OT - Dow plunges 1,175 - worst point decline in history

[CNY rider]

Originally Posted by Likes2ridefar

Daily ride goes through wealthy housing area (many $1M homes and many more well north of that) and for the past year or more it was incredibly rare to see for sale signs and if there were they said sold before the sign even made it to the dirt.

The past month or two each day seems to be another popping up, many more for sale and they aren’t saying sold and aren’t quickly disappearing.. starting to panic or maybe squeeze one last big flip?

I live and ride in an area that is definitely not wealthy.
My observations agree with yours.
Last year there were very few signs and they disappeared quickly.
This year there are signs and the signs are hanging around.

[Clean39T]

Originally Posted by C40_guy

Really? How will REITs perform with interest rates going up? (IDK...curious...)

Dunno but Redfin and Zillow are falling off a cliff, so are places like Rocket Mortgage - lots of layoffs and cutbacks being announced the last few days too from large corporations that are sensitive to consumer demand and those that had high growth ambitions..

[kppolich]

Originally Posted by echappist

That's a whole lotta alphabet soup going on there

What are QQQ, SNOW, and COIN?

QQQ Tracks the Nasdaq 100

Already in teh REIT game with my ROTH IRA (Vanguard Real Estate Index Fund Admiral Shares (VGSLX).

[joosttx]

Originally Posted by C40_guy

Really? How will REITs perform with interest rates going up? (IDK...curious...)

They raise rents….

[Clean39T]

Originally Posted by joosttx

They raise rents….

You can't get blood from a beet.

[Likes2ridefar]

Originally Posted by joosttx

They raise rents….

I think they hit the limits by me. I’m sure they will raise mine and we will leave and it’ll remain vacant for months like nearly every other on the floor I live. It is nuts.

[slowpoke]

Originally Posted by joosttx

Buys some REITs

As a millennial who splurges on the occasional avocado toast, I'm opposed to REITs as they're benefitting from the housing crisis and would definitely lobby against affordable housing. But I also turned down a job offer from Chevron a decade ago, so maybe I'm not the most fiscally responsible person...

[prototoast]

Originally Posted by slowpoke

As a millennial who splurges on the occasional avocado toast, I'm opposed to REITs as they're benefitting from the housing crisis and would definitely lobby against affordable housing. But I also turned down a job offer from Chevron a decade ago, so maybe I'm not the most fiscally responsible person...

I think your analysis of REITs is incorrect. REITs are in the business of collecting income-generating properties. They can certainly benefit from artificial scarcity among existing properties, but more money into REITs also finances new housing development.

[joosttx]

Originally Posted by Clean39T

You can't get blood from a beet.

That's why you don't buy beets when you want blood. But buying a beet will help you with blood pressure. There are some good ones that are priced right. MPW comes to mind. They yield a ~6% dividend.

[slowpoke]

Originally Posted by prototoast

I think your analysis of REITs is incorrect. REITs are in the business of collecting income-generating properties. They can certainly benefit from artificial scarcity among existing properties, but more money into REITs also finances new housing development.

Thanks -- I'm scaling back my initial criticism of them, having skimmed a few articles that point back to zoning laws. However I generally disagree that housing should be an investment vehicle because then everyone wants prices to go up, but that's for another thread.

[Clean39T]

Originally Posted by joosttx

That's why you don't buy beets when you want blood. But buying a beet will help you with blood pressure. There are some good ones that are priced right. MPW comes to mind. They yield a ~6% dividend.

I was saying REITs can't profit off increased rents if no one can afford to pay that rent - and I think we are well past the breaking point on that one.. meaning the apartment complexes are over-valued if marked to current rents, let alone have some assumption baked in of them rising over time.

I saw this on the interwebs today, someone explain why it's wrong:

I'm tired of hearing people say: "We don't have subprime mortgages that we had in 2008" or "You're not seeing people default on their mortgages, so we cannot be near a housing crash!"

Markets go up when demand outpaces supply, and they come down when there's more supply than demand. Supply could overwhelm demand for a number of reasons [edited]:

• Institutional sales of properties in reaction to equity market downturn (margin call; loss of liquidity)
• Lack of market capacity to accept new rental hikes
• Collapse of the Airbnb market due to many factors driving sale of dedicated Airbnb units, or the flooding of rental market with prior Airbnb units
• New construction flooding the market due to prior purchase commitments that are no longer viable with recent rates. Generally these commitments happen months before families are able to lock in the rate.
• Excessive population exiting the housing market as they retire.

