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2023 recession?

Recession in 2023?

  • Yes

    Votes: 171 64.3%
  • No

    Votes: 54 20.3%
  • RDP Sux

    Votes: 74 27.8%

  • Total voters
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OldSchoolBoats

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Just met with one of my builder clients in Menifee. New phase being released this Saturday. People are in tents camping in line...........

Oh and rates are not going to go to 10%, that is laughable.
 

Havasu blue label

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Covid has nothing to do with it . People spending fake money pulled money out fill bad but be responsible with spending
 

MSum661

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6%....next stop
She's runnin hard!

30 Yr. fixed 5.62

Screenshot 2022-05-05 at 12-16-33 Today&#39 s Mortgage Rates.png
 

HTMike

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Keep climbing !!! I bet in 2023 we will be talking about 15% interest rates. My friend who is a lender in Chicago has said it has ground to a halt.
 

OldSchoolBoats

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Oh no ? What will seven more .5% rate hikes leave us at from today's rate ?? LMFAO.
Keep climbing !!! I bet in 2023 we will be talking about 15% interest rates. My friend who is a lender in Chicago has said it has ground to a halt.

Well.......it is actually 6 more hikes from here (if they get there) which would be 7% for the prime rate.

Your friend must not do a lot of purchase business. Yes, it is slower compared to last years spring buying season, but I have received 3 new contracts over this week. Well qualified clients, putting 20% + down and there was a small gasp when I quoted the rates but at the end of the day, it didn't matter to them.
 

MSum661

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Keep climbing !!! I bet in 2023 we will be talking about 15% interest rates. My friend who is a lender in Chicago has said it has ground to a halt.

Given the circumstances, anything is possible, nobody knows what will happen next. The Fed doesn't even have a clue what will happen.
But, a lot of eyes will be there on June 1st, the day the Fed starts to unwind their $9 Trillion balance sheet of fraud, drastically wrong fiscal policy'(s), picking and choosing who they will bail out...who they wouldn't, etc.

My guess they won't get very far.
 

HTMike

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Well.......it is actually 6 more hikes from here (if they get there) which would be 7% for the prime rate.

Your friend must not do a lot of purchase business. Yes, it is slower compared to last years spring buying season, but I have received 3 new contracts over this week. Well qualified clients, putting 20% + down and there was a small gasp when I quoted the rates but at the end of the day, it didn't matter to them.

Obviously not all markets are the same.
 

RVRKID

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I remember buying in 07(dumbest thing we did at the time) and we locked at 6.75% thinking we got a good rate at the time, thankfully i was able to stay in the house thru everything and am locked at 2.875%..
 

Gonefishin5555

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I remember buying in 07(dumbest thing we did at the time) and we locked at 6.75% thinking we got a good rate at the time, thankfully i was able to stay in the house thru everything and am locked at 2.875%..
Yeah we all have 3% loans so big fucking deal. No one is going BK with a 3% loan and a mortgage payment that is only 50% of what the rent payment would be on my house. edit not replying to you but the thread in general:):)😁
 

monkeyswrench

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As long as everyone is still employed or making money that wants to, not a whole lot to worry about. A 3% loan or mortgage that is reasonable now, is all dependent on income. If the buyer loses their job, it could be 3 or 30%, it won't matter. All things are relative.

I hope OSB is right, and things don't get out of hand. A dip is easy for most to handle by making changes. A crash, however, would change multiple dynamics, and get ugly. I haven't much to lose or to gain either way, but the young ones, in general, I worry about.
 

pronstar

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Fox was talking about it this morning, they interviewed several politicians R & D and they all said it appears it's coming.

A politician is the absolute last person I’d look to for financial insights.

The word “recession” is loaded…everyone uses it, not everyone correctly. The media (and most politicians) uses it as another boogeyman to keep people skerred.

Better to look at fundamentals, the things that drive the economy, to determine the relative heath of the economy.
 

