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ERICOPOLY
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Posts posted by ERICOPOLY
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On 8/28/2022 at 1:10 PM, Spekulatius said:
The Southwest has issues with water scarcity
It's a matter of priorities.
Irrigated agriculture is the largest user of water in Arizona, consuming about 74 percent of the available water supply.
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5 hours ago, changegonnacome said:
Yeah it can @ERICOPOLY, the only reason there is a labor shortage.....is because there's an EXCESS of demand. The Fed is in the demand destruction business now, which in turn solves the labor shortage, right?
Politicians discouraging immigration. Boomers retiring. Fed cannot control these things.
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The Fed cannot control the labor shortage unless it pulls out an iron bar to hit the economy with.
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3 minutes ago, Gregmal said:
Yea I think it varies. All I own is some October and November IWM puts. The Oct $180 strike for instance went from $2.6-2.8 to now $5. I’ll probably hold it for a few more weeks. Obviously we need to start getting worked up for the September rate hike. I’ve heard the world ends with a 3.5-4% Fed funds rate. So you wanna sell just before everything goes to black.
A lot of what we have to thank is the 'mother of all fears' from the 1982 P/E.
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On 8/15/2022 at 2:17 PM, Gregmal said:
VIX is so low you wanna go OTM
Just to share my experience from this past 11 days, my ATM puts have outperformed my OTM puts. I have Oct 429 strike SPY puts that are now up 110%.
But my OTM puts are Nov $390 (up 55%) and March $362 (up 45%) so it could be the longer expirations that are holding them back.
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Zillow has this on my house's listing: "We estimate this home will sell faster than 87 % nearby."
It has been 2 full weeks now and we've had only one agent request a showing, and that was the day after we listed it.
On Sunday we had an open house and only 5 couple showed up, all from the Sacramento region. None from the Bay Area. Unfortunately, homes like this one normally are supported by Bay Area buyers. It was those buyers that pushed prices up in the first place.
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1 hour ago, crs223 said:
If I were in charge of writing the zestimate algorithm, i would base the price on comps, sq footage, property tax assessment, lot size, and other “public” info.
None of this captures “private” information such as: does the house have mold/termites, was the kitchen remodeled, is it a fixer-upper, etc. The asking price encompasses all of this.
The asking price was set by a professional agent and motivated seller who factor tangibles and intangibles. The asking price is a goldmine of info and certainly better than some algorithm written by a computer geek 5,000 miles away.
My algorithm would slightly adjust the asking price based on recent local trends for homes to sell above or below ask. Probably also look at the particular listing agent’s history of getting the asking price (“historically this agent asks for 7% too much”).
Makes sense. But why the $2 discrepancy?
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Zillow's pricing algorithm for my house...
Yesterday it was take asking price of $1,825,000 and add $24. Zillow estimate: $1,825,024
Today it is take asking price of $1,695,000 and add $2. Zillow estimate: $1,695,002
Question: did dropping the price $130,000 make Zillow feel more confident in our asking price so they narrowed the gap from $24 to just $2?
Why is asking price the input that Zillow uses for value?
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4 minutes ago, Gregmal said:
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%?
The rate is 2.8%. It was a cash-out refi loan for $880,000. The cash-out penalized the rate, as did the loan size.
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26 minutes ago, Gregmal said:
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.
We bought it 3.5 years ago for $1.18m. I could see the market not wanting to pay more than $1.4m. I'll find out one of these days.
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16 minutes ago, Gregmal said:
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.
We are cutting price from $1.825m to $1.695m. I can't say whether that will change a goddam thing though. There are simply very few people shopping for homes like this one. 5 bedroom in a gated community of luxury homes.
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It isn't just us, the other agents with listings are saying the same. So we're cutting price because what else can we do with growing inventories and a dwindling pool of buyers? You have to be the most attractively priced.
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Well, at least at the high end, the Sacramento area housing market is toast. The buyers have simply vanished.
Our home is in great shape and we've had ONE agent request a showing and we've been listed for 13 days.
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20 minutes ago, Gregmal said:
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 haven't heard of him, but I scrolled back on his Twitter feed and looked to see if this guy is an oracle or something:
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What stocks are the most exposed to a housing drop of 15%+?
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On 8/20/2022 at 10:46 AM, changegonnacome said:
and these folks, in the main, have the cash to act and they wont I think based on this PTSD phenomenon.
