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

[Joseph]

I have a SERIOUS question !
Why is it that the banksters can take a home for non-payment, BUT a lowly landlord cannot remove a nonpaying tenant ???????
I guess "rank" (as in a bad stench) has it's privilege !

T, we know that's a rhetorical question ....

 

[EO 11110]

Rates vary a lot from state to state so a national story might be off quite a bit, a quarter to half a point

Yes the 10 year treasury is the key rate. But the spread over that rate had been closer to one point than two. The current spread seems extended to me which might be another reason to view these higher rates as temporary

it's almost always closer to two than one (maybe 100 percent of the time)

when you got your 2.75 the 10 year had a zero handle

 

[TAEZZAR]

T, we know that's a rhetorical question ....

Well, aren't they the best ones?

 

[Bigfoot]

I have a SERIOUS question !
Why is it that the banksters can take a home for non-payment, BUT a lowly landlord cannot remove a nonpaying tenant ???????
I guess "rank" (as in a bad stench) has it's privilege !

 

[EO 11110]

only a matter of time. rates up, frbny has stopped buying mbs

looks like (they) have decided to pop the RE bubble

Surging interest rates push mortgage demand down more than 40% from a year ago

Fast-rising mortgage rates are cutting demand for home loans drastically.

www.cnbc.com

Surging interest rates push mortgage demand down more than 40% from a year ago​

 

[Voodoo]

only a matter of time. rates up, frbny has stopped buying mbs

looks like (they) have decided to pop the RE bubble

Surging interest rates push mortgage demand down more than 40% from a year ago

Fast-rising mortgage rates are cutting demand for home loans drastically.

www.cnbc.com

Surging interest rates push mortgage demand down more than 40% from a year ago​

Yep, I think it's gonna be kinda ugly this time but perhaps can be covered up with the hyper-inflating currency.

 

[edsl48]

My memory fails me these days but I seem to remember the early 2000 debacable started with soaring house prices that allowed people to get heloc loans to "harvest their equity" for cars vacations and the like. Then the markets collapsed, energy prices were rising and interest rates were headed up as well. So it seems to me we have seen this sort of thing before.

 

[Usury]

My memory fails me these days but I seem to remember the early 2000 debacable started with soaring house prices that allowed people to get heloc loans to "harvest their equity" for cars vacations and the like. Then the markets collapsed, energy prices were rising and interest rates were headed up as well. So it seems to me we have seen this sort of thing before.

We didn’t have the inflation or supply shortages the last time.

 

[edsl48]

We didn’t have the inflation or supply shortages the last time.

That is a good point that I hadn't thought of. The question is then I suppose what effect will this have on the unfolding drama? Do you or anyone have any thoughts?

 

[<SLV>]

Illegal immigration must be defended and encouraged in order to maintain tight supply.

 

[solarion]

Illegal immigration must be defended and encouraged in order to maintain tight supply.

As must low interest rates...so that blackrock and other criminal enterprises can continue to compete with individuals for available home supply.

Nearly One in Five US Homes Bought by Institutional Investors

Nearly one in five houses sold in the fourth quarter of 2021 were scooped up by large owners.

commercialobserver.com

 

[WillA2]

Simple, because the best way to destroy America is to attack the middle class

There is no America without the middle class.

 

[TAEZZAR]

There is no America without the middle class.

They are BOTH on their way out the door.

 

[WillA2]

This will not survive, either. If Black Rock winds up with a huge inventory of houses, many empty...and a huge number of Americans cannot afford to live in them...there's gonna be an epidemic of pyromania sweeping the country.

Or squatting.

 

[Usury]

That is a good point that I hadn't thought of. The question is then I suppose what effect will this have on the unfolding drama? Do you or anyone have any thoughts?

That’s the million dollar question. I suppose the answer is “it depends”. LOL. Oh and if I had a working crystal ball then I’d be sitting on a beach on my own private island sipping an umbrella drink instead of where I am.

Having said that I do think that to your point there is some risk of future declining prices due to rising rates and/or recession. I just think that inflation (due to supply side shortages due to gov interference) is the overwhelming factor currently. Could riding rates and/or a recession induced by such lower the demand enough to bring supply back into balance and lower prices? It’s possible, but my opinion based on history of gov interference in these matters is that shortages get worse, not better. So I’m not convinced we’ll see a huge drop in prices even if that happens.

