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Foreclosures are on the rise. Here’s what that says about the housing market

dacrunch

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:bang head:
 

BackwardsEngineeer

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y/y sales down big in may. june will be worse imo


Pending home sales plunged 13.6% in May on a year-on-year basis.

"Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition," said NAR chief economist Lawrence Yun. "Contract signings are down sizably from a year ago because of much higher mortgage rates."
 

dacrunch

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Apparently it looks like I can safely raise the rents of my apartments...
 

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FAF notices the blowoff top


Affordability Declines to Lowest Level Since 2007, According to First American Real House Price Index​


"In April 2022, the RHPI jumped up by 45.6 percent compared with a year ago, accelerating faster than any other point in the 30-year history of the series," said Mark Fleming, chief economist at First American. "This rapid annual decline in affordability was driven by two factors: a 21.2 percent annual increase in nominal house prices and a 1.9 percentage point increase in the average 30-year, fixed mortgage rate compared with one year ago.
 

dacrunch

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Dat's waisist!!!
 

BackwardsEngineeer

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Spent a couple of hours yesterday with one of the high volume real estate only attorneys here in Charleston. Offices all over the state, handles 50% national builder and about the same general agent closings. So here are a few bits:

Volume of deals
2020 highest volume, in addition just as many refi's as home sale closings. He commented, low rates and time off lead to an incredible refi market, most home closings came in Jan- March and July- Dec 2020, as one would have expected.
2021, 3/4 of the standard home sale closings in 2020, 1/2 of the refi closings as 2020. Home sale closings level throughout the year, refi started strong tapered off dramatically sept- dec 2021.
2022, So far 1/2 of home sale closings as 2021 (about 40% of 2020 volume). New homes making up 70% of closing volume. Refi % dropped off to almost nil in 2022..
So overall their office is doing about 27% of the business as 2020, when combining contract sales and refi's..

Ok, on pricing and who is buying...
2/3 of the buyers he sees are external to the market. 1/2 of those are cash outright. Says the 1.4 mil and up market continues to surprise him how strong it is, many of those cash and or 1031's. Says the under 450k market continues to move pretty well but the market in the middle is really slowing down. So the 500k to 1.3 mil is softening...

He is not sure sure on future market, said simply, if the norhteasterners quit invading we are pretty much screwed..
 

Lancers32

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I think most of the interest down here the general Raleigh area are the transplants from high price areas who are either retiring or see the hand writing on the wall. Most of the people who post on boards like CD think prices will stay flat or continue to rise because of the jobs coming into the area. The this time is different crowd.
 

Fiat Metaler

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I think most of the interest down here the general Raleigh area are the transplants from high price areas who are either retiring or see the hand writing on the wall. Most of the people who post on boards like CD think prices will stay flat or continue to rise because of the jobs coming into the area. The this time is different crowd.

What is CD?

Long term the prospects for RDU area are good. There are a lot of jobs in pharma in NJ and Boston that can be done for less in North Carolina. A lot of jobs. Raleigh is for life sciences what Austin is for Tech - a cheap place to relocate. There is a critical mass of other companies that have done so which means a company can't be criticized for doing something radical. There are also plenty of employees with relevant skills.
 

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The numbers in our market show this as the highest price closing as well. That seems to have been the peak.

July- Dec 2020,
 

Fiat Metaler

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this article has a map that shows which parts of the country added people and which parts lost people. It may be obvious, but for the metro areas they provided actual numbers. RDU up big; NY down big


i'm in a green dot. please make it stop

this is a great map to shop for real estate when things normalize. the lake erie shoreline looks good


1656872912199.png
 

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it has begun. not my bold


Realtor.com's data showed almost a third of listings in June had price cuts in Austin, Phoenix, and Las Vegas metro areas. Price cuts are a growing national trend as higher rates triggered an affordability crisis, removing millions of new prospective home buyers.

Price cutting comes as a flood of inventory enters a very tight market. Another Realtor.com report this week showed the number of active US listings soared 18.7% in June from a year earlier.

The rise in inventory was more profound in Austin, Texas; Phoenix, Arizona; and Raleigh, North Carolina, which saw active listings more than double from a year ago. In Nashville, Tennessee, active listings jumped 86%, and 72% in Riverside, California.

1656888793305.png
 

Fiat Metaler

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i'm in a green dot. please make it stop

this is a great map to shop for real estate when things normalize. the lake erie shoreline looks good

I understand where you are coming from, but there is a reason people are leaving those red dot areas. And these are trends in motion; 20 years from now people are still going to be leaving the Rust Belt etc for warmer weather and warmer job prospects.
 

dacrunch

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I understand where you are coming from, but there is a reason people are leaving those red dot areas. And these are trends in motion; 20 years from now people are still going to be leaving the Rust Belt etc for warmer weather and warmer job prospects.
Reversing the "Made In America" trend that Trump got started... or restarted...
 

Lancers32

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I understand where you are coming from, but there is a reason people are leaving those red dot areas. And these are trends in motion; 20 years from now people are still going to be leaving the Rust Belt etc for warmer weather and warmer job prospects.
Providing there is anything in 20 years.
 

Fiat Metaler

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leaving aside the apocylpse, If I was in a green dot area I'd move sooner rather than later. Red dot area I would enjoy the growth/appreciation or move to a blank area. I'm in a red dot area and moving to a blank area is my retirement plan.
 

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What is CD?

