I live in a nice but not super-nice suburb in northern Virginia. In fact, the very same neighborhood my wife and her 4 siblings grew up. My kids graduated from the same grade and secondary (HS) school as she did. We moved here in 2006 right before home values plummeted. Our house lost about 20 to 25% of its value by 2009. But we had benefitted from the big rise from selling our townhouse we got when we married in 1997...so it was lost equity.

From 2009 to 2019 it slowly regained all of the lost value, and from, 2019 to present, the value has shot past we we paid for it at the height of the market in 2006, probably to the tune of 10-15%. Of course, we've been semi-aggressively paying down the mortgage and periodically refinancing, so we only owe about 1/3rd of the current home value.

So, I'm officially old enough to see a boom, bust, slow recovery, and boom. I just hope it does not bust again when we look to sell out home in about 9-10 years and retire.

I wonder if home prices in Las Vegas are back to full-blown nuts, etc. Home flipping back in vogue? Banks finding new ways to give shitty loans to those that cannot afford homes, who will asked to be bailed out at the next bust, etc...?

The answer is no. This isn’t a house flipping event like we all witnessed as you described. That was fueled by bad policy and subsequent poor lending practices. People were buying massively expensive homes on salaries that under previous practice they would have never qualified for. The boom was so long that you literally could buy and sell within a month and flip for a profit.

First off just try to get a mortgage nowadays. They will get every bit of financial info from you possible. They aren’t writing questionable loans for these houses. People aren’t buying on predominantly credit, these sales are fueled by good mortgage rates, lots of cash, actually people buying new primary homes in different areas. The move away from big blue states is real and happening. Texas and Florida are the destination in many cases but it’s happening all over.

You will see the cycle continue. I doubt you will see a massive bust again though. There aren’t the classic signs. The last one was visible for everyone to see. When people were buying beach condos sight unseen and literally selling the paper the next month to an unbuilt unit for a profit you know this can’t last. This ain’t that. I watched my friends do that in the beach town I lived in. They made tons of cash. Right up until they didn’t.

will get interesting if / when these guys -- and several others like them -- decide to cash out.

https://www.wsj.com/articles/b...ng-homes-11624359600

these firms have massive big data driven algorithms to buy properties en masse.

they buy a specific type of house -- basically smack in the middle of a given market. Not too run down, not too expensive. your typical 3/2 with a garage and a yard.

if they ever decide to unload them it will be more than a ripple.

------------------------------

quote:

Originally posted by Batty67:
I wonder if home prices in Las Vegas are back to full-blown nuts, etc. Home flipping back in vogue? Banks finding new ways to give shitty loans to those that cannot afford homes, who will asked to be bailed out at the next bust, etc...?

My contact at Homeland Security lives in Lost Wages and at the bottom of the market a number of years back, bought a house that had last solf for $1.4 Million and he paid $450,000.00 for it.

The last time I asked him, which was around 2 years ago, it was still worth around $450K, so no upward movement there.

Perhaps in other parts of the area it went up though.

Las Vegas is nuts right now. We could sell our house for cash at about 100k over what it was two years ago. Everything is going above asking price.

Any house for sale is scooped up post haste, usually by Californians. I don't think I want to be here much longer.

I know too many real estate agents & they're clawing tooth & nail for inventory.

quote:

Originally posted by Sig209:
will get interesting if / when these guys -- and several others like them -- decide to cash out.

https://www.wsj.com/articles/b...ng-homes-11624359600

these firms have massive big data driven algorithms to buy properties en masse.

if they ever decide to unload them it will be more than a ripple.

Not as much of a ripple of as somewhere between 2.1 and 3.9 million homes avoiding foreclosure due to various federal and state laws. FHA's is expiring TODAY, and several large mortgage lenders may begin pushing it in July. This article aligns with conversations with two of my neighbors - one manages a title office and other in management at a mortgage lender. Adding 2.1+ million homes to the real estate market is likely to really shake things up. Maybe even end this idiotic boom.

To put it in perspective, the typical value of U.S. homes is $269,039 as of January 2021 according to Zillow which means:

Blackstone's $6 billion is 22,302 average homes.

The foreclosure issue is 94 to 175 times larger than Blackstone's splashy headline. In other words, it's $565 billion to $1.05 trillion so it would make a much larger ripple.

---

Ego is the anesthesia that deadens the pain of stupidity

DISCLAIMER: These are the author's own personal views and do not represent the views of the author's employer.

the value of real estate is only really know the day you buy it and the day you sell it.

