Off-Topic Stock Market & Crypto Discussion

[SpikeUM]

The longer this takes the less likely we see a soft landing

August job openings top 9.6 million, more than expected as labor market remains strong

www.cnbc.com

 

[SpikeUM]

And still so much more in the pipeline . Interestingly, one of the few new luxury condo buildings (as opposed to rental) went up down the street from me in the last year or so and has one unit left.

There is still a huge shortage nationwide of housing, so the problems are generally localized in rental residential due to overbuilding. Also, the upper end is still strong, because of so many wealthy individuals moving to the Sunbelt.

 

[mr.h]

08:55		USD	Redbook Index (YoY)(Sep 29)		3.5%	-	-	3.8%
10:00		USD	IBD/TIPP Economic Optimism (MoM)(Oct)		36.3	-1.87	41.6	43.2
10:00		USD	JOLTS Job Openings(Aug)		9.61M	1.84	8.8M	8.92M

YoY same store sales down slightly
economic optimism down
Job openings have increased….more hikes?
bond sell off scaring mkt.

 

[Fluffhead]

There is still a huge shortage nationwide of housing, so the problems are generally localized in rental residential due to overbuilding. Also, the upper end is still strong, because of so many wealthy individuals moving to the Sunbelt.

What was interesting is local to Atlanta (and perhaps elsewhere), you used to see a natural life cycle where people would move out of their houses in Buckhead and into a condo in Buckhead once they got older. Since the pandemic that pretty much stopped. People wanted the space even if they had to still maintain it. That may be trending back the other way again. That was another bottleneck on housing inventory in town.

 

[JD08]

What was interesting is local to Atlanta (and perhaps elsewhere), you used to see a natural life cycle where people would move out of their houses in Buckhead and into a condo in Buckhead once they got older. Since the pandemic that pretty much stopped. People wanted the space even if they had to still maintain it. That may be trending back the other way again. That was another bottleneck on housing inventory in town.

Look at NYC. People used to pay a fortune for a shoebox because they were hardly ever home. That wasn't quite as attractive once the pandemic hit.

 

[TheEye]

We are talking a little apples and oranges; rent growth has definitely slowed down or stopped, depending on the location, but they are still much higher than a few years ago.

I did not say rent lowered. I said it will likely lower in a couple of months because vacancies are higher than they have been in a long time.

 

[SpikeUM]

What was interesting is local to Atlanta (and perhaps elsewhere), you used to see a natural life cycle where people would move out of their houses in Buckhead and into a condo in Buckhead once they got older. Since the pandemic that pretty much stopped. People wanted the space even if they had to still maintain it. That may be trending back the other way again. That was another bottleneck on housing inventory in town.

Atlanta is one of the overbuilt markets in RR.

 

[SpikeUM]

What was interesting is local to Atlanta (and perhaps elsewhere), you used to see a natural life cycle where people would move out of their houses in Buckhead and into a condo in Buckhead once they got older. Since the pandemic that pretty much stopped. People wanted the space even if they had to still maintain it. That may be trending back the other way again. That was another bottleneck on housing inventory in town.

It could also be mortgage related - if you have a home with a cheap mortgage, do you want to downsize to a condo with a much higher rate mortgage.

 

[TheEye]

What happens if multi home owners start earning less in rent and more with property equity reinvested somewhere else?

 

[SpikeUM]

What happens if multi home owners start earning less in rent and more with property equity reinvested somewhere else?

Sorry, please clarify.

 

[SpikeUM]

From today's WSJ:

Bond Selloff Threatens Hopes for Economy’s Soft Landing​

A surge in long-term interest rates is sending worrying economic signals.

The yield on the 10-year Treasury note exceeded 4.8% for the first time since 2007, the latest high for rising borrowing costs that, if sustained, could meaningfully slow the U.S. and global economies over the next year. WSJ’s Nick Timiraos reports that the likeliest causes for the recent climb appear to be expectations about better U.S. growth and concerns that huge federal deficits are pressuring investors’ capacity to absorb so much debt.

 

[TheEye]

Sorry, please clarify.

We saw a big buy up of multiple homes to rent out by both corporations and private individual investors. If the equity of those homes is better used in other places, like bonds and CDs, what happens if there is a mass liquidation by owners of multiple homes? Do home prices fall despite no new construction? Or does the drop in price last temporarily being offset by high demand?

 

[SpikeUM]

We saw a big buy up of multiple homes to rent out by both corporations and private individual investors. If the equity of those homes is better used in other places, like bonds and CDs, what happens if there is a mass liquidation by owners of multiple homes? Do home prices fall despite no new construction? Or does the drop in price last temporarily being offset by high demand?

