Author Topic: McBride is now predicting a 10% nominal decline in home prices  (Read 27375 times)

FINate

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #400 on: September 09, 2023, 08:12:42 AM »

eddy20

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #401 on: September 09, 2023, 09:51:53 AM »
Well Real Estate pricing is very local; our area in SoCal is up 14% so far this year. Zero inventory and all pointing to current staying put with mortgages in the 2-4% range. New houses from major builders starting in the 800-900s, builders are providing 5% loans. Additionally we are trying to remodel our home, have been with the planning/building department since December 2022. And officials wonder why there is a shortage of housing. I believe if the economy holds together prices will continue going up and up. also if rates come down we will definitely see the next bubble RE bubble being formed.

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #402 on: September 09, 2023, 11:26:31 AM »

 No one can accurately predict what is going to happen in RE. I have a dollar-cost-average approach to investing in RE. I buy when prices are low and I buy when they are high. Interest rates will go up and down. Time will turn every RE decision into a winner if you stick with it and pay for quality properties in a great location.

Itís not about beating the other guy but running out the clock. Buy and hold. Refinance when the conditions are favorable and then buy some more. Opportunity changes place but we will never get back the value if today.

Villanelle

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #403 on: September 09, 2023, 11:44:18 AM »

 No one can accurately predict what is going to happen in RE. I have a dollar-cost-average approach to investing in RE. I buy when prices are low and I buy when they are high. Interest rates will go up and down. Time will turn every RE decision into a winner if you stick with it and pay for quality properties in a great location.

Itís not about beating the other guy but running out the clock. Buy and hold. Refinance when the conditions are favorable and then buy some more. Opportunity changes place but we will never get back the value if today.

I pretty much agree with this.  I've said before that I think it's odd that the forum in general is against market timing when it comes to stocks, but for RE, there's frequent "waiting for prices to drop" or "don't want to buy into a bubble.  I think people should buy RE--especially if it is for their personal residence--when they are financially prepared to do so and they find a house that meets their needs.  How many people were waiting for prices to drop a few years ago, and are now even more priced out of the market than they were then?  Or who were waiting for a dip but didn't think the small post-2020 dip was the bottom and therefore kept waiting? 

We will be moving out of our rental next summer and will almost certainly buy a home wherever we land (because we would plan to be there another 7-10 years, or more).  And that will be our plan whether the market is up another 10%, or down 20%, or stagnant. 

NaN

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #404 on: September 10, 2023, 07:45:07 PM »
I have a dollar-cost-average approach to investing in RE. I buy when prices are low and I buy when they are high.

These are contradictory statements. Dollar-cost-average is literally buying at regular interval without regards to price.

clarkfan1979

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #405 on: September 10, 2023, 10:19:31 PM »

 No one can accurately predict what is going to happen in RE. I have a dollar-cost-average approach to investing in RE. I buy when prices are low and I buy when they are high. Interest rates will go up and down. Time will turn every RE decision into a winner if you stick with it and pay for quality properties in a great location.

Itís not about beating the other guy but running out the clock. Buy and hold. Refinance when the conditions are favorable and then buy some more. Opportunity changes place but we will never get back the value if today.

Agreed. And make sure you are well capitalized.

Must_ache

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #406 on: September 14, 2023, 10:29:27 AM »
It would mean that the house we purchased just over ten years ago is has only risen 150% in value instead of 160% 166.7%.  :P

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #407 on: September 14, 2023, 10:37:35 AM »
No one can accurately predict what is going to happen in RE.
Time will turn every RE decision into a winner if you stick with it and pay for quality properties in a great location.

HERE are your contradictory statements.

