Stock market tips and experiences

[ASAP]

Originally Posted by RickFLM4

I think part of it is that people with 2-4% mortgages aren’t selling and builders may be slowing down the pace of new construction. Additionally, there are still cash buyers out there. Therefore, even though some buyers have decided to wait due to rates, there was a big imbalance previously due to lack of available inventory before the rate hikes and there are reasons inventory will remain constrained, so we don’t necessarily need a huge decline in prices to find something closer to equilibrium. Just need some buyers to step away from the market. It’s not like post-2008 when the market was flooded with inventory due to foreclosures and short sales. Obviously, factors vary by market and the effects will only last so long. People will always need housing and higher rates don’t really change that fact.

i tend to agree... the 2-3% buyers are technically stuck forever unless something FORCES then to move...

I now am thinking about buying and the developer has offered a buy down on the int rate and $100k price down from a year ago... so yea major shifts are happening

sales have tanked since november... so i think this will be far more a used house rather than new house problem... as long as inventory stays constrained

[chassis]

Don’t expect a 2008-style crash. Housing was overbuilt (too much supply) at that time.

Housing supply today is tight; supply-limited. The US has underbuilt housing since post-GFC and has not caught up. FRED has all the data for your perusal.

Residential construction will remain solid for the forseeable future. Sales will fluctuate as always but will trend higher.

[dradernh]

Originally Posted by ASAP

2-3% buyers are technically stuck forever

= house poor

[RickFLM4]

Originally Posted by dradernh

= house poor

Why does a 2-3% mortgage rate make someone house poor?

[ASAP]

maybe he meant it makes it unaffordable for someone to move as what they could afford at 2-3% would never happen at 6%... that's very true... remember a lot of people got into houses at low rates and low down payments that could not afford houses under many under scenarios

[dradernh]

Originally Posted by RickFLM4

Why does a 2-3% mortgage rate make someone house poor?

It doesn't; we have a small 2-3% mortgage and we're not house poor.

However, if you've bought a home you were barely able to afford and your rate was 2-3%, you're much more likely to be "stuck" as you've already assumed all the housing cost burden you can handle. I don't know if the term has gone out of common use, but in CA back in the day that was called being 'house poor' - and there were a LOT of people in that situation.

[TTM0TION]

I always heard it as house rich, as the only thing you have is your house LOL. I thought anyway, Who knows though.

[NickyC]

FRC trading halted 11 times today and now I’ve lost count. They’re next.

[RickFLM4]

Originally Posted by dradernh

It doesn't; we have a small 2-3% mortgage and we're not house poor.

However, if you've bought a home you were barely able to afford and your rate was 2-3%, you're much more likely to be "stuck" as you've already assumed all the housing cost burden you can handle. I don't know if the term has gone out of common use, but in CA back in the day that was called being 'house poor' - and there were a LOT of people in that situation.

I think a lot of us with 2-3% mortgages refinanced when rates were super low and have whatever is left of 15-year terms. I think that's a pretty good place to be. People that can barely afford the payment are mostly in 30-years (now 40-years??) and not sure how low those rates got. Maybe some 3's but would be surprised if there were many 30-year 2's out there. If there is, I agree they should stay put.

[2000cs]

I always understood “house poor” to mean you had a big house and a big mortgage payment and nothing left over to enjoy life - like dining out. The house consumed all disposable income. And for a time, you could just “outgrow” the payment because wage inflation would drive your income up and the fixed rate mortgage payment would remain constant.

Ah, the 1970s!

[Chick Webb]

Originally Posted by dradernh

However, if you've bought a home you were barely able to afford and your rate was 2-3%, you're much more likely to be "stuck" as you've already assumed all the housing cost burden you can handle. I don't know if the term has gone out of common use, but in CA back in the day that was called being 'house poor' - and there were a LOT of people in that situation.

Oh, there are plenty of people in CA that are house poor. And with the little meltdown we're having a lot of people are going to be, even if they're not now.

I've said it before in this thread. Home prices, and prices in general, will not fall substantially as long as unemployment is so low.

