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Housing Market crash imminent

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The Great Recession was largely caused by the bursting of the mid-2000s housing bubble and the damage it caused in the U.S. financial and banking system. As a “quick fix” to end the recession and create another economic boom, the Fed simply re-inflated housing prices. According to the Case-Shiller U.S. National Home Price Index, housing prices have surged by 59% since their bottom in 2012:

Like nearly all artificial booms, U.S. Housing Bubble 2.0 has inflated faster than the underlying fundamentals. As the chart below shows, U.S. housing prices have been rising much faster than overall inflation, rents, and wages, which is exactly what happened during the last housing bubble. I believe that a correction is inevitable.

As in the last housing bubble, all sorts of shenanigans has occurred during the making of U.S. Housing Bubble 2.0. Of course, it’s not shenanigans that is identical to the last housing bubble - “history doesn’t repeat, it rhymes...lightning doesn’t strike the same place twice, etc.” One form of shenanigans that occurred during Housing Bubble 2.0 is the fact that many AirBnB “super-hosts” bought scores of properties with cheap mortgages for the purposes of renting out. The coronavirus pandemic has now put these over-leveraged super-hosts in extreme jeopardy:

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AirBnB is about to crash the US housing market.  Thousands of super-hosts who bought 10, 20, 30 properties with mortgages and are heavily levered...are all about to default.
Without travel there is no rental income to pay these mortgages.

In 2-3 months - 2008 all over again
Boom

 

In addition to the housing market grinding to a halt because prospective homeowners face difficulty actually viewing houses that are for sale during this pandemic, extreme job market uncertainty and unemployment has come back with a vengeance in just March 2020 alone. According to one recent Fed estimate, job losses could total 47 million, while the unemployment rate may hit 32% - truly depression figures, forget about recession. I’m very concerned that the frothy U.S. housing market will be forced to come back to planet earth very soon, which will drag the overall economy down even more.

 

Housing prices were so far out of whack the past 6 months, it was imminent without Covid-19. Corona is going to seal the deal.

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I read that article this morning. What it wasn't clear about was the mortgage forgiveness programs by some banks. It doesn't matter if you have 1 house or 30 houses. If you don't have to pay the mortgage for 3 months, it will buy time. 

Although I haven't seen anything in regards to help with homeowners insurance or property taxes. 

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I know you've been waiting for it, but I'm not sure you'll see anything like the last crash.  

I signed a 6 month forbearance agreement for my mortgage last week.  No cost, just skip the next 6 months of payments and tack them onto the end of the mortgage.  I believe we'll be able to catch up and not have to extend the mortgage by those 6 months when all is said and done.  Of course, every situation is different, but the banks will work with people if they just need a little time.  

In addition, stimulus checks, SBA loans and unemployment compensation on steroids will help many people through this crisis.  If this thing hangs around past another 90 days, all bets are off.

I will be closely watching those AirBNB properties though.  My town is literally filled with them.  Literally over 50% of the homes in this area are second homes.  

 

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11 minutes ago, Leeson said:

I read that article this morning. What it wasn't clear about was the mortgage forgiveness programs by some banks. It doesn't matter if you have 1 house or 30 houses. If you don't have to pay the mortgage for 3 months, it will buy time. 

Although I haven't seen anything in regards to help with homeowners insurance or property taxes. 

I don't think that tax authorities and insurance companies are being generous at this point.  At least not where I am, but I have not asked for any deferred payments on my mortgage either.  

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5 minutes ago, vuduchile said:

I know you've been waiting for it, but I'm not sure you'll see anything like the last crash.  

I signed a 6 month forbearance agreement for my mortgage last week.  No cost, just skip the next 6 months of payments and tack them onto the end of the mortgage.  I believe we'll be able to catch up and not have to extend the mortgage by those 6 months when all is said and done.  Of course, every situation is different, but the banks will work with people if they just need a little time.  

In addition, stimulus checks, SBA loans and unemployment compensation on steroids will help many people through this crisis.  If this thing hangs around past another 90 days, all bets are off.

