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Recession - 2022 / 2023 / 2024

Y'all need to brush up on your bartending skills.
I discounted a repair today for some 105 proof apple pie.
PXL_20221227_224844337.jpg

Might be worth a few gallons of diesel in the near future
 
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Hobo Hilton said:
A price drop of $2,000 on a $400,000 house makes headline news. Hang on....


U.S. home prices fall for fourth month in October as high mortgage rates bite. The numbers: The S&P CoreLogic Case-Shiller 20-city house price index fell 0.5% in October, its fourth monthly decline. Year-over-year prices rose rose 8.6%, slowing from 10.4% in the previous month.


U.S. home prices fall for fourth month in October as high mortgage rates bite

www.morningstar.com www.morningstar.com
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But there's no volume right now - home sales aren't occurring because buyers and sellers can't reach agreement on prices. We'll need to wait a few months until either sellers to cave on asking price or the Fed caves on rate hikes to really understand home values.
 
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E. Bryant said:
But there's no volume right now - home sales aren't occurring because buyers and sellers can't reach agreement on prices. We'll need to wait a few months until either sellers to cave on asking price or the Fed caves on rate hikes.
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sellers are way more likely to cave or pull their inventory which will have a ripple effect throughout the economy. Rates arent going down until after Biden's second inauguration in 2025.
 
E. Bryant said:
But there's no volume right now - home sales aren't occurring because buyers and sellers can't reach agreement on prices. We'll need to wait a few months until either sellers to cave on asking price or the Fed caves on rate hikes.
Click to expand...
"....... wait a few months......" = Slow and painful death of the middle class.....
No one has figured in how many resources are expended during the "wait".
There is no reason for a seller to cave on an asking price.... Perhaps lower the asking price 0.05% so the realtor can advertise "Price Reduced".
The FED will, eventually, cave on rate hikes but the monumental spending of the Government has overshadowed that move.
1672324565890.png
 
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Charger442 said:
sellers are way more likely to cave or pull their inventory which will have a ripple effect throughout the economy. Rates arent going down until after Biden's second inauguration in 2025.
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If sellers bought in the last two years they are likely to be in a debt trap - upside down. That leaves only three options: sell at a loss and owe the bank the balance, give it back to the bank or live in it and continue to make payments on a boat anchor.
 
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lariat said:
If sellers bought in the last two years they are likely to be in a debt trap - upside down. That leaves only three options: sell at a loss and owe the bank the balance, give it back to the bank or live in it and continue to make payments on a boat anchor.
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Correct - and the third option isn't viable if someone finds themselves relocated due to their job, family matters, etc.
 
lariat said:
If sellers bought in the last two years they are likely to be in a debt trap - upside down. That leaves only three options: sell at a loss and owe the bank the balance, give it back to the bank or live in it and continue to make payments on a boat anchor.
Click to expand...

i see your third option being the most likely scenario in a majority of the circumstances.

your first option i see as not being really feasible as MOST people who bought in the last 2 years still had to drop 20% on a downpayment. the only way they sell and still owe the bank is if they are selling at something greater than that 20% of a loss off of their purchase price. i guess its all going to depend on what classification of house we are talking about. about $750k, i could see it, but on most of the under $200-$250k houses, i dont think they are able to drop below that 20% mark.

i could be very wrong.
 
lariat said:
If sellers bought in the last two years they are likely to be in a debt trap - upside down. That leaves only three options: sell at a loss and owe the bank the balance, give it back to the bank or live in it and continue to make payments on a boat anchor.
Click to expand...

In 2008, a LOT of people just lived in the house and didn't make payments. I know a guy that did that for almost 2 years. Didn't get evicted because bank rather have somebody living in it.

edit: I think most people don't put down 20%. 10% is common which causes PMI, and FHA loans with 5% down.
 
NoDopes said:
In 2008, a LOT of people just lived in the house and didn't make payments. I know a guy that did that for almost 2 years. Didn't get evicted because bank rather have somebody living in it.
Click to expand...
I remember those days well.
 