Another factor in last housing crisis is that foreclosure inventory spiked pushing up supply side. I’m not convinced that would happen again as severely either, but if it did I’m sure Black Rock and/or foreign investors whose assets would be worth more in dollars would jump in and snap them up.

End of the day, who knows…I’d try to be diversified, prepared and make the best decision we can about these matters. Sorry….wish I had a more definite answer.

 

[EO 11110]

Illegal immigration must be defended and encouraged in order to maintain tight supply.

not as potent as it could be -- have to divide by 10 to get their immediate effect on household formation. 4 generations under same roof is a regular thing for tex mex

 

[Voodoo]

it did I’m sure Black Rock and/or foreign investors whose assets would be worth more in dollars would jump in and snap them up.

I find this to be Highly unlikely. If they start losing money holding those properties they will absolutely stop buying and likely start to dump as many as they can. This is what Zillow did when they realized their stupidity.

 

[EO 11110]

 

[RebelYell]

Sounds like that would be the main reason for the uptick now.


Huh? Why not? And how would one gain from another's fortune? Maybe I'm just a bad person.

OMG. Head in hands. Your view of the world is totally upside down - and sadly the same as that of our oppressors. Once you understand that the only way for us all to truly gain is from each other's good fortune, and that one man's misfortune hurts all his neighbours too, then you might be on your way to wisdom.

I don't mean to pick on you - but this is soooo fundamental to the difference between good and evil.

 

[Casey Jones]

not as potent as it could be -- have to divide by 10 to get their immediate effect on household formation. 4 generations under same roof is a regular thing for tex mex

One MOAR thing the Globalist geniuses haven't thought through.

Few of them have lived near any ghettos or lower-class districts. Certainly not the barrios of Texas...or, these days, any metro region.

Once they pack up those Black Rock houses...the neighborhood goes to hell. Not because Mexican - because extreme poverty, helplessness, zero commitment to the neighborhood, hostility towards the landlord.

A high-school kid in the 1970s, I read a lot by "Black" writers of life in the ghetto. Manchild in the Promised Land, Autobiography of Malcolm X, Black Like Me, and similar. Social-studies reading assignments.

What hit me, was the complete disregard for the properties, even that they lived in. They lived in them, but they didn't care about them. Pissing in the stairwells. Smashing things. The stink of excrement and spoiled food...of poverty.

And property owners in big cities would often take the Final Solution. BURN IT. "Report from Engine Company 82."

That is where we're headed - because those who've seized control of our economic systems, the Globalists...are really very ignorant and stupid people.

 

[Voodoo]

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That last graph is a good indication of what has happened but that won't be reality. Prices will come down till the people can afford the payment. They won't suddenly have an extra $300 for the payment budget.

 

[Voodoo]

OMG. Head in hands. Your view of the world is totally upside down - and sadly the same as that of our oppressors. Once you understand that the only way for us all to truly gain is from each other's good fortune, and that one man's misfortune hurts all his neighbours too, then you might be on your way to wisdom.

I don't mean to pick on you - but this is soooo fundamental to the difference between good and evil.

Your worldview sounds more like Killarys it takes a village. The Free Market works because all parties benefit from free transactions.

 

[Cigarlover]

I think it's going to get brutally hard out there. Real inflation is running 15% or more. Talk of food shortages and price increases at the grocery store of another 250 plus a month. The fed raising rate will lower housing prices, but they have to go much lower to offset the real cost of inflation in everything else.
On the other hand, they can't let housing get to low or it will bust state budgets.
Then you already have a large percentage of the middle class living week to week. The cow they been milking is running dry. One hell of a mess they created for sure.

 

[RebelYell]

Your worldview sounds more like Killarys it takes a village.

Huh?

The Free Market works because all parties benefit from free transactions.

That's exactly my point. I was responding to someone who seemed to think that one can only profit from someone else's misfortune.

 

[D-FENZ]

OMG. Head in hands. Your view of the world is totally upside down - and sadly the same as that of our oppressors. Once you understand that the only way for us all to truly gain is from each other's good fortune, and that one man's misfortune hurts all his neighbours too, then you might be on your way to wisdom.

I don't mean to pick on you - but this is soooo fundamental to the difference between good and evil.

Lot to unpack here... And yes, I'm going to pick on you.

