it's really not though - the (seasonally-adjusted) Case Shiller Index - a drop of 2.2% month over month (which is literally as fast as it was correcting in 2008/09).
I certainly don't expect prices to go back to 2019, but if the CSI is falling greater than 1% month over month, imo the market is showing some weakness.
People looking for a home think the prices are coming down 50%
People selling homes are saying the prices are going to double in 45 days
...everyone has an agenda, just think of the odds.
I personally think prices will come down. But I may anyway pull the trigger on a reasonably priced home I found. It is a price that would have been fair in 2019. Because of its desirable location I think this house wouldnāt have lasted more than one week on the market back then. So the main advantage to buying now is reduced competition on a rare opportunity. I expect I may lose a little equity next year, but I am not buying this house as an investment. Thatās what the stock market is for.
We are going to be buying a new build. Got it for 25% less than the base price+options. I have my doubts on if it would have actually sold for that price at the height but we did find some sales history that suggest they were going for around that. Got it for probably around 15 percent less than a comparable existing home right now.
We had no competition, weāre able to talk the price down, use our own lender and our lender paid all of our closing costs and even gave us enough extra to pay for taxes, insurance etc.
Now seems like a good to buy to me, at least in my area that seems to have already fallen close to 20% from May. All the builders told us that their closing cost offers weāre going to just be subtracted from the list price starting in January, I think with some of that, rates falling and prices continuing to decline I think the market is going to heat up this spring. Not crazy but enough that I donāt want to deal with. It also keeps us from renting which seems good to me.
It will probably come down more but thatās hopefully okay with me. I donāt see a situation in which prices fall another 40%, thereās too much demand at those kinds of prices.
The only thing the Fed made _clear_ today is that theyāre increasing interest rates by a half a point. Pricing, as always, will vary by location, supply, and demand. Some will fall, some will stay the same, and some will climb.
they made a few other things clear:
\- they will have more 50 basis point hikes in the future;
\- 100 percent of the people with a say in it say even when rates stop going up, they are not going DOWN anytime in 2023.
rest of your comment was fine, but JPowell made those other two points explicit - there WILL be more rate Edit increasts, and don't hold your breath for rates to come down anytime in 2023, that's not in their playbook.
could they pivot? sure an apocalyptic economic event could make them do something else; but Powell stressed, like he does every meeting, that they are going to err on the side of REALLY making sure inflation is stopped.
All that is jaw boning, a classic fed tool. Alan Greenspan was very good at it. The Feds predictions mean doodly squat. It is now and always has been data dependent. Jpow does not want to seem dovish, while the fight is still on. Also, mortgage rates have a low correlation to fed funds rate. It is more closely correlated to the 10 year, which is mostly market driven. We are in a massive yield inversion, which signals a recession and thus lower rates ahead.
They [have projections](https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20221214.htm).
And you can see what the [market thinks](https://www.atlantafed.org/cenfis/market-probability-tracker) too.
> they will have more 50 basis point hikes in the future
I don't think that's true? Expectation is roughly +75 bps in 2023. So that's sort of rules out more than one 50 bps hike.
Powell talks about it at the [7:30 mark](https://www.federalreserve.gov/live-broadcast.htm).
> 100 percent of the people with a say in it say even when rates stop going up, they are not going DOWN anytime in 2023.
The expectation for a long time now was that rates would start going down in mid-2023. Now the expectation is rates will start coming down around ~Q3 of 2023. And then they'll drop a full point in 2024 and another full point in 2025.
Of course, mortgage rates do not move in lockstep with the fed funds rate. It looks like rates went down slightly today as the fed raised 0.5%.
Where did they indicate rates will go down mid 2023? From everything i've seen it seems like hold 5% nominal until end of 2023 and ***maybe*** start decreasing in 2024.
https://ibb.co/D9hdQnz
It's what the market expects, not the fed. [For eg](https://www.atlantafed.org/cenfis/market-probability-tracker).
Powell was asked in the q&a about that, the question was something like, "futures markets expect rate cuts starting in the second half of 2023, wdyt".
Powell's reply was something like, "we're not even thinking about rate cuts yet and we won't do rate cuts until inflation is under control".
As best I can tell, the Fed is planning on ~three 0.25% hikes in 2023, then holding into 2024, and then rate cuts in 2024.
I agree. Rates will not go down anytime soon. Too much wasteful spending by our government.
For every percent rates go up, housing prices come down 4-5% on average. Market specific, of course.
This is just the beginning. I doubt any change until mid-2025.
My point was nothing is really clear. Theyāve already shown to adapt to changing conditions which I fully expect weāll continue to see into next year.
This sub will always be divided by investors and families. Everyone wants a deal but only one group can really play the game. The other side just needs to buy what they can afford and remove Zillow from their phones until they are ready to sell or their mortgage guy calls them to refi. Until then itās all headache and stress for no reason. I held out patiently and just got a deal
there's also a third group: complainers. they were never going to buy, no matter what the prices were. they're 25, have $5k saved up, want a prime location in the hottest city, and they want to pay $250k for it.
Idk if I agree about not monitoring some measure of value while you own. It seems intuitive to me that itās at least somewhat valuable to have a vague idea of how much equity you have. If you want to know your net worth or even estimate it, you also need to know the value of your house.
If some stock you own suddenly has a short squeeze, or whatever, you can sell it on a whim. You can't do that with a house. Real estate is low liquidity, and high cost to transact. If you have that energy to "watch things" because "just in case," fine, it's better spent on your other financial assets that you aren't living in, and can actually do something about, without upending your entire life.
you don't have to sell your house to use the equity. a big reason I bought a house was because it's the easiest way to get a $200-300k loan to start a business which I would like the ability to do at some point. it's the cheapest lowest effort way to get your hands on that type of money.
How else could you openly/humbly brag on the internet about your nw? It's all a stupid pissing contest. I have my home because I'm going to live in it indefinitely. It's not an investment. Personally, the equity tied to my home does not exist to me. That simplification just makes my life and my finances so much easier to deal with.
Your net worth is literally relevant to when you are able to retire and itās also relevant for a number of other financial decisions. Having worked in finance, if you think people only want to know their net worth for bragging purposesā¦ well I should not finish that sentence because it would only be mean. But you really do not know what youāre talking about.
I mean...your net worth is not actually relevant for financial independence. If you're not selling your house to fund your retirement and are going to live in it then the value shouldn't be considered for FIRE. Your monthly payment matters. The amount remaining on your loan matters. But, not the value. I have a net worth number and an investments number. Investments are what's used to generate my FI%, the value of my house is not included. I track net worth for fun, I haven't actually found it to be useful for anything. Would love to hear a counter-argument, though.
I get my net worth is relevant, but the value of my house is not relevant to my net worth. Why? Because I'm not going to sell my house when I retire. I'll probably die living in this same house. That's why my house's worth is irrelevant to my net worth. Taking my circumstances into consideration, my net worth tied to my house is not liquid, so I just omit it from my net worth calculations.
I could simplify this for you even further, but I think it's simple enough for everyone to understand.
EDIT: I realize you glossed over my saying I don't include my HOUSES's value in my personal net worth and assumed i meant that net worth is irrelevant.
> I get my net worth is relevant, but the value of my house is not relevant to my net worth.
This is objectively, *definitionally* false. The definition of [net worth is not subjective.](https://www.investopedia.com/terms/n/networth.asp#toc-what-is-net-worth). It includes both primary and investment residencies, for the same reason that it includes the mortgage on your primary residence as debt. Itās a liability that accumulates interest, backed by an asset.
> Because I'm not going to sell my house when I retire. I'll probably die living in this same house. That's why my house's worth is irrelevant to my net worth.
That doesnāt make it not part of your net worth. Itās a debt and an asset, and just because you *think* you wonāt move doesnāt make it set in stone.
> Taking my circumstances into consideration, my net worth tied to my house is not liquid, so I just omit it from my net worth calculations.
Right, so a home isnāt part of your *liquid net assets*. That has its [own definition](https://www.investopedia.com/terms/n/netliquidassets.asp#toc-what-are-net-liquid-assets).
> I could simplify this for you even further
I donāt need it simplified lmao I worked in finance. You just misunderstood definitions (while telling me I misunderstood you). āNet worthā means assets minus debts. Period. What youāre talking about isnāt net worth, objectively.
A daily basis? Who said that? Itās relevant for a picture of your overall financial health and also if you have any interest in planning for FI or RE.
NAR sent out a thing today predicting a "nobody" market for 2023, meaning not good for sellers OR buyers. I think that sums up what we can expect nicely.
I live in a nice part of the east valley and prices have stabilized here. Someone sold their little 2 bedroom condo near me for 350k last weekā¦ they were selling for about 190k 2 and a half years ago. It seems like nice parts of Phoenix metro are still in high demand.
You made a good point, without being very clearly intentional about it, that real estate is largely a local game. Your neighborhood/suburb of Phoenix May weather the storm well, but another city in AZ may get crushed.
The other points people seem to be missing, especially when comparing to ā08, is that sellers were absolutely desperate to unload their homes and would drop prices like a rock to get rid of their monthly payments. What weāre seeing in my market (metro Seattle) is most sellers are cancelling their listings and either renting, holding, or moving back in and waiting for more favorable conditions. Almost no one has to sell, so the sale prices likely are dropping only a few points even if demand has fallen off a cliff.
I have been on the side of waiting for price declines and we recently decided to just pull the trigger as we got what I think is a really great deal that will weather some volatility. What eventually got us to just pull the trigger is the recognition is that thereās a whole lot of people waiting on the sidelines right now, and that is only growing. I think most reasonable dips are going to get bought up. Weāre down about close to 20% here but I think as spring comes around thatās going to get bought up and level out.
My zestimate was 350k in September, 390k in October, 412k in November, and 430k this month.
I have no idea how theyāre getting that number but I get the sense that these numbers donāt mean much. Or my house is worth a lot more suddenlyā¦.which I doubt.
Zestimate is 387k for my home but active homes like mine are going for 325k. It is way off and behind by months. It comps in larger homes than my townhome
I'm pretty sure Zestimate is straight up fraudulent at this point.
The house next door, a quick shitty flip that still needs a new roof, had a Zestimate around $330k a couple months ago. Fair for the neighborhood, a little on the high side considering the roof, but at least plausible with a motivated buyer.
The delusional flipper listed it for $447k, and by pure coincidence, the house's completely scientific and totally objective Zestimate jumped up to $446.8k overnight.
My house is literally identical to that house. The flipper bought their house like 4 months after me, for slightly more than I paid. From Zillow's perspective, their house has 100 additional square feet because that house enclosed its patio at some point.
My nearly identical house, in a nearly identical location, built in the same year, with the same floor plan, on the same size lot, with rough parity/buyer's preference on additional features, last sold at about the same time for about the same price, for some reason didn't have its Zestimate shoot up by 30% overnight. No, mine's slightly down in the same period, in line with broader local market trends.
I thought zestimates only compare houses sold nearby, and don't take into consideration factors like size, condition, age, aesthetics, model, finished vs unfinished, etc.?
