Economic Tripwire #3 – Homeownership Rates Bottom Out…

The real economy is intensely interesting.  We’ve spent a great deal of time researching the decades long fracture of modern American economics, and reconciling political fractures from a basis of the underlying economy. It helps to understand what’s going on.

trump-biglyPreviously we presented a rather radical outline explaining a new dimension in economic theory, the “Third Dimension in American Economics“.

Essentially, our focus is reconciling what happens domestically when decades of “globalism economic policy” suddenly switch-back to “Americanism economic policy”.

It is not an easy task to map out what happens in the space between a “Wall Street economy” and a “Main Street economy”.  As a result of the 2016 election we are in this space right now.

We further call this “The space between“.

To further understanding the space between the two policy-driven economies we have established some tripwires; specific points of reference which, if triggered, will either affirm or refute the basic principles within this new economic path.   One of those specific tripwires is: 

Tripwire Number ThreeAnother weird dichotomy, Housing Values.   This one is a little tricky because region to region there are multiple variances and possible outcomes.

However, in a general sense, even with expansive GDP and growing wage rate pressure, home values in the aggregate will drop.  Rent prices will also drop.  The reason is odd, yet simple.  Moving forward, investment ownership will be less favored and there is a massive amount of investment capital currently holding real estate.

A weird confluence exists.  Check your local real estate listings you will most likely see many more homes, condos and apartments for sale.  Increased inventory = lower overall prices.  Large, multi-unit building investment, lags approximately 18 months behind most current economic trends. (more)

Tripwire Number Three is indeed triggering – Home values are dropping, quickly.

With economic forecasts/projections providing greater potential for income growth in traditional main street investments; combined with an overinflated valuation of property – and a simultaneous under-occupancy by traditional home owners, institutional investors (Wall Street) are beginning to retreat from the housing sector.

Essentially, with real-estate investing pull-back, the home ownership market is beginning the process of self correcting.  The indicators now show the historically low home-ownership rate has bottomed out, and the prices will now drop until the traditional home-owner can afford to purchase and reestablish a more traditional market:

bloomberg-home-ownership-graph

(graph link and analysis)

It’s a weird and complex dynamic, but when you think about it on a larger ideological scale it begins to make sense.

The various elements of the U.S. economy which gained most benefit from Wall Street’s influence over DC legislative priorities are now positioned less favorably with a changed focus toward Main Street’s influence over legislative priorities.

The two economies “Wall Street” and “Main Street” were at their greatest distance from each other as a specific outcome of pro-Wall Street policy.   That policy has been pushing them apart for over three decades. The disparity of income wealth distribution has followed an identical path because they are related and intertwined.

Effective November 8th, 2016, the movement apart stopped.  The policies are currently in the process of re-evaluation; and with Trump economic cabinet members and policy interests clear, subsequent reversals are transparently predictable.  Main Street becomes the benefactor.

Within the housing sector, all aggregate movement will naturally begin to shift toward the representative voice/benefactor of the Main Street policy being favored.  Ergo, the sector flows economically back toward traditional home buyers.

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204 Responses to Economic Tripwire #3 – Homeownership Rates Bottom Out…

  1. jdvalk says:

    Rising interest rates indeed will factor into the percentage of home ownership.

    Liked by 3 people

    • repsort says:

      and rising rates have an immediate impact on home prices. Rates tick up, prices must drop because payment is what most buyers buy on…

      Liked by 3 people

      • stonedome says:

        in Florida, one must consider the stacks of cash that retiring baby boomers are dumping into the market…smaller, modest home prices will rise here for the foreseeable future, even though interest rates are rising. there are more buyers than supply and cash doesn’t care about interest rates

        Liked by 2 people

    • bertdilbert says:

      A lot of money is going to disappear. Not just in housing either.

      Something went wrong when they started saying home ownership was achieving the American dream, rather than home ownership being a symptom of achieving. The quality of that “home ownership” was really poor.

      Liked by 2 people

  2. joshua says:

    real estate in the home owner segment is HIGHLY location sensitive and when companies are moving or growing, scarce supply and high demand can easily drive up prices for select price ranges and location, especially when school districts are involved, as well as transportation infrastructures. I think maybe this “trip wire” has a HUGE amount of variability to be an absolute. IMO

    Liked by 9 people

    • location, location = proximity to good paying jobs.
      unless you’re hyper-wealthy, then it’s all about the ocean.

      Liked by 3 people

      • wondering999 says:

        Most people of my acquaintance (including myself) relocate to participate in a more decent school district. Re-zoning hits us small people hard. It’s a local thing, but that’s why I moved and why most of my friends have moved. School zone

        Liked by 2 people

        • wolfmoon1776 says:

          Yup. First move for safety, then move for schools.

          Liked by 2 people

        • Your tour Guide says:

          Wondering:
          There’s a whole lot of lying going on in many different jurisdictions as to why rezoning
          gets proposed. What I see time after time around metro Atlanta and North Georgia is this.

          A formerly sought after district gets rezoned, generally snaring some apartment complexes down the road. Conveniently, ( for the school board, nobody else), these
          same complexes are subsidized du jour. Generally Low Income Housing Tax Credits,
          occasionally, section 8. What this creates is instant Title 1.

          For every student on free meals ( almost everyone from said complexes), the school
          gets an additional $600. For starters. When the percentages hit critical mass ( about
          40% of the student enrollment), then the money starts flooding in. The school’s Title
          1, so they get new computers, instructional aides, materials. It doesn’t help the schools
          whatsoever, as their test scores almost always plummet. Rezoning is just another way
          for the educational lobby turds to whore more cash from the feds. And, those who think that these funds go for their intended purpose are far too trusting.

          Liked by 9 people

          • wondering999 says:

            Bingo. Title I is well-meant, but I suspect it distorts education in a number of significant ways. I was unaware of the details you are describing, though. THANKS

            Like

      • James O'Malley says:

        And that’s one area that needs to be badly addressed. Many jobs are (supposedly) moving to the cities, which are almost always Democratic strongholds, and not in a good way. As these cities grow, they become more politically powerful, and therefore begin to outweigh the voice of those outside those cities.

        The end result is that anti-MAGA forces become more powerful, and has history has shown that means more corruption, fraud, waste, and criminality.

        This economic growth is great, but it also risks making those same forces we defeated in November more powerful. Something (I don’t know what) has to be done, and soon.

        Like

  3. jupitercomm says:

    Forgive me in advance for going into the weeds… This concept of focusing on a DIFFERENCE or gap b/w two ostensibly distinct objects (real vs. global economy) is philosophically intriguing.

    Here’s Zizek from 2011 (I think) meditating on the sort of shift I think SD is talking about:
    The common definition of parallax is: the apparent displacement of an object (the shift of its position against a background), caused by a change in observational position that provides a new line of sight. The philosophical twist to be added, of course, is that the observed difference is not simply “subjective,” due to the fact that the same object which exists “out there” is seen from two different stations, or points of view. It is rather that, as Hegel would have put it, subject and object are inherently “mediated,” so that an “epistemological” shift in the subject’s point of view always reflects an “ontological” shift in the object itself

    Liked by 4 people

    • lastinillinois says:

      Huh?
      Are you speaking French to me, you silver tongued devil?

