Economy The great housing market crash of 2022

[mkess101]

Real estate investors may also sell if they think the prices will drop and buy them again when they are lower.

A notable amount of foreclosures may be coming. With inflation still being very high and the stock market lagging, I imagine a lot of people who bought a house that was barely in their price range may be struggling to afford it. Also with home prices at all time highs, property tax re-evaluations may also play a big role. I think most people who make their payments comfortably will hold on, but people who have overleveraged themselves out of housing market FOMO may have to sell or have their house foreclosed. Also if we have a decently sized recession that will have an even bigger effect on foreclosures.

Not wrong, but the starting point is the problem in a lot of areas. Meaning that there is SO much more demand than supply that even a "correction" just makes a small dent. It doesn't cause a huge shift like the crash in '08. There are less people that leveraged themselves to the hilt (or bought multiple homes on spec, etc). Small price corrections at some point? Maybe. Enough where it's looked at as some massive shift to a buyer's market? Extremely unlikely.

 

[HomeCheese]

I suspect the housing shortage areas didn't see much correction at all while the areas where this is less demand problems probably saw a much bigger correction.

 

[cottagecheesefan]

The problem is the inventory is artificially scarce as firms are buying up a large portion of houses, they are buying these houses at these high prices thinking they will be able to rent them out at high prices. But if the economy is bad, people will not be able to pay these high rent prices, while also paying inflation. Which will make these big investment firms lose money as their housing investments don’t pay off as they had planned, which then in turn makes the stock market fall.

Just to be clear, all these banks should be totally fine because their investments as mentioned here are great and totally working out. All of these people with loans, mortages, leases, are all clearly paying everything back no problem. Hey, I may have been off by a few months, half a year, etc, but the writing has clearly been on the wall.

Buckle up, buckeroos

 

[HockeyBjj]

Investors still buying houses, but at less of a pace than previous years. Nice

https://www.investopedia.com/invest...estopedia&utm_medium=email&utm_content=083123

Investors, just like private buyers, think it’s a bad time to buy a home.

That’s according to data from real estate brokerage Redfin released Wednesday, which showed that investors bought 50,000 homes in the second quarter. That's the lowest for any second quarter in seven years, and down by nearly half from the second quarter of 2022. Investors accounted for just 15.6% of home sales in this year's second quarter, a drop from 19.7% a year earlier.

Investors—including hedge funds, house flippers, and large investment banks—snapped up houses during the era of ultra-low mortgage rates during the pandemic, but have been turned off by the same factors that have kept private buyers on the sidelines. Mortgage rates have more than doubled since the start of 2022, amid a severe lack of for-sale listings.

 

[MeatheadMike]

give it another 6 months

Alright here we are 6 months later, still no crash.... or even any signs of some kind of decrease in home prices on the way.

Basically the story is still that since most homeowners have 30 fixed mortgages of ~3%, they are refusing to sell and buy something else with a mortgage of 7%. This has been keeping inventory perpetually low and prices high, and this trend will likely continue for the foreseeable future.

Housing Market Caught in a Trap of High Prices, Expensive Mortgages and Low Inventory
Housing Market Update: Prices Go Up While Demand Goes Down

 

[Romulas]

Alright here we are 6 months later, still no crash.... or even any signs of some kind of decrease in home prices on the way.

Basically the story is still that since most homeowners have 30 fixed mortgages of ~3%, they are refusing to sell and buy something else with a mortgage of 7%. This has been keeping inventory perpetually low and prices high, and this trend will likely continue for the foreseeable future.

Housing Market Caught in a Trap of High Prices, Expensive Mortgages and Low Inventory
Housing Market Update: Prices Go Up While Demand Goes Down

I'm in the development and lending end of things. This is exactly what we're seeing in NY. Volume wise my company is down 80% from previous years and we are ranked in the top 5 nation wise and #1 in NY by volume.



Higher rates have made it impossible for:
- the bottom 1/3 of buyers to get pre-approved DTI wise (HOI increases have also made that worst) so basically remove 35% of your potential buyers.

- upgrade from a 500k ,purchased with a lower rate, to 750k home DTI wise. So you're losing 95% of the seller. People dying and retiring to cheaper states is the only housing inventory we have in NY.

 

[fedorthegoat777]

I am a real estate investor, I buy and sell distressed houses for a living and hold and rent some.

I sold most of my stuff and taking a break. I worked a ton during the run up and did well. See what happens.

I am anticipating that it won't be that bad due to inflation so we will see more of a drop before the bump back.