However the alternative has mistreated them lately -- what were rents two years ago vs today? This period of rapidly rising rents should have weakened their love of renting. They should be feeling insecure as renters.
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18 minutes ago, changegonnacome said:
One addition to the above
…..is the question of the RoE your going to get on this rental and if it’s attractive relative to other opportunities to deploy capital….this depends on the LTV etc.
We already have a $90,000 house in Dunsmuir in a great location that we bought with cash earlier this year.
What we want to do is purchase a second home in San Luis Obispo, walking distance to downtown, ideally a 2 bedroom with about 1,000 sqft with a small mortgage (so the rate doesn't really matter). We can buy that home only if we sell our current one. And that's the dilemma.
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9 minutes ago, crs223 said:
There is a similar phenomenon in California. Prop 13 dictates that property tax is essentially “frozen” when you buy your house — the dollar amount of the property tax bill doesn’t go up over the decades.
So CA ends up with large houses that have just one person living in them - typically an old widow unwilling to sell to avoid “resetting”’ the property tax bill to current levels.
This is most pronounced during sellers markets when the buyers mutter to themselves about old people “hoarding” their square footage.
You are correct about the hoarding. My parents are doing that (they bought in 1970 in Los Altos Hills).
The step up in basis for the capital gains tax is the icing on the cake -- when the first spouse dies the surviving spouse can sell the home free of capital gains tax.
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7 minutes ago, crs223 said:
There is a similar phenomenon in California. Prop 13 dictates that property tax is essentially “frozen” when you buy your house — the dollar amount of the property tax bill doesn’t go up over the decades.
So CA ends up with large houses that have just one person living in them - typically an old widow unwilling to sell to avoid “resetting”’ the property tax bill to current levels.
This is most pronounced during sellers markets when the buyers mutter to themselves about old people “hoarding” their square footage.
My house is in California. The property tax would be 50% higher if I bought it today (I bought it 3 years ago).
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My house is on the market because we don't need the extra bedroom anymore and don't like living with an HOA and don't like gated communities. We are downsizing from a 5 bedroom owned home to a 4 bedroom rental.
If it doesn't sell for close to asking price I'm contemplating renting it out. Zillow's rental estimate is like $6,600 per month for the house we are selling, and the rental house a few miles away that we're beginning to move into this weekend is $3,800 per month with landscapers included.
Our mortgage is $3,600 a month. So if we can truly get $6,600 a month for the one we own, our rental income would almost cover our mortgage and the rent on the home we'll be living in. This is only possible because our mortgage rate is around 2.8% and because we have about 60% equity in the home -- those two factors are keeping our mortgage small relative to prospective rental income.
And a lot of families DO have at least 60% equity in the home.
Anyways, if the buyers are on strike (and it increasingly looks like they are), I am contemplating waiting them out instead of giving them their price. What motivates me to go through the hassle of being a landlord again is this juicy 2.8% rate that I don't want to let go of.
So I'm projecting this mentality when I ponder whether sellers will decide to rent out their homes and keep their low mortgages instead of dumping their homes onto a soft market.
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32 minutes ago, changegonnacome said:
.....and so you get what we potentially have emerging right now a "buyers strike"......
There's no question that payments are like 35% higher with the interest rate spike. But there should be fewer sellers willing to sell as well, because selling one home means finding another and they may not qualify for as nice/large a home, so that can make them sit tight.
Which should impact labor mobility and keep a lid on selling pressure.
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So, in theory, would single family housing rental stock increase as homeowners with the 30 yr fixed 2.8% mortgages choose to hang onto those homes and rent them out instead of sell them?
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1 hour ago, crs223 said:
How can housing drop when mortgage rates are below CPI?
It's a good point that it encourages leverage.
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The per capita income is $270 in Burundi. What constitutes an overpriced housing market in Burundi?
People have this notion that housing follows inflation but it follows income.
Where Does the Global Economy Go From Here?
in General Discussion
Posted
Is the shortage of labor driven by an excess of demand or an excess of retirements?
https://www.shrm.org/resourcesandtools/hr-topics/talent-acquisition/pages/employers-face-hiring-challenge-as-boomers-retire-in-record-numbers.aspx
Baby Boomers are leading the exodus, as 3.2 million more of them retired in the third quarter of 2020 than did in the same quarter of 2019.