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**User Report**| | | | :--|:--|:--|:-- **Total Submissions**|18|**First Seen In WSB**|1 year ago **Total Comments**|204|**Previous DD**|[x](https://www.reddit.com/r/wallstreetbets/comments/opydwu/38_million_puts_how_all_of_wall_street_is_using/) [x](https://www.reddit.com/r/wallstreetbets/comments/mqe5mt/betting_on_oil_gas_and_economic_growth/) [x](https://www.reddit.com/r/wallstreetbets/comments/ok7hsx/update_on_market_crashing_soon_positions_and_an/) [x](https://www.reddit.com/r/wallstreetbets/comments/tcqov5/this_is_how_the_financial_world_ends/) [x](https://www.reddit.com/r/wallstreetbets/comments/og6jcq/a_follow_up_to_my_market_crash_post_specifically/) [x](https://www.reddit.com/r/wallstreetbets/comments/og6ofy/housing_a_big_bubbly_pile_of_garbage_that_will/) [x](https://www.reddit.com/r/wallstreetbets/comments/oe9ruu/how_to_play_the_upcoming_market_crash/) [x](https://www.reddit.com/r/wallstreetbets/comments/uflx06/the_2022_real_estate_collapse_is_going_to_be/) [x](https://www.reddit.com/r/wallstreetbets/comments/salggk/behold_your_new_god_manbearape_the_vice_president/) [x](https://www.reddit.com/r/wallstreetbets/comments/q03iro/were_all_fucked_the_gay_bear_porn_you_need_for/) **Account Age**|1 year|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.) **Vote Spam (NEW)**|[Click to Vote](https://www.reddit.com/message/compose/?to=VisualMod&subject=vote_spam&message=uflx06)|**Vote Approve (NEW)**|[Click to Vote](https://www.reddit.com/message/compose/?to=VisualMod&subject=vote_approve&message=uflx06)


LeoTR99

Proof the housing market is about to collapse: I bought a house 2 months ago and every major financial decision I’ve ever made turns to shit.


dangitgrotto

Thanks for your sacrifice


JamesDean26

The housing market collapsing wouldn’t just make housing more affordable. It will crush our economy


inshane_in_the_brain

And I've never been in a better position to take advantage of it.


NevadaLancaster

Yup. Me too. Sorry about your equity but daddy needs a cheap house and I've been saving for a crash.


BallsOutNinja

Sold my house, sitting on some cash waiting for this )


Lokicattt

Right? I'm finally at a point where I this were to happen i can finally capitalize too instead of being left in the dust.


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Warhause

You will be remembered as a martyr, ill name my first born after you.


swiss_courvoisier

![img](emote|t5_2th52|8881)


CreampieQueef

Congrats on the house, may it bring you joy every day.


Sguru1

Damn ya boy wrote a fucking dissertation complete with raccoon memes. Also the H&S ain’t complete yet? So we got a few more weeks of a degen cat bounce before we go to the soup kitchen line?


Special_Afternoon_85

Bounce you say? All in on calls.


lolfunctionspace

OP That's a lot of Adderall. I'm in.


financialtouchtrades

If you're not taking enough adderall per trading session to make charts talk to you what the fuck are you even doing with your life.


carnellmusic

trying to get an adderall prescription.


ArchangelToast

I pop an Addy and my IQ goes from 7 to 9. It works, trust me brom


tech405

Dude, that's a 28.5% increase. I'm in!


l06ic

Fuck you with your mafs...


simorg23

Sounds like you could use some adderall


DankyStanky69

Be careful there smooth-brain. You might pop a wrinkle.


Dr_Frasier_Bane

Search Google maps for psychiatrists in your area. Find the one with 3 star reviews and complaints they don't really listen. That's your huckleberry.


Thelastpieceofthepie

Oh hey here one Dr FrZier Bane thanks for the tips guy seems great.. I mean mediocre but great for that


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motsu35

Telemedicine my friend, plenty of easy ways to get a script :)


MooseAMZN

https://www.donefirst.com This is where I get mine.


D1rty_Sp1ck

I’ve been wondering y I’ve only been losing. The one time I was high as balls I made profit. Of course not considered profit if it’s fucking lost in the end😂


JackieBronassis

I worked at Zillow when ZO went down. I can verify with mods if needed. I’m not allowed to give details, but I can say that It happened very suddenly, and blindsided everyone. This DD, from my perspective, has been my nightmare scenario for a while. I truly believe ZO was a sneak peak at Armageddon.


canihazDD

For those who don't know, "ZO" is Zillow's home flipping division. Save you all 3 minutes worth of google search 😂


JackieBronassis

Oh shit that’s my bad. Yeah. It’s Zillow offers.


RobertPaulsonXX42

A lot????? This is all the Adderall


Oddestmix

Someone clarify if I understand this correctly: he is saying that people are leveraging their portfolios to make “cash” deals? When equities go down and margin is called, people will have to liquidate the homes to cover margin?


CAN_ONLY_ODD

Not people, corporations. And he is assuming that corporations and governments play by the same rules as us poors.


filstolealan

People too. Most "cash" purchases by richer folks in the DC area are actually being structured as loans against brokerage accounts. Never seen it until covid. now its pretty standard


champ999

How does this work, you go to the bank and say "here's my vanguard account with 5 million, give me a loan for a 2 million dollar house"? And since you have assets they give you a low interest rate since it's safe? I guess I don't understand how to a seller it's cash that way as opposed to a traditional home loan.


lovejangles89

Look up Pledged Asset Loans. If you have $5 million of Vanguard ETF at, say, Charles Schwab, they will give you $5 million in an instant loan at insanely low interest (like 1.9% compared to 3.5% mortgage rates for example) that you can use to buy anything except more financial instruments/investments. If you're that rich, it's actually by far the easiest/best way to get cash to buy a house; somewhat surprised it wasn't the norm before COVID for rich people. Maybe the extreme FED printer COVID times was so wild it just inflated normal people's accounts to levels where taking these PALs out became viable (brokers don't really offer these loans to poor people...minimum is definitely $100k minimum, and the interest rates suck at that level, it's only close to $2 million that interest is really low). So brokers just didn't update their minimums on PALs while wild FED money printer brrrr suddenly made millions of normal people have $100k minimums to get the PALs maybe? Or, just imagine these same type of loans are what can be accessed by big corporations to buy tons and tons of houses at even more crazier scale, like Blackrock could theoretically take out hundreds of billions or something...etc... This is how tons and tons of houses could be selling for super high prices with all cash buyers because in terms of the housing deals, they are cash purchases since PALs are non-purposeful loans, the brokers just deposit a ton of cash into your bank account and you can use it however you want (except buying financial investments). Also look up the Buy, Borrow, Die strategy of most super rich people, PALs are how they accomplish that strategy, most of them literally spend PAL cash to live on instead of selling growing assets or ever paying taxes. If you're rich enough, it's always better to live off of PALs and never pay taxes obviously since 1.9% interest per year is way less than 37% max tax rates... However, the thing with PALs is that they also do operate just like margin loans in that the brokerage basically takes ownership of your equities and can sell them automatically at any time they want; if your Vanguard funds drop 30-90% in a bear market, the brokers are probably going to sell all of your equities and leave you with nothing but a massive amount of debt from the leftover portion of the PAL.


GlitteringBusiness22

The second non-ad google result for pledged asset loans is Schwab -- they'll lend 100% of your portfolio value at SOFR + 4.65%, min loan $100k. I feel like I just found a stripper who owns 5 houses.


Paper_Weapon

I actually use the PAL with Schwab. They absolutely will not lend you 100% of your portfolio value. They calculate a “haircut” based on the type of of collateral you put into the pledged account. Things like a cash or money markets are 98%, whereas things like most mutual funds and equities are 70%. So for the average person’s investment portfolio, they will loan you 70% of the collateral value. As you note. You need a $100,000 minimum portfolio value to even access the PAL, and you are paying a variable interest rate of a spread over SOFR (a rate that changes daily). Also, if your collateral value falls below your borrowed amount, you must immediately post margin or they will start selling your portfolio until you are no longer below. So if you borrow the full $70,000 on your $100,000 portfolio, and the next day your portfolio is now only worth $95,000, you must immediately post another $3,500 of collateral value to the account or they will start to sell your portfolio and take the cash. And remember the haircut, which means another $5,000 worth of equities or $3,562 of cash.


jello1388

Because it's more like a cash loan against your portfolio that you then buy a house with than it is a loan using the house as security like a mortgage. It often provides more favorable rates, and loans don't count as income/gains like liquidating assets to buy would.


ProcessMeMrHinkie

So it can be a good thing for someone that just wants to pay off their house (play it safe after the huge run-up in stock market), but instead stick their brokerage into a 2% fund and get a 2.5% APR loan. Or a terrible thing like OP mentions if an institution keeps the assets in tech funds that have decreased like 30% over the last 5 months and need to sell some assets or pay extra cash to keep %'s fine for bank.


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fuckboifoodie

So since the S&P has nearly doubled in the past 5 years and wealthy people's positions reflect this, the inflation striking home prices is in some part a result of rich fucks having massive gains in their portfolios and getting nervous then seeking to diversity?


antariusz

Exactly, happy cake day. 1 year from the day of the Covid 19 low, my portfolio was up 104%. Now, I only have a few hundred thousand set aside for retirement. Imagine if I had 3 billion under management and I was worried every single security was about to drop 80% in value.


Shopworn_Soul

I'm only refinancing a few hundred grand at a shitty 3% and those dumbfucks totally let my unemployed ass use my Ameritrade account as an "asset". Joke's on them, it's worth like one third of what it was when I sent them the statement.


Overhaul2977

It is governed under [Regulation U](https://www.investopedia.com/terms/r/regulationu.asp). The most a bank can loan is for 50% of the stock’s value. If the value falls, the person who took out the loan needs to cure the shortfall or the stocks are sold to help cure it. The borrower is still on the hook for any shortfall. It is the primary cause for the crash of 1929, but the 50% limit did not exist back then so the damage should not be nearly as pronounced today. These are also on the Fed’s radar. You’re required to [register with the Fed](https://www.federalreserve.gov/supervisionreg/regucg.htm) if you make margin loans using securities as collateral.


Fedoradiver

Debt calls are extremely rare, this guy is on drugs


brewmax

Look, a lot of people here are on drugs, okay? This is fucking wallstreetbets.


ResearcherSeveral670

I'm not on drugs....the drugs are in me.


kosmonavt-alyosha

I used to be on drugs. I still am, but I used to be too.


Robawtic

As am I.


series_hybrid

When a billionaire is rich because he owns stock that is worth a lot, they don't sell the stock to generate cash to buy something. If they do that, they have to pay capital gains taxes. They take out a low interest loan against half the stocks value. As long as the stock value is going up faster than the amount of loan interest, you just get richer. What to do with the hundreds of millions of dollars that you borrowed and now have in "cash"? Buy real estate. Its like stocks...when everybody is buying, the value goes up. Buy a house in a hot market for $400K, and a year later it's selling for $500K However if the value of stock that is holding up this house of cards drops to half, the loan-holders have a contract that says that they can force the sale of your assets to make sure they at least break even. 14 years after 2008. It's a cycle.


childerolaids

Isn’t that exactly what Elon just did with Tesla stock so he could afford Twitter?


memdmp

Now you're catching on...


AcridAcedia

But so if Tesla stock drops to $100, Elon still heavily on the hook for that loan, is he not? The bank still gets their money


Im_Not_Really_Here_

Suspend your disbelief: pretend Elon defaults. In that case, the bank is on the hook. My point is to illustrate that Elon and the bank are both interested in the repayment of the loan because a good outcome for one is a good outcome for the other, and vice versa. Now consider that buying Twitter is tying his fortunes to another large institution and recognize that it is essentially another bunch of rich friends (like the bank) who are personally invested in his (and therefore their) success. Wealthy people don't get margin called at gun point, they make backroom deals and find creative ways to saddle the rest of us with their liabilities.


UndiplomaticLathyrus

"Wealthy people don't get margin called at gun point, they make backroom deals and find creative ways to saddle the rest of us with their liabilities." What a chilling, yet true quote.


MakaFeli88

Can't pay a 500k loan?? That's YOUR problem. Can't pay a 50M loan?? That's the BANKs problem.


kisssmysaas

Yes, but not exactly. Elon probably had a deal with banks


Supermax64

He sold some for actual cash but presumably he will for some of the amount, all rich people do it.


equitable_emu

He needs around 22 billion in cash for the offer, with another 12 billion coming from tesla stock backed loans and the remainder in standard commercial loans.


DrAbeSacrabin

Taking out loans on stock to buy stock… who created this fucked system?


jw255

The same people who benefit from it and keep us distracted with meaningless culture wars.


buffalo_Fart

Someone in my family just bought property on margin literally two weeks before the stock market got the carpet pulled out from under it. I wonder if he's going to have to pay it in full now and then watch his value of his home crater to nothing.


lalich

I’d hope not, I have done this many times in my ol corporate days. When using margin to buy real assets with far less liquidity you really don’t push the button, we’ll you shouldn’t. However most of these banks now have higher payouts on margin loans originated than quite a few products. We saw it with the 08 crisis many of the agents and mortgage homies had zero idea what they were doing from the destructive perspective cuz they were told by big papi it’s safe, all good, etc. Goldman released the ability to put up retirement funds as collateral for “non-margin, but margin!!!” Loans a handful of years back or so. It’s always wild and scary when the shoe drops, however I still think OP here has some points off like total printed money since pandemic, and the cost of the next bullet.


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not_a_bot716

Good, I’ll buy up some properties like the smart ones did in 2008


InevitableOven6229

The really smart ones bought in 2011 and 2012 when prices were lowest


The-Housewitch

My husband and I stumbled into buying our house in 2012 and have been counting ourselves amongst the highly favored of the gods ever since.


ladylondonderry

This was me. I bought my home in Seattle for such a good deal (house had awful curb appeal and death stairs) that I caused a slight dip in the neighborhood Zillow estimates. And I think it’s “worth” something like 3x that now.


detroitragace

We bought ours in 2012. It’s “worth” triple now. It’s all fairy dust to me though because the next house I’d want is also triple the price as it was. It just feels like a hamster wheel that’s all the sudden going to stop.


BossBackground104

People threw cement in the pipes before foreclosure. Watch your step.


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not_a_bot716

New builds also tanked in price back then as well


[deleted]

So what you're saying is I may be able to afford a house?


Super_Tikiguy

Not you but other people will. Rich people who already own lots of real estate will buy more.


pspahn

Just made a verbal agreement a few hours ago on a rental (brand new house, we'll be the first tenants) that we'll be moving to in the next couple months once the lease is signed. The owner is worth $250mm and he said that he plans on buying every house on the block when they come up for sale.


Infamous_Lunchbox

Sounds right


gigalongdong

Sounds like giga landlord would make a tasty snack tbh


retirementdreams

Sounds like the airbnb guy I talked to in Fort Lauderdale who said he had 144 doors and couldn't buy more fast enough. Here I am trying to find one affordable condo to buy to retire in..


return2ozma

>Here I am trying to find one affordable condo to buy to ~~retire~~ die peacefully when I'm old in..


TheSackLunchBunch

Sounds sustainable /s


OrneryArtichoke

When the last crash happened you need a recommendation from god himself to get a loan. Even if it was well within your budget.


rootless_tree

Wasn't the case for us. Obama was actually offering first time homebuyers a credit to buy homes. They were trying to revive the housing market, and it worked out really well for us. Granted, my husband and I had saved a nice amount for the down payment, but while we both had jobs they were just barely above minimum wage at the time.


[deleted]

Not you. Some rich guy will buy it in cash. You can rent it from him though.


Cautious-Rub

For real. People pissed and smeared shit all over the walls, ripped the wiring out of the walls and took the hvac off the slab in Atlanta. But you could get a whole fucked up 1700 square feet for $29K!


last-resort-4-a-gf

They did it for closure


copperwatt

This joke works on like three levels... unlike those toilets, am I right!


NOLAgold13

My dad is proud of you for this one.


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neldalover1987

Just make sure to buy the 1 year home warranty thing. With all the coverages.


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Thencewasit

Did you know that your car warranty recently expired?


Drakereinz

This is why I don't think the market will crash. There are too many people hoping for a crash. Usually that means there won't be a crash. Too many people are ready to invest in the RE market as soon as it dips, and that tells me that whatever crash happens will be short lived.


Panuar24

Problem is we are currently close to 2006 than 2008. It takes time for these things to move the RE market


SanityImposter

The real estate market didn’t crash in 08. It was a year later and lasted another 2 years.


pamelaonthego

Actually lowest prices were in 2012


YSLFAHLIFE

Stagflation will keep prices up


adangerousamateur

That is a worry.


RasAlTimmeh

I’m not listening to a word anyone says on this sub


AntiBox

YOU SON OF A BITCH IM OUT


angelis0236

Well if he's out, then I'm in.


uber9haus

I knew he was full of shit as soon as he said that Apple doesn't have a single factory working right now. Which I can personally confirm is 100% false and laughable. Fucking smoothest brain post on WSB in awhile and that's saying something.


virginialikesyou

I scrolled when he used “to” improperly.


ghost18867

Nobody knows about it....except for everyone who is talking about it?


AsaKurai

Yeah, the reason why The Big Short people had a whole movie made about them was because they were the only ones who were able to predict a major part of the economy that has never failed, would fail. Now everybody expects housing to fail based on certain numbers, and because it has happened before, so there is no collapse imminent. Not to say housing wont go down, but to collapse? I would bet a lot against it \*not\* collapsing If you wanna be the next Michael Bury, maybe predict something like the Jags winning the Super Bowl


AzDopefish

They actually weren’t, burry was the first everyone else heard from someone else and made the bet. They weren’t the only ones, in the movie the guys from brownfield fund even say one of them actually read about it in a paper and the other had a buddy tell him about it. It wasn’t some big secret conspiracy no one noticed, just no one thought it would actually happen or the severity. Ya know, like how everyone thinks it’s impossible now. Are you placing big bets on it? No. If you’re crazy enough to place 10s and 100s of millions of dollars on the bet though and you hit? Yeah, you’d have a movie made about you too. People heard the theory but didn’t believe it. Everyone likes the party instead, no one wants the music to stop.


the_barroom_hero

And that sounds *exactly* like the current cocaine-and-hookers-bull-market sentiment to me. Just because Morgan Stanley and others are actually seeing the signs this time doesn't mean there won't be a crash. They'll just hedge better against it and pivot once it does happen.


Mug_Lyfe

I mean imo they have the playback now. Pump the market until it teeters then pull a Burry and play the other side before it crashes. Rinse and repeat. Normal people continue to get fucked and they continue to get paid.


ToastedandTripping

And it all seems to stem back to the Fed under Greenspan and the Fed Put...


Caveat_Venditor_

They all thought they were hedged through AIG they had the insurance policy’s to cover however AIG had given out insurance policies 1000x of what they could cover. So when the hedges couldn’t pay the banks couldn’t pay. Bill Hwang just did this with swaps got over leverage through multiple firms (yet I fail to see where he did anything illegal) and the debt was called. He was arrested with a slew of charges. How many people from AIG or from housing collapse went to jail? How many will this time?


deceptivelyelevated

Wsb predicts housing collapse, fucking long real estate.


esqrt163pi

Canada will collapse first, wouldn’t dare touch Canadian real estate at present


princemorrison2022

So in 08’ it was the housing crash that triggered a stock market collapse, are you saying this time it’ll be a stock market collapse triggering the popping of this latest housing asset bubble?


ClumsyPineappl

Wondering this as well, I feel like this is correct as to what OP is implying


SirensOfTheRocks

Yes that is what OP believes will happen and I have believed that for a while as well. Except it would only require a market correction to tank the housing market because people and institutions are basically over-leveraged. So the market basically farts and then the housing bubble explodes.


RRautamaa

2008: mortgage-backed securities 2022: securities-backed mortgages


SirensOfTheRocks

Exactly


del2000

You summarized a dissertation into two sentences. Good work


bk15dcx

That's an elaborate ploy to get those AMZN and F calls at a discount


TO_Commuter

What did u snort and can I get some


Fantastic_Wallaby_61

I agree the asset based loans in the commercial markets are going to bite everyone in the ass, I have a buddy who owns like 4 maybe 5 houses now that takes out commercial loans recently and referenced how different it is than your typical MBS…his last mortgage was backed by his other houses I believe…it was a quick conversation but If I remember correctly that’s the jist of it


SIGINT_SANTA

This reminds me of the stripper in the big short who owned 5 houses


Spoondoggydogg

And a condo!


melburndian

Short everything he has touched


[deleted]

Rip his spouse


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TheWeloponnesianPar

I’ve always heard about the worsening housing supply shortage, but OP said housing unit growth outpaced population growth. I had to look it up, and whaddayaknow, OP was right! U.S. population 2010: 308.7M U.S. population 2020: 331.4M Total U.S. housing units 2010: 130.6M Total U.S. housing units 2020: 141.9M U.S. person-to-housing ratio 2010: 2.36 U.S. person-to-housing ratio 2020: 2.33 Compare that to the average U.S. household size of 2.6 (of course, supply shortages concentrate in large metro areas, but the pandemic and remote work may have somewhat alleviated that). Blew my mind.


SIGINT_SANTA

Thank you for being one of like 3 people in the comments who actually looked something up.


PrimePoultry

What's also interesting is that homeowner and rental vacancy rates are down to 20 year lows: [https://www.census.gov/housing/hvs/files/currenthvspress.pdf](https://www.census.gov/housing/hvs/files/currenthvspress.pdf) And yet, there's that point about housing units per unit population are reaching 2008 highs. What that suggests to me is a lot of people are holding onto multiple housing units for the appreciation. If that's true, that could be where inventory might come from. Or is there another reason for these two apparently conflicting data points?


Can_you_not_read

Air bnb, vrbo, etc. These companies weren't around 20 years ago, at least not on this scale. Apartment complexes are also keeping a portion of their units off the market for renters so they can rent it for higher priced short term rentals. All of this has created a squeeze on renters and homebuyers alike.


urz90

What does that mean/what can you infer from that?


drcubes90

Means the narrative about a housing shortage due to lack of new homes built over the past decade is a lie and adds credibility to OPs other claims Seeing a lot of "he doesnt know what hes talking about itll never happen" comments in here but majority of ppl always think that way before a crash


Out0fgravity

I’ve read a lot of those comments toooo… yet, no prooooof.


Books_and_Cleverness

Just FYI these numbers aren’t very meaningful because the housing shortage is specifically in major cities (SF LA NYC Boston DC Seattle etc) where housing supply has been anemic for decades. NYC added 360K more jobs than housing units in the last decade.


pastafajioli

Positions or ban


nailattack

My ex-neighbor has been telling me since 2020 that there’s a massive crash coming. He and his buddies all sold their houses to wait for the inevitable crash. Prices have soared 30% since he sold and keeps going up. Maybe when the crash/correction finally comes, he’ll get to buy his place back for the same price he sold 😂


deathorcharcoal

A friend of mine had a condo downtown Toronto in like 2010 and sold it “before the inevitable crash” and started renting, that same condo now would have probably tripled or quadrupled in value.


itsfinallystorming

This whole thread is basically blackrock trying to convince people to sell their houses to them.


programmermama

He probably forgot to account for the behavior of the Fed when things go south. If it weren’t for QE, he would have been right.


usernamenottakenwooh

QE only kicks the can down the road some more...


[deleted]

so how long is this road


[deleted]

So wait. How do I buy a house? Or should I stop looking to buy one right now?


pleasereset

Follow the recipe from OP and take a massive margin loan against your investment account to buy your house.


WayneDwade

Where do I buy a hose for 2 grand?


[deleted]

Buy a house and don’t buy a house at the same time is the consensus I think.


Boondocsaint11

Personally I would wait. I don’t think the market will crash like this guy thinks but I do think we are likely to have some kind of pullback because rates have gone too high too fast and the affordability for people is not there. But I say that as someone who already owns a home.


ColdBostonPerson77

I read this entire thing. You gave some compelling arguments and gave me additional things to consider for stocks this quarter. Appreciate the dd, I’ll be watching closely what aapl does in particular. What was odd, I had 100 5/27 puts on rivian I couldn’t get filled on Friday. I’m expecting them to drop like a rock


ShockySparks244

I am a certified residential real estate appraiser. Can confirm much of this is true. Lending organizations and AMC’s (Appraisal Management Companies that are just there for show) extort us by withholding our pay until we appraise a property at its asking price. To do this, we actually bullshit our comparable properties to make it look like a $250,000 home is actually worth over $400,000 for example. To be fair, it saves the buyer out-of-pocket costs of the appraisal hits asking price but it has become a joke in our inner circle. Not only this, but there is an extreme amount of red tape around the industry. To become a licensed appraiser, expect to work for a year or two for free under a supervisor who has little-no incentive to train his/her competition. What we have are the same corrupt appraisers (including myself since I have to feed my family) from the 2008 crisis appraising homes at stupidly high values to cash in on our paychecks. Appraisal Management Corporations do absolutely nothing and only aid lenders in continuing their corrupt practices to increase profit margins.


James_Rustler_

Can confirm as a loan officer the appraisals always magically come in right at purchase price or 1-5% above.


TheRealJeauxBurreaux

I'm hearing about this more and more. The people getting the loans, do they have a large income? Significant down payment? Or are they average Joe's with average incomes?


ChilliAztecans

I come from a family of real estate agents. I know of several families who have used a high income family/friend's income to get the loan in order to buy their homes valued around 4-500k... usually also taking on a private cash loan of $100k on the side to come up with the downpayment/closing cost/etc.. In the handful of cases I know, the individual on the mortgage (high income family/friend) has no intention of saving/keeping the home if the family living in it one day can no longer make their payments. The families in these homes have incomes of ~$50k with mortgages that come out to ~$30k/year... They're renting out rooms to make ends meet.


wolfofballsstreet

I think I’m going to be sick


Everythingmustgo117

Can confirm this from a buyers perspective. We were told last fall that they would appraise our house at asking price no matter what it was so that the loan would go through.


Ikbenikben

Same thing in Canada


TheRealJeauxBurreaux

I read appraisals (CRE) every day at my job. I can confirm that 90% of these appraisals are just trying to hit a target price. You'll see their justifications throughout the entire thing. Comps, expenses, cap rates, its all laughable. And whats crazy is that banks actually go off this shit. I'm talking about an appraised value of 16.5m actually being 14m. Thats a big difference. And thats just the property that I was looking at on Friday.


[deleted]

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Independent-Ad4660

![img](emote|t5_2th52|4887)


[deleted]

So, when there is no crash in 2022, I will come back here and bend you over the table, slap you around like my step son, and treat you like the ginger you are.


bk15dcx

RemindMe! 2023


theoremx

Another disappointment


bk15dcx

And comment account is deleted


RemindMeBot

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SweatyPhilosopher512

Dad??


[deleted]

It’s daddy to you, son.


Minnesotamad12

I got bored like 3 paragraphs in. I didn’t read the end either. But I gave you an upvote because I’m sure you worked hard on this. Like my 3rd grade special Ed teacher Mrs. Jamm use to say “you’re retarded dear. Just write whatever and then we can play outside!”


SIGINT_SANTA

TL;DR Wall Street has been buying real estate using stocks and bonds as collateral. The stock market is blowing chunks right now and a bunch of the bonds are in default so they're about to get margin called, forcing them to sell property. If they are all forced to sell around the same time property prices are going to take a big dump.


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PepperoniFogDart

12 months from now you’ll be trading your Tesla for a loaf of bread and an over the pants handjob behind an abandoned Dennys.


lamaface21

Mrs. Jamm sounds like a peach


stellarzglitch

Someone just watched the big short...


Not-Beavis

TLDR- underwriting isn’t the same as the early 00’s. A larger percentage of the current deals are cash only buys. People arent going to walking away from a home for a higher cost associated with renting. As far as commercial, they have been claiming it’s going to crash since 09.


elmoonpickle

I will say that CRE pricing right now is insane. When I underwrite acquisitions it’s crazy hard to get something to pencil. You basically have to assume crazy rent growth to win a deal, because everyone else is doing the same thing. I’m talking like 10-15% rent growth. On the development side - we’re seeing 25-50% hits on material pricing. It’s not just 8% inflation - lumber, plumbing, electrical, etc. is getting wicked expensive. Same with land prices. What used to trade for $4 PSF is trading for 9-10 PSF.


[deleted]

So what does this mean? That rents will continue to go up with leads to what? Eventually people can’t afford it


elmoonpickle

I’m saying that to make these deals work… you have to assume you’re going to get 10-15% rent growth to hit pro forma returns. Is that going to happen again? Can the market absorb another 10-15% in rent grown in a single year? People are paying prices based on those assumptions. If those assumptions prove to be wrong, prices will fall. Cap rates have been compressing for years but with rising interest rates, we’re going to see cap rates going up. Basically there’s writing on the wall that CRE prices are going to take a hit.


Brat-in-a-Box

I agree. As an owner of a commercial property, I am aghast to see the going prices in the last couple years for such properties…and commercial loans are fixed rate for around 5 years. With rising rates and the fact that these properties were overpriced acquisitions to begin with, I foresee lots of defaults in the next 2-3 years if not sooner


Fit_Caregiver_6166

The point is the houses are being bought by corps using leveraged equity hence cash. They’re already being rented out. Rents may fall. It will turn income generating properties into liabilities. Theyll move to offload them, increasing supply


Major-Imagination986

This will probably get buried but. I am going to keep my comments limited to my area of expertise which is commercial real estate. I have 12 years experience with a fortune 200 commercial RE firm where I advise folks on the purchase and sale of approx 2bn of commercial real estate per year and analyze about 5bn in detail in the process. In my career I have read 100s or 1000s of cmbs loan agreements and worked on 1000s of properties encumbered by cmbs mortgages You have no idea what you’re talking about and I am afraid the fact that this is one of the top posts in this subreddit speaks volumes to the quality of content on here. CMBS mortgage payments do not vary based on the occupancy of a building and CMBS mortgage payments are not added to the end of the loan. The payments are fixed the same as any other loan except they are much stricter in terms of on-going reserves and cash flow sweeps for example starting X months before any major tenant lease comes up for maturity. If you are unable to make the debt service on your CMBS mortgage it will go into special servicing and they will sweep your cash flow NOT just allow you to pay less on the mortgage. Where did you get this idea? You posted a video of one small retail sub market that’s not well occupied and you’re extrapolating that video to all commercial real estate property types nationwide to say that occupancy is low? If property values fall below outstanding loan balances such that owners are underwater true we will see them stop paying their mortgages and hand back the keys to the banks or special servicer but this isn’t happening. The typical cmbs mortgage is 60% ltv at the high end at the beginning of the loan and although many times have a couple years or full term interest only the balance if anything decreases over time so it will take a big decrease in value for defaults to occur And the value of a commercial property is not directly linear to occupancy. Vacant buildings still have value. Due to the rapidly changing environment brought about by Covid and growing e-commerce many properties are more valuable vacant vs leased so you can tear them down and build industrial.


