Economy The great housing market crash of 2022

[HomeCheese]

House 3 away from me (same square footage, similar floor plans, nicer kitchen but unfinished basement whereas mines finished so I think those about cancel out) just sold for 25% more than I bought my home for 16 months ago

I'm not seeing a crash anytime soon. Still way more buyers than sellers out there keeping the costs up high. I'm not even seeing the expected plateau yet. Friends trying to buy were one of 18! offers last week.

I feel like we have peaked here but no back slide. Too little inventory for prices to go down here.

 

[deadon]

I feel like we have peaked here but no back slide. Too little inventory for prices to go down here.

I keep hearing this and would like to know where people are going to get the funds to pay for homes that don't go down in price? Rates are going up and are already double. 500k mortgage 20% down gets you a payment of 600.00 more a month than last year.

Cars are high AF. Food costs and fuel prices up high AF and set to go higher.

I just want to understand where the money will come from. I did see they are pushing ARM loans and 40 year fixed loans. There's no way prices stay high demand or nor. If you can't make the payment you can't make the payment.

Also with the decline in home sells how many times will it need to decline before homes drop in price? My guess, not long.

 

[Misfit23]

I feel like we have peaked here but no back slide. Too little inventory for prices to go down here.

I feel this...

I just made a bid $65000 over asking and was still outbid.

 

[method115]

I keep hearing this and would like to know where people are going to get the funds to pay for homes that don't go down in price? Rates are going up and are already double. 500k mortgage 20% down gets you a payment of 600.00 more a month than last year.

Cars are high AF. Food costs and fuel prices up high AF and set to go higher.

I just want to understand where the money will come from. I did see they are pushing ARM loans and 40 year fixed loans. There's no way prices stay high demand or nor. If you can't make the payment you can't make the payment.

Also with the decline in home sells how many times will it need to decline before homes drop in price? My guess, not long.

I can't speak for other places but I know here in Texas they have two separate loans that pay your down payment. First time home buyers loan and there is another loan for moving to certain areas that are typically far from downtown (around 30 mins) I forget the name of that loan though.

 

[cottagecheesefan]

I feel this...

I just made a bid $65000 over asking and was still outbid.

I can't speak for other places but I know here in Texas they have two separate loans that pay your down payment. First time home buyers loan and there is another loan for moving to certain areas that are typically far from downtown (around 30 mins) I forget the name of that loan though.

I think this circles back to what I have been saying, which is that the investment firms are keeping the prices high so people cannot compete with them, to an extent... though some places in the country, like TX, FL, some other areas are just having a lot of people move there as well, while people are leaving NY, CA, etc.

What I read in Forbes is also interesting. They say that while the number of sales is decreasing, the media/avg price is going up still. They also expect the media price to continue to go up through the end of the yea, tho perhaps not at such a high rate of increase.

Despite the collapse in sales, median prices rose to a new all-time high of more than $450,000—reflecting the price pressure that's dampening housing demand, LPL Financial chief economist Jeffrey Roach said in a Tuesday note, warning the softening housing market will drag on overall economic growth this quarter.

 

[deadon]

I can't speak for other places but I know here in Texas they have two separate loans that pay your down payment. First time home buyers loan and there is another loan for moving to certain areas that are typically far from downtown (around 30 mins) I forget the name of that loan though.

Yeah I saw that. They started doing that all over now. But that doesn't change anything and as a matter of fact it makes for two payments and more money out per month.

They're getting creative with the loans like they did in 05 and that ended up causing a crash.

To make things worse you can't refi and take lots of cash out because the rates have doubled. I think we all know the end game but there's a lot of people that don't want to see it.

There's no way in hell my house is worth 1mil. We paid 350k for it 7 years ago brand new. Our payment is 1500 I can't even imagine what it would be if we financed almost a million dollars.

 

[method115]

I think this circles back to what I have been saying, which is that the investment firms are keeping the prices high so people cannot compete with them, to an extent... though some places in the country, like TX, FL, some other areas are just having a lot of people move there as well, while people are leaving NY, CA, etc.

What I read in Forbes is also interesting. They say that while the number of sales is decreasing, the media/avg price is going up still. They also expect the media price to continue to go up through the end of the yea, tho perhaps not at such a high rate of increase.

Despite the collapse in sales, median prices rose to a new all-time high of more than $450,000—reflecting the price pressure that's dampening housing demand, LPL Financial chief economist Jeffrey Roach said in a Tuesday note, warning the softening housing market will drag on overall economic growth this quarter.

Yep houses even further down the highway from me which should make them cheaper are nearly double what I paid for mine 5 years ago. These are new houses they are building which mine was as well.

Yeah I saw that. They started doing that all over now. But that doesn't change anything and as a matter of fact it makes for two payments and more money out per month.

They're getting creative with the loans like they did in 05 and that ended up causing a crash.

To make things worse you can't refi and take lots of cash out because the rates have doubled. I think we all know the end game but there's a lot of people that don't want to see it.