CarolynandBob

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As long as everyone is still employed or making money that wants to, not a whole lot to worry about. A 3% loan or mortgage that is reasonable now, is all dependent on income. If the buyer loses their job, it could be 3 or 30%, it won't matter. All things are relative.

I hope OSB is right, and things don't get out of hand. A dip is easy for most to handle by making changes. A crash, however, would change multiple dynamics, and get ugly. I haven't much to lose or to gain either way, but the young ones, in general, I worry about.

Yes in your example it wouldn't be a big deal. However, we have seen this play out in the past.

They have a 3% mortgage. They use the equity with a heloc as an atm machine just like the commercials tell them to do and now you have the "cash" buyer of RV's and off road toys. Well now that interest rate is going up as it is an adjustable rate. Now the payments get tougher to make and they have to sell. The best thing to do is sell immediately to pay down the heloc, but most won't. In six months when the heloc rate is even higher they try to sell and can't get shit for it because everyone else in the same position is selling. Now "IF" their house still has enough equity they refinance and roll the heloc into a new fixed rate and will probably be ok. If they don't have the equity and do not qualify for a new fixed rate then the foreclosures start to happen.

Let's hope that I am wrong, but like I said we have seen this happen before.

My biggest question is when to get back in the market? As I have said I have our money sitting in bonds since the end of December/ early Jan. Reading everyone's opinions and it looks like I should stay on the sidelines. I know I am "losing" as I am not keeping up with inflation, but with the gains in the past I am ahead over the long haul, so sitting on it doesn't hurt.
 

hallett21

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Yes in your example it wouldn't be a big deal. However, we have seen this play out in the past.

They have a 3% mortgage. They use the equity with a heloc as an atm machine just like the commercials tell them to do and now you have the "cash" buyer of RV's and off road toys. Well now that interest rate is going up as it is an adjustable rate. Now the payments get tougher to make and they have to sell. The best thing to do is sell immediately to pay down the heloc, but most won't. In six months when the heloc rate is even higher they try to sell and can't get shit for it because everyone else in the same position is selling. Now "IF" their house still has enough equity they refinance and roll the heloc into a new fixed rate and will probably be ok. If they don't have the equity and do not qualify for a new fixed rate then the foreclosures start to happen.

Let's hope that I am wrong, but like I said we have seen this happen before.

My biggest question is when to get back in the market? As I have said I have our money sitting in bonds since the end of December/ early Jan. Reading everyone's opinions and it looks like I should stay on the sidelines. I know I am "losing" as I am not keeping up with inflation, but with the gains in the past I am ahead over the long haul, so sitting on it doesn't hurt.
Given the record low rates over the last 1-3 years, I would imagine most got a fixed rate?
 

rivrrts429

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Yes in your example it wouldn't be a big deal. However, we have seen this play out in the past.

They have a 3% mortgage. They use the equity with a heloc as an atm machine just like the commercials tell them to do and now you have the "cash" buyer of RV's and off road toys. Well now that interest rate is going up as it is an adjustable rate. Now the payments get tougher to make and they have to sell. The best thing to do is sell immediately to pay down the heloc, but most won't. In six months when the heloc rate is even higher they try to sell and can't get shit for it because everyone else in the same position is selling. Now "IF" their house still has enough equity they refinance and roll the heloc into a new fixed rate and will probably be ok. If they don't have the equity and do not qualify for a new fixed rate then the foreclosures start to happen.

Let's hope that I am wrong, but like I said we have seen this happen before.

My biggest question is when to get back in the market? As I have said I have our money sitting in bonds since the end of December/ early Jan. Reading everyone's opinions and it looks like I should stay on the sidelines. I know I am "losing" as I am not keeping up with inflation, but with the gains in the past I am ahead over the long haul, so sitting on it doesn't hurt.


You can quantify your theory as this statistic is out there somewhere. If I remember it correctly Heloc’s over the last few years weren’t an unusually inflated number like you’d want to see to support your thinking.

This feels very different than 2008 where you had a massive amount of Adjustable Rate Mortgages and/or stated income mortgages.

Any retraction in the economy I don’t see beginning in real estate. People actually have money in these homes with real down payments and legit financing.
 

