Real Estate Crash thread

[Toadman]

Welp, inventory is up a bit and 30 year mortgage interest rates are north of 6% but a house on my street went for sale two days ago for 50% more than 2020 pricing and it is already under contract.

Assuming it's going to have a mortgage, the payment on said house is more than 2x higher than similar houses were selling for two years ago, and about 45% higher than early this year.

I have no idea what's going on. ¯\_(ツ)_/¯

Someone laundering drug money. Or a hedge fund buying up the neighborhood.

[4matic]

My zestimate is down 15% fwiw which is not much.

[rideit]

Someone laundering drug money. Or a hedge fund buying up the neighborhood.

Still probably 1/3 the cost of a similar property over the hill.

[shroom]

wants not needs

[liv2ski]

My zestimate is down 15% fwiw which is not much.

Only matters if you want to sell, otherwise, who cares?

[4matic]

The Fed cares. Wealth effect is their primary target right now.

The doctrine of the “Wealth Effect” has long formed the official foundation for the monetary policy of the Federal Reserve. The Wealth Effect has been described in numerous Fed papers, including by San Francisco Fed president Janet Yellen in 2005. She wrote, “As part of its analysis of demand in the economy, central bank models have long incorporated the wealth effect of house prices and other assets on spending.”

[Name Redacted]

What happens if your home is suddenly worth less than you owe on your mortgage and what you have available in heloc? Do they just reduce the heloc amount available?

[J. Barron DeJong]

The Fed cares.

Gotta get that Owners Equivalent Rent back under control.

[Mustonen]

What happens if your home is suddenly worth less than you owe on your mortgage and what you have available in heloc? Do they just reduce the heloc amount available?

How do you know it’s worth less? Did you get an appraisal? Did the bank order or otherwise have access to this appraisal? If yes to both, still probably no. Depends on the bank. They can try. Any broadly based program to reduce lines of credit even with valid appraisals will likely draw the ire of regulators. They don’t have to renew it when it’s time, though.

If no, then…. Definitely no. There is no compliant mechanism available to them outside of a full appraisal to reduce lines of credit due to CLTV concerns. Same way they won’t jack your rate if your credit score takes a dive.

Why do you think your property value took a nose dive anyways? Did all prospective buyers in the next five years sign a document that they would only pay up to $X for your property? Did your local market tumble? Did the bumpus hounds move in next door?

[Name Redacted]

How do you know it’s worth less? Did you get an appraisal? Did the bank order or otherwise have access to this appraisal? If yes to both, still probably no. Depends on the bank. They can try. Any broadly based program to reduce lines of credit even with valid appraisals will likely draw the ire of regulators. They don’t have to renew it when it’s time, though.

If no, then…. Definitely no. There is no compliant mechanism available to them outside of a full appraisal to reduce lines of credit due to CLTV concerns. Same way they won’t jack your rate if your credit score takes a dive.

Why do you think your property value took a nose dive anyways? Did all prospective buyers in the next five years sign a document that they would only pay up to $X for your property? Did your local market tumble? Did the bumpus hounds move in next door?

Just curious, not in that position, or even close, just wondering if that were ever a possibility.

[Kevo]

What happens if your home is suddenly worth less than you owe on your mortgage and what you have available in heloc? Do they just reduce the heloc amount available?

In the fallout from 2008 a lot of HELOCs were cancelled, along with other forms of revolving credit. Credit cards were cancelled or greatly reduced, etc.

It's a good lesson never to rely on revolving credit for an emergency fund.

https://www.helpwithmybank.gov/help-...oc-freeze.html

[Mustonen]

Right… lots of class action lawsuits tumbled out of 2008. I guess it’s fair to acknowledge that banks can get away with shit, or try. Naive not to. Generally speaking, there has to be a severe and well documented decline in home value (like 50%) or a well documented deterioration in ability to pay. Otherwise any institution is playing with fire in canceling or reducing a line prior to expiration.

It’s a possibility. It isn’t likely.

