All Encompassing Mortgage and Real Estate Thread

[Wulaw Horn 19,126]

3 minutes ago, gurt said:

I figured the Fed pausing would be good for the rates, why did it jump so much?

Because they are terrible and they came out with “we didn’t fuck you this time around but beware the fact that we plan on fucking you in November. And maybe again in December. We are still trying to Figure that out. Then they also announced that the beatings will continue until morale improves and they can do this for years at a time in case you were ever hoping things would get better. 

Edited September 21, 2023 by Wulaw Horn

[Incredulity 11,675]

1 minute ago, Wulaw Horn said:

and they can do this for years at a time in case you were ever hoping things would get better.

Federal debt service vs. tax receipts says they can't.

[Neonmoon 38,129]

11 minutes ago, gurt said:

I figured the Fed pausing would be good for the rates, why did it jump so much?

The September pause was already priced in before yesterday's announcement. The market prices in information when it is received, and 99% of the market believed there was going to be a pause a month ago. The market prediction has never been wrong. 

So the three new pieces of information were priced in yesterday/today. 

New pieces of information were

1. 12 of 19 Fed members believe there should be another rake hike in 2023 

2. The first rate cut on the dot plot was pushed back from May to July 2024

4. The number of projected rate cuts for 2024 on dot plot went from 4 to 2

So the bond market digested the hawkish pause, and said rates will most likely be higher for longer, and make their bets accordingly 

[Sam Lin 3,559]

16 minutes ago, Incredulity said:

Federal debt service vs. tax receipts says they can't.

So, comrades, all we need to do is pay more taxes, for the good of the nation.

[gurt 749]

1 minute ago, Neonmoon said:

The September pause was already priced in before yesterday's announcement. The market prices in information when it is received, and 99% of the market believed there was going to be a pause a month ago. The market prediction has never been wrong. 

So the three new pieces of information were priced in yesterday/today. 

New pieces of information were

1. 12 of 19 Fed members believe there should be another rake hike in 2023 

2. The first rate cut on the dot plot was pushed back from May to July 2024

4. The number of projected rate cuts for 2024 on dot plot went from 4 to 2

So the bond market digested the hawkish pause, and said rates will most likely be higher for longer, and make their bets accordingly 

great, thanks for the explanation

[Wulaw Horn 19,126]

2 hours ago, gurt said:

great, thanks for the explanation

That’s the fancy way of saying what I said. If you want to get technical I guess. 

[LTtxfan 49,287]

4 hours ago, Incredulity said:

I was told it's Jobsgiving...???  Sad Panda

 

[Gil Bang 25,980]

3 hours ago, Wulaw Horn said:

Because they are terrible and they came out with “we didn’t fuck you this time around but beware the fact that we plan on fucking you in November. And maybe again in December. We are still trying to Figure that out. Then they also announced that the beatings will continue until morale improves and they can do this for years at a time in case you were ever hoping things would get better. 

[Esque 135]

US10Y jumping to 5.1% overnight... yikes!

[Wulaw Horn 19,126]

8 hours ago, Esque said:

US10Y jumping to 5.1% overnight... yikes!

What?  
I see 4.46- down slightly from yesterday. You almost gave me a heart attack. 

[UTPhil2006 3,807]

2 hours ago, Wulaw Horn said:

What?  
I see 4.46- down slightly from yesterday. You almost gave me a heart attack. 

Yeah this is where it sits about an hour into the market.  Saw that 5.1% and about passed out.  I would have went straight to the 59 underpass near MMP and began the ZJ's

[Wulaw Horn 19,126]

57 minutes ago, UTPhil2006 said:

Yeah this is where it sits about an hour into the market.  Saw that 5.1% and about passed out.  I would have went straight to the 59 underpass near MMP and began the ZJ's

What the hell happened/ misprint?

[UTPhil2006 3,807]

26 minutes ago, Wulaw Horn said:

What the hell happened/ misprint?

I meant I saw Esque’s post. Not sure what/where he saw it 

[Incredulity 11,675]

I would guess he saw the 2 year rate, which is 5.1% and was mistaken/confused.

[StassneyHorn 6,618]

20 hours ago, Incredulity said:

I was told it's Jobsgiving...???  Sad Panda

 

Still is. Revised numbers vs expectations is still 256k+ over expected.

