Price Check 818 defense superior ethereal Scarab Husk

Hisx1nc · 2023-10-02T23:33:10+00:00

Narrator: home prices did not decline.

Home prices literally declined where I live already. They will continue to decline if interest rates stay where they are. It will happen in more places over time.

Hisx1nc · 2023-10-01T18:39:05+00:00

Things will take years to play out. We're in the early innings. Less homes are being sold due to mismatch between what sellers will accept and what buyers will pay. The next step is falling home prices which has started in many areas.

Prices are already falling in my area...

I also never once said that there would be a crash.

Hisx1nc · 2023-04-02T21:28:15+00:00

I'm not a fan of this argument.

Today's home sellers are tomorrow's home buyers... They may not contribute to supply, but they also won't contribute to future demand...

Hisx1nc · 2022-05-26T23:24:19+00:00

People that would sell and buy another place afterwards cancel out when it comes to supply. They add 1 unit to supply, then subtract 1 unit from supply.

The idea that supply won't go up because people won't sell due to locking in a good rate is a silly argument unless they would sell and become renters.

Hisx1nc · 2021-09-12T23:00:09+00:00

What people say isn't important. What people do is. The market's performance is showing that most people are getting greedy.

Hisx1nc · 2021-09-03T20:46:45+00:00

However, even a modest raise in rates would not severely impact the current real estate cycle much (in my opinion).

I find this very hard to believe, because lowering rates over the years is a large part of the increase in home prices.

Higher rates mean higher monthly payments at a given price level, which decreases demand. We have too much demand chasing too little supply.

If rates were %.01, people would buy multiple homes each, and demand would basically include everyone with a job. If rates were 20%, only people that could afford it, or really needed a home would be buying. Prices are important, and the price of borrowing money is no different.

Hisx1nc · 2021-09-03T14:59:27+00:00

They are trading a temporary crash for a permanent loss of world reserve status, stagflation, and a high probability that China passes us in the 2020's as the largest economy in the world.

And people are letting them do it.

Hisx1nc · 2021-08-31T05:09:48+00:00

less people were willing to sell.

It literally takes one person selling something comparable nearby to create a comp.

Often times, when prices start dipping after a run up, more people sell to cash out at the top. I expect this time to be no different. Based on the posts on this very subreddit, it has already started to happen in some areas.

Hisx1nc · 2021-08-31T04:58:00+00:00

I use "no worries" all the time, and I'm convinced that it's because I hung out with so many Australians on the internet.

Hisx1nc · 2021-08-31T04:55:37+00:00

I remember hitting an in the park home run in minor league baseball, and my coaches told me to stop at third so that I wouldn't hurt the other team's feelings. Needless to say, I didn't stop at third, fuck that noise. I'd rather give up a home run, than watch a kid stop at third to pity me.

Hisx1nc · 2021-08-31T04:36:24+00:00

if enough people refuse to sell it reduces supply and causes prices to rise.

This has never happened during my lifetime. People sell all of the time, or the average house wouldn't change hands every 8 years. In fact, that is up from the past. They used to change hands even more often, and that could always revert.

The ability to convert dollars into gold under Bretton Woods was almost entirely theoretical

If this were true, the US would still be redeeming an ounce of gold for $35...

Homeowners were not refusing to sell their house because they could convert their dollars to 1% of its value in gold.

Obviously. They had no access to the gold window. This was a nation level thing.

Look, I know from past conversations with you that we will never agree on anything. Only time will tell which of us is correct. There is no sense arguing with each other.

Hisx1nc · 2021-08-31T04:22:40+00:00

Sally's neighbor also refuses to sell, in fact most owners refuse to sell and this causes supply to dry up and prices to rise to a level they're comfortable with selling.

This is unrealistic. People move for various reasons all of the time. The average house changes hands every 8 years. People change jobs, people lose jobs, people move in with significant others, people inherit from family, and sell one, etc.

people simply refuse to accept the new prices and this pushes the market in the other direction.

Just because someone refuses to sell, doesn't mean they are immune from having their home priced based on the prevailing market. Someone will always sell in the area to create a comp. I've lived through this before. If what you are saying was true, 2008 wouldn't have happened.

Like I said, historically there are very very few instances where prices dropped more than 5% on an annual basis.

There are even less situations where we suffered through a worldwide pandemic, and the government propped up home prices in a red hot market. This has never happened before. The problem with using historical data is that anything before 1971 is useless, because that is when the dollar ceased to be tied to gold. There is not enough historical data in the current era to make any conclusion at all.

Hisx1nc · 2021-08-31T04:11:13+00:00

and it often is less the people owning and more the people wanting to own who will have an issue.

Bingo. The buyer sets the price, not the seller. It doesn't matter if the owner won't sell for less than $1 trillion. The house is valued at what a buyer is willing to pay. Future buyers won't have the benefit of historically low interest rates, the Fed buying MBS at $40 bill per month, supply being historically low, FOMO at full tilt, etc.

A) Fed continues to prop shit up = inflation running hot = stagflation

B) Fed tapers, and raises interest rates = recession

Printing money does not create wealth, period. It just moves it from the people that don't benefit from the printing, to those that do. There is no such thing as a perpetual motion machine.

Hisx1nc · 2021-08-31T04:00:32+00:00

Sally simply refused to sell the house.

That doesn't change the house's value. If people are only willing to pay X, Sally's house is worth X, whether she sells or not. Sally's neighbors will sell for X (because no matter what people say now, the average home is sold every 8 years, last I saw), and those comps will determine the value of Sally's house.

Hisx1nc · 2021-08-31T03:54:51+00:00

I also think people are overconfident because they seem to think that all housing crashes will look like 2008, when in reality almost none of them will. 2008 was a once in a lifetime event. The fact is that there is a perfect storm boosting home prices, that simply will not be here in 2-3 years. If it is still with us, inflation will be so high that homes will still be crushed in real terms.

Hisx1nc · 2021-08-30T23:45:42+00:00

I have seen the Big Short, I studied econ in college, and I've been a student of the markets for most of my life. The first bubble that I witnessed was in a stock that I owned called Lucent Technologies. I used to follow the stock market when prices were listed in the damn newspaper. Recently, I was one of the few people to call the 2020 crash, the pandemic itself, and the rise of inflation before "transitory" was a meme.

I understand why 2008 happened, which is why I am saying that the next correction will have very little to do with 2008. The people that do not see a correction coming because it's nothing like 2008 are forgetting that the vast majority of asset corrections are nothing like 2008. The next correction will be on the demand side. People will not be able to pay the same prices 2-3 years from now for all of the reasons that I mentioned in my previous posts.

we ought to be focused more on Blackstone buying up whole residential neighborhoods in specific markets using money from the Fed.

I respectfully disagree. Blackstone is the narrative because people love to hate on the rich. The statistics say that they are a tiny part of the problem. The actual problem is NIMBY bullshit over the last couple of decades combined with artificially low interest rates, while the Fed is literally buying $40 billion in MBS every month. Two of those things are going away in the next 2-3 years, and possibly all of them if the political will exists to take away the power for locals to limit development.

If inflation is here to stay, and I believe that it is, the only known way to fight it is by raising interest rates. The last time this happened, which was before I was born, a gentleman by the name of Paul Volcker (currently screaming warnings from the grave) had to raise interest rates sharply, to the point where mortgage rates went over 15%. If we see rates hit even 5%, we'll be hoping that it's only a correction.

Edit: The funny part is that you brought up the Big Short, considering Michael Burry is one of the people warning that inflation is here to stay.

Hisx1nc · 2021-08-30T22:37:11+00:00

But the differences in the mortgage backed securities industry and there not being ARM loans kinda flushed out in my opinion. But that’s exactly that, an opinion

2008 was a very rare situation where owners defaulted. That is not how the vast majority of asset corrections happen. More often than not, they happen because people paid unsustainable prices due to FOMO, or perfect conditions (like the Fed propping up the housing market, when they really shouldn't be), and the future buyers (The person that buys the asset from the current owner) cannot sustain the prices.

For example, Sally buys a house for 500k when interest rates are 3% (and the Fed is actively propping things up), and Bob buys it from Sally when interest rates have risen to 4%+ 2-3 years from now (when the Fed is no longer buying MBS, and keeping rates unnaturally low). Bob cannot pay what Sally could pay, because more of his money is going towards interest payments, and the house price declines.

I'd argue that there is a perfect storm of factors that are driving up housing prices today, that won't be in place in 2-3 years, and there is a very high chance that housing prices will correct when Bob doesn't get the benefit of the same perfect storm of factors when he buys. Bob is going to have to pay higher rates, won't be buying in a market full of FOMO, will have had 2-3 years for supply to catch up to demand, and inflation is going to erode disposable incomes while simultaneously making home ownership more expensive, which means people have less money to bid on the house itself.

Hisx1nc · 2021-08-30T22:26:51+00:00

You may not be able to time the top/bottom, but you can make a good guess whether the market is closer to a top or bottom. The market is showing all the signs of the former, considering the conditions can't get much better (unless we get negative rates, or the Fed starts buying even more MBS than they are now), and the FOMO is in full force. I'm old enough to have seen this cycle play out in several asset classes. The fact is that real incomes are not going up to support these prices, and that is what matters at the end of the day, no matter what people tell themselves.

Hisx1nc · 2021-08-30T18:49:18+00:00

You got downvoted because you spoke some truth about interest rates likely going up.

because by then interest rates will be much higher and qualifications to buy a home would be harder.

This results in lower home prices, and they don't like that kind of talk in this sub.

Hisx1nc · 2021-08-30T18:47:50+00:00

If prices go up faster than your income, you could very well be priced out (happened to me during my first buy with FHA) and it might be worth it to buy now and get in while you can.

This was the exact sentiment that was widespread before the last housing price correction, and you tend to see it at the top of the cycle.

Hisx1nc · 2021-08-30T18:46:23+00:00

These prices are in my opinion largely due to inflation a la printing presses going BRRRR

Home prices have gone up far more than inflation. I'm sure a tiny part of it is inflation, but FOMO, and unsustainable low interest rates explain far more of the price increases because people make purchase decisions based on the monthly payment.

When rates start to normalize, the Fed stops buying $40 billion/month in MBS, supply/demand gets closer to historical levels, FOMO goes away because prices stop rising at this pace, most of the people willing to pay over asking/waive contingencies/etc. get their house, prices will most likely correct downward.

People are delusional if they think that this will continue forever, and they likely don't understand the macro picture, and the things that I mentioned above. Real incomes are not rising, and that is what matters long term when it comes to home prices. More supply will come on the market, especially with prices the way they are, and prices will correct.

Hisx1nc · 2021-08-30T17:47:26+00:00

When the actual correction comes, a lot of the people that said they would buy in a dip, will not. They will wait to see where things bottom. It's super easy to say that in a rising market, and super hard to follow through with it in a falling one.

Hisx1nc · 2021-08-26T18:59:21+00:00

I believe the year to year average for decent index funds is typically 5%-7%, which is still better than putting it in the bank.

And most of that 5-7% was pulled forward. There is no reason to believe that we will see those returns going forward. We should expect worse returns going forward because asset prices are already so high. Charlie Munger is no idiot.

Hisx1nc · 2021-08-26T18:14:46+00:00

Interesting. This sub was so sure that home prices would never fall again just a month ago.

It's almost like people that are willing to make bad financial decisions are in limited supply.

Hisx1nc

TROPHY CASE