When do you think housing prices will drop (or never)?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Supply is still far out stripped by demand. It doesn’t help that current owners bought or refinanced at the lowest interest rates in American history. That makes people hold on to properties instead of trading up or liquidating.

I refinanced $750K at 2.75% in 2021. We might leave DC, but I ain’t ever selling this property at that rate. It’s basically free money and I can find a tenant to pay off this mortgage. If we want to buy another home, we will just wait until we have another downpayment and use leverage.

I really don’t see things going, except in maybe 2nd home markets and Florida (where prices basically doubled).

Lol love replies like these when the reality is that prices HAVE ALREADY fallen and are projected to continue to fall all through next year at a minimum, because inventory is rising. Inventory is where supply meets demand. There are fewer houses being listed but WAY fewer buyers.

https://www.redfin.com/news/housing-market-update-homes-linger-on-market/

The linked article says that in Washington DC, prices fell 2% over last year, and that is the first time prices have fallen since 2016. That isn't even a dent in prices given how much they went up over the last 2+ years (and were going up steadily before that). I'm all for home prices coming down. I think it needs to happen. But what we've seen isn't all that much help. Even another 10% still has prices way higher than pre-pandemic. And part of it is people like PP who are not selling because they could never get a deal like they have.

Prices have fallen 2% year over year. That means the insane spike that happened this spring has been erased. We are now at prices lower than November 2021. I assume you do not understand how monetary policy works and have not been watching the financial news if you think that the Fed’s rate hikes have had their full effect on the market.

The fact that prices went up so quickly in such a short period of time is exactly why they can go down quickly, too. Even a 20% drop means everyone except those who bought in 2021-22 will be in great shape. It would be much more sticky if the incline was long and gradual.

So, yes, prices are down slightly y/y. That was my point exactly. You are talking about a crash, but there is no evidence that a crash is imminent. Frankly, I wish it were because prices need to come down, but there is no reason to believe it will happen absent a pretty severe recession, and all signs right now are pointing to a soft landing. For prices to get back even to pre-pandemic levels it would take much more aggressive fed actions than we've seen or are likely to see.

And for the people saying that they'd never pay X for a house because they got a great deal, I get it, I feel the same way, but that is a historical anomaly. Houses are still affordable in this area compared to savings and income, so people are willing to spend more on housing. If anything, we will see discretionary spending reduced -- people will buy the Volt instead of the Tesla or whatever -- but I don't think we'll see it for housing. But I guess we will see.

No one said anything about a “crash” or prices being back to prepandemic levels. The fact is, Powell himself has stated that house prices are disconnected from fundamentals and that we are getting ready to see the other side of the “housing bubble” (yes he used that phrase). There are so, so many signs that prices are dropping (including the actual data which unambiguously shows prices declining). Do you understand that during the last bubble, prices slowly declined from late 2005 to 2012? Seven years of declines. I’m not sure why you’re expecting everything to drop overnight. That said, prices are declining at a pace even more rapid than they did during the last bubble, so…

[Anonymous]

Anonymous wrote:We bought a 1.3mil house in close in McLean in early 2019, we refinanced at 2.75 and our mortgage is $5400. Per Redfin our home is now worth 1.6mil, I am not convinced at the appreciation. I think it will go down at least 100k.

Today, If someone were to buy 1.3 mil house at 6.4% at 25% down the payment comes to around $7500.00 and at 1.6m monthly payment is around $9200. I am not convinced that there are lots of people out there with the capacity to pay between 7500 -9500 a month in mortgage payment. I think this pool is limited and will shrink further due to rising interest rates.

FWIW, our HHI is 750k and I would never pay mortgage above $6000/month. Maybe I am an outlier but numbers don’t support the argument that prices will hold, I think they will come down 10% at least even in close in areas and that’s okay because the increase was beyond crazy.

