Gregmal

I recall a number of years ago there was some issues with realtors and brokerages potentially suing Zillow over the Zestimate stuff. I don’t recall the grounds but the gist was that Zillow was interfering with their business by misleading with the estimates. I personally don’t find them much use. They still have rent estimates for some of my properties that are lower than 2013 prices. Like how do you see an MLS rental listing, entered, just like a for sale listing, and just ignore that data point? I recently pulled up one comparable unit and it said $1450 a month was market rate rent. Except in the entire area the cheapest available rental options all year were at least $2000. Nevertheless we continue to see how Zillow is embedded in everything housing and it’s unavoidable. You’d think eventually just maybe they capitalize on some of it.

Yea I don’t see it getting anywhere near there if you take 3-6 months and only get to 140. You’d probably also need the VIX over 30 again. And even then if you’re talking Spring 2023 puts and expecting $140 to take til January then you really need to conceptualize how insane that is. You’d be lucky to get $2 because the odds of another 40% pullback in 3-4 months just isn’t there. And yes. With options, the sooner the move the better. Time is literally money.

No chance. Especially if it takes two quarters of time.

Glen Rock is a woke hell hole. You wouldn’t want to live there now. It’s not what it was 15 years ago.

Some of these areas are straight bulletproof. There’s nowhere left to build. Glen Rock/Ridgewood in Bergen County particularly. The only opportunities that occasionally come up are due to age and maintenance needed since many are 1920-1940s homes.

Yea Denver I follow somewhat cuz of Pure Cycle. And it’s a great example of what I’m talking about. In 2019 you had the entry level homes to those MPCs somewhere in the low $300s. The numbers from $10-11 per share worked at those prices. They peaked probably a little over $500-550k. They’ve come in a bit, but you still have a ton of room where it’s pure profit to the lot owner and then obviously depending upon inputs even to the builders. A 20% decline from the peak is still putting significantly more money in the bank than what one had hoped for a few years ago. Meanwhile the share price is the same and/or lower than when $350k was the ASP. The volume and pricing thing is an interesting dynamic but if managed well, another one of the unique features that makes housing different. But once a home is sold, it’s only the homeowners problem, no one else’s. You could say the banks but lending standards are tight and honestly, people forget how friggin hard it was to get through underwriting during COVID. I did a bunch of refis and bc of all the eviction moratoriums the loan process was like 2012 tight. There’s a lot of homes off the market that are never coming back and now we are already hearing about builders slowing pace of building when building at 1.6m a year was the only way out of the shortage. I can’t imagine what it would take to see 30-40% declines and foreclosures. Even if rates go to 10% it’s really just the new build that’s caught in the cross hairs because everyone else is staying put with their 3% 30 years, equity accrued from purchase, and rent optionality. The only market I’ve seen that’s borderline sketchy is Arizona. Everything else is just kind of ebbing and flowing as markets do.

I think you mentioned somewhere else you have to sell so if that’s the case the you just do what you gotta but I would hate losing the 30 year fixed on that. I remember you being pissed they limited your LTV since you are retired…what’s the rate, 2.5%?

Yea at least by me, pre COVID price and volume levels for those type of homes was….not very good. Definitely a tough market especially with the SALT issue. Across the lake there was a whole section of lakefront lots that were developed right after GFC. Maybe 12-15 of them. Maybe one or two would sell per year. Post COVID they all sold out and it was a never ending build bigger competition. Existing homes were turning over at solid prices too. I haven’t seen anything recently hit the market so it’s still wait and see, but the market dynamic before COVID was very much one where anything under $500-600k sold well. Over was tough. And over $1.5m was very tough. Palm Beach though? Totally different story LOL.

I bought a second primary home in NJ this time last year. NJ suburbs are still doing OK, but slowly bleeding out like many other blue states. I could easily sell the place for a 10-15% premium to what I paid 12 months ago. I dont have a good comp on the "highs" and I dont know if I'd have 15 all cash offers in the first week, but that doesnt exactly have to mean the world is ending or be a bad thing. I guess its just about defining what you consider healthy but I find it bizarre how people are acting like things getting back to a state of normalcy equates to GFC 2.0.