      Liked by 9 people

    • wolfmoon1776 says:

      I love this demonstration of parallax. Which view of the sun over the lamp is Main Street, and which is Wall Street, I leave up to the viewer! 😉

      Liked by 2 people

      • Derek Hagen says:

        Gol durn it, I love this site and everyone in it.

        Liked by 8 people

      • Charlie says:

        Who are you people?
        Above my pay grade!

        Liked by 4 people

      • Duhders says:

        To be technically correct this is not an example of parallax as you have not shifted your viewpoint, that is simply reflection angles and potentially reflection phase change. If you took a second photo from a different perspective at the same instant resulting in the light source being reflected to a different relationship to the lamppost, that would be parallax.

        Liked by 3 people

        • SteveInCO says:

          Thank you.

          I hate seeing science mangled. Someone did it yesterday in re: the Moon.

          Liked by 2 people

          • Texian says:

            [Some of my professors thought I “mangled”, while another mentioned he could hardly wait to read my research papers.. made him ‘think..’].. Here’s a classic “Texian” paper excerpt..

            “..When one speaks of Vitalism today, it is unfortunate that the stigma of the old connotation to the definition of the word comes to the surface. When Dreisch spoke of entelechy, he described a force he did not understand, a driving force of life. This driving force may very well be electrical in nature – Galvani may not have been completely wrong either. The messengers may be chemical, but the charges that initiate them or energize them may very well be steeped in this vital force that permeates every piece of matter in the universe..” [“Texian”. pg.6, ‘Regentelechy’: Vitalism Revisited.]

            Liked by 1 person

        • wolfmoon1776 says:

          I have to admit that I was also unsure this image (from the Wikipedia entry for Parallax) was in fact parallax, so I reasoned out that it was good enough for me to agree with them, and not to object. As I have said before, Wikipedia is generally credible on science in which the left does not have a political investment, and I think this is one more illustration of the same.

          The trick here which fits the model into a basic diagram of parallax is that we are shifting the lamppost top as the foreground object of determinable distance, not the sun, which is simply a marker on the background. I know that’s not your objection – I just want others to follow, because parallax is so often used in terms of distancing planets, stars, etc. Not here.

          I look at this example as the water being the world’s simplest optical machine, sending me its feed from a shifted viewpoint (not equidistant under rotation, but not necessarily so), the feed being reflected in space and offset in time by a small amount (super-generously, 30 nanoseconds?) due to the longer light-travel distance, but frames at the “exact” same time are easily determined from a continuous feed.

          Ignoring reflection by the machine (an artifact), the image itself is truly “as seen” from a shifted perspective (and without laying one’s head down in the water! :-D). I compared THAT setup to the normal diagrams defining basic parallax…

          …to assure myself that this is so.

          Here, the object in the foreground is the top of the lamppost, and the shifting background is shown by the relative location of the sun in the background of the image.

          Take the diagram model as vertical, viewing from left to right. Viewing from A, and shifting B to the right and closer along the dotted line, so that it can be the water, the sun is held at Red. Viewed from A, the clear sky of Blue is behind the lamppost. The direct view of the sun from A is not a parallax view for our purposes, but the view of the lamp-top is. Now viewed from B, the water surface, the sun is behind the lamppost top – again, a parallaxed view of the lamppost top. That view is reflected to A by our water-and-air apparatus, not part of the parallax phenomenon.

          If one makes the reasonable allowance that the small difference (or even any difference) in distances is immaterial, the slightly closer viewpoint of the water surface substitutes for one which would be equidistant from the sun but underground, more like the simple diagram. Although one could argue that the path after reflection would in many ways if not completely substitute for that viewpoint. All of that extra consideration being something we can ignore, bearing in mind that equidistance is not formally part of the definition of parallax, and can certainly be scrubbed from a more general definition of it, which accounts for variations in distance and time. For the purposes of illustration to humans, the two images are also invariant at the differences in arrival time because the objects are effectively static over 30 ns.

          Thus, I think that this example in fact fits the definition.

          And while I generally despise appeal to authority in matters of science, this must have gotten past quite a few science types at Wikipedia. I have not looked at their talk page, but I’ll wager it was discussed.

          https://en.wikipedia.org/wiki/Parallax

          Like

    • notamemberofanyorganizedpolicital says:

      Can’t we just watch the movie instead?

      Liked by 1 person

      • wolfmoon1776 says:

        I always though that name was so cool and mysterious. If only I had known that all parallax is, is the camera circling the actor in those “woo-woo-woo, dramatic circling of background” shots while the actor barely moves.

        Like

  4. maga2016 says:

    When million illegals leave some houses in some areas will get very cheap

    Liked by 10 people

  5. Raising Interest Rates now PROVES the FEDERAL RESERVE’s RACISM, raising interest rates to foreclose the opportunity for minority communities to own or keep their own homes.

    Liked by 1 person

  6. CORRECTION:
    Raising Interest Rates now PROVES the FEDERAL RESERVE’s RACISM, by foreclosing the opportunity for minority communities to own or keep their own homes.

    Liked by 2 people

    • WSB says:

      Managing the rise in rates seems to be paramount. PE Trump has already made some comments about this.

      Like

    • Marc says:

      This is why the Fed must be audited then summarily eliminated. As bad as Congress is, I’d rather have an elected official making the decision and then getting voted off for doing things badly than some cabal of shadowy figures behind closed doors that don’t care what the people think.

      Liked by 2 people

      • In spite of what Fed governors like to think, the Fed interest rates follow the market, they do not lead the market. Go ahead and audit the Fed, but that won’t have the effect many think it will.

        Like

        • Marc says:

          The Fed has never been audited. It’s not about the interest rates but the corruption within the organization. We will finally see what they do with our money. The Republicans and Democrats will fight him hardest on this. The Wall and trade tariffs will seem petty compared to this.

          Liked by 3 people

  7. Guy Bee says:

    The supply of buyers is declining because the younger folks are less inclined to be tied down early in their life. So who is going to buy these houses. With 50,000,000+ abortions, many of whom would be working today, consuming products and buying houses, our economy will be impacted. Bad policy has consquences.

    Liked by 9 people

    • AndrewA says:

      I know a lot of people with families in the mid 30s to late 20’s that would buy a house if they could afford it. If house prices drop they well happily tie themselves down so to speak.

      Liked by 9 people

      • WSB says:

        I would have appreciated a rent to own program. The down payment is always the problem. I also do not understand why a home buyer is penalized if using their retirement savings to support a down payment.

        Liked by 1 person

      • EJ says:

        Just think what that would do for the quality of our neighborhoods! As we move up from the bottom, it will just get better and better.

        Like

    • petszmom says:

      my kids are in their mid thirties and can’t afford the 20% down payment on the mortgage. they want to buy into home ownership but who has 50-60K laying around at their age? the median home in their county is about 250K. in my county it is 295K. we all live on the very desirable I35 corridor connecting austin to san antonio, tx. In 3.5 years my own house went up almost 30% in value, making my own home unaffordable if i were to buy today. they can only hope and my wish that something will happen where they can buy a home without 20% down.

      Liked by 2 people

      • El Torito says:

        The 20% came about due to the Clinton policies of pushing banks to give out bad loans. It’s an over correction and won’t last. Kids are avoiding home ownership because of income stream problems. Jobs jobs jobs will be the equalizer. Also, when we bought our first house 20 years ago or so, we looked for what we could afford, no one buys their first house based on the most desirable area unless they were born into it.

