Castanza Posted March 22, 2023 Share Posted March 22, 2023 Is "waiting to see how credit markets tighten" a copout answer or is it just me? It's really the perfect thing to say while being able to save face with all that has gone on this past month. Link to comment Share on other sites More sharing options...
Gregmal Posted March 22, 2023 Share Posted March 22, 2023 Just now, Dinar said: Greg, why do you think that prices will go up from here or am I misinterpreting your comment? Thank you. Prices held. This will start the beginning of the rate spread compression which is occurring just as folks are starting to get used to….higher rates. Pricing may not accelerate right away, but volume should start moving. Volume moving up is good for everyone in the ecosystem. For the last year anyone outside of actual property owners took it on the chin. All that’s gonna start buzzing again. Link to comment Share on other sites More sharing options...
Gregmal Posted March 22, 2023 Share Posted March 22, 2023 4 minutes ago, Castanza said: Is "waiting to see how credit markets tighten" a copout answer or is it just me? It's really the perfect thing to say while being able to save face with all that has gone on this past month. Yea he s a piece of shit. Your job is done, sit down Fauci. Link to comment Share on other sites More sharing options...
Gregmal Posted March 22, 2023 Share Posted March 22, 2023 15 minutes ago, changegonnacome said: Good I'm buying a house right now (seriously)....not because I think its gonna go up or down in the next 12 months......its because I need a house right now......which is usually, I find, the best time to buy one It’s almost always a good time because you control your destiny! Tangentially I was shocked to hear this anecdotal piece from a family member. She’s 28 and looking to buy and saw a starter home in Parsippany for $400k. Listed Monday and best and final due Thursday. 70 offers at or above ask. It’s why it’s so dangerous with RE to make generalizations because it’s all so specific to individual areas. The more NYC detonates as far as safety, traffic, and general livability aspects, the more suburbia gets jacked. Link to comment Share on other sites More sharing options...
gfp Posted March 22, 2023 Share Posted March 22, 2023 4 minutes ago, Gregmal said: It’s almost always a good time because you control your destiny! Tangentially I was shocked to hear this anecdotal piece from a family member. She’s 28 and looking to buy and saw a starter home in Parsippany for $400k. Listed Monday and best and final due Thursday. 70 offers at or above ask. It’s why it’s so dangerous with RE to make generalizations because it’s all so specific to individual areas. The more NYC detonates as far as safety, traffic, and general livability aspects, the more suburbia gets jacked. Yeah, I got a condo in Ft. Myers under contract 2 days ago for my Mother to live in (her last place flooded). Contract above asking price (which wasn't underpriced), just a couple days on the market, multiple offers above asking price. I wouldn't have won it at all if the listing realtor wasn't favoring our bid and sending "suggestions" back to us on a modified offer to match another bidder. Not very ethical of that realtor but happy to have the help. Link to comment Share on other sites More sharing options...
Gregmal Posted March 22, 2023 Share Posted March 22, 2023 3 minutes ago, gfp said: Yeah, I got a condo in Ft. Myers under contract 2 days ago for my Mother to live in (her last place flooded). Contract above asking price (which wasn't underpriced), just a couple days on the market, multiple offers above asking price. I wouldn't have won it at all if the listing realtor wasn't favoring our bid and sending "suggestions" back to us on a modified offer to match another bidder. Not very ethical of that realtor but happy to have the help. Congrats! Folks don’t get it. My sister in law asked me “what should I bid” and I said at least asking but really it depends how badly you want something. Especially if you’re living there. Housing is unique. Majority of the time, you want something unique, you have to overpay a little. That’s just the way the world works. Fortunately, even though they seem like big numbers, over the life of the loan they’re less impactful. If you put all the people who overpaid by 5-10% for a home they wanted in a bucket I’d guarantee they’re better off than the people who refuse to budge. Especially when it comes to a livable place/shelter…time is money and waiting around years comes with a cost. You have to do what it takes. Investment properties are much more granular, but if you’re using it, just get it in your name then work backwards if need be. Link to comment Share on other sites More sharing options...