I will be closely watching those AirBNB properties though.  My town is literally filled with them.  Literally over 50% of the homes in this area are second homes.  

 

Are you still accumulating interest during those 6 months or does everything freeze?

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Just now, Leeson said:

Are you still accumulating interest during those 6 months or does everything freeze?

Interest accumulates

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8 minutes ago, vuduchile said:

Interest accumulates

While it does, I am unclear as to what provisions have been provided for you to pay it off.  It could just be rolled into the loan ending up in a slightly higher payment. My guess is this is what happens.

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10 minutes ago, TimmySmith said:

While it does, I am unclear as to what provisions have been provided for you to pay it off.  It could just be rolled into the loan ending up in a slightly higher payment. My guess is this is what happens.

That's correct.  The 6 months of interest will impact the future monthly payments.  

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26 minutes ago, vuduchile said:

Interest accumulates

Dread it, Run from It, Intrest still arrives

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We are starting to see an increase in mortgage refinancing.  Didn't think mortgage rates could get any cheaper but they must be.  

 

 

It's good to own my home.  :)

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1 minute ago, Cdub100 said:

Dread it, Run from It, Intrest still arrives

Yep.  No getting away from it.  Long term, it's not great, but my short term plan is to hoard as much cash as possible. 

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Just now, NorthernVike said:

We are starting to see an increase in mortgage refinancing.  Didn't think mortgage rates could get any cheaper but they must be.  

 

 

It's good to own my home.  :)

Cash outs?

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1 minute ago, vuduchile said:

Cash outs?

Nope.  Just refi's.  

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36 minutes ago, vuduchile said:

I will be closely watching those AirBNB properties though.  My town is literally filled with them.  Literally over 50% of the homes in this area are second homes.  

 

Now is not the time bur remember when we were talking about a side hustle.  If this is the case you need to look into power washing houses.  You have crews that do your flooring.  Imagine if you bought the equipment and had a couple of crews power washing some of these rich people's second homes?  You could even have the flooring installers mention, Wow you're siding could use a good washing, here's our card...

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1 minute ago, fandandy said:

Now is not the time bur remember when we were talking about a side hustle.  If this is the case you need to look into power washing houses.  You have crews that do your flooring.  Imagine if you bought the equipment and had a couple of crews power washing some of these rich people's second homes?  You could even have the flooring installers mention, Wow you're siding could use a good washing, here's our card...

Not a bad idea. 

I actually jumped into buying and selling sports cards as the side hustle a few months ago.  I'd been only a buyer until recently when I started selling a few for profit that were too good to pass up. 

I was gearing up to sell a bunch more during the NBA playoffs as players certain players got hot, then this thing hit.  So I sidelined the high end basketball cards until they start playing again.  

I've been selling a few baseball cards recently, but that market has definitely cooled off.  Right now,  I'm  picking off a few cards here and there from sellers looking for quick cash.  If baseball gets cancelled this year, that will get shelved too.  So, I'm mostly focused on finding bargains of vintage baseball and current player football cards.  I'm also in the market for larger collections if I can find them.  

Right now, football looks like the most likely of the three major sports to play a full season.  It's also the only sport that has given people anything of substance to talk about.  As a result, the action is pretty good at the moment.  

Anyway, under normal market conditions, I can probably generate a couple grand in sales per month doing it the way I am now.  The next step would be to find a location and open a store front.  I have a feeling retail space is going to get really cheap in the near future.  If I can find a spot that will give me a 5 year lease at a great rate, I'll probably do it.  

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7 minutes ago, vuduchile said:

Not a bad idea. 

I actually jumped into buying and selling sports cards as the side hustle a few months ago.  I'd been only a buyer until recently when I started selling a few for profit that were too good to pass up. 

I was gearing up to sell a bunch more during the NBA playoffs as players certain players got hot, then this thing hit.  So I sidelined the high end basketball cards until they start playing again.  

I've been selling a few baseball cards recently, but that market has definitely cooled off.  Right now,  I'm  picking off a few cards here and there from sellers looking for quick cash.  If baseball gets cancelled this year, that will get shelved too.  So, I'm mostly focused on finding bargains of vintage baseball and current player football cards.  I'm also in the market for larger collections if I can find them.  

