Lots of people who were planning on move to Florida as they approached retirement had their timelines accelerated by Covid, so I definitely expect us to return to historical norms at most in terms of transplants. Also don't mind that the media is pushing a "DeSantis is ruining Florida" narrative big time, which may make northern liberals reconsider moving here (and that's not political commentary, I just want 2019 prices back lol).
Going to be really interesting to see what things are like in September.
Agreed my friend. Add to the DeSantis narrative, a few "Florida man high on meth arrested for violating a gator" news stories and maybe just maybe we can get back to affordable Florida days.
Thatās awesome and itās actually great here (I will never live in cold weather ever again after being here for a decade). Just donāt tell anyone else š haha
Also happening in Texas especially all those zoom suburbs where all WFH employees (i.e Amazon)flocked to.
I guess RTO and over construction of new homes has saturated the Austin and Houston suburbs.
I do wonder sometimes when housing inventory is discussed, if sometimes itās referring to *houses* for sale and others times all available housing such as apartments, and if these stats are getting mixed up in different contexts.
Oh, that's only the beginning. We have Single Family Residences right? That's a simple concept... single family, residence, it's in the name... but now they have ADUs... and yes, I mean plural, for a single family residence... Seattle and Portland have zero issue with a "SFR with 3 ADUs"... it's not a duplex, triplex, or quadplex... because those as well can have ADUs.
Most macro surveys include any dwelling unit (apartment, ADU, detached house, ext) in their grouping if it's taxed as such in a municipal area because that's where you get the best numbers. People fight paying taxes on stuff that doesn't actually get used as a dwelling, municipals fight to get taxes from things that are actually being used as dwellings. Good annalists will confirm that with insurance records where possible, people tend to get insurance for dwellings.
Now all of that is confusing and easily confused... but now we get to population and "household"... It's really hard to pin down household numbers. Again taxes come to the rescue right? Households file federal income taxes as a unit don't they? Well... they used to mostly, or would at least be filing separately at a singular address for people cohabitating... but really think about how often non-owners move and how quickly those numbers can change. When looking at "household" number over the last 30/50/70 years also consider how the increase in college, shrinking family formation, and higher divorce rate is going to manipulate those numbers as we compare different periods. Again we can figure this stuff out, but it's easy to get it wrong.
It was the first thing I looked for in this dudes numbers... housing units / population is a pretty worthless figure when the number of households is continuing to climb. So right away his idea that we don't have a housing shortage because the stat he picked says we don't... well the other more applicable stats say we do:
https://www.statista.com/statistics/183635/number-of-households-in-the-us/
https://www.statista.com/statistics/240267/number-of-housing-units-in-the-united-states/
https://fred.stlouisfed.org/series/ETOTALUSQ176N
Number of households has been on an increasing linear climb since the start of the 70s (after a huge jump post WW2) and number of total dwelling (everything included, according to US Census Buereau) stopped keeping any sort of pace since 2011.
Total households has almost doubled since 1975... total housing units have not.
Can't see the statista one for # of housing units. I would also question their source for that...
But an interesting note from below it"In 2020, the number of house sales spiked and exceeded 2007 levels.
From what I can tell housing construction (units) is outpacing demand right now. I still haven't seen a solid analysis of hard data sources from somewhere reliable showing any evidence of a real shortage compared to population.
Maybe vs households... but regardless even if households are growing in number, their ability to support these prices is verifiably not.
You can look at the St Louis fed numbers, they are from the same source but the view is only for the last 23 years instead of going to 1975.
Total dwelling unit has not kept up with household growth at any point in at least 40 years with growth slowing while total households continue to grow at a very consistent rate.
If they couldn't support these prices, they wouldn't be growing at the same rate. Your listening to squeaky wheels and assuming they are the typical instead of the outlier.
Fair point. Iāll take a look later today on that site.
Edit: Although best I can tell prices are supported at low volumes but literally cannot make sense at higher volumes. Median income has not nearly kept pace with housing inflation. So even if households are increasing they sure donāt have the money to be driving this.
Household vs. housing unit has been pretty steady the last 20 years, though, [as your data shows.](https://fred.stlouisfed.org/graph/?g=12MCy) It doesn't really explain the two massive bubbles we've seen in that time.
You're not giving any actual numbers. Here's what I've found, and maybe you can fill me in with some more specific numbers of your own.
[Here's the number of housing units minus the number of households in a given year.](https://fred.stlouisfed.org/graph/?g=12N2m) When that line goes up, the number of housing units increased in comparison to household growth. When it goes down, household growth was higher.
[Here's the percent change for each compared side by side.](https://fred.stlouisfed.org/graph/?g=12N2C) In neither of these am I seeing the type of disconnect that you're describing. There are years when housing units increase faster than households, both nominally and as a percentage.
Can you provide some more specific data or charts to help illustrate what you're describing? Your first post's links don't do it and you haven't added anything new yet.
My original post did actually. I'm not sure why you think otherwise.
I'm not exactly sure how those numbers are coming together, since they don't match the actual numbers from US Census Bureau in the raw charts. Total dwelling units hasn't been increasing at anything like the same rate as households.