NoDopes said:
In 2008, a LOT of people just lived in the house and didn't make payments. I know a guy that did that for almost 2 years. Didn't get evicted because bank rather have somebody living in it.

edit: I think most people don't put down 20%. 10% is common which causes PMI, and FHA loans with 5% down.
Click to expand...

outside of FHA/VA loans, i dont know of any lender after the 08 crash who wasnt wanting 20% down.
 
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Hobo Hilton said:
"....... wait a few months......" = Slow and painful death of the middle class.....
No one has figured in how many resources are expended during the "wait".
There is no reason for a seller to cave on an asking price.... Perhaps lower the asking price 0.05% so the realtor can advertise "Price Reduced".
The FED will, eventually, cave on rate hikes but the monumental spending of the Government has overshadowed that move.
View attachment 8032910
Click to expand...
How long can sellers wait it out? I assume not every seller is Scrooge Mcduck sitting on piles of cash. Some are folks moving due to jobs, downsizing and other factors that may not be able to sit on a house for a year.

We are seeing the same thing in used car sales. The market inflated quickly but doesn't want to come down to earth until several dealers go out of business. Once sellers quit paying the markup, dealer stock goes through the ceiling, and several go belly up I bet we will see a correction.

I don't know how that maps out in the housing market. They just keep on building in my area like things are rainbows and unicorns. Maybe they are waiting on mass layoffs to see reality.
 
Housing Market. All I know is yesterday I drove from rural middle Georgia to the east side of the Atlanta megatropolis. There were homes going up everywhere in the former rural area east of "Atlanta". Signs for "starting at 400k" for basically zero lot line homes not in the suburbs but rural GA. "Starting at 500K" for larger lots. Looks like they are still building/selling to me. Glad I sold my house in "Atlanta" and bought the retirement retreat "before" the rates went up.
 
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Hobo Hilton said:
"....... wait a few months......" = Slow and painful death of the middle class.....
No one has figured in how many resources are expended during the "wait".
There is no reason for a seller to cave on an asking price.... Perhaps lower the asking price 0.05% so the realtor can advertise "Price Reduced".
The FED will, eventually, cave on rate hikes but the monumental spending of the Government has overshadowed that move.
View attachment 8032910
Click to expand...

Better yet offer to pay the rest of the years HOA fees. Had to do that when I sold my mothers house. It moved the day after I told the real estate swindler that.
 
Lightning8 said:
Housing Market. All I know is yesterday I drove from rural middle Georgia to the east side of the Atlanta megatropolis. There were homes going up everywhere in the former rural area east of "Atlanta". Signs for "starting at 400k" for basically zero lot line homes not in the suburbs but rural GA. "Starting at 500K" for larger lots. Looks like they are still building/selling to me. Glad I sold my house in "Atlanta" and bought the retirement retreat "before" the rates went up.
Click to expand...

They are building like mad here as well. Not sure who is moving into them.

My boy just got married in Oct. They are renting a house at the moment and chomping at the bit to get a house of their own. Everyone in both the "kids" families are telling them to wait.

The prices are still stupid here, the interest is stupid, but they keep coming up with the "waste" of money on the rent. I get that but not a good time.
 
devildog93 said:
How long can sellers wait it out? I assume not every seller is Scrooge Mcduck sitting on piles of cash. Some are folks moving due to jobs, downsizing and other factors that may not be able to sit on a house for a year.

We are seeing the same thing in used car sales. The market inflated quickly but doesn't want to come down to earth until several dealers go out of business. Once sellers quit paying the markup, dealer stock goes through the ceiling, and several go belly up I bet we will see a correction.

I don't know how that maps out in the housing market. They just keep on building in my area like things are rainbows and unicorns. Maybe they are waiting on mass layoffs to see reality.
Click to expand...
Hind sight is 20 / 20......... All those that have bailed out on an "under water" house during the past 3 - 4 recessions, all the way back to the crash of the oil industry in the 70's, made a bad move. Every one of those properties recovered and is valued at much more than what it sold for.
We will not see as many bailing out while living in an under water property. The big "Wild Card" is how much free money the Government will be handing out to the grifters over the next 2 years, eviction moratoriums, utilities vouchers, etc....
 
