Economy The great housing market crash of 2022

The states are a huge problem. Blue states regulate building and have so much red tape and so many fees it becomes impossible to build. And the people that can navigate the madness and build have to charge insane prices.

And California experienced a drought that killed hundreds of millions of trees, and instead of allowing them to be harvested intelligently for lumber the governor literally said it is better to let them rot. But they rotted and then burned and then California polluted the Earth with smoke worse than literally any place on Earth. Madness.


I could have rough plumbing out in, have a pad poured and drop a two story TuffShed on it. Do rough electrical and have my sub contractors finish it cheap. Then insulate, dry wall and finish everything cheap. It would be a cheap rental, but once I pull permits and pay for everything and go through the California madness it more than doubles the price.

Gotta pay for big government.
My business partner has been building a home for 3 years now. Through each phase theres like a 6 month wait for a inspection before he can move on. It's crazy.

We also have the bark beetle and dead trees. They don't remove them and then we get a lighting strike and it's all over.

You really can't win when it comes to climate in CA. I started hunting at 9 and we always had 100 degree plus days. If you get a wet winter then the spring and summer dry out all that new growth and it's dry ripe for a fire to start. It's a no win.
 
My business partner has been building a home for 3 years now. Through each phase theres like a 6 month wait for a inspection before he can move on. It's crazy.

We also have the bark beetle and dead trees. They don't remove them and then we get a lighting strike and it's all over.

You really can't win when it comes to climate in CA. I started hunting at 9 and we always had 100 degree plus days. If you get a wet winter then the spring and summer dry out all that new growth and it's dry ripe for a fire to start. It's a no win.


I bought a house that was built in 1954 in Paradise. Just to convert a garage and breezeway to living space was a task I wouldn't wish on enemies. The paperwork, the phone calls, the meetings with the town. The red tape and engineering, the fees and inspections at every step. It took a lot of perseverance, and fuck building new! The fees would have been so bad I would have never been able to afford to build.

And of course the insane forest management. Watching my town be incinerated was tough. Being stuck with a house I can live in sucked more. And then looking at a house in Placer county to fix up, but getting scared of fire danger. Only to learn that the house we looked at burned down in the 2022 River fire in Colfax. Ugh. So glad we didn't buy it and get traumatized again.

Anyway, I miss the Sierra my ore than anything, but I can't deal with California. Too bad. Never thought I could move from the mountains.
 
I bought a house that was built in 1954 in Paradise. Just to convert a garage and breezeway to living space was a task I wouldn't wish on enemies. The paperwork, the phone calls, the meetings with the town. The red tape and engineering, the fees and inspections at every step. It took a lot of perseverance, and fuck building new! The fees would have been so bad I would have never been able to afford to build.

And of course the insane forest management. Watching my town be incinerated was tough. Being stuck with a house I can live in sucked more. And then looking at a house in Placer county to fix up, but getting scared of fire danger. Only to learn that the house we looked at burned down in the 2022 River fire in Colfax. Ugh. So glad we didn't buy it and get traumatized again.

Anyway, I miss the Sierra my ore than anything, but I can't deal with California. Too bad. Never thought I could move from the mountains.
It sux man, I live close to the CA border to avoid all that drama. We lived in CA for 40 years and saw the writing on the wall. Shoot you can't even buy a can of paint or lumber without a special tax or as they like to call it a "fee" lol. I make the hour and 45min drive a few times a week but kiss the NV ground when I get home.
 
It sux man, I live close to the CA border to avoid all that drama. We lived in CA for 40 years and saw the writing on the wall. Shoot you can't even buy a can of paint or lumber without a special tax or as they like to call it a "fee" lol. I make the hour and 45min drive a few times a week but kiss the NV ground when I get home.


I tried to find some land up there, but Californians fled and drove up the prices too far. Nevada was my first choice. And don't get me started on paint supplies. California made lacquer thinner based lacquer illegal! It had to be acetone based. So lacquer prices skyrocketed. As a painter you just pass the cost to the customer. Gee, just reason #9999999763535373829 building there is expensive.
 
I tried to find some land up there, but Californians fled and drove up the prices too far. Nevada was my first choice. And don't get me started on paint supplies. California made lacquer thinner based lacquer illegal! It had to be acetone based. So lacquer prices skyrocketed. As a painter you just pass the cost to the customer. Gee, just reason #9999999763535373829 building there is expensive.
Haha I may or may not import supplies for the shop.
Seriously though, when we bought we bought new 6 years ago. We're on a acre almost 2800 sq ft home 3 min from BLM land that I can shoot on. We paid 355k landscaped. Three days ago a home down the road 2100 sq ft on a busy road just sold for 800k. Crazy times and it doesn't seem to be slowing here like other places. It does help we don't have state taxes. Plus everyone getting out of CA are willing to pay cash. That all said its growing too fast here and I'm selling my half of the business. We will cash out and move to middle America and live on acres away from people and own everything. I'm over all this BS.
 
