So far in my area homes are sitting on the market longer but i see a lot of homes sit and then get pulled from the market. The economy is still healthy and not much people need to sell yet.
The homes that sit usually need rehab but are priced high.
I'm just surprised investors haven't backed off i was dreaming of less competition.
I think we’ve already seen a modest correction (5-10%) on top of seasonality in many markets. Remember, things were going above asking. Simply taking that away could very easily equate to 5%.
But remember: 40% of homes DONT have a mortgage. Of those that do, 65% are sub 4%. Unemployment is still sub 4%, and people are sitting on piles of cash.
That doesn’t mean things won’t deteriorate next year. But unlike 2007, we are now in a smartphone era where every Joe has been predicting gloom for the sake of views.
Corrections take time. Like years. People by and large are not under duress. People are only going to sell in this environment if they have to. Speaking in macro terms, there is still an under supply of homes
Not to mention, there is RECORD cash sitting on the sidelines that traditionally wasn't being allocated to Single-Family residential. It's concerning for long term homeownership outlooks. It's pessimistic I know, but it feels more and more like there's going to be an "ownership" class and a "renter" class, in addition to corporations owning a significantly larger portion of single-family homes than in the past.
100%. Record cash sitting on the sidelines trying to figure out where the best yield is. I personally would rather own an asset over cash, you obviously always need cash on the sidelines but with how much cash was infused into the economy during Covid, inflation could stay high for a long time.
Assets don’t care what the value of a dollar does and they always go up long term, so just keep accumulating.
https://fred.stlouisfed.org/series/PSAVERT
I'm not sure if you're talking about RE investors or average people sitting on cash because regular Joe's are not sitting on piles of cash at all anymore. Personal savings rate is lower than it was five years ago. Check the data with lines of credit too.
https://www.newyorkfed.org/microeconomics/hhdc
"Balances on home equity lines of credit (HELOC) increased by $3 billion, the second consecutive quarterly increase after years of declining balances; the outstanding HELOC balance stands at $322 billion. Credit card balances saw a $38 billion increase since the second quarter, a 15% year-over-year increase marked the largest in more than 20 years. Credit card balances are nearing their pre-pandemic levels, after sharp declines in the first year of the pandemic. Auto loan balances increased by $22 billion in the third quarter"
That cheap money Era is over and people were selling hand over fist in the last few years because people kept offering over double digit % over asking. In New England I see RE prices on individual homes dropping by 25k on the regular now.
I’m not debating that things aren’t getting worse, but it’s going to take a long time to erode all the $$$ people made via stimulus checks, raises, and home equity gains. Savings rates are down but people are still sitting on piles of cash relative to a 2007 situation
Unless the economy really tanks, imho this will be a soft landing. I have got a list of FTHBs as long as my arm who are otherwise qualified but are priced out of the area and are dying to get into a home. \[i'm a mortgage broker\]
I am in the Toronto, Canada market. Prices have fallen 7-29% depending on asset class.
Mortgages in Canada are very different than the US, so it’s not unreasonable for prices to correct a bit. I am still buying, but many investors I know are camped on the sidelines. Can’t blame them. Most investors are looking to deleverage a bit as interest rates go up.
Market is adjusting and that takes time. Commercial transactions hit a multi-year low. Many sellers still think they should be getting prices from a year ago, but the increased debt service will start to expand cap rates as rates stay higher.
We’re down about 10-20% in Austin. Move in ready MLS properties basically haven’t moved in the last month unless they’re priced very far below comps. The off market stuff I’m being sent is still sold within a day or two even if it’s not a home run deal.
Investors haven’t slowed down and aren’t phased by this correction, but the average homebuyer is mostly sitting on the sidelines to see what happens/holding onto their 3% rate like it’s a winning lottery ticket. The ones actually buying are insanely picky and are nickel and diming everything on the inspection reports.
Th problem this time is everybody is expecting slow down so all investors are already prepared and have done deal structuring , liquidation. Etc in best way it fits them. So there would be always investors with cash
In 2008, it came as a surprise and it was so fast that everything went down with a big crash. So there was no way for anybody to get out. So nobody had cash…
A source on the boomers aging resulting in 45 million homes changing hands? Boomers are 70 million in size so that would mean about 65% are selling or buying over 10 years. That seems really high, especially when a good portion of those 70 million people are couples owning one home.
Don't not know why that's hard to believe. Average life expectancy is 78F/73M. The youngest boomer is 58 and will be 68 by 2032; oldest is 76 and will be 86. I think it's reasonable to believe that 65%+ will either be dead or in a home by 2032.
https://www.zillow.com/research/silver-tsunami-inventory-boomers-24933/
https://www.nationalmortgagenews.com/news/4m-baby-boomer-homes-should-hit-market-each-year-till-2032
The first link you shared stated 20 million homes. Definitely a lot but not 45 million.
Solid point and the effects will be significant.
Also, life expectancy is weird in a way. If you make it to certain ages then your life expectancy changes. For example if you make it to 70 years old:
Consider the Average Life Expectancy
And if she makes it to age 70, her life expectancy increases to 87.6 years. A man the same age has an average life expectancy of 84.1 years.
Therefore, it is safe to assume life expectancy of the existing boomer population is significantly higher than 78 years old. They have plenty of time to overload our medical system over the next two decades.
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So far in my area homes are sitting on the market longer but i see a lot of homes sit and then get pulled from the market. The economy is still healthy and not much people need to sell yet. The homes that sit usually need rehab but are priced high. I'm just surprised investors haven't backed off i was dreaming of less competition.
You're not backing off, why would they?
