How Long Do You Think It Will Be?

[Addie]

From the cyclical low point in home prices six years ago, a typical home price has increased by 48 percent while the average wage rate has grown by only 14 percent.

The average rate on the 30-year fixed mortgage is nearly a full percentage point higher today than it was at its most recent low in September 2017.

A monthly survey from Redfin found fewer potential buyers requesting home tours or making offers.

Evidence is now mounting that a growing number of first-time buyers are giving up and dropping out of the market altogether.

https://www.cnbc.com/2018/05/29/run...not-sustainable-realtors-chief-economist.html

Yup. Apparently I’m the one who needs an Econ lesson but I’d beg to differ. (You didn’t say) I know when to throw the book out of the window and when not to. Now is when Econ doesn’t matter as much as perception creates reality.

1st time buyers are 100% locked in on market too expensive for them. Current owner-occupied are locked in on, too expensive to move and rates, not going to bring my supply on. Builders are not going to be able to bring on supply at a profit from 2019 on. (That’s competitive on price) So what’s happening going forward, the supply, demand price model is artificial. It’s not a real market akin to what the fed did with QE. There’s a market happening right now in kind of an economics pergatory or void area. Like what a giffen good is. It’s kind of outside typical Econ models. Going forward, we are outside typical Econ models. Why? This was all born from a 1 off QE model that wasn’t supply/demand based. It was made up. So this outcome will be made up because it was born from it. The Genesis, made from dirt, return to dirt.

 

[Joe Flacco]

I can't argue with someone that thinks people that bought something for $50 and can sell for $100 today will not sell until price goes back to $50.

 

[Addie]

I can't argue with someone that thinks people that bought something for $50 and can sell for $100 today will not sell until price goes back to $50.

Out of context.

Context. To sell your $100, you need to buy the same at $200 + inflation plus 2x’s money cost so net $250. Here the rub. They don’t have the income to do that. As in, literally don’t have the buying power. That’s why. Want vs. action.

 

[Joe Flacco]

Out of context.

Context. To sell your $100, you need to buy the same at $200 + inflation plus 2x’s money cost so net $250. Here the rub. They don’t have the income to do that. As in, literally don’t have the buying power. That’s why. Want vs. action.

You are not making any sense. Why do you sell yours for $100 if other people are selling the same for $200?

Sorry, I am not going to debate or argue with you.

 

[huntercharlie]

From the cyclical low point in home prices six years ago, a typical home price has increased by 48 percent while the average wage rate has grown by only 14 percent.

The average rate on the 30-year fixed mortgage is nearly a full percentage point higher today than it was at its most recent low in September 2017.

A monthly survey from Redfin found fewer potential buyers requesting home tours or making offers.

Evidence is now mounting that a growing number of first-time buyers are giving up and dropping out of the market altogether.

https://www.cnbc.com/2018/05/29/run...not-sustainable-realtors-chief-economist.html

I can only give this one like, so (IMO) it's worth repeating.

 

[Randolph Kinney]

The median U.S. home value rose 8.7 percent to $215,600 in April, the fastest year-over-year climb since June 2006, when the housing market was slowing from its bubble-driven, double-digit growth. By September 2007, the median home value had begun to decrease.

By contrast, the current gain is part of a general upward trend that started in early 2015, when values were climbing at less than 5 percent year-over-year.



Too often, homeowners make the damaging error of assuming recent price performance will continue into the future without first considering the long-term rates of price appreciation and the potential for mean reversion. The laws of physics state that when any object (which has a density greater than air) is propelled upward, it will return to earth because of the forces of gravity act upon it. The laws of finance say that markets that go through periods of rapid price appreciation or depreciation will, in time, revert to a price point that puts them in line with where their long-term average rates of appreciation indicate they should be. This is known as mean reversion.

Prices in the housing market follow this law of mean reversion too - after periods of rapid price appreciation (or depreciation), they revert to where their long-term average rates of appreciation indicate they should be. Home price mean reversion can be rapid or gradual. Home prices might fall (or rise) quickly to a point that puts them back in line with the long-term average, or they might stay constant until the long-term average catches up with them.

 

[Joe Flacco]

People are just going to get priced out. You guys make it sound like everybody that lives in the neighborhood needs to able to afford to buy property.

How many millionaires are being created in China every year? They want to buy US real estate. Chinese buyers are not going anywhere anytime soon and if anything the number of Chinese buyers is going to continue increasing.

 

[Randolph Kinney]

How many millionaires are being created in China every year? They want to buy US real estate.

Bad example. More people that live in the US buy way more houses in the US than millionaires that live in China buy houses in the US.

 

[Terrel L. Shields]

multi-family land isn't valued based on it's size, but rather on its yield.

Ag land will be valued by use and size. But to me, most times there is a complete disconnect between size and pricing of vacant residential lots. But it is the utility that matters, and in many of the smaller towns, zoning isn't particularly important within residential zones. Many are ranked by size (an RS4 means 4 lots per acre, an RS6 would be 6 lots per acre. Basically sell for the same dollar here.) Restriction to minimum 2,400 or some such supposedly added value in 2006, but in the crash such subdivisions froze up and basically are only now coming back on line. I saw a large number of such restricted lots sell for $6,000 - cash only. The bank holding them wanted out. Now they will bring $40-60,000 each and building is going great guns.

 

[Terrel L. Shields]

How many millionaires are being created in China every year?

Heck look at a few of the internet musicians... Avicii died last month suddenly at age 28, estimated worth was close to $100 million. Basically left Sweden so they didn't take it all away. Stephen Zhu (Chinese-American artist) has a net worth estimated at a multiple of that.

OTOH, in China, earn the distrust of the government and they don't take it away, they execute you...in fact, executed a BILLIONAIRE only a couple of years ago.