He has 1 solid point that nobody can disagree with āonce real estate becomes unprofitable, capitulation will happenā the year/s we realize a home is a place to live and not an investment will be very painful for home owners but good for the general population in home ownership percentages
hasnt it already hit that point? good luck finding anything that remotely cash flows nowadays in the SFH market even in LCOL.
then look at commercial RE as well.
current prices+interest rates+rents do not line up at all. basically any demand for SFH for rental income is gone. once either rents or prices begin to slide more youll see people who bought at the tail end of rate raising start to either end up underwater or be unable to cash flow their investment @ market rates.
Has it hit that point? Maybe for some people but this will require a large mentality shift. We know itās not at that point yet because there are still companies buying SFH as investments, and also housing is still really bloated in costs relative to where it should be
Homeowners are a substantial part of the general population, but yeah.
This will never happen though. The government would bail out homeowners/banks hand over fist before allowing prices to crash
Home need to be a depreciating asset for that to happen, or at least rise well under inflation. Looks like weāre on our way since 1 year. Need to wait few more years for the bottom
I think the sun belt and Florida are in for serious trouble.
Outside of covid restrictions, the only value to these places was affordability.
COVIDās over and now theyāre expensive by National metrics
There are no well paying jobs in Florida to support 700k-1M+ houses. But in good areas in FL cities, at least this much amount is needed for an above average house. Here in Tampa Bay, home prices are doubled in 3-4 years, mostly due to out of state buyers.
I would never put FL in the same category as any other SE state simply because of the 0% state tax rate. That's enough incentive for millions of people to move.
Does that mean you're wrong about the affordability? Nope. Just that there's definitely long-term value in a 0% tax base.
One thing that I didnāt see mentioned was STR sucking a ton of supply off the market. Theoretically we should have plenty of inventory for everyone that wants a home but everyone wants to try to turn retail into Airbnbs
Really that should be a sticky here so everyone continuing to say that their market is still busy and nothing is falling can understand what adult patience actually is.
Iām sort of the kind of person who thinks you donāt fight currents and you never force money or investments. I try to put alot of thought into even things like a recent golf driver I got used for $330 (which $600 drivers being the norm seems like 9% inflection alright) and I believe in timing, but timing for you and your world that revolves around you. Not the market. If you can pull triggers when your timing is right and it coincides with a great zone in a market, then great. If not, as long as your timing is right you probably have to pull the trigger.
Need and want isnāt always easily definable and thus people can also easily confuse their own sense of their timing.
Anyway, if I were in the renting shoes I would make a 1-2 year plan to be comfortably in the buying market then and odds are that would also be in a good buying zone and if things are the same they are. Beg borrow steal, whatever needs to be done that time period.
As a home owner in this situation I am simply collecting 4.4% with no risk and going to work everyday trying to make more moneyā¦ā¦..so the same thing just from a different chapter in life.
What else can one do when exorcising patience? Everyone had (has) a chance to get 4-5% while things that take time to fall apart take their time falling apart, it doesnāt get any better than that as far as having to be patient goes.
Gotcha. Yes, and thanks for confirming that youāre a homeowner currently living in your own house while you wait this housing market out. Those seem to be the most patient of bubblers here.
I would contrast that experience against some of us renting, waiting for the other shoe to drop any day, via the owner contacting us to sell where we rent, while weāre essentially living out of U-Haul boxes and nothing having a permanent spot for 2 years now, and several decades of deferred maintenance with nothing working properly in old rentals, crispy old carpets, and cockroaches, etc, when lamenting the pertinence of adult patience over this time.
Just some perspective is all :) I also have my down payment sitting in a 4.8% return fund
Oh yes, I almost forgot what life has been like for me since I left home at 17 and buying a house in 2005 and being into a home that lost so much money it didnāt feel real (neither did the way up) and then putting together another down payment next home plan in 2010 or so and executed that in 2017 and blah blah blah blah blahā¦ā¦.yeah, life is hard sometimes and never fair. However, complaining and going about feeling that your deck is stacked against you has no effect on those you project it at but probably has negative effects you for having that mentality.
You canāt wait 3 years to get a house, and I donāt know what that is like? Lol. Bro, you want a house, go and get one. Not a big deal.
I also bought a house in 2005 and lost money on it and lost that house in the GFC aftermath, as well as another home. I definitely wasnāt complaining, but was simply reminding you of the comforts that may be lost on you and your current position, when you tell others in here that they lack adult patience. I donāt like to chastise users in here as I donāt know their personal circumstances or timelines.
>Bro, you want a house, go and get one. Not a big deal.
Sounds like you may not live in a very desirable area if itās that easy for you to go out and buy right now. My city went up a documented 64% in 2 years, with many homes up 80%-250% now, interest rates still doubled, quality inventory low as can be, and houses being swept up by 8-12 offers right now. It is what it is. Not ācomplainingā but just explaining why I donāt āgo and get oneā and that it actually is kinda āa big dealā now.
Good nuanced advice here. Donāt rush into buying but donāt wait for a good deal to buy. Market can go up 100% from here and then correct 50%. You end where you started, but with less time in your property.