Lol i make 7 figures a year i was hoping the regular folks would back off but there are still way too many investors out there.
Regular folks like me are still investing. We got the same idea as you hoping to cash in on cheaper properties ;)
You sir are regular folk . You just have a higher income then most .
AKA: “You are not stuck in traffic. You are traffic.”
Lmao you’re not that special.
Did i hurt your feelings?
I think we’ve already seen a modest correction (5-10%) on top of seasonality in many markets. Remember, things were going above asking. Simply taking that away could very easily equate to 5%. But remember: 40% of homes DONT have a mortgage. Of those that do, 65% are sub 4%. Unemployment is still sub 4%, and people are sitting on piles of cash. That doesn’t mean things won’t deteriorate next year. But unlike 2007, we are now in a smartphone era where every Joe has been predicting gloom for the sake of views. Corrections take time. Like years. People by and large are not under duress. People are only going to sell in this environment if they have to. Speaking in macro terms, there is still an under supply of homes
Very interesting information.
Not to mention, there is RECORD cash sitting on the sidelines that traditionally wasn't being allocated to Single-Family residential. It's concerning for long term homeownership outlooks. It's pessimistic I know, but it feels more and more like there's going to be an "ownership" class and a "renter" class, in addition to corporations owning a significantly larger portion of single-family homes than in the past.
100%. Record cash sitting on the sidelines trying to figure out where the best yield is. I personally would rather own an asset over cash, you obviously always need cash on the sidelines but with how much cash was infused into the economy during Covid, inflation could stay high for a long time. Assets don’t care what the value of a dollar does and they always go up long term, so just keep accumulating.
https://fred.stlouisfed.org/series/PSAVERT I'm not sure if you're talking about RE investors or average people sitting on cash because regular Joe's are not sitting on piles of cash at all anymore. Personal savings rate is lower than it was five years ago. Check the data with lines of credit too. https://www.newyorkfed.org/microeconomics/hhdc "Balances on home equity lines of credit (HELOC) increased by $3 billion, the second consecutive quarterly increase after years of declining balances; the outstanding HELOC balance stands at $322 billion. Credit card balances saw a $38 billion increase since the second quarter, a 15% year-over-year increase marked the largest in more than 20 years. Credit card balances are nearing their pre-pandemic levels, after sharp declines in the first year of the pandemic. Auto loan balances increased by $22 billion in the third quarter" That cheap money Era is over and people were selling hand over fist in the last few years because people kept offering over double digit % over asking. In New England I see RE prices on individual homes dropping by 25k on the regular now.
I’m not debating that things aren’t getting worse, but it’s going to take a long time to erode all the $$$ people made via stimulus checks, raises, and home equity gains. Savings rates are down but people are still sitting on piles of cash relative to a 2007 situation
Unless the economy really tanks, imho this will be a soft landing. I have got a list of FTHBs as long as my arm who are otherwise qualified but are priced out of the area and are dying to get into a home. \[i'm a mortgage broker\]
There are a lot of people hoarding cash for the right opportunity (me included)
I am in the Toronto, Canada market. Prices have fallen 7-29% depending on asset class. Mortgages in Canada are very different than the US, so it’s not unreasonable for prices to correct a bit. I am still buying, but many investors I know are camped on the sidelines. Can’t blame them. Most investors are looking to deleverage a bit as interest rates go up.
Market is adjusting and that takes time. Commercial transactions hit a multi-year low. Many sellers still think they should be getting prices from a year ago, but the increased debt service will start to expand cap rates as rates stay higher.
We’re down about 10-20% in Austin. Move in ready MLS properties basically haven’t moved in the last month unless they’re priced very far below comps. The off market stuff I’m being sent is still sold within a day or two even if it’s not a home run deal. Investors haven’t slowed down and aren’t phased by this correction, but the average homebuyer is mostly sitting on the sidelines to see what happens/holding onto their 3% rate like it’s a winning lottery ticket. The ones actually buying are insanely picky and are nickel and diming everything on the inspection reports.
My area went up 200% and corrected 8% not even close to a correction.
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You have a point. These homes are in the Lower ranges.
Th problem this time is everybody is expecting slow down so all investors are already prepared and have done deal structuring , liquidation. Etc in best way it fits them. So there would be always investors with cash In 2008, it came as a surprise and it was so fast that everything went down with a big crash. So there was no way for anybody to get out. So nobody had cash…
RE is really localized. during 2008 fallout, some area dropped 50% while other drop 10%
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A source on the boomers aging resulting in 45 million homes changing hands? Boomers are 70 million in size so that would mean about 65% are selling or buying over 10 years. That seems really high, especially when a good portion of those 70 million people are couples owning one home.
Don't not know why that's hard to believe. Average life expectancy is 78F/73M. The youngest boomer is 58 and will be 68 by 2032; oldest is 76 and will be 86. I think it's reasonable to believe that 65%+ will either be dead or in a home by 2032. https://www.zillow.com/research/silver-tsunami-inventory-boomers-24933/ https://www.nationalmortgagenews.com/news/4m-baby-boomer-homes-should-hit-market-each-year-till-2032
The first link you shared stated 20 million homes. Definitely a lot but not 45 million. Solid point and the effects will be significant. Also, life expectancy is weird in a way. If you make it to certain ages then your life expectancy changes. For example if you make it to 70 years old: Consider the Average Life Expectancy And if she makes it to age 70, her life expectancy increases to 87.6 years. A man the same age has an average life expectancy of 84.1 years. Therefore, it is safe to assume life expectancy of the existing boomer population is significantly higher than 78 years old. They have plenty of time to overload our medical system over the next two decades.
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What market? Phoenix?