"The Silent Depression" & Single-Family Homes... a great big nothingburger or...?

[Wolfhound]

I've been amazed in recent years at the amount of money that is out there shopping for land. Makes me wonder if we aren't coming up on a 1980/2008 crash in values. How bad it is I think will depend a lot on if that land hungry money was real or borrowed. I remember all the housing additions construction frozen and builders going bankrupt in 08/09, we referred to it as "arrested development."

It amazes me also. I try to keep in mind that everyone wants land and they aren’t making any more of it. Well except for some artificial islands China is militarizing.

 

[HonkieKowboy]

It amazes me also. I try to keep in mind that everyone wants land and they aren’t making any more of it. Well except for some artificial islands China is militarizing.

On that topic IIRC the landmass of Macau, China's own Las Vegas, is 50% reclaimed land at this rate.

 

[Ingomike]

I cannot believe the amount of corporate money pouring into the multi-family housing development that's going up all over the place. I suppose single-family is probably the same way, it's just more "invisible." It's like Finance World decided all at once that they've gotten away with as much as they can get by owning the mortgages to the homes, and now they want to rotate places at the closing table and own the actual *house* itself, and see how much money they can make off that for a while. They've probably figured out that role is more resistant to government meddling, because sitting on the buyer's / seller's side of the closing table is not a "financial product" that can be regulated. The mortgage banker is the person sitting at the closing table who's subject to the most regulation, and it sounds like the corporate money just wants off that hot seat for the time being. Everybody sitting at that closing table is making money, except the buyer. The corporate money is just switching seats.

Back in the WW2 era when it was said that only 40% of people owned their home, towns across America were stocked with "Average Joe Landlord" types who owned the rental houses and sucked off of people who didn't have enough for a down payment. Being a landlord was the part of the "casino" that was left open to entrepreneurial individuals, because corporations weren't interested in it. Corporations didn't want to own the asset, they wanted to own the cash flow generated by the asset.

Now, they just want the damn asset.

I have a feeling we're headed back to the WW2 scenario. Except "Average Joe Landlord" will be replaced by some faceless corporation. Corporations don't really want the asset, they want the cash flow, but they will take ownership of the asset, if that's the path of least regulatory resistance to getting the cash flow. I suspect they're going to sell as many of these houses into a hot market at exorbitant prices as they can, then, when the bubble pops, they will turn the unsold inventory into rental homes, step into the landlord role, and go back to getting their cash flow again.

It sounds like Kennedy wants Uncle Sam to do for mortgages, what the Fed.Gov just got done doing with College loans for the last 5 decades. It's not clear to me that will actually help the affordability problem, if you look at what federal loan guarantees did to the cost of higher education. Kennedy's plan doesn't really make sense when you analyze it. It seems like all the Fed.Gov would be doing under Kennedy's plan is helping buyers purchase exorbitantly-priced homes they can't afford by loaning them the money for it, just like they did with exorbitantly-priced college degrees. Unless I'm missing something, why would a seller sell a house to "Average Joe" with his 3% Kennedy Mortgage, when there's a corporate buyer sitting right there waiting to out-bid him? And if Average Joe does succeed in out-competing Blackrock to buy that exorbitantly-overpriced house, then what? What happens when Corporate America decides to lay off a bunch more people? Does Uncle Sam then just forgive the mortgage? Wipe out debt and make suckers out of the people who actually paid their loans back, with the added irony that it was Fed.Gov who helped drive up the prices to begin with? Given recent Democrat behavior, the question certainly presents itself.

Short of flat-out regulating how much residential real estate inventory investment banks and private equity can hold, I'm not sure how you really do anything about this. You're either going to put the boot of government on the corporations' necks...or corporations are gonna do what they do. We've seen time and again, all that "market-oriented, government-private partnerships" accomplish is create another "casino" for corporations to exploit.

Robert Kennedy is just auditioning to be the Democrat / Home Mortgage version of Mitt Romney on Obamacare.

A few facts.

Government backed home loans started in 1932. Indirect student loans for all began 1958, GI’s 1944. Direct loans 1993.

 

[Ingomike]

Short of flat-out regulating how much residential real estate inventory investment banks and private equity can hold, I'm not sure how you really do anything about this.

Simple really, many neighborhoods are doing this. The HOA prohibits rentals period. Done and over. No rentals.

 

[Twangbanger]

I think what's going on is corporations are trying to minimize people getting into houses when rates are favorable. This could be a BS theory, but they have "money-balled" how to ride the housing cycle. Buy up the inventory to keep people out of it when rates are low, and rent it out at confiscatory prices. Then, when rates go back up, convert from landlord back into lender again, and make the same cash flow without holding the asset on your books.

