All Encompassing Mortgage and Real Estate Thread

[LCHorn 2750]

3 hours ago, Dbeasy said:

These massive insurance price increases push down real estate prices. If it doesn’t get under control soon, we have a serious serious problem.

Not sure I agree with this one, either.  I think the rise in insurance cost will be changing the cost/benefit in certain areas but Austin should be a winner there compared to Houston (hurricanes) and Dallas (the enormous sucking due to proximity to Oklahoma).

Also, I’m not seeing any health insurers struggling to make a profit.  
 

3 hours ago, Dbeasy said:

1. Elon - he will single handedly lift Central Texas real estate over the next 10 years.

Be honest, you drive a Cybertruck, right? 😉

[UTPhil2006 3930]

Houston insurance (especially the coastal counties) has definitely jumped 

[Dbeasy 15561]

59 minutes ago, horn4life said:

Honestly I hadn't really thought about a more weighted downturn in Austin because of tech.  I guess I have lived here so long I don't even really think of it as a "class" as it's so much of the Austin landscape.  But if Austin falls... What about all the ticks that have been sucking on the big dog, like Buda, Cedar Park/Leander, Georgetown? Are their markets not also largely dependent on tech's rise or fall?

 

 

24 minutes ago, LCHorn said:

Not sure I agree with this one (in that a recession hurts tech worse than other industries)-care to elaborate?

I come out of high tech management and Austin historically had been a weak tech location as compared to other areas around the country. Dallas actually for many years had better tech than Austin, believe it or not. But then in the 2000's+ Austin really started to get much more solid in tech. Part of the reason for this was the creation of new VC funds in Austin after Austin Ventures imploded.  Plus, Austin got discovered as being hip due to SXSW, etc.  So, the tech industry here has really started to become a solid, but still behind the bay area, and spots on the East Coast. The long-term outlook is very good.

If you dig into tech here a bit deeper, it's still driven today quite a bit by being the 2nd/3rd/4th location for tech companies on the west coast. They setup here as a lower cost location to supplement other higher cost centers. Some of those cost advances are waning. When recessions hit, 2nd locations are always hit harder. Whenever I went thru a recession over the years, I'd always cut other locations ahead of key, prime locations, for many reasons. Austin actually has never seen what a recession will do to it because of tech, because the tech industry here didn't get strong enough until after the last recession in 2008. People don't know what's coming, if we do hit a hard recession. Now of course the activity by Apple and Elon will blunt the impact, but even they will put the brakes on activity during a recession.

The surrounding suburbs will also feel it. You'd be amazed at how many tech industry workers live in Buda, Leander, etc. The State government and University will also limit the damage obviously.

 

15 minutes ago, LCHorn said:

Not sure I agree with this one, either.  I think the rise in insurance cost will be changing the cost/benefit in certain areas but Austin should be a winner there compared to Houston (hurricanes) and Dallas (the enormous sucking due to proximity to Oklahoma).

Also, I’m not seeing any health insurers struggling to make a profit.  
 

Be honest, you drive a Cybertruck, right? 😉

I can't talk personally to the health insurers but got off the phone yesterday with a health insurance broker who told me the whole industry is in complete turmoil.  I could go into more detail on the conversation, but you can google it. They are making money because they all raised rates dramatically.  The fear is that costs are spiraliing out of control so fast they may keep having to do it.

I can't stand Elon Musk. I think the Cybertruck is the dumbest vehicle created in history.  But, you have to acknowledge when the world's richest man wants to spend a lot of money in your city and build a lot of businesses.  If you look at the history of cities around the country, many of them were "made" by one or a few key companies or people.  For example, Portland was made by Nike, Tektronix and a few other companies. Elon's impact here, if he doesn't waver, will be substantial over time.

[jimmyjazz 47127]

43 minutes ago, LCHorn said:

Not sure I agree with this one (in that a recession hurts tech worse than other industries)-care to elaborate?

I thought the same thing, I guess it depends on the definition of "tech".  I work in a technology realm but it is very hardware oriented -- steel, copper, magnets.  We are likely much more susceptible to economic pressures related to a reduction of imported goods, etc. than the average social media company.

[horn4life 3838]

Interesting takes bay all - Interesting to consider the "satellite location" aspect of a tech downturn.  I was thinking more related to the super elevated valuations in the NASDAQ effecting tech more, and that housing markets that rise highest, tend to pull back the most percentage wise.  

