Real Estate Crash thread

[J. Barron DeJong]

I'd offer now. A lot of RE agents are shitting their pants and they'll be more inclined to take lower offer. The Fed rate should be going up for the next few quarters but mortgage rates could stay moderately low, which works against your situation anyway. Also, with inflation, your money is losing value by the day. A bird in the hand is worth two in the bush and all that. No reason to gamble and lose the property because you waited too long.

Just regarding future rate heights, Fed just increased rates to 4.25-4.5%, and the future guidance they’re currently giving is that hikes will stop at a rate of 5.0-5.25%, so not much more hiking planned at this time.

[Name Redacted]

Just regarding future rate heights, Fed just increased rates to 4.25-4.5%, and the future guidance they’re currently giving is that hikes will stop at a rate of 5.0-5.25%, so not much more hiking planned at this time.

.75% is quite a bit still. And mortgage rates are separate from that. Guy is paying cash, so it doesn't effect him, just the market he is buying into. Who knows how long the fed will leave their rates high. At least a few quarters is most people's guess. Trying to time the RE market is a lot different than timing the stock market, local conditions can have a wide range of effects. Not sure what's going on in NM, but from my POV, buying now is better than waiting to see what happens, especially if you just want to own the land for a ROW and not a speculative investment.

[zion zig zag]

There are 208 "Entire Place" AirBnBs still available to rent over Christmas weekend in Teton County Idaho. I haven't stood in a lift line yet this year at Targhee, and word is that resort bookings are way down year over year.

I assume that Utah having a ton of snow also plays a part in this.

[4matic]

Mortgage underwriting is tight because of re-finance risk. If you sell a new mortgage only to be re-financed out of it it’s a losing deal.

[Kevo]

I assume that Utah having a ton of snow also plays a part in this.

A butterfly in Ecuador flaps its wings, pushing an infinitesimally small amount of cool air into the equatorial pacific. A cascade of events take place- cooler air leads to cooler water. A third La Nina in a row is triggered. Utah has a decent snow year, and AirBnB speculators on the west side of the Tetons go cash flow negative.

[lowsparkco]

Mortgage underwriting is tight because of re-finance risk. If you sell a new mortgage only to be re-financed out of it it’s a losing deal.

There's a timeline for this, correct?

The original note cannot be repaid for 18 months? What's the minimum amount of payments that have to be serviced on the note before the mortgage broker gets paid?

[Name Redacted]

There's a timeline for this, correct?

The original note cannot be repaid for 18 months? What's the minimum amount of payments that have to be serviced on the note before the mortgage broker gets paid?

AFAIK there isn't a rule or law about this, it is just in the fine print and varies by loan and maybe state? I bet Liv2ski would know better than me though.

[Meadow Skipper]

I'd offer now. A lot of RE agents are shitting their pants and they'll be more inclined to take lower offer. The Fed rate should be going up for the next few quarters but mortgage rates could stay moderately low, which works against your situation anyway. Also, with inflation, your money is losing value by the day. A bird in the hand is worth two in the bush and all that. No reason to gamble and lose the property because you waited too long.

Good points. Thanks.

[lowsparkco]

Real estate agents don't accept or refuse offers, they make recommendations to clients. If they make poor recommendations they lose clients.

I think we're sitting on a knife's edge and the tipping point is unemployment. If we start seeing layoffs we'll see sell offs and distressed properties becoming a thing again. It's all equity based and we already have a 5 to 15% decrease in equity since the spring. You pair loss of equity with loss of employment and the reality that the vast majority of us are only a few paychecks away from financial ruin creates a huge potential catastrophe.

Retail numbers coming out of Xmas are going to be huge. I can't see how they won't be hugely down, but I'm wrong as often as I'm correct.

Edited to add: I reread and saw it's Broker owned. Sorry for the confusion. I'll leave my mistake up to not be a twat.

Meadow Skipper, I've traditionally done a lot of these types of deals. My best advice would be to hire an attorney (ask for a favor if you know one) send a letter of inquiry on letterhead and see what they say. If they come back at $150k over market value I'd probably rethink the dream and let it go. If they come back at market value maybe plus 5 or 10 points then decide what your real value is in cash and send it over once. Let it expire. Let any counter expire. Wait 8 weeks and send it again. Now is a pretty good time because it's slow around the holidays and brokers are spending money.

[lowsparkco]

AFAIK there isn't a rule or law about this, it is just in the fine print and varies by loan and maybe state? I bet Liv2ski would know better than me though.

I think you're right, it's in the fine print. Payoff penalty or something like that.... I've heard mortgage brokers address it with clients before. I've even heard of mortgage brokers asking for a contractual agreement to be compensated by the client if they payoff the note early. Thanks for bringing it up, because I hadn't thought about it in the context of the current market, definitely a factor.

[4matic]

I was referencing underwriters not brokers to be clear. Most mortgages don’t have early payment penalties these days.

[Mani_UT]

Retail numbers coming out of Xmas are going to be huge. I can't see how they won't be hugely down, but I'm wrong as often as I'm correct.

I tend to be the super optimistic guy but isnt everything going on a huge 2 months sale? I don't recall that in previous years. Profits should suffer if really the case.

[dan_pdx]

I tend to be the super optimistic guy but isnt everything going on a huge 2 months sale? I don't recall that in previous years. Profits should suffer if really the case.

Pretty sure that Lowsparkco meant "Retail numbers coming out of Xmas are going to be hugely important as a gauge of the economy," not that retail was going to have a good christmas season.