First, I am an unrepentant capitalist, not a crony capitalist or some sort of a grifting overlord as you imply. And I have questions:

Have you ever held a job in a service industry where your job was to fix something that someone has unfortunately broken, like maybe a tire shop or even a hardware store, and then accepted payment for it? Bought or sold band aids? Ok... Ok... A job of any sort? Ever bought anything, resold it and made ~ gasp~ a profit? Or maybe played a game where they kept score and the winner actually won something and the loser got nothing? Somehow I suspect participation awards are more your style.

Sure, there is an ugly side to capitalism- humans being what they are. But without competition, risk and reward there is no incentive for anyone to ever produce anything except by force. And historically, all collectivist alternatives to capitalism were and are, completely rampant with corruption. They are based on corruption. Every. Single. One.

Crack open a history book.

 

[Fiat Metaler]

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Not sure what these charts are supposed to tell us.

The third chart shows that rents have increased, well housing prices have increased 30-50% since Biden took office so this is not surprising. But in the abstract it means little. A long term chart of housing affordability would tell us more. If you look at a 20 year chart, housing had gotten very affordable (e.g. cost of housing as a percentage of income) and its starting to trend back up but still has lots of room to run, which is something not apparrent on your third chart.

Your first and second charts seem to say that housing prices have risen faster than rents. This implies to me that rents are lagging and that there is much pressure to raise them, even though they have already risen. If you think of renting as a substitute for owning, then the support for existing and higher rents creates demand for owning, even at these elevated prices and rates.

I'm not saying that these higher prices and rates don't hurt, they do. I just don't see rents or housing prices coming down.

 

[EO 11110]

Not sure what these charts are supposed to tell us.

the charts are supposed to tell you what you what your analysis is. i posted no comment for a reason.

my analysis is that rents no longer support the price on a historical basis. looking at housing as a business, means margins are being crushed. cap rates are crap.

akin to what they often say = 'reaching for yield' in other markets. today's RE investors are doing exactly that. and this goes for people that bought at much lower prices too. their property has doubled, but their rents havent kept up. they have backed into low cap rates.

 

[hammerhead]

A few days ago, I took the back roads over the mountain to get to a town North of me. It required a few trips and I took a different route each time. The road is like a straight run up and over the hills. There are several large houses being built all along these roadways. One may think that it's so nice to have development continue in our area. What I don't see is where the local economy supports these homes. The news has many articles of entrepreneurs buying up established commercial and residential properties. Rents are crazy high. I'd hate to see property tax wipe people out.

 

[RebelYell]

Lot to unpack here... And yes, I'm going to pick on you.

No - you're not picking on me - you're picking on someone else who has views completely the opposite to mine. I do find this frustrating. I criticized one statement of yours - and based on everything you're saying here I suspect if you re-read your statement you would probably agree that it didn't accurately represent your own view. From me making a criticism which is entirely in agreement with everything you are saying here, you have suddenly leapt to all sorts of conclusions about my entire belief system which are entirely incorrect.

First, I am an unrepentant capitalist, not a crony capitalist or some sort of a grifting overlord as you imply. And I have questions:

Have you ever held a job in a service industry where your job was to fix something that someone has unfortunately broken, like maybe a tire shop or even a hardware store, and then accepted payment for it? Bought or sold band aids? Ok... Ok... A job of any sort? Ever bought anything, resold it and made ~ gasp~ a profit? Or maybe played a game where they kept score and the winner actually won something and the loser got nothing? Somehow I suspect participation awards are more your style.

I think you have completely misunderstood my point and mischaracterized who I am. I am an unrepentant free marketeer (I prefer this term because it necessarily also implies capitalism, but the term capitalism does not necessarily imply freedom). I despise particpation awards, and I spent all my life at the sharp end of making a profit.

Sure, there is an ugly side to capitalism- humans being what they are.

I disagree. Or at least I would disagree if you substituted the word freedom for capitalism (see comment above). I don't think there is anything ugly about freedom at all.

But without competition, risk and reward there is no incentive for anyone to ever produce anything except by force. And historically, all collectivist alternatives to capitalism were and are, completely rampant with corruption. They are based on corruption. Every. Single. One.

I agree entirely.

My criticism of your statement was based on the statement itself. Specifically you said: "Huh? Why not? And how would one gain from another's fortune? Maybe I'm just a bad person."

But the entire point of free markets and free market capitalism is that everyone benefits from everyone else's fortune. Free market trades are necessarily win win propositions or they don't happen. I suspect you actually agree with this, and therefore you would also agree with my criticism of your specific statement.