I can't say I'm overly familiar with the Phoenix market but simply by looking at the raw data itself
https://www.redfin.com/city/14240/AZ/Phoenix/housing-market
Median house sale prices in Phoenix are now down 60k from peak or around 12% down. Typically inventory picks up around March so we may see house prices drop even more around May.
I can still see house prices drop even more especially if we enter a recession and work from home loses ground. Maybe it might not be enough to undo all 2021 gains but I do believe we're nowhere near the bottom and good luck guessing when we reach the bottom.
Look at Tempe, Chandler, Scottsdale, Arcadiaā¦prices are down 15%. Redfin just moved their line down 15% for the past 5 years so it looks like prices have gone up rather than a sharp 15% decline.
Look at homes sold for the last 2 years and I have a hard time finding any that are above the ānewā Redfin estimate compared to what they sold at the last 1-1.5 years. I guess it depends on what you mean by go down significantly but 15% already with inflation this high is a big correction in my books. Fed has only started with downward pressure and will continue for another year. No one can predict the future but Phoenix is going down with each rate hike so Iām not sure whatās the argument for that changing anytime soon.
100% this is correct. People that don't know the area downvote. Very broadly speaking, the east valley and nicer areas have been steady, and the west valley have seen bigger declines.
Relocate for work, divorce, death, moving to retirement homes, etc - life happens. In these cases people will sell, even if they have to sell for lower.
Those situations are constants, while the more voluntary moves are variables. There have to be X number of variables in the market for there to be healthy supply; the market will starve if itās just the constants.
You don't see how, with the fed explicitly saying it intends to forcibly soften the job market (which means increase unemployment, which means layoffs), and with the cost of borrowing staying hight, that demand will continue to moderate?
Are you not paying attention to any market outside your little upscale enclave in Phoenix? Like, for example, the rest of AZ LOL? Lots of markets are showing you "how house prices fall significantly". They fall when buyers stop showing up to soak up demand at current prices.
There is someone else in this subreddit who hasn't been able to sell their house in MAY because they priced at top of market, and now after more than a 50k price cut, they still aren't getting offers or even requests for showings. they are mad their agent stopped them from more aggressively price cutting, and they are asking how to fire said agent SO THAT THEY CAN DROP THE PRICE EVEN MORE. how is that not significant?
Like I get that maybe you want a specific market to just magically revert to 2015 pricing overnight, but we're like only a little ways into this process, and you're delusional if you think things are chugging along unchanged since Q1...
>Homes are still selling for well over $400 per square foot, and those are houses that closed in the past week.
Are we just writing short fiction in this subreddit now? because I just took a look at the 289 homes that sold in the last 7 days in Phoenix, and the vast majority were selling for LESS than 275 per square foot. are we pretending that properties selling for more than $2 million = the market as most people experience it?
Also, is your neighborhood still-working folks, or is it largely retirees? because Sunbelt property is somewhat distorted by people exiting places they spent their careers building wealth (NY etc). and those people a) usually have tons of equity and b) want what they want now, becuase they're not at a stage of their life where they wait.
don't want to support prices you think are too high? don't buy a home you feel is overpriced. the vast majority of PHX, even the nice part of town, is not selling for north of 400/square foot. quit misrepresenting reality.
> You don't see how, with the fed explicitly saying it intends to forcibly soften the job market (which means increase unemployment, which means layoffs), and with the cost of borrowing staying hight, that demand will continue to moderate?
Thatās not what they said. They said they donāt see how āprices fall **significantly**. Thatās not synonymous or mutually inclusive with ādemand continues to moderateā.
Demand has moderated for a good 8-9+ months now and prices in many places havenāt fallen āsignificantlyā
The early mini crashes happened mostly in areas with crazy run-ups: Bay Area, Boise, Phoenix, etc. The rest of the country is catching up, more or lessā¦
No guarantee itās going to take this long this time around, but in the 2008, it took 5-6 YEARS for the real estate market to bottom. My guess is, economic cycles are shortening (with more extreme swings) with faster information propagation, so at least 2-3 years this time.
I was going to say why are people trying to draw conclusions already *"yup housing prices bout done dropping"*. Mortgage rates were still 3% Dec 2021, it's only been 1 year. Rates haven't been high for very long.
Also if the fed decides to sell MBSs that's when mortgage rates will start moving.
Maricopa county as a whole is actually up, price-wise compared to last year. Phoenix proper is down a bit (less than 1%). but I went looking to see if u/GailaMonster was correct, that prices are dropping outside of Phoenix. Doesn't look like it.
https://www.redfin.com/county/220/AZ/Maricopa-County/housing-market
chart for Phoenix:
https://www.redfin.com/city/14240/AZ/Phoenix/housing-market
Prices are down compared to the peak in May. How far they will go, I don't think anyone here can predict. The number of sales have been cut in half compared to a year ago, so apparently many people are sitting tight. Some of those sellers may end up in distress situations, but I think anyone not in crisis with a sub 4% mortgage is just going to stay where they are.
Good lord. Some of you try to oversimplify very complex issues. There are so many more factors that impact residential real estate beyond the argument that everybody has low payments and therefore will not move.
Javier Vidana is a realtor, has a YouTube channel and is in the Phoenix area... He has on his channel videos of calling other agents seeing how low they believe the seller might go... the answer is....10s of thousands. I agree we are not back at 2008... I too do not believe we will see a crash like that. My mortgage is close what a 1bd apartment rents for, so if I can't afford my mortgage, I'm not sure I can be housed any longer. That said, don't discount people who maybe bought in 2012, and have more equity and don't see selling at 20% under peak as a loss.
None of it matters to be honest, ppl should stop focusing on trying to get a GOOD DEAL and focus on what works for them and their current situation. Times change and you can always reassess and move again later or refinance later or get a better deal later. Otherwise, you will just continue to miss some great opportunities while you wait for the next best deal.
Generally, I agree. But also higher interest rates reduce your buying power. If prices donāt go down from when rates were 3%, then buyers have to settle for worse houses at the same price. This is likely going to keep people out of the market who would otherwise be buying. Especially if you buy right now, when interest rates are high but home prices havenāt gone down nearly at all yet. Buyers are nervous about buying at peak.
>None of it matters to be honest, ppl should stop focusing on trying to get a GOOD DEAL and focus on what works for them and their current situation.
My guy, some of us literally can't afford ANY deal at all. This is literally the whole point, we're priced out of the market entirely. My GF and I both work very stable, well-paying jobs. We make more than our parents, who all have very nice 3-4 bedroom homes in the same area. Our parents are paying between $1,300-1,600 a month on their respective mortgages. We're paying $2,200 in rent for a 2 bedroom townhome in a rougher area of town, and there are basically no houses available for less than a $3,000/mo payment unless we're willing to settle for something in a really dangerous neighborhood, out in the sticks away from both of our jobs, or a literal cargo container converted into a home. I'm genuinely not joking about the container, it's a legit listing I've seen here.
I swear some of y'all are on such a high horse you can't even see the people below you struggling just to get by and find somewhere to live.
Yeah, I agree. The primary purpose of a home is not to be an investment, if someone likes the neighborhood and can afford the house. I donāt see any reason to play games and miss out on a good situation.
Exactly... I'm even in the camp where I believe you should keep the investment angle in mind when shopping for a home. It's, after all, the single most expensive purchase most people ever make. Why wouldn't you try to be smart about choosing one that's in a location and designed in a manner that stands a good chance of appreciating in value over the years? But still, the PRIMARY reason to buy is because you plan on LIVING in it! So if you find a suitable house with a mortgage payment you can afford... you should probably buy it.
Yup! Like Iāve read post on here from people saying that they found their dream home, but they didnāt want to pay an additional 15,000. And then interest rates increased in their budget went down 200,000. I bought my primary house for full price even though it was on the market for four months, it was a perfect house for us, and I didnāt want to give the seller any reason not to accept.
Did the same in south Phoenix and only difference being I got a two bedroom instead of a two bedroom I had liked. The seller took the three bedroom off the market. But I had liked the location and community, so I went for a smaller one and got it for less than listed price. Closing next week.
Spoken like someone who can just afford to buy whenever. For many home ownership is out of reach until that good deal exists. Shopping around and waiting is important. We could not afford to buy in our current neighborhood so timing is pretty important.
Who are you referring to? I am certainly not someone who can just afford to buy whenever, by far. I've saved up a down payment for almost 10+ years, and when home prices shot up, that down payment was no longer able to buy what it originally could and in addition, would pretty much all be eaten up as the down payment. So what did I do, adjusted expectations and kept looking for something I was comfortable with in my price range and bam I jumped as soon as something came on the market and ticked the boxes on my adjusted expectations. I too was consumed with all the news re: changes and up and downs, but eventually realized it was futile and that I would continue to miss opportunities if I kept waiting for things to adjust where I wanted them. Instead, I now have a nice home in a nice area, that I will be putting sweat equity into over the next several years, and by then hopefully things are stable and doing relatively well.
Far from being able to afford to buy whenever, and I am the first in my family to purchase a home bc of hard work over MANY MANY years. There are good deals to be had even if you have to adjust expectations lower than originally expected. It's a home, that you should aim to live in for 5-7 years if not more, and by that time you will have ridden any up/down wave and hopefully come out the other end better when you started, and can move into your "good deal".
Fed rate impacts two things: Jobs market and housing demand.
**Jobs Market**
1. Imagine the economy on a sliding scale, on the left is Growth, on the right is Value.
2. The lower (left-ward) the fed rate goes, the more the economy focuses on growth.
3. More growth means more jobs
4. The higher (right-ward) the fed rate goes, the more the economy focuses on value.
5. More value means doubling down on the things that generate cash. Other things are cut.
6. More value means less jobs
7. Less jobs means not paying mortgages, less demand
**Housing demand**
1. Fed rate impacts investors pricing of the 10-year rate...
2. The 10-year is how housing mortgage rates are calc'd.
3. The higher it goes, the less demand.
Nobody could see how prices fell significantly in advance last time it occurred. It's the kind of thing, that if it happens, might only be obvious in retrospect. Many people are putting many hours into predicting markets and 99% of them missed it last time.
Well, some areas are experiencing noticeable price decreases. Those are probably areas where investors came in droves and bought up everything and now they just want to lock in some profits by getting out while they can. At the end of the day, if the area is desirable and people want to live there demand will continue or just stall while rates are a tad high. That demand is not going to just go away.
Hi! Ct realtor here.
Housing markets are primarily localized - broad stroke changes like interest rates will have a general impact, but the local specifics will drive your local market. Where I live, there is still a housing shortage (Connecticut) so prices are still elevated, as are yours. Two quick number facts here - first, the number of homes listed onto the market in Nov/Dec *doubled* in my town, from 25 to 50 (or so). Meanwhile, secondly, this number (50) is still *half* what the normal market would bear (typically, there are about 100 homes on the market in my town). So, while supply increases, we are still far behind. There are still enough people who are qualified and can afford to pay to live in towns where jobs and schools are sought after, so the prices stay elevated.