 

 

[Dbeasy 15,073]

I communicate with a veteran bond trader who’s been solely a bond investor for over 15 years.

He has consistently said for two years now that the 10 year will end up somewhere between 5-6%. He’s been preaching short duration the whole way and so far has been absolutely right. Besides him, very few people forecasted the current bond situation correctly.

Finally now, some of the respected bond experts are also starting to talk about either higher for longer or even higher forever. 

[Sbbruin 21,863]

20 minutes ago, Dbeasy said:

I communicate with a veteran bond trader who’s been solely a bond investor for over 15 years.

He has consistently said for two years now that the 10 year will end up somewhere between 5-6%. He’s been preaching short duration the whole way and so far has been absolutely right. Besides him, very few people forecasted the current bond situation correctly.

Finally now, some of the respected bond experts are also starting to talk about either higher for longer or even higher forever. 

WSJ yesterday posited the "higher forever" idea.

[Incredulity 11,675]

35 minutes ago, Sbbruin said:

WSJ yesterday posited the "higher forever" idea.

 

but actually probably better long term.  I still don't think a country with 130% debt to GDP can stomach long term higher rates.

 

Guess we'll see.

[Wulaw Horn 19,126]

7 minutes ago, Incredulity said:

 

but actually probably better long term.  I still don't think a country with 130% debt to GDP can stomach long term higher rates.

 

Guess we'll see.

Probably can’t.  If the mainstream media is saying it bet on the zag. 

[Dbeasy 15,073]

51 minutes ago, Incredulity said:

 

but actually probably better long term.  I still don't think a country with 130% debt to GDP can stomach long term higher rates.

 

Guess we'll see.

You can when you allow inflation to run hot at those interest rates for ten years, inflating away the debt down to a much more manageable debt to GDP ratio. Exact same thing the country did after world war 2. That’s the plan. It’s just that no government official will ever admit it. Instead, they will complain about inflation being too sticky for the next 8 years, and swear their goal is 2%. 

To really squash inflation, it would probably require Volker-Lite measures and throwing the economy into a ditch to break the current pay raise momentum in the labor sectors. 

[Wulaw Horn 19,126]

15 minutes ago, Dbeasy said:

You can when you allow inflation to run hot at those interest rates for ten years, inflating away the debt down to a much more manageable debt to GDP ratio. Exact same thing the country did after world war 2. That’s the plan. It’s just that no government official will ever admit it. Instead, they will complain about inflation being too sticky for the next 8 years, and swear their goal is 2%. 

To really squash inflation, it would probably require Volker-Lite measures and throwing the economy into a ditch to break the current pay raise momentum in the labor sectors. 

I’m betting against this. If you normalize shelter to actually what it is now, without the lag in play inflation is a little over 3% right now. Job revisions (as shown on the chart above) have been down by 14% and unemployment doesn’t show up until you are already in a recession. That’s an inflection point showing things have already gotten about as bad as they are going to get. 
you are comparing this to the 1950’s post WW2 boom where the American economy was the only one not wrecked by the war, and we got to profit off the rebuild of Europe, to this?  
nah. Don’t think so. 
 

[Dbeasy 15,073]

3 hours ago, Wulaw Horn said:

I’m betting against this. If you normalize shelter to actually what it is now, without the lag in play inflation is a little over 3% right now. Job revisions (as shown on the chart above) have been down by 14% and unemployment doesn’t show up until you are already in a recession. That’s an inflection point showing things have already gotten about as bad as they are going to get. 
you are comparing this to the 1950’s post WW2 boom where the American economy was the only one not wrecked by the war, and we got to profit off the rebuild of Europe, to this?  
nah. Don’t think so. 
 

I agree 100% with your data points, so I’m not sure whether we are disagreeing or not. I’m saying inflation is not going to average 2% over the next 10 years, and that rates can stay more elevated than the current Fed dot plot. What are you saying?

[Wulaw Horn 19,126]

9 minutes ago, Dbeasy said:

I agree 100% with your data points, so I’m not sure whether we are disagreeing or not. I’m saying inflation is not going to average 2% over the next 10 years, and that rates can stay more elevated than the current Fed dot plot. What are you saying?