dealraker Posted March 22, 2023 Share Posted March 22, 2023 (edited) 45 minutes ago, Gregmal said: Congrats! Folks don’t get it. My sister in law asked me “what should I bid” and I said at least asking but really it depends how badly you want something. Especially if you’re living there. Housing is unique. Majority of the time, you want something unique, you have to overpay a little. That’s just the way the world works. Fortunately, even though they seem like big numbers, over the life of the loan they’re less impactful. If you put all the people who overpaid by 5-10% for a home they wanted in a bucket I’d guarantee they’re better off than the people who refuse to budge. Especially when it comes to a livable place/shelter…time is money and waiting around years comes with a cost. You have to do what it takes. Investment properties are much more granular, but if you’re using it, just get it in your name then work backwards if need be. Our builders supply and millwork businesses cater to custom build contractors. The builders supply operates and services contractors up to 2 sometimes 4 hours away; the millwork serves a wider geographical range. We are in the middle of NC. We are having our most profitable year...that's this year 2023. And last year was a barn burner as was the year before. Oh...yes to add...lumber prices cycled way-way-way down heading somewhere (up-down-up-down)? Oh yea! The above is still accurate. Edited March 22, 2023 by dealraker Link to comment Share on other sites More sharing options...
Spekulatius Posted March 22, 2023 Share Posted March 22, 2023 The ads on this site today again try to tell me something: Link to comment Share on other sites More sharing options...
longlake95 Posted March 22, 2023 Share Posted March 22, 2023 40 minutes ago, Spekulatius said: The ads on this site today again try to tell me something: Ya, stick with brass casings…. Lol… Link to comment Share on other sites More sharing options...
thowed Posted March 22, 2023 Share Posted March 22, 2023 2 hours ago, Gregmal said: If you put all the people who overpaid by 5-10% for a home they wanted in a bucket I’d guarantee they’re better off than the people who refuse to budge. Especially when it comes to a livable place/shelter…time is money and waiting around years comes with a cost. You have to do what it takes. This is absolutely true in London. There are a ton of identical terraced houses around - when you find a special property, you're never the only person who knows it, so you have to pay a bit more. But as my grandfather told me, quality holds its value better, especially in bad times, so it's generally worth it for many reasons. Link to comment Share on other sites More sharing options...
Parsad Posted March 22, 2023 Author Share Posted March 22, 2023 20 hours ago, dealraker said: Keep in mind Parsad that over 40 percent is Berkshire and 40 percent is AJ Gallagher and I do not "manage" as I am a passive owner. I completely respect that you do manage, but both manage and no manage models work exceptionally well over time. Berkshire and several others owned since Jan 10, 1975. So 20% is all those other stocks...many must make up less than 1% positions. You might want to sell some and consolidate into the ones you have more conviction on long-term. Cheers! Link to comment Share on other sites More sharing options...
Parsad Posted March 22, 2023 Author Share Posted March 22, 2023 11 hours ago, dealraker said: I inherited 1/4 of dad's Berkshire stock. It was in a trust that I could not access and "sell" for years. By then? Well, by then selling just wasn't something I thought about because I was busy in life. Good forethought by your father...and good on you not selling any! Cheers! Link to comment Share on other sites More sharing options...
rkbabang Posted March 22, 2023 Share Posted March 22, 2023 3 hours ago, Gregmal said: Congrats! Folks don’t get it. My sister in law asked me “what should I bid” and I said at least asking but really it depends how badly you want something. Especially if you’re living there. Housing is unique. Majority of the time, you want something unique, you have to overpay a little. That’s just the way the world works. Fortunately, even though they seem like big numbers, over the life of the loan they’re less impactful. If you put all the people who overpaid by 5-10% for a home they wanted in a bucket I’d guarantee they’re better off than the people who refuse to budge. Especially when it comes to a livable place/shelter…time is money and waiting around years comes with a cost. You have to do what it takes. Investment properties are much more granular, but if you’re using it, just get it in your name then work backwards if need be. This is so true. I remember a story my parents told me about buying their 1st house in the mid 1970s (the house I grew up in). They ended up in a bidding war with another couple and ended up with the higher bid. Their purchase price was somewhere around $34k and the realtor told them after closing that they beat the other couple by $200. We lived in that house for 18 years and they sold it for 6 figures in the early 90s. In the end that $200 was completely insignificant. Link to comment Share on other sites More sharing options...
mattee2264 Posted March 23, 2023 Share Posted March 23, 2023 Not as familiar with the US housing market as I am with the UK housing market. But even if mortgage interest rates come down a little they will still be considerably above the rock bottom pandemic rates that sent house prices soaring 20-30%. And certainly in London house prices are still well above pre-pandemic levels even though affordability is worse than it has ever been. And housing price declines tend to be multi year because for a while people can hold off selling which prevents prices falling off a cliff the way they do in the stock market but eventually some forced selling emerges and so on. Link to comment Share on other sites More sharing options...