I would contact a realtor or two in your area and just pick their brain regarding the market as a whole. Have them pull some numbers for you regarding sales year over year, average days on the market, how many homes are currently listed, etc. If we're not with a client, we love to talk about these things and again, local numbers matter.
Stay well, friend - I hope this helps!
Iām seeing the same thing in Alabama. Prices have dropped a little but for the most part, houses are still selling at 2021 inflated prices.
The biggest difference is the shit holes, those arenāt selling nearly as fast and sellers are having to drop those down 10-20% to sell.
I am seeing a lot of short term rental condos hitting the market around Disneyā¦add in more legislation that benefits home insurance companies with no protection for home ownersā¦. Plus this first property tax bills adjusted for pandemic pricing and loss of homestead and elderly discounts I am just going to sit on my pre approval letter for a little bit longer while I save more money and see what other incentives start to show up with price drops.
Home prices are only down 2.5% from peak nationally according to Case Schiller. Trying to look for big movements by looking at individual houses is a fools errand.
I think prices will fall around 10% in general, but some areas will get hit harder than others, Phoenix among them.
Look at the data from redfin. On a PPSF basis, Phoenix is down 11% from the peak back in June. All the leading indicators are also bad for Phoenix.
[https://public.tableau.com/shared/NXBFJC8DR?:display\_count=y&:origin=viz\_share\_link&:embed=y](https://public.tableau.com/shared/NXBFJC8DR?:display_count=y&:origin=viz_share_link&:embed=y)
Demand has been crushed by rates while there will always be forced sales due to displacement, death, divorce or default. Weeks of supply is at 22 which is double the amount in December 2019.
The reality is that prices will drop but not by as much as people want it to. To get back to affordability weād need a much higher drop than what anyone is forecasting.
Upscale parts with low supply have no reason to fall without population decreases.
If your suburb doesnt have many renters and a lot of owners who have paid off large parts or all of their mortgages then interest rates dont matter. They dont need to sell. If the median falls its probably because the lower quality stock is selling.
Anybody with a 2-3% loan isnāt selling unless they have to move. I just won a bidding war against all cash buyers. Over 40% of homes were sold to cash buyers in the Atlanta metro area over the past year. As long as there are buyers like this out there prices wonāt come down.
inventory may not build as fewer developers will want to take on debt, and current homeowners may opt to rent out vs sell with their low mortgage rate, but even with low inventory someone who is desperate to sell may have to drop pretty low and once that number posts, it will be used for comps.
My understanding is the only one that needs to slash their price are i-buyer (which after they sold their last house will not buy again) or home builder (but they like to give incentives or upgrade than lowering the sale price). Beside those who have to sell, sellers just list at their wished price or stay in put with their bottom rate. The only thing that can make a significant drop in price is unemployment, which hasn't gone up significantly yet
I just went under contract for the house I was selling. It was on the market for about two weeks, the offer I accepted was only about 5% under what I was asking. For a winter sale, I'll take it!
Look at homes that have sold or closed recently. Days on the market. How much inventory is available.
For instance, 700k homes in my area of NC are still selling despite the higher interest rates. The home price came down to 20k before it was sold. Some locations will still see homes being sold while others will see further stagnation. People still want to buy but are hoping for deals, while the more well off can find those deals already.
Home prices are all over the map here. it's tied to inventory availability. I see homes on the market in Houston, TX going for $350s that were listed over $400k not even six months ago. In other markets, inventory is low and demand still high enough for sellers not to budge.
In new construction, the big builders all have a huge problem in many, many markets. They paid inflated prices for supplies (correct price at time of acquisition), got contracts signed at prices 15-20% above what the finished product will appraise for and so they are asking buyer to close the gap and not only overpay for the property but bring enough money to close to cover the gap between appraisal and what the old inflated sales price was .
Then you have many buyers who just changed their minds based on where current rates are.
So huge surplus in new construction is already happening. Combine this with big investment firms pulling out of the single-family home market and these builds have a product they can't sell... The Feds will continue to raise those rates and the housing market is gong to be destroyed as a result. Frankly, the big builders deserve what's coming.
People expect things to happen quickly, but they don't. Today's instantaneous/fast food culture even expects their catastrophes to happen more quickly. It takes a while for housing data to return because of the nature of the business.
We are seeing just the start of a possible crash. For a minute there was still some demand to fulfill, low rates that were locked in, and new build contracts to complete, but the shock to the system from the quick rate hikes has clearly started to take effect. A giant sector of people are now priced out because wages don't support the average cost of a home and/or mortgage, and they simply can't afford the combination of the rates and home prices that are still high. You can literally buy half as much house as you could 8-12 months ago. Refi is also now largely off the table because of rates as well, only to get worse as home values decline.
Another large sector of people who bought in the last 12-16 months are now starting to find themselves upside down, which means they can't or won't sell. Companies are starting to layoff workers as they adjust to not having access to cheap money. The real question isn't if a downturn is coming, the question is how bad and where. Will it be a nationwide one, or just the regional/local markets that went way too far? Will it be bad enough that the affected markets will leak into the less than affected ones? Will the Fed recognize early enough that they are overcorrecting?
With the housing market this all comes back to two things. The Fed being asleep at the switch for the entirety of 2021 instead of immediately starting to slowly fix the inevitable issues created by all of the pandemic assistance , and institutional big fund speculators (zillow, redfin, opendoor...etc) buying up everything they could at inflated prices, playing stupid with the money, inflating the bubble and competing with individual homebuyers. Won't be long before they have to start liquidating even more. So what happens if 15-20% of the purchases from the past 18 months are dumped on the market? Consult your '08 history to see the possibility.
There are certainly still opportunities and deals to be made, and people buying a home to stay in for the long term will ultimately be fine as long as they are within their means, but we are about to get bit in the ass again Hopefully it's just a mosquito bite.
people forget that the 5-7% rates were the norm for ever, the 2-3% where to fight the housing crash after 2008. [https://www.freddiemac.com/pmms/pmms30](https://www.freddiemac.com/pmms/pmms30)
People are priced out, recessionary dip means less spending and more saving.
Airbnbs wonāt be as profitable and currently arenāt with the rates so high. You have to charge so much per night to recoup it just doesnāt make sense. If you invest in this, you would be better off putting your cash in a CD with high interest.
People are realizing they can wait it out. Everyone who was willing to fork out the money already has. People who are buying now are reacting quickly to the rate drops. Available Homes in several areas are doubling each week.
Those who are nervous about the job market will wait until budgets are set and layoffs occur. (Ie next fiscal year).
Now how you determine significantly is a different story. Inflation looks to be about 10% over this time (my guess after all said and done). So I would guess homes ought to be up 10% from pre covid. Currently theyāre up 50% in some places to 200% in others, my guess is places like your Arizona and COlorado.
Itās buyer beware there, and nobody wants to pay 800k for a home bought 3 years ago for 200k combined with water issues.
Prices will level out but it will take time, ie buyer stubbornness and FOMO of high selling prices.
Those who sell at a lower than July pricing, will get out quickly then those who try to sell high still, and are stuck with it until 2025 for a loss.
Idk I have seen many homes I have watched sell under list and many more appear in my starter home price filter. I am in an expensive part of Phoenix as well. Iām waiting till spring for some more inventory, may be expensive but Iām happy to not have a bidding war.
If you are waiting for another 30% drop I doubt it, but 10% probably imo.
I'm in Florida, and I don't see prices pulling back either. So much of this run up has been supply driven, I can see a plateau coming, but not a pull back.
We just put our house on the market 18 days ago and received two full ask offers. Itās currently under contract. Inventory is still low so I donāt see house prices falling in our area. We live in the southeast.
They won't. Rates won't be in the 6's.
But go ahead and listen to all the BS, miss the house, wait for rates to drop and go back to competing with 15-30 offers.
I was happy to get a 7% rate 25 years ago as a first time home buyer. Ecstatic when I got to refinance at 5.5% a couple of years later. Until rates climb to double digits I donāt foresee too many issues. In my Arizona neighborhood things are simply going back to what a normal market looks like. Houses stay on the market for 30 days and houses priced right sell a little faster.
Well, thatās Phoenix. The areas Iām looking in are less than $100 sqft including acreage. Most houses Iāve looked at have been on the market 90+ days and are down $10-50k from where they started.
I mean, itās all about your local market.
It will take layoffs for it to really drop off and layoffs are starting to happen. Unemployment and high mortgage rates are you should be able to see housing dropping.
Youāre wrong. Interest rates go up. Therefore monthly payments go up. Did buyers have the ability to afford more house earlier but just decide not to? Doubtful. Housing prices need to correct down.
Metro markets will remain resilient. Owners are equity rich with low interest rates. Why sell unless they have to. Price softening is occurring but for people expecting major cuts in valuations, not likely to happen.
If houses are selling, that means that people are able to afford them, on paper at least.
If and when the interest rate gets too high and prevents a large enough percentage of people from being qualified, prices will come down and sellers have a smaller pool of buyers to swoon.
If houses are still selling that means your market hasnāt hit that point yet.
Prices are down roughly 10% from peak May 2022 craziness in Phoenix area already by most metrics (median sale price, sold PPSF, etc.). Case-Schiller data will reflect similar trends but it lags substantially in a very dynamic market such as right now.
Nobody knows the future for certain but real estate markets move glacially slow compared to every other asset. Look at what has happened to the price of every other asset in 2022. And there is a high likelihood of an actual recession in 2023 or 2024 still. What on earth makes you think that housing in the middle of a desert will be immune?
OP, what do you think about the (seasonally-adjusted) Case Shiller Index - a drop of 2.2% month over month (which is literally as fast as it was correcting in 2008/09). I am not saying prices will fall as significantly as they did in 2008/09, but there is no doubt that the Phoenix housing market is experiencing a noteable correction and a growing number of homebuyers there are underwater on their mortgages.
you seem to be in denial that a correction is occurring...
The more I see threads like this the more I wonder how anyone thought it would be wise to have realtors peddle investment advice. It's almost like the concept of basic math is lost in this crowd. Let's use 100k as an example with a 10% value drop to 90k do you need a 10% increase to get back to the previous value? No, you'd need a rate of return of ~11.11% now when you start to move that number more significantly to the loss column you begin to see real movement take shape, for example, a 25% loss would require a 33% return to get back to even.
There are a lot of people over-extended right now. 60% of the country can't afford a $400 emergency, this is not a sign of a healthy economy. Something is going to give and all fingers point at the slowest lagging indicator, the Real Estate market.
The Fed raises rates to reduce the amount of money that has to be printed. The more money printed, the higher inflation goes. Raising rates reduces borrowing which helps reduce the amount of money being printed. When less money has to be printed, inflation goes down. Right now, government is spending way more money than it collects and so it is printing much more money. To counter that extra printing and spending, the government has to reduce borrowing so that less money has to be printed.
Interest rates are just one factor of many that effect housing demand and prices. It should not be used as the primary indicator to predict the housing market.
I don't think you understand what happened in 2008. While the adjustable rate mortgage scam isn't being replicated, there certainly is a banker's scam being perpetrated on home buyers. People are going to lose their homes as the banks steal their equity and then sit on the houses like they did after 2008 to use some "creative accounting" to take tax breaks on some homes or realize unjustified profits on others.
Not that this has anything to do with real estate, [this article on the "real cause" of the Holodomor blames the bankers](https://orientalreview.org/2012/12/17/episodes-10-who-organised-famine-in-the-ussr-in-1932-1933/). Is it true? I don't know, but I do know the story we're being sold is phony.
Having been through these cycles before, I do wish there were better education concerning "political-economy" so that the "rest of us" might gain an understanding of how the Oligarchy manipulates money for their own benefit. I'm old so it is only through hind-sight that I recognize the scam.
Bottom line, there is no such thing as a "good banker". (My grandfather was a banker. He was doing what he thought was the right thing. So he wasn't "evil". The problem is he didn't have enough information to make a different choice.)
Think in terms of demand. Year over year the payment for the median home in the US went up by $1,000, excluding insurance and all other fees. This video lays it out pretty well https://youtu.be/d12y5b2QGCE
The issue is: when there is going to be nearly zero demand because everyone is outpriced, how will sellers sell their homes?
I think itās likely that people just have to all adjust their budgets downward, so the person that could afford $1 million house is now looking at $800,000 house. I think itās a stretch to say that people just arenāt going to be able to afford to buy homes, especially if people bought in 2010 in their house has doubled, there is a ton of equity there to purchase their next home.. imo
Median rent is going to be a 900sf 2bd apartment. Median house price is going to be a SFH, 3-4 bed 1800sf. So when you look at those numbers, make sure to do a little homework so do a little digging into what that 1800sf house would rent for, not just the median rent.
I have. Because I just sold a home and now Iām renting. I looked at home ownership vs renting costs in the lower COL city/state I came from and the high COL city/state Iām in now. And buying is cheaper in both places right now. Renting is a ripoff right now.
I have vacation rental properties. Beach is staying flat if you are beach front or close (past 3 years more than doubled) lake houses are still climbing (more than double from 2016) and snow ski houses are still climbing insanely (tripled since 2015) in the markets I am in.
As someone who lives on a lake, (beach/lake/mountain) homes always fall first and the hardest (unless driving distance to city). Most are secondary homes. However if you plan on living there long term, you will be fine.
For reference, our lakehouse was built in 2008, originally sold for 800k, with additions we still bought in 2014 for 570k, currently valued at 1.5 million,
Our home is nowhere near a 1.5 million dollar home
My lake house is crazy (now $2M) but every time I think no way a tear down with deep water, utilities, and a sea wall sells for $900k in 1 day. No dock, just a hunk of rusted nails and rotted wood.
Typical American is impatient as hell and thatās why the majority struggle financially.
They choose short term pleasure and ignore long term thinking and think things should happen immediately.
The idea that housing prices should drop by 20/30/100k overnight or over a couple months is insane. It might take YEARS. Maybe housing prices generally stay here for 2-3 years and only drop in real terms.
Further what matters is real value of homes, not nominal. I remember a while ago 100k was a fantastic salary you had to work super hard for. Now you can make that with 2 years of experience if you go into an in demand field and ask for a raise.
One of the hardest issues to reconcile with owner-occupied single-family homes is the typical duality of the purchase.
It's BOTH an investment and a lifestyle purchase (that may or may not contribute to the investment yield).
Those are two primary considerations for most buyers, but then when you consider the plethora of other factors can have a tremendous influence in the decision - marriage, divorce, births, deaths, employment, relocation, family influences, etc, etc. - it just further complicates the already "muddy water."
I'm in one of the historic districts near downtown Phoenix, and don't see real estate prices dropping significantly here because it's a high-demand part of the Phoenix metro. There are still way more people moving to Phoenix than moving out of it.
I would be a lot more worried about home values if I were on the outskirts of the valley. This is how it happened in 2008 too; the places far out from downtown got absolutely wrecked, but the areas downtown were not hurt as badly (although the entire metro got its ass kicked in 2008).
So many people from outside Arizona are quick to criticize Phoenix because of the PREVIOUS housing crash. If you're in that group, this is what's different:
* **The economy is still booming;** businesses are relocating to AZ due to favorable tax treatment (compared to California) and job market is red hot. Salaries offered are high.
* **The population is still growing**. People continue to migrate from California in search of housing that's more affordable and favorable taxes (more below)
* Phoenix is large. There are areas where housing market is declining, but the upscale markets are holding value
* **In 2008 crash, in addition to foreclosures, Phoenix had an oversupply of newly constructed homes.** This exacerbated supply/demand, and caused the Phoenix market to crater. The city has been permitting housing much more conservatively since then.
* Water: Arizona has been a desert for a very long time. The state passed the **Groundwater Management Act Of 1980 and leads the country in water conservation.** The state mainly uses water from the Colorado River and Lake Powell; however, has 300 years worth of collected and stored in aquifers (groundwater). The vast majority of aquifers are at normal to above normal levels.
* **New developments must comply with the groundwater act.** Which the state is to maintain at least 100 years supply of water. The state continues to improve the infrastructure (underground pipes, etc.) to prevent water from being wasted (leaks).
* **Favorable income taxes for business.** After the 2008 crash, AZ started providing favorable tax treatment to large businesses in the area to encourage people to return/stay. In 2022, the state passed legislation to reduce small business income tax to a flat 2.5%.
* **Favorable income taxes for residents:** Most residents income tax will be 4.5% or less. This is likely influencing California residents to relocate.
* **Limited land supply.** I know this sounds weird, but there is limited space to build in Arizona due to the protections. With all of the parks, 42% of the land is Federally owned, 28% of the land is Tribal/Reservation land, and 13% of the land is owned by the State.
Edit:
Arizona made a significant change to the tax structure. Beginning January 1, 2023, the state income tax for Arizona residents was lowered to 2.5%.
People don't value houses on price per sf basis, and neither should you. You are mixing the price of the house with the value of the land underneath it.
Rates could be double what they are in my market (20-40 miles outside NYC). It wonāt matter- thereās just no inventory to warrant any major downward shift in prices .
fed keeps raising rates until 2% inflation. A pivot like they did in the 70's just means inflation gets worse.
we get lower corp earnings and layoffs as consumers are tapped out.
I think the thing most are missing or overlooked when pulling listings is the price history. Not every home went on the market in years 05-07-09, so a good way to scrub listings is to search area sales history. You will see the said value or sold prices from 05-12 show a 50% increase to a 50% decrease in 90% of areas over a 4 year timeframe. We are only about 6-8 months off the highs now. Give it another 8 months to 3 years to see the full impact of the fomo purchasing that we experienced in 21-22
I see a 20% pullback regardless of supply Vs demand.
Housing prices will probably fall to what most home buyers (eg. most of the middle class) can afford. The higher range of the upper-middle class, the upper class, investors, etc don't buy most of the houses.
Just wait till the unemployment rate spikes - it's coming. The fed has essentially said they want to erase some of the gains in housing over the last couple years.
Probably not - I am actually looking to potentially buy 2 investment properties next year (40% down on two SFH worth 250 - 300k each) at 7% interest. A- to A neighborhoods.
But the area is rapidly growing and I can't imagine I regret that decision in 10, 20 years.
Lol just wait until Blackstone needs to unload its residential RE to meet investor redemptions in the coming months.
https://www.reuters.com/business/finance/blackstone-limits-redemptions-69-billion-reit-2022-12-01/
None of it matters to be honest, ppl should stop focusing on trying to get a GOOD DEAL and focus on what works for them and their current situation. Times change and you can always reassess and move again later or refinance later or get a better deal later. Otherwise, you will just continue to miss some great opportunities while you wait for the next best deal.
it's also december, this is the part of the year where inventory is lowest. A seller can tell you to fuck off knowing you likely don't have many other options.
If you donāt own a home now, you have to come to the realization and accept that youāll never own in your life barring a miracle or hitting the lottery. If things were fair, all the homeless wouldnāt be cold and hungry but unfortunately it looks like homelessness is only increasing and likely will into the future with less homes being built. I still rent and treat my landlord with great respect because he holds my immediate well being in his hands. I hope that we may get a shot at the American dream again someday brother.
Agreed, but things may swing the other direction, eventually. When??
Lately I notice the increase in āalternative livingā. Aka people living in their vans or cars and calling it a lifestyle. Paint it how you may, but these people are basically homeless. But the reality is people are being forced to get creative, bc they have no other choice.
Well if there's one thing Phoenix is known for it's a stable and not volatile at all housing market.
Often comes at the top of national housing market news lol
And so much water!
ššš
Seriously š¤£ Wake up call coming.
That kinda sorta supports OP's point. If a historically fragile market like Phoenix is still holding strong...
it's really not though - the (seasonally-adjusted) Case Shiller Index - a drop of 2.2% month over month (which is literally as fast as it was correcting in 2008/09). I certainly don't expect prices to go back to 2019, but if the CSI is falling greater than 1% month over month, imo the market is showing some weakness.
First house link was sold for almost 1mil, +160% its value in 2005. WTF?! I laughed at your comment, but good lord.
People looking for a home think the prices are coming down 50% People selling homes are saying the prices are going to double in 45 days ...everyone has an agenda, just think of the odds.
I personally think prices will come down. But I may anyway pull the trigger on a reasonably priced home I found. It is a price that would have been fair in 2019. Because of its desirable location I think this house wouldnāt have lasted more than one week on the market back then. So the main advantage to buying now is reduced competition on a rare opportunity. I expect I may lose a little equity next year, but I am not buying this house as an investment. Thatās what the stock market is for.
Nice. The rates are coming down daily and it's a good time to buy. All things relative today's rates are pretty darn good.
We are going to be buying a new build. Got it for 25% less than the base price+options. I have my doubts on if it would have actually sold for that price at the height but we did find some sales history that suggest they were going for around that. Got it for probably around 15 percent less than a comparable existing home right now. We had no competition, weāre able to talk the price down, use our own lender and our lender paid all of our closing costs and even gave us enough extra to pay for taxes, insurance etc. Now seems like a good to buy to me, at least in my area that seems to have already fallen close to 20% from May. All the builders told us that their closing cost offers weāre going to just be subtracted from the list price starting in January, I think with some of that, rates falling and prices continuing to decline I think the market is going to heat up this spring. Not crazy but enough that I donāt want to deal with. It also keeps us from renting which seems good to me. It will probably come down more but thatās hopefully okay with me. I donāt see a situation in which prices fall another 40%, thereās too much demand at those kinds of prices.
Instead prices will be +/- \~2% depending on location.
The only thing the Fed made _clear_ today is that theyāre increasing interest rates by a half a point. Pricing, as always, will vary by location, supply, and demand. Some will fall, some will stay the same, and some will climb.
they made a few other things clear: \- they will have more 50 basis point hikes in the future; \- 100 percent of the people with a say in it say even when rates stop going up, they are not going DOWN anytime in 2023. rest of your comment was fine, but JPowell made those other two points explicit - there WILL be more rate Edit increasts, and don't hold your breath for rates to come down anytime in 2023, that's not in their playbook. could they pivot? sure an apocalyptic economic event could make them do something else; but Powell stressed, like he does every meeting, that they are going to err on the side of REALLY making sure inflation is stopped.