[fastfred]

What happens if your home is suddenly worth less than you owe on your mortgage and what you have available in heloc? Do they just reduce the heloc amount available?

don't know but I am very concerned about losing home value and being underwater my 120k mortgage debt might really get me in trouble with the crash coming this fall maybe I should go get a heloc or a cash out refi at 6.5% to put me even more on edge mtn town realestate is in for a big correction no one wants to live here anymore and if they do they'd rather live cheaply in a converted hotel room instead of a single family home tough times are ahead folks get ready meanwhile I'm going to smoke so much dope today and paint my house hopefully it adds 50k to my value by the time I'm done smoking $100 oz's and slaping paint on this bitch

[smmokan]

I’m surprised the TGR AI bot hasn’t taught itself how to use punctuation yet.

[rideit]

Fastfred broke it already.

[Toadman]

Sellers are having to adjust their expectations on listing price.

The average sale-to-list ratio fell below 100% for the first time since March 2021 and the share of homes with a price drop came down from its record high. With mortgage rates ticking back up, expect the post-Labor Day slowdown to be even more intense than usual.
The average home sold for less than its list price for the first time in over 17 months during the four-week period ending August 28, as the housing market cooldown continued. Every month since March of 2021 has seen an average sale-to-list ratio of over 100%, meaning that the average home has sold for more than its final asking price, after all price drops. This comes as the share of listings with a price drop has finally begun to plateau.

Despite the easing in home prices, demand from homebuyers is still chilled—mortgage purchase applications and pending sales both saw large declines from a year ago—thanks in large part to another spike in mortgage rates, which rose to 5.66%, their highest level since June. Home sellers are also reluctant to step into the market: new listings and total inventory of homes for sale saw large declines as well.

“While the cooldown appears to be tapering off, there are signs that there is more room for the market to ease,” said Redfin Chief Economist Daryl Fairweather. “The post-Labor Day slowdown will likely be a little more intense this year than in previous years when the market was super tight. Expect homes to linger on the market, which may lead to another small uptick in the share of sellers lowering their prices. Homebuyers’ budgets are increasingly stretched thin by rising rates and ongoing inflation, so sellers need to make their homes and their prices attractive to get buyers’ attention during this busy time of year.”

Leading indicators of homebuying activity:
For the week ending September 1, 30-year mortgage rates rose to 5.66%. That’s down from a 2022 high of 5.81% but up from 3.22% at the start of the year.
Fewer people searched for “homes for sale” on Google. Searches during the week ending August 27 were down 26% from a year earlier.
The seasonally adjusted Redfin Homebuyer Demand Index—a measure of requests for home tours and other home-buying services from Redfin agents—was up 15% from the 2022 low in June during the week ending August 28, but was down 16% year over year.
Touring activity as of August 28 was down 9% from the start of the year, compared to a 11% increase at the same time last year, according to home tour technology company ShowingTime.
Mortgage purchase applications were down 2% week over week, seasonally adjusted, and were down 23% from a year earlier during the week ending August 26.

[4matic]

Pent up selling will be a thing next year and if rates stay firm prices are coming down. New home sellers are sending me offers of “free stays” in model homes. That was popular a few years ago.

[Percy Rideout]

I’m surprised the TGR AI bot hasn’t taught itself how to use punctuation yet.

Living TGR legend at this point.

Fred's living what most of you suburban dentists dream of...

[fastfred]

Living TGR legend at this point.

Fred's living what most of you suburban dentists dream of...

thanks for the props but aint' that romantic
like everyone got tons of shit to deal with doing my best but these fucking doctors at least they didn't tell me to stop smoking weed first time in three years I haven't heard that outa their mouth kinda odd maybe they gave up on me? got lucky on some things got shafted on others



sheer brilliance the people in that scene are some of the best in the business

[XXX-er]

https://www.cbc.ca/news/business/ban...hike-1.6574457

3/4 % rate hike eh

[Core Shot]

Fuck me. Looks like another big rate hike in September in USA.

I need to raise my commercial rents. Asap.

Or maybe get a six figure sprinter van and live down by the river.

[liv2ski]

When will the rate hikes crush the S&P?

[rideit]

Why raise rents based on that? Are your properties financed with ARM's?

[liv2ski]

Seems like commercial loans are always some sort of hybrid ARM (5/1) so maybe his rate is adjusting annually now.

[J. Barron DeJong]

When will the rate hikes crush the S&P?

I don’t think that’s inevitable: