forums

Off-Topic Stock Market & Crypto Discussion

08:55USDRedbook Index (YoY)(Sep 29)3.5% --3.8%
10:00USDIBD/TIPP Economic Optimism (MoM)(Oct)36.3-1.8741.643.2
10:00USDJOLTS Job Openings(Aug)9.61M1.848.8M8.92M
YoY same store sales down slightly
economic optimism down
Job openings have increased….more hikes?
bond sell off scaring mkt.
 
Advertisement
SpikeUM said:
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.
Click to expand...
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.
 
wspcane said:
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.
Click to expand...
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.
 
SpikeUM said:
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.
Click to expand...
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.
 
wspcane said:
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.
Click to expand...

Atlanta is one of the overbuilt markets in RR.
 
wspcane said:
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.
Click to expand...

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.
 
What happens if multi home owners start earning less in rent and more with property equity reinvested somewhere else?
 
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.
 
Advertisement
SpikeUM said:
Sorry, please clarify.
Click to expand...
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?
 
TheEye said:
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?
Click to expand...

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'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?
 
07:30USDChallenger Job Cuts(Sep) 47.457K--75.151K
08:30USDContinuing Jobless Claims(Sep 22) 1.664M-0.501.675M1.665M
08:30USDGoods and Services Trade Balance(Aug) $-58.3B5.58$-62.3B$-64.7B
08:30USDGoods Trade Balance(Aug) $-84.5B--$-84.3B
08:30USDInitial Jobless Claims(Sep 29) 207K-0.42210K205K
08:30USDInitial Jobless Claims 4-week average(Sep 29) 208.75K--211.25K
Payroll numbers and the unemployment rate, tomorrow, will be strong.
 
SpikeUM said:
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.
Click to expand...

@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.
 
SpikeUM said:
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.
Click to expand...
I know some families that are not selling because of their low interest rates.
 
TheEye said:
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?
Click to expand...
For you risk takers. You can buy options of TLT or TBT, that follow bond yields.
 
Advertisement
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…
 
08:30USDAverage Hourly Earnings (MoM)(Sep) TRADE NOW0.2% -0.980.3% 0.2%
08:30USDAverage Hourly Earnings (YoY)(Sep) TRADE NOW4.2% -0.684.3% 4.3%
08:30USDAverage Weekly Hours(Sep) 34.40.0034.434.4
08:30USDLabor Force Participation Rate(Sep) 62.8% --62.8%
08:30USDNonfarm Payrolls(Sep) TRADE NOW336K2.66170K227K
08:30USDU6 Underemployment Rate(Sep) 7% --7.1%
08:30USDUnemployment Rate(Sep) TRADE NOW3.8% 0.623.7% 3.8%
Non farm payrolls jumps to 336K
Hourly earnings down fractionally
good news = bad news..
 
mr.h said:
08:30USDAverage Hourly Earnings (MoM)(Sep) TRADE NOW0.2% -0.980.3%0.2%
08:30USDAverage Hourly Earnings (YoY)(Sep) TRADE NOW4.2% -0.684.3%4.3%
08:30USDAverage Weekly Hours(Sep)34.40.0034.434.4
08:30USDLabor Force Participation Rate(Sep)62.8% --62.8%
08:30USDNonfarm Payrolls(Sep) TRADE NOW336K2.66170K227K
08:30USDU6 Underemployment Rate(Sep)7% --7.1%
08:30USDUnemployment Rate(Sep) TRADE NOW3.8% 0.623.7%3.8%
Non farm payrolls jumps to 336K
Hourly earnings down fractionally
good news = bad news..
Click to expand...

Its not bad, its atrocious and concerning, am surprised the market hasnt cratered. Its unadvisable to react to one or two numbers, but the overall picture is increasingly stagflation and a hard landing.
 
Back
Top