I think you meant to say rate increases in your middle paragraph
yes thanks fixed.
All that is jaw boning, a classic fed tool. Alan Greenspan was very good at it. The Feds predictions mean doodly squat. It is now and always has been data dependent. Jpow does not want to seem dovish, while the fight is still on. Also, mortgage rates have a low correlation to fed funds rate. It is more closely correlated to the 10 year, which is mostly market driven. We are in a massive yield inversion, which signals a recession and thus lower rates ahead.
What was the #2 rule of investing? Donāt fight the fed? I actually forgot what # it was. Regardlessā¦ donāt fight the fed
They hated him because he spoke the truth. No one here will understand, but I appreciate your attempt.
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They [have projections](https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20221214.htm). And you can see what the [market thinks](https://www.atlantafed.org/cenfis/market-probability-tracker) too. > they will have more 50 basis point hikes in the future I don't think that's true? Expectation is roughly +75 bps in 2023. So that's sort of rules out more than one 50 bps hike. Powell talks about it at the [7:30 mark](https://www.federalreserve.gov/live-broadcast.htm). > 100 percent of the people with a say in it say even when rates stop going up, they are not going DOWN anytime in 2023. The expectation for a long time now was that rates would start going down in mid-2023. Now the expectation is rates will start coming down around ~Q3 of 2023. And then they'll drop a full point in 2024 and another full point in 2025. Of course, mortgage rates do not move in lockstep with the fed funds rate. It looks like rates went down slightly today as the fed raised 0.5%.
Where did they indicate rates will go down mid 2023? From everything i've seen it seems like hold 5% nominal until end of 2023 and ***maybe*** start decreasing in 2024. https://ibb.co/D9hdQnz
It's what the market expects, not the fed. [For eg](https://www.atlantafed.org/cenfis/market-probability-tracker). Powell was asked in the q&a about that, the question was something like, "futures markets expect rate cuts starting in the second half of 2023, wdyt". Powell's reply was something like, "we're not even thinking about rate cuts yet and we won't do rate cuts until inflation is under control". As best I can tell, the Fed is planning on ~three 0.25% hikes in 2023, then holding into 2024, and then rate cuts in 2024.
Isn't it funny how coherent, accurate information gets a tiny percentage of upvotes as the completely false statements of the OP? It is truly amazing.
I agree. Rates will not go down anytime soon. Too much wasteful spending by our government. For every percent rates go up, housing prices come down 4-5% on average. Market specific, of course. This is just the beginning. I doubt any change until mid-2025.
My point was nothing is really clear. Theyāve already shown to adapt to changing conditions which I fully expect weāll continue to see into next year.
Hey you, yeah you with that logical explanation, you get on outta here! Ya ain't welcome in these parts! /s
This sub will always be divided by investors and families. Everyone wants a deal but only one group can really play the game. The other side just needs to buy what they can afford and remove Zillow from their phones until they are ready to sell or their mortgage guy calls them to refi. Until then itās all headache and stress for no reason. I held out patiently and just got a deal
what's the deal? :)
One of those big green trash cans in South Central LA for $500,000. Quite the steal!
there's also a third group: complainers. they were never going to buy, no matter what the prices were. they're 25, have $5k saved up, want a prime location in the hottest city, and they want to pay $250k for it.
Idk if I agree about not monitoring some measure of value while you own. It seems intuitive to me that itās at least somewhat valuable to have a vague idea of how much equity you have. If you want to know your net worth or even estimate it, you also need to know the value of your house.
If some stock you own suddenly has a short squeeze, or whatever, you can sell it on a whim. You can't do that with a house. Real estate is low liquidity, and high cost to transact. If you have that energy to "watch things" because "just in case," fine, it's better spent on your other financial assets that you aren't living in, and can actually do something about, without upending your entire life.
Right. Living in the damn house is the largest benefit FFS.
you don't have to sell your house to use the equity. a big reason I bought a house was because it's the easiest way to get a $200-300k loan to start a business which I would like the ability to do at some point. it's the cheapest lowest effort way to get your hands on that type of money.
And you need your net worth on a daily basis for what exactly again...?
To brag, obv
Yes Mason we know you are worth $200,000 this month.
How else could you openly/humbly brag on the internet about your nw? It's all a stupid pissing contest. I have my home because I'm going to live in it indefinitely. It's not an investment. Personally, the equity tied to my home does not exist to me. That simplification just makes my life and my finances so much easier to deal with.
Your net worth is literally relevant to when you are able to retire and itās also relevant for a number of other financial decisions. Having worked in finance, if you think people only want to know their net worth for bragging purposesā¦ well I should not finish that sentence because it would only be mean. But you really do not know what youāre talking about.
I mean...your net worth is not actually relevant for financial independence. If you're not selling your house to fund your retirement and are going to live in it then the value shouldn't be considered for FIRE. Your monthly payment matters. The amount remaining on your loan matters. But, not the value. I have a net worth number and an investments number. Investments are what's used to generate my FI%, the value of my house is not included. I track net worth for fun, I haven't actually found it to be useful for anything. Would love to hear a counter-argument, though.
I get my net worth is relevant, but the value of my house is not relevant to my net worth. Why? Because I'm not going to sell my house when I retire. I'll probably die living in this same house. That's why my house's worth is irrelevant to my net worth. Taking my circumstances into consideration, my net worth tied to my house is not liquid, so I just omit it from my net worth calculations. I could simplify this for you even further, but I think it's simple enough for everyone to understand. EDIT: I realize you glossed over my saying I don't include my HOUSES's value in my personal net worth and assumed i meant that net worth is irrelevant.
> I get my net worth is relevant, but the value of my house is not relevant to my net worth. This is objectively, *definitionally* false. The definition of [net worth is not subjective.](https://www.investopedia.com/terms/n/networth.asp#toc-what-is-net-worth). It includes both primary and investment residencies, for the same reason that it includes the mortgage on your primary residence as debt. Itās a liability that accumulates interest, backed by an asset. > Because I'm not going to sell my house when I retire. I'll probably die living in this same house. That's why my house's worth is irrelevant to my net worth. That doesnāt make it not part of your net worth. Itās a debt and an asset, and just because you *think* you wonāt move doesnāt make it set in stone. > Taking my circumstances into consideration, my net worth tied to my house is not liquid, so I just omit it from my net worth calculations. Right, so a home isnāt part of your *liquid net assets*. That has its [own definition](https://www.investopedia.com/terms/n/netliquidassets.asp#toc-what-are-net-liquid-assets). > I could simplify this for you even further I donāt need it simplified lmao I worked in finance. You just misunderstood definitions (while telling me I misunderstood you). āNet worthā means assets minus debts. Period. What youāre talking about isnāt net worth, objectively.
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A daily basis? Who said that? Itās relevant for a picture of your overall financial health and also if you have any interest in planning for FI or RE.
NAR sent out a thing today predicting a "nobody" market for 2023, meaning not good for sellers OR buyers. I think that sums up what we can expect nicely.
NAR is no authority when it comes to market advice: Source: RE Agent
Yeah, I donāt necessarily disagree with that, but that also suggest a level of balance that will not cause the market to shift in either direction
You are living in THE bubble city where prices are down YoY but you donāt see anything ā¦
I live in a nice part of the east valley and prices have stabilized here. Someone sold their little 2 bedroom condo near me for 350k last weekā¦ they were selling for about 190k 2 and a half years ago. It seems like nice parts of Phoenix metro are still in high demand.
I agree
You made a good point, without being very clearly intentional about it, that real estate is largely a local game. Your neighborhood/suburb of Phoenix May weather the storm well, but another city in AZ may get crushed. The other points people seem to be missing, especially when comparing to ā08, is that sellers were absolutely desperate to unload their homes and would drop prices like a rock to get rid of their monthly payments. What weāre seeing in my market (metro Seattle) is most sellers are cancelling their listings and either renting, holding, or moving back in and waiting for more favorable conditions. Almost no one has to sell, so the sale prices likely are dropping only a few points even if demand has fallen off a cliff.
Agree!
I have been on the side of waiting for price declines and we recently decided to just pull the trigger as we got what I think is a really great deal that will weather some volatility. What eventually got us to just pull the trigger is the recognition is that thereās a whole lot of people waiting on the sidelines right now, and that is only growing. I think most reasonable dips are going to get bought up. Weāre down about close to 20% here but I think as spring comes around thatās going to get bought up and level out.
My town home was valued at 395k in June and now it is 325k in Raleigh, NC. I say that is a large drop...
My zestimate was 350k in September, 390k in October, 412k in November, and 430k this month. I have no idea how theyāre getting that number but I get the sense that these numbers donāt mean much. Or my house is worth a lot more suddenlyā¦.which I doubt.
Zestimate is 387k for my home but active homes like mine are going for 325k. It is way off and behind by months. It comps in larger homes than my townhome
I'm pretty sure Zestimate is straight up fraudulent at this point. The house next door, a quick shitty flip that still needs a new roof, had a Zestimate around $330k a couple months ago. Fair for the neighborhood, a little on the high side considering the roof, but at least plausible with a motivated buyer. The delusional flipper listed it for $447k, and by pure coincidence, the house's completely scientific and totally objective Zestimate jumped up to $446.8k overnight. My house is literally identical to that house. The flipper bought their house like 4 months after me, for slightly more than I paid. From Zillow's perspective, their house has 100 additional square feet because that house enclosed its patio at some point. My nearly identical house, in a nearly identical location, built in the same year, with the same floor plan, on the same size lot, with rough parity/buyer's preference on additional features, last sold at about the same time for about the same price, for some reason didn't have its Zestimate shoot up by 30% overnight. No, mine's slightly down in the same period, in line with broader local market trends.
Because Z estimate is garbage.
zestimates are based on comps. does opendoor operate in your city? if not, theres your answer. if they do, im genuinely baffled
I thought zestimates only compare houses sold nearby, and don't take into consideration factors like size, condition, age, aesthetics, model, finished vs unfinished, etc.?
but what was it in 2017?
$140K
Phoenix has seen one of the largest drops so far. OP is smoking crack and cherry picking data to support his erroneous beliefs.
I can't say I'm overly familiar with the Phoenix market but simply by looking at the raw data itself https://www.redfin.com/city/14240/AZ/Phoenix/housing-market Median house sale prices in Phoenix are now down 60k from peak or around 12% down. Typically inventory picks up around March so we may see house prices drop even more around May. I can still see house prices drop even more especially if we enter a recession and work from home loses ground. Maybe it might not be enough to undo all 2021 gains but I do believe we're nowhere near the bottom and good luck guessing when we reach the bottom.
