Housing market's gonna crash

sucks2beme wrote: »

If buyers can't afford it, the thing will sit on the market.
And the seller doesn't want to eat the loss. So then what?
There was about 8 years of that limbo around Memphis.
Are we ready for something like that to happen everywhere?
Dallas market pre-2008 didn't go crazy. This time, it was a
hotbed of crazy price hikes. I don't think they will be as lucky
this time around. And let's face it, Los Vegas is going to be
another blood bath.

It's looking like we're going to find out what happens.

Saw a Facebook post this morning from a guy on the local town Facebook page lamenting that he waited too long to sell and now he's afraid that not only will he not be able to sell at a price that will cover his outstanding mortgage but that he won't be able to get a new mortgage in the place that he's looking to relocate too.

He's "new to town" having coming in from Philadelphia on the "Great Flight" in the "Summer of Peace" in 2020. He paid about $435K for house that was on the market for around $285K. He was the winner of one of the first bidding wars in town. He's only been paying for about 4.5 years on that mortgage so he's still paying interest. His house valuation is down to $360K to $385K depending on which website you look at. If he put 10% down on the house and he's barely knocking on the principle, he's likely still around $380K of principle left. So his fear is kinda real and valid.

A local real estate broker echoed the same sentiments that many clients are having. He also mentioned that inventory nationally is about half of what it was at the peak in 2016 but in NJ it's extremely low. I looked at Zillow this morning and there were 0 houses on the market in my town.

The broker guy also mention that around 40% of the houses on the market were foreclosures from folks who bought at the absurdly high prices in 2020 and with the valuation contractions last year, the under water mortgages aren't what's killing them, though. It's revaluations that insurance companies are doing and dropping policies because they were written for a $300K house that will cost $450K to rebuild now. So the risk is outside of acceptable range and they are cutting policies left and right. No home owners, you're likely to lose your mortgage. So the majority of foreclosures on the market right now, at least in my area, are breach of contract foreclosures over insurability.

So inventory is going up, slowly but, the buyer list is shrinking.

That's mostly because like the one guy was worried about...you could be stuck with a bad mortgage foreclosure on your credit history with wiped out savings and that means there's a good chance you can't secure funding for a new house in another area of the country because your savings are non-existent and the penalized interest rates would be a non-starter. Even if you don't have the foreclosure, the ability to secure financing is difficult to put it nicely.

Anyway, long story short, broker guy said we're clearly heading for a perfect storm in the real estate market and the current administration had nothing to do with it. This has been building since 2022 when they started talking about hiking rates and lying about inflation numbers.

There's going to be a glut of available inventory at high values with nobody to buy them because of the astronomical interest rates. That's going to make value plummet and all the lenders with foreclosed assets on the books that are worth less than what they were underwritten for is going to cause massive losses and another "too big to fail moment".

Maybe he was being a bit overly pessimistic but this has been a slow burn for a number of years now. It's been slowed by the book cooking the fed has been doing with interest rates but it was never going to fend it off completely. Not when we're spending money like it's going out of style, racking up debt and printing dollars like we just got new ink cartridges in the printers. All they really did was prolong it until it became the next guy's problem.

Anyway, we're heading somewhere and it ain't going to be pretty. Hell, it's kinda ugly right now.

And the BRICS stuff? Russia's debacle in Ukraine has pretty much sealed the deal on BRICS being any kind of power player in the global economy. It had little if anything to do with the devaluation of the dollar and subsequent inflation. It was our own government who did that to us.