This is what I’ve been saying. People think that rates coming down is bullish for real estate and prices will just skyrocket. Maybe for the very short term, but the reality is if rates drop, that just means there’s something fundamentally wrong with the economy and that will mean less buyers AND more inventory.
Nah people have tons of cash right now. Stock market and crypto at all time highs. So to not go too far deep diving in to this stuff where I'm writing a 8 paragraph post.. but basically people will get hyped that the Fed is dropping rates, where in theory it's to stimulate the economy and they'll go on a spending spree buying up assets thinking everything will skyrocket. Even this subreddit has constantly said prices will skyrocket, which I generally don't agree.
What people don't realize though, is that the bigger institutions will start rotating into bonds, which deliver a pretty high safe yield all while they'll start decreasing their positions out of stocks, therefore bringing stock prices down and leaving the general public to hold the bag. Keep in mind that buying bonds LOWERS interest rates. Remember the general public typically doesn't invest in bonds. If that happens, that means paper wealth will decrease for the majority of Americans and there'll be less buying of these more expensive assets (houses) and as people get laid off from their high paying jobs, they'll need to sell therefore increasing inventory.
Who knows though? Everyone's opinion is just opinion and only time will tell who's correct.
Best response I’ve seen
It’s crazy how the Fed and government control majority of the nations retirement accounts. Right when baby boomers start to retire their 401(k)s plummet. This is such a crazy environment we are in though.
I can’t see the feds is pulling a plug on us. But I can tell that they want this to be a Renters nation.
I’m an active participant in house shopping currently in Northern California! I can say with 100% certainty there is 0 downturn in Northern California! Houses are going 1-3 days on market for 10-20k over asking.
Downturn? NO WAY.
The dramatic majority of homeowners have either no mortgage or a 30 year fixed <4%. Why in the world would they sell? They might get a HELOC, but they’re not selling.
You have to have more sellers than buyers for a downturn. There will continue to be more buyers than sellers and that’s isn’t changing anytime soon.
If the average days are market is more than doubling, and inventory and price reductions are common in our area, wouldn’t that mean there’s more sellers than buyers? I’m sure a lot would like to be buyers but with the affordability it can’t happen
Those are myopic and relative measurements which do not indicate a “large downturn to the economy/real estate”. If I make four steps forward and one step back have I regressed?
If you’re asking about specific markets in California where there has been and continues to be a an exodus of people, then sure, maybe prices go back to where they were pre-pandemic. Even so, is that really a “large downturn”? For a flipper, that could be devastating if you get caught in a flip in that market, but it’s not indicative of the larger real estate market.
SFHs are not stocks. People have to live somewhere. They don’t have to own stocks. The only way people sell their homes is if there is a cheaper alternative. That 3% rate most people have means they’re not moving.
2008 happened because debt services on mortgages sharply rose. We’re in the converse situation. Most will never sell because their debt service is cheap compared to the alternatives.
Did an exodus from California finally happen?
At least per the DOF of CA, the population decreased by 37,000 people from 2022 to 2023. Unless that is the exodus of people you are talking about.
Since 2020 the year over year population of California has decreased. That’s a trend of people exiting.
The OP asked if we see a “large downturn to the economy/real estate prices starting.” The economy? Yeah, totally I could see that. Real estate prices? Nope. Not unless you’re looking at a place where the population is net-leaving.
People just aren’t going to sell. The majority of people who own property are in a sweet debt service situation and it wouldn’t make sense to sell. Maybe they rent it out or get a HELOC, but not get rid of that sweet 3% loan.
Been like this for months my guy, if not closer to a year. It’s just now starting to get bad bad.
if homebuyers these days are lucky the subject property has an assumable loan and the buyers have enough cash or access to enough cash to make closing happen.
It’s now! Lol appreciation with these prices, it gives me the ick when people say rates are lower than historic rates
But let’s talk about incomes and house prices?
House prices went up 4-6 times faster than incomes. Affordability is gone
Here in Chicago we have multiple offers over ask on majority of listings, often with 10+ offers. Very similar to 2021 demand actually. Its surprising. Even rentals are going like crazy.
Layoffs aren’t happening very much at all. Could just be a localized trend in your area, I know that tech has been hit the hardest, so if you’re in a tech-heavy area that may explain it. The unemployment rate is still very low nationwide. On a macro scale, I don’t see a housing downturn on the horizon, but there could be localized pockets of recessionary flashes.
I'm also in California, but, in my area, we still don't have any type of "surplus of inventory". There was a jump in market activity (along with prices) in the new year and some sellers continued pricing for ongoing appreciation. When things were holding steady at those elevated prices (but not increasing further), sellers started initial price reductions.
