This article suggests that housing prices will continue to drop through next summer or so.

https://www.foxbusiness.com/economy...send-home-prices-tumbling-economist-says

My wife and I plan to move to Arkansas in early October and will be renting a mobile home. Not sure of the rent yet but suspect it will be under $1000/month. We looked at 11 homes while we were there recently and only found 1 that we really liked but it had just been listed the day before we saw it and was priced at $425,000. It is further away from where I will be working than I would ideally like to commute but was a stunning house on acreage. The owner is a realtor and presumably has some sense of the current market and priced it accordingly. We will see if he drops the price anytime soon or maybe it will sell today?

Anyway maybe we should just stay in the mobile home for several months and see if house prices do drop. Of course interest rates could continue to climb but maybe the prices will drop enough such that we could just buy a house outright without needing a mortgage. That would be sweet but I suspect to get what we are looking for we will still need a mortgage to some extent.

Rate hikes finally taking hold?

Hold off buying until the TV tells people we're in a recession.

Prices are likely to drop 'some'.

The issue will be the cost of new builds over the past 1-2 years IMHO

Many 'new home' owners will be upside down if prices drop drastically.

Nobody wants a high interest home loan now.

That will hurt the real estate market across the board.

FJB!

Lol.

I would guess within three years we will be seeing a bunch of "short sales" and repos hitting the market.

The prices will definitely drop overall. Any individual market might hold onto prices but there’s going to be damned few. Interest rates are going to kill the housing market. You shouldn’t see a repeat of the ‘08 crash because there isn’t that many adjustable rate mortgages or balloon mortgages. Many people will be upside down and stuck. Some will lose their homes due to income loss but it shouldn’t be overwhelming. I would certainly wait to buy until prices fall and the Fed reverses course and starts lowering interest rates. Timed right you can catch the bottom of the market and lower interest rates.

Yep, I bet you’re right. Lots of folks are going to be under water. Imagine having to relocate and your house is worth $50,000.00 less than you paid for it.

But your home loan is at 3.2% and if you walk away to buy a similar home slightly cheaper your new home loan intrest rate would be much, much higher.

Making your upside down low interest rate home appearing to be the prize that it is.

6% is high interest? That was a really great rate not too long ago, I've heard horror stories of them 16-20% in the past.
But I get ya, definitely high compared to what we've seen the past couple years.

You can not only thank FJB but J Powell as well for this mess.

Interest rates should have been 'bumped' upward starting a year ago[if not 7-8 years ago] to head this off.
Powell wanted to be renamed to the position so badly that he wouldn't even admit that the trend wasn't transitory.

So we get full on recession & high interest so one person could keep his position.

Houses may be harder to sell in the future because of interest rates, but the price to build a new home will keep prices up. With that said as mentioned above, in a couple of years the repo department at Wells Fargo could get busy.

I don't care. One house is paid for and the mortgage on the other is locked in at 2.625. The rent for the paid for house pays the mortgage and utilities on the house I live in.

Boomer privilege.

I flipped the other rental house after a year and made $25K on it. Used the money to buy my wife a new RDX.

Not rich by no means. But if the crazies don't get us nuked, I ought to be able to live fairly relaxed until the reaper knocks on the door.

Until the renter stops paying...

No section 8,....prospective renters have to qualify.

They don't pay, they don't stay.

My rental property is in one of the historic districts of town. Houses there rarely come up for rent. When they do it's just a matter of choosing the best applicant.

So far I've had an attorney and a physician rent the place.

Thought I had it made, with all appropriate due diligence done as well. It sometimes goes sideways.
Done with rentals. Never again. Not even commercial.
Living in a no mortgage paid for home, and always will.
And capital gains (especially after a tax hit) never go into depreciating assets. Or assets requiring intense babysitting.

Do feel for the younger generation, trying to make a start.
But I had no free fuel put into my tank at the beginning of the race either.

Looking forward to any increases in interest rates paid to savers. Haha.
My attempt at humor on a Friday.

I don't worry about it. I'm not rich, as mentioned. But I'm far enough ahead that it would take an extreme set of circumstances to crash me. It worst comes to worst, I could sell the rental property, pay off this place, and have enough left over to pay taxes and utilities on it for the rest of my life.

Me either, Brother Bristoe.
Hoping all works according to plans for you, as it is always great to have a plan.
Life does bring some crazy turns in the road.
I had to make hard decisions a few years ago and might have lost some friendships over it.
But doing what is right for my team is best. I sincerely wish the same for you as well.

