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Posted
2 hours ago, UTPhil2006 said:

I despise OpenDoor the most, but Redfin is a close second. They're a huge pain to deal with on the other side of the deal. 

Where is ReMax on that spectrum?  We tried to sell my then-fiance's house via some ReMax couple and they failed miserably.  I called a well-known Austin realtor while we were on our honeymoon and she basically had the place improved and sold by the time we got back.

Posted
14 minutes ago, jimmyjazz said:

Where is ReMax on that spectrum?  We tried to sell my then-fiance's house via some ReMax couple and they failed miserably.  I called a well-known Austin realtor while we were on our honeymoon and she basically had the place improved and sold by the time we got back.

ReMax is fine. It's these new bargain internet "realty" companies that I'm not even sure they visit the property. Basically for the 1% you pay you get what you pay for if even that. They are not an ally and if anything they're a detriment 

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Posted

Interesting to see Rocket just agree to buy Redfin.  I am trying to decide if this is good for Rocket or not?  I see how it broadens the possibility of getting both the sale and the mortgage.  And possible incentive packaging on a sell and repurchase scenario?

But on the flip side of the coin, did Rocket just open itself up to more potential downside pain, if the market doesn't turn?  Rates are indeed coming down, seemingly now in concert with declines in the stock market.  I don't really see how this is a positive for Rocket, at least at this point.  But funny to see "Redfin sucks balls" in this tread followed by "Redfin bought by Rocket!"

Redfin nearly doubles in pre-market trading.  

Posted
3 hours ago, horn4life said:

Interesting to see Rocket just agree to buy Redfin.  I am trying to decide if this is good for Rocket or not?  I see how it broadens the possibility of getting both the sale and the mortgage.  And possible incentive packaging on a sell and repurchase scenario?

But on the flip side of the coin, did Rocket just open itself up to more potential downside pain, if the market doesn't turn?  Rates are indeed coming down, seemingly now in concert with declines in the stock market.  I don't really see how this is a positive for Rocket, at least at this point.  But funny to see "Redfin sucks balls" in this tread followed by "Redfin bought by Rocket!"

Redfin nearly doubles in pre-market trading.  

I was just reading about this. The buyout price was announced at $12.50 per share and RDFN is now trading at just under $10 per share. That leaves a decent 25% upside if you believe this acquisition will go through as announced. A gap that large indicates some doubt by the market, but i can't really see the Trump administration stopping any of these deals. I guess RDFN shareholders could vote it down, but $12.50 seems like a price that stock may not see for a very long time.

RDFN now up ~64% and RKT down ~15%

Im just glad I sold my RDFN puts ($7.5P) after their latest earnings instead of trying to eek out additional gains before expiry (3/21). I woulda been proper fucked. 

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Posted

I don’t see what Redfin has to offer in a consumer environment in which EVERY agent is customizing their own comp.  
 

Also, surprised Rocket has free cash and an appetite to spend it in this environment.  They are making a bet that refinance revenue will pick up, I’m sure.  

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Posted (edited)
10 hours ago, horn4life said:

Interesting to see Rocket just agree to buy Redfin.  I am trying to decide if this is good for Rocket or not?  I see how it broadens the possibility of getting both the sale and the mortgage.  And possible incentive packaging on a sell and repurchase scenario?

But on the flip side of the coin, did Rocket just open itself up to more potential downside pain, if the market doesn't turn?  Rates are indeed coming down, seemingly now in concert with declines in the stock market.  I don't really see how this is a positive for Rocket, at least at this point.  But funny to see "Redfin sucks balls" in this tread followed by "Redfin bought by Rocket!"

Redfin nearly doubles in pre-market trading.  

This model works for big tract home builders such as the DR Horton's of the World. They get the profit from selling a house for more than they have in it, and are willing to finance that house at substantially lower interest rates, I think they are currently offering about 4.5% financing on their own homes, in our area.

Like you, I am wondering how  this is going to work out. 

CHIEF

Edited by CHIEF
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Posted
1 hour ago, CHIEF said:

They get the profit from selling a house for more than they have in it, and are willing to finance that house at substantially lower interest rates

I have a suspicion that this action (using the loan to support the purchase price) is far less profitable for them than you would think.  

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Posted
2 hours ago, CHIEF said:

This model works for big tract home builders such as the DR Horton's of the World. They get the profit from selling a house for more than they have in it, and are willing to finance that house at substantially lower interest rates, I think they are currently offering about 4.5% financing on their own homes, in our area.