 

[WillA2]

Once you understand that the only way for us all to truly gain is from each other's good fortune, and that one man's misfortune hurts all his neighbours too, then you might be on your way to wisdom.

This is how American Capitalism was meant to work. Even Henry Ford understood this. What good is it to build cars if no one can buy them?

 

[WillA2]

Your worldview sounds more like Killarys it takes a village. The Free Market works because all parties benefit from free transactions.

You and Reb came to similar conclusions from different angles. Separated by a common language.

What he speaks of is described by your last sentence.

The only thing missing is where people are taught personal responsibility.

 

[WillA2]

Lot to unpack here... And yes, I'm going to pick on you.

First, I am an unrepentant capitalist, not a crony capitalist or some sort of a grifting overlord as you imply. And I have questions:

Have you ever held a job in a service industry where your job was to fix something that someone has unfortunately broken, like maybe a tire shop or even a hardware store, and then accepted payment for it? Bought or sold band aids? Ok... Ok... A job of any sort? Ever bought anything, resold it and made ~ gasp~ a profit? Or maybe played a game where they kept score and the winner actually won something and the loser got nothing? Somehow I suspect participation awards are more your style.

Sure, there is an ugly side to capitalism- humans being what they are. But without competition, risk and reward there is no incentive for anyone to ever produce anything except by force. And historically, all collectivist alternatives to capitalism were and are, completely rampant with corruption. They are based on corruption. Every. Single. One.

Crack open a history book.

Taken to an extreme, you should advocate for open war. Break things so there can be a profit.

What happens when we run out of people to fix things?

 

[EO 11110]

BofA economist Alex Lin recently showed clients that housing affordability is at the lowest since 2007, about a year before the housing bubble imploded.



What does this affordability shock mean for actual home prices, sales, and the coming recession?

According to Lin, housing affordability tends to lead the trajectory of existing home sales by about half a year.

The question is - given the smoothing and delays in Case-Shiller's data series - what happens next? Maybe mortgage rates provide some ideas...



The hit to affordability is just one piece of the puzzle. Now supply is building as sellers drop prices, potentially painting an ominous outlook for the housing market.

Cracks Appear In Housing Market As Sellers Begin To Lower Asking Prices | ZeroHedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

 

[Fiat Metaler]

What happens in the future remains to be seen. I don't think housing prices will fall; they may pause for a while, but I expect that over the medium and long term will continue to rise.

I draw slightly different conclusions than you do for three reasons.

Affordability is still good. I will point out that your reference to housing affordability is merely the change in affordability, not the absolute affordability. If you look at a longer tem time series, housing is still "affordable" and has lots of room to move (i.e. we haven't even reverted to the mean yet). Also, the houses being sold now are larger, safer, more energy efficient, more open/better use of space, etc. which would warrant hedonic adjustments (but are not in the data).

Interest rates can't go up any further, or the Fed will become insolvent. They may even come down some over the medium term.

There are no alternatives. You either buy, rent, or live with someone else like a family member. Sure, house prices have risen substantially and quickly, but the alternative is to rent. For now, there is a disconnect between housing prices and rents. One could interpret this as housing prices being extended. Another interpretation is that rent increases are lagging home price increases. If the latter is correct, then rents are going to rise substantially. I think the pressure of rising rents creates a floor under housing prices, especially at the entry level end of market. At the high end of the market, the Fed's policies are creating a lot of wealth and people are trading up. The middle priced houses have the most opportunity for softness but I'm still seeing strength there - people are working from home and want a larger, nicer place.

I am seeing higher rates but I'm not seeing prices go down or even slow as suggested in the Zillow article. But I'm in a state that people are moving TO, not FROM. I think Zillow is based in Seattle.

 

[hammerhead]

What happens in the future remains to be seen. I don't think housing prices will fall; they may pause for a while, but I expect that over the medium and long term will continue to rise.

I draw slightly different conclusions than you do for three reasons.

Affordability is still good. I will point out that your reference to housing affordability is merely the change in affordability, not the absolute affordability. If you look at a longer tem time series, housing is still "affordable" and has lots of room to move (i.e. we haven't even reverted to the mean yet). Also, the houses being sold now are larger, safer, more energy efficient, more open/better use of space, etc. which would warrant hedonic adjustments (but are not in the data).

Interest rates can't go up any further, or the Fed will become insolvent. They may even come down some over the medium term.