Crazy days we live in. Only wish those of us who lived within our means and practiced smart saving and spending practices could see better reward for our efforts and sacrifices. Free money has nearly killed savings and investments. Cash? No interest paid. Bonds? Little interest paid and bigger risks than ever before. Stocks? Daily losses. Real estate? Artificially inflated and walk-away attitudes prevail.

I'd love to be more optimistic....

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.

I'm always looking in select markets. A little cool off noted, but nothing making me want to unseat some capital.

Reasons NOT to expect home prices to "crash" :

1. Historically, and in especially in light of current inflation 6% is NOT a high interest rate for a mortgage.

2. Some of the hottest real estate appreciation (mid-late 1980's, early 2000's) occurred when mortgage rates were much higher than present.

3. huge real estate appreciation has happened at the same time as stock market declined, e.g. after the Dot-Com bubble burst.

4. Residential rents are high and continue to climb.

5. Cost of new residential construction is high relative to resale prices.

6. High population growth and low amount of construction since "Sub. Prime Crisis"

7. Exodus from expensive urban areas, as already mentioned.

Don’t tell Old Two Fist Houston

Good commentary...

I would add lack of labor at any practical level...

i.e. the squeeze is on with any functional worker... competition to flip burgers at $30/hour vs. $25/hour for a roofer.

And that is amongst the smaller and smaller group of people willing to work anyway... vs. jackoff on their cell phones all day.

The socialism promise of "Equality For All" is an undercurrent in all matters...

Of course it is a lie... but that matters not.

There simply are too many ticks living on the hound-dog... for the hound-dog to make it.

Thanks, Cash.

I agree with your earlier assessment that the "moving parts" are different this time, for many reasons.
Relating to the worker psychology / cell phone jackoff issue, I think in the near future a lot of self-relocated remote workers will have their positions eliminated or off-shored.

Houses/real estate in some areas will decline in price. Others won't. Depends on as always location. Less desirable areas will decline first. Demands in my area (Huntsville AL) is extremely strong. Not slowing down here at all.

We have not purchased an investment property to flip on almost to years due to current work load and crazy prices. Investor friends were over-paying because money was so cheap and rents are crazy. I do not see a crash like in 07-08 coming but a moderation in prices without the bidding wars we have here. The wife and I are looking for another house for ourselves and would like to rent our current house out now that it's paid for but I cannot find something to build equity in at a reasonable price. I do believe some of the major markets will be hit much harder as people move away.

I’m not sure about that. Carter screwed up so bad interest rates went nuts, I had one at 17% as everyone said it was the new norm. At the same time there were lines to get gas which nearly doubled in price, utilities went way up, and so did most everything else including food etc.
The cost of living went up very fast.

Osky

how much is a new well?....of course depending on depth...what is your estimate......bob

I’m selling out west and buying over east.

Some folks are pricing aggressively and the homes are moving.

Others priced homes like rates are still dick nothing and they are dropping prices or not selling.

Interest rates aren’t “high” yet. They just aren’t inflation fanning retarded anymore.

Ouch. Home equity loan maybe?

interest rates are high....its a matter of perspective....3 to 7 is high not everyone had a 10 or 15% mortgage....alot weren't even born yet.


I dont think 6% is bad ....but I have seen the flip side of things....housing will and already is slowing down yes some markets will be better than others...

building prices will come down...they have to when material isnt selling the price will drop...how much it comes down is the question.

labor will come down....if we get in a longer recession than anticipated.....no work no toys no house.....some areas it will be a blip others not so much....bob

Bought a house & property 10 or so weeks ago. Sold my house & property 5-6 weeks ago.

Houses are not selling as quickly as they have in the past 2 or so years.

Houses around 325K > 380K went very fast if at all desireable.

The buyers in that market are a little more cautious for a couple reasons:

1) loans a little higher

2) More houses on the sell for longer time- no big rush

3) the prices are dropping, not at all uusual to see a 400K home now reduced by 50k

4) everything slowing down

5) this situation feeds on itself

This is your average buyer, people that can afford 500K +homes ....little different situation

I have been trying to get a well on my place in WV for 2 years... or at least get someone to come out and look/give me an estimate.

Started with 5 points of contacts... then 3...

Now there are only 2 still doing that work.