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Hobo Hilton said:
"....... wait a few months......" = Slow and painful death of the middle class.....
No one has figured in how many resources are expended during the "wait".
There is no reason for a seller to cave on an asking price.... Perhaps lower the asking price 0.05% so the realtor can advertise "Price Reduced".
The FED will, eventually, cave on rate hikes but the monumental spending of the Government has overshadowed that move.
View attachment 8032910
Click to expand...

$1.7 trillion omnibus put any hope of the FED not raising rates to rest. Feds will raise rates every quarter through the next year.
 
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I guess that depends on your point of view. Loss of earning power due to inflation, increase in the cost of food, autos, housing,etc. Seems like a backslide to me.
 
Skunk said:
Paying rent doesn’t bother me as much as paying interest.
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I see them as about equal. And one reason to apply more when you make your house payment. If you have a fixed rate loan, and IMHO you are an idiot if you have an ARM then your house payment is BASICALLY the same, give or take based on insurance and taxes.

As my income went up over the years my house payment got more and more money, and I never took money out of my house for anything, much less something as stupid as a vac. I know people that did that, these same people are amazed that my house is paid for now and wonder how I got "rich". No I still have that same 1990 truck, I did not take two expensive vac per year, and it came a time when an extra $2k was going into the house. I made a choice, pay off my house so my "golden years" have as little outlay as possible, or buy that new BMW.

Guess I should not have said that to the guy that just bought a new BMW.

I bought stuff here and there as I went along, remove that house payment and you have quite a bit of money laying on the table. It is freeing, you can spend it on things you must, new generator for the house, new AC and furnace all the way down to stupid things like gunz. And all of it is free and clear.

But somehow because I made the choice to work hard and spend my money in a manner I thought was right, I am evil because I am a rich guy that owns his own house.

Seems to me there is an ant and grasshopper story in there somewhere.
 
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devildog93 said:
I guess that depends on your point of view. Loss of earning power due to inflation, increase in the cost of food, autos, housing,etc. Seems like a backslide to me.
Click to expand...
Money is flowing. A common thing I hear is “Only broke people care about inflation.”

It’s a callous statement, but it sticks in my mind as we watch the fed do its thing.
 
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Skunk said:
Paying rent doesn’t bother me as much as paying interest.
Click to expand...
mortgage + interest for 30 years at 1,500 dollars a month BEATS the hell out of (NOT AN ARM, a fixed rate)
Watching your rent go from 900 to 1500 to 2000 to 2500 (as with inflation)
One is predictable, the other isn't. And besides, the borrow (homeowner) comes out a head on their loan if they can get a job that can keep up with inflation.
example - the house that you got a mortgage with a job at 50k a year; that same job with inflation will pay 100k a year. Your home mortgage did not increase. hence, borrower before inflation comes out ahead.
 
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I hear you guys….

I’ve rented the last couple of years and have enjoyed being rid of the costs of ownership. If something needs work, I call the homeowner and get on with life.

My only real point is that the mortgage and insurance isn’t the only cost of home ownership.
 
zeroz said:
Ownership has costs, no doubt. That said, as a renter you are buying my house and paying for the lions share of ownership costs. I can pony up for some repairs here and there, thanks.
Click to expand...
My “rent” consists of basically mowing the yard and not letting the place burn down. My situation is much different than the norm.
 
fpgt72 said:
If you have a fixed rate loan, and IMHO you are an idiot
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Anybody that financed a 30year loan over the last several years is set at 3%. ARM's reset to current rates every few years.. today, that's around 6.5%. How are the fixed rate loan borrowers idiots here?
 
Owning from 2021 through 2023 seems to me to be likely to cost 30-50% of the asset value at this time. Sure, spread over 30+ years you still end up ahead, but being able to avoid the cost of a huge downside is not a bad thing. As luck would have it, I’ve sold relatively high and not bought back in yet. If there is no way for a high middle class earner to re-enter the market, so be it. Avoiding watching my net worth drop $300K is nice.
 