The one thing I will say that if I were advising anyone, especially younger folks without kids, is look CAREFULLY at school districts when buying.  Simply as I remember the RE crash and it was fascinating to see the houses hold their value better, and turn more often in the better school districts.  If I am looking at two very similar houses, the ISD might be the deciding factor.  It's not a huge thing, but when you need to sell in a tough market you need every edge you can get.  And even in shitty markets parents are willing to spend a little more to get their kids a better education.  IMHO.

[UTPhil2006 3930]

Fed announces 25 bps rate cut. 10 year up

[Wulaw Horn 19579]

5 minutes ago, UTPhil2006 said:

Fed announces 25 bps rate cut. 10 year up

Because of course. 

[UTPhil2006 3930]

2 minutes ago, Wulaw Horn said:

Because of course. 

Them moving the target from 2.9 to 3.1 is prob the underlying reason for the jump(s)

[Wulaw Horn 19579]

22 minutes ago, UTPhil2006 said:

Them moving the target from 2.9 to 3.1 is prob the underlying reason for the jump(s)

Either that or because I touch myself. One or the other. 
oh well. I have no rate exposure right now. I have no upcoming rate exposure other than the deals we won’t do bc people won’t buy. It would have been really nice if that 6.1 national average didn’t turn into a 7.05 national average in 3 months after 100 bips of fed rate cuts, but it is what it is I guess. 
 

Edited Wednesday at 07:47 PM by Wulaw Horn

[Dbeasy 15561]

16 hours ago, Wulaw Horn said:

Because of course. 

This should be no surprise. I’ve been hinting at this for months. The yield curve was inverted and it MUST un-invert, which it finally did this week. 

I’ve personally felt that this switch in Fed thinking about 2025 was definitely going to happen because inflation data is still a bit high and the economy is still relatively strong. But things will likely change next year, and create new Fed views. 

If you dig deeper into the inflation data from the most recent report, it’s actually very good. Most categories are down into the 2% range. That leaves the incoming administration as the main influence for the economy and inflation. 

There is a ton of uncertainty over that. Trump has been throwing out all sorts of policies. My personal opinion is that excess government spending is the main inflationary item, so even if Trump uses tariffs and other inflationary policies, it will be offset by significant cuts in government spending, leading to a slowing of the economy and less inflation pressure. 

But because his policies are so radical, it could have very unintended effects, such as re-ignition of inflation. If I were a home buyer I would buy now. Why? Because not owning a home in a higher inflation environment is a financially very bad decision. Two, rates could end up higher to fight unintended inflation. Three, even if you lock in higher rates now, you can refinance later. This unidirectional option is a powerful financial tool for borrowers. 

In the tech company discussion above, tariffs aren’t the main influence on employment. All tech companies keep excess employment during good economic times. Why? 

They are hitting their numbers and want to spend money on various less critical projects and products to drive future growth. When times get tough, they all cut. It’s a formula used by every single tech company out there. 

For those companies that are growing spectacularly, obviously they don’t reduce headcount, but they do slow hiring of planned growth. That could be the scenario with Apple. Austin has priced in the opening of the Apple campus and a certain number of employees. That growth plan may change. 

[jimmyjazz 47127]

46 minutes ago, Dbeasy said:

My personal opinion is that excess government spending is the main inflationary item, so even if Trump uses tariffs and other inflationary policies, it will be offset by significant cuts in government spending,

I chuckled.

[Dbeasy 15561]

48 minutes ago, jimmyjazz said:

I chuckled.

Ya more accurately, spending growth will potentially be lower than its otherwise might be, maybe. Or maybe not. 

[horn4life 3838]

I made my arguments pretty clear a month ago.  Markets do not like instability, they like predictability.  Try to find a post election market collapse. You can't.  Because elections give clarity going forward.  Unpredictability, makes any reasonable forecasting extremely difficult.  The stock market is a forward looking beast, and I nearly came in yesterday saying how well I thought the markets were reacting to exactly what I expected from Powell.  A rate cut, followed by a speech talking about the strength of the economy, concerns about hiring, but no need for action at current levels.  The kill shot was when he said "it could take two more years to get inflation under control." (might be paraphrasing here)

I actually put my money where my mouth was a month ago, and sold off some of my Palantir, and put 1/3 of my risky portfolio into UVIX.  I also rebalanced the 401K Monday and shifted it from 90% stocks, to about 20% stock funds and 80% into bonds.  That actually went up yesterday as well, which was amazing.  So while I am not cutting and running from the stock market, I feel that it's wise to assume extreme unpredictability in the first few months of 2025 as political rhetoric becomes policy (or doesn't). That's the unpredictability part of the equation.  