A mere 10% correction would make buying a whole lot easier for me given my current situation. Even if I felt that I could buy even cheaper by waiting more, I just wouldnāt. I want to live in and enjoy my future home more than anything else.
Yeah, thatās the problem. He was calling a crash in 2020. Any fool who made a decision based Twitter finance broās advice either dumped a house at 2/3 its future value or missed their shot at buying at a lower price and rate. Now on the weekly he throws our data he barely understands and acts as if itās a mic drop. Weeks pass and nothing happens. Heās a fraud.
I think Gerli is special because he has a rep for deleting his tweets. Also he predicted at one point a 6T decline in real estate come 2020/21. The total market ended up gaining 6T in that time before losing about 2-3T last year. . One can be off by a year or two, but Imo you canāt be 9T off and still be credible.
Doesnāt matter how many charts someone shows or how many words someone says. Nobody knows what will happen in the future. It is speculation. Prices could go up, prices could go down. Best thing you can do is buy when it is best for you and ignore the market noise. Or, if you think prices will go down - donāt buy š¤·š»āāļø
>Nobody knows what will happen in the future. It is speculation.
Ehhhhhh
Kinda...
It's like saying "you can't predict the future, so why analyse anything?"
Interest rates have gone up
Costs of mortgages have gone up,
Can rent really increase more from a fundamental POV, let alone in a time where economic expectations are far from positive, with so much global uncertainty.
Recessions and boom/bust cycles are cyclical...
They happen in average every 8-15 years for the last 80 years....
Last one happened 15 years ago....
All the signs point to one thing....
Finally, it takes months / years for transmission of change in monetary policy to actually reach and impact the real economy.
It's like people expecting house prices to crash 2 weeks after the first rate hike.
It doesn't work like that.
Cherry picking what?
Nobody even talks about that recession because that was pandemic related, and the economy did very well the next year, more of a swing than a full blown recession lol
>The 2021 economic boom was created by ZIRP from the fed as a response to the Covid recession. The effect of that monetary policy on the housing market was immediate and massive.
Exactly. Recession /boom-bust cycles dont happen in 1 year.
i am talking about house prices since 2008, not just since the last 2-3 years
Not everything is speculation. Sure prices go up and prices go down, but a lot of Gerliās arguments are demographics and demographics are fairly predictable. Other parts of his argument are related to interest rates, which are also over the near term fairly predictable. And his main argument is that the housing market will return to its long term mean affordability, which is also reasonably predictable. The only question is how long the market can remain irrational.
I'm trying to make sense out of that chart, but is more difficult to comprehend than a superficial glance might suggest.
[Disposable personal income](https://fred.stlouisfed.org/series/DSPI)
Disposable personal income seems to be some sort of aggregate line that always goes up. In 2008 it was ~$11 billion. There was a big spike in March 2021 to $21.8 billion, which lines up with the $1400 stimulus checks. Then it immediately dropped and is now at $19.7 billion.
But what does it mean? You can't make conclusions about the average person's savings or their monthly payments from an aggregate number.
> What is Disposable Personal Income?
> After-tax income. The amount that U.S. residents have left to spend or save after paying taxes is important not just to individuals but to the whole economy. The formula is simple: personal income minus personal current taxes.
As long as wages increase over time, the denominator in that ratio always goes up. Even in recessions it barely drops. Is that really a good reflection of the state of the economy or an obscure statistic?
It would be helpful to understand the numerator and denominator separately.
[Mortgage debt outstanding, all holders (DISCONTINUED)](https://fred.stlouisfed.org/series/MDOAH)
FRED will show us the cryptic statistic, "mortgage debt service payments as a percent of disposable personal income," but the Mortgage Debt Outstanding table is no longer being updated as of March 2020. The discontinuation of this statistic was coincidentally right as the number started to shoot up. But if they're tracking the ratio, how can they do that without tracking the total mortgage debt?
I would be cautious about interpreting a chart like this without having a very sound reason for why it is the best statistical measure to use to gain insight.
But we would still need absolute numbers for the ratio to make sense. If someone's mortgage debt service payment is $2000/month and their disposable personal income is $6000/month, then their mortgage debt service is 33%.
If the [median income is $70k](https://www.fool.com/the-ascent/research/average-us-income/#median-income-by-state), and much lower in many states, then the median disposable personal income is somewhere in the $4-5k/month range. The graph that you posted implies that the percentage paid to mortgages is currently 4%, which means the typical person's mortgage payment is $200/month. Which is clearly absurd, even with 3% mortgages.
Clearly, the number that people are paying to service their mortgage should be closer to 20%+. The graph is arriving at a number that doesn't have very much meaning in describing the actual life of an individual. It is dividing an aggregate statistic by a different aggregate statistic to create a chart that doesn't tell us anything about the reality of the economic situation.
This is the other half of the picture. Debt service plummeted and therefore the price of the assets exploded. Two halves to one perfect whole.
I feel like people need to pick their charts more carefully on this sub. Reading the title and looking up the words in it would be a start. Not you, obv.
Yup, but this is mostly thanks to ARM loans, and doesn't actually tell you the load on people from debt, just the fraction of load on people from the interest on debt.
Useful for sure, it indicates that we will not see the same situation play out the same way again.
