Housing Analysis

[CalBears96]

LL, rates need to go even higher if they'll start making a dent in the market demand.  We still have a serious lack of inventory, inventory levels are up slightly in the past month.

Higher rates will actually hurt resale inventory because those who planned to move up, thus creating resale inventory, won't be selling their homes anymore.

 

[Liar Loan]

LL, rates need to go even higher if they'll start making a dent in the market demand.  We still have a serious lack of inventory, inventory levels are up slightly in the past month.

Higher rates will actually hurt resale inventory because those who planned to move up, thus creating resale inventory, won't be selling their homes anymore.

So less demand for move up homes then.

 

[usctrojancpa]

LL, rates need to go even higher if they'll start making a dent in the market demand.  We still have a serious lack of inventory, inventory levels are up slightly in the past month.

Higher rates will actually hurt resale inventory because those who planned to move up, thus creating resale inventory, won't be selling their homes anymore.

So less demand for move up homes then.

Well if you don't have move-up buyers selling their homes that does depress inventory levels.  Besides forced sales (death, divorce, job loss, job transfer) who will your sellers be if people are locked into their homes with low rates?

 

[CalBears96]

LL, rates need to go even higher if they'll start making a dent in the market demand.  We still have a serious lack of inventory, inventory levels are up slightly in the past month.

Higher rates will actually hurt resale inventory because those who planned to move up, thus creating resale inventory, won't be selling their homes anymore.

So less demand for move up homes then.

I see that logic isn't your strong suit. New homes will always sell. The wait list is still strong. So less demand for move up homes isn't doing much. But if these people aren't moving up, they won't put up their homes for sale. As a result, inventory will stay low.

 

[Liar Loan]

Well if you don't have move-up buyers selling their homes that does depress inventory levels.  Besides forced sales (death, divorce, job loss, job transfer) who will your sellers be if people are locked into their homes with low rates?

Inventory is a function of both supply and demand.  Demand will get hit harder by rising interest rates than supply in my opinion.  Many owners of move up homes are older people with low loan balances or no loan balance, and interest rates just aren't a concern in their decision to sell.  Another source of inventory will be older folks that want to downsize and move to a single story as they age.  Many Boomers have been holding out, delaying the inevitable by "aging in place", but their egos are writing checks that their bodies can no longer cash.

I see that logic isn't your strong suit. New homes will always sell. The wait list is still strong. So less demand for move up homes isn't doing much. But if these people aren't moving up, they won't put up their homes for sale. As a result, inventory will stay low.

New home sales are one of the first things to tank at the start of a recession, so much so that Bill McBride at Calculated Risk believes it to be the THE most reliable indicator of a coming recession.  Home builder cancellations spike like crazy and those on wait lists have a sudden change of heart. 

P.S. We currently have the largest number of units under construction since 1973 so future supply hitting the market will be abundant.

 

[Ready2Downsize]

Old people who have no loan or a low loan have L O W property taxes. They can take their basis with them but if they buy anything with mello, they pay the mello on top of the basis. When I moved from Irvine to Legacy, I bought a house that was over $700K cheaper, took my basis and my property taxes doubled because of the mello. Most old people do not want that.

Old people want LOW maintenance which means they do not want old homes. WHERE are they going to get a single story newer home with low property taxes here?

Most will not sell because of those factors alone. They might move to other areas, such as AZ (you know that bubble state accepting sunshine dollars right and left for single stories paid for in cash........ but why would THEY want to move even if it is a bubble, another reason AZ is not as bad as you might think), if they have family there.

Why do you think California has laws to move old people basis? It's an attempt to get them to SELL their houses cuz they ain't doing it without a reason.

You want more inventory? Take away the $500K cap gain exclusion. You'll see a quick rush of homes for sale.

 

[zubs]

Just rent out CA house, and use it to rent a house in the new area you wanna go.
Why ever sell in CA?

 

[usctrojancpa]

Well if you don't have move-up buyers selling their homes that does depress inventory levels.  Besides forced sales (death, divorce, job loss, job transfer) who will your sellers be if people are locked into their homes with low rates?

Inventory is a function of both supply and demand.  Demand will get hit harder by rising interest rates than supply in my opinion.  Many owners of move up homes are older people with low loan balances or no loan balance, and interest rates just aren't a concern in their decision to sell.  Another source of inventory will be older folks that want to downsize and move to a single story as they age.  Many Boomers have been holding out, delaying the inevitable by "aging in place", but their egos are writing checks that their bodies can no longer cash.

I see that logic isn't your strong suit. New homes will always sell. The wait list is still strong. So less demand for move up homes isn't doing much. But if these people aren't moving up, they won't put up their homes for sale. As a result, inventory will stay low.