 

[Jacket time]

We have rented the same place for 20 yrs...900$ 1300 sqft
I also pay my MIL rent 550$...shes handicapped

I have 125k set for a place and was going to pull the trigger before Covid, I waited to see if her other 7 kids would step up.
Guess I'll wait it out...

 

[10000yearsold]

Was going to post this in the ongoing GOP back to inflation worry thread, but now that the inflation IS here and it is now really starting to metastasize, which is now highlighted with the US economy actually now shrinking. So, I wanted to make a new thread.

But as I mentioned several times in that thread, there was primary inflation for over a year now, starting with gas prices, along with raw materials, which then slowly goes to housing. Then slowly trickles in to grocery stores that initial just ate cost increases hoping it would be transitory, avoiding noticable increases in price. But then after food supply and whole salers can no longer hold out, it then comes to the service industry and other sectors that did not initially feel the inflation.

And as I posted in that thread a few weeks ago, even now, Producer Price Inflation was still exceeding Consumer Price Inflation, so naturally the rise is only going to continue to rise, if not accelerate.

Part of this was also being covered up last year, hiding how truly damaged the economy is. Keep in mind, there was a federal stay on Foreclosures. This ended in Sept of last year I believe, and now we are seeing a truly disturbing trend.

Just look at this headline from Bloomberg about foreclosures in January:

Foreclosure filings such as default notices, scheduled auctions or bank repossessions jumped 29% from a month earlier and more than doubled compared with January 2021, the report said. Lenders repossessed 4,784 properties in the month and started the process on another 11,854 homes.


https://www.bloomberg.com/news/arti...-rose-in-january-after-end-of-pandemic-freeze

Look how they call 11,854 homes a "surge". Fast forward to March numbers, and it is triple that.

Last month, 33,333 properties across the U.S. faced foreclosure, a 181 percent jump from March 2021 and 29 percent pop from February, according to a report by foreclosure tracker Attom. The first quarter saw 78,271 properties with a foreclosure filing, a 39 percent from the previous quarter and 132 percent from last year.

https://www.wfla.com/news/national/foreclosures-surge-181-to-highest-levels-since-march-2020/





What is even more so worrisome is that there was this freeze. So the people who were not having to pay mortgage payments during this time, well they were not making enough to save for when the freeze was lifted... why? Because of inflation.

Anyways, just like with the housing crash of 2008, a stock market crash coincided as well, and it seems after having a lot of volatility and being artifically propped up throughout COVID. Just a few months ago, the Dow was over 36500, now it is under 33000, dropping over 3500 points, in addition to the drop this past Friday. Perhaps not coincidentally, the sell offs are rivaling 2008

oh no, wealthy people tried to start another pyramid scheme in real estate and forgot that they don't actually pay the larger mass of humans that they employ a living wage that permits them entry in being accomplice to the scam and the last boys in turned rotten eggs?!?!?!

what a tragedy….. clowns.

they'll just claim their losses against their tax dues and complain about the poor wasting their tax money over cigars and a bottle of wine made by a castle owned by an oligarch in France priced at 400x its cost served by a man acting as a servant who is being taxed on the "income" that no one is legally obligated to pay him, that is legally described as a "gratuity" for his work upon completion.

 

[MeatheadMike]

I'm in the development and lending end of things. This is exactly what we're seeing in NY. Volume wise my company is down 80% from previous years and we are ranked in the top 5 nation wise and #1 in NY by volume.



Higher rates have made it impossible for:
- the bottom 1/3 of buyers to get pre-approved DTI wise (HOI increases have also made that worst) so basically remove 35% of your potential buyers.

- upgrade from a 500k ,purchased with a lower rate, to 750k home DTI wise. So you're losing 95% of the seller. People dying and retiring to cheaper states is the only housing inventory we have in NY.

Yep, kind of comical and morbid, but dying baby boomers is the main way homes come on the market these days. What's crazy is that many of their houses have had no work done since their deceased owners bought them... and they are still selling for over asking.

Since baby boomers own the majority of properties, I imagine in about 10 years we will see inventory improve as they really start to die off.

But things don't seem like they will change much in the near future. Inventory may improve a bit if interest rates drop to around 5%... but even then I doubt it would offset the influx of new buyers who would come out of the woodwork.

 

[Mr Holmes]

 

[RoastBeast]

The Government could have built a hell of a lot of houses with the 75 billion they've sent to Ukraine.

 

[cottagecheesefan]

imagine if blackrock, Berkshire, etc weren’t buying up all these foreclosures to eventually force a rental model.