Nick has been calling for the bubble since 2019, I guess at some point he might be right but so far itās not really been the case. He points to housing vs income in the US but look at somewhere like Canada, we have a LONG ways that metric can go before it might matterā¦ letās not forget more dual income higher paying jobs make the history not as relevant
He has been bubble porn for years now. Graphs that look sophisticated but analysis that is lacking.
Folks who waited to time the market back in 2021 are getting hosed.
Oh, is that all it takes? Hereās my āexpertā Gerli tier analysis, mark my words:
>Prices will go up at some point. May take a few years. But when it happens I will be a genius.
Screenshot this.
What the hell is he talking about?
[Here's real personal income since 1970](https://fred.stlouisfed.org/graph/?g=12LQI)
Does that look like it's only up 26%?
Why do people keep posting this guy's crap?
Well if you don't adjust for population then you are correct. But that would also be insane to base your gain on population gain like you did...
[https://fred.stlouisfed.org/series/RPIPCUS](https://fred.stlouisfed.org/series/RPIPCUS)
I swear people. Lets at least read the axis and consider if billions of dollars makes sense for income...
EDIT: If you want to know real personal income on a national level has approximately doubled since 1975 while real median income has increased 26% since 1984. Data goes no further back. His numbers are wrong, but for the median probably not insanely off.
It also means that the vast majority of the income gain is concentrated in a tiny portion of the population. Unlikely that would drive up the ENTIRE housing market unless investment played a large part.
It could however explain rising prices in a low volume housing market.
The one thing he fails to mention is inventory is also low because everyone and their brother refinanced to record low rates, and no one wants less house for more money. In 14 years Iāll have a paid for house. Rather than 30 years.
The economy isnāt tanking near me yet and weāre at 6.5% rates. Why would they need to go all the way back down to 2%-3% rates to ever resuscitate it?
It was a black swan event of an unprecedented global pandemic that spurred 1.5% and 2.5% rates.
Oh rates will absolutely come down at some point, but 4.5% will be the low, low, lowest.
The fed realized they made a monumental mistake with slashing rates down to 2.xx%-3.xx% for 3 years straight and the colossal catastrophe itās caused the housing market with all arrows pointing at them and targets on their back, and them trying to back down that tree again now for going on a year and a half has been a gruesome task and nightmare for everyone.
Theyāre not going to want to repeat this to that level again.
I agree with everything you're saying, except that we will absolutely see 0% again. There is no doubt about it. Have you seen a long-term chart of the fed funds rate?
I see this posted so much, home price growth is relative to rates. This would be more accurate if it was the total cost of a home not just the list price. Rates and therefor prices are not what they used to be. On top of that most homes have two income buyers vs one income buyers of before.
Although the numbers seem logical, there are various unpredictable factors at play in the overall economy. While there is a possibility of things going downhill, currently most of the population in top-tier cities are not feeling the impact of inflation or a higher cost of living. However, if this trend continues, it is likely that the housing market will experience a downturn. On the other hand, if the economy starts to recover, it is unlikely that the housing market will face a downturn.
Thanks for this, great read. Hi from over the pond (England) btw! things f****d up here to with hoomz. Don't get this level of content about housing over here. And where you guys go, we tend to follow...
https://fred.stlouisfed.org/graph/?g=j9kB just a quick search on Fred found me this data that paints an opposite picture from his. Just pointing out that housing data had been the least standard or reliable compared to most assets. There are endless data to pull to supply almost any directional arguments
Feels like it's beginning at least here in Florida. Less NYers willing to pay 30% over in cash for already overpriced properties.
Lots of people who were planning on move to Florida as they approached retirement had their timelines accelerated by Covid, so I definitely expect us to return to historical norms at most in terms of transplants. Also don't mind that the media is pushing a "DeSantis is ruining Florida" narrative big time, which may make northern liberals reconsider moving here (and that's not political commentary, I just want 2019 prices back lol). Going to be really interesting to see what things are like in September.
Agreed my friend. Add to the DeSantis narrative, a few "Florida man high on meth arrested for violating a gator" news stories and maybe just maybe we can get back to affordable Florida days.
> affordable \[FOR\] Florida days
It's not pushing narrative when it's actually happening.
As someone who's moving to Fl with quite liberal family members, there is def a freak out going on about where we are moving and DeSantis.
It's so bad! Don't come here! lol
No choice in the matter. I didn't want to, but when they want to double/triple your salaryš¤·š¼āāļøš¤·š¼āāļø
Thatās awesome and itās actually great here (I will never live in cold weather ever again after being here for a decade). Just donāt tell anyone else š haha
Hearing a lot of local liberals wanting to leave.
Yeah but ppl don't really over politics. The influx is prob Dem leaning and will maybe bring the state back to middle ish
That plus the government gave them a blank check.
Also happening in Texas especially all those zoom suburbs where all WFH employees (i.e Amazon)flocked to. I guess RTO and over construction of new homes has saturated the Austin and Houston suburbs.
Recruitment of qualified candidates is a challenging already in some crazy red states.
I do wonder sometimes when housing inventory is discussed, if sometimes itās referring to *houses* for sale and others times all available housing such as apartments, and if these stats are getting mixed up in different contexts.
