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Housing bubble 2.0? Regional housing markets are beginning to look like they did in 2007

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When the U.S. housing bubble burst more than a decade ago, it brought the global economy to its knees. It turned out that the multiyear housing boom through the early 2000s was hiding skeletons. Homebuyers, driven by a fear of missing out on home price gains, were stretching themselves well beyond their financial means. And zealous lenders were giving out mortgages (or better put, subprime mortgages) to folks who historically wouldn't have qualified. As that credit rushed in, it helped to drive the housing boom. However, as the housing market corrected, those bad loans created a foreclosure crisis that took many of the nation's biggest financial firms, like Bank of America and Citigroup, to the brink.

Fast-forward to today, where the U.S. housing market is once again going through a historic housing boom. Over the past two years, U.S. home prices are up 34.4%—including a 19.8% jump over the past 12 months. That 12-month hike is more than four times greater than the historic annual average (4.6%) posted since 1987. It's also well above the largest 12-month price jump (14.7%) posted in the years leading up to the 2008 financial crisis.

Our ongoing housing boom has more economists pondering the most feared word in real estate: “bubble.” In March researchers at the Federal Reserve Bank of Dallas sent chills down the spines of homebuilders and real estate agents when they released a paper titled "Real-time market monitoring finds signs of brewing U.S. housing bubble." The Dallas Fed researchers found home prices were becoming detached from economic fundamentals (i.e., household incomes). However, if a housing correction does come to pass, the Dallas Fed researchers don't think it would cause macroeconomic issues like we saw from the last bubble. Unlike the last go-around, they write, "household balance sheets [today] appear in better shape, and excessive borrowing doesn’t appear to be fueling the housing market boom."

That said, some regional housing markets could be in full-blown housing bubbles. At the very least, many markets are priced exorbitantly compared to what local income levels can support. That's what Fortune found after looking at an analysis by the Real Estate Initiative at Florida Atlantic University. Each month, researchers at the university calculate how overpriced or underpriced home prices are in America's 100 largest housing markets.

 

https://fortune.com/2022/05/09/housing-bubble-watch-housing-markets-are-beginning-to-look-like-they-did-in-2007/

 

Burn baby burn.

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House down the street, not much different from mine, went on the market for 600k. Loads of people showed up, now the for sale sign is down. I bought mine for 375 in 2017. Now I just have to wait and see who’s moving in.  I hope it’s chinks or gays 

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I've been saying 2008 was going to happen again for a long time.

You can always tell where the bubble in the economy is by looking at naming rights to sports stadiums.  When a sector in the economy is in a bubble, it has more money than it knows what to do with, and they start putting their names on stadiums and arenas.  (And no, that doesn't mean every arena and stadium has to follow the trend, it just means you can clearly see that one sector is buying a lot of them).

1.  In the late 1990s, it was the dotcoms buying naming rights.
2.  After the dotcom bubble bust, the banks starting buying a slew of naming rights.
3.  After the banking crisis / housing bust of 2008, the banks / financial companies started buying naming rights all over again.  So you KNEW the next big crash was gonna be a banking crisis / housing bubble.

I mean look at California.  Crypto.com arena for the Lakers / Kings / Clippers.  Sofi Stadium for the Chargers and Rams (Sofi is a financial company).  LAFC (the soccer club) plays in Banc of California stadium.  The San Jose Earthquakes play in PayPal Park.  The Sacramento Kings play in Golden 1 Center (named for Golden 1 Credit Union).  The Golden State Warriors play in Chase Center (Chase Bank).  (giants, sharks, padres, galaxy, athletics have non-financials holding naming rights)

There are 11 stadiums and arenas for football, baseball, basketball, hockey and soccer in California.  6 of them have sold naming rights to banks and financial institutions.  With the As soon to leave Oakland, it'll change to 6 of 10.

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17 minutes ago, JustinCharge said:

I've been saying 2008 was going to happen again for a long time.

 

It doesn’t really count as a prediction if it takes a long time to come true

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Blackrock still buying up thousands of homes? I bet they are. Gonna rent them out to the government. Illegals need a place to stay.  