        Liked by 8 people

        • The Demon Slick says:

          Bought mine in 2003 with no money down. They did an 80/20 where you get a loan for the 20% down then that qualifies you for the other 80. Refinanced in 2010 when I got divorced, took no money out, Refinanced to a 15 year. It’s halfway paid for. I don’t know about the rest of you but I am not going to benefit from dropping home prices. No, not at all.

          Like

        • James O'Malley says:

          I’m in that boat, I definitely don’t get paid enough to buy property, and neither do a lot of my peers.

          Like

      • repsort says:

        Especially with the massive student loans we’ve saddled their generation down with!

        Liked by 5 people

        • wondering999 says:

          ^^^ This is true for many ^^^
          There are other factors besides student loans.
          Health insurance is horribly expensive. Doesn’t leave much room for savings.

          If your neighborhood becomes gang-infested/drug-infested, there goes all that hard work and the value drops

          When I bought my house, appraiser told me it was difficult because of the number of rented homes in my neighborhood; however, homes have held and increased in value because of the school district.

          Landlords are hard-hit by bedbugs. Nobody wants to talk about the bugs but it’s a public health problem. Other day someone explained to me that if she goes to the movies, she brings a spray bottle of alcohol and spritzes the seat and the back of her coat etc. to deter the critters. She also puts her clothes into a plastic bag before washing and drying if she suspects she has been in a bedbug distribution point. Know someone who worked for a larger-scale landlord who was paying out thousands in pest control, overwhelmed by the chronic problem and its expense

          Liked by 3 people

          • gawntrail says:

            Amazing point. Bed bugs are awful. Interiors of homes have to be gutted and personal belongings burned. Low-level plague.

            Liked by 1 person

            • wondering999 says:

              There are effective treatments but the price is high
              http://www.thermalremediation.com/
              “The Thermal Remediation process was developed in the late 1990s due to the rise in environmental concerns, insect resistance to chemicals and a shift in consumer preferences. Thermal Remediation from TEMP-AIR® quickly became the safest, most effective and environmentally friendly alternative to chemical fumigation or fogging. Originally intended for eliminating stored product pests in industrial food product plants, a modified Thermal Remediation process is now also used on a residential level for ridding properties of bed bugs.”

              Like

        • MrE says:

          Bingo.

          Like

      • Texas Mikey says:

        Yep. Live in North Central San Antonio home appreciation over the past 10 years has been unreal. Great Texas economy is part of what’s driving prices but also lots of damn CA refugees who apparently love the Hill country

        Liked by 3 people

    • rsanchez1990 says:

      I would say as a young person myself I’ve been extremely hesitant to purchase a home, for a few reasons, some of which may well change with the election of President Trump.

      The housing crisis hit as I started going to college. It affected my family and as a result, I’ve grown averse to holding that much debt with the aim of paying it off over decades.

      This was especially so as the economy refused to recover during Obama’s presidency. Holding huge amounts of debt during uncertain economic times just did not seem like a good idea to me. As the economy starts to improve under President Trump and home prices start to fall, conditions for taking such a risk may become much more favorable.

      One other personal reason is, frankly, marriageable women who are not steeped in PC/SJW culture are scarce in my area. This may also change under President Trump, and level of Trump support is definitely a good preselection characteristic! 😁

      Liked by 10 people

      • rsanchez1990 says:

        I should add that I currently can afford a house, it just doesn’t seem like a good investment at the moment for the above reasons.

        Liked by 3 people

      • wondering999 says:

        Is there going to be a “Trump Matchmaking Service” for single Trumpsters? 🙂
        I have some heartbreak in this area, I want to be a grandma, but I’m afraid my college-indoctrinated offspring tend SJW. Maybe that will change this year, they do notice success. Wishing you (and me too, in an indirect way) successful matrimony and household happiness, rsanchez. There’s nothing more important

        Liked by 3 people

      • WSB says:

        Debt is fine the closer it gets to 0% and if your personal situations is solid. I am not sure where the sweet spot is on lower prices vs. interest rates in the next year. SD may have an opinion. This also is dependent upon where you buy, of course, and how much down payment you can afford.

        Liked by 1 person

      • Hillsdalian says:

        I’d like to offer a contrarian view, as a… well, not so old, but Gen-X homeowner. I’m 38 and bought my first & current single family, detached home in March of 2009, when I was 30. By myself, in so-called “highly desirable” Howard County, MD. Median income, according to ’10 census was $103K, while I only made $83k at the time. I had been full-time for only 7 years.

        What’s crazy – as I type this, I recall one of the previous occupants watching Obama’s inauguration

        Anyway, watching my 401k drop by a third in 2008, I ultimately bit the bullet and depleted most of it to put 10% down on the property. In my case, this was $30k on a $300k mortgage. The rate back then was 4.875%, and there was a first-time homebuyer credit of $8k. I received no monetary help from family or others.

        It was considerable risk, one in which I almost screwed myself out of the tax credit. See, taking an early withdrawal on that $30k was an immediate $3k in federal tax (10% penalty), plus being $30k of untaxed income on top of what I made. It grew my adjusted gross income too high to get the credit, and I had to pay $9700 to the feds… Thank goodness for that necessary evil of credit.

        But I figured out that one could get the homebuyer credit with an amendment to 2008 taxes. So I did that an promptly got new windows and doors for the house.

        Onto my belabored point: If you’re a fan of Trump, and you enjoyed his quips about being smart for not paying taxes, then you would appreciate the effect that owning a home has on one’s ability to subsist under the current system. If you can buy, you really ought to.

        I took full advantage of my great credit score and the low interest rates, so that I could better manage existing debts. I took advantage of the mortgage interest deduction, while continuing to put 10% into the 401k. This allowed me to adjust my exemptions so I could get more $$ in my pocket.

        After I bought the house, I had only $20k in retirement savings. Since then, I’ve accumulated $180K. And I cannot wait to reap the whirlwind as Trump takes over. I’ve adjusted my retirement holdings to sectors that ought to do well, and by the time I’m 40, health permitting, my only debt will be the mortgage payment. Everything else will be elective expenses and utilities.

        That all being said, yes, on the face of it, no debt is better. But you can tilt this system favorably. I’m still a single man and I share your phobia of PC/SJW women, of which, dreadfully, there are plenty here in MD. In some ways, yeah, it’s like living in Hell, but at least I have my own sanctuary, where it’s just me and my dog that matters. I’ll continue to get my tax dollars back as a government contractor and hopefully retire early, taking my MD dollar west where it will most certainly go farther.

        Liked by 4 people

        • rsanchez1990 says:

          You’re a braver man than I am. I’m still only 26 so I guess I have time. One other reason I’m averse to debt is I’m another young person who did graduate with student loan debt, and although it wasn’t that much, I missed a few payments along the way and as a result my credit is still bad. I did manage to pay it off in full a few years after I started my current job (thankfully it wasn’t that much) but the credit score has been slow to recover.

          I even live in a comparatively favorable area of North Central Florida where I would only need a mortgage of around $100k for a decent home. As Trump takes over, I have a feeling home ownership will soon become a no-brainer.

          Like

          • Hillsdalian says:

            I’ll tell you a secret. There are many things I wish I had started sooner. If homebuying isn’t it, then learn to invest.

            The time is now.

            Literally, learn how to cultivate Your own cash crop. You won’t regret it.