All of these situations are presenting themselves right now, as well as others I've probably missed. Which one will break the camel's back, no one knows....

Common misconception is that we have a shortage of housing. In fact we have more housing per person than ever in history: https://fred.stlouisfed.org/graph/?g=OlPV (low means lots of units)

Another common misconception is that we're not building fast enough. ALSO WRONG. We're building faster than we've ever built in history as well. https://fred.stlouisfed.org/series/UNDCONTSA

To that list I'd add that when there is more FOMO on selling than there is on buying, the market will take a turn..

And it seems that sentiment could be sinking in to the collective consciousness any day now.

[joosttx]

Originally Posted by Clean39T

I was saying REITs can't profit off increased rents if no one can afford to pay that rent - and I think we are well past the breaking point on that one.. meaning the apartment complexes are over-valued if marked to current rents, let alone have some assumption baked in of them rising over time.

I saw this on the interwebs today, someone explain why it's wrong:

I'm tired of hearing people say: "We don't have subprime mortgages that we had in 2008" or "You're not seeing people default on their mortgages, so we cannot be near a housing crash!"

Markets go up when demand outpaces supply, and they come down when there's more supply than demand. Supply could overwhelm demand for a number of reasons [edited]:

• Institutional sales of properties in reaction to equity market downturn (margin call; loss of liquidity)
• Lack of market capacity to accept new rental hikes
• Collapse of the Airbnb market due to many factors driving sale of dedicated Airbnb units, or the flooding of rental market with prior Airbnb units
• New construction flooding the market due to prior purchase commitments that are no longer viable with recent rates. Generally these commitments happen months before families are able to lock in the rate.
• Excessive population exiting the housing market as they retire.

All of these situations are presenting themselves right now, as well as others I've probably missed. Which one will break the camel's back, no one knows....

Common misconception is that we have a shortage of housing. In fact we have more housing per person than ever in history: https://fred.stlouisfed.org/graph/?g=OlPV (low means lots of units)

Another common misconception is that we're not building fast enough. ALSO WRONG. We're building faster than we've ever built in history as well. https://fred.stlouisfed.org/series/UNDCONTSA

To that list I'd add that when there is more FOMO on selling than there is on buying, the market will take a turn..

And it seems that sentiment could be sinking in to the collective consciousness any day now.

I think there are some errors in this cut and pasted blurb. With that said, I would not focus on REITs that focus on residential building which I think this bullet point criticism is focusing. Regarding your FOMO point, call me a contrarian, but That does sound like an excellent reason to buy.

[froze]

Originally Posted by joosttx

Buys some REITs

I have my own property that I manage, I don't need no stinking REITs. Besides they are extremely vulnerable to recessions. And if you have followed the market since the 2008 crash, REITs have done very poorly. They are also highly leveraged, so when interest rates go up it impacts on the cost of acquisitions and refinancing. Plus REITs are well known to be very narrow in their investment portfolios, i.e., a single property type, which means they lack diversification. Also, most of these REITs are bought on a 5 to 10 year fixed maturity, which means at the end of the time period they have to sell the properties, if the market is down you lose; and they can only invest 10% of their profits at the most by federal law, this also limits their growth and potential.

One should always study various investment types in depth before taking the word of someone and jumping in only to find that someone forgot to fill the pool with water.

[joosttx]

Originally Posted by froze

I have my own property that I manage, I don't need no stinking REITs. Besides they are extremely vulnerable to recessions. And if you have followed the market since the 2008 crash, REITs have done very poorly. They are also highly leveraged, so when interest rates go up it impacts on the cost of acquisitions and refinancing. Plus REITs are well known to be very narrow in their investment portfolios, i.e., a single property type, which means they lack diversification. Also, most of these REITs are bought on a 5 to 10 year fixed maturity, which means at the end of the time period they have to sell the properties, if the market is down you lose; and they can only invest 10% of their profits at the most by federal law, this also limits their growth and potential.

One should always study various investment types in depth before taking the word of someone and jumping in only to find that someone forgot to fill the pool with water.

Yep, you got to be smart and discipline to win especially in this environment.

[Ken Robb]

Originally Posted by Likes2ridefar

I think they hit the limits by me. I’m sure they will raise mine and we will leave and it’ll remain vacant for months like nearly every other on the floor I live. It is nuts.

Where will you go?