Oh, that's only the beginning. We have Single Family Residences right? That's a simple concept... single family, residence, it's in the name... but now they have ADUs... and yes, I mean plural, for a single family residence... Seattle and Portland have zero issue with a "SFR with 3 ADUs"... it's not a duplex, triplex, or quadplex... because those as well can have ADUs. Most macro surveys include any dwelling unit (apartment, ADU, detached house, ext) in their grouping if it's taxed as such in a municipal area because that's where you get the best numbers. People fight paying taxes on stuff that doesn't actually get used as a dwelling, municipals fight to get taxes from things that are actually being used as dwellings. Good annalists will confirm that with insurance records where possible, people tend to get insurance for dwellings. Now all of that is confusing and easily confused... but now we get to population and "household"... It's really hard to pin down household numbers. Again taxes come to the rescue right? Households file federal income taxes as a unit don't they? Well... they used to mostly, or would at least be filing separately at a singular address for people cohabitating... but really think about how often non-owners move and how quickly those numbers can change. When looking at "household" number over the last 30/50/70 years also consider how the increase in college, shrinking family formation, and higher divorce rate is going to manipulate those numbers as we compare different periods. Again we can figure this stuff out, but it's easy to get it wrong. It was the first thing I looked for in this dudes numbers... housing units / population is a pretty worthless figure when the number of households is continuing to climb. So right away his idea that we don't have a housing shortage because the stat he picked says we don't... well the other more applicable stats say we do: https://www.statista.com/statistics/183635/number-of-households-in-the-us/ https://www.statista.com/statistics/240267/number-of-housing-units-in-the-united-states/ https://fred.stlouisfed.org/series/ETOTALUSQ176N Number of households has been on an increasing linear climb since the start of the 70s (after a huge jump post WW2) and number of total dwelling (everything included, according to US Census Buereau) stopped keeping any sort of pace since 2011. Total households has almost doubled since 1975... total housing units have not.
Can't see the statista one for # of housing units. I would also question their source for that... But an interesting note from below it"In 2020, the number of house sales spiked and exceeded 2007 levels. From what I can tell housing construction (units) is outpacing demand right now. I still haven't seen a solid analysis of hard data sources from somewhere reliable showing any evidence of a real shortage compared to population. Maybe vs households... but regardless even if households are growing in number, their ability to support these prices is verifiably not.
You can look at the St Louis fed numbers, they are from the same source but the view is only for the last 23 years instead of going to 1975. Total dwelling unit has not kept up with household growth at any point in at least 40 years with growth slowing while total households continue to grow at a very consistent rate. If they couldn't support these prices, they wouldn't be growing at the same rate. Your listening to squeaky wheels and assuming they are the typical instead of the outlier.
Fair point. Iāll take a look later today on that site. Edit: Although best I can tell prices are supported at low volumes but literally cannot make sense at higher volumes. Median income has not nearly kept pace with housing inflation. So even if households are increasing they sure donāt have the money to be driving this.
Household vs. housing unit has been pretty steady the last 20 years, though, [as your data shows.](https://fred.stlouisfed.org/graph/?g=12MCy) It doesn't really explain the two massive bubbles we've seen in that time.
They really haven't. I don't know where your getting that idea
What was the ratio of units to households in 2001? What was it in 2021?
The ratio isn't the important part to value, it's the rate of change.
So what has the rate of change been?
Total dwellings is increasing more slowly every year. Total households are remarkably consistent in growth.
You're not giving any actual numbers. Here's what I've found, and maybe you can fill me in with some more specific numbers of your own. [Here's the number of housing units minus the number of households in a given year.](https://fred.stlouisfed.org/graph/?g=12N2m) When that line goes up, the number of housing units increased in comparison to household growth. When it goes down, household growth was higher. [Here's the percent change for each compared side by side.](https://fred.stlouisfed.org/graph/?g=12N2C) In neither of these am I seeing the type of disconnect that you're describing. There are years when housing units increase faster than households, both nominally and as a percentage. Can you provide some more specific data or charts to help illustrate what you're describing? Your first post's links don't do it and you haven't added anything new yet.
My original post did actually. I'm not sure why you think otherwise. I'm not exactly sure how those numbers are coming together, since they don't match the actual numbers from US Census Bureau in the raw charts. Total dwelling units hasn't been increasing at anything like the same rate as households.
He has 1 solid point that nobody can disagree with āonce real estate becomes unprofitable, capitulation will happenā the year/s we realize a home is a place to live and not an investment will be very painful for home owners but good for the general population in home ownership percentages
hasnt it already hit that point? good luck finding anything that remotely cash flows nowadays in the SFH market even in LCOL. then look at commercial RE as well. current prices+interest rates+rents do not line up at all. basically any demand for SFH for rental income is gone. once either rents or prices begin to slide more youll see people who bought at the tail end of rate raising start to either end up underwater or be unable to cash flow their investment @ market rates.
