Investing General Discussion

Palum · Aug 20, 2023

Tide27 said:
I feel like some people figured they had no choice at this time. The nature of my job and trying to progress upwards meant, in theory, that renting was the best option.

However, the rent on the home we were living in went from $1300 to $2200 over the course of 2 years...and the entire area followed suit.

Housing prices started to get so outrageous that we couldn't even purchase a used home because they were selling for 50k + above ask, so we had to build. I think when we got the clear to build, interest was around 4%, by the time we were allowed to lock in the interest rate...it had jumped to 6%

Yes this is nuts and the real crisis. House values being particularly inflated is a social issue but rents are even worse and will quickly become a short term problem. The average rental price in my area for half the square footage is now equivalent to a mortgage payment from late 2022. E.g. a 1000 sq foot apartment now rents the same as someone's mortgage for a 2000 sq foot house as prices were in say fall 22. Equivalent sq footage is now about 35% more.

Sanrith Descartes · Aug 20, 2023

Sludig said:
Then does that not actually basically support the soft landing celebratory? I was going of most of the doomsday laughing at the Fed in this thread over last however long

Very well could be. Janet Powell dance seems to be working

Sanrith Descartes · Aug 20, 2023

Big Phoenix said:
Speaking of NVDA, Intel is laying off GPU/AI workers;

Back when TSMC reported their q2 earning they said they dont see "ai demand" significantly effecting their revenue this year.

AMD didnt report anything of note in regards to AI other than their MI300 gpu is coming sometime late 2023.

Is NVDA going to meet, beat or fail its guidance come Wednesday?

I think whether they meet/best expectations is irrelevant. Their forward guidance is going to be make or break.

Sanrith Descartes · Aug 20, 2023

Mist said:
This is irrelevant. It still needs fresh data that comes from somewhere, and it still needs GPUs and terawatts.

Hey

Lightning Lord Rule , have you considered leasing out FOH to act as a training data set for AI? That would be some good comedy.

"Hey AI, why do you always refer to African Americans as Joggers or Inventors?"

Sanrith Descartes · Aug 20, 2023

Tide27 said:
I feel like some people figured they had no choice at this time. The nature of my job and trying to progress upwards meant, in theory, that renting was the best option.

However, the rent on the home we were living in went from $1300 to $2200 over the course of 2 years...and the entire area followed suit.

Housing prices started to get so outrageous that we couldn't even purchase a used home because they were selling for 50k + above ask, so we had to build. I think when we got the clear to build, interest was around 4%, by the time we were allowed to lock in the interest rate...it had jumped to 6%

The hurdle right now for residential real estate is lack of supply. People aren't willing to sell their sub-3% mortgage for a 7% mortgage. Unless they are relocating from areas where they appreciated enough to buy for cash, they are not selling in general. This lack of supply is what's countering high rates right now.

Tide27 · Aug 20, 2023

Palum said:
Yes this is nuts and the real crisis. House values being particularly inflated is a social issue but rents are even worse and will quickly become a short term problem. The average rental price in my area for half the square footage is now equivalent to a mortgage payment from late 2022. E.g. a 1000 sq foot apartment now rents the same as someone's mortgage for a 2000 sq foot house as prices were in say fall 22. Equivalent sq footage is now about 35% more.

I don't know how accurate this info is, but there is a gentleman that purchased 4 houses near us who said he raised all the rents because the govt raised their subsidized rates.

According to him, quite a few of his tenants qualify for some sort of govt program and they now guarantee roughly $1900 a month subsidized, so he raised his minimum rent from 1200 to 1900, since that's the amount the govt will guarantee.

Sounds a lot like TDY when I was in the military. The businesses know what the max per diem rate, so they just take whatever the max rate is and charge it ( hotels ) for example.

Sounds exactly the same as my daughters daycare. Rates went from 900 to 1200 overnight, and yup...it's because the govt now subsidizes up to 1200 per kid, so that set the price floor. Only 2 out of 12 families at my child's daycare paid...the rest got it for free.

/sigh

ShakyJake · Aug 20, 2023

Sanrith Descartes said:
The hurdle right now for residential real estate is lack of supply. People aren't willing to sell their sub-3% mortgage for a 7% mortgage. Unless they are relocating from areas where they appreciated enough to buy for cash, they are not selling in general. This lack of supply is what's countering high rates right now.

I'm left wondering who is buying these new constructions at these 7% rates. But then I realized, they are being told they can just refinance with the rates drop again. But that's probably not going to be anytime soon?

Creslin · Aug 20, 2023

ShakyJake said:
I'm left wondering who is buying these new constructions at these 7% rates. But then I realized, they are being told they can just refinance with the rates drop again. But that's probably not going to be anytime soon?

I think the most likely way this plays out is the rates stay high for a year or so until the economy really shows some cracks and then we see modest cuts so you might see rates drop to 5%, still high enough to dampen supply but low enough that the couple who buys today feels good about it. The guys who wait? Probably get a lower rate but a much high sticker price and come out behind vs buying today.

Big Phoenix · Aug 20, 2023

Sanrith Descartes said:
People aren't willing to sell their sub-3% mortgage for a 7% mortgage

People are essentially trapped, if theyre not dumb.

For example, if I sold my house and rolled all the equity into a down payment on a new house, with my current income id only be able to afford at best a similar house which I would be paying twice as much for due to interest rates. Theres effectively no mobility atm.

Id have to double my current income to be able to afford an appreciably nicer house even with a $200k+ down payment.

The housing market is utterly fucked;

Tide27 · Aug 20, 2023

ShakyJake said:
I'm left wondering who is buying these new constructions at these 7% rates. But then I realized, they are being told they can just refinance with the rates drop again. But that's probably not going to be anytime soon?