I dont follow CA at all so I dont know that market. What Ive heard is San Diego is one of the few areas really doing well but SF/Bay Area is struggling. Everyone by you is moving to Texas and Colorado LOL. Jokes aside, the markets I do follow, the volume issue is easily solvable with some minor concessions but some are just being unreasonable and others by and large arent in a hurry to sell. This pause really just allows inventory to build back up and get things balanced again which IMO is when you wanna think about starting to get long the builders and brokerages. If prices come down it will be in exchange for volume. Moving off the ATH 10-15% is hardly a big deal even though the fear mongers are trying to present it as one. I personally found the housing market to be quite healthy and attractive back in 2019 and dont think getting back to those dynamics just with higher prices, is bad or bearish at all. Real question, if you listed your house for a 10-20% premium to pre covid prices, does it sell? People saw cash registers ringing 6 months ago and it was nuts but going from 110 mph to 80 is still going pretty fast. Thats why the investment will continue to work. I wouldn't be fooled by people setting the bar at Q3 2021 levels and saying and sort of downward move on ANY metric at all, is GFC 2.0, which is whats going on right now.

Yea I’ve never heard of him. But this is the kind of head scratching victory lap taking you only see on Wall Street. He s been super bearish on housing and a volume slowdown is his vindication? If I’m bearish on Berkshire Hathaway I don’t think I’d have the nuts to call victory over the ADV declining as the stock trades around all time highs. To each their own.

Another thing I found funny lately was how we have a literal recession occurring with the US economy and we are being told its not a recession....meanwhile home prices are a tick or two off all time highs and we're being screamed at about a housing recession....interesting clash of agenda driven narratives at play.

Welcome to the clown show. He's obviously feeling vindicated. LOL Call doom and gloom and you get a slowdown in volume, inventory pushing back to normalized levels, and pricing from a whole year ago.... GFC 2.0 bro. This is what the bears are all about. Not about making money. Not about anything actionable. Just about saying "I called it". Even when virtually nothing remarkable has happened.

I think it really comes down to determining what you want in life. Then figure out what that costs to maintain. Then figure out what the most practical way is to achieve that. I’ve never understood how people with millions choose career over stuff like seeing their kids grow up. Or not being able to drop them at school because they have business meetings or work shit. I laugh every time I see another Paulson, Ackman, Gross, Einhorn, Tepper, etc getting divorced. Buffett too even. There’s more to life than shallowly chasing money or obsessing over your “career”. So really it’s a personal thing. What gives you the best chance and the easiest path to doing what you want with your life? What the current generation of kids doesn’t seem to get…is that the answer is often doing something very unpleasant for a short while to get started. If you’ve already gotten yourself a solid foundation, I don’t think it’s worth putting up with egomaniacs and pathetic money whores like you encounter regularly in the investment world.

This is what I call the plague of high level finance. There is a systematic “risk management” protocol established that gets taught from entry level, to mba classes, to higher level. The logic corrupts ones individual investment process because it’s ridiculous and sometimes downright stupid. But at the institutional level it makes sense because the golden rule is to never burn your “fee generating capital”. Hence the “big positions” are meant to never burn your base. It’s why you see so many guys who work in finance routinely holdings high levels of cash, gold, and puts. Because their bread is buttered from OPM. Of course they never want to risk their own money and often even, they are invested in other stuff. Real estate, “personal businesses”, etc. Of course none of those things are wrong per se, but they always manage to look out for themselves first. If the work bets go south, and all the stupid risk protocols fail, they still have theirs.

Used to. If the only thing you care about is money, do it. It’s the easiest and fastest route to making tons of it. The catch is that 98% of the people you’ll deal with on a regularly basis are single dimensional folks who don’t give two shits about anything but money, lack ethics, and will stomp your head or hurt someone else without thinking for a few extra bps. Typically the exception to this are the single person shop managers or small shops that have few employees and are pretty much off the beaten path. Most of the good folks in the biz I’ve met fit that profile. The worst examples, which are superfluous, are the mid size and larger fund analysts and pms who are little but stereotypes and only care about career advancement. I’ve met a few folks from the old Steve Cohen SAC fund and to a T they are what you’d have pictured just worse. Walking stereotypes of the NYC hedge fund bro. So it’s clearly not for everyone and definitely not an environment I cared for very much. It comes down to what you want and for how long. Probably easier just to setup a small time RIA biz somewhere in middle America and do boring but fulfilling biz. It’s not hard and doesn’t cost much to do a basic money management operation. Maybe $50-100k.