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Emerson0311 said:
Owning from 2021 through 2023 seems to me to be likely to cost 30-50% of the asset value at this time. Sure, spread over 30+ years you still end up ahead, but being able to avoid the cost of a huge downside is not a bad thing. As luck would have it, I’ve sold relatively high and not bought back in yet. If there is no way for a high middle class earner to re-enter the market, so be it. Avoiding watching my net worth drop $300K is nice.
Click to expand...
Interesting perspective.
How long do you have before you must roll the funds over into like property ?
One way or the other, we all pay to "have a rood over our head". Are you renting a place until you purchase ?
"Depending on the area"... I'm not seeing SFR's losing 30-50%, even if purchased today at fair market value. A lot of variables in that statement.
???
 
Hobo Hilton said:
Interesting perspective.
How long do you have before you must roll the funds over into like property ?
One way or the other, we all pay to "have a rood over our head". Are you renting a place until you purchase ?
"Depending on the area"... I'm not seeing SFR's losing 30-50%, even if purchased today at fair market value. A lot of variables in that statement.
???
Click to expand...
Well, the breakdown I heard was that a payment that would get a $600K house in March would get a $392K house in the late fall. I expect interest rates will continue to rise in order to crush the indebted middle class. Others feel differently, but I’ve been right a lot lately. Will see I guess. The only reason house prices have exploded is because someone will lend the $$ necessary to buy them. Wages have not inflated to cover the larger interest payments. I’m no rich guy with a big plan, just found myself here and realized it could be a lot worse.
 
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Emerson0311 said:
Well, the breakdown I heard was that a payment that would get a $600K house in March would get a $392K house in the late fall. I expect interest rates will continue to rise in order to crush the indebted middle class. Others feel differently, but I’ve been right a lot lately. Will see I guess. The only reason house prices have exploded is because someone will lend the $$ necessary to buy them. Wages have not inflated to cover the larger interest payments. I’m no rich guy with a big plan, just found myself here and realized it could be a lot worse.
Click to expand...
Understood... Thank you.

Some of us have been watching Blackstone's Real-estate division (BREIT) the $69 billion private REIT fund, the Blackstone Real Estate Income Trust buying up entire housing tracts and turning them into Rental Property. It seemed to be a pretty gutsy move heading into this recession. Recently they started limiting withdrawals from that fund. That has a lot of people getting nervous.

Perhaps they are following your plan and will buy more SFR's during the late fall of 2023..... IDK
www.breit.com

BREIT | Blackstone Real Estate Income Trust

BREIT gives individuals the ability to invest with the world’s largest commercial real estate owner through a perpetually offered, non-listed REIT.
www.breit.com www.breit.com
 
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Emerson0311 said:
Owning from 2021 through 2023 seems to me to be likely to cost 30-50% of the asset value at this time. Sure, spread over 30+ years you still end up ahead, but being able to avoid the cost of a huge downside is not a bad thing. As luck would have it, I’ve sold relatively high and not bought back in yet. If there is no way for a high middle class earner to re-enter the market, so be it. Avoiding watching my net worth drop $300K is nice.
Click to expand...

That is another thing to think about. IMHO again I think WHAT you buy is pretty critical. So many want to "keep up with the Jones" and like Waylon said "four car garage and still building on". Why? I have a rather small 3bdr 3 bath house.....we built it just what we wanted. Roughly 1800sq feet not counting the basement. Big enough for two of us and ?two? kids, no more. Ended up with just one kid, but why do you need so much house for so few people? Is it to impress people? Ok valid reason I guess, but I hate people so why should I care. So my small house was built for us to basically die in. No need to move, however warmer would be nice, cold is starting to really hurt. So none of the costs to "upsize" or "downsize". Just stay put. It is enough, and has what the wife and I wanted....a little land, enough to shoot on, enough to garden in, enough to build a shop on, and no zoning requirements. It is what we wanted.

Story time:

I have a buddy I have known for over 50 years (he reminded me of that not long ago....gee thanks) I knew his brothers but not real well. One went on to marry a pretty girl, he became a Dr. And had what the Kansas City area calls the "johnson county lifestyle" HUGE house, couple kids doing every activity possible, fancy car, and he worked....ALL THE TIME, 3 different Dr. type jobs, as well as being on this board and that board. He was not happy, and oddly enough as what usually happens the last kid gets out of Highschool and the marriage falls apart.