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The house I sold for $69,900 in 2003 which was the very start of the original housing bubble, they are asking $199000 now. Its 888 sq feet. 🤣  It will almost fit inside my current house. Yeah, my center room ceiling is higher.

Too late, the latest bubble has popped via high interest rates. now they are stuck with it.

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6 minutes ago, Hardcore troubadour said:

Blackrock still buying up thousands of homes? I bet they are. Gonna rent them out to the government. Illegals need a place to stay.  

Most likely since now most people are priced out of a house. As klaus shithead said, "you will own nothing and like it."

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6 minutes ago, lod001 said:

Most likely since now most people are priced out of a house. As klaus shithead said, "you will own nothing and like it."

They don’t hide their intentions, by word or deed. Conspiracy theory! Tin foil! 

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The last bubble was founded on bad loans. I not sure what the basis for this one could be. Rising interest rates could lower prices for desperate sellers, I guess. 

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1 hour ago, Hardcore troubadour said:

House down the street, not much different from mine, went on the market for 600k. Loads of people showed up, now the for sale sign is down. I bought mine for 375 in 2017. Now I just have to wait and see who’s moving in.  I hope it’s chinks or gays 

Yes...keep yard nice and make great neighbors!!

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I’m not sure what’s going on but it makes no sense.  I can sell my house for 140% more that what I bought it for.  Something is going to give and it won’t be pretty.  
 

Everything is weird.  All businesses can’t find help.  I see it all the time, every restaurant has help wanted signs.  My company can’t find workers.  Yet EVERYTHING is more expensive.  It’s bizzare and something is going to burst.  

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5 minutes ago, KSB2424 said:

I’m not sure what’s going on but it makes no sense.  I can sell my house for 140% more that what I bought it for.  Something is going to give and it won’t be pretty.  

Interest rates were at historic lows for years and years. That’s your answer.

Now with inflation out of control they have to figure out how to bring up interest rates without totally tanking the economy. Home buying market will be a huge part of that. People can’t afford those houses at 5.5, 6, 7% and nobody will move when they’ve got 30 years at 2.5

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4 hours ago, KSB2424 said:

I’m not sure what’s going on but it makes no sense.  I can sell my house for 140% more that what I bought it for.  Something is going to give and it won’t be pretty.  
 

Everything is weird.  All businesses can’t find help.  I see it all the time, every restaurant has help wanted signs.  My company can’t find workers.  Yet EVERYTHING is more expensive.  It’s bizzare and something is going to burst.  

I think a lot of excess and redundant businesses will continue to fold in the coming years.  
 

We don’t actually need 4 gas stations at every intersection and a dozen drive-thru fast food joints at every highway exit. 
 

Many of these businesses have existed due to convenience, but have operated on thin margins and meager profits for years. Without low-paid workers, they’re dead   

And with the glut of vacant or soon-to-be vacant office space, major cities will see even more of those businesses that supported their tenants shut their doors forever. 
 

The great resignation is one thing.  But soon we’ll also be looking at a decent % of the population that has never held or even applied for a “traditional job”

 

 

 

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15 hours ago, KSB2424 said:

I’m not sure what’s going on but it makes no sense.  I can sell my house for 140% more that what I bought it for.  Something is going to give and it won’t be pretty.  
Everything is weird.  All businesses can’t find help.  I see it all the time, every restaurant has help wanted signs.  My company can’t find workers.  Yet EVERYTHING is more expensive.  It’s bizzare and something is going to burst.  

I've got the same feeling.   Something is "off" with the US economy and it doesn't feel sustainable.     I fear that we have another 2008 level event coming.   

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15 hours ago, KSB2424 said:

I’m not sure what’s going on but it makes no sense.  I can sell my house for 140% more that what I bought it for.  Something is going to give and it won’t be pretty.  
 

Everything is weird.  All businesses can’t find help.  I see it all the time, every restaurant has help wanted signs.  My company can’t find workers.  Yet EVERYTHING is more expensive.  It’s bizzare and something is going to burst.  