Like you, I am wondering how  this is going to work out. 

CHIEF

I sure as hell don't see how overpaying for Redfin is a good deal.  To be honest, rather than merging, I would be a seller of both right now.  it's like a marriage between ugly people hoping for beautiful children... if there is enough cash flow.

19 minutes ago, LCHorn said:

I have a suspicion that this action (using the loan to support the purchase price) is far less profitable for them than you would think.  

Is it desperation, looking for a new captive source of financing?  I don't see the margin in loans to justify the premium for Redfin.  BUT, from what it sound like from everyone here who deals with Redfin. Mortgage funding is difficult for the Redfin dumbass agents. Maybe that's the angle. If you made the agents not so stupid... it would be easier to close a Redfin mortgage?

 

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Posted

This is off the top of my head, but the new compensation rule changes, combined with the entrance into the market by competitors like opendoor, now means that the financing of a house sale or purchase has become much more intertwined into the sale process. So Rocket must believe the future is a package of offerings where the agent functions and financing is more optimized and integrated, like OpenDoor and others like them. 

Posted
2 minutes ago, Dbeasy said:

This is off the top of my head, but the new compensation rule changes, combined with the entrance into the market by competitors like opendoor, now means that the financing of a house sale or purchase has become much more intertwined into the sale process. So Rocket must believe the future is a package of offerings where the agent functions and financing is more optimized and integrated, like OpenDoor and others like them. 

Maybe I am looking at this backwards. Rocket is basically a financing entity. 

If I am Rocket, is not every mortgagor that wants to move an opportunity for two loans?  One for the existing mortgagor for the new home. And a new mortgagor for the property being sold that you have carried the note on for X amount of years.  Just as many agents might negotiate a lower rate on a sale and buy paired together.  Might Rocket looking a the mortgage market in the same way?  Knowing a deal is there, and trying to get both sides for a tiny discount in rate?   

I would think Rocket is the lead marketer.  Selling the "Redfin package" that allows a point(+/-?) On both loan originations, and still make pretty good bank?  THIS IS A QUESTION?

From the professional mortgage lender side of the equation does my meandering make sense mathematically?  I have not idea honestly, but I am trying to figure out why this is a good idea for Rocket and these are my post- Gloria's rita musings.  So might not make any fucking sense at all.. 

Posted
11 hours ago, ChickenSandwich said:

I like that they are going down (and this is perhaps impacted by the fact I'm hypersensitive to mortgage related news breaking), but media companies pretty much run with a "lowest/highest rate since x" every day and it's all rather meaningless to help contextualize the real question of "what does this mean for me?" 

Aside from about 48 hours in September 2024, rates have been bouncing around the same range since 2023. 

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Posted
36 minutes ago, LCHorn said:

I like that they are going down (and this is perhaps impacted by the fact I'm hypersensitive to mortgage related news breaking), but media companies pretty much run with a "lowest/highest rate since x" every day and it's all rather meaningless to help contextualize the real question of "what does this mean for me?" 

Aside from about 48 hours in September 2024, rates have been bouncing around the same range since 2023. 

Yeah technically the 3 month low was last Monday. But it's splitting hairs between last Monday and this Monday and we're 10 basis points higher currently 

Posted
2 hours ago, LCHorn said:

I like that they are going down (and this is perhaps impacted by the fact I'm hypersensitive to mortgage related news breaking), but media companies pretty much run with a "lowest/highest rate since x" every day and it's all rather meaningless to help contextualize the real question of "what does this mean for me?" 

Aside from about 48 hours in September 2024, rates have been bouncing around the same range since 2023. 

Such a glorious 48 hours. Will remember it fondly. 

Posted

Peter Thiel on broken real estate system

Quote

Thiel lays it out simply: When a city's population grows by 10%, housing prices can spike by 50%. But wages? They don't rise nearly as fast. So while the economy might be expanding, the real winners are homeowners—especially older generations, specifically boomers—while young and lower-middle-class Americans find themselves locked out of homeownership, struggling to compete in a market that keeps pushing prices higher.

Quote

And the numbers back him up. The average age of U.S. homebuyers has jumped from 49 in 2023 to 56 in 2024

Anyhow interesting article that popped up in my feed.  This is actually one of my concerns with my younger daughter, being able to own her own place.  