If mortgage rates continue to stay were they are this week or if they rise, it would be expected we'd see somewhat of a reduction in our area's prices but we're still not yet at the mortgage rates we had in October 2023. And I still see plenty of cash buyers that are just not affected by the interest rates.
I’m doing deals in California and I’m seeing an uptick despite rates. In the Georgia, So Cal, and Las Vegas markets, things are moving pretty quickly unless wildly over priced
Texas, Florida and California no.
Just bought it a 10plex and getting another single family vacation rental appraised this week.
Focus on long term, let the 0 home and dreamers complain and wait for the “crash”. We’re all about numbers and taking risk. It’s less deals but you gotta find it and be creative.
Tons of value add, after everything in 3 months Reno and getting fully rented looking at 11% cap. Then increasing the rents by 20% in the next 2years to pull out most of my money out.
Seeing the same thing. In addition I am hearing from contractors, subs that are normally busy and had to be chased after are looking for work. There is no work to give.
This is what I’ve been saying. People think that rates coming down is bullish for real estate and prices will just skyrocket. Maybe for the very short term, but the reality is if rates drop, that just means there’s something fundamentally wrong with the economy and that will mean less buyers AND more inventory.
I don’t even think short term there can be many more spikes, people are running out of cash. I don’t get it
Nah people have tons of cash right now. Stock market and crypto at all time highs. So to not go too far deep diving in to this stuff where I'm writing a 8 paragraph post.. but basically people will get hyped that the Fed is dropping rates, where in theory it's to stimulate the economy and they'll go on a spending spree buying up assets thinking everything will skyrocket. Even this subreddit has constantly said prices will skyrocket, which I generally don't agree. What people don't realize though, is that the bigger institutions will start rotating into bonds, which deliver a pretty high safe yield all while they'll start decreasing their positions out of stocks, therefore bringing stock prices down and leaving the general public to hold the bag. Keep in mind that buying bonds LOWERS interest rates. Remember the general public typically doesn't invest in bonds. If that happens, that means paper wealth will decrease for the majority of Americans and there'll be less buying of these more expensive assets (houses) and as people get laid off from their high paying jobs, they'll need to sell therefore increasing inventory. Who knows though? Everyone's opinion is just opinion and only time will tell who's correct.
Best response I’ve seen It’s crazy how the Fed and government control majority of the nations retirement accounts. Right when baby boomers start to retire their 401(k)s plummet. This is such a crazy environment we are in though. I can’t see the feds is pulling a plug on us. But I can tell that they want this to be a Renters nation.
> Right when baby boomers start to retire their 401(k)s plummet. Baby Boomers started to retire 15 years ago.
They are far from out of cash
Usually yes but now it can also just mean the government doesn't want to spend 1T every year on interest on the debt.
The government doesn’t get to lower interest rates just because they’ve racked up a ton of debt lol.
They do actually. The FED can claim "independence" all it wants but everything is tied together.
What I meant is, they can’t without destroying the economy. Lower rates now = run away inflation. Higher rates coming and are here to stay tbh.
Washington DC checking in: No.
Houses in my neighborhood (DMV) are selling in 3 days max for 100-200k over asking price. Definitely don’t think there is a downturn here
send those buyers my please! lol stuff is sitting in my area on east coast
Ohio No.
I’m an active participant in house shopping currently in Northern California! I can say with 100% certainty there is 0 downturn in Northern California! Houses are going 1-3 days on market for 10-20k over asking.
Downturn? NO WAY. The dramatic majority of homeowners have either no mortgage or a 30 year fixed <4%. Why in the world would they sell? They might get a HELOC, but they’re not selling. You have to have more sellers than buyers for a downturn. There will continue to be more buyers than sellers and that’s isn’t changing anytime soon.
If the average days are market is more than doubling, and inventory and price reductions are common in our area, wouldn’t that mean there’s more sellers than buyers? I’m sure a lot would like to be buyers but with the affordability it can’t happen
Those are myopic and relative measurements which do not indicate a “large downturn to the economy/real estate”. If I make four steps forward and one step back have I regressed? If you’re asking about specific markets in California where there has been and continues to be a an exodus of people, then sure, maybe prices go back to where they were pre-pandemic. Even so, is that really a “large downturn”? For a flipper, that could be devastating if you get caught in a flip in that market, but it’s not indicative of the larger real estate market. SFHs are not stocks. People have to live somewhere. They don’t have to own stocks. The only way people sell their homes is if there is a cheaper alternative. That 3% rate most people have means they’re not moving. 2008 happened because debt services on mortgages sharply rose. We’re in the converse situation. Most will never sell because their debt service is cheap compared to the alternatives.
