Why inventory could grow by 40% this year

[@RaymondKeen.]

I must say you are an inspiration because I started up investing and trading as a scared investor who doesn’t want to lose money, glad to say I’m very profitable now and bought my first house through it

[@ScottKindle-bk3hx]

As a beginner, educate yourself: Learn the basics of investing and the stock market. There are many resources available online , including books, articles, and online courses. It’s a good idea to diversify your portfolio across different stocks and sectors to minimize risk.

[@KarenLavia]

The truth is that this is really not as difficult as many people presume it to be. It requires a certain level of diligence, no doubt, which is something ordinary investors lack, and so a financial advisor often comes in very handy. My friend just pulled in more than $84k last month alone from his investment with his advisor. That is how people are able to make such huge profits in the market

[@Derawhitney]

Wow! This is just mind-blowing. I have set aside $80k since the start of the year, but I've been hesitant to go into the market by myself because of fear of a crash. How about you recommend your financial advisor, please? I could really use some help.

[@KarenLavia]

Well, there are a few out there who know what they are doing. I tried a few in the past years, but I’ve been with Melissa Terri Swayne for the last five years or so, and her returns have been pretty much amazing.

[@Suleferdinand]

Looked up her name and her website popped up immediately, interesting stuff so far, about to schedule a session with her.

[@billknudson2236]

If you have not attended a monthly seminar, HIGHLY recommend doing so. Always something to learn.

[@antoniolopez2799]

I manage several properties, each at different stages of renovation and reselling, and I find this information incredibly valuable. Thank you for sharing your insights!

[@jerryvega5345]

Lower rates will bring far more buyers than sellers. Employment and CPI numbers continue to come back higher than expected, but even if this changes, I don't see the Fed lowering rates enough to induce sellers to cough up their precious sub 3% rates. Prices will continue to increase this 2024 and beyond.

[@Newjerseydevil950003]

January payrolls were revised down to 229,000 from 353,000, a massive readjustment.

[@cherylbray3092]

no mention of election year shenanigans in this outlook? The efforts by all current administrations to maintain or improve the economic outlook (and thereby kick the can down the road) are always at play in an election year.

[@peterbedford2610]

40%....very unlikely. Maybe if rates hit 5%?? Cost of switching homes and lack of choices..plus, not much margin for people who bought in last two years.

[@ronno1202]

it's already 21% and demand is much lower than last year. only 3 months ago inventory was down YoY. so why wouldn't it reach 40%?

[@MrWaterbugdesign]

OK but the percentage of new owners who will be selling after only 2 years of ownership I assume would be slow low to not matter. Low percentage of a already low number isn't much of anything.

[@cvballa23]

And if it does we would still be at below average inventory levels in history. Would probably only weaken the housing market at the margins.

[@ronno1202]

inventory doesn't matter without respect to demand. currently demand is at historically low levels so you wouldn't expect to see "normal" inventory numbers. if we did, houses would be sitting on the market for an extremely long time!

[@scottsnyder2726]

I hope so! That would be great for buyers. I agree with your assessment that with higher mortgage rates inventory will increase. I do believe in older metro areas, often those with low current inventory, new listings will rise simply because of aging homeowners. Most own homes free and clear of mortgages. They have significant equity and no worries about mortgage rates. If they move to resort areas, downsize, enter retirement communities they will buy with cash.

[@Anonymous-sl1yu]

Why do you keep on suggesting that rates will fall without a recession? Why would the fed ever lower rates in a strong economy with a credible fear of inflation? You're going to eat those words if you keep on saying that so much. 1) Lower rates without recession = obviously more buyers & falling inventory 2) Lower rates with a recession = no idea which will have a bigger impact the lower rates or the recession 3) Higher rates without recession = less demand & rising inventory #3 we agree on. #2 you barely bring up, but #1 I don't get how you think its remotely possible. #1 is ridiculous wishful thinking.

[@LoganMohtashami]

Mortgage rates have already fallen 1%+ from the highs of last year.

[@shaynalee]

I’m a realtor and have been saying the same as you since 2022. No one wants to hear about it. In fact I get ridiculed so being too technical. It’s just basic monetary policy

[@Anonymous-sl1yu]

​@@LoganMohtashami You mean from peak end of season rates? But still up vs. last year's spring buying season? And while I get that we go back and forth from long term rates to Fed Funds rates without calling out each one, but when we're talking about material rate cuts we're talking about Fed reserve rate cuts which haven't happened yet. Mortgage rates only fell a little because market if forecasting some rate cuts down the road that keep getting pushed out. But the only reason why future forecast rates are falling is because the assumption that current rates are monetary restrictive and will slow economic activity enough (mild recession) to necessitate accommodative monetary policy (Fed lowering rates as a response) to pick up economic activity in the future.

[@LoganMohtashami]

@@Anonymous-sl1yu Rates have had two big legs lower moves since 2022 10-year yield 4.25%- 3.37% Rates from 7.37% to 5.99% 10-year yield 5.0% to 3.82% Rates from 8.03% to 6.63% No recession in either case. You can make the case that the 2022 drive lower in rates where anticipating economic weakness and the banking crisis peak. However, considering today's economic data, the 10-year yield between 3.80% and 4.25% looks right. The spreads create roughly 1% higher rates, so if the spreads get better, you don't need much to get the mortgage rate to the low to mid 6% levels while having the economy expand.