Gonefishin5555

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I don’t think anyone will refi out of a 3% loan into a 6% mortgage to payoff a heloc. I got a used car loan at 3.7% in early March right before the rates spiked. I would guess most people didn’t use a heloc for vehicle purchases cause the financing rates have been so low. My boat is at 5.9% it still wasn’t high enough to make me go get a heloc
 

zhandfull

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I believe total consumer debt divided by population equals 80k.

I find it hard to believe people are carrying the average household income in debt. Put another way a family house hold making 90k has 80k in non mortgage debt.

Maybe they do 🤷🏼‍♂️
New truck today can easily be 80k. I know we all pay cash on RDP but most run with payment outside of this fine establishment.
 

monkeyswrench

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You can quantify your theory as this statistic is out there somewhere. If I remember it correctly Heloc’s over the last few years weren’t an unusually inflated number like you’d want to see to support your thinking.

This feels very different than 2008 where you had a massive amount of Adjustable Rate Mortgages and/or stated income mortgages.

Any retraction in the economy I don’t see beginning in real estate. People actually have money in these homes with real down payments and legit financing.
I believe you about the stated incomes, and people having more tied up in their homes. That is my one sliver of hope really. The only thing I have seen that bothers me here in my area, is the number of 1st time buyers that refied within a year or so, and bought all kinds of toys and cars. Most of them are "contractors". I don't know how that plays out in the long term. I know these guys tend to be younger, and a little less seasoned or prepared.
 

hallett21

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New truck today can easily be 80k. I know we all pay cash on RDP but most run with payment outside of this fine establishment.
Lol. But the “average” American household does not have a F250 lariat in the driveway.
 

Go-Fly

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You can quantify your theory as this statistic is out there somewhere. If I remember it correctly Heloc’s over the last few years weren’t an unusually inflated number like you’d want to see to support your thinking.

This feels very different than 2008 where you had a massive amount of Adjustable Rate Mortgages and/or stated income mortgages.

Any retraction in the economy I don’t see beginning in real estate. People actually have money in these homes with real down payments and legit financing.
I've said it before, it's coming from the bottom up. The government has built a system for the working class that rewards you for making less. People get better healthcare coverage the less money they make. Working moms are making more money by staying home. If the goal is to spend less, the working class is headed that direction as they follow the leader of inflation.
 

OldSchoolBoats

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I believe you about the stated incomes, and people having more tied up in their homes. That is my one sliver of hope really. The only thing I have seen that bothers me here in my area, is the number of 1st time buyers that refied within a year or so, and bought all kinds of toys and cars. Most of them are "contractors". I don't know how that plays out in the long term. I know these guys tend to be younger, and a little less seasoned or prepared.
As someone who was on the front lines of the refinance boom, I can tell you with 100% certainty that 1st time buyers were not refinancing within a year or so and buying toys and cars. They were refinancing into lower rates / lower mortgage insurance or getting a lower rate and eliminating mortgage insurance altogether. I don't think that people give this generation enough credit. A lot of them saw what happened to their family and friends in 2008 and know not to make the same mistakes. Granted, there are people that probably refinanced, took cash out and bought a toy, but the majority didn't. I know that it is tough for a lot of people on this site to believe, but those are the facts.

Great thing about life is that NOBODY can predict the future. Tomorrow is not guaranteed. Enjoy life, take chances and don't worry about the things that you can't control, that is how I live.
 

gqchris

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A politician is the absolute last person I’d look to for financial insights.

The word “recession” is loaded…everyone uses it, not everyone correctly. The media (and most politicians) uses it as another boogeyman to keep people skerred.

Better to look at fundamentals, the things that drive the economy, to determine the relative heath of the economy.
You forgot to add realtors and mortgage brokers to that list as well. LOL...Im sure they all have my our best interests at heart!
 