            Liked by 1 person

  8. wheatietoo says:

    ObamaCare.
    I think the big drain of ObamaCare has had an effect on home ownership too.

    People are paying double & triple what they used to pay for health insurance.
    It’s like a house payment is being taken out of their income…and it is going towards health insurance instead of buying a home.

    Liked by 28 people

  9. WalksByTheWater says:

    Rising interest rates will further reduce housing prices; as a general rule. In most cases, people are purchasing a monthly payment, not the house (eventually the house). As a result, a rise in interest rates, without a change in housing prices, will create a higher payment for a given house. The only way to reduce the monthly payment down to a more ‘affordable’ level is to reduce the purchase price of the home.

    The decline and suppression in interest rates has been a factor in the rise in interest rates, on a regionally adjusted basis.

    Liked by 4 people

    • Tom W says:

      I recall real estate in the early 80’s was very dependent upon “assumable loans” whereby the seller could transfer their mortgage/rate to a qualified buyer, and the buyer would satisfy the balance.
      With interest rates climbing, it was the only way deals got done in CA.
      Unless current mortgage paper precludes assumability -which is very possible- that will help support housing along with hopefully rising incomes.
      But, it’s more complex of course

      Liked by 1 person

      • Trying to buy a home for your family in the 80s was very difficult.

        The assumable loan ” was one of the ideas that someone came up with that did not work out too well.

        It was complicated situation and not all lending institutions wanted to work with it (for good reason).

        Not many of those “sounds wonderful but hold onto your cash ” deals were made.

        Thank Heavens.

        When we get our Country back on track I truly hope we do it with sound business practices.

        Liked by 4 people

  10. In your first economic trip wire article, you thought home prices would fall. I disagree in the long run.

    Fly from Miami to NY. Then fly from San Diago to Seattle. You can also see this grand on those videos that show what the world and America look like at night, all the lights.
    What you will see is that the east coast is almost a solid pictur of homes and businesses. The west coast, not nearly as dense. The east coast is coming to the west coast, mark my words.
    Though homeownership has lost its appeal to this coming generation, there will always be the human nature ergo to have a place of their own, be it condos or single family residents. Esp within the immigrant community. Land ownership is still a desire.
    Though the coming interest rates are going to go up, destroying purchasing power, incomes will also rise. Inflation will also continue. It will take time for this adjustment, but in the end, housing prices will increase.
    PE Trump is a real estate man. He’s not built to ruin the business that he loves. Rule and regulations will ease, making homeownership easier to acquire. Mortgage interest and property taxes will always be deductible for the median home price.
    As interest rates rise, banks will get back into the business of lending again. It’s a good way to make money with minimal risk, which I believe needs to be places on the mortgage maker, not Fannie and Freddie.

    My best advice to my children, buy a home NOW, while rate are low if you plan to stay in the area 5+ years. Dont sweat the ebb and flow of prices. If you move, make it a rental.

    I do however believe commercial property is in for a huge price drop, esp in malls, and brick and mortar stores. In time those property will be repurposed for the future needs, but stay away from commercial rental for now.

    Liked by 5 people

    • sundance says:

      You said: …”In your first economic trip wire article, you thought home prices would fall”…

      I still do.

      And they are.

      Quickly. Home prices are dropping. I believe over the next 6 months you will see an exponential decrease… and it will continue.

      Mortgage lenders are no longer banks, they are investment agencies under the roof of banks, but not actually banks. There’s no difference between the guy who lends you money for a mortgage, than the guy who is a venture capitalist. Same/Same now.

      It would take a serious increase in interest rates (return on lending) for a VC to loan money on mortgages. Ergo, home prices will drop, and they will drop, and they will keep on dropping until the average Joe/Joan can buy them..

      Tripwire #3 is not some modest drop in home prices. The trigger is a DRAMATIC drop in home prices….

      Home prices will plummet.

      Liked by 6 people

      • lastinillinois says:

        I wish home prices would drop in the area I’m looking to buy (northeast Fla).

        They are rising, and have been since 2012.

        Liked by 1 person

        • sundance says:

          Be careful. My tripwire is 18 months ahead of the public seeing it. If you make an offer, make it 20% or more lower than any asking price. And keep watching closely…. you’ll see.

          Liked by 5 people

          • lastinillinois says:

            Thank you very much. You may have just helped me make up my mind, at least for the short term.

            I have been watching closely, for at least 2 years now.
            Made an offer on a home last year down there but it fell through when the appraisal came back a bit lower than selling price and i let it go, as i refuse to go into an underwater situation AGAIN (bought a place in late ’05 in northern illinois and within 3 years was underwater – just came level again within 2 years ago).

            Anyway, i have noticed these past few months that not only have prices still been on the rise down there but there are MANY more homes for sale than typical – figured that was knowledgeable owners looking to dump prior to a predicted downturn.

            Liked by 2 people

          • I am open to your analysis because of who you’ve proven to be, extremely experienced and educated in politics, economics, investigations and so much more. I think to gather your knowledge, I’d put you around 120 yrs old. Just kidding.

            I love what you have given to America and myself. You are a voice of reason and do your homework. Thank you a million times over for the risk and work you do to bring us valuable and useful information.

            I live on western WA. The economy is revving up. Trucks are moving material, highways are packed. 10 yr underground’s utilitiy plans are for huge growth in residential and business.

            I agree that housing is once again in a bubble, not within reach of middle class Americans
            It would be a dream for the middle class if housing prices did fall.

            You see around corners as I do not. My gut, head and heart say values my stagnant for a while, but over the long run (10 yrs) they will go up substantially, esp if the economy is based on producing more good and service VS the US dollar.

            I’m not a flipper, I’m buy and hold, pay off asap and collect rent as my income. This was taught to me by my mother, a Norwegian immigrant, so that we would be in control of our own income and never be dependent on the government. As imcomes rise , so does rent. When the economy tanked. I gave my renters a 25% decrease. They hurt as much as anyone. It a business and you take care of your clients. Again, LONG term good tenants are priceless.

            My great st joy is when they tell me they are leaving, because they bought a house! Real estate has been a blessing to my family and I would hope other American realize how very fortunate we Americans are that can own and sell land. It’s not the norm! And a communist hate that part of our rights.

            Liked by 6 people

            • gawntrail says:

              Land/home ownership is the Pinnacle of the American Dream. There is a very real sense of satisfaction walking to your mailbox… trimming your lawn… cleaning your gutters… painting your nursery… I love pulling up to my home after work. I like to water my front by hand. I have sprinklers and we get plenty of rain (NW Arkansas). But, I do it so I can look at my home and appreciate the sense of success and pride that my Grandparents instilled in me. I’ve owned quite a few homes. And standing there watering, I can see every front door I’ve owned. Watch the neighbor kids play and see my own as they grew….

              I love this country.

              Liked by 1 person

      • starfcker says:

        Sundance. Absolutely correct. Real estate prices will be normalized only when average mortgage payments (PITI) are about 35% of average wages. And you can take the currently exempted industries out of that average. Government, medical and education are headed for steep wage declines. It’ll be ok, as long as the cost of living comes down. Prosperity=abundant employment, low cost of living. Simple

        Liked by 4 people

      • What about ag land sundance.

        What is going to happen to it?