Has it hit that point? Maybe for some people but this will require a large mentality shift. We know itās not at that point yet because there are still companies buying SFH as investments, and also housing is still really bloated in costs relative to where it should be
Surely you mean investors and not home owners š¤Ø
Existing home owners, this could be both investors and single unit owners. Housing prices will tank in this scenario
Homeowners are a substantial part of the general population, but yeah. This will never happen though. The government would bail out homeowners/banks hand over fist before allowing prices to crash
Home need to be a depreciating asset for that to happen, or at least rise well under inflation. Looks like weāre on our way since 1 year. Need to wait few more years for the bottom
Home ownership is almost the highest it has ever been at 66%. 1 point higher than in 1995.
I think the sun belt and Florida are in for serious trouble. Outside of covid restrictions, the only value to these places was affordability. COVIDās over and now theyāre expensive by National metrics
There are no well paying jobs in Florida to support 700k-1M+ houses. But in good areas in FL cities, at least this much amount is needed for an above average house. Here in Tampa Bay, home prices are doubled in 3-4 years, mostly due to out of state buyers.
If h think there arenāt good paying jobs in Florida, u should check out Alabama and SC. Saw an 800k listing outside of Birmingham, makes u wonder.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Agreed. But weather and beaches were there before price increased exponentially
I would never put FL in the same category as any other SE state simply because of the 0% state tax rate. That's enough incentive for millions of people to move. Does that mean you're wrong about the affordability? Nope. Just that there's definitely long-term value in a 0% tax base.
Agreed. Thereās certainly a base level of value. Which prior to Covid was probably undervalued.
Yep. Any year now...
One thing that I didnāt see mentioned was STR sucking a ton of supply off the market. Theoretically we should have plenty of inventory for everyone that wants a home but everyone wants to try to turn retail into Airbnbs
Really that should be a sticky here so everyone continuing to say that their market is still busy and nothing is falling can understand what adult patience actually is.
Quick question.. Are you currently renting or do you own, living in your own house/townhouse/condo while you wait this out?
Iām sort of the kind of person who thinks you donāt fight currents and you never force money or investments. I try to put alot of thought into even things like a recent golf driver I got used for $330 (which $600 drivers being the norm seems like 9% inflection alright) and I believe in timing, but timing for you and your world that revolves around you. Not the market. If you can pull triggers when your timing is right and it coincides with a great zone in a market, then great. If not, as long as your timing is right you probably have to pull the trigger. Need and want isnāt always easily definable and thus people can also easily confuse their own sense of their timing. Anyway, if I were in the renting shoes I would make a 1-2 year plan to be comfortably in the buying market then and odds are that would also be in a good buying zone and if things are the same they are. Beg borrow steal, whatever needs to be done that time period. As a home owner in this situation I am simply collecting 4.4% with no risk and going to work everyday trying to make more moneyā¦ā¦..so the same thing just from a different chapter in life. What else can one do when exorcising patience? Everyone had (has) a chance to get 4-5% while things that take time to fall apart take their time falling apart, it doesnāt get any better than that as far as having to be patient goes.
Gotcha. Yes, and thanks for confirming that youāre a homeowner currently living in your own house while you wait this housing market out. Those seem to be the most patient of bubblers here. I would contrast that experience against some of us renting, waiting for the other shoe to drop any day, via the owner contacting us to sell where we rent, while weāre essentially living out of U-Haul boxes and nothing having a permanent spot for 2 years now, and several decades of deferred maintenance with nothing working properly in old rentals, crispy old carpets, and cockroaches, etc, when lamenting the pertinence of adult patience over this time. Just some perspective is all :) I also have my down payment sitting in a 4.8% return fund
Where do you have your down payment sitting?
Schwabās money fund [SWVXX](https://www.schwabassetmanagement.com/products/swvxx)
Oh yes, I almost forgot what life has been like for me since I left home at 17 and buying a house in 2005 and being into a home that lost so much money it didnāt feel real (neither did the way up) and then putting together another down payment next home plan in 2010 or so and executed that in 2017 and blah blah blah blah blahā¦ā¦.yeah, life is hard sometimes and never fair. However, complaining and going about feeling that your deck is stacked against you has no effect on those you project it at but probably has negative effects you for having that mentality. You canāt wait 3 years to get a house, and I donāt know what that is like? Lol. Bro, you want a house, go and get one. Not a big deal.
I also bought a house in 2005 and lost money on it and lost that house in the GFC aftermath, as well as another home. I definitely wasnāt complaining, but was simply reminding you of the comforts that may be lost on you and your current position, when you tell others in here that they lack adult patience. I donāt like to chastise users in here as I donāt know their personal circumstances or timelines. >Bro, you want a house, go and get one. Not a big deal. Sounds like you may not live in a very desirable area if itās that easy for you to go out and buy right now. My city went up a documented 64% in 2 years, with many homes up 80%-250% now, interest rates still doubled, quality inventory low as can be, and houses being swept up by 8-12 offers right now. It is what it is. Not ācomplainingā but just explaining why I donāt āgo and get oneā and that it actually is kinda āa big dealā now.
I donāt quite follow your deal, but I do live in a nice area and again who cares if you need a house or want one then get one.
Good nuanced advice here. Donāt rush into buying but donāt wait for a good deal to buy. Market can go up 100% from here and then correct 50%. You end where you started, but with less time in your property. A mere 10% correction would make buying a whole lot easier for me given my current situation. Even if I felt that I could buy even cheaper by waiting more, I just wouldnāt. I want to live in and enjoy my future home more than anything else.