Pretty meaningless statements without knowing exactly how much time.  People that bought into the Nikkei 225 in July 1990 instantly lost money and that trade only turned profitable in recent months, 33 years later.  So, a terrible investment overall.  Just because something will be profitable someday doesn't mean anyone should want in on it.  Give me written guarantees that real estate will yield 7% and I'll sell off some of my CD's I bought recently and park some there.  Otherwise no thank you I'd rather buy low.
« Last Edit: September 14, 2023, 11:04:03 AM by Must_ache »

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #408 on: September 14, 2023, 01:03:39 PM »
I pretty much agree with this.  I've said before that I think it's odd that the forum in general is against market timing when it comes to stocks, but for RE, there's frequent "waiting for prices to drop" or "don't want to buy into a bubble.  I think people should buy RE--especially if it is for their personal residence--when they are financially prepared to do so and they find a house that meets their needs.  How many people were waiting for prices to drop a few years ago, and are now even more priced out of the market than they were then?  Or who were waiting for a dip but didn't think the small post-2020 dip was the bottom and therefore kept waiting? 

I agree with your conclusion but I think some nuance is in order.   Many people seem to believe that high stock market prices imply that prices will drop and a better entry point will be available in the future.   While there might be a price drop in the future, the market could simply meander sideways for years as well and the better entry point never occurs.   Hence the advice to simply invest when funds are available.  Instead of implying a drop, a more accurate and effective way to view high market prices is that high prices imply lower future rates of return.   And that's okay.  You can't be above average all the time.  But it is a truism that the investment performance is dependent upon the initial cost.   

Same principle applies to investment real estate.  The higher the initial price the lower the final performance.  And that can be okay.  We've seen however that in many markets prices are high enough that real estate investments don't make a ton of sense for the time being. 










Villanelle

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #409 on: September 14, 2023, 01:39:34 PM »
I pretty much agree with this.  I've said before that I think it's odd that the forum in general is against market timing when it comes to stocks, but for RE, there's frequent "waiting for prices to drop" or "don't want to buy into a bubble.  I think people should buy RE--especially if it is for their personal residence--when they are financially prepared to do so and they find a house that meets their needs.  How many people were waiting for prices to drop a few years ago, and are now even more priced out of the market than they were then?  Or who were waiting for a dip but didn't think the small post-2020 dip was the bottom and therefore kept waiting? 

I agree with your conclusion but I think some nuance is in order.   Many people seem to believe that high stock market prices imply that prices will drop and a better entry point will be available in the future.   While there might be a price drop in the future, the market could simply meander sideways for years as well and the better entry point never occurs.   Hence the advice to simply invest when funds are available.  Instead of implying a drop, a more accurate and effective way to view high market prices is that high prices imply lower future rates of return.   And that's okay.  You can't be above average all the time.  But it is a truism that the investment performance is dependent upon the initial cost.   

Same principle applies to investment real estate.  The higher the initial price the lower the final performance.  And that can be okay.  We've seen however that in many markets prices are high enough that real estate investments don't make a ton of sense for the time being.

I definitely differentiate between investment RE a a place to live.  With investment RE, if you are looking primarily for income/cash flow, that it's pretty easy to run the numbers and not buy if they don't make sense (because your money is very likely to do better elsewhere).  If you are buying primarily for appreciation, that water is much muddier, but I'd say that's also more comparable to investing in the stock market.

My "buy if you are in a position--and have a desire--to buy, regardless of prices" is really just referring to a residence. 

SilentC

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #410 on: September 15, 2023, 04:09:37 PM »
I pretty much agree with this.  I've said before that I think it's odd that the forum in general is against market timing when it comes to stocks, but for RE, there's frequent "waiting for prices to drop" or "don't want to buy into a bubble.  I think people should buy RE--especially if it is for their personal residence--when they are financially prepared to do so and they find a house that meets their needs.  How many people were waiting for prices to drop a few years ago, and are now even more priced out of the market than they were then?  Or who were waiting for a dip but didn't think the small post-2020 dip was the bottom and therefore kept waiting? 

I agree with your conclusion but I think some nuance is in order.   Many people seem to believe that high stock market prices imply that prices will drop and a better entry point will be available in the future.   While there might be a price drop in the future, the market could simply meander sideways for years as well and the better entry point never occurs.   Hence the advice to simply invest when funds are available.  Instead of implying a drop, a more accurate and effective way to view high market prices is that high prices imply lower future rates of return.   And that's okay.  You can't be above average all the time.  But it is a truism that the investment performance is dependent upon the initial cost.   

