Author Topic: Global Recession?  (Read 12508 times)

0 Members and 1 Guest are viewing this topic.

Offline Ready2Downsize

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 15
  • -Received: 266
  • Posts: 1830
Re: Global Recession?
« Reply #60 on: March 25, 2022, 01:23:12 PM »
This tidbit caught my eye this morning:

In Phoenix, 32% of single-family purchases in January were by investors with fewer than 10 properties, up from 28% a year earlier, according to data from John Burns Real Estate Consulting. By comparison, large investor purchases accounted for 12% of transactions.


https://www.bloomberg.com/news/articles/2022-03-25/real-estate-investing-homeowners-use-cash-out-refis-to-buy-rentals

So 44% of all single-family homes in Phoenix are purchased by investors.  A lot of this is funded by cheap cash-out refi's on other properties they own in other parts of the country (the point of the article).  If investor demand dries up due to a combination of higher mortgage costs and renters missing payments due to nationwide job losses, it's going to have an outsized effect on the Phoenix market.  This cycle has played out repeatedly, which is why Phoenix is more of a boom/bust market.

Phoenix has been boom and bust because they didn't have job growth. They have that now.

Alot of those investor homes were bought up by companies that rent out homes and it was cheaper to buy a house than to rent it when rents were rising. Now that rents are higher and rates are higher, they will just hand onto them. These are BIG companies that rent homes nationwide. It's like saying well the Irvine company has all these places they rent out and when rates rise they are going to have to SELL baby!

Maricopa is the fourth largest county in the country and there is a big difference between downtown phoenix and the area that is included in Phoenix metro. It's like saying Orange County is made up of Santa Ana, Garbage Grove, Anacrime there so Irvine must be overpriced and is headed for a cliff!

During the pandemic, The OC lost population (small amount) along with San Diego, Los Angeles and the Bay area. Maricopa county population went up by 1.7% and it has been going up for years. Phoenix/Chandler/Mesa went up over 2% and indeed the growth in Arizona is not in Phoenix. Phoenix is a lower income area that is built out. The newer areas are growing supported by jobs coming to the state. I know it's weird to think that companies are actually building new factories and offices when you're used to companies reducing their footprint in your state but it does still happen.

If Irvine population went up that much in one year, it would be 6000 new residents. If only 25% of those wanted to buy a house and you used 2000 of the residents as your household assuming some are single, couples and families that would be an additional 500 houses that would have to be built. That is in addition to what is already in demand from household formation and young people entering the market. Good thing the OC didn't see a population jump like that. Imagine the supply/demand ratio!
« Last Edit: March 25, 2022, 01:37:58 PM by Ready2Downsize »

Offline daedalus

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 281
  • -Received: 286
  • Posts: 1026
Re: Global Recession?
« Reply #61 on: March 25, 2022, 05:09:12 PM »
Pretty simple, in an inflationary environment you want to own real assets and real estate falls into that category.

Does toilet paper count? 

Offline Liar Loan

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 812
  • -Received: 521
  • Posts: 2614
  • Don't fight the Fed.
Re: Global Recession?
« Reply #62 on: April 26, 2022, 09:37:28 AM »
If the Fed funds rate reaches 6%, how high would mortgage rates end up going?  Job losses + the highest mortgage rates in a generation will not end well for the housing market.

Deutsche Bank Sees 5%-6% Fed Target Rate and Deep U.S. Recession

The Federal Reserve is likely to need to engage in the most aggressive monetary tightening since the 1980s to tamp down an inflation rate at a four-decade high, which will lead to a deep U.S. recession next year, Deutsche Bank AG economists warned.

“We assume conservatively that a Fed funds rate moving well into the 5% to 6% range will be sufficient to do the job this time,” the authors including David Folkerts-Landau, group chief economist and head of research, wrote in a report Tuesday. “This is partly because the monetary-tightening process will be bolstered by Fed balance-sheet reduction, which our U.S. economics team estimates will be equivalent to a couple additional 25 basis-point rate hikes.”

This monetary tightening and the financial upheaval that accompanies it “will push the economy into a significant recession by late next year,” Folkerts-Landau said, adding Deutsche sees the unemployment ultimately rising “several percentage points.”


https://www.bloomberg.com/news/articles/2022-04-26/deutsche-bank-sees-5-6-fed-target-rate-and-deep-u-s-recession

The following member(s) thanked this post:


Offline Liar Loan

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 812
  • -Received: 521
  • Posts: 2614
  • Don't fight the Fed.
Re: Global Recession?
« Reply #63 on: April 27, 2022, 10:43:48 AM »
Why would home builders be so worried?  Maybe because there are the largest number of homes under construction since 1973?