We eat out A LOT, like almost every other day. Have yet to eat somewhere that isn't understaffed and doesn't have a help wanted sign

I went to a mall up here near me. Liberty Tree Mall. has a Kohls the lady wanted to go to. I took the boy to go to the bathroom and we walked through the mall. 80% of the stores were closed. This was like 6 pm on a weekday. 

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In 2013 I bought 2,600 sf for $175k.  2021 sold it for $312k.

At the same time, bought 4,200 sf for $455k with $120k down at 2.79%.  No way I’m selling in the next 20 years.  Zillow says my house is now “worth” $515k.

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22 hours ago, Hardcore troubadour said:

That chart is not good if you’re planning on selling in a few years. Unsustainable. 

True, & might be less than a few years.

But it 'might' be a good time for people looking to buy.  Let's say John & Jane Doe live in any town USA.

They've been looking for a home for a couple years. Problem is, for the home they want, the price is 600 K 

They never pulled the trigger because they figured a real estate correction was on the horizon.

Let's say the price dropped from 600 K to 400 K & they bought.

 

The positives: 200 K in the purchase price.

Last time I bought a home, you were required to pay 20% down to avoid mortgage insurance.

If that's still the case, that would save them another 40 K

The negatives: The mortgage rate may be double the 3% it was @ when the home was selling for 600 K.

All they'd have to do to address that, would be to discipline themselves to pay an extra couple hundred $ a month towards the principal.

 

 

 

 

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16 hours ago, vuduchile said:

I think a lot of excess and redundant businesses will continue to fold in the coming years.  
 

We don’t actually need 4 gas stations at every intersection and a dozen drive-thru fast food joints at every highway exit. 
 

Many of these businesses have existed due to convenience, but have operated on thin margins and meager profits for years. Without low-paid workers, they’re dead   

And with the glut of vacant or soon-to-be vacant office space, major cities will see even more of those businesses that supported their tenants shut their doors forever. 
 

The great resignation is one thing.  But soon we’ll also be looking at a decent % of the population that has never held or even applied for a “traditional job”

 

 

 

Well, we do have millions of low wage workers crossing the border since fucktard got into office. Maybe we can make them slaves.

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On 5/12/2022 at 12:56 AM, vuduchile said:

I think a lot of excess and redundant businesses will continue to fold in the coming years.  
 

We don’t actually need 4 gas stations at every intersection and a dozen drive-thru fast food joints at every highway exit. 
 

Many of these businesses have existed due to convenience, but have operated on thin margins and meager profits for years. Without low-paid workers, they’re dead   

And with the glut of vacant or soon-to-be vacant office space, major cities will see even more of those businesses that supported their tenants shut their doors forever. 
 

The great resignation is one thing.  But soon we’ll also be looking at a decent % of the population that has never held or even applied for a “traditional job”

 

What do you see as the future for baseball card shops?

 

 

15 hours ago, easilyscan said:

True, & might be less than a few years.

But it 'might' be a good time for people looking to buy.  Let's say John & Jane Doe live in any town USA.

They've been looking for a home for a couple years. Problem is, for the home they want, the price is 600 K 

They never pulled the trigger because they figured a real estate correction was on the horizon.

Let's say the price dropped from 600 K to 400 K & they bought.

 

The positives: 200 K in the purchase price.

Last time I bought a home, you were required to pay 20% down to avoid mortgage insurance.

If that's still the case, that would save them another 40 K

The negatives: The mortgage rate may be double the 3% it was @ when the home was selling for 600 K.

All they'd have to do to address that, would be to discipline themselves to pay an extra couple hundred $ a month towards the principal.

 

What do you mean "another" 40k though?  If they're only putting down the 20%, the rest is all part of the loan costs, so the down payment is the main thing they're saving.

Obviously no one knows but I think you're also being aggressive with how far you think prices may fall.   $600k to $400k is like a 33% drop.   Even many people that think prices will come down don't think it will be that drastic.   We may also see interest rates come back down too...for example they did get to almost 5% in 2018 before coming back down.