Right now, football looks like the most likely of the three major sports to play a full season.  It's also the only sport that has given people anything of substance to talk about.  As a result, the action is pretty good at the moment.  

Anyway, under normal market conditions, I can probably generate a couple grand in sales per month doing it the way I am now.  The next step would be to find a location and open a store front.  I have a feeling retail space is going to get really cheap in the near future.  If I can find a spot that will give me a 5 year lease at a great rate, I'll probably do it.  

This guy has his own channel and one night I just fell down the rabbit hole on youtube and ended up watching him for hours.  I have no idea why.  He's just a normal dude though with a regular 9-5 job who wanted to make more money so he started mowing lawns.  He got a bunch of regular lawn jobs and then during certain times of the year when they didn't need to be cut he decided to power wash houses.  He's a hard-working regular Joe and he does it on the cheap but he makes pretty great money at it it seems and what a cool way to make a few bucks.  https://www.youtube.com/watch?v=gVkQAY7n37U

 

 

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🤔  🤫

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Air BNB and Uber may not survive this. And hotels are going to have to up their cleaning game. 

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I would love to see an Airbnb housing crash.

They single handedly focked the housing market in most vacation towns and cities that are tourist destinations. 

 

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1 hour ago, Intense Observer said:

I would love to see an Airbnb housing crash.

They single handedly focked the housing market in most vacation towns and cities that are tourist destinations. 

 

Airbnb is only part of the problem. There are dozens of rental mgmt companies in my area that cater to vacationers.   It’s the biggest industry here.  

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JPMorgan Chase is tightening its mortgage lending standards just as the federal government has been pumping massive amounts of money into the crippled economy to create liquidity.

Borrowers now need a credit score of at least 700 and a 20 percent down payment if they want a home loan from the bank, according to Reuters. JPMorgan Chase is the fourth largest mortgage lender in the country.

Amy Bonitatibus, chief marketing officer for JPMorgan’s home lending service, called it a “temporary” change that would allow the bank to focus on existing customers. The bank also said it would free up employees to handle the wave of refinancing requests that have come in since mortgage rates dropped to near record lows last month.

Most home mortgage lenders require a 10 percent down payment, although 20 percent down was for years the industry standard. Home prices have surged over the last decade and previous surveys show young homebuyers were not able to put down 20 percent.

JPMorgan’s latest move is another blow to the U.S. government’s recent efforts to keep the economy moving and avoid a prolonged recession after the coronavirus pandemic subsides.

Home sales have already plummeted in many parts of the country that remain under stay-at-home orders. Last month, the National Association of Realtors said that sales could be 10 percent lower than usual this time of year. Borrower requests to delay mortgage payments skyrocketed 1,900 percent last month, according to Reuters.

 

 

 

How was a 700 credit score and 20% down already not mandatory? did they not learn their lesson the 1st time :wall:

I'd like to see them up the credit score to 775 

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15 minutes ago, edjr said:

 

 

How was a 700 credit score and 20% down already not mandatory? did they not learn their lesson the 1st time :wall:

I'd like to see them up the credit score to 775 

That's racist!!!!

775 is pretty high.  If you have 700+, you are at least in the top 60% of Americans.  

At this point, if there are a ton of foreclosures, the banks can go under.  Fool me once...

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2 minutes ago, Patriotsfatboy1 said:

That's racist!!!!

775 is pretty high.  If you have 700+, you are at least in the top 60% of Americans.  

At this point, if there are a ton of foreclosures, the banks can go under.  Fool me once...

Oh there definitely will be. People were paying nutso prices for houses just in March! 

 

609k for this!!  https://www.realtor.com/realestateandhomes-detail/13-Parsons-Dr_Beverly_MA_01915_M40924-55727

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4 minutes ago, edjr said:

Oh there definitely will be. People were paying nutso prices for houses just in March! 

 

609k for this!!  https://www.realtor.com/realestateandhomes-detail/13-Parsons-Dr_Beverly_MA_01915_M40924-55727

Jesus..