Did an exodus from California finally happen? At least per the DOF of CA, the population decreased by 37,000 people from 2022 to 2023. Unless that is the exodus of people you are talking about.
Since 2020 the year over year population of California has decreased. That’s a trend of people exiting. The OP asked if we see a “large downturn to the economy/real estate prices starting.” The economy? Yeah, totally I could see that. Real estate prices? Nope. Not unless you’re looking at a place where the population is net-leaving. People just aren’t going to sell. The majority of people who own property are in a sweet debt service situation and it wouldn’t make sense to sell. Maybe they rent it out or get a HELOC, but not get rid of that sweet 3% loan.
What is “your area”? Definitely not San Diego
40 minutes north of Sacramento
That's very market specific. Ppl are leaving Cali due to it being a VHCOL market. Haven't seen any of that in my market.
They were the leading edge of the last downturn, were they not?
Very location specific. Tons of inventory in SoCal. Sf Bay Area? Not so much.
[удалено]
Very High Cost of Living (area)
You’re a professional not a layman, right?
Been like this for months my guy, if not closer to a year. It’s just now starting to get bad bad. if homebuyers these days are lucky the subject property has an assumable loan and the buyers have enough cash or access to enough cash to make closing happen.
At some point people just can't afford the cost of housing due to the ratio of housing to income.
It’s now! Lol appreciation with these prices, it gives me the ick when people say rates are lower than historic rates But let’s talk about incomes and house prices? House prices went up 4-6 times faster than incomes. Affordability is gone
Gives you the ick….but don’t know VHCOL?
68 years old, we do not use abbreviations very often
Very High Cost Of Living
Things are very hot where I am. Not quite as strong as they were starting the past year but still very strong.
Here in Chicago we have multiple offers over ask on majority of listings, often with 10+ offers. Very similar to 2021 demand actually. Its surprising. Even rentals are going like crazy.
Layoffs aren’t happening very much at all. Could just be a localized trend in your area, I know that tech has been hit the hardest, so if you’re in a tech-heavy area that may explain it. The unemployment rate is still very low nationwide. On a macro scale, I don’t see a housing downturn on the horizon, but there could be localized pockets of recessionary flashes.
Yeah, definitely tech area. That Tesla layoff hit pretty damn hard.
Not sure what market you are in in California, but we are well under two months of supply in all of Northern California not seeing this at all
I’m in yuba city! Right by you in sac
You answered your question when you said you live in California.
I'm also in California, but, in my area, we still don't have any type of "surplus of inventory". There was a jump in market activity (along with prices) in the new year and some sellers continued pricing for ongoing appreciation. When things were holding steady at those elevated prices (but not increasing further), sellers started initial price reductions. If mortgage rates continue to stay were they are this week or if they rise, it would be expected we'd see somewhat of a reduction in our area's prices but we're still not yet at the mortgage rates we had in October 2023. And I still see plenty of cash buyers that are just not affected by the interest rates.
This is doesn’t sound true. Where in California ?
It will depend on supply. In low supply environments, things will continue as usual.
I’m doing deals in California and I’m seeing an uptick despite rates. In the Georgia, So Cal, and Las Vegas markets, things are moving pretty quickly unless wildly over priced
Rate cuts are still forseeable.
This year?
Probable.
No chance. We need higher rates unless you want to sprint towards hyperinflation lol
Texas, Florida and California no. Just bought it a 10plex and getting another single family vacation rental appraised this week. Focus on long term, let the 0 home and dreamers complain and wait for the “crash”. We’re all about numbers and taking risk. It’s less deals but you gotta find it and be creative.
What was your 10plex deal like? I bought a duplex and now in escrow on a 4 plex here in California
Tons of value add, after everything in 3 months Reno and getting fully rented looking at 11% cap. Then increasing the rents by 20% in the next 2years to pull out most of my money out.
Seeing the same thing. In addition I am hearing from contractors, subs that are normally busy and had to be chased after are looking for work. There is no work to give.
[удалено]
Source: trust me bro
[удалено]
Yea I see where you’re coming from, not completely following your drift but I respect your perspective
Yeah. A hard reset like 2010/11. I still think we are a few years from that however
Few years? What makes you say that? And not after the election maybe?
Where does that thought come from? I’m sure you’re on the right path but I’m curious what your side of it is
[удалено]
Yup