Monkeys, I was reading this article on WSJ which said that it was a bad period for home builders even though the shares of companies are rising due to lack of labour, rise of material facts and other factors.
To preserve profit margins, builders could raise prices, but they are already so high that it could prove difficult. The median price for a new home was $315,000 in the second quarter, according to the Commerce Department, which compared with $236,000 five years earlier.
Does this mean that we are headed towards a real estate slump? Want to know the community's view on this.
I work in commercial real estate, but my understanding of the residential side is that there is a HUGE demand for single family homes. As far as pricing, look at SF, LA, Boston, etc. those metros are living proof that people can tolerate enormous housing prices.
This.
Prices here are getting ridiculous.
Granted, I own one (bought in 2011) and could take a pretty nice profit from it. But that would require moving, paying commissions, and finding my next home (which will be as equally marked up -- if not more so since we'd probably go bigger to accomodate a growing family)
My sister-in-law bought a foreclosure that needed nothing more than a roof and a new septic. Those two together and the appraisal came back +$150k from her purchase price. And she's so far out of town from Boston that she's not even in the Burbs, she's in the sticks.
Prices are absolutely stupid right now.
It's 2008 part II. Banks will issue a 300k mortgage with virtually nothing more than a handshake and promise to repay. 10, 5, or even 0% down are common. PMI is ubiquitous. If anyone actually thinks there is true demand, backed by actual wealth and the ability to repay the note, they're delusional.
That's just not true.
Well shit, they're goes my argument. Thanks for educating me bro.
Want me to go look up studies or some shit? I talk to real estate investors every day and am one. That is not accurate at all. The lending environment is nothing like it was in ‘07/’08. When's the last time you bought a property?
I'm not talking about investors. If you're buying properties to flip or to just hold and wait for the price to increase, there is money to be made no doubt. I'm not even saying you should give a damn about the credit worthiness of the buyers. But banks have relaxed lending standards and what I said about no down payment, etc. is true.
Here are three articles about it that I just happen to have bookmarked. Plenty more you can look up on your own if you're interested.
http://www.investors.com/politics/editorials/government-wants-to-lend-m…
http://www.homebuyinginstitute.com/news/more-relaxed-mortgage-standards…
https://www.wsj.com/articles/mortgage-lenders-set-to-relax-standards-14…
I hope you sell at the top man, seriously. Just don't expect the gravy train to go on for ever. Market is way over-valued right now.
Market appreciation is for chumps. I only care about value-add forced appreciation and cash flow. But that's irrelevant. It's incredibly difficult to find anything lower than 3-5% down. And with those, the landing standards are very strict. This is great for first-time home buyers.
Did you even read the 2nd article you linked man?
"So the easing of mortgage standards mentioned above mainly refers to conventional home loans — those that are not insured by the federal government."
"Over on the government side, it seems that standards might actually be tougher for FHA and VA loans. According to the Fed’s November report: “In contrast [to the easing mentioned above], modest net fractions of banks tightened standards on government residential mortgages.”"
"The latest survey also provided some insight into mortgage standards for “subprime” borrowers. According to the Federal Reserve’s report, most banks said they “do not extend home-purchase loans to subprime borrowers.”"
The problem with '08 wasn't the pricing itself, its that too large of a percentage of the mortgages on the bank balance sheets were subprime. The percentage of subprime loans has gone way down on the major bank balance sheets and has stayed down. If the government starts insuring those and we see disproportionate holdings/issuances of those again, then I'd be more concerned. As others in the thread have mentioned, the surge in pricing makes sense.
We have one of the largest cohorts in history (baby boomers) retiring and not turning over/selling their homes unless in the event of death or incapacitation. Simultaneously, we have an even larger cohort (millennials) just hitting the point in their lives where home buying is both attainable and makes sense. Throw in the fact that developers have been heavily favoring multifamily projects over SFR, and you have a supply and demand dynamic that is way out of whack. I'm not an economist, but there are so many other things in the economy right now that I feel are more at risk of an impending bubble that I don't get when people keep going back to real estate as the impetus for the next recession.
Say what? Where the hell do I sign up?
I know, right? The fuck is he talking about? Even VA loans aren't true 0 down.
USDA/VA for 0, FHA for 3.5
Supply is low. Rates are all time low. People scrambling to buy. Coastal markets at peak. Low-end new construction slumped because of atrocious regulatory environment. 40 cents on the dollar of new construction is fucking permits. Higher-end doing just fine. I'm praying for a dip. I'm in buy mode
Believe me, Canada cheating on softwood lumber, we're gonna make homes affordable again, tremendous.
Income remains flats while cost of living continues to increase. The plight of the worker.
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