Tuesday, July 15, 2014

Housing has hit a wall.

Last week we had great pending sales numbers. When I saw them I kinda laughed and said - we will see how many of those people get kicked out. Now, my gut feeling is quite a few.

A flip house came up a few months ago in arguably one of the nicest areas of my town. It isn't the richest part (or even close), but you do have to have money. I would have flipped this house if the world were different. Worst house on the nicest block is an understatement. You could tell an old lady lived there, and old people houses are the best flips. They just fall into disrepair on almost every level. The house actually sold very quickly. I think it took around two weeks.  Quick enough that it made me re-evaluate all my opinions on the market. Maybe there is still a pulse in certain areas I thought.

Today I drive past it and instead of a sale pending sign - it had an open house sign. I let out an audible doh. That house obviously fell out. I would not want to be that guy right now. I was that guy once. I mean, it's a pricey neighborhood and he only bought it a few months ago.

That made me whip over and check to see how many price reductions there were today. Which was not good at all.

I don't know how this is going to play out. People are not going to give up their houses like last time. First - if you can't afford a house at 3-4.5% - you can't afford a house. Second - greed drives everything in life. Since prices have come back to some degree - walking away willy nilly will not come as easily. And lastly, those people still underwater might have the option of low interest rates for a while. The fear of a reset will kill them from the inside, but rates are much lower then they are paying. It gonna be a real nail biter.

1 comment:

Anonymous said...

I think housing will continue to be strong. Milk hit $5 per gallon at my local supermarket this week. Its only a matter of time before inflation starts showing up in wages and then blammo people will pay the higher interest rates and prices. DF