[liv2ski]

I think you're right, it's in the fine print. Payoff penalty or something like that.... I've heard mortgage brokers address it with clients before. I've even heard of mortgage brokers asking for a contractual agreement to be compensated by the client if they payoff the note early. Thanks for bringing it up, because I hadn't thought about it in the context of the current market, definitely a factor.

On FNMA & FHLMC loans there is no prepay penalty. However, every investor tells the originating lender if the loan is paid off before 6 payments are made, the originator is going to be brutally ass raped with no lube.
Now, because my pricing is usually unbeatable (or I tell you who has the better deal) I tell my clients they will need to sign an Origination agreement to make at least 6 payments before paying off the loan or they pay the penalty when it is sent to me. If they don't sign, I don't do the loan. I have never seen another LO have the balls to explain the business to the client out of fear of losing a loan. I don't care, as I feel like I am hooking people up, so don't fuck with me.

[goldenboy]

The weird thing right now is that like all other economic data, good news is bad news and bad news is good news. If holiday spending is down, the Fed will take that as a sign that the economy is slowing down like they want it to. Even though it could also mean layoffs and struggling businesses.

--Probably a better discussion for the Fed thread though.

[Meadow Skipper]

Edited to add: I reread and saw it's Broker owned. Sorry for the confusion. I'll leave my mistake up to not be a twat.

You caught it. Nicely.

Meadow Skipper, I've traditionally done a lot of these types of deals. My best advice would be to hire an attorney (ask for a favor if you know one) send a letter of inquiry on letterhead and see what they say. If they come back at $150k over market value I'd probably rethink the dream and let it go. If they come back at market value maybe plus 5 or 10 points then decide what your real value is in cash and send it over once. Let it expire. Let any counter expire. Wait 8 weeks and send it again. Now is a pretty good time because it's slow around the holidays and brokers are spending money.

Hey, thanks. Seems like really good advice.

[lowsparkco]

Pretty sure that Lowsparkco meant "Retail numbers coming out of Xmas are going to be hugely important as a gauge of the economy," not that retail was going to have a good christmas season.

Thanks for the clarification. You are correct. Not my best writing.

I think retail numbers will be off. Just seems like a timing thing with inflation and the supply chain. There has been a gluttony of consumer goods and people have feasted. Bills are due, higher consumer credit rates, less feel goods with the market and home equity. Belts are tightening.

[BFD]

maybe people will spend less since they are hurting from the record spending on Halloween.

[yeahman]

Just judging by how empty Big Sky has been during this great early season, people are cutting way back. There are still rooms available for Christmas week. Never seen that, usually booked solid.

[rideit]

In air b-n-b news, they fucking suck.

https://www.surviving-tomorrow.com/p...-rental-market

[schuss]

In air b-n-b news, they fucking suck.

https://www.surviving-tomorrow.com/p...-rental-market

I blame Airbnb less than I blame municipalities. They simply optimized the experience of hosting and renting places, which already existed in fractured form via VRBO, Craigslist, travel agents, real estate agents etc.
What should have happened is meaningful regulation or limitations for different communities, but people seem to have forgotten how to use those tools.

[Name Redacted]

I blame Airbnb less than I blame municipalities. They simply optimized the experience of hosting and renting places, which already existed in fractured form via VRBO, Craigslist, travel agents, real estate agents etc.
What should have happened is meaningful regulation or limitations for different communities, but people seem to have forgotten how to use those tools.

Airbnb also didn't create the housing shortage, at least around here, they just exacerbated it. Our local towns shooting down and preventing any and all development for decades created the housing shortage. The chickens just came home to roost in the last decade when technology, financial conditions, remote work, and consumer wealth all came to a peak right over every desirable location in the country (world). STRs are definitely part of the overall problem, but around here it is more than that.

[lowsparkco]

I went to a planning meeting earlier in the fall where STR was the main discussion. People gave testimony where they just made stuff up. One of my neighbors who seemed to know everyone at the planning department by their first name spoke at length about the threat to our blue collar neighborhood (entry level $550k). I searched Airbnb and VRBO while she blabbered on, not a single unit. Not surprising, as it’s not touristy at all. Why steer a discussion with false information that doesn’t effect you? Agenda.

[Brock Landers]

I blame Airbnb less than I blame municipalities. They simply optimized the experience of hosting and renting places, which already existed in fractured form via VRBO, Craigslist, travel agents, real estate agents etc.
What should have happened is meaningful regulation or limitations for different communities, but people seem to have forgotten how to use those tools.

Travel agents? Real estate agents? No one has forgotten how to use them. People under 40 never used them in the first place. (Vrbo is like Airbnb 1.0 isn’t it?)

Too much of the country, too many people and $ are online now, and it’s too easy for travelers/tourists/forms of revenue and economic growth for municipalities to hang their hopes on a travel agent or….Craigslist?

Make it super easy for people to visit and people will visit and spend dollars. If communities don’t want this (which is completely valid) then don’t. And plenty of places have done this (along with condo bylaws etc).

[Name Redacted]

Ironically, one of the STRs that I manage on the side is a condo that used to be a hotel in the 60's and 70's, and before that it housed workers who built a local dam in the 60's.
Now the town says that there isn't enough parking spaces in the large parking lot for the amount of units in the building and all the STRs need to pay $900 a year to compensate for the lack of parking space. There is always ample parking in the parking lot, even during the busy holiday season. Even more annoying, was that the town even did a study a few years ago that showed that there was excessive parking in town, they used this study to justify allowing developers to build two large condo buildings in a public parking lot across the street from the condo building where our condo is.