Interestingly, I was going to question affordability with lumber prices on the rising about 20% in the last 6 months playing into the problem.  I was unsure of this statement, so I pulled up a ten year lumber price chart.  And I found it interesting just to look at a 10 year chart.  I could not get the image to imbed, sorry.  But I was actually surprised by the spike coming out of covid, and before rate increases.  But is demand or speculation driving up prices right now? 

https://www.macrotrends.net/2637/lumber-prices-historical-chart-data

Anyhow curious to see what you think about Thiel's thinking on the fundamentals of pricing, and what your thoughts are on how to make entry level homes more affordable.

 

Posted
34 minutes ago, horn4life said:

Peter Thiel on broken real estate system

Anyhow interesting article that popped up in my feed.  This is actually one of my concerns with my younger daughter, being able to own her own place.  

Interestingly, I was going to question affordability with lumber prices on the rising about 20% in the last 6 months playing into the problem.  I was unsure of this statement, so I pulled up a ten year lumber price chart.  And I found it interesting just to look at a 10 year chart.  I could not get the image to imbed, sorry.  But I was actually surprised by the spike coming out of covid, and before rate increases.  But is demand or speculation driving up prices right now? 

https://www.macrotrends.net/2637/lumber-prices-historical-chart-data

Anyhow curious to see what you think about Thiel's thinking on the fundamentals of pricing, and what your thoughts are on how to make entry level homes more affordable.

 

Lumber- went up during Covid and just continued to get out of control. Lot of saw mill places were in Canada or states that shut down for a long time and it decimated the supply chain- as I recall. 
 

affordability needs to come with smaller houses and more multi- unit. Problem with that is nobody is making the former and if you buy a condo they all seem to have a $400 maintenance fee attached to them. 

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Posted

Affordability isn’t coming down, at least not on the cost side without some sort of real shock (a la 2008) to the system.

Either incomes need to grow, or supply (baby boomers selling en mass) needs to increase. There is no other way around it. And yes, what we’ve done with the housing market is a total fuck you to our kids  

 

Also, always important to remember, improving affordability means your house too. Want to improve affordability? Sell your house for 65% of what it’s worth. No one does that and no one will ever do that. It’s a complete joke to hear people talk about improving affordability. 

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Posted
14 minutes ago, tbone_ said:

It’s a complete joke to hear people talk about improving affordability

I think everyone in the policy space (that I read anyway) is mostly focused on the supply mix and zoning.  There’s an obvious way forward and that’s current homeowners not getting overly precious about higher density being built nearby.  

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Posted (edited)

That’s because people in the policy space don’t know shit. Allowing more density will help, sort of. But it won’t be any cheaper to build (or rent/sell) And the more you allow the more expensive it will be to build due to constrained supply of labor.  Supply and demand - how does it work? lol

The cost aint coming down. And neither is the price as long as the capital required to pay for it demands a market return.

Source: based on my 30 years of experience as a housing developer.

 

Edited by tbone_
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Posted

Either interest rates need to drop back down, or building costs will need to come down, that is the only two ways to make homes affordable for young buyers again. Starter homes, in my area, are around $250k. The difference in mortgage payment between 6% and 3.5% is a little over $300/month. That payment eliminates quite a few potential buyers.

Labor and materials are outrageous right now. I'm not sure labor prices will ever go back down. I have no problem with labor being paid what they should, it lets the construction worker have discretionary income that gets churned back into the local economy. But material costs? Those guys have been around long enough that they are still profitable with prices dropping back into 2010-2018 prices. One of the guys that owns part of our small, local, concrete plants is a friend of mine. He lives in a $2 million house on the river, has about two or three $100k trucks, wife has a $120k car. He bought those when concrete was about $110/yard. Concrete went over $200/yard in our area, and is back down to about $175/yard. When construction nearly slows to a halt, concrete, lumber, and roofing materials will have the room to drop prices drastically and still remain profitable. One of the suppliers is going to have to feel enough pressure to break ranks.

Personally, I would like to see both a drop in interest rates and material costs come down as well.

CHIEF

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Posted
11 minutes ago, CHIEF said:

But material costs? Those guys have been around long enough that they are still profitable with prices dropping back into 2010-2018 prices. One of the guys that owns part of our small, local, concrete plants is a friend of mine. He lives in a $2 million house on the river, has about two or three $100k trucks, wife has a $120k car. He bought those when concrete was about $110/yard. Concrete went over $200/yard in our area, and is back down to about $175/yard. When construction nearly slows to a halt, concrete, lumber, and roofing materials will have the room to drop prices drastically and still remain profitable. One of the suppliers is going to have to feel enough pressure to break ranks.