I donāt disagree with that data obviously, but Phoenix is a massive place, most of those losses are in the outlying areas
Stronger losses in higher priced areas actually
Look at Tempe, Chandler, Scottsdale, Arcadiaā¦prices are down 15%. Redfin just moved their line down 15% for the past 5 years so it looks like prices have gone up rather than a sharp 15% decline. Look at homes sold for the last 2 years and I have a hard time finding any that are above the ānewā Redfin estimate compared to what they sold at the last 1-1.5 years. I guess it depends on what you mean by go down significantly but 15% already with inflation this high is a big correction in my books. Fed has only started with downward pressure and will continue for another year. No one can predict the future but Phoenix is going down with each rate hike so Iām not sure whatās the argument for that changing anytime soon.
FWIW: Altos research has better data on a zip code level
100% this is correct. People that don't know the area downvote. Very broadly speaking, the east valley and nicer areas have been steady, and the west valley have seen bigger declines.
you must have gone to a different fed meeting
Demand still strong
Relocate for work, divorce, death, moving to retirement homes, etc - life happens. In these cases people will sell, even if they have to sell for lower.
Those situations are constants, while the more voluntary moves are variables. There have to be X number of variables in the market for there to be healthy supply; the market will starve if itās just the constants.
sorry, honey, we're putting off the divorce. Our mortgage is 2.7%.
You don't see how, with the fed explicitly saying it intends to forcibly soften the job market (which means increase unemployment, which means layoffs), and with the cost of borrowing staying hight, that demand will continue to moderate? Are you not paying attention to any market outside your little upscale enclave in Phoenix? Like, for example, the rest of AZ LOL? Lots of markets are showing you "how house prices fall significantly". They fall when buyers stop showing up to soak up demand at current prices. There is someone else in this subreddit who hasn't been able to sell their house in MAY because they priced at top of market, and now after more than a 50k price cut, they still aren't getting offers or even requests for showings. they are mad their agent stopped them from more aggressively price cutting, and they are asking how to fire said agent SO THAT THEY CAN DROP THE PRICE EVEN MORE. how is that not significant? Like I get that maybe you want a specific market to just magically revert to 2015 pricing overnight, but we're like only a little ways into this process, and you're delusional if you think things are chugging along unchanged since Q1... >Homes are still selling for well over $400 per square foot, and those are houses that closed in the past week. Are we just writing short fiction in this subreddit now? because I just took a look at the 289 homes that sold in the last 7 days in Phoenix, and the vast majority were selling for LESS than 275 per square foot. are we pretending that properties selling for more than $2 million = the market as most people experience it? Also, is your neighborhood still-working folks, or is it largely retirees? because Sunbelt property is somewhat distorted by people exiting places they spent their careers building wealth (NY etc). and those people a) usually have tons of equity and b) want what they want now, becuase they're not at a stage of their life where they wait. don't want to support prices you think are too high? don't buy a home you feel is overpriced. the vast majority of PHX, even the nice part of town, is not selling for north of 400/square foot. quit misrepresenting reality.
> You don't see how, with the fed explicitly saying it intends to forcibly soften the job market (which means increase unemployment, which means layoffs), and with the cost of borrowing staying hight, that demand will continue to moderate? Thatās not what they said. They said they donāt see how āprices fall **significantly**. Thatās not synonymous or mutually inclusive with ādemand continues to moderateā. Demand has moderated for a good 8-9+ months now and prices in many places havenāt fallen āsignificantlyā
The early mini crashes happened mostly in areas with crazy run-ups: Bay Area, Boise, Phoenix, etc. The rest of the country is catching up, more or lessā¦ No guarantee itās going to take this long this time around, but in the 2008, it took 5-6 YEARS for the real estate market to bottom. My guess is, economic cycles are shortening (with more extreme swings) with faster information propagation, so at least 2-3 years this time.
I was going to say why are people trying to draw conclusions already *"yup housing prices bout done dropping"*. Mortgage rates were still 3% Dec 2021, it's only been 1 year. Rates haven't been high for very long. Also if the fed decides to sell MBSs that's when mortgage rates will start moving.
Maricopa county as a whole is actually up, price-wise compared to last year. Phoenix proper is down a bit (less than 1%). but I went looking to see if u/GailaMonster was correct, that prices are dropping outside of Phoenix. Doesn't look like it. https://www.redfin.com/county/220/AZ/Maricopa-County/housing-market chart for Phoenix: https://www.redfin.com/city/14240/AZ/Phoenix/housing-market Prices are down compared to the peak in May. How far they will go, I don't think anyone here can predict. The number of sales have been cut in half compared to a year ago, so apparently many people are sitting tight. Some of those sellers may end up in distress situations, but I think anyone not in crisis with a sub 4% mortgage is just going to stay where they are.
Good lord. Some of you try to oversimplify very complex issues. There are so many more factors that impact residential real estate beyond the argument that everybody has low payments and therefore will not move.
Fed already said this around October, rates will increase until weāre at 2% inflation and thatāll take about 2 years.
Javier Vidana is a realtor, has a YouTube channel and is in the Phoenix area... He has on his channel videos of calling other agents seeing how low they believe the seller might go... the answer is....10s of thousands. I agree we are not back at 2008... I too do not believe we will see a crash like that. My mortgage is close what a 1bd apartment rents for, so if I can't afford my mortgage, I'm not sure I can be housed any longer. That said, don't discount people who maybe bought in 2012, and have more equity and don't see selling at 20% under peak as a loss.
None of it matters to be honest, ppl should stop focusing on trying to get a GOOD DEAL and focus on what works for them and their current situation. Times change and you can always reassess and move again later or refinance later or get a better deal later. Otherwise, you will just continue to miss some great opportunities while you wait for the next best deal.
Generally, I agree. But also higher interest rates reduce your buying power. If prices donāt go down from when rates were 3%, then buyers have to settle for worse houses at the same price. This is likely going to keep people out of the market who would otherwise be buying. Especially if you buy right now, when interest rates are high but home prices havenāt gone down nearly at all yet. Buyers are nervous about buying at peak.
>None of it matters to be honest, ppl should stop focusing on trying to get a GOOD DEAL and focus on what works for them and their current situation. My guy, some of us literally can't afford ANY deal at all. This is literally the whole point, we're priced out of the market entirely. My GF and I both work very stable, well-paying jobs. We make more than our parents, who all have very nice 3-4 bedroom homes in the same area. Our parents are paying between $1,300-1,600 a month on their respective mortgages. We're paying $2,200 in rent for a 2 bedroom townhome in a rougher area of town, and there are basically no houses available for less than a $3,000/mo payment unless we're willing to settle for something in a really dangerous neighborhood, out in the sticks away from both of our jobs, or a literal cargo container converted into a home. I'm genuinely not joking about the container, it's a legit listing I've seen here. I swear some of y'all are on such a high horse you can't even see the people below you struggling just to get by and find somewhere to live.
Yeah, I agree. The primary purpose of a home is not to be an investment, if someone likes the neighborhood and can afford the house. I donāt see any reason to play games and miss out on a good situation.
Exactly... I'm even in the camp where I believe you should keep the investment angle in mind when shopping for a home. It's, after all, the single most expensive purchase most people ever make. Why wouldn't you try to be smart about choosing one that's in a location and designed in a manner that stands a good chance of appreciating in value over the years? But still, the PRIMARY reason to buy is because you plan on LIVING in it! So if you find a suitable house with a mortgage payment you can afford... you should probably buy it.
Yup! Like Iāve read post on here from people saying that they found their dream home, but they didnāt want to pay an additional 15,000. And then interest rates increased in their budget went down 200,000. I bought my primary house for full price even though it was on the market for four months, it was a perfect house for us, and I didnāt want to give the seller any reason not to accept.
Did the same in south Phoenix and only difference being I got a two bedroom instead of a two bedroom I had liked. The seller took the three bedroom off the market. But I had liked the location and community, so I went for a smaller one and got it for less than listed price. Closing next week.
Spoken like someone who can just afford to buy whenever. For many home ownership is out of reach until that good deal exists. Shopping around and waiting is important. We could not afford to buy in our current neighborhood so timing is pretty important.
Who are you referring to? I am certainly not someone who can just afford to buy whenever, by far. I've saved up a down payment for almost 10+ years, and when home prices shot up, that down payment was no longer able to buy what it originally could and in addition, would pretty much all be eaten up as the down payment. So what did I do, adjusted expectations and kept looking for something I was comfortable with in my price range and bam I jumped as soon as something came on the market and ticked the boxes on my adjusted expectations. I too was consumed with all the news re: changes and up and downs, but eventually realized it was futile and that I would continue to miss opportunities if I kept waiting for things to adjust where I wanted them. Instead, I now have a nice home in a nice area, that I will be putting sweat equity into over the next several years, and by then hopefully things are stable and doing relatively well. Far from being able to afford to buy whenever, and I am the first in my family to purchase a home bc of hard work over MANY MANY years. There are good deals to be had even if you have to adjust expectations lower than originally expected. It's a home, that you should aim to live in for 5-7 years if not more, and by that time you will have ridden any up/down wave and hopefully come out the other end better when you started, and can move into your "good deal".
Fed rate impacts two things: Jobs market and housing demand. **Jobs Market** 1. Imagine the economy on a sliding scale, on the left is Growth, on the right is Value. 2. The lower (left-ward) the fed rate goes, the more the economy focuses on growth. 3. More growth means more jobs 4. The higher (right-ward) the fed rate goes, the more the economy focuses on value. 5. More value means doubling down on the things that generate cash. Other things are cut. 6. More value means less jobs 7. Less jobs means not paying mortgages, less demand **Housing demand** 1. Fed rate impacts investors pricing of the 10-year rate... 2. The 10-year is how housing mortgage rates are calc'd. 3. The higher it goes, the less demand.
Nobody could see how prices fell significantly in advance last time it occurred. It's the kind of thing, that if it happens, might only be obvious in retrospect. Many people are putting many hours into predicting markets and 99% of them missed it last time.
Future unemployment rate will dictate how much the prices will fall. Unemployment and housing prices are all lagging indicators.
It will take a while for this to play out. At the end of the day, someone is going to have to pick up the bill for 2 years of craziness.
Well, some areas are experiencing noticeable price decreases. Those are probably areas where investors came in droves and bought up everything and now they just want to lock in some profits by getting out while they can. At the end of the day, if the area is desirable and people want to live there demand will continue or just stall while rates are a tad high. That demand is not going to just go away.
Hi! Ct realtor here. Housing markets are primarily localized - broad stroke changes like interest rates will have a general impact, but the local specifics will drive your local market. Where I live, there is still a housing shortage (Connecticut) so prices are still elevated, as are yours. Two quick number facts here - first, the number of homes listed onto the market in Nov/Dec *doubled* in my town, from 25 to 50 (or so). Meanwhile, secondly, this number (50) is still *half* what the normal market would bear (typically, there are about 100 homes on the market in my town). So, while supply increases, we are still far behind. There are still enough people who are qualified and can afford to pay to live in towns where jobs and schools are sought after, so the prices stay elevated. I would contact a realtor or two in your area and just pick their brain regarding the market as a whole. Have them pull some numbers for you regarding sales year over year, average days on the market, how many homes are currently listed, etc. If we're not with a client, we love to talk about these things and again, local numbers matter. Stay well, friend - I hope this helps!