Looming 'housing recession' has builders appeal to Biden administration

As mortgage rates and home prices reach record highs, the National Association of Home Builders is now calling on the White House to take action.

"We are very concerned that we will have a housing recession, and that this unsustainable, undesirable fact that right now the average American can't afford the average house will continue to get worse," Jerry Howard, chief executive officer of the National Association of Home Builders told FOX Business."We will have a real and unsolvable housing crisis if we don't get on top of it soon."

The letter, signed by over 10,000 homebuilders...


https://www.foxbusiness.com/economy/homebuilders-calling-on-biden-administration-housing-recession-inflation-real-estate


Offline Liar Loan

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 812
  • -Received: 521
  • Posts: 2614
  • Don't fight the Fed.
Re: Global Recession?
« Reply #64 on: April 28, 2022, 09:33:41 AM »
Ruh Roh Shaggy!  US exports are tanking leading to a decline in GDP.

U.S. Economy Posts Surprise Contraction, Belying Solid Consumer Picture

The U.S. economy shrank for the first time since 2020, reflecting an import surge tied to solid consumer demand.

While the surprise contraction adds to political headaches for President Joe Biden, it’s unlikely to dissuade the Federal Reserve from hiking interest rates aggressively to combat inflation.

Gross domestic product fell at a 1.4% annualized rate in the first quarter following a 6.9% pace at the end of last year, the Commerce Department’s preliminary estimate showed Thursday. The median projection in a Bloomberg survey of economists called for a 1% increase.


https://www.bloomberg.com/news/articles/2022-04-28/u-s-economy-contracted-in-first-quarter-on-surge-in-trade-gap



Offline Liar Loan

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 812
  • -Received: 521
  • Posts: 2614
  • Don't fight the Fed.
Re: Global Recession?
« Reply #65 on: May 06, 2022, 12:15:32 PM »
More Retailers Say They Can’t Pay Rent, Even As Shoppers Keep Shopping

Consumer spending is expected to rise this year, but retailers aren't out of the woods yet. Many are still struggling with rents, which have been rising with inflation.

Thirty-four percent of small retail businesses couldn’t make rent in April, up 6 percentage points from February, Retail Dive reports, citing survey data from Alignable. Retailers pointed to inflation, gas prices, supply chain issues, labor shortages and reduced revenues as compounding their financial woes.


https://www.bisnow.com/national/news/retail/retail-spending-to-outpace-inflation-this-year-nrf-predicts-112902

Offline Liar Loan

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 812
  • -Received: 521
  • Posts: 2614
  • Don't fight the Fed.
Re: Global Recession?
« Reply #66 on: May 24, 2022, 12:08:00 PM »
This is the canary in the coal mine.  Get ready for a spike in FHA mortgage defaults.

More Subprime Borrowers Are Missing Loan Payments
Borrowers with limited or troubled credit histories are defaulting on credit cards, car loans and personal loans

The share of subprime credit cards and personal loans that are at least 60 days late is rising faster than normal, according to credit-reporting firm Equifax Inc. In March, those delinquencies rose month over month for the eighth time in a row, nearing their prepandemic levels.

https://www.wsj.com/articles/more-subprime-borrowers-are-missing-loan-payments-11652952602

Offline OCtoSV

  • Yearning for 949 / 714
  • **
  • Thanks
  • -Given: 87
  • -Received: 81
  • Posts: 420
Re: Global Recession?
« Reply #67 on: May 24, 2022, 01:01:22 PM »
today's $1.6M detached Irvine condos will be $1M in a year

Offline Liar Loan

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 812
  • -Received: 521
  • Posts: 2614
  • Don't fight the Fed.
Re: Global Recession?
« Reply #68 on: May 24, 2022, 03:13:59 PM »
today's $1.6M detached Irvine condos will be $1M in a year

It will be interesting to see how this plays out.  The house two doors down from mine is listed at 60% higher than we paid in March 2020, even though our house is 800 sq ft bigger, but not as updated.  Assuming the same down payment amount we used, their monthly P&I payment would be 150% higher than ours based on current rates.  I just can't imagine somebody paying that much for a house given what they were going for only a couple years ago.  I think many people still don't acknowledge how distorted this current housing market is because they are either blinded by greed or by fear of missing out.

Offline sleepy5136

  • O.C. Resident
  • ***
  • Thanks
  • -Given: 7
  • -Received: 56
  • Posts: 818
Re: Global Recession?
« Reply #69 on: May 24, 2022, 03:55:42 PM »
today's $1.6M detached Irvine condos will be $1M in a year

It will be interesting to see how this plays out.  The house two doors down from mine is listed at 60% higher than we paid in March 2020, even though our house is 800 sq ft bigger, but not as updated.  Assuming the same down payment amount we used, their monthly P&I payment would be 150% higher than ours based on current rates.  I just can't imagine somebody paying that much for a house given what they were going for only a couple years ago.  I think many people still don't acknowledge how distorted this current housing market is because they are either blinded by greed or by fear of missing out.
the numbers and graphs that you posted recently are saying otherwise.