        Liked by 2 people

        • sundance says:

          Not sure. Just a guess. If we decrease our exports, AG land will probably devalue. If inflation on domestic products drops AG land will probably drop in value.

          Go back and look at the inflationary chart. Now reverse it. Everything that was subject to inflation (exported consumables) will begin dropping…. Everything that was subject to deflation (imported durables) will begin rising.

          Conduct yourself accordingly.

          Liked by 3 people

      • repsort says:

        This will put existing homeowners underwater and unable to sell when they need to… talk about a ball and chain. That’s gonna hurt, but it’s a necessary correction that needs to happen.

        Liked by 1 person

        • fuzzi says:

          We bought our first house ten years ago, and the value has dropped steadily since 2008. We can’t afford needed repairs, and don’t have enough value in the house to get a homeowner’s loan.

          The roof is good, the heat pump is new, the rest will have to wait. We’ll get by.

          Like

      • muffyroberts says:

        You really think that? Because I don’t think home prices will fall until the interest rates reach 8%

        Liked by 1 person

      • anthohmy says:

        So watching Silicon Valley after arriving in 1998 and hearing everybody say there startup was going to make money on ‘advertising’. Eventually started thinking ‘there are only so many ad dollars in circulation, they can’t all survive on that’. noticed the home values kept going up and that after dot.com bubble burst, when it seemed like it was going to go south, it kept going.

        Then I realized everybody had been and still was getting home equity loans on the increased value of their house and buying SUV’s and big screen tvs and gadgets, which I thought might be fueling an economy which would have otherwise floundered then.

        Then along comes round 2 with FB worth billions before ever turning a profit and all these other tech companies generating paper wealth the early birds were cashing out of. Am living with original homeowner of home purchased when it was still orchards here. The value of the home doubled between 2008 and now to over 2M for a 2k ranch on a postage stamp in a neighborhood of exact same and a freeway right behind it. Good schools, but heck that the 1.25M extra and send your kid to private school.

        Interesting thing is the entire neighborhood is full of first and second gen immigrants mostly from China and India, only 2 original neighbors left on street.

        Besides advertising new tech economy is surviving on the subscription model. I can no longer buy my software, I have to subscribe month after month and have nothing at the end, like leasing a car. As an early adopter, also was early to realize subscriptions were killing me and started moving towards products like Affinity Photo instead of Photoshop, etc. Now every new product I see is subscription based, unsustainable as little subscriptions start to add up to as much as health insurance. That may start to catch up to itself for dotcom bust 2.

        I’m wondering though, only peripherally versed in this subject by casual observation, will the Main St. focus and retooling also be more of an opportunity for investment in real property such that the VC’s now investing in paper and some 20 year old will choose to invest in a new printing press or storefront on Main Street?

        Won’t the stock market feel all this and won’t the housing markets affected by tech settle down on that basis alone? Didn’t other communities start to read about the astronomical values in Silicon Valley and start pushing things in that direction to the degree possible.

        And somewhere in the middle of all this wasn’t there an appraiser working with a banker who agreed to elevate the value of all these properties in order to make the mortgages large enough to be profitable with a lower interest rate?

        Also I’ve always been confused. If they just paid off the percentage of bad mortgages in 2008 as the bailout and that was the ’cause’ of the economy crashing, wouldn’t that have fixed things right away? One day i was looking at new home sales during that time and it was weird, construction had already slowed down and there was excess inventory a few years before Citibank and cohorts publicly realized that law Bill passed on his way out was leading to a problem. Not that many new mortgages were issued, not enough to cause multi trillion dollar global chaos considering only a percentage of them were bad loans.

        It doesn’t make sense. Or I just don’t get it.

        It’s very interesting to watch Hillary during her pink pantsuit interview back in the 90’s, explaining the Savings and Loan crisis and how the lack of federal regulation and oversight contributed to a certain environment. Then she got a deer caught in the headlights look at it was meant to explain her involvement with a failed savings and loan and geez weren’t they setting up the same to happen again on their way out the door?

        Totally Machiavellian, but she also talked about health care that day, Duly noted Podesta was ready at the helm to swing back around with Citibank execs and cleanup the mess and leave the bailout package in the federal budget for the next 8 years.

        Sorry for long post, but this housing thing is important to understand. The kids are looking at a price reduced 699k house in So California right now.

        Liked by 3 people

        • Great comment, anthohmy! All good points to ponder. My daughter, the real estate genius, refused to buy (get a mortgage on) real estate in California. She and hubby and kids moved many times over the past 20 years and she bought houses in Wash. State and Utah, but never Calif. – whether north or south part of the state.
          She finally broke down about 10 years ago and bought a nice house in Joshua Tree for about $90K, but recently became convinced that her original opinion of Calif. was correct, so just sold the place … for $400K!
          However, she is also convinced that inflation, perhaps massive inflation, is on the way, so for the first time she is going into debt to buy residential real estate as an investment property in another state. Of course, she still owns her home free and clear.
          Everything she knows about real estate she got from long conversations with her realtors, personal experience, and from reading this long-running blog below:
          http://www.doctorhousingbubble.com/real-estate-is-not-local-top-10-housing-markets-2016-prices/#more-8912
          I consider the good Dr. Housing Bubble the Sundance of real estate. He analyses the micro-economic climate, while our Sundance is analyzing mostly the macro-economic picture. Incredibly good information.
          Thanks for opening up this topic, Sundance! Now is the time to think and plan, not when the S hits the F.

          Liked by 3 people

          • anthohmy says:

            The risk of an earthquake wiping everything out when nobody can get insurance is the best argument against real estate in California.

            I came from a family where polite people don’t talk about money, and the women went to school, but marriage was the end game. Took me years to even begin to think things out, wish I knew then what I know now…

            I’ll dig into Dr. Housing Bubble. Thanks!

            Like

      • pawatcher says:

        Property taxes will not decline because of lower home prices for the already homeowners. Not a good position for the older population: mortgage paid, property taxes twice as much as mortgage used to be. Add the increase in Medicare without an increase in Social Security benefits and the oldsters are in a pinch.

        Like

    • rsanchez1990 says:

      I’ve been seeing articles pop up on ZeroHedge with increasing frequency talking about how prices in the luxury home market, and rents of luxury apartments have been falling rapidly in recent months. I think this will eventually spread to the rest of the housing market. It won’t ruin the real estate business, just open it up to more people.

      Liked by 5 people

  11. Stringy theory says:

    Speaking as someone who once had a 14% mortgage, interest rates today, even if the fed does a bit of increasing, will remain low by modern historical standards.

    Liked by 5 people

  12. Lisa Reynolds says:

    Another element I want to toss into the mix here, and one that will influence this tripwire, is the fact that many foreign companies are buying up land and property. If you need evidence of this, look no further than Texas!

    So although housing (and land) prices may become more affordable, Americans will not be the only ones (or possibly the main ones) buying up those properties. I wish we could keep our land in American hands, but it is a commodity that anyone with money (and soon, a U.S. passport) can buy.

    Liked by 5 people

    • M. Mueller says:

      That should be changed now. In many countries, you have to be a citizen to own land. Why would we sell our country to non-citizens!