I don't expect the housing market to crash in California much at all. Maybe retrace a bit with interest rates rising, but far from crash.

I've noticed used cars are dropping in price a bit though, hopefully they tank quite a bit over the next few months.
 
Absolutely everything in the economy crashing right now

Except housing

Fuck. All those investment firms buying up housing from the middle class were spot on.
 
Absolutely everything in the economy crashing right now

Except housing

Fuck. All those investment firms buying up housing from the middle class were spot on.
Don't worry, those investment firms that bought so high now have to try and rent at super high prices to make their money back. Money that people don't have. They're screwed, give it time.
 
Don't worry, those investment firms that bought so high now have to try and rent at super high prices to make their money back. Money that people don't have. They're screwed, give it time.

yup, this is exactly what I was saying earlier too as this has been brought up a number of times. It isn't just these big firms either, which own about 20-25% of the market. But even more so, there are lots of people/small time investors/small businesses doing the same thing, hoping to rent and/or air bnb. I am friends with a married couple who in the last year and a half bought a local property to rent, also a property in TN and one in NC to rent out as Air BnBs... part of that model is paying off the mortgages through the money they take in... but if people are struggling to just get by and gas prices are high, people likely will not be vacationing as much, etc... so I know they are a bit worried they won't be getting as many guests at the two Air BnBs as they were hoping for and/or have to lower their rate.

They have good jobs too and have been a insulated from the inflation and such... but just because they are doesn't mean their potential guests have been.
 
One of my buddies that's a loan officer told me today ARM loans are up 14%. Anyone remember what happened the last time everyone was getting a ARM?
 
There's one monster difference between now and the 2008 housing crisis....inventory, or lack therof. Although interest rates will continue to skyrocket, prices will continue to rise as inventory remains scarce.
To add to this even if interest rates got to a point to where upper middle class was priced out then it won't matter because investors will come in and pay cash, they're not reliant on interest rates

Almost every single house in my neighborhood is being bought by non loan straight cash (either an out of state person who's from a higher cost of living state or an investor that's immediately turning it into a rental)

A lot of those investment companies have quotas on how many houses they have to buy per year regardless of price. Add in no inventory like you stated and it becomes more complicated then "high prices and possible foreclosures = crash"
 
Not to completely disagree but isn't it plausible that the later generations are also dealing with significantly more emotional turbulence than previous generations.

For example, the slient generation didn't have to deal with a 24/7 news cycle constantly bombarding them with everything that's wrong with the world. Prior to the internet, no one had to deal with the massive emotional and social difficulties presented by social media.

While the physical side of the world has eased, there are significantly more burdens on the emotional side than previously.
not to be disagreeable but i always find it puzzling when people talk about the trauma that comes form news cycles and social media... as if we arent the ones choosing it over living and life instead... its weird to me that people choose what is hurting them.
 
No doubt.

Which is why I carefully monitor anything my kids use the internet for. Currently they are restricted to watching video game videos and schoolwork.
yep... if kids are harmed by the internet they have bad parents simple as that.
 
This housing crisis is what parts of Europe, especially Britain and France, have been going through for 20-30 years. This is the primary driver of Brexit and a potential Frexit. A few cities in Canada have been dealing with this for about 10-15 years too. This is entirely by design. By limiting foreign ownership, using progressive taxation on people who own from dozens to hundreds* of houses, nevermind companies owning thousands of domestic propperties, governments could increase supply rapidly without even having to build. And by writing into contracts clauses that rescind planning permission if someone tries to landbank, then more homes will be built and prices will come down so that average families can compete.


*no one has a problem with Jeanie the retired widow owning 3 houses and using rent from two to as her pension supplement. But there are slumlords overbidding families on dozens or hundreds of propperties, because they have assets they can leverage againsts. This is not sustainable for society.


Don't worry, those investment firms that bought so high now have to try and rent at super high prices to make their money back. Money that people don't have. They're screwed, give it time.

Housing is an inelastic commodity, like food & water, or healthcare.

You can't afford a car? Take a bus. Can't afford a bus? Walk.

Can't afford a TV? Read a book. Can't afford a smartphone? Go to the public library.