New home sales are one of the first things to tank at the start of a recession, so much so that Bill McBride at Calculated Risk believes it to be the THE most reliable indicator of a coming recession.  Home builder cancellations spike like crazy and those on wait lists have a sudden change of heart. 

P.S. We currently have the largest number of units under construction since 1973 so future supply hitting the market will be abundant.

Most of my move-up buyers need a larger home because of kids and/or working from home.  They purchased their smaller condos/homes in the past 3-5 years and still have decent sized loans.  It may be true that new home cancellations may be the first indicator that things are slowing down but again I'm not seeing it on my end as builder wait lists in Irvine are still jam packed.  Like I said, to get the market to neutral in Irvine inventory has to go from 150 today to 750 so that's a 5x increase.

 

[usctrojancpa]

Old people who have no loan or a low loan have L O W property taxes. They can take their basis with them but if they buy anything with mello, they pay the mello on top of the basis. When I moved from Irvine to Legacy, I bought a house that was over $700K cheaper, took my basis and my property taxes doubled because of the mello. Most old people do not want that.

Old people want LOW maintenance which means they do not want old homes. WHERE are they going to get a single story newer home with low property taxes here?

Most will not sell because of those factors alone. They might move to other areas, such as AZ (you know that bubble state accepting sunshine dollars right and left for single stories paid for in cash........ but why would THEY want to move even if it is a bubble, another reason AZ is not as bad as you might think), if they have family there.

Why do you think California has laws to move old people basis? It's an attempt to get them to SELL their houses cuz they ain't doing it without a reason.

You want more inventory? Take away the $500K cap gain exclusion. You'll see a quick rush of homes for sale.

You mean create an unlimited gain exclusion?  Because if they took away the $500k gain exclusion that would cause less people to want to sell.

 

[Ready2Downsize]

Old people who have no loan or a low loan have L O W property taxes. They can take their basis with them but if they buy anything with mello, they pay the mello on top of the basis. When I moved from Irvine to Legacy, I bought a house that was over $700K cheaper, took my basis and my property taxes doubled because of the mello. Most old people do not want that.

Old people want LOW maintenance which means they do not want old homes. WHERE are they going to get a single story newer home with low property taxes here?

Most will not sell because of those factors alone. They might move to other areas, such as AZ (you know that bubble state accepting sunshine dollars right and left for single stories paid for in cash........ but why would THEY want to move even if it is a bubble, another reason AZ is not as bad as you might think), if they have family there.

Why do you think California has laws to move old people basis? It's an attempt to get them to SELL their houses cuz they ain't doing it without a reason.

You want more inventory? Take away the $500K cap gain exclusion. You'll see a quick rush of homes for sale.

You mean create an unlimited gain exclusion?  Because if they took away the $500k gain exclusion that would cause less people to want to sell.

If they removed it, I would want to unload something that I was planning on selling before it went asta la vista, especially if I was an old person.

It would be a temporary blip but I bet an increase in supply would come from the so called shadow inventory.

 

[usctrojancpa]

Old people who have no loan or a low loan have L O W property taxes. They can take their basis with them but if they buy anything with mello, they pay the mello on top of the basis. When I moved from Irvine to Legacy, I bought a house that was over $700K cheaper, took my basis and my property taxes doubled because of the mello. Most old people do not want that.

Old people want LOW maintenance which means they do not want old homes. WHERE are they going to get a single story newer home with low property taxes here?

Most will not sell because of those factors alone. They might move to other areas, such as AZ (you know that bubble state accepting sunshine dollars right and left for single stories paid for in cash........ but why would THEY want to move even if it is a bubble, another reason AZ is not as bad as you might think), if they have family there.

Why do you think California has laws to move old people basis? It's an attempt to get them to SELL their houses cuz they ain't doing it without a reason.

You want more inventory? Take away the $500K cap gain exclusion. You'll see a quick rush of homes for sale.

You mean create an unlimited gain exclusion?  Because if they took away the $500k gain exclusion that would cause less people to want to sell.

If they removed it, I would want to unload something that I was planning on selling before it went asta la vista, especially if I was an old person.

It would be a temporary blip but I bet an increase in supply would come from the so called shadow inventory.

If they got rid of the gain exclusion several of my move-up buyers would have not sold their exit homes and would have kept them as rentals to avoid the tax.  When you have $400k-$500k in gains that are tax free versus paying 25-30% tax (long term cap) it makes a big difference.