When my wife and I first got married and started looking for a house, our bank actually refused to lend to us. Not because we were bad candidates, but because rates were so low, they didn't want to lend their capital out at those rates. They simply closed their loan window and waited for market rates to come back in their favor. We just went elsewhere for a loan; that was the beauty of the free market.

The "corporate lender/developers" today have decided that should never be allowed to happen, and seem bent on eliminating that "elsewhere" by buying up the available inventory of assets. Again maybe another BS theory on my part, but I think available single family homes compete against the high-density developments they're building and trying to fill up. Right now it's better for them to be owners than lenders. They simply have no interest in facilitating the cycle of people buying when rates are good, paying it off in 15 years, and disappearing from the revenue stream. Those cycles generate a significant number of older people who bought when the market was good, and are now absent from the available revenue streams.

The moneyball game in residential housing now seems to be minimizing the ability of future generations to "hit" that cycle at a favorable time. You will own nothing and "be" a revenue stream for the longest period possible in your life, and you will like it. Just like in 2008, when finance companies wanted to erase the distinction between a retail bank and an investment bank, so they could "switch sides" and work whichever angle was best at the time. Residential Capital wants to organize itself as an amorphous "lender/developer/landlord" so they have a lucrative handle on all phases of the market.

 

[Twangbanger]

Simple really, many neighborhoods are doing this. The HOA prohibits rentals period. Done and over. No rentals.

I heard about the no "short term" rentals wave, but I suppose no rentals "period" could be a thing. You can bet if it's inimical to the interests of Capital, there's a lobbying campaign to pre-empt the practice.

What is really needed is a policy preventing sale to someone who doesn't intend to _occupy_ the property. This used to be a key component of energy regulation; companies couldn't access the full regulatory benefits of being a "bona fide" gasoline hedger unless they had storage facilities to actually take possession of the oil. That cut down on speculation, until regulators started granting all kinds of exceptions and loopholes. That directly led to the run-up of gas prices in 2008.

 

[Ingomike]

What is really needed is a policy preventing sale to someone who doesn't intend to _occupy_ the property.

The no rentals does the same thing and keeps government out of it…

 

[Ingomike]

When my wife and I first got married and started looking for a house, our bank actually refused to lend to us. Not because we were bad candidates, but because rates were so low, they didn't want to lend their capital out at those rates. They simply closed their loan window and waited for market rates to come back in their favor. We just went elsewhere for a loan; that was the beauty of the free market.

Must have been a very small local bank, very few banks do not sell the mortgages they originate as they need liquidity and they can profit on originating a new loan too. They may even retain the servicing rights, meaning you make your payments to them, but most do not own the mortgage…

 

[Ark]

It sounds like Kennedy wants Uncle Sam to do for mortgages, what the Fed.Gov just got done doing with College loans for the last 5 decades. It's not clear to me that will actually help the affordability problem, if you look at what federal loan guarantees did to the cost of higher education. Kennedy's plan doesn't really make sense when you analyze it. It seems like all the Fed.Gov would be doing under Kennedy's plan is helping buyers purchase exorbitantly-priced homes they can't afford by loaning them the money for it, just like they did with exorbitantly-priced college degrees. Unless I'm missing something, why would a seller sell a house to "Average Joe" with his 3% Kennedy Mortgage, when there's a corporate buyer sitting right there waiting to out-bid him? And if Average Joe does succeed in out-competing Blackrock to buy that exorbitantly-overpriced house, then what? What happens when Corporate America decides to lay off a bunch more people? Does Uncle Sam then just forgive the mortgage? Wipe out debt and make suckers out of the people who actually paid their loans back, with the added irony that it was Fed.Gov who helped drive up the prices to begin with? Given recent Democrat behavior, the question certainly presents itself.

That's exactly what will happen. No better way to drive the price of a ramshackle one bedroom cottage on 38th St to $1.2 million than having Uncle Sam money print loans that can't be discharged. Think that's an outlandish number? Compare how much college you could get for $120,000 in 1965,

 

[sixGuns]

I heard RFK interviewed on this. He makes a lot of sense. Not many other candidates are talking about this that I've heard.

Exactly why I brought it up.

Exactly, Either YOU Get Up or Give Up

I don't feel bootstraps and get creative is going to fix this and implying that says to potential voters everything is fine, just vote R. That doesn't help get independents. From what I've seen anyways.

Simple really, many neighborhoods are doing this. The HOA prohibits rentals period. Done and over. No rentals.