There are no alternatives. You either buy, rent, or live with someone else like a family member. Sure, house prices have risen substantially and quickly, but the alternative is to rent. For now, there is a disconnect between housing prices and rents. One could interpret this as housing prices being extended. Another interpretation is that rent increases are lagging home price increases. If the latter is correct, then rents are going to rise substantially. I think the pressure of rising rents creates a floor under housing prices, especially at the entry level end of market. At the high end of the market, the Fed's policies are creating a lot of wealth and people are trading up. The middle priced houses have the most opportunity for softness but I'm still seeing strength there - people are working from home and want a larger, nicer place.

I am seeing higher rates but I'm not seeing prices go down or even slow as suggested in the Zillow article. But I'm in a state that people are moving TO, not FROM. I think Zillow is based in Seattle.

FM, what I see in my area is the rents are as high as a mortgage payment. There is a service economy that along with health care and retail (including grocery). As I see outside money gobbling up properties and dumping huge amounts of money into renovations, my thoughts are that the outcome will not be favorable to anybody.

 

[Fiat Metaler]

The metro Atlanta housing market roared into spring with prices up 20% last month from a year earlier, driven by cash and corporate buying that could squeeze out many young purchasers.

A scarcity of homes listed for sale intensified the competition among potential buyers in March, pushing the median price of a home in the 12-county region to nearly $377,000 — an average of $8,481 above the sellers’ asking prices, according to the Georgia Multiple Listing Service.
The tilt in favor of sellers shows no sign of leveling off, said John Ryan, the company’s chief marketing officer. “It could be at least two years before the supply of homes evens out.”

The number of homes listed for sale has been historically low for months and it dipped again in March, even though many potential buyers are searching for homes.

For buyers and sellers to have roughly equal negotiating power, the number of homes listed for sale should represent at least six months of sales, expert say. Currently listings are closer to one month of sales, forcing wannabe buyers into competition with each other, especially for the lower-priced homes that attract first-time purchasers.

Moreover, typical buyers who must obtain a mortgage to make the purchase are at a disadvantage: Cash offers accounted for more than one in every four sales, most of them hedge funds and other investment groups, Ryan said.

 

[hoarder]

Interest rates can't go up any further, or the Fed will become insolvent.

I am seeing higher rates but I'm not seeing prices go down or even slow as suggested in the Zillow article. But I'm in a state that people are moving TO, not FROM. I think Zillow is based in Seattle.

Is the Fed really subject to such accountability or will they just make up their own numbers and forge ahead?

The White Flight I'm seeing is unprecedented in our history. Since 2019, homes and lots are up around 450% in Flathead County and 350 to 400% in the rest of Western Montana, with no end in sight. I doubt interest rates would even have any effect on this trend, they will continue to flee the hostile areas. How can we predict where this trend will go when there are no historical figures or formulas to factor in White flight?

 

[dacrunch]

Article this weekend in France.

Due to rising interest rates, cities with soaring real-estate prices are seeing price drops and houses remaining longer in the market.

In Paris, where I sold in 2018 @ 10k/euros per square meter, prices rose later above 11k, but are now back down to 10k... So I don't feel as stupid as I did for a few years... And are predicted to perhaps fall further...

(House in boonies where I live now cost me 800/E/square meter "in the rough", and after renovations I've got 1.7k/E/square meter invested... So not much "downside" ahead... (Was an eyesore, now one of the nicest on the block - helped the neighborhood...)

I learned in Florida in late 2000's (the hard way) that it's better to bail out too early rather than too late... That "lesson" cost me over $200k (on paper)... (in real FRNs $40k)

 

[EO 11110]

FM, what I see in my area is the rents are as high as a mortgage payment. There is a service economy that along with health care and retail (including grocery). As I see outside money gobbling up properties and dumping huge amounts of money into renovations, my thoughts are that the outcome will not be favorable to anybody.

i'm a huge 'reversion to the mean' fag. the people buying/investing today are the antithesis of that. they think a 'new normal' has arrived.

history shows few rewards for the 'new normies'

perhaps there will be no more recessions/job losses. b/c if/when that happens, shit is going to get real for the new normies

 

[RebelYell]

i'm a huge 'reversion to the mean' fag. the people buying/investing today are the antithesis of that. they think a 'new normal' has arrived.

Are you sure?

I'm a huge 'reversion to the mean' guy as well. But the way I look at things is that the mean value of paper currency is pretty close to zero.

So surely swapping it for anything else at all, at any price, is a good idea?

How are house prices doing in terms of gold? Think the median house is still around 200 oz - no?