And at the other end of the market, we needed a mortgage under $2000 and bought a very small older place to get that. With interest rates that literally isn't possible right now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We bought a 1.3mil house in close in McLean in early 2019, we refinanced at 2.75 and our mortgage is $5400. Per Redfin our home is now worth 1.6mil, I am not convinced at the appreciation. I think it will go down at least 100k.

Today, If someone were to buy 1.3 mil house at 6.4% at 25% down the payment comes to around $7500.00 and at 1.6m monthly payment is around $9200. I am not convinced that there are lots of people out there with the capacity to pay between 7500 -9500 a month in mortgage payment. I think this pool is limited and will shrink further due to rising interest rates.

FWIW, our HHI is 750k and I would never pay mortgage above $6000/month. Maybe I am an outlier but numbers don’t support the argument that prices will hold, I think they will come down 10% at least even in close in areas and that’s okay because the increase was beyond crazy.

And at the other end of the market, we needed a mortgage under $2000 and bought a very small older place to get that. With interest rates that literally isn't possible right now.

PS to be clear I think two trends we are seeing will go further.
1) Prices will decline somewhat. It's happening already. It's going to make it hard for people to move up from their current homes or sell.

2) More properties will be bought as investments and rented out - my neighborhood is seeing this already, most 2021 sales are now AirBnBs. This makes it even harder for low and middle income people to buy by decreasing supply and keeping prices higher than they would be in a purely residential market.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We bought a 1.3mil house in close in McLean in early 2019, we refinanced at 2.75 and our mortgage is $5400. Per Redfin our home is now worth 1.6mil, I am not convinced at the appreciation. I think it will go down at least 100k.

Today, If someone were to buy 1.3 mil house at 6.4% at 25% down the payment comes to around $7500.00 and at 1.6m monthly payment is around $9200. I am not convinced that there are lots of people out there with the capacity to pay between 7500 -9500 a month in mortgage payment. I think this pool is limited and will shrink further due to rising interest rates.

FWIW, our HHI is 750k and I would never pay mortgage above $6000/month. Maybe I am an outlier but numbers don’t support the argument that prices will hold, I think they will come down 10% at least even in close in areas and that’s okay because the increase was beyond crazy.

The current data suggests otherwise. Case Schiller Index for the DC area shows prices have barely nudged down since the peak and seem to be stabilizing. That's consistent with what I'm seeing through more recent sale data in my neighborhood. Of course the Case Schiller data is lagged (last from October) but rates were already pretty high at that point. I think the problem is inventory. The houses right now are too expensive, yes, but there are so few of them. Only people who really want to buy are buying, and they have very few options. Maybe this will change at some point? I don't know. I'm not someone who thinks prices can't go down at all, or can't go down significantly...I just don't see an immediate path to a large drop in prices.

It's realtor talk to say that home values have stabilized. It's way to soon to make that call and there's no evidence to support it.

[Anonymous]

Anonymous wrote:We bought a 1.3mil house in close in McLean in early 2019, we refinanced at 2.75 and our mortgage is $5400. Per Redfin our home is now worth 1.6mil, I am not convinced at the appreciation. I think it will go down at least 100k.

Today, If someone were to buy 1.3 mil house at 6.4% at 25% down the payment comes to around $7500.00 and at 1.6m monthly payment is around $9200. I am not convinced that there are lots of people out there with the capacity to pay between 7500 -9500 a month in mortgage payment. I think this pool is limited and will shrink further due to rising interest rates.

FWIW, our HHI is 750k and I would never pay mortgage above $6000/month. Maybe I am an outlier but numbers don’t support the argument that prices will hold, I think they will come down 10% at least even in close in areas and that’s okay because the increase was beyond crazy.

I agree. We’re in that position now. HHI of about $400 and can’t imagine paying more than $6,000 a month. Three years ago that would have bought us something nice but now we’re looking at $9,000 a month for something that needs a lot of work or is in a less desirable location. I can’t imagine spending $9000 at all, and certainly not on something I’m unhappy with.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We bought a 1.3mil house in close in McLean in early 2019, we refinanced at 2.75 and our mortgage is $5400. Per Redfin our home is now worth 1.6mil, I am not convinced at the appreciation. I think it will go down at least 100k.

