You continue to compare micro data with macro. 75% of people have always lived paycheck to paycheck.

And macro data shows the bottom 20% of income earners have received the highest increase in real income end the last two years. The top 2% the least.

If you don't want to name it I understand but if you're comfortable with it what community do you represent?

Back to the original topic. The last year has thinned the herd in anything RE related from what I can tell. I've gotten many calls from people in mortgage origination and operations looking for jobs. Realtors, appraisers as has been mentioned and for the first time in a long time title company people are feeling it.

Even the we buy houses letters have slowed to a trickle.

I suspect a high percentage of the cash that was out there in recent years, wasn't actually liquid cash and was tied to equity in other properties. The cost to borrow has to have slowed that down.

Some of it has surely dried up paying off variable rate loans.

And some of it is probably happy drawing 5% sitting in the bank with zero effort.

When rates finally drop, are prices on larger homes in Texas suburbs (specifically Houston) going to shoot up even more? I always thought property taxes in Texas helped keep the overall price more affordable. Seems I was very wrong in this assumption.

We are renting while away for my work, but look on occasion at where we might end up in another 1-2 years depending on how my job goes. And it's shocking to see how much the yearly tax bill would be, even ignoring the cost of a mortgage. Seems unsustainable that people are paying 2.5-3.5% taxes on 650-850k homes. Aside from loan rates how much is this affecting the market, if at all?

I'm worried about this. Prices for the homes we're interested in have continued to rise over the past year and demand isn't going down any time soon. Especially if rates slowly trickle down I don't think that will cause enough new supply to enter the market compared to where demand already is

One of the reasons Ive always been amazed at the number of $600k+ houses we have around. Even if you can pay cash, no way could i permanently saddle myself with $1500 a month in property taxes on a personal home. People have lost their minds. Gives me anxiety just thinking about it.

Houston is my market and I do believe that will be the case. We saw 2-3% price growth roughly in the last two years, so when rates drop, I believe prices will adjust in that 5-10% range. Hopefully they do not get any crazier than that

It came off wrong, didn't mean to brag, just describing the magnitude that the rich will always do well.

I just bought a real estate investment property and my mortgage payments with escrow is right at 6K and a 7.25% rate. Numbers doesn't work, but this place would have went for 1.2-1.5M when rates were 3-4%. Prices will be even higher when rates drop when all of the pent up demand will finally have places to buy.

A young person who wants to live in a major city unless they have parental help or making 200K/yr is not going into a 500K+ home. The numbers are staggeringly high.

Red Pear Realty said:

---

Exactly. I think people will rationalize higher prices with lower interest rates by saying to themselves something to the affect of:

"Well at 7% my payment was going to be $3,000 per month but now at 3% and 20% higher prices it will only be $2,500 so I'm getting a deal."

---

It's turning into this exactly. Not a "I'm $500K in debt buying this house" mindset but a "I can afford to pay the $2500 a month" and get this house. It's like car dealerships trying to sell someone on the "only $x a month, I can afford that from my paychecks" and there is no downside planning if they lose their jobs.

I've noticed some builders starting to build more homes that have separate entrances and living space including kitchen for multiple generations.

Most of the rich people I talk to ask what's the lowest down payment and longest loan term. Even with these rates they're ahead financing purchases.

I'm in a goodly number of MF syndication deals, and it a mess. Even the ones that are doing fine can't sell right now. There are a couple that have executed their value add turnarounds to perfection, but are still losing money due to non-op (rates, taxes, interest). And then there are those where the leads were, in fact, not wearing swim trucks at all.

Survive to 25 is the mantra.

jja79 said:

---

Most of the rich people I talk to ask what's the lowest down payment and longest loan term. Even with these rates they're ahead financing purchases.

---

Last time I bought a car.

"Ok, you've been approved at 0.9%. How much would you like to put down?"
"The absolute minimum amount possible."
"Ha, guess that is why you are approved at 0.9%."

They might be admonished by the Texags 20% or more down, 15 years and make extra payments crowd. When someone can write a check for a 7 figure house without any real effect on their finances they don't need financial advice from me.

2wealfth Man said:

---

GenericAggie said:

---

It's a bit scary. We have 30+ LP multi-family investments and luckily most have interest caps on loans. A few have had capital calls and 2 will fold, with us losing about 150K.

If rates don't drop, the multi-family market is going to crater in 2 years as bridge loans continue to mature.

Need interest rates to drop.

---

sitting on a shovel ready 95 unit multi family project and can't even get sniff for traditional construction financing. At some future point there is going to be a dearth of available MF units with the pipeline literally frozen.