Around the same money in my neck of the woods..

https://www.zillow.com/homedetails/11110-Pinewood-Cir-Evansville-IN-47725/94607142_zpid/

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Yeah this pisses me off. When my new house is ready I wanted to sell this one and put it in a dividend growth personal index. But now I might need that money as a down payment to convert my construction loan to a fixed. :wall:

Focking poor people making things harder for me.

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6 minutes ago, Patriotsfatboy1 said:

yeah, but it is in Evansville Indiana.  :o

how far from French lick?

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9 hours ago, Patriotsfatboy1 said:

yeah, but it is in Evansville Indiana.  :o

I've been to Boston a few times, was always glad to get home.

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17 hours ago, Reality said:

I've been to Boston a few times, was always glad to get home.

Big city living ain't for everyone. I am thrilled to not live  in or near Boston

I am 3 mins from the beach. 

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33 minutes ago, edjr said:

Big city living ain't for everyone. I am thrilled to not live  in or near Boston

I am 3 mins from the beach. 

“Big city”.  Lol. College town. 

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2 minutes ago, Hardcore troubadour said:

“Big city”.  Lol. College town. 

21st in amount of people, 5th in population density.   

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1 hour ago, edjr said:

21st in amount of people, 5th in population density.   

21st?  Lol. What’s Buffalo? 

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20000 cities in the usa. the top .001 % is nothing :wacko:

carry on

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I'm really enjoying paying interest only on my construction loan while no work is going on.