Can't afford now sneakers? Visit a thrift store.

Can't afford a shelter from the elements? Die.

There are only a handul of places on Earth where the last statement isn't true at least one season a year. If you can are outside permenantly during a Texas summer or a Manitoba winter, you will die from exposure.
 
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yep... if kids are harmed by the internet they have bad parents simple as that.
Problem is we can't monitor what they do at school and daycare, both of which let them on tablets and wifi. And neither can they(the teachers) 100% of the time because usually when I arrive to pick them up, the 1 or 2 teachers are trying to watch 30 kids and can't keep track of them all.
 
It sux man, I live close to the CA border to avoid all that drama. We lived in CA for 40 years and saw the writing on the wall. Shoot you can't even buy a can of paint or lumber without a special tax or as they like to call it a "fee" lol. I make the hour and 45min drive a few times a week but kiss the NV ground when I get home.
My moms family is long time Californian. We rolled out of LA when my mom caught my dad packing a pistol to go to work. Her family had been there 200 years when we rolled out in 87. No regrets. Would have been awful growing up there
 
not to be disagreeable but i always find it puzzling when people talk about the trauma that comes form news cycles and social media... as if we arent the ones choosing it over living and life instead... its weird to me that people choose what is hurting them.
It's not puzzling. It's ubiquitous.

You go into a waiting room and they have the news on. You're listening to the radio and they constantly give news updates, even on the music stations. It's not all political news but it's still impactful. Even if someone minimizes their personal engagement with the news, the people around them are still consuming it and bringing to the forefront of conversation.

Social media is the same. We can all look down our noses at it but it's a huge driver of social information and people are social. I'll use 2 anecdotes to illustrate how older people simply do not understand how this works for the younger generations.

First, my business partner has a kid. The kid plays video games with his friends. But many of the games they play are online so they talk while they game. So, one kid starts making fun of another kid in the video game chat but the kid being mocked isn't online playing the game, so he doesn't know. Then that mockery goes from the game to a social media platform. Now the kid being mocked is being made fun of by kids he doesn't he even know. And the spread is almost instantaneous because social media. When he goes back to school the next day, he finds himself being mocked by a large contingent of people for reasons that he has no idea about. Why? Because the mockery started on social media but it moved into real life. We didn't have to deal with that growing up, if someone was making fun of you, you either knew who they were or their reach was only their close friends. Now, that reach is everyone with access to that social media account. How does a young person manage that effect? Even if they are not on social media themselves it's going to have a massive impact on their social standing, their sense of self, etc. It's a completely different world.

Second story, I have a friend at my kid's school (smart guy, runs a hedge fund, used to a pretty good athlete so a well rounded normal human). Put his foot down on social media. Complete no go in his house until the kid is 16. But then in middle school, the school organized a dance. Kid needed a date. Problem was, everyone was asking people out on social media. All of the plans about meeting up to get there or what to do afterwards were happening on social media. By not being on social media, his kid was being locked out of the social world for his age group which is horrible for kids at that age. So, he had to choose between his adult opinion on not letting his kid have social media and the kid's social health from being ostracized. Tough balance but he had to accept that he couldn't run a complete ban on social media and still have a socially healthy child. He struck a compromise but the end result is still that the kid is now somewhat exposed to social media...because it has become an essential part of this generation's living and life, for good and for ill.

Our generation gets to pretend that it's easily ignored because all of our similar aged friends grew up in the same way. Either social media was brand new and not what it is now or, for the older people, they went through their formative years and social media didn't even exist. Either way, none of us have the requisite experience to honestly say that this generation can just ignore it like we're choosing.
 
It's not puzzling. It's ubiquitous.

You go into a waiting room and they have the news on. You're listening to the radio and they constantly give news updates, even on the music stations. It's not all political news but it's still impactful. Even if someone minimizes their personal engagement with the news, the people around them are still consuming it and bringing to the forefront of conversation.

Social media is the same. We can all look down our noses at it but it's a huge driver of social information and people are social. I'll use 2 anecdotes to illustrate how older people simply do not understand how this works for the younger generations.

First, my business partner has a kid. The kid plays video games with his friends. But many of the games they play are online so they talk while they game. So, one kid starts making fun of another kid in the video game chat but the kid being mocked isn't online playing the game, so he doesn't know. Then that mockery goes from the game to a social media platform. Now the kid being mocked is being made fun of by kids he doesn't he even know. And the spread is almost instantaneous because social media. When he goes back to school the next day, he finds himself being mocked by a large contingent of people for reasons that he has no idea about. Why? Because the mockery started on social media but it moved into real life. We didn't have to deal with that growing up, if someone was making fun of you, you either knew who they were or their reach was only their close friends. Now, that reach is everyone with access to that social media account. How does a young person manage that effect? Even if they are not on social media themselves it's going to have a massive impact on their social standing, their sense of self, etc. It's a completely different world.

