For the Real Estate Drop in sales and price Naysayers HOLD ONTO YOUR HATS

[78Southwind]

I still can’t figure out what this means

This is my wildest guess. If you are shopping for lots or homes in Havasu drop off your letter of interest and give me a call. For the first couple of months, I thought these responses were from a bot. I am still kind of wondering .

 

[zhandfull]

I think you are very logical. I'm hoping majority are like you. My current sphere of influence, the work trucks and such I work on, they aren't as bright.

The older guys get it. Been there done that, not going to do it again. Five younger "insta-contractors" I know...not quite. One of them is doing good, paid for a newer used truck, left stock, paid for his tractor...new. He's the smart one.

The other 4, not so much. All 4 bought homes in the last 3 years. 3 have refied to pull equity in the past two years...one of them twice! (I didn't know it was possible, but the market kept going up I guess). All 4 have new trucks, lifted, SxS's and new cars for their wives or girlfriends. Lately I'm seeing a shift, bare minimum to keep equipment running, and a lot of "I have to wait until next week". Their monthly is a killer. Weather hasn't been too cooperative either...

I don't know what it's like in Cali, or down in Phoenix, but I'm afraid we're about to have a problem.

California is the same. Everyones a contractor in my world!

Problems is what I see ahead as well.

Been in the middle class workforce for over 30 years. During that time I have watched mortgage rates fall from 10% to 2.5%.

It’s been mentioned many times that jobs support the economy. However, no mention or consideration of how many times the average middle class property owner has refinanced a mortgage during the past 30 years to start a business, buy second homes, toys, or simply dig themselves out of debt. I’m not only talking about just cash outs. Even refinancing to lower payments has been a huge driver of the economy over the past 30 years. Can we all agree that the refinance your mortgage to lower rate or payment is likely over for the vast majority of Americans?

So here we are bouncing off arguably the lowest rates ever in the past 30 years. High debt, rents, taxes, and energy cost.

I’m not seeing any get out of debt free cards remaining for the middle class in the foreseeable future. Yes I see some pain ahead. Time to pay the Piper!

 

[COCA COLA COWBOY]

Why would that be rough? These prices got over inflated because of Covid and artificial demand? There was a period in havasu across two or three months that avg houses were rising 50+k a month.. .

If it returned to 2020 I wouldn’t call that a crash, I’d call that a return to normal. If it went back to 2011 -2013 prices I’d call that a horrendous crash. Everything in between 2016-2020 it wouldn’t be great, but maybe part of a natural
Cycle?

RD

For those in the real estate industry, it will be rough. Lots of lost jobs, lots of agents returning to their prior work related experience, lots of soccer moms not working, etc. Many in the real estate industry live beyond their means....lord knows I did in 2007. I have been in real estate for about 30 years and have gone through the good and the bad. I learned to do well in the downturns, but the transition is rough for sure. We didn't have the big teams during the last downturn so I'm interested to see how they handle it. I've been on a huge team in San Diego for 5 years and the doors are pretty much closed now for a few reasons, but the lead knew this was coming and decided to shut down and return at another time. I know the P&L's of real estate and am curious who the winners and losers will be this go around.

For the homeowners, I don't foresee a major issue unless you bought during COVID to present. It will affect some, but psychologically people want to own homes and keep them so the foreclosure rate will be elevated and not detrimental. I have always wondered if the psychology of people changed from 2008-2011 where if they saw loss of equity they would just walk away instead of holding, but there are no signs of this at all. It was so commonplace for people to walk away in that cycle so was wondering if people would just walk if values dropped.

Socal has felt the increase in values for sure, but as mentioned we are heading to Texas. Historically, Texas real estate does not increase nearly as much as Socal. I have seen precovid pricing of $400k and current pricing of $700k so I do believe those areas will be hurt more due to the high increases. This is consistent will many other areas where demand was through the roof due to the California exodus. It will be rough for those Californians that left. When prices go down in those areas, it will be a long time before those values return unless demand for those areas again is elevated enough. Many of those areas do not have industry to attract people. The sole reason people went there was to get away from California.

It will be interesting to see how this plays out, but I'm more concerned that the Dem's are trying to get in a war to prevent a recession and support their Ukraine investments.