Why? People with jobs spend money (even if it's money they don't have) because they believe that they'll be able to make it work somehow, even if it's not clear how. When people start losing jobs, or maybe when their best bruh or next door neighbor loses theirs, that's when they'll stop spending. And not just on houses, on lots of stuff; essentially anything discretionary.

We're starting to see the effects of this in the Bay Area, I think. Homes are sitting on the market and you're seeing asking prices come down 5-10%. If interest rates stay high (likely) then over the next 12-24 months prices will keep going down as people will be forced to sell because 1) they lost their job and can't afford it any longer, so they figure they'll cash out and use the funds to rent (at least it's not '08 and they have equity), 2) they have to move for a new job and need the cash, and/or 3) they're just tired of the overtaxed sh*thole that CA has become and figure they'll take their money and run to somewhere cheaper.

This will ripple down the economic spectrum to all of the people who provide goods/services to those now-vamoosed tech workers. Home prices and apartment rents will likely fall even further in the lower strata, since everything hurts those folks more.

It's all about the jobs and like it or not, we need 1-2 million more people unemployed in this country to get inflation down, even to 3%. It's not going to be pretty. Especially going into an election year. A lot of people are going to call Powell a lot of nasty names. Hell, Warren already has.

[dradernh]

Originally Posted by RickFLM4

I think a lot of us with 2-3% mortgages refinanced when rates were super low and have whatever is left of 15-year terms. I think that's a pretty good place to be. People that can barely afford the payment are mostly in 30-years (now 40-years??) and not sure how low those rates got. Maybe some 3's but would be surprised if there were many 30-year 2's out there. If there is, I agree they should stay put.

Here: January, 2021 - 2.625% on a 30-year mortgage. They couldn't get rid of the money fast enough.

Originally Posted by 2000cs

I always understood “house poor” to mean you had a big house and a big mortgage payment and nothing left over to enjoy life - like dining out. The house consumed all disposable income. And for a time, you could just “outgrow” the payment because wage inflation would drive your income up and the fixed rate mortgage payment would remain constant.

Ah, the 1970s!

And if you were in California, the 1980s, the 1990s, the 2000s, the 2010s, and now. Prices, you see - nothing necessarily to do with house size - all driven by outsized demand for a scarce product. The pricier parts of that state are still running at $1-$2K per square foot whether it's an apartment or a house. The less expensive areas are merely crazy expensive for what you get (compared to much of the rest of the country.

Originally Posted by Chick Webb

Oh, there are plenty of people in CA that are house poor. And with the little meltdown we're having a lot of people are going to be, even if they're not now.

I've said it before in this thread. Home prices, and prices in general, will not fall substantially as long as unemployment is so low.

Why? People with jobs spend money (even if it's money they don't have) because they believe that they'll be able to make it work somehow, even if it's not clear how. When people start losing jobs, or maybe when their best bruh or next door neighbor loses theirs, that's when they'll stop spending. And not just on houses, on lots of stuff; essentially anything discretionary.

We're starting to see the effects of this in the Bay Area, I think. Homes are sitting on the market and you're seeing asking prices come down 5-10%. If interest rates stay high (likely) then over the next 12-24 months prices will keep going down as people will be forced to sell because 1) they lost their job and can't afford it any longer, so they figure they'll cash out and use the funds to rent (at least it's not '08 and they have equity), 2) they have to move for a new job and need the cash, and/or 3) they're just tired of the overtaxed sh*thole that CA has become and figure they'll take their money and run to somewhere cheaper.

This will ripple down the economic spectrum to all of the people who provide goods/services to those now-vamoosed tech workers. Home prices and apartment rents will likely fall even further in the lower strata, since everything hurts those folks more.

It's all about the jobs and like it or not, we need 1-2 million more people unemployed in this country to get inflation down, even to 3%. It's not going to be pretty. Especially going into an election year. A lot of people are going to call Powell a lot of nasty names. Hell, Warren already has.

This has been true in CA for going-on 50 years now. Think about it - one-half of a century.

What I saw during that period is well-located properties fell little during the down periods. The exception was '80-'82, when sellers often had to offer a 2nd to the buyer to get the numbers to work. With 18% mortgage rates, it was insane for everyone, but sellers who didn't have to sell simply sat tight and waited it out.