 

[horn4life 3838]

oops hit send accidentally - 

Valuations of stocks are sky high, and economic optimism is raging.  But if in two months the tariff and deficit side of the coin is played then that means increased inflation.  Massive increase in the deficit (which is what happened last time) is inflationary, whether it's spending or tax cuts.  At this point I simply don't see anything but a collision between what Trump has promised and what he needs to deliver. One promise on immigration is going to squeeze employment in an inflationary manner more than we have ever seen in the home construction industry.  Unless I am mistaken and the labor force building homes, at least in Texas are non-english speakers.  I don't think I have had any work done on my house other than AC that was by predominantly english speakers.

It may be great in 6 months, but I am hedging big that history repeats itself, and the unpredictability of the marketplace in so many areas will keep rates high as folks seek safe haven of US treasuries.  I think we are in for a period of Governmental disruption the likes of nothing we have ever seen.  I simply fail to see how such disruption, even if wildly successful, is going to lead to lower interest rates that folks were predicting for 2025 in September.  

But what I do predict is that buyers will indeed start buying again reluctantly.  As they realize that the Fed is not going to be able to push rates lower, combined with a time sense of urgency among those who may have been waiting for rates to fall.  And if the Stock market keeps climbing I believe that will help push net worth of potential buyers into the market as well. Not to the level that low interest rates would, but a gradual increase, slow but steady (too slow and unsteady for the industry).  First time buyers will be fucked because they don't have money in the markets to see their down payment funds surging.   I go back to what a lot of you guys got pissed at me for.  The folks that wil make the most money in home industry will be folks that can convince buyers that these rates probably are not coming down much.  How many buyers who really want to buy will wait 6 months to a year for the HOPE of a half point decrease?   

Trump for example just endorsed no longer having a debt ceiling. The bond market might view that as potentially inflationary.

Hope I am wrong and my hedge is just a safety play.  But I did not follow my gut on Covid and I literally missed out on an easy fortune.

Edited Thursday at 02:39 PM by horn4life

[Dbeasy 15561]

Here is my wag under Trump.

We all know Trump will do anything and everything to juice the economy for the next four years, so that he can take credit for it. But, there are conflicting policies right now that would significantly hurt the economy.

He will definitely extend the tax cuts. That’s a given. But letting Elon loose to reduce spending by any significant amount? The only thing they will do is make sure the spending cuts take effect four to five years from now, so that it doesn’t torpedo the economy in the next four years. He will then make a bunch of speeches about getting government spending and deficits under control while not actually delivering anything. At this point Elon will realize he’s been snookered. Elon actually believes he will accomplish something.

To be fair, they will fix social security and medicare by extending the retirement age, reducing benefits, and modestly increasing the SS cutoff point.

Then, he will implement some lame tariffs with a bunch of loopholes to make it seem like he did something when he won’t have. Same with immigration. Same with every policy. Just like his first term, he will talk a big game but actually not deliver any real impact.

So then inflation will creep up because he’s really done nothing. He will blame Biden and let inflation run a little hot, which it needs to do in order for debt as a percentage of gdp to get under control. 

By year 3-4 of his administration, the inflation effects will put the economy in danger, finally slowing inflation and forcing rates cuts. The rate cuts will get him through the end of his presidency. 

He will have served another four years and really not done anything other than benefit from the current government overspending that is partially responsible for driving the economy.  Our debt level will be scary large for the next administration. 

[BrazilHorn 6822]

1 hour ago, Dbeasy said:

Here is my wag under Trump.

We all know Trump will do anything and everything to juice the economy for the next four years, so that he can take credit for it. But, there are conflicting policies right now that would significantly hurt the economy.

He will definitely extend the tax cuts. That’s a given. But letting Elon loose to reduce spending by any significant amount? The only thing they will do is make sure the spending cuts take effect four to five years from now, so that it doesn’t torpedo the economy in the next four years. He will then make a bunch of speeches about getting government spending and deficits under control while not actually delivering anything. At this point Elon will realize he’s been snookered. Elon actually believes he will accomplish something.