I'm wondering what % of HOA's would be on-board with this. Generally speaking, their only concern are HoA fees and guideline adhesion. That would put it individualistic to each HoA and their position based on individual morals. It's possible I guess, but I don't feel confidant in it and it wouldn't be my solution.

Theorize and speculate all we'd like into every hypothetical, but the fact remains, it's in the public lexicon and RFK Jr. is the only candidate I've found with any position on this. If we're to court more votes it's going to be independents and this is likely at the forefront of their minds along with the general economy. "Well, then they should vote republican!" I'm not sure that's tempting them. Quite a few I've talked to tend think all politicians are the reason things are like this.

For this election cycle I'm thinking the battleground is policy surrounding the independent vote more than ever before. D's aren't going to vote R and vice versa and nothing is going to sway them. I'm trying to talk to more independents, but the data is not complete. As much as everyone would groan about this I think there is going to be some intervention via big.gov on holding theses assets for the sole purpose of renting. What that would amount to... we can only speculate and I'm watching this unfold just like the rest of us.

 

[bobzilla]

That's exactly what will happen. No better way to drive the price of a ramshackle one bedroom cottage on 38th St to $1.2 million than having Uncle Sam money print loans that can't be discharged. Think that's an outlandish number? Compare how much college you could get for $120,000 in 1965,

Inflation alone pushed that $120k to 1.1M.

 

[Ingomike]

I'm wondering what % of HOA's would be on-board with this. Generally speaking, their only concern are HoA fees and guideline adhesion. That would put it individualistic to each HoA and their position based on individual morals. It's possible I guess, but I don't feel confidant in it and it wouldn't be my solution.

Who the heck is “their”? An HOA is the total of the owners. No one else. The owners make the choice. If one already has rentals that certainly makes it harder. The owners can and usually do hire a company to manage the neighborhood, collect the fees, enforce the covenants, and do the maintenance, but they have no say in these matters.

 

[Mark-DuCo]

I'm 34 and coming to terms with the reality that I will never own a home or start a family. It's just off the table completely. I went to school like I was supposed to. I stayed out of trouble and obeyed the law like I was supposed to. I just got laid off from a job that paid $8k less than the "starting salary" for my major...in 2012.

I live in an apartment by myself that I can sort of afford, when I had a job, but that can change any moment. I have the savings to survive joblessness, for a while, but not enough to change anything about my life. I have nothing in particular to look forward to or work towards, because America doesn't seem like a country where things happen anymore.

But I also know people who are certified dumbasses but seem to exist in a constant shower of God's rewards for doing **** all to earn them so maybe it's just me.

I'm 33, was divorced about 10 years ago and left with about $500, my car, and beater truck. With lots of hard work, I now have a home on 4 acres, I owe less than $100,00 on it at the moment and it is worth close to $275,000.

I also have a ten year old son where I pay all of the bills because his mom is pretty much useless when it comes to money and I am too nice of a guy I guess. I fund his racing hobby, so we have a dirt bike and quad that he races, and racing is a huge money pit.

Anyone can survive in this economy if you put in the time and effort. I'm pretty sure basically every company and factory around here is hiring, so finding a job shouldn't be a problem.

 

[mmpsteve]

I've been amazed in recent years at the amount of money that is out there shopping for land. Makes me wonder if we aren't coming up on a 1980/2008 crash in values. How bad it is I think will depend a lot on if that land hungry money was real or borrowed. I remember all the housing additions construction frozen and builders going bankrupt in 08/09, we referred to it as "arrested development."

I believe people (and corporations) are looking for safe havens for cash as they become more leery of the stock markets and what they perceive as sketchy times ahead, given the total ****show the economy has become under current leadership.

My wealthy brother is getting nervous about his huge portfolio of what I consider digital dollars, were the dollar to collapse, and he's started investing in land and other tangible assets as a hedge against future events.

I don't think he's atypical among the moneyed class.

.

 

[Leadeye]

I'm 33, was divorced about 10 years ago and left with about $500, my car, and beater truck. With lots of hard work, I now have a home on 4 acres, I owe less than $100,00 on it at the moment and it is worth close to $275,000.

I also have a ten year old son where I pay all of the bills because his mom is pretty much useless when it comes to money and I am too nice of a guy I guess. I fund his racing hobby, so we have a dirt bike and quad that he races, and racing is a huge money pit.

Anyone can survive in this economy if you put in the time and effort. I'm pretty sure basically every company and factory around here is hiring, so finding a job shouldn't be a problem.

I'm surprised Dubois County isn't overrun with people escaping big cities. I've always found the quality of life there to be good.