Same principle applies to investment real estate.  The higher the initial price the lower the final performance.  And that can be okay.  We've seen however that in many markets prices are high enough that real estate investments don't make a ton of sense for the time being.

I definitely differentiate between investment RE a a place to live.  With investment RE, if you are looking primarily for income/cash flow, that it's pretty easy to run the numbers and not buy if they don't make sense (because your money is very likely to do better elsewhere).  If you are buying primarily for appreciation, that water is much muddier, but I'd say that's also more comparable to investing in the stock market.

My "buy if you are in a position--and have a desire--to buy, regardless of prices" is really just referring to a residence.

Not knocking this view but I find it interesting how many people here, on a FIRE blog, get twisted around the axle over tenths of a point on mutual fund fees and brag on being ultra frugal grocery shoppers, DIY experts etc but then owning personal residences is somehow treated differently.   I think the true-to-FIRE thing to do is to not do mental gymnastics to justify a bad risk/reward bet for a primary residence just because the system has drilled into us that the American Dream is home ownership.  Obviously market specific but if one can rent for $3k/mo and a mortgage is $4.5k maybe they shouldnít buy because they can and they want to?  Thatís If FIRE is an actual priority.

FINate

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #411 on: September 15, 2023, 04:52:01 PM »
Not knocking this view but I find it interesting how many people here, on a FIRE blog, get twisted around the axle over tenths of a point on mutual fund fees and brag on being ultra frugal grocery shoppers, DIY experts etc but then owning personal residences is somehow treated differently.   I think the true-to-FIRE thing to do is to not do mental gymnastics to justify a bad risk/reward bet for a primary residence just because the system has drilled into us that the American Dream is home ownership.  Obviously market specific but if one can rent for $3k/mo and a mortgage is $4.5k maybe they shouldnít buy because they can and they want to?  Thatís If FIRE is an actual priority.

This isn't really a fair characterization of those here that don't view a primary residence as an investment. We aren't saying one should just willy-nilly buy a primary residence. Instead, we're saying it should be viewed as consumption. This avoids things like buying more home than one needs because "it's an investment" which is super common in the US. We all have to live somewhere, and remember MMM isn't simply about saving money as much as making sure money is being spent in a way that adds value. This can mean buying a house to live and simply enjoying life instead of wasting years trying to time the market.
« Last Edit: September 15, 2023, 04:56:51 PM by FINate »

Villanelle

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #412 on: September 15, 2023, 05:14:38 PM »
I pretty much agree with this.  I've said before that I think it's odd that the forum in general is against market timing when it comes to stocks, but for RE, there's frequent "waiting for prices to drop" or "don't want to buy into a bubble.  I think people should buy RE--especially if it is for their personal residence--when they are financially prepared to do so and they find a house that meets their needs.  How many people were waiting for prices to drop a few years ago, and are now even more priced out of the market than they were then?  Or who were waiting for a dip but didn't think the small post-2020 dip was the bottom and therefore kept waiting? 

I agree with your conclusion but I think some nuance is in order.   Many people seem to believe that high stock market prices imply that prices will drop and a better entry point will be available in the future.   While there might be a price drop in the future, the market could simply meander sideways for years as well and the better entry point never occurs.   Hence the advice to simply invest when funds are available.  Instead of implying a drop, a more accurate and effective way to view high market prices is that high prices imply lower future rates of return.   And that's okay.  You can't be above average all the time.  But it is a truism that the investment performance is dependent upon the initial cost.   

Same principle applies to investment real estate.  The higher the initial price the lower the final performance.  And that can be okay.  We've seen however that in many markets prices are high enough that real estate investments don't make a ton of sense for the time being.

I definitely differentiate between investment RE a a place to live.  With investment RE, if you are looking primarily for income/cash flow, that it's pretty easy to run the numbers and not buy if they don't make sense (because your money is very likely to do better elsewhere).  If you are buying primarily for appreciation, that water is much muddier, but I'd say that's also more comparable to investing in the stock market.

