Future Real Estate Markets

[cj7zrcool]

I just did some work for a guy who is a manager on the McCoys professional desk. He said that the larger window company's sent out an email to their largest distributors stating that window production is at an 8 to the 12-month backlog. Sign of the times, I guess.

Tell him to send his clients my way. We're still getting window packages from a very large national manufacturer in the 12-14 week range.

Lumber market is falling off a cliff. It’s usually a good indicator of what’s to come in the housing market. Will be interesting to watch.

Don't know where you're seeing that. Some dimensions/species dipped over the last 3-4 weeks but the bottom certainly hasn't fallen out and I expect a rebound from that in the next couple of weeks. The long length (22'-36') doug. fir market is still super high and hard to get. 7/16" 4x8 OSB has gradually come down from $60ish highs a few months ago to $36ish today. Roofing is up, drywall is up, engineered wood is up, millwork is up....and it'll all stay up as long as there's a demand for it.

[BrianL]

Who knows who is correct. I don't like to make predictions, but I tend to lean towards Brandon's prediction. Never say never. I remember well, when I was a banker, and people said the same thing that some say today...that R/E will never get cheaper because they aren't making any more. That is a naive thing to state.

From the link I posted earlier. Prices peaked in mid 80's, and it took about 13 years or so to get back to even:

Both of the RE falls were due to some outside issue like S&L crisis and the Sub Prime lending scandal. If there is a underlining scandal then I agree it could collapse, but I don't see anything scamming the markets like in the previous two downturns.

[BrandonA]

One can't predict what the FED will do. But you can predict what will happen if they raise rates like they say they will. RE would correct at least a good bit.

If they don't raise rates RE will not go down.

Feds are telling us what they plan to do. The question is how fast and how high to curb this runaway inflation

[RiverRat1]

Feds are telling us what they plan to do. The question is how fast and how high to curb this runaway inflation

Past experience..... They've said a lot of times they will raise rates but once stock markets fall enough they back off...every single time.

Now this time they at least appear to be more serious so we shall see. I'm 50/50 on how this turns out. But I still say if or once markets tank another 20% from here they won't raise rates anymore until they stabilize.


And Burnadell - I just looked at that chart. They sure didn't drop much. Maybe 5% and by 2000 prices were higher than 1989.

But as mentioned other outside forces can happen at any time so who knows?

[themoonrulz]

Inflation is out of control, over leveraged people are going to look to sell, however money won’t be cheap so they’re won’t be as many buyers, ARM rate holders are going to be hit with high rates and inflation forcing them to foreclose, the stock market is tanking and will continue to pull back.

Real estate correction is coming, may not crash like it did in 2008 but it will def correct. If you have cash keep it parked on the sidelines for now.

[Burnadell]

Past experience..... They've said a lot of times they will raise rates but once stock markets fall enough they back off...every single time.

Now this time they at least appear to be more serious so we shall see. I'm 50/50 on how this turns out. But I still say if or once markets tank another 20% from here they won't raise rates anymore until they stabilize.


And Burnadell - I just looked at that chart. They sure didn't drop much. Maybe 5% and by 2000 prices were higher than 1989.

But as mentioned other outside forces can happen at any time so who knows?

Tim, Tim, Tim! They didn't drop much???Why do we have always have a difference of opinion when we discuss peak to bottom, then pack to previous peaks??? We have had these same previous calculation discussions on how long it took the stock market to recover. Did you take any math courses? :

Please explain how you arrived at a 5% decrease when the average price per acre in 1985 (click on the annual) was $804/acre, and the price went down to $505 in 1993. That is a 37% decrease. How in the heck do you get 5% decrease? ...and why did you choose 1989-2000 to TRY to prove your mistaken point??? The average price did not get back to the 1985 high until 2002, which was 17 years after the previous peak. What were you doing during those years?

[BrandonA]

I think it was sometime around 1990 mom and dad bought 6 acres in Horseshoe Bay, off the Court House steps, for $1500 for back taxes. That same property sold in the early 80’s for something like $40,000. I know of several ranches in Llano Cnty that were bought in the early 80’s for development that went into bankruptcy and foreclosed on in the early 90’s because there were no buyers. And the old saying buy land because they ain’t making anymore is horse****. They may not be making anymore but it sure changes hands a bunch

[RiverRat1]

Go back and look at Fed Funds rates between 1989 and 2004 and compare the land price chart I posted...Rates trended down and so did land.