Sweet Posted March 23, 2023 Share Posted March 23, 2023 2 minutes ago, mattee2264 said: Not as familiar with the US housing market as I am with the UK housing market. But even if mortgage interest rates come down a little they will still be considerably above the rock bottom pandemic rates that sent house prices soaring 20-30%. And certainly in London house prices are still well above pre-pandemic levels even though affordability is worse than it has ever been. And housing price declines tend to be multi year because for a while people can hold off selling which prevents prices falling off a cliff the way they do in the stock market but eventually some forced selling emerges and so on. London prices are insane, so insane that I don’t think it’s sensible to buy a house there. Most would have a much higher quality of life moving away. It’s NYC level. Link to comment Share on other sites More sharing options...
Gregmal Posted March 23, 2023 Share Posted March 23, 2023 Own vs renting correlates. If it’s too expensive to own, get ready for your rent to jack up because your landlord knows this. If both are too expensive, find a more reasonable area. There’s really no other way around it. Especially in a major hub, London, NY, Miami, Vancouver, you’re a global destination for 1%ers. You can roll the dice waiting for the 1-2x a generation “opportunity” with the risk it doesn’t come or too much of your life is spent paying someone else’s mortgage, or just bite the bullet. 3 options, that’s it -forget all the stuff you think you know and just buy -rent potentially forever -move I run into so many “I bought after the GFC” braggarts mainly bc I worked in finance for a bit…but banking on that is living life by the exception to the rule playbook. For a regular person, looking to have a life, it’s terrible advice and terribly misleading to think of you just sit on your hands perpetually you’ll have a generational deal on your lap. That’s not to say don’t have a slug of cash ready and waiting for that if it occurs, but I can’t imagine holding up my life waiting for a 1 in 15-25 year event that may never come. Sometimes we think things are expensive, but that’s just the cost of having such an asset. We re seeing it with Manchester United right now. Ratcliffe keeps opining that he won’t overpay and that $4b was lunacy…and he just lodged a $5b bid. Which still probably won’t even be good enough. It’s your life, what do you want for it? Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted March 23, 2023 Share Posted March 23, 2023 (edited) The Fed hikes 0.25% and the 2-year falls 0.20%. Bond markets are being very clear. Recession incoming. I expect the Fed to follow the 2-year directionally from here on out. Might be cutting as soon as May pending how quickly the corporate sector deteriorates. Edited March 23, 2023 by TwoCitiesCapital Link to comment Share on other sites More sharing options...
Simba Posted March 23, 2023 Share Posted March 23, 2023 Anyone have a view of Canadian Real Estate? Long-term still a good buy? Link to comment Share on other sites More sharing options...
formthirteen Posted March 23, 2023 Share Posted March 23, 2023 10 hours ago, Spekulatius said: The ads on this site today again try to tell me something: Silver bullets and women, I don't know, maybe a werewolf-zombie apocalypse is coming? I better send an email to Peter Schiff and ask. Link to comment Share on other sites More sharing options...
changegonnacome Posted March 23, 2023 Share Posted March 23, 2023 15 hours ago, TwoCitiesCapital said: The Fed hikes 0.25% and the 2-year falls 0.20%. Bond markets are being very clear. Recession incoming. I expect the Fed to follow the 2-year directionally from here on out. Might be cutting as soon as May pending how quickly the corporate sector deteriorates. I think the great divergence....in this cycle defined by inflation....is that Fed for the first time in 40yrs wont be following the 2yr.......why?.....because the incoming recession is not a bug, its a feature. Link to comment Share on other sites More sharing options...