My "buy if you are in a position--and have a desire--to buy, regardless of prices" is really just referring to a residence.

Not knocking this view but I find it interesting how many people here, on a FIRE blog, get twisted around the axle over tenths of a point on mutual fund fees and brag on being ultra frugal grocery shoppers, DIY experts etc but then owning personal residences is somehow treated differently.   I think the true-to-FIRE thing to do is to not do mental gymnastics to justify a bad risk/reward bet for a primary residence just because the system has drilled into us that the American Dream is home ownership.  Obviously market specific but if one can rent for $3k/mo and a mortgage is $4.5k maybe they shouldnít buy because they can and they want to?  Thatís If FIRE is an actual priority.

I'm not sure how you got that from what I said.

My point was that *IF* someone is determined to buy a house, they should just get on with it and buy when they can.  In the same way that if they have money to invest, they should just buy the darn mutual fund shares today, rather than wait for the bottom. 

If they aren't determined to buy, then they shouldn't.  That's also regardless of market conditions, unless *maybe* conditions are such that it is cheaper to own than rent. 

I'm not justifying a bad risk.  I'm saying that if you are determined to take that risk, market timing is not the way to go. 

Also, while there is definitely a "how to save $.14 on dried beans" component here, there's also a "spend money where it actually improves your life" element.  I want to own my home when I settle.  That's entirely for non-financial reasons. IMO, that doesn't make it wrong, as long as I'm going into it with a clear understanding of what I'm doing, and an understanding that it's not financially ideal.  How is that any different than--or mental gymnastics--buying out of season fruit because you love it, or literally any other spending that isn't 100% optimized and reduced to the bare minimum?  Unless someone is living in a van down by the river (and I rented van, at that, I suppose) and eating food out of dumpsters and wearing rags and whose sole source of entertainment is library books, then it seems there's a clear acknowledgment that sometimes we spend money in a sub-optimal (from a dollars and cents perspective) way, and that that's not a bad thing.  I'd argue that it's part of why we are frugal--so that we can spend money when it actually increases happiness.  And for some people, that comes from owning a home. 


Dicey

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #413 on: September 18, 2023, 12:07:27 PM »
Just for fun, we looked at this property last weekend. It has great bones and is very dated, just the way we like them. We were very interested until we found they had 80 requests for reports. Offers were due Friday. They received two offers for over $1.5M, so they went with the all-cash offer. Geez.

https://www.redfin.com/CA/Walnut-Creek/66-Amigo-Ln-94596/home/1274033?

In other fun, I just noticed that every one of our properties "Zestimates" has jumped considerably. Yawn.

clarkfan1979

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #414 on: September 19, 2023, 12:26:38 PM »
Just for fun, we looked at this property last weekend. It has great bones and is very dated, just the way we like them. We were very interested until we found they had 80 requests for reports. Offers were due Friday. They received two offers for over $1.5M, so they went with the all-cash offer. Geez.

https://www.redfin.com/CA/Walnut-Creek/66-Amigo-Ln-94596/home/1274033?

In other fun, I just noticed that every one of our properties "Zestimates" has jumped considerably. Yawn.

It looks like they were very strategic with listing the house under 1 million, which probably gave it maximum exposure to buyers. However, there are pros and cons to underpricing your property.

I'm a big fan of listing a property 5-10% under market value to provoke a multiple offer situation. However, if the house above sold for 1.5 million, I think it's possible that they might have listed it a little too low. When you list a property 30%+ under market value, people are going to "anchor" their offers closer to the list price than market value which can sometimes fall short of market value, even with multiple offers. 


SilentC

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #415 on: September 19, 2023, 09:31:48 PM »
Not knocking this view but I find it interesting how many people here, on a FIRE blog, get twisted around the axle over tenths of a point on mutual fund fees and brag on being ultra frugal grocery shoppers, DIY experts etc but then owning personal residences is somehow treated differently.   I think the true-to-FIRE thing to do is to not do mental gymnastics to justify a bad risk/reward bet for a primary residence just because the system has drilled into us that the American Dream is home ownership.  Obviously market specific but if one can rent for $3k/mo and a mortgage is $4.5k maybe they shouldnít buy because they can and they want to?  Thatís If FIRE is an actual priority.