Today, If someone were to buy 1.3 mil house at 6.4% at 25% down the payment comes to around $7500.00 and at 1.6m monthly payment is around $9200. I am not convinced that there are lots of people out there with the capacity to pay between 7500 -9500 a month in mortgage payment. I think this pool is limited and will shrink further due to rising interest rates.

FWIW, our HHI is 750k and I would never pay mortgage above $6000/month. Maybe I am an outlier but numbers don’t support the argument that prices will hold, I think they will come down 10% at least even in close in areas and that’s okay because the increase was beyond crazy.

And at the other end of the market, we needed a mortgage under $2000 and bought a very small older place to get that. With interest rates that literally isn't possible right now.

PS to be clear I think two trends we are seeing will go further.
1) Prices will decline somewhat. It's happening already. It's going to make it hard for people to move up from their current homes or sell.

2) More properties will be bought as investments and rented out - my neighborhood is seeing this already, most 2021 sales are now AirBnBs. This makes it even harder for low and middle income people to buy by decreasing supply and keeping prices higher than they would be in a purely residential market.

Ok, I’m all for a healthy debate but these are two flat out dumb takes.

1) Yes, prices are declining but this will make it easier for people to move up, unless you bought in 2021-2022 in which case you will be under water. The rest of homeowners will still be swimming in equity AND will be buying houses at more affordable prices. Right now, even people who own homes can’t afford the move-up home with prices and interest rates where they are. That’s why they’re so few listings - no one can sell because they can’t buy what they want. Prices coming down will make the market much more fluid.

2) Everyone knows investor purchases absolutely tanked after interest rates increased. Most investors (including large institutional investors) borrow money for leverage, which is why there were even more investor purchases during this bubble than the last bubble. https://therealdeal.com/2022/11/22/investor-home-purchases-plummet-30/amp/

As for AirBnB, there is a huge supply glut and occupancy rates are falling off a cliff because too many investors purchased properties. https://time.com/6223185/airbnbs-empty-short-term-rentals/

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Supply is still far out stripped by demand. It doesn’t help that current owners bought or refinanced at the lowest interest rates in American history. That makes people hold on to properties instead of trading up or liquidating.

I refinanced $750K at 2.75% in 2021. We might leave DC, but I ain’t ever selling this property at that rate. It’s basically free money and I can find a tenant to pay off this mortgage. If we want to buy another home, we will just wait until we have another downpayment and use leverage.

I really don’t see things going, except in maybe 2nd home markets and Florida (where prices basically doubled).

Lol love replies like these when the reality is that prices HAVE ALREADY fallen and are projected to continue to fall all through next year at a minimum, because inventory is rising. Inventory is where supply meets demand. There are fewer houses being listed but WAY fewer buyers.

https://www.redfin.com/news/housing-market-update-homes-linger-on-market/

The linked article says that in Washington DC, prices fell 2% over last year, and that is the first time prices have fallen since 2016. That isn't even a dent in prices given how much they went up over the last 2+ years (and were going up steadily before that). I'm all for home prices coming down. I think it needs to happen. But what we've seen isn't all that much help. Even another 10% still has prices way higher than pre-pandemic. And part of it is people like PP who are not selling because they could never get a deal like they have.

Prices have fallen 2% year over year. That means the insane spike that happened this spring has been erased. We are now at prices lower than November 2021. I assume you do not understand how monetary policy works and have not been watching the financial news if you think that the Fed’s rate hikes have had their full effect on the market.

The fact that prices went up so quickly in such a short period of time is exactly why they can go down quickly, too. Even a 20% drop means everyone except those who bought in 2021-22 will be in great shape. It would be much more sticky if the incline was long and gradual.

So, yes, prices are down slightly y/y. That was my point exactly. You are talking about a crash, but there is no evidence that a crash is imminent. Frankly, I wish it were because prices need to come down, but there is no reason to believe it will happen absent a pretty severe recession, and all signs right now are pointing to a soft landing. For prices to get back even to pre-pandemic levels it would take much more aggressive fed actions than we've seen or are likely to see.

