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Be Careful Buying the Homebuilder & Building Materials Dip!

The reason the housing market boomed was because …

1. Record low interest rates (Self Explanatory and the FED will raise them sooner than originally thought.)

2. The rent moratorium (Drove up the price of rent beyond that of a mortgage because the price of folks not paying their rent had to be passed on to new renters) This incentivized buying, not renting.

3. Mortgage forbearance (Folks didn’t have to make full mortgage payments keeping them in their homes) This allowed people to stay in their homes rather than sell them for the equity.

So mortgage forbearance and the rent moratorium is mostly coming to an end this month. Moreover all the money that should have been going to rent and mortgages got spent in the general economy, creating the boom we have right now. Folks will still be charged for the rent and mortgage they missed out on during the pandemic and we are likely to see evictions skyrocket! Suddenly the folks gaming the system will have ruined credit and leans placed against all their property. The housing market may dump. And money that was being spent in the economy will go back to paying rent and mortgages. Moreover building materials have skyrocketed yet these builders are under contract to produce at a certain price. A lot can go wrong here.

And I didn’t say anything about enhanced unemployment benefits ending yet, which will tighten the screws even more.

Anyway for all these reasons the FED has not raised interest rates … they’re just not telling us this is the reason. They got to keep money flowing when all this calamity happens.

When all this ends folks will be booted out of apartments and you will see an increased amount of people selling their homes. Money that was flooding purchases in the non home & rent market will draw back. Building materials will be more abundant lowering the price and the market for these material will be more competitive as many have expanded to produce more. This will have a chain reaction throughout the economy. So be careful about buying home builder and building material stocks when everything gets turned off later this month. This includes steel!

Food for thought Economics 101

And if you don’t think folks aren’t gaming the system, remember the case study of the EBT glitch in Louisiana. Whereas stores were raided when the balances went black on their cards and when everything came back online full Walmart shelves were emptied and carts abandoned in the grocery store isles. (See YouTube)

What do you think?

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15 Comments

  1. >The rent moratorium (Drove up the price of rent beyond that of a mortgage because the price of folks not paying their rent had to be passed on to new renters) This incentivized buying, not renting.

    I stopped reading here because who the fuck told you that? Home prices are outpacing rent increases by 40% in the US. For the last year or so renting has been a significantly better and cheaper option than buying. Kinda hard to take the rest of your post seriously when it seems like you’re just talking out your ass.

  2. While I do agree that there will likely be a uptick in rental evictions after July 31st, I don’t see that happening with homeowners. Banks are tacking all of the missed mortgage payments on to the back of the loans, there will be no huge lump sum coming due for homeowners.

    The huge demand for real estate is not coming from the people you say are “gaming the system”. People in any position to buy a home right now are certainly not the ones who were financially affected by the pandemic.

    I’m expecting to see a continued migration from cities to less populated areas where homes will need to be built.

  3. Home builders aren’t contracting at specific prices anymore. You pay material + labor. Demand for new housing will take a couple years to cool down, I do see a short opportunity in mortgage stocks though.

  4. I will wait for the collapse before I start thinking of HOA bullshit. I know people who’ve signed leases with 1 + 2 mo rent free just to fill the apt.
    Totally agree that there’s about to be foreclosures. I can’t tell you how many friends and family are urging me to buy right now because “the market for housing is shrinking and there’s no inventory left!!!”
    Lol I’ll see y’all in a year when imma be around waiting to scoop something up.

  5. Anyone who is not a tard has arranged their missed mortgage payments into a ‘balloon’ structure due with the final payment which almost no one ever makes as they sell the house long before then.

    There’s not that many people looking for homes right now but there are even fewer people selling. Both will start to increase in the coming months so it’s hard to predict how it will go.

    I think you will see a mixed set of responses from apartment management. The smart play for them here is to increase the rent to make up for lost time – guilt people into paying over market rate. If they try to play this hard they will fuck themselves. The new person moving in gets market rate. The old person kicked out tells the apartment complex to GFT and gets market rate at a new place.

  6. > When all this ends folks will be booted out of apartments and you will see an increased amount of people selling their homes

    aren’t a lot of buyers from out of the country?

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