 

[BehindBlueI's]

Curious for those who may know, how many cash sales are from MegaBux Corp from a state/country known for drug trafficking? Supposedly that was a huge driver of real estate prices in Colorado, weed farms moving money into 'legit' assets so they could then put the money in a bank. Can't put weed money in the bank, but you can buy a house with weed money, sell the house, and put house money in the bank.

 

[Ingomike]

Curious for those who may know, how many cash sales are from MegaBux Corp from a state/country known for drug trafficking? Supposedly that was a huge driver of real estate prices in Colorado, weed farms moving money into 'legit' assets so they could then put the money in a bank. Can't put weed money in the bank, but you can buy a house with weed money, sell the house, and put house money in the bank.

Interesting tactic, had not heard that…

 

[Tombs]

Your outlook is the end goal of the leftist plan. To push people to the point of hopelessness. They want as many people as possible to feel that the American dream is dead and success, or even a comfortable living, is out of reach.

I can tell you unequivocally that's simply not true. You have so much more control over your economic success that anyone in Indianapolis or Washington DC ever will.

Hope is not lost. People absolutely can still make it in this country and people do it every single day. I heard from a guy the other day who started a dog poop pick-up service as a side hustle and is bringing in over $100,000 a year. Another guy had a dog he uses to get contracts chasing geese off the property of corporate customers and he's making close to $200k a year doing that.

People who are willing to work hard and get creative will have success. I refuse to let hope stealers in DC tell me otherwise.

The accessibility of the American dream has been drastically reduced through licensing, codes, regulations, and other means monopolies have implemented to prevent competition. The economic conditions make taking big risks much more difficult as well.

Sure it's possible to an extent, but it has been made harder than the majority of people are ever going to try for. So telling them that's still an option rings hollow.

With groups like blackrock and vanguard owning a significant fraction of residential properties, they can effectively decide whether the American public is allowed to own a home or not. IMO it's a national security vulnerability, and they should be broke up. All of our economic independence rests on whether these companies want us to be able to be independent or not.

 

[Creedmoor]

I think what's going on is corporations are trying to minimize people getting into houses when rates are favorable. This could be a BS theory, but they have "money-balled" how to ride the housing cycle. Buy up the inventory to keep people out of it when rates are low, and rent it out at confiscatory prices. Then, when rates go back up, convert from landlord back into lender again, and make the same cash flow without holding the asset on your books.

When my wife and I first got married and started looking for a house, our bank actually refused to lend to us. Not because we were bad candidates, but because rates were so low, they didn't want to lend their capital out at those rates. They simply closed their loan window and waited for market rates to come back in their favor. We just went elsewhere for a loan; that was the beauty of the free market.

The "corporate lender/developers" today have decided that should never be allowed to happen, and seem bent on eliminating that "elsewhere" by buying up the available inventory of assets. Again maybe another BS theory on my part, but I think available single family homes compete against the high-density developments they're building and trying to fill up. Right now it's better for them to be owners than lenders. They simply have no interest in facilitating the cycle of people buying when rates are good, paying it off in 15 years, and disappearing from the revenue stream. Those cycles generate a significant number of older people who bought when the market was good, and are now absent from the available revenue streams.

The moneyball game in residential housing now seems to be minimizing the ability of future generations to "hit" that cycle at a favorable time. You will own nothing and "be" a revenue stream for the longest period possible in your life, and you will like it. Just like in 2008, when finance companies wanted to erase the distinction between a retail bank and an investment bank, so they could "switch sides" and work whichever angle was best at the time. Residential Capital wants to organize itself as an amorphous "lender/developer/landlord" so they have a lucrative handle on all phases of the market.

The interest rate when I bought my first home for $112,000 in Md was around 16.5%
The payments were about 50% of our bring home each month.

 

[MCgrease08]

This seems relevant here. Probably relevant to many threads, but this is as good as any.

Stop Dooming

townhall.com

Dooming is tiresome. It gets exhausting to hear people willfully ignoring and downplaying any hint of success so that no gleam of hope pierces the darkness of the hopeless future they anticipate. Yes, in any operation you always have to count on things going to hell and be ready to deal with that. But the fact is that things don’t always go to hell. In almost every case, things are not as bad as they seem.

Dooming makes you forget about the fact that the other side in this cultural struggle has its own problems. We conservatives are not facing geniuses. We are facing a bunch of narcissistic halfwits who are not a tenth as brilliant as they believe they are, and who inherited their cultural positions instead of creating them. We’re not fighting a bunch of cunning Darth Vaders. We’re fighting a bunch of pronoun-obsessed dorks, many of whom can’t even do a push-up. And all the while, we got 400 million guns.