Second story, I have a friend at my kid's school (smart guy, runs a hedge fund, used to a pretty good athlete so a well rounded normal human). Put his foot down on social media. Complete no go in his house until the kid is 16. But then in middle school, the school organized a dance. Kid needed a date. Problem was, everyone was asking people out on social media. All of the plans about meeting up to get there or what to do afterwards were happening on social media. By not being on social media, his kid was being locked out of the social world for his age group which is horrible for kids at that age. So, he had to choose between his adult opinion on not letting his kid have social media and the kid's social health from being ostracized. Tough balance but he had to accept that he couldn't run a complete ban on social media and still have a socially healthy child. He struck a compromise but the end result is still that the kid is now somewhat exposed to social media...because it has become an essential part of this generation's living and life, for good and for ill.

Our generation gets to pretend that it's easily ignored because all of our similar aged friends grew up in the same way. Either social media was brand new and not what it is now or, for the older people, they went through their formative years and social media didn't even exist. Either way, none of us have the requisite experience to honestly say that this generation can just ignore it like we're choosing.

again.... nobody is forcing anyone to be on social media... look at phones.... watch the news.... etc. in fact i dont know any parents who allow much of that at all. the fact is its irresponsible parents that allow their kids to choose to be traumatized by media, music and television. my child is not and none of her freinds are either.

as far as i can tell it seems to be just a certain class of people that dont have the knowledge and discipline to stay off all of that who are traumatized by things they choose to watch daily. and its ironic that all of this is completely avoidable.
 
yup, this is exactly what I was saying earlier too as this has been brought up a number of times. It isn't just these big firms either, which own about 20-25% of the market. But even more so, there are lots of people/small time investors/small businesses doing the same thing, hoping to rent and/or air bnb. I am friends with a married couple who in the last year and a half bought a local property to rent, also a property in TN and one in NC to rent out as Air BnBs... part of that model is paying off the mortgages through the money they take in... but if people are struggling to just get by and gas prices are high, people likely will not be vacationing as much, etc... so I know they are a bit worried they won't be getting as many guests at the two Air BnBs as they were hoping for and/or have to lower their rate.

They have good jobs too and have been a insulated from the inflation and such... but just because they are doesn't mean their potential guests have been.
Don't worry, those investment firms that bought so high now have to try and rent at super high prices to make their money back. Money that people don't have. They're screwed, give it time.

You guys are missing some important pieces of the conversation. When we say "investors" we're not talking people buying 1-2 places hoping to make rental income. We're talking, on the small end, groups buying 1-2 properties a month. As someone else already pointed out, they're primarily buying cash. This means no mortgage and thus they have a bigger rent range on the low end than someone who has to meet the mortgage note. Additionally, once you hit a certain tipping point, you can run 10% vacancy rates and still be cash flow positive. The mom and pop people you're thinking about don't have that type of flexibility.

And a last note, when we say investors, many people are thinking local investors looking for stuff in their city or town. That's not how this works anymore. Investors are buying nationally. I'll use a client of mine for example. Has several properties in her locality but is constantly buying houses up to 3 states away if the price is low enough, sight unseen. She doesn't need to see them, she needs the volume. The properties can be handed over to a management company to handle the rents and simple upkeep. She owns over a dozen houses that she has literally never seen in person. Doesn't care because it doesn't matter.

People buying single family homes and renting them out are dinosaurs in this space. Maybe they'll make money, maybe they won't but the real business model has long since moved past that.
 
again.... nobody is forcing anyone to be on social media... look at phones.... watch the news.... etc. in fact i dont know any parents who allow much of that at all. the fact is its irresponsible parents that allow their kids to choose to be traumatized by media, music and television. my child is not and none of her freinds are either.

as far as i can tell it seems to be just a certain class of people that dont have the knowledge and discipline to stay off all of that who are traumatized by things they choose to watch daily. and its ironic that all of this is completely avoidable.
I think you missed the point of my post. It doesn't matter if someone is on social media or watches the news, it's become so ubiquitous that it intersects people's lives even if they are not actively seeking it out. Re-read the 2 anecdotes I posted regarding kids for examples of how this happens.
 
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