I admit the housing market did not crash. But I also feel they realize the commercial reali estate model is now failing and moving to controlling residential and thus inflating the industry, etc.

you do see this in inflation and debt numbers. Couple With foreclosures and other repossession rates.

regardless of if the housing market crash happen, got to love bidenomics and it’s fall out. Based on that, I think this thread has aged well, that bidenomics is a lie and the economy sucks.

to anyone who cheers on my assessment being wrong, you literally love these mega corporations buying everything up. I guess, congrats?

 

[Mr Holmes]

imagine if blackrock, Berkshire, etc weren’t buying up all these foreclosures to eventually force a rental model.

I admit the housing market did not crash. But I also feel they realize the commercial reali estate model is now failing and moving to controlling residential and thus inflating the industry, etc.

you do see this in inflation and debt numbers. Couple With foreclosures and other repossession rates.

regardless of if the housing market crash happen, got to love bidenomics and it’s fall out. Based on that, I think this thread has aged well, that bidenomics is a lie and the economy sucks.

I read somewhere Blackrock was getting out of the house game.

 

[cottagecheesefan]

I read somewhere Blackrock was getting out of the house game.

they are and sent those assets to blackstone. To yet again avoid taxes, and a million other things

https://www.cnbc.com/amp/2017/06/22...ck-schwarzman-and-fink-did-it-on-purpose.html

they literally say it opening paragraph of the article that they are all the same company and conspired for this


teve Schwarzman, the billionaire co-founder of Blackstone Group, said Thursday on CNBC that he gets a "real chuckle" about the confusion between his private equity firm's name and Larry Fink's BlackRock.

During an interview on "Squawk Box,"Schwarzman told the behind-the-scenes story about the similar names, saying Fink and he decided decades ago to do it on purpose.

 

[wlu.29]

they are and sent those assets to blackstone. To yet again avoid taxes, and a million other things

https://www.cnbc.com/amp/2017/06/22...ck-schwarzman-and-fink-did-it-on-purpose.html

they literally say it opening paragraph of the article that they are all the same company and conspired for this


teve Schwarzman, the billionaire co-founder of Blackstone Group, said Thursday on CNBC that he gets a "real chuckle" about the confusion between his private equity firm's name and Larry Fink's BlackRock.

During an interview on "Squawk Box,"Schwarzman told the behind-the-scenes story about the similar names, saying Fink and he decided decades ago to do it on purpose.

Your lack of comprehension turns everything into a conspiracy

You dont have to live in fear

 

[Limeade]

TS said "Just a few months ago, the Dow was over 36500, now it is under 33000, dropping over 3500 points"

Meh. It goes up and it goes down. Some volatility with the tech stocks. Overall I'm at a 12% return YTD which is outstanding.

I'm getting rough up on my small cap funds though, anyone know what's going on?

 

[MeatheadMike]

From that source:

"Across the country, about 1 in every 1,121 properties had a foreclosure filing in the third quarter. That’s a return to almost pre-pandemic levels as foreclosure moratoriums put in place in the early days of COVID-19 have expired."
​

A "surge" in foreclosures after the moritorium was lifted, causing them to almost return to prepandemic levels isn't really indicative of anything.

 

[AWilder]

From that source:

"Across the country, about 1 in every 1,121 properties had a foreclosure filing in the third quarter. That’s a return to almost pre-pandemic levels as foreclosure moratoriums put in place in the early days of COVID-19 have expired."
​

A "surge" in foreclosures after the moritorium was lifted, causing them to almost return to prepandemic levels isn't really indicative of anything.

they are just asking questions!

 

[MeatheadMike]

imagine if blackrock, Berkshire, etc weren’t buying up all these foreclosures to eventually force a rental model.

I admit the housing market did not crash. But I also feel they realize the commercial reali estate model is now failing and moving to controlling residential and thus inflating the industry, etc.

you do see this in inflation and debt numbers. Couple With foreclosures and other repossession rates.

There's a glut of commercial real estate and a shortage of residential. A win-win solution to both problems would be to convert some of that commercial to residential... but zoning laws are a problem and local governments don't seem to care enough to do much about it.

regardless of if the housing market crash happen, got to love bidenomics and it’s fall out. Based on that, I think this thread has aged well, that bidenomics is a lie and the economy sucks.

to anyone who cheers on my assessment being wrong, you literally love these mega corporations buying everything up. I guess, congrats?

Umm no?
You were wrong, it happens to all of us. Rather than trying to save face, it would be more useful to figure out why you were wrong though, if you care about being less wrong in the future.