But I have been assured repeatedly that price gouging never happens

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Posted
53 minutes ago, tbone_ said:

That’s because people in the policy space don’t know shit. Allowing more density will help, sort of. But it won’t be any cheaper to build (or rent/sell) And the more you allow the more expensive it will be to build due to constrained supply of labor.  Supply and demand - how does it work? lol

The cost aint coming down. And neither is the price as long as the capital required to pay for it demands a market return.

Source: based on my 30 years of experience as a housing developer.

 

I think everyone in the housing reform world understands acutely the cost issue and the limitations that currently exist, but most of the efforts on the supply side are to partly improve the economics of development by mitigating or removing regulations that basically exist to obstruct housing: inclusionary zoning (primarily), environmental review processes, “community impact fees” (ie, shakedowns), union labor requirements, etc. But absolutely, what is left unsaid is that the best case scenario is that housing prices simply increase at a slower rate and that incomes somehow need to rise. 

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Posted
2 minutes ago, We’reTexas said:

I think everyone in the housing reform world understands acutely the cost issue and the limitations that currently exist, but most of the efforts on the supply side are to partly improve the economics of development by mitigating or removing regulations that basically exist to obstruct housing: inclusionary zoning (primarily), environmental review processes, “community impact fees” (ie, shakedowns), union labor requirements, etc. But absolutely, what is left unsaid is that the best case scenario is that housing prices simply increase at a slower rate and that incomes somehow need to rise. 

This is the issue with concrete. The EPA went after Portland cement mines heavily to reduce industrial pollution. Most portland mines have been around for about 100 years and retrofitting can't be done overnight. All of the current stock has to be shipped, by rail, out of Mexico. The transportation costs are what drove concrete prices through the roof. 

CHIEF

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Posted
10 hours ago, CHIEF said:

Either interest rates need to drop back down, or building costs will need to come down, that is the only two ways to make homes affordable for young buyers again. Starter homes, in my area, are around $250k. The difference in mortgage payment between 6% and 3.5% is a little over $300/month. That payment eliminates quite a few potential buyers.

Labor and materials are outrageous right now. I'm not sure labor prices will ever go back down. I have no problem with labor being paid what they should, it lets the construction worker have discretionary income that gets churned back into the local economy. But material costs? Those guys have been around long enough that they are still profitable with prices dropping back into 2010-2018 prices. One of the guys that owns part of our small, local, concrete plants is a friend of mine. He lives in a $2 million house on the river, has about two or three $100k trucks, wife has a $120k car. He bought those when concrete was about $110/yard. Concrete went over $200/yard in our area, and is back down to about $175/yard. When construction nearly slows to a halt, concrete, lumber, and roofing materials will have the room to drop prices drastically and still remain profitable. One of the suppliers is going to have to feel enough pressure to break ranks.

Personally, I would like to see both a drop in interest rates and material costs come down as well.

CHIEF

Dropping rates will make housing more expensive, not cheaper. Might make the payment more affordable.

 

I’ve been in the housing development business since 1996. Only time I’ve seen costs come down in a meaningful way was 2008. Unless that happens again, we aren’t getting a cost reset. 

Posted
9 hours ago, Captainant said:

But I have been assured repeatedly that price gouging never happens

Whoever told you that is clueless. I work for a company run by people as fair as I’ve ever run across in this industry. We raised rents 30% from mid 2020 to early 2022. Because we could. And we would have been chumps for not doing it. And our partners would have skewered us if we didn’t.

 

When supply and demand is out of whack, those who benefit bend those who don’t over. This shit isn’t complicated. 

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Posted
18 hours ago, tbone_ said:

Whoever told you that is clueless. I work for a company run by people as fair as I’ve ever run across in this industry. We raised rents 30% from mid 2020 to early 2022. Because we could. And we would have been chumps for not doing it. And our partners would have skewered us if we didn’t.

 

When supply and demand is out of whack, those who benefit bend those who don’t over. This shit isn’t complicated. 

What’s your take on some congress critters in Austin making the claim that cutting property taxes focused on rental units will lead to rent relief for tenants, ie trickle down/pass through effect?

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