I’m saying inflation is already 35% of what it was at its high, it won’t take long to get it back down to 2, and that the job market is going tits up and we will be in a recession. The comparison to the 50’s when america was the lone super power, tasked with rebuilding the world, and the biggest times of prosperity in our countries history are not comparable to what we will get the rest of the decade. 
we will hit a recession and rates will fall as they always do in a recession.  

[Neonmoon 38,129]

1 minute ago, Wulaw Horn said:

I’m saying inflation is already 35% of what it was at its high, it won’t take long to get it back down to 2, and that the job market is going tits up and we will be in a recession. The comparison to the 50’s when america was the lone super power, tasked with rebuilding the world, and the biggest times of prosperity in our countries history are not comparable to what we will get the rest of the decade. 
we will hit a recession and rates will fall as they always do in a recession.  

While I’m hoping your scenario will happen, I think the “high landing” is more likely. The labor market is slowing down, but it’s not crashing which signals a recession is less likely. Unemployment is still incredibly low. Inflation has come down but it’s going to be sticky in the 3 range thanks to energy prices, strikes, war, etc. 

The housing market is struggling and will continue to struggle but I think the Fed is willing to sacrifice the housing market for their dual mandate 

The Fed cutting rates because of a recession was supposed to happen in 2023. Then it was 2024. Then it was maybe no recession. Now it’s dropped from 4 cuts to 2 cuts in 2024. Unless there is an unknown event that changes things, the Fed is signaling higher for longer. 

If so, the housing business is going to suck for a while. People better get used to 7% 

 

 

 

[Bozo_Casanova 26,496]

12 minutes ago, Neonmoon said:

it’s going to be sticky in the 3 range

so a low-normal level.

Edited September 22, 2023 by Bozo_Casanova

[Wulaw Horn 19,126]

13 minutes ago, Neonmoon said:

While I’m hoping your scenario will happen, I think the “high landing” is more likely. The labor market is slowing down, but it’s not crashing which signals a recession is less likely. Unemployment is still incredibly low. Inflation has come down but it’s going to be sticky in the 3 range thanks to energy prices, strikes, war, etc. 

The housing market is struggling and will continue to struggle but I think the Fed is willing to sacrifice the housing market for their dual mandate 

The Fed cutting rates because of a recession was supposed to happen in 2023. Then it was 2024. Then it was maybe no recession. Now it’s dropped from 4 cuts to 2 cuts in 2024. Unless there is an unknown event that changes things, the Fed is signaling higher for longer. 

If so, the housing business is going to suck for a while. People better get used to 7% 

 

 

 

I’d be happy to make you a Duke brothers gentlemen wager we will go recessionary in 2024. 

[Neonmoon 38,129]

52 minutes ago, Wulaw Horn said:

I’d be happy to make you a Duke brothers gentlemen wager we will go recessionary in 2024. 

[gmr548 16,584]

I’d be happy to make you a Duke brothers gentlemen wager we will go recessionary in 2024. 

For the record, what’s the definition of recession for the purpose of this? (Not trying to start larger philosophical discussion)

[Wulaw Horn 19,126]

21 minutes ago, gmr548 said:

 

For the record, what’s the definition of recession for the purpose of this? (Not trying to start larger philosophical discussion)

 

We shall know it when we see it. 
As a general rule declining gdp and rising unemployment corresponding to lower bond hikes, higher bond prices, stock market going down and interest rates going down. 

[Neonmoon 38,129]

I don’t think we need a numerical definition for a gentleman’s wager. If we even get close to a recession, the media will be screaming it

[Incredulity 11,675]

36 minutes ago, Neonmoon said:

If we even get close to a recession, the media will be screaming

 

Really?   We recently had 2 consecutive negative GDP quarters. The media response was screaming about technicalities.  
 

I don’t care to fight or CR.  But it doesn’t appear to me there will be anything resembling unanimity about the start of a recession.

Edited September 23, 2023 by Incredulity
Clarity of purpose

[Bozo_Casanova 26,496]

 

[Neonmoon 38,129]

7 minutes ago, Bozo_Casanova said:

 

[Dbeasy 15,073]

6 minutes ago, Bozo_Casanova said:

 

This is not going to happen. The rest of the world has to deal with higher real estate expenses. It’s now hit the US due to wealth inequality and the massive amounts of cash directed towards SFH as an investment. This is the new reality. 