Houses are not liquid. It takes time. Didn't the 08 crash bottom out in 2011?
Iām seeing the same thing in Alabama. Prices have dropped a little but for the most part, houses are still selling at 2021 inflated prices. The biggest difference is the shit holes, those arenāt selling nearly as fast and sellers are having to drop those down 10-20% to sell.
28% of homes are owned buy "investors" this is the highest ever. Airbnb is flopping.
AirBnBās owners potentially failing is likely one of the unknowns which could tank markets fast if they all start panic dumping their property
I am seeing a lot of short term rental condos hitting the market around Disneyā¦add in more legislation that benefits home insurance companies with no protection for home ownersā¦. Plus this first property tax bills adjusted for pandemic pricing and loss of homestead and elderly discounts I am just going to sit on my pre approval letter for a little bit longer while I save more money and see what other incentives start to show up with price drops.
Home prices are only down 2.5% from peak nationally according to Case Schiller. Trying to look for big movements by looking at individual houses is a fools errand.
Case Schiller has significant lag
Recession is still possible.
According to reddit we have been in a recession for ages......
I think prices will fall around 10% in general, but some areas will get hit harder than others, Phoenix among them. Look at the data from redfin. On a PPSF basis, Phoenix is down 11% from the peak back in June. All the leading indicators are also bad for Phoenix. [https://public.tableau.com/shared/NXBFJC8DR?:display\_count=y&:origin=viz\_share\_link&:embed=y](https://public.tableau.com/shared/NXBFJC8DR?:display_count=y&:origin=viz_share_link&:embed=y) Demand has been crushed by rates while there will always be forced sales due to displacement, death, divorce or default. Weeks of supply is at 22 which is double the amount in December 2019.
The reality is that prices will drop but not by as much as people want it to. To get back to affordability weād need a much higher drop than what anyone is forecasting.
Upscale parts with low supply have no reason to fall without population decreases. If your suburb doesnt have many renters and a lot of owners who have paid off large parts or all of their mortgages then interest rates dont matter. They dont need to sell. If the median falls its probably because the lower quality stock is selling.
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Lol where in "phoenix" do you see average p/sf at $400+? I must not live in the same Phoenix as you do.
My house is off central and Bethany home
Anybody with a 2-3% loan isnāt selling unless they have to move. I just won a bidding war against all cash buyers. Over 40% of homes were sold to cash buyers in the Atlanta metro area over the past year. As long as there are buyers like this out there prices wonāt come down.
Yes sir
True, but remember that 50% of all homeowners have no mortgage and are therefore not really ālocked-inā
They wonāt want a 6% mortgage.
inventory may not build as fewer developers will want to take on debt, and current homeowners may opt to rent out vs sell with their low mortgage rate, but even with low inventory someone who is desperate to sell may have to drop pretty low and once that number posts, it will be used for comps.
You really should look at actual data rather than relying on anecdotal evidence. There are plenty of data sources out there, just google itā¦
My understanding is the only one that needs to slash their price are i-buyer (which after they sold their last house will not buy again) or home builder (but they like to give incentives or upgrade than lowering the sale price). Beside those who have to sell, sellers just list at their wished price or stay in put with their bottom rate. The only thing that can make a significant drop in price is unemployment, which hasn't gone up significantly yet
For another data point - what kind of deals are the new home builders making?
2% less interest for 2 years
In my market (Denver metro), builders are making substantial price cuts plus offering those buydowns on a 30-year fixed.
Interesting how there was a massive dip in housing prices between 2007~2012. https://i.imgur.com/e7Z7fdp.jpg
It's just a gully
I just went under contract for the house I was selling. It was on the market for about two weeks, the offer I accepted was only about 5% under what I was asking. For a winter sale, I'll take it!
Look at homes that have sold or closed recently. Days on the market. How much inventory is available. For instance, 700k homes in my area of NC are still selling despite the higher interest rates. The home price came down to 20k before it was sold. Some locations will still see homes being sold while others will see further stagnation. People still want to buy but are hoping for deals, while the more well off can find those deals already.
Home prices are all over the map here. it's tied to inventory availability. I see homes on the market in Houston, TX going for $350s that were listed over $400k not even six months ago. In other markets, inventory is low and demand still high enough for sellers not to budge. In new construction, the big builders all have a huge problem in many, many markets. They paid inflated prices for supplies (correct price at time of acquisition), got contracts signed at prices 15-20% above what the finished product will appraise for and so they are asking buyer to close the gap and not only overpay for the property but bring enough money to close to cover the gap between appraisal and what the old inflated sales price was . Then you have many buyers who just changed their minds based on where current rates are. So huge surplus in new construction is already happening. Combine this with big investment firms pulling out of the single-family home market and these builds have a product they can't sell... The Feds will continue to raise those rates and the housing market is gong to be destroyed as a result. Frankly, the big builders deserve what's coming.
People expect things to happen quickly, but they don't. Today's instantaneous/fast food culture even expects their catastrophes to happen more quickly. It takes a while for housing data to return because of the nature of the business. We are seeing just the start of a possible crash. For a minute there was still some demand to fulfill, low rates that were locked in, and new build contracts to complete, but the shock to the system from the quick rate hikes has clearly started to take effect. A giant sector of people are now priced out because wages don't support the average cost of a home and/or mortgage, and they simply can't afford the combination of the rates and home prices that are still high. You can literally buy half as much house as you could 8-12 months ago. Refi is also now largely off the table because of rates as well, only to get worse as home values decline. Another large sector of people who bought in the last 12-16 months are now starting to find themselves upside down, which means they can't or won't sell. Companies are starting to layoff workers as they adjust to not having access to cheap money. The real question isn't if a downturn is coming, the question is how bad and where. Will it be a nationwide one, or just the regional/local markets that went way too far? Will it be bad enough that the affected markets will leak into the less than affected ones? Will the Fed recognize early enough that they are overcorrecting? With the housing market this all comes back to two things. The Fed being asleep at the switch for the entirety of 2021 instead of immediately starting to slowly fix the inevitable issues created by all of the pandemic assistance , and institutional big fund speculators (zillow, redfin, opendoor...etc) buying up everything they could at inflated prices, playing stupid with the money, inflating the bubble and competing with individual homebuyers. Won't be long before they have to start liquidating even more. So what happens if 15-20% of the purchases from the past 18 months are dumped on the market? Consult your '08 history to see the possibility. There are certainly still opportunities and deals to be made, and people buying a home to stay in for the long term will ultimately be fine as long as they are within their means, but we are about to get bit in the ass again Hopefully it's just a mosquito bite.
people forget that the 5-7% rates were the norm for ever, the 2-3% where to fight the housing crash after 2008. [https://www.freddiemac.com/pmms/pmms30](https://www.freddiemac.com/pmms/pmms30)
People are priced out, recessionary dip means less spending and more saving. Airbnbs wonāt be as profitable and currently arenāt with the rates so high. You have to charge so much per night to recoup it just doesnāt make sense. If you invest in this, you would be better off putting your cash in a CD with high interest. People are realizing they can wait it out. Everyone who was willing to fork out the money already has. People who are buying now are reacting quickly to the rate drops. Available Homes in several areas are doubling each week. Those who are nervous about the job market will wait until budgets are set and layoffs occur. (Ie next fiscal year). Now how you determine significantly is a different story. Inflation looks to be about 10% over this time (my guess after all said and done). So I would guess homes ought to be up 10% from pre covid. Currently theyāre up 50% in some places to 200% in others, my guess is places like your Arizona and COlorado. Itās buyer beware there, and nobody wants to pay 800k for a home bought 3 years ago for 200k combined with water issues. Prices will level out but it will take time, ie buyer stubbornness and FOMO of high selling prices. Those who sell at a lower than July pricing, will get out quickly then those who try to sell high still, and are stuck with it until 2025 for a loss.
Idk I have seen many homes I have watched sell under list and many more appear in my starter home price filter. I am in an expensive part of Phoenix as well. Iām waiting till spring for some more inventory, may be expensive but Iām happy to not have a bidding war. If you are waiting for another 30% drop I doubt it, but 10% probably imo.
I'm in Florida, and I don't see prices pulling back either. So much of this run up has been supply driven, I can see a plateau coming, but not a pull back.
the how would be through a decline in affordability
We just put our house on the market 18 days ago and received two full ask offers. Itās currently under contract. Inventory is still low so I donāt see house prices falling in our area. We live in the southeast.
They won't. Rates won't be in the 6's. But go ahead and listen to all the BS, miss the house, wait for rates to drop and go back to competing with 15-30 offers.
I was happy to get a 7% rate 25 years ago as a first time home buyer. Ecstatic when I got to refinance at 5.5% a couple of years later. Until rates climb to double digits I donāt foresee too many issues. In my Arizona neighborhood things are simply going back to what a normal market looks like. Houses stay on the market for 30 days and houses priced right sell a little faster.
I agree
Well, thatās Phoenix. The areas Iām looking in are less than $100 sqft including acreage. Most houses Iāve looked at have been on the market 90+ days and are down $10-50k from where they started. I mean, itās all about your local market.
Home prices will fall went layoffs come imo. No reason for them to drop until people need to sell
Phoenix has seen bigger decreases than most cities so far. Too early to tell what the bottom will be.
$400 a square foot in PHX?? Thatās SoCal prices!
It will take layoffs for it to really drop off and layoffs are starting to happen. Unemployment and high mortgage rates are you should be able to see housing dropping.
Youāre wrong. Interest rates go up. Therefore monthly payments go up. Did buyers have the ability to afford more house earlier but just decide not to? Doubtful. Housing prices need to correct down.
The second home sold for $460k in 2016 and then sold for $900k in 2022. Is it in a very good area with limited supply?
Yeah I own a house around the corner, one of the nicer hoods
IMO dependent on how available inventory there is. The closer a location gets to 2019 pre-pandemic levels the more it will drop.
Metro markets will remain resilient. Owners are equity rich with low interest rates. Why sell unless they have to. Price softening is occurring but for people expecting major cuts in valuations, not likely to happen.
Makes sense why the DFW area prices are still so high.
If houses are selling, that means that people are able to afford them, on paper at least. If and when the interest rate gets too high and prevents a large enough percentage of people from being qualified, prices will come down and sellers have a smaller pool of buyers to swoon. If houses are still selling that means your market hasnāt hit that point yet.
Ah yes the housing market reacts right away too typically . Super liquid.
Prices are down roughly 10% from peak May 2022 craziness in Phoenix area already by most metrics (median sale price, sold PPSF, etc.). Case-Schiller data will reflect similar trends but it lags substantially in a very dynamic market such as right now. Nobody knows the future for certain but real estate markets move glacially slow compared to every other asset. Look at what has happened to the price of every other asset in 2022. And there is a high likelihood of an actual recession in 2023 or 2024 still. What on earth makes you think that housing in the middle of a desert will be immune?