It's worth noting that Northern California (generally, the Bay Area) and Southern California have frequently been two very different real estate markets.

Many regions in SoCal have seen home price swings significantly greater than those in NorCal. That's partly because it's been easier to build in the Southland since the 1970s; despite demand, building in NorCal since that time has been on a smaller scale, and that's placed a high floor under prices.

It was simply easier for Southland developers to get too far ahead of the market - the same then holding true for their recent buyers. Not that the average buyer is generally focused on what's going to happen in the market during the 2-5 years after they purchase - especially first-time home buyers, I think.

Having bought our first home in California with 5% down at the tippy-top of one of the state's major price updrafts, and with a 1st at 10%, a 2nd at 10.5%, and a 3rd and a 4th each at 12%, we had a just-under-$5K monthly PITI nut to cover in 1989. I developed an ulcer during that period.

[Ivilla035]

Puts on what boys? Need to make some money in this market... even though its volatile.

[BMW F22]

I don’t really agree with housing market not crashing. People always say “this time it’s different vs whenever and therefore won’t crash.” Sure, things aren’t exactly the same, but these things happen in cycles. People didn’t worry about banks failing and then bam, they are failing! Doesn’t it seem eerily familiar with Bear Stearns and Goldman Sachs of 2008?

[antzcrashing]

Originally Posted by ASAP

So if one can get a 100K discount off asking price of a house from a year ago, is this stilll a good time to buy? i mean in my mind yes... bcuz nothing is moving RE prices from what i can tell

Honestly that much of a drop makes me concerned that it falls harder after you buy it. I am always very value oriented. That said if you plan to be in the home for 5+ years then you mitigate the risk of my worry.

Good luck, homes are investiments too

[antzcrashing]

I am wicked impressed with Acorns after downloading the app and starting a small investment. It automatically allocates you into a few ETFs and bonds, great lessons for new or even seasoned investors.

I will keep it going

I encourage others to try this Acorns app too, novice or veteran

Best.

[LuvMyE92]

Originally Posted by NickyC

FRC trading halted 11 times today and now I’ve lost count. They’re next.

The stock is actually up in pre-market, it seems that JPM might help them out more by buying stuff.

Stuff: it's technical banking terminology.



I made some money playing in FRC as it gyrated around last week, maybe I'll try again today. But as a long-term investment: No. This is something that you want to hold for minutes, maybe an hour or two, no longer.

[dradernh]

Originally Posted by BMW F22

I don’t really agree with housing market not crashing.

When did Bay Area real estate last crash, do you think?

[NickyC]

Originally Posted by LuvMyE92

The stock is actually up in pre-market, it seems that JPM might help them out more by buying stuff.

Stuff: it's technical banking terminology.



I made some money playing in FRC as it gyrated around last week, maybe I'll try again today. But as a long-term investment: No. This is something that you want to hold for minutes, maybe an hour or two, no longer.

If you bought before the pump this morning congrats! They keep halting trading on it however so nail biting stuff!

[BMW F22]

Originally Posted by dradernh

When did Bay Area real estate last crash, do you think?

2008-2012
It cratered. Areas like SF and Saratoga only dropped 15-20% but the rest of the South Bay, for example, dropped significantly.

[LuvMyE92]

Re: FRC

Originally Posted by NickyC

If you bought before the pump this morning congrats! They keep halting trading on it however so nail biting stuff!

Yeah, no, I decided not to risk it. Sure, I would have made money (hindsight) but it's still just too much of a gamble. Long or short...

[Chick Webb]

Originally Posted by BMW F22

2008-2012
It cratered. Areas like SF and Saratoga only dropped 15-20% but the rest of the South Bay, for example, dropped significantly.

Yeah, 2001-2, as well. I have some friends that bought a house pretty near the peak in Sunnyvale in '98, came into a little money in '03 and bought a nicer house in Saratoga for cheap, but were so far under water on the first one that they had to rent it. Things were pretty tight for them, what with carrying two mortgages and all, until they were able to finally sell at a small profit in '07.

It has been for a long time true that you can't lose money in the long run buying California real estate. In the short term, though....