And for the people saying that they'd never pay X for a house because they got a great deal, I get it, I feel the same way, but that is a historical anomaly. Houses are still affordable in this area compared to savings and income, so people are willing to spend more on housing. If anything, we will see discretionary spending reduced -- people will buy the Volt instead of the Tesla or whatever -- but I don't think we'll see it for housing. But I guess we will see.

No one said anything about a “crash” or prices being back to prepandemic levels. The fact is, Powell himself has stated that house prices are disconnected from fundamentals and that we are getting ready to see the other side of the “housing bubble” (yes he used that phrase). There are so, so many signs that prices are dropping (including the actual data which unambiguously shows prices declining). Do you understand that during the last bubble, prices slowly declined from late 2005 to 2012? Seven years of declines. I’m not sure why you’re expecting everything to drop overnight. That said, prices are declining at a pace even more rapid than they did during the last bubble, so…

Plenty of people in this thread are talking about a crash being imminent. Maybe that wasn't you -- obviously hard to tell on an anonymous message board. And plenty of people speculating that prices will go down 20+%. Neither of those seem remotely realistic. I'm not a realtor. Just a random house buyer.

As to Jay Powell, where did he say the bolded statement? That would surprise me coming from him.

As for prices dropping, I'm not impressed by a sub 2% y/y drop. If you posted the Redfin link upthread, the rest of the data is even less encouraging for those looking for deals on houses. And you cannot be serious suggesting that this is any way comparable to the GFC, if that's what you're saying. If you are saying that we'll see 7 years of price declines, I guess we'll see in 7 years, but I seriously doubt it. Employment is strong. The economy overall is very strong. People have a ton of equity around here. Savings are very high, especially for the top 10% of earners in this country. Inventory is very low and no reason to believe supply is on the way to push prices down further, at least not in this area.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Supply is still far out stripped by demand. It doesn’t help that current owners bought or refinanced at the lowest interest rates in American history. That makes people hold on to properties instead of trading up or liquidating.

I refinanced $750K at 2.75% in 2021. We might leave DC, but I ain’t ever selling this property at that rate. It’s basically free money and I can find a tenant to pay off this mortgage. If we want to buy another home, we will just wait until we have another downpayment and use leverage.

I really don’t see things going, except in maybe 2nd home markets and Florida (where prices basically doubled).

Lol love replies like these when the reality is that prices HAVE ALREADY fallen and are projected to continue to fall all through next year at a minimum, because inventory is rising. Inventory is where supply meets demand. There are fewer houses being listed but WAY fewer buyers.

https://www.redfin.com/news/housing-market-update-homes-linger-on-market/

The linked article says that in Washington DC, prices fell 2% over last year, and that is the first time prices have fallen since 2016. That isn't even a dent in prices given how much they went up over the last 2+ years (and were going up steadily before that). I'm all for home prices coming down. I think it needs to happen. But what we've seen isn't all that much help. Even another 10% still has prices way higher than pre-pandemic. And part of it is people like PP who are not selling because they could never get a deal like they have.

Prices have fallen 2% year over year. That means the insane spike that happened this spring has been erased. We are now at prices lower than November 2021. I assume you do not understand how monetary policy works and have not been watching the financial news if you think that the Fed’s rate hikes have had their full effect on the market.

The fact that prices went up so quickly in such a short period of time is exactly why they can go down quickly, too. Even a 20% drop means everyone except those who bought in 2021-22 will be in great shape. It would be much more sticky if the incline was long and gradual.

So, yes, prices are down slightly y/y. That was my point exactly. You are talking about a crash, but there is no evidence that a crash is imminent. Frankly, I wish it were because prices need to come down, but there is no reason to believe it will happen absent a pretty severe recession, and all signs right now are pointing to a soft landing. For prices to get back even to pre-pandemic levels it would take much more aggressive fed actions than we've seen or are likely to see.

