Real Estate Crash thread

[Toadman]

There's an amazing amount of RE construction going on in Bend. 3 high end homes being built within a few blocks of us. There are several other developments that seem to have picked up steam this summer.

My boss's wife is friends with one of the Pahlisch execs, and it sounds like they are having no problem selling new construction in Central Oregon.

https://pahlischhomes.com/communities/central-oregon

New development on the NW side of Bend. It's changed a lot since we lived over in that area when we moved here 6 years ago.

http://tallinewestbend.com/#form

Plus this big development in NW Bend off of Robal Rd. and Cooley Rd. is going to turn that area in to a traffic nightmare.

https://ktvz.com/news/bend/2023/06/3...tion-car-wash/

[Kevo]

I recently finished reading "The Price of Time", which is a very informative book on the history of interest rate policy dating back to the Babylonians.

The book details how crazy real estate and financial markets get when interest rates get too low. It talks about how near zero rates in the Victorian era led to a massive boom in real estate. So much real estate was being built and developed that all the building supplies were sold out country wide in England. People were in such a hurry to build that they were delivering literally hot off the kiln bricks to job sites. The hot bricks lit brick carts and job sites on fire.

Inventory here in Teton Valley is going up pretty dramatically. We have gone from almost no available housing to 140+ SFHs for sale in a county with 10k residents.

Also of note- the author makes the case for deflation to be a good thing for the working class. Modern monetary theorists and just about every policy maker in the developed world today are strongly against deflation, but the author talks about how deflationary resets are a good thing for anyone who works for a living.

[J. Barron DeJong]

I recently finished reading "The Price of Time", which is a very informative book on the history of interest rate policy dating back to the Babylonians.

The book details how crazy real estate and financial markets get when interest rates get too low. It talks about how near zero rates in the Victorian era led to a massive boom in real estate. So much real estate was being built and developed that all the building supplies were sold out country wide in England. People were in such a hurry to build that they were delivering literally hot off the kiln bricks to job sites. The hot bricks lit brick carts and job sites on fire.

Inventory here in Teton Valley is going up pretty dramatically. We have gone from almost no available housing to 140+ SFHs for sale in a county with 10k residents.

Also of note- the author makes the case for deflation to be a good thing for the working class. Modern monetary theorists and just about every policy maker in the developed world today are strongly against deflation, but the author talks about how deflationary resets are a good thing for anyone who works for a living.

The argument against deflation isn’t about its effect on any individuals. It’s that when there’s deflation, there’s an incentive to save your money instead of spending it, because things will be cheaper in the future. But ‘my spending is your income’ so if everyone starts saving excessively, then it leads to recession/depression.

If you work for a living, it’s important to be employed…

ETA: I actually find the opposite argument much more convincing: the Fed has been overly concerned with maintaining low inflation, at the cost of less employment. The larger pool of unemployed workers allows employers to pay less, since there is less competition for hiring. This stagnates wages, particularly at the low end of the spectrum.

This seems like something the Fed has finally started to acknowledge.

[summit]

The argument against deflation isn’t about its effect on any individuals. It’s that when there’s deflation, there’s an incentive to save your money instead of spending it, because things will be cheaper in the future. But ‘my spending is your income’ so if everyone starts saving excessively, then it leads to recession/depression.

If you work for a living, it’s important to be employed…

ETA: I actually find the opposite argument much more convincing: the Fed has been overly concerned with maintaining low inflation, at the cost of less employment. The larger pool of unemployed workers allows employers to pay less, since there is less competition for hiring. This stagnates wages, particularly at the low end of the spectrum.

This seems like something the Fed has finally started to acknowledge.

Yep and proportionally consumer debt becomes worse. All those notes on cars and houses will become brutal under a high interest deflationary spiral, so will credit card and student debt. Meanwhile nobody is spending and jobs go bye bye.

We are a debt fueled economy. Inflation actually helps debt holders. Although this is surprising: https://fred.stlouisfed.org/series/TDSP I wonder if it is true when you pull the top 10% out?

[Kevo]

The argument against deflation isn’t about its effect on any individuals. It’s that when there’s deflation, there’s an incentive to save your money instead of spending it, because things will be cheaper in the future. But ‘my spending is your income’ so if everyone starts saving excessively, then it leads to recession/depression.

If you work for a living, it’s important to be employed…

ETA: I actually find the opposite argument much more convincing: the Fed has been overly concerned with maintaining low inflation, at the cost of less employment. The larger pool of unemployed workers allows employers to pay less, since there is less competition for hiring. This stagnates wages, particularly at the low end of the spectrum.

This seems like something the Fed has finally started to acknowledge.

To add more about the author's argument, chasing low inflation numbers in a basket of goods without considering asset price inflation creates a massive class divide between asset owners and non asset owners.

Japan had a massive deflation after the 1980s bubble, but the average Japanese worker is better off today than they were in the 1980s despite asset prices in Japan declining for several decades.

Lots to be said on both sides of the argument, but I do think you'd enjoy the book given the topics that you post about.

[J. Barron DeJong]

To add more about the author's argument, chasing low inflation numbers in a basket of goods without considering asset price inflation creates a massive class divide between asset owners and non asset owners.

Japan had a massive deflation after the 1980s bubble, but the average Japanese worker is better off today than they were in the 1980s despite asset prices in Japan declining for several decades.

Lots to be said on both sides of the argument, but I do think you'd enjoy the book given the topics that you post about.