mattee2264 Posted March 23, 2023 Share Posted March 23, 2023 Something I was a little too late to figure out was that foreign investors use London property as a bank and store of value so affordability means nothing to them. So that is a supportive factor. But what is different between London property and USA property is we don't have 30 year mortgage rates. Most people are on 2/3/5 year mortgage rates and these are all getting reset to much higher rates. Sure some buy-to-let investors have tried to increase rents dramatically to cover this which works in the short term but eventually people will either move further out/move back with their parents/move into flat shares/downsize to smaller properties etc. leaving landlords with vacant properties. If affordability didn't matter at all you wouldn't have seen prices rise 20-30% during the pandemic because interest rates and mortgage rates hit rock bottom levels. And it is quite typical for a lag because people at first react by holding off selling when prices start to fall which arrests further declines and volumes instead plummet. But eventually there is some forced selling. And then foreclosures. And then people get fed up waiting for prices to recover when they want to move house. And slowly that drives prices down. Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted March 23, 2023 Share Posted March 23, 2023 (edited) 2 hours ago, changegonnacome said: I think the great divergence....in this cycle defined by inflation....is that Fed for the first time in 40yrs wont be following the 2yr.......why?.....because the incoming recession is not a bug, its a feature. We'll see. I generally agree with your take on inflation, but if you get an extra 1-2 million unemployed, suddenly the raises they received previously no longer factor into the equation for non-productive flows of money into the economy. I think inflation will be higher this decade versus last, but not by much and not until later in the decade. Almost ALL of the disinflationary/deflationary trends are still in place. Productivity/demographics/debt loads/globalization/etc. Over time, some of these will fall off (like demographics and globalization). But that will take years. In the meantime, disinflationary and deflationary trends remain in place but are somewhat counteracted by underinvestment in real resources and war which play inflationary roles. I think we'll see these boom/bust headfakes with inflation. It'll appear and then disappear as inflationary/deflationary forces wage battle in timing. But ultimately, the really inflationary trends won't be ingrained until the second half of the decade so I'm still betting that the Fed follows the 2-year this time around. Edited March 23, 2023 by TwoCitiesCapital Link to comment Share on other sites More sharing options...
changegonnacome Posted March 23, 2023 Share Posted March 23, 2023 2 hours ago, TwoCitiesCapital said: I think we'll see these boom/bust headfakes with inflation. It'll appear and then disappear as inflationary/deflationary forces wage battle in timing. But ultimately, the really inflationary trends won't be ingrained until the second half of the decade so I'm still betting that the Fed follows the 2-year this time around. Interesting take and I think you could be right on that - supply chains and near shoring dont happen over night.......and against those, maybe to come, inflationary forces will be ChatGPT-esque disinflation.....interesting times for sure! Link to comment Share on other sites More sharing options...
changegonnacome Posted March 27, 2023 Share Posted March 27, 2023 Been kicking around the recent banking debacle in the context of inflation & the mark-to-market losses sitting on bank balance sheets…..which are being saved to a certain extent, if liquidity is required, by the BFTP program….which notably has a year long lifespan attached to it….now I don’t want to impute too much meaning in that timeframe….they set it up fast and nothing like this can last forever so an end date needed to be provided. But when you think now of the vast quantum of economic participants (banks, CRE, government itself) that really really really need rates to go back down to get back to par or trim losses on their balance sheets or maintain themselves as a going concern ….it’s immense…..however to get rates back down (responsibly), you need to tackle inflation and to conquer inflation it’s unfortunately clear you need to inflict some economic pain……mark to market losses only become real losses if one is forced to transact….. You put all this together from Powell’s perspective…..and you think about how he’s mentally preparing himself for the worsening economy to come…..and steeling himself in the knowledge that inflation is the thief of the poor and he’s doing the right thing….he can now also add to that pros & cons list…....that’s it’s clear that so much of the US economic & financial system has become dependent on low rates (in the case of some banks even for their very solvency). Getting the economy sustainably and permanently back to 2…such that Fed funds can be low also….has both a moral (helping poor people) & practical imperative (so much of the US economies balance sheet is hooked on & dependent low rates). My expectation then is that this SVIB debacle has actually strengthened Powell’s resolve later this year to hold the line in the face of economic weakness..…..perversely the SVIB debacle has raised the stakes in conquering inflation…….the banking system, commercial real estate holders, VC’s, the very Federal government itself…..desperately need a return to lower rates that are sustainably low! The price of in-action…is terribly high….to lose control of the long end of the curve (if long run inflation expectations were to become unanchored is so unbelievably dangerous to various balance sheets it would make the current mark to market losses/mini-bank crisis look like a joke). Put it all in the pot…..and JP should and will I believe be unbelievably & surprisingly resolute in not cutting as unemployment climbs into the 5’s and SPY heads to the low 3000’s….until he’s certain the inflation dragon is slayed…..a deep but short lived recession is the most optimal long term solution to our immediate inflation problem….but also the problem of a world that’s filled up with assets purchased at 3.x% FCF yields….you want to destroy families & institutions balance sheets….run inflation at 3.5%….and half ass-dly try to fix inflation by running Fed Funds at 3.75%…and watch what 10/30yr treasury starts to do…to mortgage rates etc.……it’s a one way ticket to destroying the long term mark to market balance sheet of American households, banks etc. The optimal solution….is indeed to get back to as close as possible to ZIRP (knowing that isn’t realistic of course) but we need to get as close as we can back to it…..doing so will require a journey through the valley of death for the economy…..but the greater good is optimized by that journey….I used to say it needed to be done to help the lowest decile of American’s by income and that’s still true…….to that list I can now confidently add Stevie Schwarzman & Blackstone, First Republic, Brookfield, Vornado, Sequoia, the broad US banking system that the Fed forced into treasury’s as a result of Dodd-Frank, the very Treasury & Josephine from accounts that bought a condo in Fort Lauderdale in late 2021 @ 90% LTV but now HAS to sell and move back to Boston …..you get my point. I don’t think we get back to ZIRP let me be clear…..but we need to get as close as we can….a whole bunch of stakeholders need it….the collateral damage will be the economy (briefly) and those forced to transact assets inside the valley of death! Link to comment Share on other sites More sharing options...