And for the people saying that they'd never pay X for a house because they got a great deal, I get it, I feel the same way, but that is a historical anomaly. Houses are still affordable in this area compared to savings and income, so people are willing to spend more on housing. If anything, we will see discretionary spending reduced -- people will buy the Volt instead of the Tesla or whatever -- but I don't think we'll see it for housing. But I guess we will see.

No one said anything about a “crash” or prices being back to prepandemic levels. The fact is, Powell himself has stated that house prices are disconnected from fundamentals and that we are getting ready to see the other side of the “housing bubble” (yes he used that phrase). There are so, so many signs that prices are dropping (including the actual data which unambiguously shows prices declining). Do you understand that during the last bubble, prices slowly declined from late 2005 to 2012? Seven years of declines. I’m not sure why you’re expecting everything to drop overnight. That said, prices are declining at a pace even more rapid than they did during the last bubble, so…

Plenty of people in this thread are talking about a crash being imminent. Maybe that wasn't you -- obviously hard to tell on an anonymous message board. And plenty of people speculating that prices will go down 20+%. Neither of those seem remotely realistic. I'm not a realtor. Just a random house buyer.

As to Jay Powell, where did he say the bolded statement? That would surprise me coming from him.

As for prices dropping, I'm not impressed by a sub 2% y/y drop. If you posted the Redfin link upthread, the rest of the data is even less encouraging for those looking for deals on houses. And you cannot be serious suggesting that this is any way comparable to the GFC, if that's what you're saying. If you are saying that we'll see 7 years of price declines, I guess we'll see in 7 years, but I seriously doubt it. Employment is strong. The economy overall is very strong. People have a ton of equity around here. Savings are very high, especially for the top 10% of earners in this country. Inventory is very low and no reason to believe supply is on the way to push prices down further, at least not in this area.

There are many respected analysts forecasting 20% declines. Note that the only analysts who see prices being stable (or rising LOL) are those with a vested interest in house prices staying high. https://fortune.com/2023/01/05/housing-market-something-big-is-happening-home-prices-2023-2024-forecast-prediction/amp/

As for the Fed comments:

https://www.builderonline.com/money/economics/fed-chair-jerome-powell-says-u-s-housing-bubble-formed-during-pandemic_c

https://www.bloomberg.com/news/articles/2022-09-21/powell-warns-of-correction-in-once-red-hot-us-housing-market

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We bought a 1.3mil house in close in McLean in early 2019, we refinanced at 2.75 and our mortgage is $5400. Per Redfin our home is now worth 1.6mil, I am not convinced at the appreciation. I think it will go down at least 100k.

Today, If someone were to buy 1.3 mil house at 6.4% at 25% down the payment comes to around $7500.00 and at 1.6m monthly payment is around $9200. I am not convinced that there are lots of people out there with the capacity to pay between 7500 -9500 a month in mortgage payment. I think this pool is limited and will shrink further due to rising interest rates.

FWIW, our HHI is 750k and I would never pay mortgage above $6000/month. Maybe I am an outlier but numbers don’t support the argument that prices will hold, I think they will come down 10% at least even in close in areas and that’s okay because the increase was beyond crazy.

And at the other end of the market, we needed a mortgage under $2000 and bought a very small older place to get that. With interest rates that literally isn't possible right now.

PS to be clear I think two trends we are seeing will go further.
1) Prices will decline somewhat. It's happening already. It's going to make it hard for people to move up from their current homes or sell.

2) More properties will be bought as investments and rented out - my neighborhood is seeing this already, most 2021 sales are now AirBnBs. This makes it even harder for low and middle income people to buy by decreasing supply and keeping prices higher than they would be in a purely residential market.