To be fair, they will fix social security and medicare by extending the retirement age, reducing benefits, and modestly increasing the SS cutoff point.

Then, he will implement some lame tariffs with a bunch of loopholes to make it seem like he did something when he won’t have. Same with immigration. Same with every policy. Just like his first term, he will talk a big game but actually not deliver any real impact.

So then inflation will creep up because he’s really done nothing. He will blame Biden and let inflation run a little hot, which it needs to do in order for debt as a percentage of gdp to get under control. 

By year 3-4 of his administration, the inflation effects will put the economy in danger, finally slowing inflation and forcing rates cuts. The rate cuts will get him through the end of his presidency. 

He will have served another four years and really not done anything other than benefit from the current government overspending that is partially responsible for driving the economy.  Our debt level will be scary large for the next administration. 

Debt level is such a joke now a days as no one has any interest in a balanced budget. Just keep printing money and kicking that can down the line. 

[LCHorn 2750]

20 hours ago, horn4life said:

and the unpredictability of the marketplace in so many areas will keep rates high as folks seek safe haven of US treasuries.

Typically we expect increased demand for treasuries to lead to lower rates.  

[horn4life 3838]

2 hours ago, LCHorn said:

Typically we expect increased demand for treasuries to lead to lower rates.  

You are correct- that was part of my accidental first post.  My statement is the exact opposite of what increased demand for Treasuries would do. 

[UTPhil2006 3930]

Got what we lost yesterday back this morning in the 10 year. Next week probably minimal movement 

[Gil Bang 26230]

so yesterday, I show a house, lock up, chat with my client a bit in the driveway, and leave.

2 hours later I get a call from the listing agent...I'm the last person to use the lockbox, and I left the house wide open and the lockbox open.  didn't even close the doors.

I call my client.   Do you recall me locking up?   Of course, she says.  You locked the doors and then returned the key to the lockbox while we were chatting.

I don't know what the fuck happened, but some agent out their thinks i'm an irresponsible asshole.  I will stipulate to being an asshole, but I'm at least responsible. 

 

[UTPhil2006 3930]

21 minutes ago, Gil Bang said:

so yesterday, I show a house, lock up, chat with my client a bit in the driveway, and leave.

2 hours later I get a call from the listing agent...I'm the last person to use the lockbox, and I left the house wide open and the lockbox open.  didn't even close the doors.

I call my client.   Do you recall me locking up?   Of course, she says.  You locked the doors and then returned the key to the lockbox while we were chatting.

I don't know what the fuck happened, but some agent out their thinks i'm an irresponsible asshole.  I will stipulate to being an asshole, but I'm at least responsible. 

 

Doesn't it register when you enter and leave along with your name and info? Our SUPRA boxes do here 

[Dbeasy 15561]

4 minutes ago, UTPhil2006 said:

Doesn't it register when you enter and leave along with your name and info? Our SUPRA boxes do here 

Yes, ought to be able to prove it with a 10 second check of the log, unless the selling agent cheaped out with some lame box that isn’t internet connected. In which case the seller agent and seller are learning a valuable lesson about saving $100 and potentially losing thousands. 

[Gatorubet 30710]

On 12/19/2024 at 9:36 AM, Dbeasy said:

To be fair, they will fix social security and medicare by extending the retirement age, reducing benefits, and modestly increasing the SS cutoff point.

…and I will be invited to be the only man in a Victoria’s Secret supermodel group orgy.

[Gatorubet 30710]

Almost half of Americans don’t have a dedicated retirement savings account, according to the Federal Reserve’s 2022 Survey of Consumer Finances. The survey, which includes the latest government data, reveals only 54.4% of American families reported having dedicated retirement accounts such as a 401(k) or IRA.      

On average, Social Security is considered to replace around 40% of a person's pre-retirement income, meaning it typically makes up about 40% of a retiree's total retirement income. 

As the median 401(k) is less than 90 K, most retirees will be depending heavily on Social Security (and the sale of their home if they have problems meeting their nut on Social Security). I’m not sure the political will of our country will accept more tax cuts to rich people at the same time we cut Social Security benefits to the olds.  If there is a line in the sand for Democrats, that would be it, and I don’t think Republicans who wanna be reelected are going to go all in on reducing Social Security and Medicare.  

American voters are generally fine with fucking other people, but not so keen on fucking themselves.