 

[MSum661]

MBA Mortgage Applications Fell 14.2% vs -3.7% the week before.
Purchases down 12.6%, vs -0.4% last read.
Refis down 17.8%, vs -10.9% last read.

 

[hallett21]

MBA Mortgage Applications Fell 14.2% vs -3.7% the week before.
Purchases down 12.6%, vs -0.4% last read.
Refis down 17.8%, vs -10.9% last read.

I think if we see refis trending up while rates increase, then we know we have a problem coming.

 

[evantwheeler]

MBA Mortgage Applications Fell 14.2% vs -3.7% the week before.
Purchases down 12.6%, vs -0.4% last read.
Refis down 17.8%, vs -10.9% last read.

This cannot be a surprise to anyone with rates bouncing from 5% to 7% in a month.

 

[DrunkenSailor]

I think you need to get a little more granular on the refi number to spot trouble. The rate and term refi is dead so these are all cash out. Why take a cash out refi at 7%? You need the money or your gonna try to fuck the bank and ride the bailout wave. The next big question is what's the ltv?

 

[monkeyswrench]

Many of those areas do not have industry to attract people. The sole reason people went there was to get away from California.

This right here fits my area perfectly. The only "big industry" so to speak is building homes for Cali refugees. When that slows, it's going to hurt big time. In addition to that, majority of the money moving here is retirement age. Some of them built their dream homes, massive and beautiful. Without a steady influx of retirees from more well to do areas, we're screwed. Prescott itself has a median income of 60k I believe...and that's the "wealthy" area around here. Very few that have lived here their whole lives can afford a basic home, let alone the "California Built" homes.

Damnit! Someone needs to leave the gate open.

 

[COCA COLA COWBOY]

This right here fits my area perfectly. The only "big industry" so to speak is building homes for Cali refugees. When that slows, it's going to hurt big time. In addition to that, majority of the money moving here is retirement age. Some of them built their dream homes, massive and beautiful. Without a steady influx of retirees from more well to do areas, we're screwed. Prescott itself has a median income of 60k I believe...and that's the "wealthy" area around here. Very few that have lived here their whole lives can afford a basic home, let alone the "California Built" homes.

Damnit! Someone needs to leave the gate open.

That's a great area though! I love Prescott! I woosed out and didn't buy a lot at Ruger Ranch when I had my chance years ago. I have an old family friend that moved there that loves it. I'm sure you'll meet him sometime. He has a white and blue flame 32 roadster that is really nice. The guy used to drag race blown alcohol flats. Good dude and amazing fabricator.

 

[RiverDave]

For those in the real estate industry, it will be rough. Lots of lost jobs, lots of agents returning to their prior work related experience, lots of soccer moms not working, etc. Many in the real estate industry live beyond their means....lord knows I did in 2007. I have been in real estate for about 30 years and have gone through the good and the bad. I learned to do well in the downturns, but the transition is rough for sure. We didn't have the big teams during the last downturn so I'm interested to see how they handle it. I've been on a huge team in San Diego for 5 years and the doors are pretty much closed now for a few reasons, but the lead knew this was coming and decided to shut down and return at another time. I know the P&L's of real estate and am curious who the winners and losers will be this go around.

For the homeowners, I don't foresee a major issue unless you bought during COVID to present. It will affect some, but psychologically people want to own homes and keep them so the foreclosure rate will be elevated and not detrimental. I have always wondered if the psychology of people changed from 2008-2011 where if they saw loss of equity they would just walk away instead of holding, but there are no signs of this at all. It was so commonplace for people to walk away in that cycle so was wondering if people would just walk if values dropped.

Socal has felt the increase in values for sure, but as mentioned we are heading to Texas. Historically, Texas real estate does not increase nearly as much as Socal. I have seen precovid pricing of $400k and current pricing of $700k so I do believe those areas will be hurt more due to the high increases. This is consistent will many other areas where demand was through the roof due to the California exodus. It will be rough for those Californians that left. When prices go down in those areas, it will be a long time before those values return unless demand for those areas again is elevated enough. Many of those areas do not have industry to attract people. The sole reason people went there was to get away from California.

It will be interesting to see how this plays out, but I'm more concerned that the Dem's are trying to get in a war to prevent a recession and support their Ukraine investments.

There will be a lot of realtors losing their jobs for sure. As mentioned in the other threads about shitty realtors though I can’t help but wonder if some of these people should be in that line of work to begin with.