People are / were buying new construction because that is all they could get.

I'll put my finances out there. Rent raised from 1300 to 2200..so we started looking for a home. There is no guarantee that rent didn't keep exploding, so we had no choice.

My budget range was about 200k for a home. We shopped around and placed 3 to 4 bids on homes and got outbid everytime. We decided to stop looking for an ideal home, and just something we could tolerate....got outbid there by 30k to 50k everytime, and this is on homes in the 200k range. We don't have an additional 50k above ask to cover a purchase, as the loans only covered appraised value.

Finally we had to go to a new build, which they started in the 280s, but could actually get into one without a budding war.

We were uneducated to the fact we couldn't lock in an interest rate prior to 45 days to close, so we signed in the 4% range, and had to end up eating a 6% rate.

I think many others were in the same boat. They couldn't qualify for a 200k home loan because they needed an addition 50k to cover the appraisal gap, but banks had no problem approving them for 300k+ loans because that's what the new builds were appraising for.

I'd much rather have purchased a cheaper home, but the nature of the market wouldn't allow it

Gravel · Aug 20, 2023

Yeah, we started looking in the 180-220k range. Ended up at about 290k for a new build. Although ours is partially because we realized that Florida is fucked and insurance rapes you here. Anything older than about 10 years and you start adding a significant amount to your monthly payment in insurance. For instance, there was a house we really like that was built in the 80's, for probably low 200's, and it would've been significantly more expensive than the house we ended up in entirely because of insurance (about 3-4x the insurance premium).

And that couple I mentioned the other day, that was exactly what he said; they'll refinance whenever rates fall. For their sake, I hope they do. But from what I've also seen, we're at about average historical rates. The crazy low shit we had for the prior decade isn't normal.

Sanrith Descartes · Aug 20, 2023

Big Phoenix said:
People are essentially trapped, if theyre not dumb.

For example, if I sold my house and rolled all the equity into a down payment on a new house, with my current income id only be able to afford at best a similar house which I would be paying twice as much for due to interest rates. Theres effectively no mobility atm.

Id have to double my current income to be able to afford an appreciably nicer house even with a $200k+ down payment.

The housing market is utterly fucked;

No doubt it's a fucked situation. We just sold and our buyer basically just bought the payment and in essence was willing to take less house for the payment. I think is what most buyers with mortgages are doing. Those who are selling are relocating to cheaper areas and either going cash or likewise taking less house. We ended up in an ideal situation as we sold in an insanely priced area and the equity was enough to buy a nice chunk of land with a junior McMansion being built in it.

People thinking about ARMs are finding the discount is pretty shitty compared to a 30-year. It's not really worth it.

Sanrith Descartes · Aug 20, 2023

Gravel said:
Yeah, we started looking in the 180-220k range. Ended up at about 290k for a new build. Although ours is partially because we realized that Florida is fucked and insurance rapes you here. Anything older than about 10 years and you start adding a significant amount to your monthly payment in insurance. For instance, there was a house we really like that was built in the 80's, for probably low 200's, and it would've been significantly more expensive than the house we ended up in entirely because of insurance (about 3-4x the insurance premium).

And that couple I mentioned the other day, that was exactly what he said; they'll refinance whenever rates fall. For their sake, I hope they do. But from what I've also seen, we're at about average historical rates. The crazy low shit we had for the prior decade isn't normal.

Same experience here. I just got a quote for insurance with windstorm and it's about 800$ a year. By contrast my flood is about 700$ a year. The discounts in Florida for new construction make it really unappealing to go with an existing house. My previous Florida house (built in the 70's) had annual insurance bill of about $4k.

That insurance bill never goes away and will only go up. New build and low insurance was a no-brainer financially.

Sanrith Descartes · Aug 21, 2023

Kind of funny watching the prices increase on the short term Treasury Notes I bought. One is up 0.18% and the other up 0.15%. It not significant in any real sense, just interesting watching more people buy into the short notes.

Sanrith Descartes · Aug 21, 2023

Sanrith Descartes · Aug 21, 2023

TSLA +6% coming off Forbes article saying they are delivering Cybertrucks. The funny part of the article is it is based solely on the same pics and videos being posted online of the car haulers being seen on the highways. The state of journalism today.

Palum · Aug 21, 2023

Sanrith Descartes said:
TSLA +6% coming off Forbes article saying they are delivering Cybertrucks. The funny part of the article is it is based solely on the same pics and videos being posted online of the car haulers being seen on the highways. The state of journalism today.

That's the state of finance today too...

Sanrith Descartes · Aug 21, 2023

Took a flyer and bought a small long position on MP (since my ALB play worked so well). Went long shares at $20.25. I don't advise anyone following me on this trade unless you have a strong stomach.

Blazin · Aug 21, 2023

Sanrith Descartes said:
TSLA +6% coming off Forbes article saying they are delivering Cybertrucks. The funny part of the article is it is based solely on the same pics and videos being posted online of the car haulers being seen on the highways. The state of journalism today.

How do you know the article has anything to do with the price movement? My stool was softer this morning and I was quite confident that was the real driver

Sanrith Descartes · Aug 21, 2023

Blazin said:
How do you know the article has anything to do with the price movement? My stool was softer this morning and I was quite confident that was the real driver

Well, I used a highly scientific methodology... I read the article.

As Tesla Ships Cybertruck ‘Candidate’ Units, Price In Play [Update]

Limited Cybertruck production has begun ahead of a fall delivery event. And the price? Kelley Blue Book has some thoughts.

www.forbes.com

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