---

what market are you located in?

I am in a good number of MF syndications too. One is outperforming and increased distribution. One doing well and distributing but less than predicated. One has put a hold on distribution, but still cash flow positive.

Success of these syndications are very operator based, so you better be selective on who to ride.

Medaggie said:

---

Any economic hardship always hit the middle class the worse.

If you are lower class, you are living on aid and have little dreams of owning anything significant.

If you are middle class, inflation/high interest rates hurt. After the middle class pays for their basic needs, they may have 20-30% left to pay for everything else including investing. Increase the cost of living by 10% is a huge deal and makes any unforeseen hardships very difficult.

If you are part of the top 5-10%, 10% inflation means little. They spend a fraction of their income on basic needs so an extra 20K in basic expenses means very little.

That is why Rolex prices almost never goes down. Spending 20-50K on a nice Rolex is money they don't even think about. I have tried for the last year to get 5 matching rolexes for my family and still on the waiting lists.

---

I agree with everything you said. What Rolex model are you looking for? Matching datejusts?

I provide services to commercial construction lenders up in Dfw and business has slowed. Lenders are being really conservative, pulling back and requiring more cash from borrowers. New Land development sign ups have dried up and home builds on any recently completed developments are way way down with many available lots for sale. 2024 is gonna be a challenging year for us imo. The Lag Effect has arrived in my sector. Maybe it'll swing back by the end of the year the other way.

Far from Texas, but in Charleston which has been booming for the last decade there's still no inventory. At least not in this part of the city which is a more established area (1950-1970) with good schools and a 10 minute drive to downtown. What does come up for sale every so often is still bought by flippers.

Their construction moves a lot more slowly now than it did a year or two ago. I've wondered a couple times whether one got caught up biting off more than they could handle, but after another week or two contractor trucks are back again.

TresPuertas said:

---

Just curious to see how everyone is doing in terms of volume and what you're seeing.

My wife and I own an appraisal firm in the Metroplex and over the last 6 months we are really seeing everything dried up and shriveled away. Its been ROUGH.

Just curious to see how everyone's local market is doing and checking the volume.

Hang in there

---

Last year was slow because we couldn't get surveyors. All were too busy. Jobs that normally took 4-6 months instead took a year. We still need surveyors SOOOOO badly but the bottleneck has opened slightly.

This year so far I have ordered 171 appraisals on parcels we will acquire and I am consulting (legal support) and QA/QC'ing another 140ish acquisitions. It is rather busy

I would hire another person or two but it is so hard to find someone who can do what we do.

knoxtom said:

---

TresPuertas said:

---

Just curious to see how everyone is doing in terms of volume and what you're seeing.

My wife and I own an appraisal firm in the Metroplex and over the last 6 months we are really seeing everything dried up and shriveled away. Its been ROUGH.

Just curious to see how everyone's local market is doing and checking the volume.

Hang in there

---

Last year was slow because we couldn't get surveyors. All were too busy. Jobs that normally took 4-6 months instead took a year. We still need surveyors SOOOOO badly but the bottleneck has opened slightly.

This year so far I have ordered 171 appraisals on parcels we will acquire and I am consulting (legal support) and QA/QC'ing another 140ish acquisitions. It is rather busy

I would hire another person or two but it is so hard to find someone who can do what we do.

---

Curious on your strategy. Are the parcels large blocks of acreage? Are you splitting them to sell off in smaller lots or developing?

I own a right of way acquisition firm. I am also buying a specific income producing real estate asset but I am not discussing that.

2.5 years ago a bipartisan bill for infrastructure was passed. $1.2 trillion of which $110 BILLION went to roads and bridges and another $50 BILLION went to internet. TxDOT has $33 Billion budgeted for the next ten years on road and bridge projects. Rail projects are going on EVERYWHERE.

If you are an appraiser, surveyor, archeologist, real estate broker, attorney, civil engineer, etc and you didn't see this bill and immediately say "Wow, I need to get in on that!", then you are just not a good businessman. Everyone of those roads, bridges, powerlines, sewers and internet cables need right of way services, appraisals, surveys, legal teams, etc.


I see these posts about people starving for business and I just shake my head. The business is out there... figure it the F out and get into the game. Or just spend your kids college funds and complain while waiting for the market to save you.

That's not related to my business and my circle is almost complete so this isn't for me but would the people you mentioned as involved in these transactions need additional training? For example a residential appraiser isn't going to get these type assignments with just that designation right? Looks like a boon for title companies and I've seen for the first time in a long time title companies cut back.