While prices were rising at unprecedented rates people were in a buying frenzy. I can’t help but ask why people wouldn’t do the same if it’s in a falling situation? Much like stocks so long as there’s movement there’s always buyers and sellers..

I’m more worried about when the market flat lines and doesn’t go up or down. That’s a little frightening.

As for income yes realtors are going to feel it big time… If they are basing their idea of “normal” off the last two years. I looked at that as abnormal, and now possibly returning back to a more normal situation.

I am setting up my machine shop for a reason though and other ventures.. I kinda liked that level of income and would like to maintain it.

 

[LargeOrangeFont]

There will be a lot of realtors losing their jobs for sure. As mentioned in the other threads about shitty realtors though I can’t help but wonder if some of these people should be in that line of work to begin with.

While prices were rising at unprecedented rates people were in a buying frenzy. I can’t help but ask why people wouldn’t do the same if it’s in a falling situation? Much like stocks so long as there’s movement there’s always buyers and sellers..

I’m more worried about when the market flat lines and doesn’t go up or down. That’s a little frightening.

As for income yes realtors are going to feel it big time… If they are basing their idea of “normal” off the last two years. I looked at that as abnormal, and now possibly returning back to a more normal situation.

I am setting up my machine shop for a reason though and other ventures.. I kinda liked that level of income and would like to maintain it.

The only reason it won’t be the same in a falling situation is access to money, and the .gov injection of money directly into the hands of consumers via PPP and other means.

If stuff actually drops in price to 2020 levels or below, there will buyers absolutely.

 

[Cole Trickle]

The only reason it won’t be the same in a falling situation is access to money, and the .gov injection of money directly into the hands of consumers via PPP and other means.

If stuff actually drops in price to 2020 levels or below, there will buyers absolutely.

I think cash buyers will make some moves. upgrades, down sizing or the cash out and move to a new state people.

The average buyer isn't going to be selling there home at a 3% interest rate and moving up the housing ladder when rates are now closer to 7%.

Not only is the principal mortgage more but with the higher rate it would be a huge monthly jump in payment and probably property tax.

 

[LargeOrangeFont]

I think cash buyers will make some moves. upgrades, down sizing or the cash out and move to a new state people.

The average buyer isn't going to be selling there home at a 3% interest rate and moving up the housing ladder when rates are now closer to 7%.

Not only is the principal mortgage more but with the higher rate it would be a huge monthly jump in payment and probably property tax.

Agreed.

 

[Cdog]

This right here fits my area perfectly. The only "big industry" so to speak is building homes for Cali refugees. When that slows, it's going to hurt big time. In addition to that, majority of the money moving here is retirement age. Some of them built their dream homes, massive and beautiful. Without a steady influx of retirees from more well to do areas, we're screwed. Prescott itself has a median income of 60k I believe...and that's the "wealthy" area around here. Very few that have lived here their whole lives can afford a basic home, let alone the "California Built" homes.

Damnit! Someone needs to leave the gate open.

Yeah, GET READY! I think Prescott will lead the way in AZ for RE correction. I've spent the last couple of years watching that market closely. I think it's at a minimum 50% over priced based on average build quality and lack of employment.

Sorry to have to say and I don't blame people for trying to capitalize off fools with money from CA but that town in for a big change..

 

[Cdog]

I'll use my situation as an example. It would be hard to talk me out of a 2.75% 30 yr fixed. Particularly when I have a 10 yr plan to sell everything when my youngest is in her last year of college. We should be in the throws of the high side of the next RE cycle by then.

However from a cost basis it makes more sense to sell at a lower cycle price and buy or build during the cycle low than it does to wait till it's skyrocketing like we see in every cycle.

Assuming you have a 25% equity situation on what you're buying or building from the net sale of current property I'd rather do that transaction on a lesser dollar amount at a cycle low. It's just smart business.

 

[shintoooo]

Neighbor two houses down listed his house for $1.35 beginning of August and closed last week for $1.325

It's a tear down.

 

[Havasu blue label]

Property tax don’t change

 

[Havasu blue label]

Certain areas of California will still sell no problem

 

[pronstar]

People will always need money, and pulling equity isn’t going away.

People with a need will continue to borrow at prevailing interest rates, regardless of what that rate is.