Yea I’ve had the same aapl trade on a few times and just come to the conclusion it’s a tough nut to crack and that there’s better stuff to play on the short side. Even if you hit you’re going to have to nail the sell/cover timing bc it will be first to rebound.

Most fund managers shape up their books into filing date. What you see is what’s beneficial to them more often than not. It’s why you see confidentiality notice filings when they want to hide something. Best just to do your own work.

Adds to meta and msge

Demand for housing hasn’t waned. Folks have just been pushed out. I spoke with a builder recently and then to their preferred mortgage lender. On “have rates effected building for you guys” the answer was interesting. The lady said yes and no. Yea obviously some people had to cancel, but for us not really because we tend to build for the more affluent customer. So again, pick your spots accordingly but the trends haven’t changed. There’s still builders increasing prices in many regions. But there’s also areas where they’re dropping contracts quite fast and lowering price. This is why by and large the national statistics are useless.

Probably depends. A lot of the conventional wisdom ones have dumped big time because the perception is that they rely on volume even though prices haven’t come down much. If price comes down 15%, volume is gonna surge. Which for a builder or a brokerage per say, is something they’d take all day. Additionally, what if prices come down 15% because commodity based inputs have come down? Depending upon how much, most can probably keep similar margins or even improve them. NVR mentioned something like that recently. Costs come down so they can sort of pass that along to the buyer. Sort of lol.

Yea to me crash is probably 30%+ but then also a sustained flatline. Not a dip and then rebound or 15-20% pullback. Some like to trumpet the leverage in housing but that again doesn’t show an understanding of how residential housing works. I bought a new golf club the other day. Was my mental set a) wow I just spent money on what will be a 50-100% loss? Or b) I’m excited to have something? Most homebuyers, think much more like this than the fund analysts in his Excel bubble. Someone signs a lease and if rents plummet the follow week most probably don’t even know or care they just have their place a pay an amount they were fine with. Buying a home is even more like this. If your numbers derisk you enough to qualify for a certain loan amount, the price you pay is fine. In today’s environment, most folks are ecstatic just to be able to buy one. You think they care one iota what the Zillow estimate is a month later? Nope. They just pay their mortgage and live their lives as happy homeowners.

Yea but that age group I don’t think is as dominant(or moneyed up) as the 35-55 crowd. Especially in the money management/ finance world. You’ve got the younger definitely reckless group and the slightly older, scared of their shadow, I wanna be the next Michael Bury group and it creates an interesting dynamic. Both IMO are wrong. Generally I think just evaluating things from a historical context and then applying some logic/deductive reason in terms of how people act/react works best. Or just focus on company or sector fundamentals but I guess a lot of folks wanna be macro traders… There is virtually zero relevant data that supports a housing crash if you define crash the way any rational person would. If folks wanna define crash as prices in some areas maybe pull back to levels from a year or two ago and a slowdown in activity then I mean, they’re free to, but what I’ve found is those folks generally don’t have their money where there mouth is in a meaningful way and are really just looking to capitalize on short term noise. Often their own noise.

The gift with being a rational investor is that since GFC you have this huge percentage of folks who are influenced by or suffering from PTSD due to it. There’s a whole generation of investors who have wild misconceptions about housing, irrational needs to hoard cash, and just a general belief that this sort of thing is always right around the corner. Literally every two years or so since GFC there’s been massive opportunities in the market because these people take over the narrative and scare people for a little bit. Europe in 2H 2011, China in maybe august or so 2016, in between oil and gas contagion, Trump election, then basically “the punch bowl” thing every 6 months since 2017.

The number of low probability events that need to occur for a “forced sale” with housing is insane. And even then, the process takes 6-12 months at least. There are many reasons folks ignored risks leading into GFC, but the underpinnings of the institutional belief that housing only goes up were solid. Obviously this doesn’t mean there won’t be stops and starts such as in the early 90s. But it’s just so hard to get things to a widespread point of distress. What is even more telling now is the same shit that unfolded after COVID is taking place. Where tons of people are cashed up on the sidelines waiting for bargains. Which almost always is a sign that you won’t get them. You get them when no one expects it. But further for a case study on why it’s all about simply weathering the storm, check out what occurred to the values of some of the Citi and Lehman holdings. Or go see what the history of the Howard Hughes company was. Even those “problem assets” really just needed some time. Probably the only rule I’d say is steadfast for someone with housing is don’t be a forced seller.