[Wulaw Horn 19,126]

2 minutes ago, Dbeasy said:

This is not going to happen. The rest of the world has to deal with higher real estate expenses. It’s now hit the US due to wealth inequality and the massive amounts of cash directed towards SFH as an investment. This is the new reality. 

Or- we could build more houses. 

[Neonmoon 38,129]

Or stop the nimby zoning shit 

[Bozo_Casanova 26,496]

On 9/23/2023 at 8:44 AM, Incredulity said:

 

Really?   We recently had 2 consecutive negative GDP quarters. The media response was screaming about technicalities.  
 

I don’t care to fight or CR.  But it doesn’t appear to me there will be anything resembling unanimity about the start of a recession.

This is an aside, but relevant to the topic. I and a bunch of banking industry economists* have observed that the relatively recent decoupling of household incomes and productivity also tracks the decoupling of median incomes and asset values, including and especially housing. 
In other words - we've been using money borrowed from the future to make the rich richer, and the reason we didn't experience much inflation as a result because we mostly funneled the growth in aggregate demand into the value of assets rather than the price of things like food**.  So it follows that while a recession is still a recession, it doesn't feel like they used to feel because just as the good times weren't spread across the population, the bad times aren't either. So the recent mild technical recession and the next deeper recession is likely to be felt most acutely for the people in the 80th-95th %ile of net worth and incomes, who are rich enough to really feel the pain, but not rich enough to be well hedged or secure in their futures. 

 

* I am not a banking industry economist. I just follow and know a bunch. 
** The transient inflation spike last year being the exception, mainly caused by stimulus and shortages/supply chain disruptions. 

Edited September 24, 2023 by Bozo_Casanova

[Bozo_Casanova 26,496]

12 minutes ago, Dbeasy said:

This is not going to happen. The rest of the world has to deal with higher real estate expenses. It’s now hit the US due to wealth inequality and the massive amounts of cash directed towards SFH as an investment. This is the new reality. 

yep

9 minutes ago, Wulaw Horn said:

Or- we could build more houses. 

this! Actually the inflation spike we say last year was like a consumer goods version of the last 20 years in real estate: cheap debt + engineered shortage = value explosion

5 minutes ago, Neonmoon said:

Or stop the nimby zoning shit 

inshallah!

Edited September 24, 2023 by Bozo_Casanova

[Wulaw Horn 19,126]

45 minutes ago, Neonmoon said:

Or stop the nimby zoning shit 

No doubt that’s part of the answer. Build more of everything. 

[Gil Bang 25,980]

5 hours ago, Bozo_Casanova said:

 

I hate dumbfucks that do sloppy, imprecise shit like this.

A 4% reduction in mortgage rates could happen at any time. 

Now, a 4 percentage point reduction?  That's another story. 

[Bozo_Casanova 26,496]

1 hour ago, Gil Bang said:

I hate dumbfucks that do sloppy, imprecise shit like this.

A 4% reduction in mortgage rates could happen at any time. 

Now, a 4 percentage point reduction?  That's another story. 

Pretty obv it was a 4ppt reduction, but agreed. 

[Esque 135]

On 9/22/2023 at 12:03 PM, Incredulity said:

I would guess he saw the 2 year rate, which is 5.1% and was mistaken/confused.

I follow the US10Y like a hawk because it has the most impact on my business.  The 5.10% was a miss print over night.  I have the screen shot because I sent it to an investment banker late at night to see what was blowing up.  But was nothing.

My bad.

[Neonmoon 38,129]

 

57 minutes ago, Esque said:

I follow the US10Y like a hawk because it has the most impact on my business.  The 5.10% was a miss print over night.  I have the screen shot because I sent it to an investment banker late at night to see what was blowing up.  But was nothing.

My bad.

I mean...

We aren't not high

[Wulaw Horn 19,126]

Every day is another melt down. 

[Esque 135]

1 hour ago, Wulaw Horn said:

Every day is another melt down. 

Also disheartening the forward curve is, more or less, moving in unison. Over the last 30 days the US2Y is up 22.8 bps, US5Y is up 16.6 bps, and US10Y is up 29.4 bps.  Would have hoped to see some better progress on un-inverting the forward curve.  With the US2Y at 5.12%, seems like the US10Y still has room to run.