We may see a dip in the volume of people pulling equity in the short term, but numbers always revert to the mean and that pent-up demand for money will be satisfied one way or another.

People will also always have a need to relocate. Houses will sell at prevailing rates.

 

[pronstar]

I read that people are getting over 700hp out of that motor NA…crazy

You know what you need to do…

 

[monkeyswrench]

Yeah, GET READY! I think Prescott will lead the way in AZ for RE correction. I've spent the last couple of years watching that market closely. I think it's at a minimum 50% over priced based on average build quality and lack of employment.

Sorry to have to say and I don't blame people for trying to capitalize off fools with money from CA but that town in for a big change..

I'm not in real-estate or finance, but it's even obvious to me. I've been offered more than double what I paid in '12, and my place is a cracker box. I see 50% being a conservative guess in the coming years. Then again, the inflation may keep the numbers the same...when a dollar is worth .50

 

[RiverDave]

I read that people are getting over 700hp out of that motor NA…crazy

You know what you need to do…

Solid pull.. both in the thread and the dyno lol

 

[zhandfull]

Seems like a decent deal for a fixer. Listed for $350,000 and sold three month later for $225,000.

 

[zhandfull]

Here’s another, listed $419,000 and sold for $$364,000. Looks like a bit of a correction might be taking place.

 

[zhandfull]

One more pool home listed $529,000 and sold for $400,000.

 

[motormonkey]

The sky is not falling in my opinion. If you bought pre covid with a low fixed rate, who cares what the market does. Your mortgage would be so low that you have nothing to lose.
The people that are going to hurt in this are the business side of buying and selling, speculators, flippers, and developers.
There could only be a few reasons to go into foreclosure, but not like 2008. No blood in water unless you over extended your business position in housing.

 

[Havasu blue label]

Big correction coming if your house go below what you paid for it and start eating at your down payment things change

 

[jet496]

The sky is not falling in my opinion. If you bought pre covid with a low fixed rate, who cares what the market does. Your mortgage would be so low that you have nothing to lose.
The people that are going to hurt in this are the business side of buying and selling, speculators, flippers, and developers.
There could only be a few reasons to go into foreclosure, but not like 2008. No blood in water unless you over extended your business position in housing.

Agreed. Even if you bought high & the housing prices crashed 50%, as long as your job & financial status hasn't changed it doesn't matter. At that point it would be just a psychological problem, no reason to hand the keys to the lender & file bankruptcy, like I saw happen during the previous crash in 2008 or so.

Of course people with balloon payments got hosed & lost it all back then, but I personally knew a few people that just because the value of their house plummeted, they bailed on it, yet they could afford the payment same as before. They just couldn't handle the fact that it was worth much less than when they bought it, but if they would have kept those homes, today they would be sitting pretty.

In this case that super low interest rate, which we may not see again, helps offset the high cost of the home. It's all in the mind. These houses will be double in 20 years so don't fret if your buying high, as long as you like it.

 

[Done-it-again]

I just want to build my house in TX. But new build cost are still high and haven’t dropped in relation to the rise in interest rates or existing homes.

I’m not all to concerned about interest rates as long as the price of the home is not overpriced when buying. Rates all ways change and you can refi accordingly.

 

[Sportin' Wood]

I feel like I have seen this movie before. Regardless of turning the direction of 2008, something I suspect is the same.

When times are good, the world is a little easier to navigate. Soccer Mom can sell Real Estate; a car salesman can hustle a side gig selling Mortgages; a construction worker suddenly becomes a contractor. All these can cash flow pretty well but might give the false sense of success when times are good and demand is high. Add in a bit of risk, and the lack of business acumen starts to crack the shaky foundation on which these endeavors are built. Tightening credit and lack of free money make survival difficult. You wake up one morning, and you are in a debt pile; your cash flow turns to a drip, suddenly, it is like the music stopped, and there are not enough chairs to go around.

Maybe your wife was working for your small business, and in the blink of an eye, you have no income? I don't care how awesome a mortgage rate you have; you can't squeeze blood from a turnip.

Maybe the sequel will have a happier ending.

 

[zhandfull]

Definitely turning to a buyers market in Havasu. It would seem the days of bidding over asking price in Havasu may be over for the time being. Yes, every situation is different. But based on some recent sales the tide is turning.