This isn't really a fair characterization of those here that don't view a primary residence as an investment. We aren't saying one should just willy-nilly buy a primary residence. Instead, we're saying it should be viewed as consumption. This avoids things like buying more home than one needs because "it's an investment" which is super common in the US. We all have to live somewhere, and remember MMM isn't simply about saving money as much as making sure money is being spent in a way that adds value. This can mean buying a house to live and simply enjoying life instead of wasting years trying to time the market.

The desire to view it as consumption does make sense FINate, I appreciate that.   At the same time it seems somewhat silly to me to view it that way when things seem extreme Ö why not save a little more and buy it in three or four years, there will still be houses and even if they go up in price you have a much stronger downpayment.  That is an unpopular view, three years is an eternity lol.  One also has to have to have some basic understanding of real estate investment (like know what maintenance costs, what a cap rate is, understand that 3% mortgage rates were an aberration etc.) to really understand the extremes and most people here know that but I probably take for granted many donít.  MMMís latest article was a must-read on that front. And itís probably not obvious in a lot of markets I forget that, I live in a deflating bubble so itís a lot easier to get perplexed about realtor talk of buying when you are ready.

FINate

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #416 on: September 20, 2023, 07:26:14 AM »
Not knocking this view but I find it interesting how many people here, on a FIRE blog, get twisted around the axle over tenths of a point on mutual fund fees and brag on being ultra frugal grocery shoppers, DIY experts etc but then owning personal residences is somehow treated differently.   I think the true-to-FIRE thing to do is to not do mental gymnastics to justify a bad risk/reward bet for a primary residence just because the system has drilled into us that the American Dream is home ownership.  Obviously market specific but if one can rent for $3k/mo and a mortgage is $4.5k maybe they shouldnít buy because they can and they want to?  Thatís If FIRE is an actual priority.

This isn't really a fair characterization of those here that don't view a primary residence as an investment. We aren't saying one should just willy-nilly buy a primary residence. Instead, we're saying it should be viewed as consumption. This avoids things like buying more home than one needs because "it's an investment" which is super common in the US. We all have to live somewhere, and remember MMM isn't simply about saving money as much as making sure money is being spent in a way that adds value. This can mean buying a house to live and simply enjoying life instead of wasting years trying to time the market.

The desire to view it as consumption does make sense FINate, I appreciate that.   At the same time it seems somewhat silly to me to view it that way when things seem extreme Ö why not save a little more and buy it in three or four years, there will still be houses and even if they go up in price you have a much stronger downpayment.  That is an unpopular view, three years is an eternity lol.  One also has to have to have some basic understanding of real estate investment (like know what maintenance costs, what a cap rate is, understand that 3% mortgage rates were an aberration etc.) to really understand the extremes and most people here know that but I probably take for granted many donít.  MMMís latest article was a must-read on that front. And itís probably not obvious in a lot of markets I forget that, I live in a deflating bubble so itís a lot easier to get perplexed about realtor talk of buying when you are ready.

We bought our house right as the pandemic was beginning. Everything locked down while in the middle of being in contract. At the time it seemed like a terrible time to buy, an extreme environment. I fully expected prices to decline, a lot. We thought about backing out, which seemed smart at the time. But I've also lived long enough to know I'm not really that smart, especially when it comes to predicting the future. And the part of me that says "it's just a place to live, not an investment, short term price fluctuations don't matter" took over. Our plan was to be there for more than 5 years, so we didn't worry about it. We closed on the house and within about a year prices spiked ~50% as the pandemic migration got underway.

The point is, no one knows what prices will do. We expected prices to drop and were fine with that, because a drop in value wouldn't make it a worse place to live. But if we had waited we would be in a much worse position today.