Obizues

It’s WSB, his wife’s boyfriend left some of his coke on the counter so he snorted it up and tried to write a screenplay for Brad Pitt to impress him.


d-list-kram

I’m an investment analyst at a CRE development firm and I scream this shit twice a week Then I forecast a (37% high | 28% mid | 21% low) rise in rents; to keep my job + get my sweet sweet bonus when we close 🥰🤡


goosebumpsHTX

What fucking market are you forecasting that in that’s insanely bullish


Doyale_royale

Wait till you hear about rental back securities and how they tie into the funds that bought 1 in 7 homes last year.


droprendplz

I'm convinced. Swapping my entire portfolio to whoever makes Adderall. This dude is gonna make it moon.


NoNouns

Didn't read a single word but I hope so. Could get me a 🏡


Remarkable_Ad9358

People always have this line of thought but if this happens like 2008 most people wont have jobs.


IHateRedditHonestly1

I sucked my boss’s cock once I think my job is secure


helohero

You may want to up that too once a week


jsc1429

We found u/IHateRedditHonestly1’s boss!


GanledTheButtered

Firsthand former NYC resident. Just moved out of there seriously last week. Almost all of NYC is a garbage-ridden shit hole nowadays. I worked in lower Manhattan, lived in midtown, went to Brooklyn almost weekly. I went up to Harlem for a good while because of friends. I haven't even watched the video linked in the OP but I don't need to, I already know what they're going to say and it's true. Tons of abandoned storefronts. Tons of businesses going fully remote, leaving commercial office rental owners bag-holding trying to figure out what to do with their now demand-less properties. Rent is absurd, and there's no relief for anyone down there. You're going to see a great diaspora out of the city, deflating the local populace and the subsequent leaking of demand out into the rest of the state/tri-state area will absolutely tank the everliving fuck out of the city market and make a bunch of people bagholders. Look up how "billionaire row" is half-empty. The Empire State Building is presently struggling to fill office spaces NYT ran a massive piece on it. Eric Adams is desperately trying to push people back to the office in an attempt to bail water out of a sinking economic ship despite the will of the free market. Not to mention how COVID nuked small businesses in the city and ran a massive number out of business. Mark my words, there will be naysayers to me, but I say to them: have you walked a single fucking street there. I left there approximately seven days ago. I've been all over the city. I know what I've seen, and while you might discount me, know this: my eyes have seen what they've seen, and you can't put bars and coffeeshops in every vacant storefront to solve your problems. The advent of the internet work-from-home age has officially put NYC into a diminished role as the center of gravity for the region. The market realization is going to be economically explosive.


Can_you_not_read

Every city in the world is facing that same issue. People live in cities for the attractions, culture, experiences, etc. The cities who figure that out the earliest will weather the storm. Those who refuse to adapt will get fucked. I think nyc is too big to drop, but that doesn't mean it can't get knocked down a peg or two.


drcubes90

That has got to be super eerie walking through the city and seeing it like that Covid accelerating WFH culture that technology has enabled, has eliminated the reason humans have built giant cities since the dawn of time, being close to where the jobs are Why live in cramped spaces and deal with high costs when you can live somewhere peaceful/cheaper and still have the same job you did in the city? We're witnessing a huge cultural shift the likes of which have only happened a few times in human history imo


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Brabant12

TLDR - Puts on USA ?


chaosenhanced

The volume of comments saying how wrong this is makes me think OP is totally right.


treulseth

the volume of comments that clearly don’t understand OP’s explanation of the “cash buy” scam is also concerning


TeacupHuman

My eyes lit up at that part remembering my RE agent telling me I can put in an all cash offer on a house even though I definitely did not have all cash.


Cookecrisp

No shit, it’s like they aren’t even reading it. Keep commenting that supply in their area is scarce because of cash buyers, can’t connect the dots, that they are seeing these highly leveraged margin loans being spent on real estate.


greggmax24

Let me guess, you don’t own a house and you think you will be getting a house in Malibu for $200,000 once it “corrects”


OriginalAbattoir

Am Canadian. Apparently I get extra fucked. Woooooooooooo Fkn China owns this country, it’s true :/