 

[Ready2Downsize]

Old people who have no loan or a low loan have L O W property taxes. They can take their basis with them but if they buy anything with mello, they pay the mello on top of the basis. When I moved from Irvine to Legacy, I bought a house that was over $700K cheaper, took my basis and my property taxes doubled because of the mello. Most old people do not want that.

Old people want LOW maintenance which means they do not want old homes. WHERE are they going to get a single story newer home with low property taxes here?

Most will not sell because of those factors alone. They might move to other areas, such as AZ (you know that bubble state accepting sunshine dollars right and left for single stories paid for in cash........ but why would THEY want to move even if it is a bubble, another reason AZ is not as bad as you might think), if they have family there.

Why do you think California has laws to move old people basis? It's an attempt to get them to SELL their houses cuz they ain't doing it without a reason.

You want more inventory? Take away the $500K cap gain exclusion. You'll see a quick rush of homes for sale.

You mean create an unlimited gain exclusion?  Because if they took away the $500k gain exclusion that would cause less people to want to sell.

If they removed it, I would want to unload something that I was planning on selling before it went asta la vista, especially if I was an old person.

It would be a temporary blip but I bet an increase in supply would come from the so called shadow inventory.

If they got rid of the gain exclusion several of my move-up buyers would have not sold their exit homes and would have kept them as rentals to avoid the tax.  When you have $400k-$500k in gains that are tax free versus paying 25-30% tax (long term cap) it makes a big difference.

Exactly BUT taking it away would move some to sell to GET that exclusion before it's gone. Lots of people sitting on a $500K gain who bought two years ago.

 

[usctrojancpa]

Old people who have no loan or a low loan have L O W property taxes. They can take their basis with them but if they buy anything with mello, they pay the mello on top of the basis. When I moved from Irvine to Legacy, I bought a house that was over $700K cheaper, took my basis and my property taxes doubled because of the mello. Most old people do not want that.

Old people want LOW maintenance which means they do not want old homes. WHERE are they going to get a single story newer home with low property taxes here?

Most will not sell because of those factors alone. They might move to other areas, such as AZ (you know that bubble state accepting sunshine dollars right and left for single stories paid for in cash........ but why would THEY want to move even if it is a bubble, another reason AZ is not as bad as you might think), if they have family there.

Why do you think California has laws to move old people basis? It's an attempt to get them to SELL their houses cuz they ain't doing it without a reason.

You want more inventory? Take away the $500K cap gain exclusion. You'll see a quick rush of homes for sale.

You mean create an unlimited gain exclusion?  Because if they took away the $500k gain exclusion that would cause less people to want to sell.

If they removed it, I would want to unload something that I was planning on selling before it went asta la vista, especially if I was an old person.

It would be a temporary blip but I bet an increase in supply would come from the so called shadow inventory.

If they got rid of the gain exclusion several of my move-up buyers would have not sold their exit homes and would have kept them as rentals to avoid the tax.  When you have $400k-$500k in gains that are tax free versus paying 25-30% tax (long term cap) it makes a big difference.

Exactly BUT taking it away would move some to sell to GET that exclusion before it's gone. Lots of people sitting on a $500K gain who bought two years ago.

They won't take it away, that'd be political suicide.

 

[sleepy5136]

If you want more inventory, remove prop 13. All the landlords will unload as their cash flow on their properties will be low.

 

[usctrojancpa]

If you want more inventory, remove prop 13. All the landlords will unload as their cash flow on their properties will be low.

Not going to happen because the senior vote will not approve it.

 

[akula1488]

...

 

[Ready2Downsize]

If you want more inventory, remove prop 13. All the landlords will unload as their cash flow on their properties will be low.

Not going to happen because the senior vote will not approve it.

Those pesky seniors!

Would never happen till congress sold all their properties.

 

[Liar Loan]

EDIT: See the Arizona Real Estate thread for this post.

 

[Liar Loan]

Uh oh!... This time it's not just Calculated Risk, but the Dallas Federal Reserve saying that price-to-rent and price-to-income ratios are out of whack.  Additionally, REAL home prices (adjusted for inflation for all you women's studies majors) are now higher than the peak of the housing bubble.

Real-Time Market Monitoring Finds Signs of Brewing U.S. Housing Bubblehttps://www.dallasfed.org/research/economics/2022/0329

Our evidence points to abnormal U.S. housing market behavior for the first time since the boom of the early 2000s. Reasons for concern are clear in certain economic indicators?the price-to-rent ratio, in particular, and the price-to-income ratio?which show signs that 2021 house prices appear increasingly out of step with fundamentals.

 

[AccidentalAnalytics]

After 2 years and 30% appreciation later, you may finally be right!!!  You?re so smart!