 

[bk2drvr]

Definitely turning to a buyers market in Havasu. It would seem the days of bidding over asking price in Havasu may be over for the time being. Yes, every situation is different. But based on some recent sales the tide is turning.

The three recent solds above are pretty big wacks to the original listing price.

 

[zhandfull]

The three recent solds above are pretty big wacks to the original listing price.

If I could afford gas for the drive from SoCal I would go looking at properties in Havasu.

 

[bk2drvr]

If I could afford gas for the drive from SoCal I would go looking at properties in Havasu.

You have plenty of time, we are only half way through the first inning.

 

[grumpy88]

What about the changing environmental policies. Cities forcing people to remove grass and pretty much kill off landscape . In Las Vegas you can only build a bathtub of a pool now . Those will be two huge industries that will be decimated in the next year or two . There tenticals run wide to new trucks , supply houses and even insurance brokers . Like mentioned it does not matter how low your interest rate is if the money stops coming in .

 

[TCHB]

What about the changing environmental policies. Cities forcing people to remove grass and pretty much kill off landscape . In Las Vegas you can only build a bathtub of a pool now . Those will be two huge industries that will be decimated in the next year or two . There tenticals run wide to new trucks , supply houses and even insurance brokers . Like mentioned it does not matter how low your interest rate is if the money stops coming in .

My neighbor is tearing out a huge pool and putting in a even bigger pool. The pool builder told me he is booked out 7 months.

 

[TCHB]

Agreed. Even if you bought high & the housing prices crashed 50%, as long as your job & financial status hasn't changed it doesn't matter. At that point it would be just a psychological problem, no reason to hand the keys to the lender & file bankruptcy, like I saw happen during the previous crash in 2008 or so.

Of course people with balloon payments got hosed & lost it all back then, but I personally knew a few people that just because the value of their house plummeted, they bailed on it, yet they could afford the payment same as before. They just couldn't handle the fact that it was worth much less than when they bought it, but if they would have kept those homes, today they would be sitting pretty.

In this case that super low interest rate, which we may not see again, helps offset the high cost of the home. It's all in the mind. These houses will be double in 20 years so don't fret if your buying high, as long as you like it.

We bought our home in Huntington Beach in 1980. The market went up and down but never really bothered us because we liked the area to raise the girls.

 

[LuauLounge]

Another factor are the flippers, small guys to Opendoor and others.
The big guys were writing checks way above the market, doing a quick rehab and 4 months later are now down below what they originally paid.

 

[LargeOrangeFont]

What about the changing environmental policies. Cities forcing people to remove grass and pretty much kill off landscape . In Las Vegas you can only build a bathtub of a pool now . Those will be two huge industries that will be decimated in the next year or two . There tenticals run wide to new trucks , supply houses and even insurance brokers . Like mentioned it does not matter how low your interest rate is if the money stops coming in .

The cost to build a bathtub or a regular pool aren’t too much different sadly.

Waiting to see if that happens.. then I’ll build a pool.

 

[jet496]

I feel like I have seen this movie before. Regardless of turning the direction of 2008, something I suspect is the same.

When times are good, the world is a little easier to navigate. Soccer Mom can sell Real Estate; a car salesman can hustle a side gig selling Mortgages; a construction worker suddenly becomes a contractor. All these can cash flow pretty well but might give the false sense of success when times are good and demand is high. Add in a bit of risk, and the lack of business acumen starts to crack the shaky foundation on which these endeavors are built. Tightening credit and lack of free money make survival difficult. You wake up one morning, and you are in a debt pile; your cash flow turns to a drip, suddenly, it is like the music stopped, and there are not enough chairs to go around.

Maybe your wife was working for your small business, and in the blink of an eye, you have no income? I don't care how awesome a mortgage rate you have; you can't squeeze blood from a turnip.

Maybe the sequel will have a happier ending.

Yup, it's starting to happen. An employee of mine didn't need to work much because his wife made bank but he just asked if he could move up as a manager & huge increase in pay since he'll be sole provider now.

I see the construction boom is coming to an end just by looking around, our customer activity & invitations for bids.

We're looking into a couple houses that my son is interested in and the monthly payments with interest, property tax & insurance are $7,000 month ($84,000 year) for one at $1.2 mil and $10,600 per month ($140,000 year) for $1.8 mil for another, which are normal for our area. I don't know how your average Joe on a fixed salary can afford this. That's just for a roof over your head.

