Goldtent TA Paradise

Real Estate

1. silverboom says:

   May 24, 2019 - 11:14 am at 11:14 am

   I beg to differ with you on the “lower rates” comment. There are no “lower rates.” Mortgage rates in the U.S. are sitting at recent highs, way up relatively from their historic lows a scant couple of years ago. And they are slow to go down even when the 10 year yield goes down (which is what drives mortgage rates in the U.S.) because why should they? Until there is confirmation of ongoing lower rates and reduced volatility, mortgage rates will remain stubbornly stuck at current levels. Much better rates than historic norms, but quite a bit higher than their recent basement-level bargain rates.

   Example: we are in the market for what is called a park home. These are smaller homes in retirement communities, ranging in size from about 1,000 square feet to a massive 1,500 square feet. We are interested in the bottom end of that market.

   Two years ago we could have bought one of these things for $60,000 and carrying costs of $300 a month. Cheap living, eh?

   Today, that thing is running closer to $80,000 and our monthly carrying cost is $500 a month. Ergo, no impact from low rates. Quite the opposite – a bit of an uptick in mortgage rates and a huge rise in purchase price.

   • Fullgoldcrown says:

     May 24, 2019 - 12:29 pm at 12:29 pm

     Thanks Boomer…I was unaware that mortgage rates were not following the 10 year yield.

     That sucks….sort of like gas prices when Oil falls

     bastards

     🙂

     • silverboom says:

       May 24, 2019 - 1:47 pm at 1:47 pm

       Yeah, it’s kinda like that. Easier to go up, slow to go down. At one point you could have had a 30 year fixed mortgage for 3% – 3.5%. At that rate, housing here was incredibly cheap if you were a buyer. But since rates climbed above 4% they seem to be “stuck” there. Also, if you buy a place that costs less than $125,000 or so rates go UP on your mortgage. Which is what happened with our look at park homes. We’d pay close to 5.5% – about 25% more – just because our purchase price is lower.

       Bastards indeed.

2. Northstar says:

   May 24, 2019 - 11:40 am at 11:40 am

   From a UK perspective, the recent rises in property prices are caused largely by high demand and poor supply. New home building has been woefully inadequate for many, many years now. I bought my first home in 1995 for £60,000. I’ve since moved twice. I sold it in 2003 for £120,000 and it’s now valued at £300,000

   • norvast says:

     May 25, 2019 - 12:15 am at 12:15 am

     That’s called the real estate & banking cycle (or credit cycle).

     Profits almost always finish up returning to land & houses, fuelling demand, then credit, higher prices, more credit, then a credit induced bust!

     Been going on for hundreds of years.

     Average length of cycle 18-22 years so expect a mid cycle slowdown next year, then exponential growth, following by a topping in 2026-27, then bust!

     You hardly need a road map but they are available!

     • Fullgoldcrown says:

       May 25, 2019 - 8:52 am at 8:52 am

       Thanks Sir Norvast…very valuable info.

3. pedro_deleon says:

   May 24, 2019 - 1:46 pm at 1:46 pm

   IYR is not land, its development.
   Commercial development, generally.
   And they are making tons of it where none existed before.
   Just visited my old neighborhood in VA suburbs outside DC.
   Used to be a place called Indian Spices and Appliances. No more.
   Instead, nothing but 10 story high rises, everywhere you looked. (Ballston)

   But yes, tracking the inverse SRS. And I would be expecting it to be on the leading edge of a recession driven market swoon. Or a yield hiking crunch. Neither so far.

4. Pyrite says:

   May 24, 2019 - 8:42 pm at 8:42 pm

   Read this a while back. Thought it was another interesting tidbit on real estate value and how price can be ” falsely elevated”

   https://wolfstreet.com/2019/04/24/how-a-little-money-laundering-can-have-a-big-impact-on-real-estate-prices/

   • Fullgoldcrown says:

     May 25, 2019 - 8:55 am at 8:55 am

     Thanks Pyrite…thats very interesting