[UTPhil2006 3930]

1 hour ago, Dbeasy said:

Yes, ought to be able to prove it with a 10 second check of the log, unless the selling agent cheaped out with some lame box that isn’t internet connected. In which case the seller agent and seller are learning a valuable lesson about saving $100 and potentially losing thousands. 

He's in San Diego IIRC

[Gil Bang 26230]

we use sentrilock, which, IMO, is a superior system.   Orange County and I.E. use Supra.   No idea what they are doing in Los Angeles. 

The advantage to Sentrilock is the keypad.  I can give vendors, appraisers, whatever, a "1 day code" which they can enter in the keypad to get access.  The code is generated by the phone app. 

In this case, I was the last agent who opened the lockbox per the entry log.  BUT, if she had given somebody a 1 day code, that entry won't show until the next sentri subscriber opens the box.  The lockbox communicates with the app, and tells the app "hey, I was opened with a code entry at 2:24 PM (or whenever).  Once the box communicates that with somebody's app, the listing agent's log will be updated.  

[Gil Bang 26230]

2 hours ago, Dbeasy said:

Yes, ought to be able to prove it with a 10 second check of the log, unless the selling agent cheaped out with some lame box that isn’t internet connected. In which case the seller agent and seller are learning a valuable lesson about saving $100 and potentially losing thousands. 

these boxes are NOT internet connected.  They communicate via bluetooth to a subscribers phone. 

[Dbeasy 15561]

9 minutes ago, Gil Bang said:

these boxes are NOT internet connected.  They communicate via bluetooth to a subscribers phone. 

That’s what I mean. The box tells the phone who entered, what time, and left and the time. 

Edited 9 hours ago by Dbeasy

[UTPhil2006 3930]

28 minutes ago, Gil Bang said:

these boxes are NOT internet connected.  They communicate via bluetooth to a subscribers phone. 

Correct. 
 

either way this should be explainable. 

[Bozo_Casanova 26841]

On 12/13/2024 at 10:12 AM, Dbeasy said:

 

I come out of high tech management and Austin historically had been a weak tech location as compared to other areas around the country. Dallas actually for many years had better tech than Austin, believe it or not. But then in the 2000's+ Austin really started to get much more solid in tech. Part of the reason for this was the creation of new VC funds in Austin after Austin Ventures imploded.  Plus, Austin got discovered as being hip due to SXSW, etc.  So, the tech industry here has really started to become a solid, but still behind the bay area, and spots on the East Coast. The long-term outlook is very good.

If you dig into tech here a bit deeper, it's still driven today quite a bit by being the 2nd/3rd/4th location for tech companies on the west coast. They setup here as a lower cost location to supplement other higher cost centers. Some of those cost advances are waning. When recessions hit, 2nd locations are always hit harder. Whenever I went thru a recession over the years, I'd always cut other locations ahead of key, prime locations, for many reasons. Austin actually has never seen what a recession will do to it because of tech, because the tech industry here didn't get strong enough until after the last recession in 2008. People don't know what's coming, if we do hit a hard recession. Now of course the activity by Apple and Elon will blunt the impact, but even they will put the brakes on activity during a recession.

The surrounding suburbs will also feel it. You'd be amazed at how many tech industry workers live in Buda, Leander, etc. The State government and University will also limit the damage obviously.

 

I can't talk personally to the health insurers but got off the phone yesterday with a health insurance broker who told me the whole industry is in complete turmoil.  I could go into more detail on the conversation, but you can google it. They are making money because they all raised rates dramatically.  The fear is that costs are spiraliing out of control so fast they may keep having to do it.

I can't stand Elon Musk. I think the Cybertruck is the dumbest vehicle created in history.  But, you have to acknowledge when the world's richest man wants to spend a lot of money in your city and build a lot of businesses.  If you look at the history of cities around the country, many of them were "made" by one or a few key companies or people.  For example, Portland was made by Nike, Tektronix and a few other companies. Elon's impact here, if he doesn't waver, will be substantial over time.

This is a really good post and you are absolutely right, but “if he doesn’t waver” is doing some very heavy lifting at the end. 
Austin’s biggest issues in no particular order are 

1) Texas <25 brain drain

2) Water scarcity 

3) affordability and its impact on public sector employees and young families

4) loss of young families in urban core, and negative feedback loop w/r/t public school funding