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1    New York[d]     New York    8,398,748    8,175,133    +2.74%    301.5 sq mi    780.9 km2    28,317/sq mi    10,933/km2    40.6635°N 73.9387°W
2    Los Angeles     California    3,990,456    3,792,621    +5.22%    468.7 sq mi    1,213.9 km2    8,484/sq mi    3,276/km2    34.0194°N 118.4108°W
3    Chicago     Illinois    2,705,994    2,695,598    +0.39%    227.3 sq mi    588.7 km2    11,900/sq mi    4,600/km2    41.8376°N 87.6818°W
4    Houston[3]     Texas    2,325,502    2,100,263    +10.72%    637.5 sq mi    1,651.1 km2    3,613/sq mi    1,395/km2    29.7866°N 95.3909°W
5    Phoenix     Arizona    1,660,272    1,445,632    +14.85%    517.6 sq mi    1,340.6 km2    3,120/sq mi    1,200/km2    33.5722°N 112.0901°W
6    Philadelphia[e]     Pennsylvania    1,584,138    1,526,006    +3.81%    134.2 sq mi    347.6 km2    11,683/sq mi    4,511/km2    40.0094°N 75.1333°W
7    San Antonio     Texas    1,532,233    1,327,407    +15.43%    461.0 sq mi    1,194.0 km2    3,238/sq mi    1,250/km2    29.4724°N 98.5251°W
8    San Diego     California    1,425,976    1,307,402    +9.07%    325.2 sq mi    842.3 km2    4,325/sq mi    1,670/km2    32.8153°N 117.1350°W
9    Dallas     Texas    1,345,047    1,197,816    +12.29%    340.9 sq mi    882.9 km2    3,866/sq mi    1,493/km2    32.7933°N 96.7665°W
10    San Jose     California    1,030,119    945,942    +8.90%    177.5 sq mi    459.7 km2    5,777/sq mi    2,231/km2    37.2967°N 121.8189°W
11    Austin     Texas    964,254    790,390    +22.00%    312.7 sq mi    809.9 km2    3,031/sq mi    1,170/km2    30.3039°N 97.7544°W
12    Jacksonville[f]     Florida    903,889    821,784    +9.99%    747.4 sq mi    1,935.8 km2    1,178/sq mi    455/km2    30.3369°N 81.6616°W
13    Fort Worth     Texas    895,008    741,206    +20.75%    342.9 sq mi    888.1 km2    2,491/sq mi    962/km2    32.7815°N 97.3467°W
14    Columbus     Ohio    892,533    787,033    +13.40%    218.5 sq mi    565.9 km2    3,936/sq mi    1,520/km2    39.9852°N 82.9848°W
15    San Francisco[g]     California    883,305    805,235    +9.70%    46.9 sq mi    121.5 km2    18,569/sq mi    7,170/km2    37.7272°N 123.0322°W
16    Charlotte     North Carolina    872,498    731,424    +19.29%    305.4 sq mi    791.0 km2    2,757/sq mi    1,064/km2    35.2078°N 80.8310°W
17    Indianapolis[h]     Indiana    867,125    820,445    +5.69%    361.5 sq mi    936.3 km2    2,366/sq mi    914/km2    39.7767°N 86.1459°W
18    Seattle     Washington    744,955    608,660    +22.39%    83.8 sq mi    217.0 km2    8,405/sq mi    3,245/km2    47.6205°N 122.3509°W
19    Denver     Colorado    716,492    600,158    +19.38%    153.3 sq mi    397.0 km2    4,521/sq mi    1,746/km2    39.7619°N 104.8811°W
20    Washington[j]     District of Columbia    702,455    601,723    +16.74%    61.1 sq mi    158.2 km2    11,148/sq mi    4,304/km2    38.9041°N 77.0172°W
21    Boston     Massachusetts    694,583    617,594    +12.47%    48.3 sq mi    125.1 km2    13,938/sq mi    5,381/km2    42.3320°N 71.0202°W
22    El Paso     Texas    682,669    649,121    +5.17%    256.8 sq mi    665.1 km2    2,660/sq mi    1,030/km2    31.8484°N 106.4270°W
23    Detroit     Michigan    672,662    713,777    −5.76%    138.8 sq mi    359.5 km2    4,847/sq mi    1,871/km2    42.3830°N 83.1022°W
24    Nashville[k]     Tennessee    669,053    601,222    +11.28%    475.9 sq mi    1,232.6 km2    1,388/sq mi    536/km2    36.1718°N 86.7850°W
25    Portland     Oregon    653,115    583,776    +11.88%    133.5 sq mi    345.8 km2    4,793/sq mi    1,851/km2    45.5370°N 122.6500°W
26    Memphis     Tennessee    650,618    646,889    +0.58%    317.4 sq mi    822.1 km2    2,056/sq mi    794/km2    35.1028°N 89.9774°W
27    Oklahoma City     Oklahoma    649,021    579,999    +11.90%    606.3 sq mi    1,570.3 km2    1,053/sq mi    407/km2    35.4671°N 97.5137°W
28    Las Vegas     Nevada    644,644    583,756    +10.43%    134.4 sq mi    348.1 km2    4,709/sq mi    1,818/km2    36.2292°N 115.2601°W
29    Louisville[l]     Kentucky    620,118    597,337    +3.81%    263.5 sq mi    682.5 km2    2,339/sq mi    903/km2    38.1654°N 85.6474°W
30    Baltimore[m]     Maryland    602,495    620,961    −2.97%    80.9 sq mi    209.5 km2    7,598/sq mi    2,934/km2    39.3000°N 76.6105°W

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Did you all see the new CARES act details regarding mortgage forbearance?  Freddie and Fannie backed mortgage customers can get a year of no payments pretty easily.

 

https://www.nationalreview.com/2020/04/coronavirus-relief-cares-act-mortgage-forebearance-seriously-flawed/

Upon receiving a request for forbearance from a borrower, the servicer shall . . . with no additional documentation required other than the borrower’s attestation to a financial hardship caused by the COVID-19 emergency and with no fees, penalties, or interest . . . provide the forbearance for up to 180 days. [Emphasis added]

That 180 days of forbearance can be extended for an additional 180 days by simple request of the borrower. So essentially what this section has done is allow home borrowers to not pay their mortgage for a full calendar year, with no penalties or interest, just by saying that COVID-19 has indirectly affected them.

Do you know anyone not “indirectly” affected by COVID-19? It is universal language on its face, and there is a significant problem with this that is already doing far greater harm than good and that, if not addressed, will continue to do so.

 

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JP Morgan has laid off over 1k mortgage bankers and are reassigning others to lower paid positions. 

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