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pkrrvr619

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As someone who was on the front lines of the refinance boom, I can tell you with 100% certainty that 1st time buyers were not refinancing within a year or so and buying toys and cars. They were refinancing into lower rates / lower mortgage insurance or getting a lower rate and eliminating mortgage insurance altogether. I don't think that people give this generation enough credit. A lot of them saw what happened to their family and friends in 2008 and know not to make the same mistakes. Granted, there are people that probably refinanced, took cash out and bought a toy, but the majority didn't. I know that it is tough for a lot of people on this site to believe, but those are the facts.

Great thing about life is that NOBODY can predict the future. Tomorrow is not guaranteed. Enjoy life, take chances and don't worry about the things that you can't control, that is how I live.
That’s what we did three years into our mortgage a while ago. Got a better rate and got rid of mortgage insurance.
 

monkeyswrench

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As someone who was on the front lines of the refinance boom, I can tell you with 100% certainty that 1st time buyers were not refinancing within a year or so and buying toys and cars. They were refinancing into lower rates / lower mortgage insurance or getting a lower rate and eliminating mortgage insurance altogether. I don't think that people give this generation enough credit. A lot of them saw what happened to their family and friends in 2008 and know not to make the same mistakes. Granted, there are people that probably refinanced, took cash out and bought a toy, but the majority didn't. I know that it is tough for a lot of people on this site to believe, but those are the facts.

Great thing about life is that NOBODY can predict the future. Tomorrow is not guaranteed. Enjoy life, take chances and don't worry about the things that you can't control, that is how I live.
You are on the frontline on a much different battlefield than where I am. It may be completely different in SoCal compared to here. Being the guy doing liftkits, exhaust systems and other upgrades on newer trucks, I can tell you with great certainty there is a fair percentage out here that did just that. Many of them under 35yo, and pretty much bragging because they "made so much on their house".

Our bubble here is pretty much supported by Cali escapees. When it so much as hiccups there, things will get ugly here. When your sales slow, ours will stop.

That said, by all means, keep doing what you're doing. I could care less if people quit coming here and buying homes. In fact, I'd rather them not. For the sake of the younger families though, I hope things stay strong. I have little faith in the government and the banking system.
 

MSum661

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I believe you about the stated incomes, and people having more tied up in their homes. That is my one sliver of hope really. The only thing I have seen that bothers me here in my area, is the number of 1st time buyers that refied within a year or so, and bought all kinds of toys and cars. Most of them are "contractors". I don't know how that plays out in the long term. I know these guys tend to be younger, and a little less seasoned or prepared.

Basically you're concerns are real, imo. Looking back in the rear view mirror home prices have appreciated +/- 40% since the start of the pandemic.
We don't need to hash out any of the reasons why that happened, but the one thing we can absolutely count on is the days of a generation of Fed backed stupid easy money is over. Done. Period. They can't keep playing the game's as the lender of last resort. They have already foolishly done enough damage.

Your concern may be better directed at what now happens going forward by the promise that mortgage interest rates will continue to climb and keep climbing, as they quickly already have by nearly doubling since the recent lows, and what effect that will have on price appreciation going forward on top of the previous 40 +/-%. Right now, the market is stable and should remain that way for the time being. But its not a stretch of the imagination that if the Feds new policy plan could eventually start to erode away at the existing 2021-2022 home price appreciation by half of the 40+% price growth and take out 20%. If that happens, then the market would be filled with new home buyers with loans that came into their loans with 20% down payments now sitting on zero equity. In other words, 100% mortgage debt. And if they wanted out they would need to subtract any realtor fees on top of that which means it would cost them out of pocket cash to make the exit.

We don't need to go back and use 2008 as a comparable as so many here like to do, if you've been on this planet long enough and have or had skin in this RE game for decades then you can with ease use other historical data to clearly see 20%+ price corrections are real. And when they do correct, the correction doesn't heal itself in months or a year or two....it takes years & years. So if there is any silver lining, 2021-2022 home borrowers locked in at low rates, will play a big part in keeping those borrowers living in their homes for the long duration, but they might get their 20% deposit swept out from underneath them and then be parked over a home with a 100% mortgage debt and no chance of any future re-fi options due to poor loan to equity ratios.