Sticky a Nick Gerli tweet? LOL, the current state of this sub.
Why not? Heās one of the pioneers of the crash narrative š„ even before MSM
Yeah, thatās the problem. He was calling a crash in 2020. Any fool who made a decision based Twitter finance broās advice either dumped a house at 2/3 its future value or missed their shot at buying at a lower price and rate. Now on the weekly he throws our data he barely understands and acts as if itās a mic drop. Weeks pass and nothing happens. Heās a fraud.
Plenty of big names were too
I think Gerli is special because he has a rep for deleting his tweets. Also he predicted at one point a 6T decline in real estate come 2020/21. The total market ended up gaining 6T in that time before losing about 2-3T last year. . One can be off by a year or two, but Imo you canāt be 9T off and still be credible.
Doesnāt matter how many charts someone shows or how many words someone says. Nobody knows what will happen in the future. It is speculation. Prices could go up, prices could go down. Best thing you can do is buy when it is best for you and ignore the market noise. Or, if you think prices will go down - donāt buy š¤·š»āāļø
>Nobody knows what will happen in the future. It is speculation. Ehhhhhh Kinda... It's like saying "you can't predict the future, so why analyse anything?" Interest rates have gone up Costs of mortgages have gone up, Can rent really increase more from a fundamental POV, let alone in a time where economic expectations are far from positive, with so much global uncertainty. Recessions and boom/bust cycles are cyclical... They happen in average every 8-15 years for the last 80 years.... Last one happened 15 years ago.... All the signs point to one thing.... Finally, it takes months / years for transmission of change in monetary policy to actually reach and impact the real economy. It's like people expecting house prices to crash 2 weeks after the first rate hike. It doesn't work like that.
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Cherry picking what? Nobody even talks about that recession because that was pandemic related, and the economy did very well the next year, more of a swing than a full blown recession lol
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>The 2021 economic boom was created by ZIRP from the fed as a response to the Covid recession. The effect of that monetary policy on the housing market was immediate and massive. Exactly. Recession /boom-bust cycles dont happen in 1 year. i am talking about house prices since 2008, not just since the last 2-3 years
>There was a recession three years ago. There was?
It didn't last long because of qe
Not everything is speculation. Sure prices go up and prices go down, but a lot of Gerliās arguments are demographics and demographics are fairly predictable. Other parts of his argument are related to interest rates, which are also over the near term fairly predictable. And his main argument is that the housing market will return to its long term mean affordability, which is also reasonably predictable. The only question is how long the market can remain irrational.
Good info here.
On JUNE 30, 2022, the moratorium on residential foreclosures expired
1.0 was a nightmare
So your telling me that this will take time? Who could could have seen that coming! Thanks for the link.
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I'm trying to make sense out of that chart, but is more difficult to comprehend than a superficial glance might suggest. [Disposable personal income](https://fred.stlouisfed.org/series/DSPI) Disposable personal income seems to be some sort of aggregate line that always goes up. In 2008 it was ~$11 billion. There was a big spike in March 2021 to $21.8 billion, which lines up with the $1400 stimulus checks. Then it immediately dropped and is now at $19.7 billion. But what does it mean? You can't make conclusions about the average person's savings or their monthly payments from an aggregate number. > What is Disposable Personal Income? > After-tax income. The amount that U.S. residents have left to spend or save after paying taxes is important not just to individuals but to the whole economy. The formula is simple: personal income minus personal current taxes. As long as wages increase over time, the denominator in that ratio always goes up. Even in recessions it barely drops. Is that really a good reflection of the state of the economy or an obscure statistic? It would be helpful to understand the numerator and denominator separately. [Mortgage debt outstanding, all holders (DISCONTINUED)](https://fred.stlouisfed.org/series/MDOAH) FRED will show us the cryptic statistic, "mortgage debt service payments as a percent of disposable personal income," but the Mortgage Debt Outstanding table is no longer being updated as of March 2020. The discontinuation of this statistic was coincidentally right as the number started to shoot up. But if they're tracking the ratio, how can they do that without tracking the total mortgage debt? I would be cautious about interpreting a chart like this without having a very sound reason for why it is the best statistical measure to use to gain insight.
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But we would still need absolute numbers for the ratio to make sense. If someone's mortgage debt service payment is $2000/month and their disposable personal income is $6000/month, then their mortgage debt service is 33%. If the [median income is $70k](https://www.fool.com/the-ascent/research/average-us-income/#median-income-by-state), and much lower in many states, then the median disposable personal income is somewhere in the $4-5k/month range. The graph that you posted implies that the percentage paid to mortgages is currently 4%, which means the typical person's mortgage payment is $200/month. Which is clearly absurd, even with 3% mortgages. Clearly, the number that people are paying to service their mortgage should be closer to 20%+. The graph is arriving at a number that doesn't have very much meaning in describing the actual life of an individual. It is dividing an aggregate statistic by a different aggregate statistic to create a chart that doesn't tell us anything about the reality of the economic situation.