Something's gotta give.

 

[RiverDave]

I feel like I have seen this movie before. Regardless of turning the direction of 2008, something I suspect is the same.

When times are good, the world is a little easier to navigate. Soccer Mom can sell Real Estate; a car salesman can hustle a side gig selling Mortgages; a construction worker suddenly becomes a contractor. All these can cash flow pretty well but might give the false sense of success when times are good and demand is high. Add in a bit of risk, and the lack of business acumen starts to crack the shaky foundation on which these endeavors are built. Tightening credit and lack of free money make survival difficult. You wake up one morning, and you are in a debt pile; your cash flow turns to a drip, suddenly, it is like the music stopped, and there are not enough chairs to go around.

Maybe your wife was working for your small business, and in the blink of an eye, you have no income? I don't care how awesome a mortgage rate you have; you can't squeeze blood from a turnip.

Maybe the sequel will have a happier ending.

Lol man you nailed that!!

It’s kinda weird you can feel an “edginess” in Havasu right now. I have never seen so many people arguing with their wives, arguing with friends etc.. everyone is wondering what happens next and it’s wearing on people.

 

[RiverDave]

We bought our home in Huntington Beach in 1980. The market went up and down but never really bothered us because we liked the area to raise the girls.

That’s how I feel.. purchaser my house for 310.. at the absolute peak I coulda got 950’ish.. In the last three months I’d say it has gone down between 100-150k..

Doesn’t matter to me it’s all paper money anyways, I don’t plan on selling it.

Some realities that I believe personally.. the market isn’t crashing, it’s correcting. For Havasu things got hyper inflated because of being open during Covid.. for a variety of reasons but we aren’t Newport Beach and n some areas they were getting at or over Newport prices.

 

[cyclone]

In my neighborhood there are several large lots for sale that have sat on the market for at least six months. Not many houses in this area so it's rare when one comes up for sale. A house on my street (Northwest Georgia, about 30 miles from Atlanta) was listed two months ago for 1.2 million. Seller just dropped the price again and are down to 899K. They bought the house about 5 years ago for less than 600K. The house is identical in size to mine but does not have a view of the lake (neither do i) and that house has a small garage that you can't park a boat inside of. I have a six car garage and my house isn't worth 899K and neither is that other one. Seems to me like the market has cooled off.

 

[TCHB]

That’s how I feel.. purchaser my house for 310.. at the absolute peak I coulda got 950’ish.. In the last three months I’d say it has gone down between 100-150k..

Doesn’t matter to me it’s all paper money anyways, I don’t plan on selling it.

Some realities that I believe personally.. the market isn’t crashing, it’s correcting. For Havasu things got hyper inflated because of being open during Covid.. for a variety of reasons but we aren’t Newport Beach and n some areas they were getting at or over Newport prices.

Sounds like you have a home for your family!

 

[boatpi]

Having on property along the orange county coastline since the late 1970s I can tell you one thing that has never changed downward more than 3%. A single-family home within a half a mile of the orange county coastline it’s like gold.

 

[Havasu blue label]

That is very true we have a duplex in hb never worried about since 1989

 

[Maw]

We bought our home in Huntington Beach in 1980. The market went up and down but never really bothered us because we liked the area to raise the girls.

HB here too as well. Closed a couple of days after our honeymoon in June 1980, raised three boys in that home. $92k back then, worth about $1M now as one of our rentals.

 

[LuauLounge]

In 83, we moved to an area that we were familiar with, but weren’t ready to make a commitment to. Leased a place and waited a bit. Wanted to buy a lot and definitely a pool. As the area was pretty much built out, lots were expensive and hard to find. Found a 4/3 house on a 1/3 of an acre with a pool. Quick math, buying it was cheaper than a bare lot and a pool.
Long story short, still here.

 

[grumpy88]

The cost to build a bathtub or a regular pool aren’t too much different sadly.

Waiting to see if that happens.. then I’ll build a pool.

Terrible experience. I don't think I would ever do it again .

 

[grumpy88]

My neighbor is tearing out a huge pool and putting in a even bigger pool. The pool builder told me he is booked out 7 months.

Only if the permit was pulled already . I think it was Oct 1 no more pools over x dimension and depth being approved .