Its not the end of the World.
 

pronstar

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Interesting data on “housing shortage”

He fails to cover supply/demand, and how there’s been a shortage of entry-level homes for decades…that didn’t just start in 2021.

He makes a good case with data for some segments, but I don’t think he’s looking at the entire picture.
 

OldSchoolBoats

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You are on the frontline on a much different battlefield than where I am. It may be completely different in SoCal compared to here. Being the guy doing liftkits, exhaust systems and other upgrades on newer trucks, I can tell you with great certainty there is a fair percentage out here that did just that. Many of them under 35yo, and pretty much bragging because they "made so much on their house".

Our bubble here is pretty much supported by Cali escapees. When it so much as hiccups there, things will get ugly here. When your sales slow, ours will stop.

That said, by all means, keep doing what you're doing. I could care less if people quit coming here and buying homes. In fact, I'd rather them not. For the sake of the younger families though, I hope things stay strong. I have little faith in the government and the banking system.
I mean, if someone sold their home they bought in 2011 - 2019 they definitely made some money. If they moved to your area and bought a new home with a cheaper monthly payment then their California home and still had money left over from the sale then I could see someone using that to buy a toy or customize a truck, etc. Not the smartest thing to do IMO, but not everyone is an intelligent investor.
 

monkeyswrench

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Basically you're concerns are real, imo. Looking back in the rear view mirror home prices have appreciated +/- 40% since the start of the pandemic.
We don't need to hash out any of the reasons why that happened, but the one thing we can absolutely count on is the days of a generation of Fed backed stupid easy money is over. Done. Period. They can't keep playing the game's as the lender of last resort. They have already foolishly done enough damage.

Your concern may be better directed at what now happens going forward by the promise that mortgage interest rates will continue to climb and keep climbing, as they quickly already have by nearly doubling since the recent lows, and what effect that will have on price appreciation going forward on top of the previous 40 +/-%. Right now, the market is stable and should remain that way for the time being. But its not a stretch of the imagination that if the Feds new policy plan could eventually start to erode away at the existing 2021-2022 home price appreciation by half of the 40+% price growth and take out 20%. If that happens, then the market would be filled with new home buyers with loans that came into their loans with 20% down payments now sitting on zero equity. In other words, 100% mortgage debt. And if they wanted out they would need to subtract any realtor fees on top of that which means it would cost them out of pocket cash to make the exit.

We don't need to go back and use 2008 as a comparable as so many here like to do, if you've been on this planet long enough and have or had skin in this RE game for decades then you can with ease use other historical data to clearly see 20%+ price corrections are real. And when they do correct, the correction doesn't heal itself in months or a year or two....it takes years & years. So if there is any silver lining, 2021-2022 home borrowers locked in at low rates, will play a big part in keeping those borrowers living in their homes for the long duration, but they might get their 20% deposit swept out from underneath them and then be parked over a home with a 100% mortgage debt and no chance of any future re-fi options due to poor loan to equity ratios.

Its not the end of the World.
If a buyer can stay in their purchase long enough, they should be fine. That is what always scared me about rentals...I didn't make enough to cover the other doors without a renter. With the eviction BS they did, I would have gone ballistic. By the time things got to where I could make that kind of move, values here skyrocketed, so I held off. Maybe this next cycle? No matter what. There will be opportunities for some, and headache for others. Pretty sure it's always been that way.
 

Mrs. Riley1

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We sold a dirt lot in Willow Valley several months ago. We had three offers the first day. Two of them were contingent on the finalization of their heloc. $56k just for dirt and then they still have to build on it. Makes me wonder how much they pulled out of their equity.
 

monkeyswrench

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I mean, if someone sold their home they bought in 2011 - 2019 they definitely made some money. If they moved to your area and bought a new home with a cheaper monthly payment then their California home and still had money left over from the sale then I could see someone using that to buy a toy or customize a truck, etc. Not the smartest thing to do IMO, but not everyone is an intelligent investor.
That is the key example of all the retirees in the development at the end of my road. New trucks, new cowboy boots and a "look at me" attitude 😂 Most came from track homes they made a killing on, but were probably very "average". Here, they are big fish in a small pond. Hell, I had one customer that refied his home and used a good portion of the funds for an early car...If I'd had known that, I wouldn't have done so much work, if any, for him. He's the first ever to stiff me, even if just for a few hundred:mad:.

