Valley Real Estate

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Dback Jon

Dback Jon

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A lot. All of the VC money has dried up since the Fed started raising the rate. The multiples on all of these companies have fallen through the floor due to it. We're going to have a shakeup where only the top one or two survive. Same thing with instacart type companies, delivery companies, etc. They've all been running negative to build market share. They can't survive that way now.
Which isn’t unusual, right? New concept, early adapters make money, lots follow, only a few survive
 

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Which isn’t unusual, right? New concept, early adapters make money, lots follow, only a few survive
True you always get the copycats on anything that's successful. I think the difference here is that we're going to see the death spiral happen quicker now than it would happened over the last 10 years. The "free" money from the Fed had been allowing them to limp on longer than they will now.
 
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True you always get the copycats on anything that's successful. I think the difference here is that we're going to see the death spiral happen quicker now than it would happened over the last 10 years. The "free" money from the Fed had been allowing them to limp on longer than they will now.
yes - rates were kept too low, too long.

We are seeing this in the company I work for - 50% bought out by a private equity firm whose business model is centered around high leverage debt to fund acquisitions to grow the business, then sell. This only works with free money (or basically free).
 

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yes - rates were kept too low, too long.

We are seeing this in the company I work for - 50% bought out by a private equity firm whose business model is centered around high leverage debt to fund acquisitions to grow the business, then sell. This only works with free money (or basically free).
The global world/economy is now literally a trading block. Long time coming. But we seem to be there. Debt. Refinance debt. Rinse and repeat for the big boys.
 

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opendoor finally has a pending offer accepted on the home they bought from me for roughly 17k less than they paid me for it
 

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Interesting thread.
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dscher

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With money bleeding from MBS after a historical run up from fed intervention and now sky high (in today's economy/ rate environment) rates... This doesn't bode well for the housing market.


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dscher

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opendoor still has not sold my old house lol
Good. Hopefully they get stuck holding the bag instead of the little guy. Unfortunately, they'll likely find their sucker. The big banks/players always do by sweetening the deal by easing application standards or enticing new buyers somehow with a catchy gimmick or two.

The likes of BlackRock and others will be bailed out anyhow. So they don't care. All while they were allowed to borrow almost free/cheap debt to buy up everything... What a system.
 

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Good. Hopefully they get stuck holding the bag instead of the little guy. Unfortunately, they'll likely find their sucker. The big banks/players always do by sweetening the deal by easing application standards or enticing new buyers somehow with a catchy gimmick or two.

The likes of BlackRock and others will be bailed out anyhow. So they don't care. All while they were allowed to borrow almost free/cheap debt to buy up everything... What a system.
If they have it on market for 20k less than I sold it to them for at this point. Def bag holders in this scenario.

Plus they have owned it since like february
 

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If they have it on market for 20k less than I sold it to them for at this point. Def bag holders in this scenario.

Plus they have owned it since like february
We're definitely seeing a bifurcated market right now. Significant slowdowns in mortgage demand and increasingly over supply of hyper inflated house prices equals one thing from my perspective.. lower rates and prices to create demand.
 

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Opendoor is a disaster. It's only a matter of time until someone buys up the whole company on the cheap. Otherwise they are headed for an ugly bankruptcy.
Well their margins even if their business model were run perfectly were only projected to be 1-2 percent. Soon as I saw that I ruled out ever investing in the company.

Yeah, going to be interesting how they fair with the real estate market in the process of collapsing.
 

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Opendoor is a disaster. It's only a matter of time until someone buys up the whole company on the cheap. Otherwise they are headed for an ugly bankruptcy.

I think those businesses need to be local and nimble. I'm not sure a national business model will work with razor thin profit margins and extreme variation between markets.
 

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I think those businesses need to be local and nimble. I'm not sure a national business model will work with razor thin profit margins and extreme variation between markets.

And much better projection for how quickly they can flip a property. This "plan" of being stuck with homes all across the country that they can't sell, with no strategy for moving on from them, is fatal.
 

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Stopping inflation in housing is not enough; they need deflation. They have to bring down prices because they really messed up and fueled an insane spike in housing prices that pushed home ownership out of reach for millions of young Millennials and Gen Z.

I think shelter deflation is one the primary goals of the Fed's recent hikes. That and I think they loathe the rampant speculation and have their eye on a few assets with a goal of breaking them.
 

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I really don't see the market crashing here like other places. Unless the economy tanks as a whole nation wide, we have too many jobs being created here in the valley. People have to live somewhere. Apartments are behind the curve on supply and demand so rents are high, making mortgages cheap in comparison. We need more apartments and more houses. The lurking beast in all of this is water. The lack of water would be the only thing I see that would slow down the PHX economic engine.
 

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