Red Lion Posted March 27, 2023 Share Posted March 27, 2023 19 minutes ago, changegonnacome said: Been kicking around the recent banking debacle in the context of inflation & the mark-to-market losses sitting on bank balance sheets…..which are being saved to a certain extent, if liquidity is required, by the BFTP program….which notably has a year long lifespan attached to it….now I don’t want to impute too much meaning in that timeframe….they set it up fast and nothing like this can last forever so an end date needed to be provided. But when you think now of the vast quantum of economic participants (banks, CRE, government itself) that really really really need rates to go back down to get back to par or trim losses on their balance sheets or maintain themselves as a going concern ….it’s immense…..however to get rates back down (responsibly), you need to tackle inflation and to conquer inflation it’s unfortunately clear you need to inflict some economic pain……mark to market losses only become real losses if one is forced to transact….. You put all this together from Powell’s perspective…..and you think about how he’s mentally preparing himself for the worsening economy to come…..and steeling himself in the knowledge that inflation is the thief of the poor and he’s doing the right thing….he can now also add to that pros & cons list…....that’s it’s clear that so much of the US economic & financial system has become dependent on low rates (in the case of some banks even for their very solvency). Getting the economy sustainably and permanently back to 2…such that Fed funds can be low also….has both a moral (helping poor people) & practical imperative (so much of the US economies balance sheet is hooked on & dependent low rates). My expectation then is that this SVIB debacle has actually strengthened Powell’s resolve later this year to hold the line in the face of economic weakness..…..perversely the SVIB debacle has raised the stakes in conquering inflation…….the banking system, commercial real estate holders, VC’s, the very Federal government itself…..desperately need a return to lower rates that are sustainably low! The price of in-action…is terribly high….to lose control of the long end of the curve (if long run inflation expectations were to become unanchored is so unbelievably dangerous to various balance sheets it would make the current mark to market losses/mini-bank crisis look like a joke). Put it all in the pot…..and JP should and will I believe be unbelievably & surprisingly resolute in not cutting as unemployment climbs into the 5’s and SPY heads to the low 3000’s….until he’s certain the inflation dragon is slayed…..a deep but short lived recession is the most optimal long term solution to our immediate inflation problem….but also the problem of a world that’s filled up with assets purchased at 3.x% FCF yields….you want to destroy families & institutions balance sheets….run inflation at 3.5%….and half ass-dly try to fix inflation by running Fed Funds at 3.75%…and watch what 10/30yr treasury starts to do…to mortgage rates etc.……it’s a one way ticket to destroying the long term mark to market balance sheet of American households, banks etc. The optimal solution….is indeed to get back to as close as possible to ZIRP (knowing that isn’t realistic of course) but we need to get as close as we can back to it…..doing so will require a journey through the valley of death for the economy…..but the greater good is optimized by that journey….I used to say it needed to be done to help the lowest decile of American’s by income and that’s still true…….to that list I can now confidently add Stevie Schwarzman & Blackstone, First Republic, Brookfield, Vornado, Sequoia, the broad US banking system that the Fed forced into treasury’s as a result of Dodd-Frank, the very Treasury & Josephine from accounts that bought a condo in Fort Lauderdale in late 2021 @ 90% LTV but now HAS to sell and move back to Boston …..you get my point. I don’t think we get back to ZIRP let me be clear…..but we need to get as close as we can….a whole bunch of stakeholders need it….the collateral damage will be the economy (briefly) and those forced to transact assets inside the valley of death! Could the all powerful fed just avoid the valley of death and manage this problem with QE? Either way, reading this post makes me want to raise cash. Link to comment Share on other sites More sharing options...
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