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  • So, homes are going on sale for 50% off?
  • Please happen here, please happen here...
  • In the case, then I'll be just barely able not to afford a house in San Diego as opposed to completely not able to afford.
  • I still laugh at how the county says my home is worth $187K and I get offers in the mail for $300k. Now I like my place and all and it has been nice living there but I would not pay more than $150 for it, maybe more if I remodel the kitchen.
  • groppet: I still laugh at how the county says my home is worth $187K and I get offers in the mail for $300k. Now I like my place and all and it has been nice living there but I would not pay more than $150 for it, maybe more if I remodel the kitchen.


    Valuation for tax purposes kind of marches to the beat of its own drum.
  • So places where tech companies are having layoffs. Such insight. Much prediction. Very fundamentals. Wow.

    Next you'll tell me Detroit suffered after the auto industry sent factory jobs offshore.
  • NewportBarGuy: So, homes are going on sale for 50% off?


    better be more than 50% if you're looking to buy in phoenix
  • NewportBarGuy: So, homes are going on sale for 50% off?


    No. They're selling for 2% less than their expected market value would have been projected 5 years ago.

    I'd love it if they were auctioned off. 

    Secret qualifier : only to people who don't have a home and can't borrow to bid.
  • kittyhas1000legs: Please happen here, please happen here...


    This.
    That was my first thought.
  • Yes.  The run up in prices was unsustainable and detached from fundamental value.
    fred.stlouisfed.orgView Full Size


    Used cars were also an inevitability and they finally started to correct.
    wolfstreet.comView Full Size

    Used cars are simply more elastic than houses.  The switching costs are a lot lower.  Houses will follow this trend eventually.
  • Rapmaster2000: Yes.  The run up in prices was unsustainable and detached from fundamental value.
    [fred.stlouisfed.org image 850x440]

    Used cars were also an inevitability and they finally started to correct.
    [wolfstreet.com image 528x419]
    Used cars are simply more elastic than houses.  The switching costs are a lot lower.  Houses will follow this trend eventually.


    The key difference being that everybody needs a place to live.  Not everybody needs a car.  If the investors holding the property simply decide to keep holding (and likely lease them out), prices won't correct.  Real estate doesn't wither on the vine, and there is a very limited supply.  Prices can be maintained indefinitely, as long as new construction doesn't boom (won't under higher interest rates), and there are people who need to live in the area.  With remote work being more common, it could allow prices to drop down a bit, but most jobs do still require personal presence.

    We're in this mess for a long time to come.  Mass liquidation of investment properties isn't likely to happen.
  • Kuroshin: Rapmaster2000: Yes.  The run up in prices was unsustainable and detached from fundamental value.
    [fred.stlouisfed.org image 850x440]

    Used cars were also an inevitability and they finally started to correct.
    [wolfstreet.com image 528x419]
    Used cars are simply more elastic than houses.  The switching costs are a lot lower.  Houses will follow this trend eventually.

    The key difference being that everybody needs a place to live.  Not everybody needs a car.  If the investors holding the property simply decide to keep holding (and likely lease them out), prices won't correct.  Real estate doesn't wither on the vine, and there is a very limited supply.  Prices can be maintained indefinitely, as long as new construction doesn't boom (won't under higher interest rates), and there are people who need to live in the area.  With remote work being more common, it could allow prices to drop down a bit, but most jobs do still require personal presence.

    We're in this mess for a long time to come.  Mass liquidation of investment properties isn't likely to happen.


    Mass liquidation isn't going to happen.  It simply will never happen.  That's why I haven't argued for such a silly thing.

    Home prices fell nationwide 27% in 2008-2011.  That's what I expect to see again.  It will also be entirely regional.  Austin will fall more than Forth Wayne, IN because it rose a lot more (Fort Wayne was the only city that saw no price decline in the Great Recession because it never experienced appreciation in the boom).

    People will eventually have to move and sell at a loss.  They will capitulate on rental properties that are losing them money.  Homes are not immune from supply and demand.  This time it is never different.
  • So, is goldman helping to crash the market to help drive corporate home purchases?
  • The aftermath of the 2008 crash is why I now own a house three blocks from the beach. At current levels, crashing house prices are a good thing.
  • Even without a major recession, home prices can fall.  1990-1991 was a mild recession and LA County homes fell 25% from 1991 to 1996:  http://www.laalmanac.com/economy/ec37.php

    This wasn't a widespread national problem.  It was focused in California, but most places that boomed in the 80s corrected in the 90s:  https://www.thedailybeast.com/if-the-90s-housing-market-taught-us-anything-its-that-bigger-isnt-always-better

    I think people forget that houses booms and bust all the time.  We're conditioned only to see the Great Recession because of recency bias.
  • Unless the tech layoffs are permanent, I don't see Austin falling that much. I mean, maybe the tech companies aren't cynically cutting labor rosters to collectively control wages across the industry. And maybe tech companies won't start rehiring similar amounts of people at lower price points generally. But Austin has too little housing stock and people haven't stopped moving there.
  • Depends on where in San Diego I imagine. There's a lot of investment buyers who aren't bothered by interest rates.
  • During the Great Recession, home prices in my Phoenix neighborhood dropped by half before recovering.  A 25% fall is bad, but it isn't 2008 bad.

    Also, there were a lot of small investors mortgaged to the hilt in the Phoenix market that were forced to sell in 2008.  These days, investment ownership has shifted to large corporate REITs that bought with cash.  They're not going to sell.  If anything, I expect them to snatch up properties on the cheap when the rebound starts.
  • Do any of these potential declines have anything to do with drought and the availability of potable water in these metro areas?
  • Coredatum: Do any of these potential declines have anything to do with drought and the availability of potable water in these metro areas?


    No, but they have a lot to do with the laptop class bugging out of Cali.
  • So, like 2008, banks will hold on to all foreclosed homes, never reducing any prices and letting them decay or burn down just to not lose a penny on paper.
  • groppet: I still laugh at how the county says my home is worth $187K and I get offers in the mail for $300k. Now I like my place and all and it has been nice living there but I would not pay more than $150 for it, maybe more if I remodel the kitchen.


    This is how they can "raise" more taxes without increasing the tax percentage.
  • Metaluna Mutant: So, like 2008, banks will hold on to all foreclosed homes, never reducing any prices and letting them decay or burn down just to not lose a penny on paper.


    I had friends who rented out their foreclosed condo for years and just pocketed the money. The bank never even sent anybody by until quite some time later.
  • Scorpitron is reduced to a thin red paste: Unless the tech layoffs are permanent, I don't see Austin falling that much. I mean, maybe the tech companies aren't cynically cutting labor rosters to collectively control wages across the industry. And maybe tech companies won't start rehiring similar amounts of people at lower price points generally. But Austin has too little housing stock and people haven't stopped moving there.


    They aren't going to lower wages here for tech(at least specific fields), my company cannot find enough engineers and I doubled my salary last year by moving from last employer to my present one. That being said, I won't be sad if the housing here corrects to sane levels. I'm not going to pay 450k for a 1300 sq. ft bungalow built in 1975 that is a tear-out.
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