This is happening because people don’t want to sell into this market and they think they can wait out high interest rates. As a result, the AirBnB market is saturated and owners aren’t seeing the returns they were during Covid. At some point the investors that bought rental property based on Covid income are going to have to sell.

https://www.wsj.com/articles/the-housing-slowdown-is-wreaking-havoc-on-the-short-term-rental-market-11670518837?reflink=integratedwebview_share

[Anonymous]

Anonymous wrote:I think they are already dropping and on a steady decline for the next 18-36 months.

If by decline you mean 5-10 percent in total, sure. I would not expect more. In fact prices will still go up in certain areas.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Supply is still far out stripped by demand. It doesn’t help that current owners bought or refinanced at the lowest interest rates in American history. That makes people hold on to properties instead of trading up or liquidating.

I refinanced $750K at 2.75% in 2021. We might leave DC, but I ain’t ever selling this property at that rate. It’s basically free money and I can find a tenant to pay off this mortgage. If we want to buy another home, we will just wait until we have another downpayment and use leverage.

I really don’t see things going, except in maybe 2nd home markets and Florida (where prices basically doubled).

Lol love replies like these when the reality is that prices HAVE ALREADY fallen and are projected to continue to fall all through next year at a minimum, because inventory is rising. Inventory is where supply meets demand. There are fewer houses being listed but WAY fewer buyers.

https://www.redfin.com/news/housing-market-update-homes-linger-on-market/

The linked article says that in Washington DC, prices fell 2% over last year, and that is the first time prices have fallen since 2016. That isn't even a dent in prices given how much they went up over the last 2+ years (and were going up steadily before that). I'm all for home prices coming down. I think it needs to happen. But what we've seen isn't all that much help. Even another 10% still has prices way higher than pre-pandemic. And part of it is people like PP who are not selling because they could never get a deal like they have.

Prices have fallen 2% year over year. That means the insane spike that happened this spring has been erased. We are now at prices lower than November 2021. I assume you do not understand how monetary policy works and have not been watching the financial news if you think that the Fed’s rate hikes have had their full effect on the market.

The fact that prices went up so quickly in such a short period of time is exactly why they can go down quickly, too. Even a 20% drop means everyone except those who bought in 2021-22 will be in great shape. It would be much more sticky if the incline was long and gradual.

So, yes, prices are down slightly y/y. That was my point exactly. You are talking about a crash, but there is no evidence that a crash is imminent. Frankly, I wish it were because prices need to come down, but there is no reason to believe it will happen absent a pretty severe recession, and all signs right now are pointing to a soft landing. For prices to get back even to pre-pandemic levels it would take much more aggressive fed actions than we've seen or are likely to see.

And for the people saying that they'd never pay X for a house because they got a great deal, I get it, I feel the same way, but that is a historical anomaly. Houses are still affordable in this area compared to savings and income, so people are willing to spend more on housing. If anything, we will see discretionary spending reduced -- people will buy the Volt instead of the Tesla or whatever -- but I don't think we'll see it for housing. But I guess we will see.

No one said anything about a “crash” or prices being back to prepandemic levels. The fact is, Powell himself has stated that house prices are disconnected from fundamentals and that we are getting ready to see the other side of the “housing bubble” (yes he used that phrase). There are so, so many signs that prices are dropping (including the actual data which unambiguously shows prices declining). Do you understand that during the last bubble, prices slowly declined from late 2005 to 2012? Seven years of declines. I’m not sure why you’re expecting everything to drop overnight. That said, prices are declining at a pace even more rapid than they did during the last bubble, so…

Plenty of people in this thread are talking about a crash being imminent. Maybe that wasn't you -- obviously hard to tell on an anonymous message board. And plenty of people speculating that prices will go down 20+%. Neither of those seem remotely realistic. I'm not a realtor. Just a random house buyer.

As to Jay Powell, where did he say the bolded statement? That would surprise me coming from him.

As for prices dropping, I'm not impressed by a sub 2% y/y drop. If you posted the Redfin link upthread, the rest of the data is even less encouraging for those looking for deals on houses. And you cannot be serious suggesting that this is any way comparable to the GFC, if that's what you're saying. If you are saying that we'll see 7 years of price declines, I guess we'll see in 7 years, but I seriously doubt it. Employment is strong. The economy overall is very strong. People have a ton of equity around here. Savings are very high, especially for the top 10% of earners in this country. Inventory is very low and no reason to believe supply is on the way to push prices down further, at least not in this area.