[@Anonymous-sl1yu]

@@LoganMohtashami Long term rates move on forecasts. We're talking about our central bank lowering rates and they have only gone 1 direction over that period. If you want material rate cuts where sub 5.5% mortgages are a thing again it will take Fed action and they aren't doing that without a recession... if you think otherwise you're delusional.

[@pablo81778]

We might see a FED try to cut rates in a few months but I'm not sure the 10 year will follow. We are still in a very stimulus and inflationary environment because of excess gov spending and the bond market knows this and the FED usually follows the bond market.

[@Anonymous-sl1yu]

I'll "Yes and" you in an interesting way. Theoretically if the federal reserve did a rate cut in a strong economy with some mild inflationary resurgence signs (lets say to make good on prior expectations)... there would be just as high of a chance of long term rates spiking as falling. Why? Because long term rates are built off of future fed action prediction. If its believed they made a mistake then they'll assume the fed has to be more aggressive in the future to make up the mistake and long rates could spike a little. It's situations like the above where you can easily get to 2 different market reactions to the very same event that makes even cause/effect predictions much harder to rely on that even someone as smart as Mike would like to acknowledge.

[@MrWaterbugdesign]

What I know with 100% certainty is I can't predict the future. And I suck at gambling which it would if I tried. So instead of wasting time trying to delude myself I'd rather prepare for probable possible outcomes. For example houses I'm getting ready to sell I can list if prices climb or rent in case rates stay high. The longer buyers put off buying the more renters that are created and the higher rents go or stay put. Better to make money either way.

[@Anonymous-sl1yu]

​@@MrWaterbugdesign ​ A few things I'm confident of: 1) A lot of new rentals are hitting the market at the moment due 5+ unit completions or prior homeowner rental listings. In the short run that is not good for vacancy or rent increases in most markets. 2) Subprime credit risk is deteriorating fast which is a factor in rent deficiency, evictions, etc. (most prime credit risk is holding up just fine and the household sector is still near recent record low debt at percentage of GDP, but that is disproportionately in the homeowner not rental part of the population). 3) Homebuilder margins are skyrocketing and while multi-family permits are collapsing after this block of inventory is about to hit... SFH/TH permits are spiking quickly and if you believe Warren Buffett and the giant move in homebuilder stocks then its easy to see a flood of new home construction. 4) Rent vs buy calculator for purchases have never been is bad on record. So you compare that against having a cash flowing property with a sub 4.5% mortgage on it and still its a tough call. But if I had anything SFH that was ballooning in next decade, low LTV/mostly paid off, paid off, at over 5% interest, etc. I would be reducing property count in this spring season. Not sell everything off, but no point in having a max portfolio in a market like this. The rent vs. buy calculator is bad that you either have to presume massive rent inflation over the next 10 years or you have to assume that rates will fall considerably which means recession and there are always more opportunities in a recession.

[@Anonymous-sl1yu]

@@MrWaterbugdesign A few things I'm confident of: 1) A lot of new rentals are hitting the market at the moment due 5+ unit completions or prior homeowner rental listings. In the short run that is not good for vacancy or rent increases in most markets. 2) Subprime credit risk is deteriorating fast which is a factor in rent deficiency, evictions, etc. (most prime credit risk is holding up just fine and the household sector is still near recent record low debt at percentage of GDP, but that is disproportionately in the homeowner not rental part of the population). 3) Homebuilder margins are skyrocketing and while multi-family permits are collapsing after this block of inventory is about to hit... SFH/TH permits are spiking quickly and if you believe Warren Buffett and the giant move in homebuilder stocks then its easy to see a flood of new home construction. 4) Rent vs buy calculator for purchases have never been is bad on record. So you compare that against having a cash flowing property with a sub 4.5% mortgage on it and still its a tough call. But if I had anything SFH that was ballooning in next decade, low LTV/mostly paid off, paid off, at over 5% interest, etc. I would be reducing property count in this spring season. Not sell everything off, but no point in having a max portfolio in a market like this. The rent vs. buy calculator is bad that you either have to presume massive rent inflation over the next 10 years or you have to assume that rates will fall considerably which means recession and there are always more opportunities in a recession.

[@wadej769]

Looks like we are in the mid 90s. They cut 3 times in the Summer then held for another 5 years because things flared back up and there was no way to tame it down

[@nonexistent5030]

Gonna be really interesting to see who these marginal buyers are as inventory rises. Is the retail investor going to pass off the bag to an institutional one? Seems hard to believe with the rhetoric in Washington and uncertainty around election outcomes. I would expect those institutional buyers demand a higher cap rate too in this new rate regime given their degree of sophistication. If so this puts downward pressure on prices a bit more than I think people are giving credit to. And in an environment where the credit window may start closing thus disqualifying a larger share of home occupier demand who is already stretched thin on affordability. If banks limit DTI to 30% as hedge funds Step back... boy now that will be eventful. Of course it's all speculation... just like the folks bidding home prices up! 😅

[@self-drivingscientist512]

I live in SF bay area, and the inventory is near all time lows, prices just keep on increasing every month. One of the most difficult markets for buyers!

[@MrWaterbugdesign]

I don't remember the last time SF bay area was a good market for buyers. 1930's? Maybe May 1906?

[@self-drivingscientist512]

@@MrWaterbugdesign No idea, definitely not since I was born :D

[@peterbedford2610]

Early 1990s. Was ok for SF bay prices But, renting was still far cheaper. CA median price matched the US until the late 1970s, then it took off and has not looked av.

[@feixing8939]

It looks like CA is a completely different place than the rest of the country in terms of the inventory😅

[@ChrisandKatie09]

Seattle is up 12% yoy