks like the average rate for 30 year mortgages fell .15% https://finance.yahoo.com/news/us-mo...140000735.html

[Whiteroom_Guardian]

One man's trash is another man's treasure....

Partly this. Some people moved from places like NYC to the "country" in NJ/Hudson Valley etc. Those people filled the homes sold by people who moved out west etc.

[J. Barron DeJong]

this

Tried reposting with edited color but didn’t work on the first try, so I’m giving up. Good luck y’all!

[4matic]

The supply of homes for sale jumped 9% last week compared with the same week one year ago, according to Realtor.com.

Real estate brokerage Redfin also reported that new listings rose nearly twice as fast in the four weeks ended May 15 as they did during the same period a year ago.

Pending home sales, a measure of signed contracts on existing homes, dropped nearly 4% in April, month to month and were down just over 9% from April 2021, according to the National Association of Realtors.

[Kevo]

^Supply is going up by a bit, demand is dropping by a bit but list prices seem to be at all time highs just about everywhere.

The increase in the headship rate mentioned in the calculated risk blog above is an interesting factor related to the pandemic.

A factor that I haven't seen addressed in media coverage is the eviction moratorium. I believe that the eviction moratorium contributed to a significant amount of rent increases because it artificially reduced the supply of available rentals for an extended period of time.

Any landlord who had an available property was able to charge very high rent during the moratorium, which set the bar high for when the moratorium ended and the natural rental turnover cycle started again.

The increased yield on rentals helps pencil out increased valuations for any properties that are for sale. Mortgage rates are obviously another major variable (inversely proportional) in the valuation calculation equation.

[4matic]

"The housing market is sending clearer signals that the pandemic-driven housing frenzy is coming to an end. Nearly one in five (19.1%) home sellers dropped their price during the four week period ending May 22—the highest level since October 2019" $RDFN

[liv2ski]

Kevo, for the most case, current rents do not support a purchase with 30% down and a break even cash flow, which is the historical norm. Based on inflated rents, prices are to damn high.

[Kevo]

Kevo, for the most case, current rents do not support a purchase with 30% down and a break even cash flow, which is the historical norm. Based on inflated rents, prices are to damn high.

Good to know about the historical norm.

With rents in many places being 20% or 30% higher than they were 2.5 years ago, wouldn't it help prop up the bottom in a correction? Or would you expect rental defaults during a down economy nullify the effects of increased rental yields?

[4matic]

Redfin CEO says move up market is dead unless all cash. Also, escape markets like Sacramento and Seattle suburbs are showing weakness and price reductions

[phatty]

Redfin CEO says move up market is dead unless all cash. Also, escape markets like Sacramento and Seattle suburbs are showing weakness and price reductions

Anecdotally have not seen in my Seattle suburb. Buddies house just sold for over asking with multiple offers in under 4 days on market. Still hearing similar stories from friends in the market buying or selling. I suspect the further out suburbs (Maple Valley, Duval, Snohomish, etc.) would see it first, though.

[4matic]

Same with the good houses in my escape hood. Still go in one weekend

[up an down]

"The housing market is sending clearer signals that the pandemic-driven housing frenzy is coming to an end. Nearly one in five (19.1%) home sellers dropped their price during the four week period ending May 22—the highest level since October 2019" $RDFN

.. My siblings and I dropped the price for a farmet that we inherited from my dad. Much more of a buyers market now where I live in Northern Illinois

[liv2ski]

Good to know about the historical norm.

With rents in many places being 20% or 30% higher than they were 2.5 years ago, wouldn't it help prop up the bottom in a correction? Or would you expect rental defaults during a down economy nullify the effects of increased rental yields?

Historically no, the rents do not prop up the values if people are running for the door
In fact, the rents may decline a bit depending on available inventory.
Everything gets expensive with lack of inventory and then cheaper when the buyers disappear. Just a fact of life.
Outlying areas always correct first and then the closer in areas may start to see the effects of weaker demand

[sirbumpsalot]

Outlying areas always correct first and then the closer in areas may start to see the effects of weaker demand

This will be the first downtrend post-WFH era....will be interesting to see how things work out now that there is no longer a "desire" to be "closer-in" to workplaces.

Maybe Bozeman and Tahoe will keep going up?