Really tough question because there is no one simple answer. Medium and long term, there is a huge shortage of housing, so whatever correction there is will likely be relatively brief. For example, almost no new projects have started this year, so with the continued growth in the population, it likely means that real estate will go up in 25 and beyond.

Short term, there is likely to be a drop in real estate, but a lot of individual homeowners dont want to sell and lose their cheap mortgage, and also remember that a lot of the rental homes/multi family is owned by folks with deep pockets who dont have to sell, so my best guess is we are not looking at a real estate crash, unless we get into a great recession type scenario.

 

[90scane]

I'll jump into this one. I'm actually liquidating and have been for the better part of 20 months now but for other reasons.


Let's just do some simple math for you on WHY the average investor won't be liquidating for "better" returns on CDs and Bonds.
Example of one house:
Purchased in 2021 at $165,000 with 25% down
$124,000 loan at 5% commercial 30 yr fixed loan
Cashflow of $600/month x 12 = $7200
Principal paydown of around $150/month x $1800
Appreciation: the home is worth around $265,000 = $100,000 and homes historically beat inflation (assume 5% until more supply is built)

Exit cost rough math:
$265,000 * 93% (average closing cost is around 6-7%) = $246,450 -122000 debt = 124,450 CASH - 41000 downpayment = 83,450 profit before tax
62500 profit after taxes (roughly 25%)

Investing that in CDs, Bonds...for 6% with a return of $3750 compared to $9000 (cash flow and principal paydown) just doesn't seem logical to most.


I'll play devils for you. 1M single-family units are dropped onto the market that were rentals. What happens to rent inflation when those units don't exist?

 

[mr.h]

07:30		USD	Challenger Job Cuts(Sep)		47.457K	-	-	75.151K
08:30		USD	Continuing Jobless Claims(Sep 22)		1.664M	-0.50	1.675M	1.665M
08:30		USD	Goods and Services Trade Balance(Aug)		$-58.3B	5.58	$-62.3B	$-64.7B
08:30		USD	Goods Trade Balance(Aug)		$-84.5B	-	-	$-84.3B
08:30		USD	Initial Jobless Claims(Sep 29)		207K	-0.42	210K	205K
08:30		USD	Initial Jobless Claims 4-week average(Sep 29)		208.75K	-	-	211.25K

Payroll numbers and the unemployment rate, tomorrow, will be strong.

 

[SpikeUM]

Really tough question because there is no one simple answer. Medium and long term, there is a huge shortage of housing, so whatever correction there is will likely be relatively brief. For example, almost no new projects have started this year, so with the continued growth in the population, it likely means that real estate will go up in 25 and beyond.

Short term, there is likely to be a drop in real estate, but a lot of individual homeowners dont want to sell and lose their cheap mortgage, and also remember that a lot of the rental homes/multi family is owned by folks with deep pockets who dont have to sell, so my best guess is we are not looking at a real estate crash, unless we get into a great recession type scenario.

@TheEye

To add to my comment, the bigger macro issue is the banks; they already have weaker balance sheets, and there are are a lot of office space loans that will likely go south, plus multi family loans that will be maturing that will also be under pressure. All of that may/will cascade down through the economy and real estate.

 

[mr.h]

Really tough question because there is no one simple answer. Medium and long term, there is a huge shortage of housing, so whatever correction there is will likely be relatively brief. For example, almost no new projects have started this year, so with the continued growth in the population, it likely means that real estate will go up in 25 and beyond.

Short term, there is likely to be a drop in real estate, but a lot of individual homeowners dont want to sell and lose their cheap mortgage, and also remember that a lot of the rental homes/multi family is owned by folks with deep pockets who dont have to sell, so my best guess is we are not looking at a real estate crash, unless we get into a great recession type scenario.

I know some families that are not selling because of their low interest rates.

 

[mr.h]

We saw a big buy up of multiple homes to rent out by both corporations and private individual investors. If the equity of those homes is better used in other places, like bonds and CDs, what happens if there is a mass liquidation by owners of multiple homes? Do home prices fall despite no new construction? Or does the drop in price last temporarily being offset by high demand?

For you risk takers. You can buy options of TLT or TBT, that follow bond yields.

 

[mr.h]

Nice little comeback..it looks like the Fed won’t raise, but will keep rates high.
Tomorrows Payroll numbers will remain high and Unemployment low…

 

[561caneforever]

Nice little comeback..it looks like the Fed won’t raise, but will keep rates high.
Tomorrows Payroll numbers will remain high and Unemployment low…

That would not be good for the bond or stock market.