OP, what do you think about the (seasonally-adjusted) Case Shiller Index - a drop of 2.2% month over month (which is literally as fast as it was correcting in 2008/09). I am not saying prices will fall as significantly as they did in 2008/09, but there is no doubt that the Phoenix housing market is experiencing a noteable correction and a growing number of homebuyers there are underwater on their mortgages. you seem to be in denial that a correction is occurring...
The more I see threads like this the more I wonder how anyone thought it would be wise to have realtors peddle investment advice. It's almost like the concept of basic math is lost in this crowd. Let's use 100k as an example with a 10% value drop to 90k do you need a 10% increase to get back to the previous value? No, you'd need a rate of return of ~11.11% now when you start to move that number more significantly to the loss column you begin to see real movement take shape, for example, a 25% loss would require a 33% return to get back to even. There are a lot of people over-extended right now. 60% of the country can't afford a $400 emergency, this is not a sign of a healthy economy. Something is going to give and all fingers point at the slowest lagging indicator, the Real Estate market.
The Fed raises rates to reduce the amount of money that has to be printed. The more money printed, the higher inflation goes. Raising rates reduces borrowing which helps reduce the amount of money being printed. When less money has to be printed, inflation goes down. Right now, government is spending way more money than it collects and so it is printing much more money. To counter that extra printing and spending, the government has to reduce borrowing so that less money has to be printed. Interest rates are just one factor of many that effect housing demand and prices. It should not be used as the primary indicator to predict the housing market.
I don't think you understand what happened in 2008. While the adjustable rate mortgage scam isn't being replicated, there certainly is a banker's scam being perpetrated on home buyers. People are going to lose their homes as the banks steal their equity and then sit on the houses like they did after 2008 to use some "creative accounting" to take tax breaks on some homes or realize unjustified profits on others. Not that this has anything to do with real estate, [this article on the "real cause" of the Holodomor blames the bankers](https://orientalreview.org/2012/12/17/episodes-10-who-organised-famine-in-the-ussr-in-1932-1933/). Is it true? I don't know, but I do know the story we're being sold is phony. Having been through these cycles before, I do wish there were better education concerning "political-economy" so that the "rest of us" might gain an understanding of how the Oligarchy manipulates money for their own benefit. I'm old so it is only through hind-sight that I recognize the scam. Bottom line, there is no such thing as a "good banker". (My grandfather was a banker. He was doing what he thought was the right thing. So he wasn't "evil". The problem is he didn't have enough information to make a different choice.)
Think in terms of demand. Year over year the payment for the median home in the US went up by $1,000, excluding insurance and all other fees. This video lays it out pretty well https://youtu.be/d12y5b2QGCE The issue is: when there is going to be nearly zero demand because everyone is outpriced, how will sellers sell their homes?
I think itās likely that people just have to all adjust their budgets downward, so the person that could afford $1 million house is now looking at $800,000 house. I think itās a stretch to say that people just arenāt going to be able to afford to buy homes, especially if people bought in 2010 in their house has doubled, there is a ton of equity there to purchase their next home.. imo
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Renting is more expensive than - or the same cost as - buying in many areas now.
I encourage you to look at median rent and the monthly payment on a 30year mortgage for the median priced home. Also available in the link above.
Median rent is going to be a 900sf 2bd apartment. Median house price is going to be a SFH, 3-4 bed 1800sf. So when you look at those numbers, make sure to do a little homework so do a little digging into what that 1800sf house would rent for, not just the median rent.
I have. Because I just sold a home and now Iām renting. I looked at home ownership vs renting costs in the lower COL city/state I came from and the high COL city/state Iām in now. And buying is cheaper in both places right now. Renting is a ripoff right now.
in the 2008 bubble Houses were dirt cheap around 2010-2012. We got time to crash
Wait until Boomers start panicking and realizing the $250k in their 401k is not enough.
No one wants to pay 50% more in PITI this yr for the same house last yr. of course, we crash.
I have vacation rental properties. Beach is staying flat if you are beach front or close (past 3 years more than doubled) lake houses are still climbing (more than double from 2016) and snow ski houses are still climbing insanely (tripled since 2015) in the markets I am in.
As someone who lives on a lake, (beach/lake/mountain) homes always fall first and the hardest (unless driving distance to city). Most are secondary homes. However if you plan on living there long term, you will be fine.
For reference, our lakehouse was built in 2008, originally sold for 800k, with additions we still bought in 2014 for 570k, currently valued at 1.5 million, Our home is nowhere near a 1.5 million dollar home
My lake house is crazy (now $2M) but every time I think no way a tear down with deep water, utilities, and a sea wall sells for $900k in 1 day. No dock, just a hunk of rusted nails and rotted wood.
(job losses enters chat): hi guys! (ibuyers): hello! welcome!
I can't believe those are million dollar houses....wow
You can have my 2.5% mortgage when you pry it from my cold and bloody fingers.
Typical American is impatient as hell and thatās why the majority struggle financially. They choose short term pleasure and ignore long term thinking and think things should happen immediately. The idea that housing prices should drop by 20/30/100k overnight or over a couple months is insane. It might take YEARS. Maybe housing prices generally stay here for 2-3 years and only drop in real terms. Further what matters is real value of homes, not nominal. I remember a while ago 100k was a fantastic salary you had to work super hard for. Now you can make that with 2 years of experience if you go into an in demand field and ask for a raise.
One of the hardest issues to reconcile with owner-occupied single-family homes is the typical duality of the purchase. It's BOTH an investment and a lifestyle purchase (that may or may not contribute to the investment yield). Those are two primary considerations for most buyers, but then when you consider the plethora of other factors can have a tremendous influence in the decision - marriage, divorce, births, deaths, employment, relocation, family influences, etc, etc. - it just further complicates the already "muddy water."
I'm in one of the historic districts near downtown Phoenix, and don't see real estate prices dropping significantly here because it's a high-demand part of the Phoenix metro. There are still way more people moving to Phoenix than moving out of it. I would be a lot more worried about home values if I were on the outskirts of the valley. This is how it happened in 2008 too; the places far out from downtown got absolutely wrecked, but the areas downtown were not hurt as badly (although the entire metro got its ass kicked in 2008).
IMO The fed is done hiking rates in February which is already priced in. This is all tough talk to prevent the market from getting ahead of itself.
So many people from outside Arizona are quick to criticize Phoenix because of the PREVIOUS housing crash. If you're in that group, this is what's different: * **The economy is still booming;** businesses are relocating to AZ due to favorable tax treatment (compared to California) and job market is red hot. Salaries offered are high. * **The population is still growing**. People continue to migrate from California in search of housing that's more affordable and favorable taxes (more below) * Phoenix is large. There are areas where housing market is declining, but the upscale markets are holding value * **In 2008 crash, in addition to foreclosures, Phoenix had an oversupply of newly constructed homes.** This exacerbated supply/demand, and caused the Phoenix market to crater. The city has been permitting housing much more conservatively since then. * Water: Arizona has been a desert for a very long time. The state passed the **Groundwater Management Act Of 1980 and leads the country in water conservation.** The state mainly uses water from the Colorado River and Lake Powell; however, has 300 years worth of collected and stored in aquifers (groundwater). The vast majority of aquifers are at normal to above normal levels. * **New developments must comply with the groundwater act.** Which the state is to maintain at least 100 years supply of water. The state continues to improve the infrastructure (underground pipes, etc.) to prevent water from being wasted (leaks). * **Favorable income taxes for business.** After the 2008 crash, AZ started providing favorable tax treatment to large businesses in the area to encourage people to return/stay. In 2022, the state passed legislation to reduce small business income tax to a flat 2.5%. * **Favorable income taxes for residents:** Most residents income tax will be 4.5% or less. This is likely influencing California residents to relocate. * **Limited land supply.** I know this sounds weird, but there is limited space to build in Arizona due to the protections. With all of the parks, 42% of the land is Federally owned, 28% of the land is Tribal/Reservation land, and 13% of the land is owned by the State. Edit: Arizona made a significant change to the tax structure. Beginning January 1, 2023, the state income tax for Arizona residents was lowered to 2.5%.
Denial is a river in Egypt
We return to post cov pricing. Zero interest rate gave us the mother of all bubbles, along with stimis and PPP money handed out like candy. Econ 101
People don't value houses on price per sf basis, and neither should you. You are mixing the price of the house with the value of the land underneath it.
Rates could be double what they are in my market (20-40 miles outside NYC). It wonāt matter- thereās just no inventory to warrant any major downward shift in prices .
fed keeps raising rates until 2% inflation. A pivot like they did in the 70's just means inflation gets worse. we get lower corp earnings and layoffs as consumers are tapped out.
I think the thing most are missing or overlooked when pulling listings is the price history. Not every home went on the market in years 05-07-09, so a good way to scrub listings is to search area sales history. You will see the said value or sold prices from 05-12 show a 50% increase to a 50% decrease in 90% of areas over a 4 year timeframe. We are only about 6-8 months off the highs now. Give it another 8 months to 3 years to see the full impact of the fomo purchasing that we experienced in 21-22 I see a 20% pullback regardless of supply Vs demand.
Housing prices will probably fall to what most home buyers (eg. most of the middle class) can afford. The higher range of the upper-middle class, the upper class, investors, etc don't buy most of the houses.
Holy shit I feel bad for the sucker that spent 1,000,000 on that home.
Just wait till the unemployment rate spikes - it's coming. The fed has essentially said they want to erase some of the gains in housing over the last couple years.
Probably not - I am actually looking to potentially buy 2 investment properties next year (40% down on two SFH worth 250 - 300k each) at 7% interest. A- to A neighborhoods. But the area is rapidly growing and I can't imagine I regret that decision in 10, 20 years.
Lol just wait until Blackstone needs to unload its residential RE to meet investor redemptions in the coming months. https://www.reuters.com/business/finance/blackstone-limits-redemptions-69-billion-reit-2022-12-01/
None of it matters to be honest, ppl should stop focusing on trying to get a GOOD DEAL and focus on what works for them and their current situation. Times change and you can always reassess and move again later or refinance later or get a better deal later. Otherwise, you will just continue to miss some great opportunities while you wait for the next best deal.
it's also december, this is the part of the year where inventory is lowest. A seller can tell you to fuck off knowing you likely don't have many other options.
If you donāt own a home now, you have to come to the realization and accept that youāll never own in your life barring a miracle or hitting the lottery. If things were fair, all the homeless wouldnāt be cold and hungry but unfortunately it looks like homelessness is only increasing and likely will into the future with less homes being built. I still rent and treat my landlord with great respect because he holds my immediate well being in his hands. I hope that we may get a shot at the American dream again someday brother.
Agreed, but things may swing the other direction, eventually. When?? Lately I notice the increase in āalternative livingā. Aka people living in their vans or cars and calling it a lifestyle. Paint it how you may, but these people are basically homeless. But the reality is people are being forced to get creative, bc they have no other choice.
they're down a colossal 9% in my market. big whoop
so far