      Liked by 5 people

      • Foreigners can form American corporations and buy land through those companies. Passing laws to stop trade is not a good way to deal with a problem. Trump’s way – jobs, jobs, jobs, is better. I don’t know anything about residential or commercial real estate, but I do know a little bit about agricultural land ownerhship.
        Anyway, in my county, Danish families have bought farms from aging farmers whose kids were talked by the public schools into leaving agriculture. The Danes are great! And their kids WANT to run the farm when their parents age out (which is actually never in most farm families).
        Some French people have bought ag land here and are planting vineyards. If the need to flee France arises, they will be ready. An Egyptian family also has established a vineyard here, too. His daughters are drop-dead gorgeous! I think they are Christians.
        The great thing about farm land is that, to succeed, you have to be smart and able to work very, very hard. The best kind of immigrant, IMO.

        Liked by 2 people

  13. youme says:

    Privately owned housing starts/30 year fixed rate mortgage average

    https://twitter.com/jmanfreddi

    Liked by 2 people

  14. carnan43 says:

    It would be great if more you afford to purchase a home. The reality is in too many areas you have to also content with onerous property taxes and crushing land use laws. When you control the amount of new construction via land use regulations it artifically inflates home prices. I live in one of those hell hole marxist’s paradises called Oregon.

    Liked by 5 people

  15. golfmann says:

    The damage dome to rigging and destroying the old Savings and Loan industry has been and is incalculable to American life AND savings. Just look at saving rates since Banks got them out of the way. Only good thing is they are forced to choke on these artificially low loan rates they can charge.
    I hope it bugs them every day…

    Liked by 5 people

    • WSB says:

      I would really like for good sturdy S&L’s to come back. And I advocate for Social Security to be decentralized, so your account is at your own local bank. 20% available for investment, whether it be the down payment for a home or other investments.

      Liked by 3 people

  16. MrE says:

    Watch out for Fannie Mae and Freddie Mac! Two of the murkiest places in the swamp (aside from our politicized intelligence community). Those folks will not be happy.

    Related note: The student debt bubble needs to be dealt with, too, and quickly. Even if kids get a worthwhile degree and can find good full-time work, they’re still graduating with the equivalent of a mortgage in federal loans. That’s what is really holding the young folks back. Get them into the market!

    Liked by 4 people

  17. Doug says:

    interestingly I think if one were to address student loans and the effect that has had on young people and families and their ability to afford starter homes. address this issue and home ownership will increase rather quickly.

    Liked by 3 people

  18. litlbit2 says:

    To further the declining home prices is the fact that the American population has not increased the birth rate for many years. The population increase are in the immigration numbers, legal/illegal, as high paying jobs left the USA. Furthermore as the baby boomers die off, millions of homes will hit the market as their offspring will not hold two or three homes. The younger generations owe college debt, maybe living with parents, do not have savings account or high paying jobs. They can not afford to leave their parents or purchase homes without being in a non liquid position. Even if many can qualify for home loans the numbers of buyers will not match supply. Considering the above and adding higher interest rates, a stronger dollar and a generation collecting lower wages, shorter work week among many other hidden bubbles it will become a wake up knowledge for many going forward.

    However, a few years out and with the success I believe the Trump administration can bring to Americans a economy raising all boats! Do not get discouraged, we have been going down hill for a long time. Work, family, savings, faith will return.

    Liked by 5 people

  19. SLM says:

    I think that one of the big reasons that young people are not buying as many homes is because they think they are “too good” for a starter home. Some of them want their first home to have all the bells and whistles that most people cannot afford until they are older and more financially established.

    So, rather than give up the luxuries of Mommy and Daddy’s home, they choose to just not buy a house.

    My husband and I bought our first home many years ago, and it was not our dream home by any means. Neither is our current home! But we worked on our first home and when we sold it, it was much nicer and had upgrades that most comparable homes didn’t have. Now we are doing that with our current home. Most young men nowadays don’t have the skills to do any renovations, so many young people will not even consider a home that isn’t turnkey.

    As a mother of three daughters, I can only pray that my girls marry a “man’s man”; someone who can do plumbing, drywall, etc. It certainly is a valuable skillset to have. Probably their father should start teaching them now, because I have little hope that the men of their generation are going to be able to do much when it comes to home/car maintenance. But I digress.

    Bottom line is, many young people are spoiled and aren’t willing to buy a starter home that is in their price range. They want and think they deserve perfection from the start. And yes, student loan debt etc does play into their inability to save for a down payment. But the fact is, if you have good credit, you don’t have to have 20% down. The money these kids spend on their cell phones, eating out, the newest gadget–it all adds up.

    If they would learn to go without and be frugal, I think they could afford to buy a home. But why bother if mom and dad will let you live with them forever! The concept of delayed gratification has certainly fallen by the wayside with the millenials and the generation that came after them (my children included). I thought I was rich when my first house had an attached garage!

    And I don’t care if I sound like a grumpy old lady–what I’m saying is, sadly, true. I worry every day that I’m spoiling my kids. I want them to know that you have to work hard for the things you want–you don’t just automatically deserve them!

    Liked by 15 people

    • justfactsplz says:

      This comment wins this thread. You are so right. Many years ago I bought my first used home when Cape Canaveral laid off a bunch of people and we had just moved to Brevard County. I was so happy. It too had a single attached garage. It was a modest home but we were thrilled to get it as we had a baby on the way.

      Liked by 3 people

      • Your tour Guide says:

        Anybody else find themselves screaming at the spoiled brats on all those HGTV shows?
        The little wonders all act like it’s the aplocalypse if there’s no granite counter tops, stainless steel appliances, and if the kitchen is past half a decade old.

        Liked by 6 people

      • SLM says:

        Same situation here–baby on the way! We were beside ourselves with happiness and so proud to have bought a home. I grew up in a 1000 Sq ft home with one bathroom. What riches that my starter home had more than one bathroom! Haha
        But we were content with our first home. When we got a little more financially secure, we bought up in our late 30s.
        It’s hard to feel sorry for these kids, although I do realize they face challenges we didn’t, the most concerning being the cost of college and the cost of healthcare. I am so glad that Trump won and I pray that he will be able to do something about these issues. The cost of college is absolutely ridiculous, and people are beginning to realize it’s not always worth it. A generation is being held hostage by student loan debt, and starting off adulthood behind the 8 ball financially. I say bring back apprenticeship programs–there is absolutely no shame in learning a trade as opposed to going to college. You can make a good salary, too.

        Liked by 4 people

    • anthohmy says:

      I’ve been watching the effect of inheritance or potential inheritance on a family from close up. Remember stuff happening in both my parents families that is coming more into focus.

      It is turning people into vultures, causing loss of family relationships and whoever wins through the sleight of signature or other shenanigan does not live happily ever after nor do all those who scramble for some of the other crumbs from the table.

      After watching my mother’s sisters squabble, I always said to myself that didn’t want anything, to the point of hurting my mother in the end as she asked us for a list of what we wanted and mine never arrived. I didn’t think about that!

      Giving too much doesn’t seem like a solution, either, which I have definitely seen in my children, on a much smaller basis. I had to work hard and am deeply grateful for that.

      Liked by 2 people

      • WSB says:

        My great aunt invested like a shark and made a lot of money with small starter companies like Xerox, Polaroid, and IBM. She passed away in the late seventies and was very smart about the bickering she knew would occur.

        Other than a few willed items for sentimental purposes, she split the proceeds of the home equally amongst her nieces and nephews and very smartly decreed that all items would be auctioned off, with the family able to purchase anything they wanted in a pre-sale by the estate coordinators.