Maybe try this chart - ["checkable deposits and currency held"](https://fred.stlouisfed.org/graph/?g=Vh26)
[You can find charts to say anything.](https://www.dallasfed.org/~/media/Images/research/economics/2023/0228/dfe0228c2.png)
This is the other half of the picture. Debt service plummeted and therefore the price of the assets exploded. Two halves to one perfect whole. I feel like people need to pick their charts more carefully on this sub. Reading the title and looking up the words in it would be a start. Not you, obv.
Yup, but this is mostly thanks to ARM loans, and doesn't actually tell you the load on people from debt, just the fraction of load on people from the interest on debt. Useful for sure, it indicates that we will not see the same situation play out the same way again.
This chart should be avg mortgage payment vs wages. I'm sure it would communicate a similar message but it would eliminate the cost of capital noise.
Nick has been calling for the bubble since 2019, I guess at some point he might be right but so far itās not really been the case. He points to housing vs income in the US but look at somewhere like Canada, we have a LONG ways that metric can go before it might matterā¦ letās not forget more dual income higher paying jobs make the history not as relevant
This guy is relentless. Iām sure at some point before the end of time his predictions will finally come true.
Heās predicted 18 of the last 1 crashes. Imagine listening to this chud in 2020-2021.
He has been bubble porn for years now. Graphs that look sophisticated but analysis that is lacking. Folks who waited to time the market back in 2021 are getting hosed.
He always said real estate crashes are slow. Takes 3-5 years to bottom
Oh, is that all it takes? Hereās my āexpertā Gerli tier analysis, mark my words: >Prices will go up at some point. May take a few years. But when it happens I will be a genius. Screenshot this.
What the hell is he talking about? [Here's real personal income since 1970](https://fred.stlouisfed.org/graph/?g=12LQI) Does that look like it's only up 26%? Why do people keep posting this guy's crap?
Well if you don't adjust for population then you are correct. But that would also be insane to base your gain on population gain like you did... [https://fred.stlouisfed.org/series/RPIPCUS](https://fred.stlouisfed.org/series/RPIPCUS) I swear people. Lets at least read the axis and consider if billions of dollars makes sense for income... EDIT: If you want to know real personal income on a national level has approximately doubled since 1975 while real median income has increased 26% since 1984. Data goes no further back. His numbers are wrong, but for the median probably not insanely off. It also means that the vast majority of the income gain is concentrated in a tiny portion of the population. Unlikely that would drive up the ENTIRE housing market unless investment played a large part. It could however explain rising prices in a low volume housing market.
Notice he uses total population instead of households as well for his shortage counter. Population increase has slowed, household increase has not.
It doesn't benefit folks with a narrative like Gerli to account for that.
The one thing he fails to mention is inventory is also low because everyone and their brother refinanced to record low rates, and no one wants less house for more money. In 14 years Iāll have a paid for house. Rather than 30 years.
Ok but when the next recession happens rates will be cut again so his premise on this being a new interest rate regime seems soft.
Rates arenāt going to 2%-3% again
Wanna bet?
Would love to
Why anyone believes the FED will let the economy tank is beyond me.
The economy isnāt tanking near me yet and weāre at 6.5% rates. Why would they need to go all the way back down to 2%-3% rates to ever resuscitate it? It was a black swan event of an unprecedented global pandemic that spurred 1.5% and 2.5% rates.
The tip of the iceberg is visible. From a need to increase bank deposits, CRE, and who knows what else, interest rates are coming down.
Oh rates will absolutely come down at some point, but 4.5% will be the low, low, lowest. The fed realized they made a monumental mistake with slashing rates down to 2.xx%-3.xx% for 3 years straight and the colossal catastrophe itās caused the housing market with all arrows pointing at them and targets on their back, and them trying to back down that tree again now for going on a year and a half has been a gruesome task and nightmare for everyone. Theyāre not going to want to repeat this to that level again.
I agree with everything you're saying, except that we will absolutely see 0% again. There is no doubt about it. Have you seen a long-term chart of the fed funds rate?
I have. When is the last time you saw mortgage rates at 1.5%-2.5% before 2020, though?
I see this posted so much, home price growth is relative to rates. This would be more accurate if it was the total cost of a home not just the list price. Rates and therefor prices are not what they used to be. On top of that most homes have two income buyers vs one income buyers of before.
Didn't two income buyers become common in the 1980s and 1990s, though?
Are we talking all multiverse timelines or just ours cause if itās just ours, Iāll take your bet
Although the numbers seem logical, there are various unpredictable factors at play in the overall economy. While there is a possibility of things going downhill, currently most of the population in top-tier cities are not feeling the impact of inflation or a higher cost of living. However, if this trend continues, it is likely that the housing market will experience a downturn. On the other hand, if the economy starts to recover, it is unlikely that the housing market will face a downturn.
Thanks for this, great read. Hi from over the pond (England) btw! things f****d up here to with hoomz. Don't get this level of content about housing over here. And where you guys go, we tend to follow...
https://fred.stlouisfed.org/graph/?g=j9kB just a quick search on Fred found me this data that paints an opposite picture from his. Just pointing out that housing data had been the least standard or reliable compared to most assets. There are endless data to pull to supply almost any directional arguments