I don't think it could possibly be any worse than it is now. We've been trying to buy a house for two years already, made four or five offers, and every time-- blasted out of the water by investors making cash offers above asking, no inspection. We could borrow more, and maybe outbid them. The bank would loan us the money. But it would not be financially responsible of us to take on that much debt. We'd lose the house the first time it needed a new roof.
So.
I've been keeping tabs on the reddit real estate investing subs lately trying to figure out how all that financing gimmickry works-- like, it drives me bonkers that people who want to buy a house and flip it or rent it out, have access to completely different types of financing than people who just want to buy a house to live in, and I *need* to understand how this works, or the walls close in and hope departs.
And this is not all being driven by the big firms. The pricing is driven by them, but the rush into REI is also a lot of just-some-dude types who've decided that being a landlord is the next Bitcoin. They're going into serious debt to do this, and counting on being able to collect enough rent to make a profit and service multiple high-interest loans, which is why rents are getting so ridiculous. That's not going to last in a declining economy, and as soon as we reach a critical mass of people not being able to afford the rent anymore, the whole thing tips over into the canyon. As Charles Hugh Smith points out, repeatedly, the working class is already up against the wall. We are paying as much as we can possibly pay for rent already. There's no squeezing out more, and groceries aren't getting any cheaper. So at some point very soon, a lot of us are going to lose the ability to keep paying, and either end up homeless or move into Uncle Bob's garage-- and then nobody will be paying rent on that dwelling. They're so heavily leveraged that lowering the rent isn't an option: they wouldn't be able to service the loan. The avalanche happens when these guys start defaulting. And they will: what they're doing is radically unsustainable. There'll likely be a little hang-time where everybody's hanging on for dear life, hoping things turn around. After that, only the big investors will still be in the market, the small fry cash investors will not be lining up to get burned again very soon. And they are the ones crowding us out of the market where we live. That might not be true of places where the big companies are heavily involved, like Atlanta and Charlotte, but it'll be enough in a lot of places, for regular people to finally afford a home. I think. I hope.
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branchandroot
(no subject)
Date: 2024-05-21 07:06 pm (UTC)So.
I've been keeping tabs on the reddit real estate investing subs lately trying to figure out how all that financing gimmickry works-- like, it drives me bonkers that people who want to buy a house and flip it or rent it out, have access to completely different types of financing than people who just want to buy a house to live in, and I *need* to understand how this works, or the walls close in and hope departs.
And this is not all being driven by the big firms. The pricing is driven by them, but the rush into REI is also a lot of just-some-dude types who've decided that being a landlord is the next Bitcoin. They're going into serious debt to do this, and counting on being able to collect enough rent to make a profit and service multiple high-interest loans, which is why rents are getting so ridiculous. That's not going to last in a declining economy, and as soon as we reach a critical mass of people not being able to afford the rent anymore, the whole thing tips over into the canyon. As Charles Hugh Smith points out, repeatedly, the working class is already up against the wall. We are paying as much as we can possibly pay for rent already. There's no squeezing out more, and groceries aren't getting any cheaper. So at some point very soon, a lot of us are going to lose the ability to keep paying, and either end up homeless or move into Uncle Bob's garage-- and then nobody will be paying rent on that dwelling. They're so heavily leveraged that lowering the rent isn't an option: they wouldn't be able to service the loan. The avalanche happens when these guys start defaulting. And they will: what they're doing is radically unsustainable. There'll likely be a little hang-time where everybody's hanging on for dear life, hoping things turn around. After that, only the big investors will still be in the market, the small fry cash investors will not be lining up to get burned again very soon. And they are the ones crowding us out of the market where we live. That might not be true of places where the big companies are heavily involved, like Atlanta and Charlotte, but it'll be enough in a lot of places, for regular people to finally afford a home. I think. I hope.