Home Forums Hunting & Shooting Hunter's Campfire Housing price drop prediction

Interest rate increases will make a ‘price drop’ moot.

I had a 15 plus percentage mortgage with “Peanuts Carter.” So I don’t have a lot of sympathy for bitching about 5% mortgage rates. The sub 3% rates of not to long ago were unrealisticly low. If you were smart or lucky enough to grab that rate, good for you. I haven’t had a mortgage in 15 plus years.
And so what if the value of your house drops a bit, if you’re not selling, ride it out. The real estate market always has had its ups and downs but trends up over time.

Not very long ago, around here, folks were looking at how far upside down they were.

Then they would take a look at the identical house across the street, for sale for a lot less than they owed on their own.

Simple math. Buy the house across the street and let the bank foreclose on the one you are living in.

Not my way. I honor my debts. But some don't

Sure hope it does not get that bad this time.

LOCATION IS EVERYTHING...

Average blue collar wage in some areas is $100/hour.

Other locations $12/hour.

Fox is terrible.

I wouldn’t count on the cost of building going up. Lumber futures just tumbled to $471, which is below the 5 year average.

https://tradingeconomics.com/commodity/lumber

Russia is going into recession, China’s construction sector is already in recession, interest rates have already whacked housing starts……

There’s going to be a lot of cheap materials and hungry crews lookin for anyone with some cash to build houses for.

I think you are correct, by next year I'll be looking to build some multi family units once material prices come in a bit. Don't look for huge drops in prices, that won't happen for 12-18 months after we hit 10% + unemployment.

Just remember that cost of living back then was way less than it is now as far as % income required for housing, essentials, vehicles etc. So it's not really apples to apples when you consider all of it together.

There will be housing prices adjustment 10-25% depending on the area, due to high interest rates, high inflation and coming recession which has already started there will be layoffs so it's inevitable for housing prices to come down. This will be good opportunity for those with money to buy rental or second homes.

The "moving parts" of 2022 are very different than any other point in my lifetime.

At least that is my opinion...

People are unlike ever before...

Historical Models are not applicable

We won’t see near the downturn in the mountain and Southern Southern states, where we are just so far behind the demand it’s hard to fathom. Building will continue especially in multi family housing where cheap materials and crews and insane rent levels mean quick and easy money.

On the coasts, outside of a few major crown cities like NY and SFO, the market will stay soft for a long, long time. I really don’t expect any big outright drops in prices, but the next 10 years of inflation combined with stagnant prices will cut the real values by as much as half.

Even today, they claim housing went up by 7.5% in August, but that’s still a drop of 1% of value in an 8.5% inflation environment. Inflation isn’t going away for a long time, which will adjust the market significantly over time.

Some make a good case that inflation is already “crashing” as shipping costs are plummeting and inventory is going to get ridiculous and have to be moved. So they think the fed will see inflation easing and lower interest rates.

They are predicting a 7-8% increase in real estate this year as opposed to 17-18% last year.

Just what I am hearing.

Ok Calvin, do you believe that?
How about as mortgage interest goes up the value of real estate will decline... seems like simple common sense to me... or should I believe the pundits? who seem to be consistently wrong.
As an investor I would recommend you think for yourself

I think we’re past peak inflation, but according to economic theory, inflation is “sticky”, because people EXPECT higher prices. As a seller of food, I absolutely love inflation. I can get away with raising prices just by saying “you know prices are going up”.

Yes, oil is below $80 again, yes, transportation costs on the spot market are below the long term average, but there are a lot of long term contracts written under the previous price levels that won’t expire for a while yet.

Food is going to stay high for a while, labor will stay high for a while. I’m buying a couple of thousand feet of pipe for the farm right now and everyone is trying to unload the inventory they bought high., so I’m looking for the outfit that doesn’t have any, so I can get “fresh” prices.

It’s going to be a fight for a while.

Lumber futures are a poor indicator of building costs. We rarely see the same percentage of movement at retail level and it takes a long time to trickle down. Lumber futures are for commodity brokers. M
Cost of pipe, wire, windows, flooring, shingles, cabinets, appliances, tubs, paint, Sheetrock, insulation, concrete, grass seed etc. is still rising or not dropping.
Labor is traditionally 1/3-1/2 the cost of building. It’s going UP. I gave multiple 20% raises this year.

Anyone that thinks we’ve peaked and things are going to start getting better is delusional

Not seeing it in our AO. Pipe is high and will continue to be so. Our masonry supplier is limited to 40,000 bricks per month. That’s one big house. Architects are specing stone and siding now. Windows 20 weeks out, truss 8 weeks out, granite tops 6-8 weeks out.

Happening around here. Prices are dropping $50K-$70K and houses that sold in less than a week are now sitting for a month and still no lookers

You can tell the used house salesman by their answer… “unpredictable and unlike anything we have ever seen”… “Interest rate increases will make a ‘price drop’ moot”. I’m sorry and no offense but used house salesmen and insurance agents are less than a notch above politicians IMHOP. And yes you will be looking for jobs soon enough because cho biddens economy is a dumpster fire and the housing market is not far behind it. Your best bet is to start finding homes for illegals to weather the storm.

How many here are actually selling or buying?

Not me!

I am saving for a new well Ed.

And by saving I mean shopping around for an interest rate under 8.

I think the crime situation in the cities will cause many properties outside of the cities to maintain their value. New York City and the west coast urban areas are going to take the biggest hit because they're grossly over-priced and the areas are becoming extremely undesirable places to live.

Right now California is more or less breaking even between people leaving and naive young people moving in. But that won't last much longer.

When the real exodus from the cities begin in earnest, there's going to be a rush to get rid of housing in those areas and the housing prices will plummet.