        This solved everything because although the ‘prices’ were low, everyone who wanted anything was equalized. I do not remember anyone fighting over pieces but believe there would be an auction of such items among family members. I still have the 11 pieces of furniture I purchased. This was my biggest investment prior to finding a home for it all!

        Like

      • anthohmy has some good points, but I would like to add that parents of young kids can (and should) teach them to work hard and STILL leave them a sizable sum of money without causing ructions in the family. It is the family culture that does it, not the number of dollars.
        I’m very, very grateful to my in-laws for leaving my DDH and me a nice, but not huge, inheritance of all stock and cash. No real estate. They had gotten rid of all their “stuff” and rented apts/rooms their last 10 years. There was hardly any squabbling.
        My own parents didn’t have anything to leave (worked all their lives, didn’t accumulate capital) except good examples, esp my Dad, who started joint bank accounts with all four of us “kids.” When he died, it was ours. Period. End of story. No will. No inheritance. Just cold, hard cash. Small, but important to us.

        Liked by 1 person

        • anthohmy says:

          Just watched a sibling swoop in on the others during end of life and rewrite a living trust, or thought they did, but the parent put a bunch of tripwires in, discovered 10 years later, lol. One day I insisted or reading the whole pile, probably under the influence of CTH and there it was.

          Parents of older kids can still swing back around for them, I’m discovering. Learn, teach…

          Like

  20. ruralnc says:

    At this time which is preferable? : 1) Pay off mortgage from investments 2) Refi.

    Like

  21. muffyroberts says:

    Three are a lot better things to invest in, than real estate, at this time in history.

    Liked by 1 person

    • True, but a home is not an investment, contrary to what some people tell you. I had to face the rent or buy decision a few years ago after owning a home, debt-free, for 30 years. After hearing news stories about rents going up, and hearing a young man who was upset because the house he was renting was being sold out from under him (elderly owner), I decided to buy.

      And I had money left over from selling that debt-free house, so I am again living rent-free! Property taxes are bad, of course, and repairing normal wear and tear can be costly, but one can plan for that – it is under MY control.

      You can’t buy the peace of mind gained from owning your home free and clear!

      Like

  22. muffyroberts says:

    Back in the early 90’s if you got a 7%. Interest rate on the house you just bought, you would be thinking you got the rock bottom price.

    What gets up will come down 7% looking good yet again.

    It is a realistic interest rate for byying a house.

    Liked by 1 person

  23. usnveteran says:

    I have concerns about how the housing foreclosure phenomenon contributes to these market fluctuations. It seems that the 2008 American housing market got slammed with foreclosures – and there doesn’t appear to be a decent ‘recovery’ from that.

    Which, by the way, I point out that thousands of Americans have become homeless, but not so much for immigrating-refugees or illegal aliens.

    Sure enough the job losses were a huge contributing factor, however, even after obtaining job security, it will take several years to compensate for a ‘come-back’ especially after ‘forced’ or ‘corrupt practices’ foreclosures occurred with mortgage companies and/or questionable State tax lien practices which disallow any ‘due process of law’.

    Just sayin’ …

    Like

    • Actually, most mortgage holding banks held off on foreclosing b/c it would have looked very, very bad on their P&L statements. The crisis stories you read were rare occurrences, ginned up by the leftist media which is always in the market for a good victim story.

      I remember reading one sob story in the Sacramento paper. The comments were brutal! “What? They didn’t know they’d have to make monthly payments???” etc. No sympathy at all.

      Liked by 1 person

      • anthohmy says:

        I have a friend who was a diligent saver for such a time as this and swooped in and bought two houses during this period, for cash during the foreclosures- one close to Sacramento for 100k, renters pay double the mortgage and on paper it is worth triple that right now. So there were some foreclosures out here.

        Like

      • usnveteran says:

        Yeah, the exceptions being Citi and Wells Fargo (to name a few). They got sued for their corruption in the mortgage violation rulings and ‘eventually’ lost. Of course the lawyers got paid very well before the homeowners got anything. Several of my neighbors did not have ‘fixed’ rates and went from about $900.00 per month to $2000.00 per month during one season. Ouch! Just from my driveway I counted 9 property for sale signs. It was a little unnerving.

        Like

  24. Bob says:

    The dirty secret of the Ponzi scheme banking industry is that housing prices must generally increase and inflation must continue to prop up the scheme. This is achieved through ever increasing population and printing money. Booting 20 million illegals will decrease home prices. Bankers will not like this one bit.

    Liked by 2 people

  25. missmarple2 says:

    Associated with this is something I have been paying attention to for a few years: minimalist decor and the tiny houses movement. It’s in all the decorating and home improvement magazines, and has features on HGTV.

    My sister says (and I agree) that it’s a concerted effort to make Millennials feel virtuous and content with their lack of funds. They can’t afford a regular house, so buy what is essentially a garden shed on wheels, with fold-out bed, 2-burner stove, and a shower (no tub). If you’re in a house and apartment and cannot afford framed art or decent furniture, tack a piece of fabric on stretcher bars and use old crates spray-painted white for shelving. It’s “re-purposing!”

    I am all for frugality, but there does seem to be an effort to push this. It cannot be from advertisers, because furniture companies and such want you to buy new. I personally agree with my sister in that it’s a propaganda effort to keep younger people from asking “Why can’t I afford a nicely decorated house?”

    Another reason I am glad Trump got elected is that some of this will stop. I LIKE seeing the French antiques (including an original Renoir in Melania’s office). I like that he loves property and beauty. I am hoping this translates into better design and a more elegant lifestyle for people (within budget, of course).

    This isn’t economics-oriented as much as general society trends, but it sort of is in the same area, so hope I didn’t sidetrack the discussion.

    Liked by 4 people

  26. Grace Anne says:

    So here is a me, me, me comment. Apology in advance. I am hoping to sell our home in the next few months and down-size by 50%. I am hoping to pay new one off with selling of current home. We live in a booming community in central Texas. Hoping for the best and know the uncertainty. So who knows? Better days ahead for all of us is my prayer for America. May we leave a better America for our next generation and the next. What we do and fight for matters.

    Liked by 3 people

  27. CatherinesMom says:

    So I’m a bit concerned. From my prospective, we purchased a 12 acre property with outbuildings and a solid house but stuck in the 1970’s decor fro 150K, well below any of our neighbors. Neighborhood home prices average 220K at the very lowest. Is my house that I play on renovating to this century not worth doing upgrades as my home value will be plummenting? Can someone kindly explain this in baby steps? Thank you.

    Liked by 1 person

    • dutzie60 says:

      Is it your home or an investment? First decision IMO.

      Liked by 2 people

      • CatherinesMom says:

        It’s our home, our only residence. We plan on living here until we both part from this realm. Great question. I see how that pertains to SD’s post a bit more.

        Liked by 1 person

        • dutzie60 says:

          Then I would do whatever needed for me to enjoy it until I left this realm. We only get one go around so might as well enjoy it as best we can. Good Luck and happy renovating! 😀

          Liked by 3 people

        • sundance says:

          Renovations are currently a great idea, if you are committed to staying in the house longer than 5 years from this moment.

          Over renovate it to enjoy it completely if it’s your last house ever.

