If you trust Zillow mine is already down 20% the past couple of months, still up over 50% from the start of COVID though.

Well, it looks like I bought at or near the top. Good thing I plan on being here for a while.

On the bright side, I also sold at the top and was able to lock in a pretty good rate. Looks like it will be a while before we see sub 5% again.

YouBet said:

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We are selling right now. It's not looking great, Bob.

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Where are you? Market still pretty strong in Houston. We're passively looking and any house that we would consider is gone in a week or two. Still surprising to us to see a house on the market for a month....

I think it's smart to wait depending on where you live.

Fortunately we don't live in a big city and our housing markets didn't go completely totally bonkers.

Bide your time, something has to give one way or another at some point.

The difference between a $300K mortgage at 3% & 6%, with a 700-719 credit score, is $6400/yr, not including taxes & insurance.

So the real question is on what payment amount can you afford. Do your budget based on that.

If I remember the area you're looking at, I would be surprised if that changed.

htxag09 said:

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YouBet said:

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We are selling right now. It's not looking great, Bob.

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Where are you? Market still pretty strong in Houston. We're passively looking and any house that we would consider is gone in a week or two. Still surprising to us to see a house on the market for a month....

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North Dallas. Most around us dropping their price. We are tracking around 25 homes in our rough comp range. Two have gone under contract and then pretty immediately gone back on market with price drops.

contracts Falling off due to appraisals being low or what?

Market down another 700 pts. Awesome.

I already have my floor price in mind that if we don't get it I'm just going to pull our house and we will just carry both homes and wait until recovery (assuming we recover anytime in the next 1-3 years).

aren't mortgage rates set by the 10 year Fed bond?

the 2 and the 10 year bonds have been flying upwards the last 6 days

4.23% today on the 2

What drop in prices would define a crash? 10%, 20%, 50% reduction in asking prices? Just curious if there is a real definition, or what people think that looks like.

Tex117 said:

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I always say this BUT...

Wait wait, I was absolutely assured by RE people that prices would not come down...grumble grumble supply something or other.

I don't know why it irks me that RE people think that their asset class is somehow immune from macrotrends in the economy. Especially one that is so closely tied to monetary policy. Just boggles my mind.

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What RE people are you referring to. Name them.

Sold for asking in April in GOOF area of Houston, which is great since we overpriced to test the still booming madness. If we would have decided to sell earlier and been ready earlier, we could have been in the bidding war situation, but still happy.

Looks like we will be waiting a while to re-enter, but we've seen longer listings and more unlisted builder-bought lots open up of late. Still waiting for the interest rate effect to dawn on sellers who are slow-playing their price drops. It may take a while to realize that they can't overprice any more because there are still people paying it.

That worries my wife, but I told her that where we may see our opportunities will be with the builders who can't risk building spec houses and may not be able to sell their customs at what they need, so they'll start selling their lots that they've been hoarding. Seems to be heading that way. We may buy a lot and hold it until things really turn south and the builders' prices come back to Earth.

Tex117 said:

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I always say this BUT...

Wait wait, I was absolutely assured by RE people that prices would not come down...grumble grumble supply something or other.

I don't know why it irks me that RE people think that their asset class is somehow immune from macrotrends in the economy. Especially one that is so closely tied to monetary policy. Just boggles my mind.

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Yes, that is true but the supply is still constrained. Millennials are just now having enough money for down payments into a huge demographic entering the market of homebuying. We didn't build enough SFH for millennials to buy homes and Boomers aren't downsizing en masse. As the monthly cost of ownership rises with interest rates, prices will eventually fall because markets like to be at equilibrium, but it's not as simple as saying the housing market run up was merely because of cheap money.

Diggity said:

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so your strategy is wait for the builders to sell their lots because they can't make the numbers work (presumably with a lower cost basis) and then hire a builder to build you a house, because you can make the numbers work? Seems like a stretch.

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Sort of. Builders are holding lots (and paying holding costs) that they bought in hopes of building specs and customs on all of them. With demand down and their costs up, they may have to unload some lots and build one or two homes at a time. (I'm not talking the big burb builders, I'm talking the custom ITL builders).

We can probably get a decent deal on a lot and they can still sell it for profit, since it was scooped up for cheap on a cash deal. We buy and wait. Seems that builders were allowed to name their sq. foot price for years, but may not be able to now. May not be able to ask near that a year from now. Then we build at a better price.

So not today's numbers, next year's numbers.

HtownAg92 said:

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Diggity said:

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so your strategy is wait for the builders to sell their lots because they can't make the numbers work (presumably with a lower cost basis) and then hire a builder to build you a house, because you can make the numbers work? Seems like a stretch.

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Sort of. Builders are holding lots (and paying holding costs) that they bought in hopes of building specs and customs on all of them. With demand down and their costs up, they may have to unload some lots and build one or two homes at a time. (I'm not talking the big burb builders, I'm talking the custom ITL builders).

We can probably get a decent deal on a lot and they can still sell it for profit, since it was scooped up for cheap on a cash deal. We buy and wait. Seems that builders were allowed to name their sq. foot price for years, but may not be able to now. May not be able to ask near that a year from now. Then we build at a better price.

So not today's numbers, next year's numbers.

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I think the only flaw in your line of thinking is that building prices will decrease substantially.

History tells us they tend to go in one direction. I would be surprised to see significant drops in construction costs.

Do you really think higher end custom builders are holding that many lots? I know some do - but that's generally not their business plan. I do believe lots may loosen up and become cheaper if the markets continue down this current path...but I just don't think it'll be because of custom builders selling them cheap.

Totally uneducated opinion - other than I know lots of custom builders and those that do business with them.

MAS444 said:

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Do you really think higher end custom builders are holding that many lots? I know some do - but that's generally not their business plan. I do believe lots may loosen up and become cheaper if the markets continue down this current path...but I just don't think it'll be because of custom builders selling them cheap.

Totally uneducated opinion - other than I know lots of custom builders and those that do business with them.

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Where we are looking there are a ton of lots that are not for sale, with a builder's sign on them only. Some have no signs at all. We talked with a realtor just last weekend about certain lots that are valued in the 3's and 4's, and she told us that they were owned by builders looking to fill with $1.5M+ houses.