Offline OCtoSV

  • Yearning for 949 / 714
  • **
  • Thanks
  • -Given: 87
  • -Received: 81
  • Posts: 420
Re: Global Recession?
« Reply #70 on: May 24, 2022, 04:03:55 PM »
today's $1.6M detached Irvine condos will be $1M in a year

It will be interesting to see how this plays out.  The house two doors down from mine is listed at 60% higher than we paid in March 2020, even though our house is 800 sq ft bigger, but not as updated.  Assuming the same down payment amount we used, their monthly P&I payment would be 150% higher than ours based on current rates.  I just can't imagine somebody paying that much for a house given what they were going for only a couple years ago.  I think many people still don't acknowledge how distorted this current housing market is because they are either blinded by greed or by fear of missing out.
the numbers and graphs that you posted recently are saying otherwise.

I've put a stake in the ground with my prediction. Oh and 7% 30 yr mortgage rate then too. USC, CalBruin, IHO - anyone care to put your prediction on the record?

Offline CalBears96

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 37
  • -Received: 137
  • Posts: 1218
Re: Global Recession?
« Reply #71 on: May 24, 2022, 04:14:18 PM »
today's $1.6M detached Irvine condos will be $1M in a year

Since you asked for my prediction, I'll say today's $1.6M detached Irvine condo will be $1.3M-$1.4M in a year. I think we're reaching the peak soon, then flatten out and will probably drop 20%. It could take a year or two for the 20% to happen.

Offline irvinehomeowner

  • The Unicorn Hunter
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2769
  • -Received: 4099
  • Posts: 23833
  • 3CWG
Re: Global Recession?
« Reply #72 on: May 24, 2022, 05:10:04 PM »
I predict Liar Loan will say he predicted whatever will happen.
Once you go 3-car garage... your junk can never go back.
3CWG: 3-Car Wide Garage
FCB: Foreign Cash Buyer
I recommend:
www.irvinerealtorsite.com
member: Soylent Green Is People (loans/refis)

Offline Compressed-Village

  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 390
  • -Received: 344
  • Posts: 2481
Re: Global Recession?
« Reply #73 on: May 24, 2022, 05:12:25 PM »
today's $1.6M detached Irvine condos will be $1M in a year

I will take a wager on this with you, since you are very confident of the out come?

You can layout the details and the amount and I could add to your proprositions.

What do you say?

Offline USCTrojanCPA

  • Your CPA Realtor
  • Certified Irvine Addict
  • ****
  • Thanks
  • -Given: 2907
  • -Received: 2267
  • Posts: 11173
  • Gender: Male
Re: Global Recession?
« Reply #74 on: May 25, 2022, 08:25:06 PM »
If the Fed funds rate reaches 6%, how high would mortgage rates end up going?  Job losses + the highest mortgage rates in a generation will not end well for the housing market.

Deutsche Bank Sees 5%-6% Fed Target Rate and Deep U.S. Recession

The Federal Reserve is likely to need to engage in the most aggressive monetary tightening since the 1980s to tamp down an inflation rate at a four-decade high, which will lead to a deep U.S. recession next year, Deutsche Bank AG economists warned.

“We assume conservatively that a Fed funds rate moving well into the 5% to 6% range will be sufficient to do the job this time,” the authors including David Folkerts-Landau, group chief economist and head of research, wrote in a report Tuesday. “This is partly because the monetary-tightening process will be bolstered by Fed balance-sheet reduction, which our U.S. economics team estimates will be equivalent to a couple additional 25 basis-point rate hikes.”

This monetary tightening and the financial upheaval that accompanies it “will push the economy into a significant recession by late next year,” Folkerts-Landau said, adding Deutsche sees the unemployment ultimately rising “several percentage points.”


https://www.bloomberg.com/news/articles/2022-04-26/deutsche-bank-sees-5-6-fed-target-rate-and-deep-u-s-recession

They'd be below 6% and the 10/30 bond rates would be lower than the Fed Funds Rate because the yield curve would be inverted because we'd be in a recession at that point.
Martin Mania, CPA
AgencyOne
CA DRE License # 01799007
CA CPA License # 107675
mmania001@yahoo.com
714-747-3884 cell

Often imitated....Never duplicated!
Have license, will travel!

 

Talk Irvine Links

[Recent Posts]
[FAQ / Rules]

Site Supporters


SimplePortal 2.3.7 © 2008-2022, SimplePortal