          Liked by 3 people

          • WSB says:

            But don’t overdo it if you are ever planning on downsizing. I meet a lot of people who cannot sell their house because they made odd renovation choices. They so over personalize it without a professional sounding board to guide them. Prospective buyers just see $$$$$ to make changes to suit their own personality. Straight forward and high quality simple planing, fittings and fixtures.

            In 2009, I built out a lower level, and it has greatly increased our property’s value when others have fallen. We also live in a area that has become very popular for tourism, so the values have increased by 15%, when more expensive neighboring areas have dropped by similar percentages.

            Like

        • wondering999 says:

          If you plan on staying in your home, talk with some caregivers/assisted living people about the layout. There are benefits to particular layouts with wide enough doors that will accommodate wheelchairs, don’t have steps, bathrooms accessible etc. It’s a pain in the tail to have to renovate when you actually NEED those sorts of features; better when it’s part of the planned layout.

          Liked by 2 people

    • Totally agree with Wondering999 comment below. Pretend you are going to take care of each other in wheelchairs. Your home will be made for your latter years and have great value for those baby boomers coming behind you.

      Like

  28. pjb535i says:

    Rising interest rates will swamp those current homeowners with poor credit who are already overextended with debt. This will put additional upward pressure on rental prices. The recovering economy will provide buyers for uptick in housing inventory. New construction will handle difference. As it should be. #MAGA

    Liked by 1 person

    • Unless they have a variable interest loan, changing interest rates should not affect monthly payments of mortgage holders, regardless of credit rating either. Of course, pjb535i, you may be talking about a mortgage holder who is looking to get another bigger mortgage on a higher-priced home.

      IMO, people with mortgages should not be referred to as “homeowners.” It is misleading.

      Oh, and also, as a geezer, I can say I despise the idea I just heard on the radio this morning of “getting cash out of your house.” The worst idea EVER. People using their houses as ATMs is one of the bad practices that got people in trouble the last time around – not the big bad bankers, but stupid, greedy mortgage holders speculating on real estate!

      Sorry for the rant.

      Liked by 1 person

  29. willvecchio says:

    Yup, its happening already. Just checked USAA home valuator. It says my home value has leveled off and that recent home sale prices here in Cape Coral, Florida have fallen.

    Liked by 1 person

    • sundance says:

      Unique area. You are an “epicenter” community tracked closely by think tank economists. Very unique area.

      The epicenter of the housing crisis began in your region in late 2005. It took until 2007/2008 for it to show up nationally.

      Epicenter markets are the leading edge of national outcomes. Very unique. Epicenter markets are first to fall, first to level, and first to rise…. What’s happening around you right now will take 1.5 years to reach mainstream.

      Liked by 3 people

      • RedBallExpress says:

        I could tell when the housing boom ended in NW Wisconsin. The surveyors quit trying to steal our land, the beep, beep, beep of backing up trucks and bulldozers quit and the local county quit issuing building permits more than a year before the idiots in Washington figured out the party was over. Within five years almost a dozen banks in the area were Kaput.

        One Friday the FDIC threw everyone out of our local small town bank that had bet millions on many housing developments in our rural area. They lost 11 million on a single 400 acre project that today has four lane roads, fire hydrants, city sewers and 3 completed houses that are 10 feet apart. The end came swiftly. Oh yeah. The crooked president of the bank that lived so high on the hog? He walked away without a scratch and the blessing of the local paper.

        By the way the local contractors are digging basements like crazy right now despite more than 3′ of frozen ground.

        Like

  30. Japan has three generations mortgages to make housing affordable. Norway is right behind them. I pry that’s not an omen.

    Maybe a big rest is what we need in America. The derivatives are around $700 Trillion. Wonder how that’s going to end. IDK. I am a stable long term person who can adapt quickly to change. RE is not liquid, but I have always believed in owning something with intrinsic value, land, gold, business, farms.

    Liked by 1 person

  31. chojun says:

    Sundance,

    “The Space Between” the two economies reminds me of one of my favorite songs and its accompanying music video, which I believe carries a very strong metaphor that describes the current state of affairs in Main St. vs. Wall St. (K St., DC).

    The song is “The Space in Between” by How To Destroy Angels

    In the video, a couple lies murdered and their killer sits unaware/oblivious/uncaring about their demise. He destroyed their lives and set their place on fire, carelessly oblivious to his own impending demise.

    The same applies to the current state of affairs in DC and Wall St. They destroyed the lives of millions of Americans for their own purpose, unwilling or unable to care about their destruction, and how the series of events they set into motion would result in their own destruction.

    Arms entwined in a final pose
    Narrative drawing to a close
    Still remain the things we couldn’t kill
    In your eyes I can see it still

    How we choose the framing of the scene
    Hate begins to spill across the screen

    Blinding light illuminates the scene
    Try to fill The Spaces in Between

    Liked by 1 person

  32. Southpaw says:

    Debt for kids is in part due to the values you try to impart to them. Just graduated second from college, both left debt free. One with an MBA all on scholarship, the other works at Chil-Fil -a. Both got Dave Ramsey books as graduation gifts.

    If only we could get a president who understood real estate and debt we might have a shot.

    Liked by 3 people

    • WSB says:

      Glad to hear about your kids! Dave Ramsey is an idol!!!!!

      Well, your wish has come true! Our new president understands global real estate and complex management systems in his sleep. Along a lot of other things! MAGA!

      Liked by 1 person

  33. asawasa says:

    i can personally attest that my family has contributed to this trend when we sold our house in October. Take that Obama and if true about this projection in 18 months it will be a good time for us to buy a house.

    Like

  34. Dare I proffer another possibility?

    I base my hypothesis on President Trump (I love saying that!) being arguably the most real estate friendly POTUS in my lifetime (age 55), an economic expansion so breathtaking that even the most leaky dinghy will be lifted by the rising tide of real wealth, and productive Americans love of home and land ownership.

    I believe there will be a restoration of tax laws that favor real estate. Accelerated cost recovery rules like Ronald Reagan gave us, and restoration of incentive to own second and third homes.

    I believe that individual risk will be incentiveized: risk being defined as an individual’s empowerment to start a business via tax credits, regulatory relaxation, and also a robust consumer demand for American goods and services. Trump is totally “buy American. This you can believe.

    Real wealth will be created by production and it will be in the hands of the many, not the few. Typically a gusher of wealth first manifests in restoration and repair, then investment in more production, then deleveraging, then luxury spending.

    I made my wealth in the 80s. It was so easy then! I have personally lived through the Jummah Carter malaise, and the Reagan expansion. I watched and participated in what I have described above in real time. There is going to be BIG money made by MANY people- not just the “connected” ones.

    For the above reasons I am bullish on quality real estate. .

    Liked by 1 person

    • I believe in your assessment. My one concern is the money bubble. All developed nations are living on fiat and debt. Something’s gotta give. I do not know what that looks like. But when it does blow, I want real assets, paid in full land being my primary.

      Location, view and location. Stay AWAY from low and water heavy land.

      Like

  35. TrustyHaste says:

    Explain this to me in the simplest terms, please. Why does Sundance say “traditional home owners?” As opposed to investment or flip-type owners? I am so confused. Also, how will this effect the average city homeowner who is halfway thru a 30 yr mortgage and wanting to move to a larger house and have some land and space? Will country houses go down in price?

    Like

  36. EJ says:

    Sundance – what sources would your recommend for further reading regarding (not just housing) but the current economy in general?

    Like

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