I'm not saying people should stretch to buy a home at all costs. I'm actually arguing the opposite. Viewing a home as consumption, just a place to live, removes a lot of the FOMO that drives people to becoming overextended. When it's not an investment it's easier to view it as just a house, not a retirement plan or path to riches. So if it's something you value and can truly afford, there's nothing wrong with just buying something modest and getting on with living life. I can think of a million other things I'd rather be doing with my time than trying to time the housing market, watching prices over multiple years, moving more times than necessary (which is also expensive).
« Last Edit: September 20, 2023, 07:29:58 AM by FINate »

SilentC

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #417 on: September 20, 2023, 10:43:05 AM »
Not knocking this view but I find it interesting how many people here, on a FIRE blog, get twisted around the axle over tenths of a point on mutual fund fees and brag on being ultra frugal grocery shoppers, DIY experts etc but then owning personal residences is somehow treated differently.   I think the true-to-FIRE thing to do is to not do mental gymnastics to justify a bad risk/reward bet for a primary residence just because the system has drilled into us that the American Dream is home ownership.  Obviously market specific but if one can rent for $3k/mo and a mortgage is $4.5k maybe they shouldnít buy because they can and they want to?  Thatís If FIRE is an actual priority.

This isn't really a fair characterization of those here that don't view a primary residence as an investment. We aren't saying one should just willy-nilly buy a primary residence. Instead, we're saying it should be viewed as consumption. This avoids things like buying more home than one needs because "it's an investment" which is super common in the US. We all have to live somewhere, and remember MMM isn't simply about saving money as much as making sure money is being spent in a way that adds value. This can mean buying a house to live and simply enjoying life instead of wasting years trying to time the market.

The desire to view it as consumption does make sense FINate, I appreciate that.   At the same time it seems somewhat silly to me to view it that way when things seem extreme Ö why not save a little more and buy it in three or four years, there will still be houses and even if they go up in price you have a much stronger downpayment.  That is an unpopular view, three years is an eternity lol.  One also has to have to have some basic understanding of real estate investment (like know what maintenance costs, what a cap rate is, understand that 3% mortgage rates were an aberration etc.) to really understand the extremes and most people here know that but I probably take for granted many donít.  MMMís latest article was a must-read on that front. And itís probably not obvious in a lot of markets I forget that, I live in a deflating bubble so itís a lot easier to get perplexed about realtor talk of buying when you are ready.

We bought our house right as the pandemic was beginning. Everything locked down while in the middle of being in contract. At the time it seemed like a terrible time to buy, an extreme environment. I fully expected prices to decline, a lot. We thought about backing out, which seemed smart at the time. But I've also lived long enough to know I'm not really that smart, especially when it comes to predicting the future. And the part of me that says "it's just a place to live, not an investment, short term price fluctuations don't matter" took over. Our plan was to be there for more than 5 years, so we didn't worry about it. We closed on the house and within about a year prices spiked ~50% as the pandemic migration got underway.

The point is, no one knows what prices will do. We expected prices to drop and were fine with that, because a drop in value wouldn't make it a worse place to live. But if we had waited we would be in a much worse position today.

I'm not saying people should stretch to buy a home at all costs. I'm actually arguing the opposite. Viewing a home as consumption, just a place to live, removes a lot of the FOMO that drives people to becoming overextended. When it's not an investment it's easier to view it as just a house, not a retirement plan or path to riches. So if it's something you value and can truly afford, there's nothing wrong with just buying something modest and getting on with living life. I can think of a million other things I'd rather be doing with my time than trying to time the housing market, watching prices over multiple years, moving more times than necessary (which is also expensive).

It actually seemed like a great time to buy early in Covid if you were ok being a landlord.  Mortgage rates were so low that on a long term hold you didnít need any appreciation to make the #s work. Uncle Sam was allowing forbearance.  I admittedly didnít understand this at the time as I was hyper-focused on stocks and distressed debt. 