The appraised value of my house over 30 years

385K
450K
700K
200K
500K
900K

My first home was purchased in early '81 at the start of the Jimmy Carter days. Interest rates went from the low to higher teens by years end. I lived there for about 18 years and by then the rates were about 6-7% and the home was about 2 1/2 times the purchase price.

The truth is that you don't really gain or lose much as you are selling higher but also buying the next place under similar conditions.

As far a present mortgages, some things are being done better than '08 but some things not.
Yes, your credit needs to be sound but they are extending near 100% loans at times to buy homes that may be overinflated and a sudden drop in the market will be a big problem for those folks that have to sell for any reason. Another issue is the artificially low interest rates that are not following market demand but instead policy makers designs that are controlled by other (political) issues. The supply and demand forces that kept things somewhat in balance are not being allowed to work right now.
What's going to happen in the next few years or decades? Who knows. Live below your means and have a cushion so you can take advantage of opportunities and don't have to rely on being a fortune teller.

There will be a bust. You cannot have things happening like they have been (not just RE appreciation) and not have an upside down point. It is coming. Best not be the guy or gal buying at or near the top of the bubble with serious exposure. That is what provides real opportunity for those laying in wait.
If you are telling yourself to do something now. And have not been prepared for the now. You will be the one providing to opportunity soon enough. My take.

quote:

Originally posted by old rugged cross:
There will be a bust. You cannot have things happening like they have been (not just RE appreciation) and not have an upside down point. It is coming. Best not be the guy or gal buying at or near the top of the bubble with serious exposure. That is what provides real opportunity for those laying in wait.
If you are telling yourself to do something now. And have not been prepared for the now. You will be the one providing to opportunity soon enough. My take.

So, are you describing a mini-bust/strong correction or along the lines of what happened 2006-2010 or so?

As far as a prediction goes I would say somewhere between door number 2 and door number 3.

One thing that has always fascinated me is that contrary to the spoon feed line. The very rich seem to always get richer during the dem admins. Hmmmm.

So we know everything from RE, to cars, to boats, to ATV/SxS to just about everything else has been bought up and is in short supply, supposedly.
So wait and see when the info. comes out on debt ratio's across the spectrum of Americans after all this. Do you think the folks buying all this stuff plopped down good old green backs to buy the billions of dollars of all this non essential stuff. I am pretty sure not. So where does that leave them.
How much of the bubble has to deflate before these folks realize, whoops, we are screwed. Oh its coming. I am pretty sure.

It's already happening...

I was hoping my brother in law could get his house listed and sold while this market was peaking, but he's still not ready and I fear he's missed the boat to dump a house in a not-so-great neighborhood and school district.

From Zero Hedge:

Mortgage Apps Crash To Pre-COVID Lows As Homebuyer Confidence Collapses

I’m in the mortgage biz and I’m busy as ever. I work form home so literally 12-14 hours a day. My bank has always been very conservative and a full doc underwriter. Always requiring 20% or sometimes a lot more down.

I’m also in contract to sell my house in the SF Bay Area. More than double what I paid 13 years ago. We got just a shade under $1mm for 3/2 1100 feet. I feel like I could have squeezed out another 25-50k since we had down a complete interior remodel. But my wife was just get it done. And of course the realtor despite being a long time friend was also pushing to take that offer. 500k tax free gain is a juicy reward hanging there. Conversely the house I bought in Florida (for 1/2 what I sold in CA for and 3 times the size and 10x the land) appraised for 50k over the sale price and we got it for 20k under their ask.

Maybe a few months ago it felt a bit more frenzied and stories of dozens of offers in a week vs the 5 we got in 4 days.

As far as the article goes, I would also posit that a drop in refinance applications is not the end all. If you haven’t gotten yourself into money in the 2’s or very low 3’s in the last year. That’s your fault. And new home purchase mortgages may also just reflect no inventory.

I’m in the biz as well. While some macro data suggests a slowdown, I’m not seeing any major signs of slowdown…..lack of inventory in some markets seems to drive the slowdown but the demand is still there overall. This is not the same landscape as the last bust. Lenders and regulators are tighter overall. Eventually it will stabilize/correct as it always does. If you own a “Turkey” now is the time to dump it.

quote:

Originally posted by PASig:
It's already happening...

I was hoping my brother in law could get his house listed and sold while this market was peaking, but he's still not ready and I fear he's missed the boat to dump a house in a not-so-great neighborhood and school district.