Even if it's a 30% drop: 

$600k house at 3% with $4k in taxes/insurance = $120k down payment, $2,357 monthly payment for 30-year

$420k house at 6% with $4k in taxes/insurance = $84k down payment, $2,348 monthly payment for 30-year

So you still save $36k on the down payment, but not much on the monthly payment.   Prices coming down will help those that don't also have a house to sell, but most people who buy a house are selling a different one, so in most cases that difference in down payment is just going to come from their current house now being worth less.

 

If I had to guess, I'd think prices may come down about 10-20% or so, but interest rates will come back to around 4-4.5%.

$510k house (15% loss from $600k) at 4.3% with $4k in taxes/insurance = $102k down payment, $2,352 monthly payment for 30-year

 

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On 5/11/2022 at 5:31 PM, JustinCharge said:

I've been saying 2008 was going to happen again for a long time.

 

You say a lot of things, most of us stopped listening around 2011.

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1 hour ago, TimHauck said:

What do you see as the future for baseball card shops?

 

 

 

What do you mean "another" 40k though?  If they're only putting down the 20%, the rest is all part of the loan costs, so the down payment is the main thing they're saving.

Obviously no one knows but I think you're also being aggressive with how far you think prices may fall.   $600k to $400k is like a 33% drop.   Even many people that think prices will come down don't think it will be that drastic.   We may also see interest rates come back down too...for example they did get to almost 5% in 2018 before coming back down.

Even if it's a 30% drop: 

$600k house at 3% with $4k in taxes/insurance = $120k down payment, $2,357 monthly payment for 30-year

$420k house at 6% with $4k in taxes/insurance = $84k down payment, $2,348 monthly payment for 30-year

So you still save $36k on the down payment, but not much on the monthly payment.   Prices coming down will help those that don't also have a house to sell, but most people who buy a house are selling a different one, so in most cases that difference in down payment is just going to come from their current house now being worth less.

 

If I had to guess, I'd think prices may come down about 10-20% or so, but interest rates will come back to around 4-4.5%.

$510k house (15% loss from $600k) at 4.3% with $4k in taxes/insurance = $102k down payment, $2,352 monthly payment for 30-year

 

Interest rates are not coming back to 4%.

IMO best case scenario they don’t rise to above 5.5% once everything settles down.

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22 minutes ago, IGotWorms said:

Interest rates are not coming back to 4%.

IMO best case scenario they don’t rise to above 5.5% once everything settles down.

I think this is likely true, and perhaps even a bit optimistic. 

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1 hour ago, IGotWorms said:

Interest rates are not coming back to 4%.

IMO best case scenario they don’t rise to above 5.5% once everything settles down.

Maybe, but I’m talking like a year from now.  As I mentioned, they did get up to almost 5% in 2018, before coming back closer to 3.5% by the end of 2019 (so before Covid)

https://fred.stlouisfed.org/series/MORTGAGE30US

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4 hours ago, IGotWorms said:

There was no inflation in 2018

But if house prices come down as a result of these interest rates, then that will impact the overall inflation #'s.

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23 hours ago, TimHauck said:

What do you see as the future for baseball card shops?

 

 

 

What do you mean "another" 40k though?  If they're only putting down the 20%, the rest is all part of the loan costs, so the down payment is the main thing they're saving.

Obviously no one knows but I think you're also being aggressive with how far you think prices may fall.   $600k to $400k is like a 33% drop.   Even many people that think prices will come down don't think it will be that drastic.   We may also see interest rates come back down too...for example they did get to almost 5% in 2018 before coming back down.

Even if it's a 30% drop: 

$600k house at 3% with $4k in taxes/insurance = $120k down payment, $2,357 monthly payment for 30-year

$420k house at 6% with $4k in taxes/insurance = $84k down payment, $2,348 monthly payment for 30-year

So you still save $36k on the down payment, but not much on the monthly payment.   Prices coming down will help those that don't also have a house to sell, but most people who buy a house are selling a different one, so in most cases that difference in down payment is just going to come from their current house now being worth less.

 

If I had to guess, I'd think prices may come down about 10-20% or so, but interest rates will come back to around 4-4.5%.