No one ďknowsĒ but if you understand the relationship between price, rates and rents and have a long term view you can bet with the odds in your favor, sometimes highly in your favor.  Right now prices are flattish or declining in many (not all!) markets and mortgage rates are significantly higher than cap rates + some reasonable appreciation assumption in many (but not all!) markets so buyer beware.  You can compound ~7%+/yr now in fairly safe bonds and bank loans with a downpayment which makes waiting way more compelling than any time in the last decade. 

FINate

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #418 on: September 20, 2023, 03:25:42 PM »
It actually seemed like a great time to buy early in Covid if you were ok being a landlord.  Mortgage rates were so low that on a long term hold you didnít need any appreciation to make the #s work. Uncle Sam was allowing forbearance.  I admittedly didnít understand this at the time as I was hyper-focused on stocks and distressed debt. 

No one ďknowsĒ but if you understand the relationship between price, rates and rents and have a long term view you can bet with the odds in your favor, sometimes highly in your favor.  Right now prices are flattish or declining in many (not all!) markets and mortgage rates are significantly higher than cap rates + some reasonable appreciation assumption in many (but not all!) markets so buyer beware.  You can compound ~7%+/yr now in fairly safe bonds and bank loans with a downpayment which makes waiting way more compelling than any time in the last decade.

Real estate is very local. Here in Boise it didn't seem like a great time to buy. Before the pandemic the RE market was exceptionally competitive, with houses selling in 2-3 days with multiple over-asking offers. Not my idea of a good time to purchase. And then it got much worse during the pandemic, with people waving inspections with way over asking all-cash offers for pretty much every home -- complete bananas.

A lot of people here looking to buy have been eagerly hoping for a crash. I get it, they're priced out and want an opportunity to get in. But hope isn't a strategy. While prices have dropped a bit, it's been very modest, and not what it may seem from the headlines. The mix of homes sold has skewed less expensive, which has pulled down the median. Which means homes in pricier neighborhoods haven't really declined as much as many assume. People are still moving here, yet builders can't build fast enough due to labor shortages and supply chain issues. Very few people are leaving, and existing homeowners are locked into sub 3% rates.

What has changed is there's more inventory to choose from. Nowhere near oversupply, but more like a healthy balance. This means people can take their time, do their due diligence. And they can be pickier. I know quite a few young families with kids taking this opportunity to find a decent home in a quiet low traffic walkable neighborhood near schools they like. They're finding homes that have everything they want, at a price they can easily afford, and they plan to be there for a long time, so it just makes sense. Could they save some money by waiting 3 years? Honestly, I don't know. Sure it's possible. But it's also possible that inflation continues to moderate, the economy makes a soft landing, Putin "accidentally" falls out a window essentially ending the war, and then we're looking at lower rates (though not as low as during the pandemic) with a strong job market and increasing home prices.

Is it worth putting off the home one can purchase now that checks all the boxes to maybe save some money but risk being in a much less then ideal housing situation if things don't decline? That's a tough decision, and probably comes down to a much of personal factors, including location.
« Last Edit: September 20, 2023, 03:45:08 PM by FINate »

Dicey

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #419 on: September 20, 2023, 05:33:40 PM »
Just for fun, we looked at this property last weekend. It has great bones and is very dated, just the way we like them. We were very interested until we found they had 80 requests for reports. Offers were due Friday. They received two offers for over $1.5M, so they went with the all-cash offer. Geez.

https://www.redfin.com/CA/Walnut-Creek/66-Amigo-Ln-94596/home/1274033?

In other fun, I just noticed that every one of our properties "Zestimates" has jumped considerably. Yawn.

It looks like they were very strategic with listing the house under 1 million, which probably gave it maximum exposure to buyers. However, there are pros and cons to underpricing your property.

I'm a big fan of listing a property 5-10% under market value to provoke a multiple offer situation. However, if the house above sold for 1.5 million, I think it's possible that they might have listed it a little too low. When you list a property 30%+ under market value, people are going to "anchor" their offers closer to the list price than market value which can sometimes fall short of market value, even with multiple offers.
There were multiple offers over $1.5M and there were many, many, more offers that landed somewhere in between (25+ IIRC). The market is nuts and there is no inventory. The only thing that makes sense is that someone bought it to, you know, fix up and actually live in. There is still meat on the bone, but probably not enough for a flipper. OTOH, well-appointed homes in the area fetch close to $1k/sf. Since the house is 2700 sf, it might. We shall see...