There's no way in hell my house is worth 1mil. We paid 350k for it 7 years ago brand new. Our payment is 1500 I can't even imagine what it would be if we financed almost a million dollars.

Not sure what you mean by two payments. I used the first time home buyers loans and I only have 1 payment about the same as yours.

 

[cottagecheesefan]

One way this could screw the market is in the CNBC clip I posted too where they say a big problem/where this is going to lead to some hurt and is a sign of slowing economy is new housing construction/communities that are still being built. As mentioned earlier in the thread, part of that is people (not big firms) who thought they might get a place or two to Air BnB and/or rent out, along with first time home buyers who were going to get a freshly built house, are now backing out of these deals (which can last for months as communities are being built), realizing they can now not afford them. So canceling their idea of a rental/Air BnB and/or the first time, new home buyer realizing they need to scale back and get an older house in a not new community.

 

[HomeCheese]

I keep hearing this and would like to know where people are going to get the funds to pay for homes that don't go down in price? Rates are going up and are already double. 500k mortgage 20% down gets you a payment of 600.00 more a month than last year.

Cars are high AF. Food costs and fuel prices up high AF and set to go higher.

I just want to understand where the money will come from. I did see they are pushing ARM loans and 40 year fixed loans. There's no way prices stay high demand or nor. If you can't make the payment you can't make the payment.

Also with the decline in home sells how many times will it need to decline before homes drop in price? My guess, not long.

Where I live there is very little inventory so any desirable property gets great interest. A lot of people from CA are moving here and to them the prices here are doable.

I also think the last few years has shifted some values for people and more want to live here now.

 

[HomeCheese]

I feel this...

I just made a bid $65000 over asking and was still outbid.

That sucks man, must be nerve wracking to bid that much over. My neighbor just sold and got something on the other side of the island. He paid 180,000 over asking, they had something like 14 offers.

 

[tdluxon]

I feel like we have peaked here but no back slide. Too little inventory for prices to go down here.

Similar here. Now that interest rates are back up people aren't going so crazy, but there's not enough inventory that prices are likely to go back down, at least not by a significant amount though. It's definitely cooling off though. My brother in law is a realtor and does tons of open houses, all of last year they were having 50+ people show up to every one of them, sometimes hundreds. He did an open house this past weekend... one person came. It wasn't a great house but still, that is unheard of over the last couple of years.

 

[cottagecheesefan]

Where I live there is very little inventory so any desirable property gets great interest. A lot of people from CA are moving here and to them the prices here are doable.

I also think the last few years has shifted some values for people and more want to live here now.

yea, in addition to the investment firms, this too is driving up the price in some areas, but is going to lead to a crash in the urban areas and/or more wealthy areas the are leaving. Like the places in CA those people are leaving from, or NY as they are moving to FL and such.

It is going to lead to a very interesting dynamic in the next few years or so, when most/all the money and working class is gradually moved away from these urban areas in CA, NY, etc as those places also see rises in crime and such. Gonna be like some real life escape from LA or escape from NY type dystopia shit

 

[fedorthegoat777]

House 3 away from me (same square footage, similar floor plans, nicer kitchen but unfinished basement whereas mines finished so I think those about cancel out) just sold for 25% more than I bought my home for 16 months ago

I'm not seeing a crash anytime soon. Still way more buyers than sellers out there keeping the costs up high. I'm not even seeing the expected plateau yet. Friends trying to buy were one of 18! offers last week.

Sometimes that nicer kitchen can do it. If the finished basement isn't a walk out, sometimes they don't add much. Sad but true.

 

[MeatheadMike]

yea, in addition to the investment firms, this too is driving up the price in some areas, but is going to lead to a crash in the urban areas and/or more wealthy areas the are leaving. Like the places in CA those people are leaving from, or NY as they are moving to FL and such.

It is going to lead to a very interesting dynamic in the next few years or so, when most/all the money and working class is gradually moved away from these urban areas in CA, NY, etc as those places also see rises in crime and such. Gonna be like some real life escape from LA or escape from NY type dystopia shit

Every local market is different, but as for the NY market, people are not exactly fleeing the state in mass. Whats going on (because of covid and now permeant work from home for some) is that people with money from the city have left their luxury apartments to buy up all the properties in the neighboring suburbs (50% of all home sales in my NY suburb last year were from from Manhattan buyers).

This is causing a chain reaction where people originally looking to buy in those suburbs have now been pushed out in remote areas away from the city.... then the people originally looking to buy in those remote areas have now been pushed out into of the state entirely, and are pushing other people in other states out of their suburbs. Hence the housing shortages everywhere (also exacerbated even further by investors going after single family homes last year due to the low interest rates). But the point is the people with money are still staying in NY, its the people without money that are mostly being bullied out.

You'd think that this would cause the prices of homes in Manhattan to decrease (which the did a bit during the pandemic), but they've since continued to rise (just not at the rate of the suburbs). Demand is still high in wealthy areas like SoHo or upper West Side... there's no shortage of people after the city lifestyle.