[Neonmoon 38,129]

There are fewer* deals and every deal is pulling your pants down, and it's still not enough. Kind of depressing

Edited September 25, 2023 by Neonmoon
*grammar nazis

[Bozo_Casanova 26,496]

6 minutes ago, Neonmoon said:

There are less deals and every deal is pulling your pants down, and it's still not enough. Kind of depressing

fewer

[Wulaw Horn 19,126]

1 hour ago, Neonmoon said:

There are fewer* deals and every deal is pulling your pants down, and it's still not enough. Kind of depressing

It’s tough out there for sure man. 

I was beating the hell out of myself as my business was down 50% or 60% or so. Got invited to a top producer seminar based upon 2022 numbers this summer. Didn’t even want to go- was afraid I’d be embarrassed. Upon getting there I found my standing had dropped from #14 originator in the company all the way down to… #16 (out of like 1400 originators in our little broker shop)

fuck- it just is. Give yourself permission to have a bad month or year. It’s not you and no matter what you think you aren’t riding the struggle bus alone. Do the activities you know you need to and that’s planting seeds you will absolutely harvest someday (hopefully soon). 

I can’t tell you how much self loathing I had, how much feelings of being an absolute failure. Worries. How are my kids gonna eat?  Where are we going to live?  Will my wife still love me if we go bust?  Will my friends respect me?  Will I be able to go on and put one foot in front of the other. Then, I internalized that it was not my fault and everything felt better.  Once everything felt better that freed me up to work on my business and be better.  Maybe you know all this stuff already and if so, good for you. I’m saying it out loud 1) to remind myself because it is worth repeating and 2) to tell you it’s not your fault and it will get better if you don’t know that and believe that. It’s also not just you (or myself) I’m talking to but anyone that might be lurking and feel the same way.  It’s really tough. From my other career as a lawyer I know that when lawyers feel that way a lot of them turn to drugs, alcohol and suicide. I don’t know the numbers on the mortgage industry but I’d think of an industry crashes into this kind of dark place it can’t be good for the people in the industry or their mental health.  
 

[Neonmoon 38,129]

3 hours ago, Wulaw Horn said:

It’s tough out there for sure man. 

I was beating the hell out of myself as my business was down 50% or 60% or so. Got invited to a top producer seminar based upon 2022 numbers this summer. Didn’t even want to go- was afraid I’d be embarrassed. Upon getting there I found my standing had dropped from #14 originator in the company all the way down to… #16 (out of like 1400 originators in our little broker shop)

fuck- it just is. Give yourself permission to have a bad month or year. It’s not you and no matter what you think you aren’t riding the struggle bus alone. Do the activities you know you need to and that’s planting seeds you will absolutely harvest someday (hopefully soon). 

I can’t tell you how much self loathing I had, how much feelings of being an absolute failure. Worries. How are my kids gonna eat?  Where are we going to live?  Will my wife still love me if we go bust?  Will my friends respect me?  Will I be able to go on and put one foot in front of the other. Then, I internalized that it was not my fault and everything felt better.  Once everything felt better that freed me up to work on my business and be better.  Maybe you know all this stuff already and if so, good for you. I’m saying it out loud 1) to remind myself because it is worth repeating and 2) to tell you it’s not your fault and it will get better if you don’t know that and believe that. It’s also not just you (or myself) I’m talking to but anyone that might be lurking and feel the same way.  It’s really tough. From my other career as a lawyer I know that when lawyers feel that way a lot of them turn to drugs, alcohol and suicide. I don’t know the numbers on the mortgage industry but I’d think of an industry crashes into this kind of dark place it can’t be good for the people in the industry or their mental health.  
 

Appreciate the kind words. You are right. I do need to remind myself more. Sometimes it’s easy to get lost in the beat down when deals are crumbling, or multiple in a day. 

 

 

[Dbeasy 15,073]

Does anyone understand the recent and future proposed Austin Single family zoning changes? I’ve tried to find them on the web but the City of Austin just shows Access Denied on their website. 

it is my understand they made changes in 2019/2020 to allow more density, and are about to do it again