The ones I see that worry me the most, out here, are the young guys in their first homes. They haven't seen the cycles. It's all roses, but roses wilt.
 

OldSchoolBoats

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We sold a dirt lot in Willow Valley several months ago. We had three offers the first day. Two of them were contingent on the finalization of their heloc. $56k just for dirt and then they still have to build on it. Makes me wonder how much they pulled out of their equity.
A lot of people do this when purchasing lots to build on because the terms on a HELOC are better than a land loan. They then roll that lot purchase into a construction loan to build.
 

Hammer

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If a buyer can stay in their purchase long enough, they should be fine. That is what always scared me about rentals...I didn't make enough to cover the other doors without a renter. With the eviction BS they did, I would have gone ballistic. By the time things got to where I could make that kind of move, values here skyrocketed, so I held off. Maybe this next cycle? No matter what. There will be opportunities for some, and headache for others. Pretty sure it's always been that way.

This is us. Same boat. Would love to invest in RE for retirement Income when that day comes.
 

Hammer

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A lot of people do this when purchasing lots to build on because the terms on a HELOC are better than a land loan. They then roll that lot purchase into a construction loan to build.
We were close to this but the cost of dirt and not being able to hold suppliers to material quotes due to inflation and availability kept me on the sidelines.
 
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EmpirE231

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You are on the frontline on a much different battlefield than where I am. It may be completely different in SoCal compared to here. Being the guy doing liftkits, exhaust systems and other upgrades on newer trucks, I can tell you with great certainty there is a fair percentage out here that did just that. Many of them under 35yo, and pretty much bragging because they "made so much on their house".

Our bubble here is pretty much supported by Cali escapees. When it so much as hiccups there, things will get ugly here. When your sales slow, ours will stop.

That said, by all means, keep doing what you're doing. I could care less if people quit coming here and buying homes. In fact, I'd rather them not. For the sake of the younger families though, I hope things stay strong. I have little faith in the government and the banking system.
Look man.... everyone got those 50K side by sides and 150-250K boats all cash!! no funny money from the home bank accts....... Even though there are stats showing 500billion in equity pulled out in cash our refinances over the last 2 years....

Somehow someway... in the last 10 years, everyone has been super financially conservative because they locked in a 3% rate...
 

EmpirE231

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He fails to cover supply/demand, and how there’s been a shortage of entry-level homes for decades…that didn’t just start in 2021.

He makes a good case with data for some segments, but I don’t think he’s looking at the entire picture.
he did touch on that for a bit... about population size, in comparison to available SFR / apartments etc

also... the fact of if we didn't have such low rates for the last 10 years, etc, eviction and foreclosure bans for the last 2 years... there wouldn't be much of a shortage

Things will play out... who knows how bad it'll get... I just remember the same line of "shortage" being used in 06 & 07 and since then.... there has been a crap ton of new homes / apartments built... and population size really hasn't drown at a crazy pace since then.
 

monkeyswrench

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Look man.... everyone got those 50K side by sides and 150-250K boats all cash!! no funny money from the home bank accts....... Even though there are stats showing 500billion in equity pulled out in cash our refinances over the last 2 years....

Somehow someway... in the last 10 years, everyone has been super financially conservative because they locked in a 3% rate...
Up here, the younger guys are brazen about stating they "paid cash" with the cash out refi...stupid things to brag about, but they do.

Some of us here have been super financially conservative. Those that are, it's because we remember. Those in my area that aren't, are either too young, and this is their first rodeo, or freshly retired from a gig and thinking they're living large...the Cali folks that sold out, but didn't buy outright, bought shiny toys, but kept a house payment...and a fixed income.
 
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