From Zero Hedge:

Mortgage Apps Crash To Pre-COVID Lows As Homebuyer Confidence Collapses

I hate to say it, but I see somewhat of a perfect storm developing. This will not be like the prior 2006 boom/bust, but I fear, will be worse due to other factors.

Consider....

- Inflation is rising at a rate faster than we've seen in the past decade or two.
- Contrary to the liars in Washington, the media, and the investors in the pockets of Washington, the economy is not strong or solid. There are fissures developing everywhere.
- Trillions of dollars of 'funny money' have been pumped into the economy for Covid relief continuing to push inflation. That sugar high will be short lived and that money will have to come back out somehow to re-settle the economy.
- The primary way to contract the money supply is to raise interest rates, which when/if implemented, would pull this economy to a halt and perhaps send it spiraling downward.
- If the economy halts or turns downward, many of the people who bought into the real estate market now at ridiculous values will default on their loans for one reason or another causing housing prices to plummet (talk about wealth transfer). The primary asset for middle class families is their home, so this will kill the middle class.

Long story short, pain is inevitable. The only questions are what will happen to trigger it, when it will happen, and how bad will it be. Given the cast of complete failures and morons infesting Washington today, I have zero confidence they will be able to successfully manage any of this when it occurs only making things worse.

quote:

Originally posted by ElToro:
I’m in the mortgage biz and I’m busy as ever. I work form home so literally 12-14 hours a day. My bank has always been very conservative and a full doc underwriter. Always requiring 20% or sometimes a lot more down.

I’m also in contract to sell my house in the SF Bay Area. More than double what I paid 13 years ago. We got just a shade under $1mm for 3/2 1100 feet. I feel like I could have squeezed out another 25-50k since we had down a complete interior remodel. But my wife was just get it done. And of course the realtor despite being a long time friend was also pushing to take that offer. 500k tax free gain is a juicy reward hanging there. Conversely the house I bought in Florida (for 1/2 what I sold in CA for and 3 times the size and 10x the land) appraised for 50k over the sale price and we got it for 20k under their ask.

Maybe a few months ago it felt a bit more frenzied and stories of dozens of offers in a week vs the 5 we got in 4 days.

As far as the article goes, I would also posit that a drop in refinance applications is not the end all. If you haven’t gotten yourself into money in the 2’s or very low 3’s in the last year. That’s your fault. And new home purchase mortgages may also just reflect no inventory.

I worked for a large super regional bank here in Florida for years and I'm curious of something at your bank. Where is your management structure setting your Reserve for loan losses? When we were writing a million new loans during the last boom/burst cycle the bank continued to increase their reserves well above prior norms forseeing what was likely coming. I have friends that still work at a couple Florida banks and they tell me their reserves are increasing far faster than their loan volumes, and substantially ahead of prior years practices. I think the banks are starting to see the writing on the wall and are preparing for it through their reserve accounts.

I am not concerned. If this spiral starts, Biden will step in to fix it (like 2008 ?). Then it will all come tumbling down.

Illegals have to live somewhere

Why RE and the stock market are booming. All the cheap money has to find a home, and it's going into assets.

https://fred.stlouisfed.org/series/M1SL

At some point the inflation will become problematic and the fed will have to yank on the money chain. When interest rates go to double digits, the assets will strongly devalue.

Bigdeal my bank is about the 20th to 25th largest bank by market cap depending what the market does today. Publicly available data suggest loan loss reserves have been consistent the last 5 years at about 1/2 of 1% of total gross loans. This is also about where our delinquency ratio is which is about the best in the country. Actual foreclosures are few and far between. The loan officers are held accountable for 5 years if the loan goes bad they lose a multiple of their commissions in bad loan. So it’s not turn and burn the loan like a mortgage broker might be with no concern if they can make any payments. We are located in about 6 major bicoastal markets that seem to do well in the last several downturns and our client base is more affluent than the general population.

As far as inflation goes. If somebody has a 30 fixed. And inflation starts to exceed their interest rate that is not terrible for the borrower. As long as your other investments are keeping and out stripping the inflation rate. And you have some investments that do well in inflation like precious metals and land etc. Fixed income pensioners are the ones that get screwed.

quote:

Originally posted by BBMW:
Why RE and the stock market are booming. All the cheap money has to find a home, and it's going into assets.

https://fred.stlouisfed.org/series/M1SL

At some point the inflation will become problematic and the fed will have to yank on the money chain. When interest rates go to double digits, the assets will strongly devalue.

And your banker will send a limo over to pick you up if you suggest you want to prepay a 2-3% loan if inflation is 10%