$510k house (15% loss from $600k) at 4.3% with $4k in taxes/insurance = $102k down payment, $2,352 monthly payment for 30-year

 

So much happening in this biz right now and not all shops are the same.  So the future looks bright for those that adapt and modernize 

If your shop looks like a garage sale with sh!t strewn everywhere and you don’t have POS, Inventory Control and CRM systems, you’re dead. 
 

Distributors are being cut out of the supply chain so you have to have direct accounts with Topps, Panini and Upper Deck to make it work.  
 

The fanatics takeover also means thinner margins on new boxes. Some of the margins are insane now, and I expect fanatics to keep a bigger cut as we move forward.

Cards will be everywhere again pretty soon.  WaWa, ’s, Lids, BJ’s and more already have them and that will expand 

Modern hobby shops that fanatics chooses to partner with will have the more desirable, expensive hobby boxes. 
 

Fanatics is committed to grow the biz 10-20X.  They have to in order to recoup their investments.  Expect to see more advertising and marketing for cards as well 

The NFT craze is pretty much dead now. So that “threat” to physical cards came and went.  
 

Staffing is going to be tough for most. 
 

We’re fortunate in that my wife, 2 sons and I can run the place with occasional help from 2 other guys. 
 

The work isn’t hard, especially compared to many other industries.  
 

My sons and I measure sales by tacos. If we have a $10K day, I ask them how many tacos we’d have to sell to gross $10K.

When they do the math, I ask them if they’d rather own a taco shop or a card shop.   
 

That’s 3333 tacos in 8 hours.  416 tacos per hour.  Serving over 250 customers every hour.  You’d need 10-12 workers to handle that IF you could even attract that many customers.  
 

We can do the same volume with 1-10 customers and 2 of us. And, as I mentioned, our margins are great.  
 

Card shop wins by a mile.  

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We definitely needed a new thread on this. 

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Housing has turned into Bitcoin

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Completely unaffordable right now for the average person. That is why they stack 2 or 3 families in one house. Mexicans no longer have a corner on the market of piling 10 people in a home.

When you see more that 2 cars in the driveway, pretty much a guarantee there are multiple families in that house.

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19 minutes ago, lod001 said:

Completely unaffordable right now for the average person. That is why they stack 2 or 3 families in one house. Mexicans no longer have a corner on the market of piling 10 people in a home.

When you see more that 2 cars in the driveway, pretty much a guarantee there are multiple families in that house.

Yup. And if your school tax is based on home value, there is no additional tax revenue to pay for the added students in that house.  

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I'm pretty much fuk'd either way.   I own my house in MA but will be looking to sell it in the next 2-3 yrs or less.    I need/would like to buy a place in VT but all of the G-D NY'ers and CT'ers buying up places around southern VT during and after CV19 have jacked VT's real estate market to the moon.    So, if the housing market tanks - then I'll be able to buy a place in VT but my MA place loses value when I sell that.    If it keeps going up - I do well when I sell my place in MA but still can't afford to overspend for a place in VT.      So - yah, I'm screwed either way.   

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At least the timing of the crash, if it happens would coincide with me returning to the US... so... it'd be good for me. The rest of you guys, not so much...

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6 minutes ago, Voltaire said:

At least the timing of the crash, if it happens would coincide with me returning to the US... so... it'd be good for me. The rest of you guys, not so much...

…if you can pay in cash.  But given this is the GC I’m assuming you can

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Just now, TimHauck said:

But given this is the GC I’m assuming you can

What does that mean? 

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9 minutes ago, Voltaire said:

At least the timing of the crash, if it happens would coincide with me returning to the US... so... it'd be good for me. The rest of you guys, not so much...

I rent an apartment. It's awesome. Putting all that money towards retirement investments instead of buying and selling houses is killing it for me. 

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3 minutes ago, TimHauck said:

…if you can pay in cash.  But given this is the GC I’m assuming you can

There's something or other benefit to do with me qualifying for a VA Home loan that should work in my favor but I've not yet looked into what that entails since I've never used it before.

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