There are many respected analysts forecasting 20% declines. Note that the only analysts who see prices being stable (or rising LOL) are those with a vested interest in house prices staying high. https://fortune.com/2023/01/05/housing-market-something-big-is-happening-home-prices-2023-2024-forecast-prediction/amp/

As for the Fed comments:

https://www.builderonline.com/money/economics/fed-chair-jerome-powell-says-u-s-housing-bubble-formed-during-pandemic_c

https://www.bloomberg.com/news/articles/2022-09-21/powell-warns-of-correction-in-once-red-hot-us-housing-market

No here. Too many buyers; too little supply.

[Anonymous]

I’m a cash buyer for an investment and the issue I see is thetr is NO INVENTORY. People have great interest rates and are holding. What is out there right now is crap and not worth buying.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We bought a 1.3mil house in close in McLean in early 2019, we refinanced at 2.75 and our mortgage is $5400. Per Redfin our home is now worth 1.6mil, I am not convinced at the appreciation. I think it will go down at least 100k.

Today, If someone were to buy 1.3 mil house at 6.4% at 25% down the payment comes to around $7500.00 and at 1.6m monthly payment is around $9200. I am not convinced that there are lots of people out there with the capacity to pay between 7500 -9500 a month in mortgage payment. I think this pool is limited and will shrink further due to rising interest rates.

FWIW, our HHI is 750k and I would never pay mortgage above $6000/month. Maybe I am an outlier but numbers don’t support the argument that prices will hold, I think they will come down 10% at least even in close in areas and that’s okay because the increase was beyond crazy.

And at the other end of the market, we needed a mortgage under $2000 and bought a very small older place to get that. With interest rates that literally isn't possible right now.

PS to be clear I think two trends we are seeing will go further.
1) Prices will decline somewhat. It's happening already. It's going to make it hard for people to move up from their current homes or sell.

2) More properties will be bought as investments and rented out - my neighborhood is seeing this already, most 2021 sales are now AirBnBs. This makes it even harder for low and middle income people to buy by decreasing supply and keeping prices higher than they would be in a purely residential market.

Ok, I’m all for a healthy debate but these are two flat out dumb takes.

1) Yes, prices are declining but this will make it easier for people to move up, unless you bought in 2021-2022 in which case you will be under water. The rest of homeowners will still be swimming in equity AND will be buying houses at more affordable prices. Right now, even people who own homes can’t afford the move-up home with prices and interest rates where they are. That’s why they’re so few listings - no one can sell because they can’t buy what they want. Prices coming down will make the market much more fluid.

2) Everyone knows investor purchases absolutely tanked after interest rates increased. Most investors (including large institutional investors) borrow money for leverage, which is why there were even more investor purchases during this bubble than the last bubble. https://therealdeal.com/2022/11/22/investor-home-purchases-plummet-30/amp/

As for AirBnB, there is a huge supply glut and occupancy rates are falling off a cliff because too many investors purchased properties. https://time.com/6223185/airbnbs-empty-short-term-rentals/

As someone with a diversified portfolio of long term and short term rentals, this last statement is 100% fact. Anyone buying a STR right now is a complete moron. We first need to flush all the morons out who bought STRs in 2021. Those idiots thought the travel market had made a permanent switch.

I’ve had my STRs for over a decade and saw these fools come if in 2020 and 2021 snatching up property that was priced way way way too high. Now many of them are stuck with expenses that the current demand now won’t cover. And I’m over here laughing my ass off because I can afford to drop my rent and wait them out and drive the price down. I’m at full occupancy due to my price point and I have people asking me to put them in a cancellation list and every single time I tell them to hit up 5 listing and ask them to half their nightly rate-one of these dummies is gonna have to fold.