Fast forward to today and he is living on a farm with horses and chickens, still does the Dr. thing, only with "normal Dr. type hours" and we all know what that means. Married again and even according to my friend is more happy now then he has been in the last 40 years.

Where that brings me is, did he try the other lifestyle and just not like it, thought he would but did not? Or is the "slower" lifestyle really more what people really do what, they are just to "busy" to know it.

To circle all the way back into our current discussion, we spend so much money on the things we think we want, all of us are guilty of this to some extent. When doing something as big as a house it really pays to sit down and really think is this where I want to spend the rest of my days, at least my "money earning" days.

I understand that areas change, my first house bought with a VA loan was in a nice area, quiet. City built a bridge over the highway and that allowed the "trash" to come over. Our area went from a nice older area to a total shit hole in short order, we had to get out of there......I had an "escort" agency across the street.....no I never used it.

Eh long ramble, sorry.
 
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Hobo Hilton said:
Understood... Thank you.

Some of us have been watching Blackstone's Real-estate division (BREIT) the $69 billion private REIT fund, the Blackstone Real Estate Income Trust buying up entire housing tracts and turning them into Rental Property. It seemed to be a pretty gutsy move heading into this recession. Recently they started limiting withdrawals from that fund. That has a lot of people getting nervous.

Perhaps they are following your plan and will buy more SFR's during the late fall of 2023..... IDK
www.breit.com

BREIT | Blackstone Real Estate Income Trust

BREIT gives individuals the ability to invest with the world’s largest commercial real estate owner through a perpetually offered, non-listed REIT.
www.breit.com www.breit.com
Click to expand...
It's a private non traded REIT and investors know when they sign up they have a 12 year hands off policy. No one can claim they didn't know b/c you sign your life away on a product like that so the 'recently' isn't really news. It's an extremely illiquid investment and now that people are nervous suddenly they want their money. Well. Too bad you signed up so sit tight. They do on occasion allow some withdrawls, but it's few and far between. I love NNN REITs and own several, but I'd never tie my money up into something that illiquid with a 12 year timeframe. I have a buddy who works for a small boutique firm and he has clients losing their minds over BREIT at present.
 
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I signed up with Lido investors.. They completely didn't listen to me and tried to get me to sign off on a REIT in which the document only said, "Possible significant signup costs, possible significant operating fees, completely illiquid, you may lose all your money if you try to leave and you may not be able to leave at all.". There was no actual costs, just massive warnings. I'm like fuck that, you're fired for even presenting this to me after I explicitly said I wanted to be able to leave any REITs after at most 5 years. They also made several trades in the meantime, directly against my instructions.
 
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NoDopes said:
I signed up with Lido investors.. They completely didn't listen to me and tried to get me to sign off on a REIT in which the document only said, "Possible significant signup costs, possible significant operating fees, completely illiquid, you may lose all your money if you try to leave and you may not be able to leave at all.". There was no actual costs, just massive warnings. I'm like fuck that, you're fired for even presenting this to me after I explicitly said I wanted to be able to leave any REITs after at most 5 years. They also made several trades in the meantime, directly against my instructions.
Click to expand...
I wouldn't let an active or passive paid strategy touch my portfolio for no cost and likely not if they paid me. You may/may not find this surprising, but your advisor at Lido likely doesn't invest in much of anything he pushes on you with his own money. I have several acquaintances retired from the finserv industry and 1 great friend still actively working at a small boutique firm for large net worth individuals/tax strategy etc. None of them invest/invested in the products their brokers pushed them to put clients in by and large. In point of fact my buddy still working can't put his clients into 90% of what his personal portfolio is currently invested in. Not b/c his portfolio is off the scale on risk it's quite the opposite it's in boring dividend income producers in established companies. ~ 70% fixed income/bonds/baby bonds/preferred shares and the rest CEFs and individual energy names/MLPs.
 
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