Tim, Tim, Tim! They didn't drop much???Why do we have always have a difference of opinion when we discuss peak to bottom, then pack to previous peaks??? We have had these same previous calculation discussions on how long it took the stock market to recover. Did you take any math courses? :

Please explain how you arrived at a 5% decrease when the average price per acre in 1985 (click on the annual) was $804/acre, and the price went down to $505 in 1993. That is a 37% decrease. How in the heck do you get 5% decrease? ...and why did you choose 1989-2000 to TRY to prove your mistaken point??? The average price did not get back to the 1985 high until 2002, which was 17 years after the previous peak. What were you doing during those years?

Randy Randy Randy... I was talking about rates. You gave me the date range of when they were lowering rates so that's what I used.

I don't see the argument here. Except I think rising rates will cause RE to drop but you seem to maybe think that also..

[louieagarcia]

Who knows who is correct. I don't like to make predictions, but I tend to lean towards Brandon's prediction. Never say never. I remember well, when I was a banker, and people said the same thing that some say today...that R/E will never get cheaper because they aren't making any more. That is a naive thing to state.

From the link I posted earlier. Prices peaked in mid 80's, and it took about 13 years or so to get back to even:


[ATTACH]1090008[/ATTACH]

A curve fit of the data from 72 to 84 is linear...the data from 88 to current is exponential. Plot the available real estate against US population. I don’t think the 80’s comparison is valid anymore. A lotta folks sitting on a lot of cash, feds raise interests probably won’t have the drastic effect on cash buyers that is predicted, especially in Texas where folks are migrating from North-South-East-West

[eradicator]

Let the stock market correct a lot more over the next 3-5 weeks and the FED won't raise rates (my guess). They will say inflation looks to have stabilized enough and they want to give it more time before raising rates...Some BS like that. Then markets rally HARD and then they raise rates more LOL

lol. I think you mean 3-5 years......

[Preacher Man]

With the crazy demand for housing in my area, it is difficult to for me to see a big downward 'correction'. Regardless of what interest rates do.

Any decrease in real estate prices will need to come from outside sources. Like a big recession with general economic depression.

[Txhunter3000]

Oh it's gonna happen.

[Pedernal]

With the crazy demand for housing in my area, it is difficult to for me to see a big downward 'correction'. Regardless of what interest rates do.

Any decrease in real estate prices will need to come from outside sources. Like a big recession with general economic depression.

Biden says hold my beer and watch this

I personally hope we don’t have a bad recession but it sure seems like where we are being driven to.

[Burnadell]

Randy Randy Randy... I was talking about rates. You gave me the date range of when they were lowering rates so that's what I used.

I don't see the argument here. Except I think rising rates will cause RE to drop but you seem to maybe think that also..

Well, you were wrong on rates. Look at this chart:

https://www.depositaccounts.com/blog...eral%20Reserve.

The Fed Funds Rate dropped from 11.50% in Aug, 1984, down to 3.00% in April, 1989. THAT is 850 basis points , or 87%. They went back up to 6.5% in June, 2000, still a drop of 500 basis points and 33% below the 11.5% in Aug, 1984. Then, the rate proceeded to drop to 1.00% in Jan, 2004...1050 basis points in 10 year (approximate) the period from 1984, all the while land prices were trying to, and finally did recover, but it took a long time to recover from their peak.

I don't know how we can see the same chart and glean two different answers. Rates dropped more than 5%, all with land prices dropping.

I was making loans back in those days, and certainly remember that land prices don't always drop only when interest rates rise.

[Burnadell]

A curve fit of the data from 72 to 84 is linear...the data from 88 to current is exponential. Plot the available real estate against US population. I don’t think the 80’s comparison is valid anymore. A lotta folks sitting on a lot of cash, feds raise interests probably won’t have the drastic effect on cash buyers that is predicted, especially in Texas where folks are migrating from North-South-East-West

Luis, I am not smart enough to discuss linear curve fits and exponential stuff. , but I agree with the numbers flocking to Texas are changing the dynamics...somewhat.

Bottom line is...we can't predict with certainty what the next few years will hold.