 

[deadon]

Should be interesting to see what happens. Everyone has their own take.

 

[MeatheadMike]

I feel this...

I just made a bid $65000 over asking and was still outbid.

I feel your pain. I just bid $50k over asking on a total fixer-upprer (1950s built house with kitchen, bathrooms, siding and all windows needing replacement) . Thought it would be a lock. Figured it would be less competitive since it needed probably about $75k of work... but was outbid anyway.

Worst time in history to buy a house. Maybe inventory increases bit and the frenzy cools off a little after the spring buying season is over. Mortgage rates went down slightly last week and may hold if inflation continues to decrease slowly but who knows. Need some luck but hang in there.

 

[ineverpost]

As a guy whos been trying to buy a house since just before the pandemic, and would love for the to be a housing crash.... I can say with great confidence there won't be one.

This is nothing like 2007, where banks had lax lending standards and people were taking variable rate mortgages. People are able to service their debts and the problem is there's just not enough houses to fulfill demand and there won't be for the foreseeable future.

I thought that the higher interest rates would at least calm things down but they made it even more competitive because of desperation and fear of missing out. Just last week I put an offer in on a house ($35k over asking with appraisal contingency waived) and it wasn't even enough to be considered as a backup option. They were likely getting multiple cash offers.

Everything I've read about the housing market says the growth will likely decrease this year, but all that means is prices will still go up, just jnot as fast as last year.

Anyway, Id be willing to do a sig bet with anyone who thinks there will be a a housing crash this year.

Do not underestimate American's willingness to overleverage themselves. If someone can comfortably afford a 3 bedroom 2 bath, you better believe they will stretch to get a 4 bedroom or more. That's simply American.

Listen to the Dave Ramsay show. You have guys calling in that are somehow smart enough to have a 300K p/year job but are fucking broke. One doofus today was thanking Dave for telling him he should give up his 150K+ mercedes and get a honda. America is filled with assholes like this who are obsessed with keeping up with the Joneses. I don't know what a crash would be defined as but I would bet there will be a lot of assholes like this who find themselves holding a bag of shit because they are living paycheck to paycheck despite having massive incomes.

 

[Gas121]

Building Surveyor here, I can tell you as someone with a decade of experience in the construction industry; the materials are becoming cheaper to cut corners and the builds are not great. Building materials have been mooning which is causing huge pressure on the industry now and businesses are starting to go under or have went into forced liquidation. This isn't just a US issue btw, it's all over the globe. Australia, UK, NZ, Canada are all the same. Skyrocketing house prices have priced out the millennial generation. The majority live in shared houses and cannot afford a home. It's a massive problem that has not been resolved. The houses for even a 2 bedroom box house with little to no room is mind boggling. The issue has gotten deeper the past few years unfortunately by kicking the can down the road.

Buying a house now is a game of roulette. I'd compare it to throwing a dart and hoping it will continue to go up but its not sustainable and bubble is likely not here to stay for the foreseeable.. Any real estate agent telling you too 'buy now, you are going to miss out' are not looking in your best interest and aren't telling you the truth. Let me tell you; now is not the time to be gambling with rising interest rates, inflation yada yada.. I'd be very nervous right now buying property.. Mortgage rates are going up, the debt households are taking on is getting bigger with rising inflation. Defaults will likely start happening soon. Sales are dropping as well.

I have been watching this play out the past few years in the industry and the bubble has now become evident.

To buy at current prices is extremely risky and many are not thinking about the bigger picture. I think many have been sucked into the bubble and it will not end well, something like the current conditions in the stock market where stocks were pumped to extraordinary levels and now we have investors holding the bag and likely will never see that money again. Greed has run its course IMO.

My advice would be very careful with your finances at this stage and stack some cash incase of any cash flow issues. This is only the beginning before we see something bigger. Many are going to run into trouble going forward if not well prepared.

 

[deadon]

Do not underestimate American's willingness to overleverage themselves. If someone can comfortably afford a 3 bedroom 2 bath, you better believe they will stretch to get a 4 bedroom or more. That's simply American.

Listen to the Dave Ramsay show. You have guys calling in that are somehow smart enough to have a 300K p/year job but are fucking broke. One doofus today was thanking Dave for telling him he should give up his 150K+ mercedes and get a honda. America is filled with assholes like this who are obsessed with keeping up with the Joneses. I don't know what a crash would be defined as but I would bet there will be a lot of assholes like this who find themselves holding a bag of shit because they are living paycheck to paycheck despite having massive incomes.

I listen to this show every now and then. Some of the callers make me almost fall out out of my chair.
Makes me feel pretty good about the way the wife and I have handled finances.

 

[12ga.]

My home has doubled since I bought it in August last year. I also bought 10 acres for the wife's horses also doubled on zillow. Yeah that's sustainable.

The one I sold for this one was also doubled but that took 10 yrs.