The "Next Generation" is not taking up these jobs/trades.

At least around me.

---------------------------

Here in Virginia... my new neighbor put in a septic system (just last week). I am friends with the GC.

$30k. 5-6 month delay.

3/2 home. Nothing fancy.

I did not ask about the cost of the well.

Can you spell NY'er?

They sell their place in NY for $750k-1M. $500-750k in FL? No big deal.

1000+ NY'ers a day coming across FL's GA/FL state line. They're not stopping in GA like they were. GA going too blue.

Real estate markets are by NEIGHBORHOOD in FL now.

I concur...

BUT

The "blip" might be way longer... than a normal blip...

And the "other areas" may be 3x-5x longer than "normal".

i.e. we all may be speaking Spanish by then.

I heard a small rumor once that the rich California folks may someday also think of moving out.

Places like Montana, Idaho, Jackson Hole.

But I am sure it ain't true.

Lol.

Probably not.

,(More from CA coming here now in larger numbers, too.)

Newscum policies.

not a rumor.....lot of texas plates this year also....bob

CashisKing,

"There simply are too many ticks living on the hound-dog... for the hound-dog to make it."

I have stolt that from you.

That's the root of a lot of our troubles now and in the future.

I ain't never seen no Californya license plate in West Virginny.

Tain't none of my neighbors nether...



But... they remain hopeful.

Yeah, I know Fl & Tx are hot markets. I do a lot of business from companies in FL.

I am in Northwest Indiana , a lot of people fleeing to Indiana.

However, that market has cooled.

Cool, I guess? If you're paying cash.

If you take a 30 year mortgage out, random figures;


2020 $400,000 2.9% = $1665 per month

20% decrease in value $320,000 @ 7.5% = $2237 month

Winning?

Thank God!!!

Someone that actually does math... Bless you!

$400,000 @ 2.9% = $1,665 per month

20% decrease in value $320,000 @ 7.5% = $2,237 per month

------------------------------

$400,000 @ 7.5% = $2,797 per month

20% increase... $500,000 @ 7.5% = $3,496 month

---------------------------

Now try that with 12.5% interest...

20% decrease in value $320,000 @ 12.5% = $3,415 per month

$400,000 @ 12.5% = $4,296 per month

20% increase... $500,000 @ 12.5% = $5,336 month

Powell will keep going until the blood is flowing...

O'Biden will issue more free money and...

Powell will keep going until the blood is flowing... EVEN MORE.

It’s going to be an inflationary recession, Powell purposefully drives up unemployment/drives wages down while the costs of goods continue to rise because the dollar pool continues to be diluted by Biden/dems continuing to print trillions in free cash give aways.

It's going to fall.... the question is how much? I think a bunch.... or not

Wages ain't coming down... no way... no how...

People won't work... Social Economics will provide a safety net.

When 51% are on the .GOV teet...

Game over.

But then we are back to, the tick being bigger than the dog

Entonces la garrapata Venezolana matará al perro.

(Translation... Then the Venezuelan tick will kill the dog.)

Truth.

Not sure what the number is right now but it has to be close to 51%.

That's the Demon's plan.

As for buying a house right now.............some deals but not many & no, pricing is going down & the market has been artificially high for some time anyway so definitely not the time to buy if you don't really have to.

MM

There's some interesting predictions for mortgage rates next month.
https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional
I'd be tempted to rent while waiting for a dip in rates. Renting would give you a chance to learn the local real estate market better also. What kinda place does $425,000 get ya in Arkansas, anyway? Acreage, view, newer construction, fish camp on site?

Erikj, the home I mentioned was built in 1999 if I remember correctly and is 3500 square feet. Very nicely built with 2 car attached garage and a separate garage. In ground pool which for us is a detraction. We have never been interested in having a pool. Mostly I figure they are costly to maintain and also take time to maintain. Well landscaped around the house and on 24 acres, most of it on a timbered hill behind the house. Other similar homes with acreage are priced higher from what we have seen. This place is near a small town which has been known as a hotbed area for druggies in the past but driving around the town we didn't see many derelict places. Plus as mentioned previously it is further from work than ideal. Still if it hasn't sold by the time we get out there we might make an offer.

Sounds like a pretty nice set up. Don't forget to research the water supply. Good luck with the entire endeavor.

Thanks Erikj and others for your thoughts on this topic.

Exactly my earlier point. Some don’t get it - many will hopefully wake up