I am a huge fan of pricing close to the actual value of the property. I hate this trick that they seem to be using to garner attention.

ChpBstrd

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #420 on: September 21, 2023, 02:32:39 PM »
Just for fun, we looked at this property last weekend. It has great bones and is very dated, just the way we like them. We were very interested until we found they had 80 requests for reports. Offers were due Friday. They received two offers for over $1.5M, so they went with the all-cash offer. Geez.

https://www.redfin.com/CA/Walnut-Creek/66-Amigo-Ln-94596/home/1274033?

In other fun, I just noticed that every one of our properties "Zestimates" has jumped considerably. Yawn.

It looks like they were very strategic with listing the house under 1 million, which probably gave it maximum exposure to buyers. However, there are pros and cons to underpricing your property.

I'm a big fan of listing a property 5-10% under market value to provoke a multiple offer situation. However, if the house above sold for 1.5 million, I think it's possible that they might have listed it a little too low. When you list a property 30%+ under market value, people are going to "anchor" their offers closer to the list price than market value which can sometimes fall short of market value, even with multiple offers.
There were multiple offers over $1.5M and there were many, many, more offers that landed somewhere in between (25+ IIRC). The market is nuts and there is no inventory. The only thing that makes sense is that someone bought it to, you know, fix up and actually live in. There is still meat on the bone, but probably not enough for a flipper. OTOH, well-appointed homes in the area fetch close to $1k/sf. Since the house is 2700 sf, it might. We shall see...

I am a huge fan of pricing close to the actual value of the property. I hate this trick that they seem to be using to garner attention.
When the goal of attracting the biggest bidding war possible exceeds the value of the goal of setting a favorable anchor price, it might be a sign we've entered the late-bubble stage. Just saying, this is how you sell rare antiques on eBay, not how you'd normally sell a house.

Dicey

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Re: McBride is now predicting a 10% nominal decline in home prices
« Reply #421 on: September 21, 2023, 05:34:30 PM »
Just for fun, we looked at this property last weekend. It has great bones and is very dated, just the way we like them. We were very interested until we found they had 80 requests for reports. Offers were due Friday. They received two offers for over $1.5M, so they went with the all-cash offer. Geez.

https://www.redfin.com/CA/Walnut-Creek/66-Amigo-Ln-94596/home/1274033?

In other fun, I just noticed that every one of our properties "Zestimates" has jumped considerably. Yawn.

It looks like they were very strategic with listing the house under 1 million, which probably gave it maximum exposure to buyers. However, there are pros and cons to underpricing your property.

I'm a big fan of listing a property 5-10% under market value to provoke a multiple offer situation. However, if the house above sold for 1.5 million, I think it's possible that they might have listed it a little too low. When you list a property 30%+ under market value, people are going to "anchor" their offers closer to the list price than market value which can sometimes fall short of market value, even with multiple offers.
There were multiple offers over $1.5M and there were many, many, more offers that landed somewhere in between (25+ IIRC). The market is nuts and there is no inventory. The only thing that makes sense is that someone bought it to, you know, fix up and actually live in. There is still meat on the bone, but probably not enough for a flipper. OTOH, well-appointed homes in the area fetch close to $1k/sf. Since the house is 2700 sf, it might. We shall see...

I am a huge fan of pricing close to the actual value of the property. I hate this trick that they seem to be using to garner attention.
When the goal of attracting the biggest bidding war possible exceeds the value of the goal of setting a favorable anchor price, it might be a sign we've entered the late-bubble stage. Just saying, this is how you sell rare antiques on eBay, not how you'd normally sell a house.
Sure, but it's been going on in my market for years. Heck, we had to outbid 12 other bidders when we bought our house in 2013. It may be a bubble, but it's a mighty strong one.