Long term the prospects for RDU area are good. There are a lot of jobs in pharma in NJ and Boston that can be done for less in North Carolina. A lot of jobs. Raleigh is for life sciences what Austin is for Tech - a cheap place to relocate. There is a critical mass of other companies that have done so which means a company can't be criticized for doing something radical. There are also plenty of employees with relevant skills.
I sure hope so. Against my advice my daughter and her husband just bought a house in RDU for WAY too much money. Mama is not happy.
 

Casey Jones

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I understand where you are coming from, but there is a reason people are leaving those red dot areas. And these are trends in motion; 20 years from now people are still going to be leaving the Rust Belt etc for warmer weather and warmer job prospects.
Not if air conditioning is suddenly made a prerogative of the State and the Greens...denied mere mortals (not government employees).

The South never really started growing until home refrigerant cooling became practical in the 1950s. And that growth will reverse, if the De-Growthers have their way. Actually, the whole of the population will be well on the decline - between Jabs, eating of bugs, and denial of fuel for heating, cooling and transportation, there won't be a lot of ways to sustain life.
 

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I sure hope so. Against my advice my daughter and her husband just bought a house in RDU for WAY too much money. Mama is not happy.
Avalon,
You're a good mom, that decision rides on them. As you know the influence of Duke, state politics and a whole lot of pharma dollars have skewed that market. Some contend that will carry, but those industries are all facing simultaneous assault from a variety of factors. There is no way you could of swayed them anyways, once minds are set they roll on no matter what..

As a parent we all want the very best for the ones we love. We have done all, suffered much to give them the best shot at life. Now its up to them, these decisions are theirs as is the outcome good, bad or neutral. Collectively as a group the under fifty crowd has never experienced the wonderfulness of margin in ones life. While having margin means you might not be there for the highest of highs, it often means that you won't experience the lowest of lows. The road might get really bumpy but they'll grow through it...
 

Avalon

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Avalon,
You're a good mom, that decision rides on them. As you know the influence of Duke, state politics and a whole lot of pharma dollars have skewed that market. Some contend that will carry, but those industries are all facing simultaneous assault from a variety of factors. There is no way you could of swayed them anyways, once minds are set they roll on no matter what..

As a parent we all want the very best for the ones we love. We have done all, suffered much to give them the best shot at life. Now its up to them, these decisions are theirs as is the outcome good, bad or neutral. Collectively as a group the under fifty crowd has never experienced the wonderfulness of margin in ones life. While having margin means you might not be there for the highest of highs, it often means that you won't experience the lowest of lows. The road might get really bumpy but they'll grow through it...
Thank you, its weighed heavy on me. :(
 

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Thank you, its weighed heavy on me. :(
dont sweat it. worst case - they lose their down payment and work with the bank for a short sale

bad credit used to be bad. standards are much lower now
 

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At least they are no longer subject to 15% yearly rent increases. What is too much money? Especially money that will probably be worthless in 3-5 years. Way before that mortgage comes due. As long as they can afford the payment they did the right thing. Waiting to buy hasn't worked out very well for people the past few years. Plus it doesn't seem interest rates are getting any cheaper anytime soon.
 
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Voodoo

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This is their plan below.

"According to the policy statement released on May 4th, the Fed will reduce its balance-sheet not by actively making sales, but by letting bonds that have reached the end of their lives mature without buying a new bill or bond to replace them. By September, if all has gone to plan, the Fed’s portfolio will be shrinking by $95bn a month, split between $60bn of Treasuries and $35bn of mortgage-backed bonds. At that pace the Fed’s balance-sheet will shrivel by more than $1trn over the next year. That is “quite the clip”, says Darrell Duffie of Stanford University."

It looks like we got some real data and June was a disaster for the FED... Apparently when they tried to sell MBS that was when it went No bid. They ended up BUYING 3 Billion in MBS for June. In other words, the FED is the only thing propping up the already weak real estate lending markets.


"However, the central bank managed less than one-third of its Treasuries target in June, and actually added $3 billion of mortgage-backed securities to its stockpile."
 

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It looks like we got some real data and June was a disaster for the FED... Apparently when they tried to sell MBS that was when it went No bid. They ended up BUYING 3 Billion in MBS for June. In other words, the FED is the only thing propping up the already weak real estate lending markets.


"However, the central bank managed less than one-third of its Treasuries target in June, and actually added $3 billion of mortgage-backed securities to its stockpile."
they dont have the balls to sell. this isnt the first time they cheesed -- or lied, about their intent to sell sh-t they shouldnt be buying

the only real question is if they will stop buying to replace the stuff that is maturing
 

Fiat Metaler

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There is no one to buy those MBS in small quantities, let alone the ginormous quantities the Fed has.

Long term, they could just stop purchasing. The loans average less than 7 years in a declining rate environment; if rates continue to go up then we may see re-fi's which eventually bust the MBS (they get redeeemed as loans are paid) or refinanced.

But it begs the question who buys the mortgage loans. The banking system has risk-weighted capital requirements (Basel III). Mortgage loans have a high risk weight which means banks don't want to own them. They sell them to Fannie and Freddie who in turn issue bonds. Without Fannie and Freddie buying, and investors buying those MBS from Fannie and Freddie, housing comes to a halt. I don't see the banks letting that happen.
 

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My next door neighbor is selling. He bought in 2018 for 196k, listing now for 399k. He told his agent to show it to families only, no speculators. I hate to see them go. He got married last year and did a lot of remodeling. They are moving to a neighborhood with better schools so they can have kids.
 

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There is no one to buy those MBS in small quantities, let alone the ginormous quantities the Fed has.
Fed can print fiat as needed and buy it all. So you will own nothing & they will own everything.