“TOKYO -- As Japan's political parties spar over how to reduce inequality ahead of the upcoming general election, three decades of nearly flat wages suggest that growing the economic pie first may be a more pressing priority.

Annual real wages in Japan averaged about $39,000 in 2020 at purchasing power parity last year, an increase of just 4% from 30 years earlier, according to data by the Organization for Economic Cooperation and Development. Over the same period, U.S. wages jumped by roughly half to $69,000, and the OECD average rose by a third to $49,000.”

https://asia.nikkei.com/Politics/Jap...ibution-debate

I’ll take a look at the book though. It does seem like it would be right up my alley.

ETA:

Uh, oh.

“Having said all that, yes, as you know, the book inclines quite strongly toward the Austrian interpretations, and many Austrian economists have slightly different takes on the subject. I suppose that Schumpeter’s view was perhaps sitting to the side of everyone else, but as you know, I’m a big fan of Hayek, and a big fan of Schumpeter.”

https://mises.org/library/price-time

For those that don’t know (hopefully most of you…) , Hayek is clearly wrong. Arguments explained here:

[Tips^Up]

There is a further appeal process that is not handled by the assessor.

I had about 35% of my client's appeals changed, none to the extent we requested. I heard that many appeals were denied because the assessor staff was simply overwhelmed and did not have the time to process, review and answer every appeal. Shitty outcome for property owners/taxpayers, but we get the next shot at CBOE, where at least the appeal will be heard.

For the record, my soft solicitation for tax appeal work on TGR garnered no interest.

[Danno]

Your solicitation was too flaccid.

[Foggy_Goggles]

Since I got a bit of extra time in my office due to running out of talent on my bike, I listened in on the Country Commissioners Meeting today. The 90 studio unit project by my house was denied in the preliminary stage despite being recommended approval by staff and the planning commission.

One of the Commissioners stated that he thinks market rate affordable housing is dead and then voted against a market rate affordable housing project. That's some pretty heavy signaling to me. If you own property in Grand County, heads the fuck up for asset price protections, continued labor shortages, employer welfare and tons of taxpayer supported housing initiatives.

I think I'll just raise my prices, buy a ranchette somewhere that doesn't disqualify me (France?) and apply for every subsidized unit that come available.

[4matic]

Still loads of new apt construction around here not finished yet:

U.S. rental vacancy rate reached a low of 4.1% in October 2021 and has been on rise since ... now hovering near 7.1%, which is third-highest in index's history

[liv2ski]

Still loads of new apt construction around here not finished yet:

U.S. rental vacancy rate reached a low of 4.1% in October 2021 and has been on rise since ... now hovering near 7.1%, which is third-highest in index's history

I have read rents are decreasing (maybe due to that increase in vacancies) but I have not noticed it yet in San Diego.

[4matic]

Number of multi-family units under construction climbed to 994k in June, which is tied for all-time high reached back in May 1973

[liv2ski]

I always look at Mammoth real estate and the high end is down about 20%-25% from last year. Stuff under $1M is still way over priced.

[AdironRider]

Upper Valley real estate is still crushing. Noticing a slight uptick in availability of daycare slots though. Feels like more than a few people who decided to move here might have gotten called back to the city as their WFH dream ended. That said, they don't seem to be selling and are content just renting their places to new professors for big money. Rents here continue to climb with a 3 bed/2 bath house going for a minimum of 3500 (more like 4k+ on average) within 15-30 minutes of the College. Not chump change for northern New England.

[byates1]

here you go. here's the solution in bozeman..


https://bozeman.craigslist.org/reo/d...647809039.html


a deed restricted 550 sq ft room. w hoa fees, etc. pushing a quarter million dollars.

ppl are fucked.

[Bunion 2020]

MY PT and her husband just bought a place in the new Story Mill subdivision. Theirs was not "affordable" it is a market rate unit and they paid $607K for what is a small starter home.

[skaredshtles]

MY PT and her husband just bought a place in the new Story Mill subdivision. Theirs was not "affordable" it is a market rate unit and they paid $607K for what is a small starter home.

Yeesh.

[byates1]

MY PT and her husband just bought a place in the new Story Mill subdivision. Theirs was not "affordable" it is a market rate unit and they paid $607K for what is a small starter home.

if their parents did't flow them 200 grand they are crushed under a 4000$ a month mortgage, plus car payments, taxes, student loans etc etc.

have fun w that. welcome to hell on earth, that looks all new and pretty.

[byates1]

edit: even w 20% down(120,000) a 30 yr fixed at 7.5% is 4300$ a month.

that is w no land. you can literally urinate on the 3 houses surrounding yours from inside your house.

[yeahman]

Bozeman will always be fucked but prices in Helena are trending down. Lots more houses on the market and seeing lots of price reductions.

Saw a great bumper sticker in town the other day: "Too poor for Bozeman, too ugly for Missoula." Lol

[byates1]

got a couple of these for you next time i see you

[yeahman]

^^People used to say that about Missoula years ago. Back then Bozeman was a redneck town with an Ag college and not the target of people's ire. Missoula was hippies and granolas.

[I Skied Bandini Mountain]

Go live in Jordan or Browning if you want it real. I'll wait in the meantime.

[yeahman]

Go live in Jordan or Browning if you want it real. I'll wait in the meantime.

Spent two years in Rudyard. Pretty real up there.

[byates1]

yeah browning keeps it real. we should head up there and go on a meth bender.

i sort of am here, work 8 months or so here. would not participate in housing here unless i was a landlord.

it's amusing all the hyper inflated prices. at least the cages ppl can barely afford look nice.