Monday, October 10, 2022

Negative equity is back.

This weekend, I was driving down my street and noticed that one of the two houses that turned over this year, was back on the market. Self I said - that was a flip. And they have had it a while. I couldn't wait till it hit the MLS so I could see what they'd done to it an how much they were selling it for.

Both houses were time capsule houses. Which is my term for a house that is original to the year it was built. This means it basically needs a gut. It literally needs everything because it's never been updated in any way. 

The flip house is about 10 houses down. The other one is right across the street from me. They paid 400k OVER asking. I can't even believe it honestly. But it's true. Both of these houses sold within a month of each other so they are a good gauge of the market. The flip house is about 500 square feet bigger. Both are one stories.

If the flip house sells for that they are asking, my neighbor across the street will be 100 grand in negative equity. That's not even accounting for all the money they have put in to bring it back to life. And that flip house is not going to get asking. Not in this market.

I've gutted a house before, and have an idea how much that costs. That flipper might get out flat if he gets asking. Otherwise...... not so much. 

I haven't really talked about the housing market in a while because I don't really understand why no one cared that houses went up 20-40% in TWO years....... and literally no one cared. Especially in markets like Vegas that depend so much on tourism. No one was sounding the alarm. On the contrary, everyone was saying how this time was different than the Great Finical Crisis. Is it NOT.

It doesn't matter who your Presidential candidate is - printing the kind of money they did during the pandemic was wrong. Trump built this enormous fire and everyone co-signed apparently. Biden only poured a small amount of gas on it. Trump made it so the banks could not foreclose or evict people. Distorting the market and causing people to pay insane prices just to get into a house. People went out with their pandemic loans (helicopter money) and bought houses and cars and boats and literally everything!

Hell, if my neighbor across the street had waited SIX months, they could have gotten a house that was 500 square feet bigger. Which is completely updated now, for 100 grand less!

Now innocent people are going to pay.

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