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Hadlock posted:Is this where we loop through the "investors are buying up all the houses" conversation again for three pages Them buying what other people can't afford isn't causal, it's just a result. And it's far from "all the houses".
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Oct 6, 2023 22:20
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I don't see housing prices falling much at all. Maybe some small regional corrections in certain areas of the US, but as a whole, I think the market doesn't fall at all. In fact I think there's going to be another housing frenzy if interest rates go below 5% again. Rates are drat near 8% right now, and if we get below 5 everyone sitting on the sidelines waiting for those rates to go down are going to jump in the market again.
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Oct 6, 2023 22:22
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Playing around with the mortgage rate calculator is scary. I entered what I paid for my house in 2021 with today's interest rates and over the 30 year loan the amount of interest paid would exceed our purchase price. Based off of our current monthly mortgage payment if I assumed that was the max we could afford any house I purchased would be 36% less than what it was in July 2021. Even under that scenario the total interest paid over the life of that 30 year loan is almost double what it will be with our current rate. I know all of the math checks out but it's still shocking to compare.
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Oct 6, 2023 22:28
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Yep, there are a lot of people who literally can't afford their own home if they were to have to buy it today. 5.3% is what you're looking for on a 30 year loan. That's where, if you follow the amortization schedule and payments, you pay about as much in interest as in principal.
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Oct 6, 2023 22:35
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cosmic gumbo posted:Playing around with the mortgage rate calculator is scary. I entered what I paid for my house in 2021 with today's interest rates and over the 30 year loan the amount of interest paid would exceed our purchase price. Based off of our current monthly mortgage payment if I assumed that was the max we could afford any house I purchased would be 36% less than what it was in July 2021. Even under that scenario the total interest paid over the life of that 30 year loan is almost double what it will be with our current rate. I know all of the math checks out but it's still shocking to compare. I tossed the numbers in just to see. I'd be paying $5948 per month at current interest rates, once PMI + Tax + Insurance are accounted for.  I'd be straight-up priced out of my area, even on a condo.quote:Yep, there are a lot of people who literally can't afford their own home if they were to have to buy it today.  Perhaps not literally for me (it'd be about 2/3 of my non-bonus take-home pay, and I don't consider bonuses income until they're in my bank account), but it'd be a bad enough idea that I would never, ever have bought. I'd have sent my family back east to live with in-laws until I could find a job outside this region somewhere more affordable, and I'd have lived in my office or something in the meantime.
Sundae fucked around with this message at 22:40 on Oct 6, 2023 |
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Oct 6, 2023 22:36
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I mean, every time the cost of shelter goes up relative to inflation, a smaller portion of people can afford shelter. If we're never going to see a price drop, that's basically an apocalyptic scenario. And maybe even a likely one, but mass homelessness can't keep worsening forever without other things changing in ways I'm not going to try to predict. So I'm comfortable waiting years to maybe buy if things ever get better. Maybe they do, or maybe society is changed drastically and unpredictability and I'm coping the best I can. Or maybe I'm an idiot and people who scraped together to buy in on the last rung as the ladder gets pulled up end up sitting comfortably somehow. Or maybe housing affordability and homelessness stay put at more or less this level of bad, indefinitely. We'll see! E: which is to say, I hope all your homes lose value Ditocoaf fucked around with this message at 23:16 on Oct 6, 2023 |
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Oct 6, 2023 23:01
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Baddog posted:Honestly I don't think doing an ARM right now would be that bad a move. Putting aside the fact that prices are likely to drop over the next year. People have been screaming into the void since the mini covid crashes that were on the precipice of a massive economy crash that’s just been slowly held off. There’s certainly risk there.
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Oct 6, 2023 23:05
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Ditocoaf posted:I mean, every time the cost of shelter goes up relative to inflation, a smaller portion of people can afford shelter. If we're never going to see a price drop, that's basically an apocalyptic scenario. And maybe even a likely one, but mass homelessness can't keep worsening forever without other things changing in ways I'm not going to try to predict. Single-family homes, and more specifically "ownership of" a single-family home is not the only form of shelter. I don't think we're headed toward a mass homelessness scenario just because the most desirable form of shelter continues to go up in value. I don't mean to sound like Marie Antoinette with "let them live in condos" but there are many scenarios in which the most coveted forms of real estate can go up in value indefinitely without triggering the end times.
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Oct 6, 2023 23:15
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GoGoGadgetChris posted:Single-family homes, and more specifically "ownership of" a single-family home is not the only form of shelter. I don't think we're headed toward a mass homelessness scenario just because the most desirable form of shelter continues to go up in value. We are far far more likely to see regulation that targets rent prices than regulation that aims to reduce the value of home ownership. Especially after the Supreme Court just agreed to leave New York’s rent control alone.
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Oct 6, 2023 23:21
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GoGoGadgetChris posted:Single-family homes, and more specifically "ownership of" a single-family home is not the only form of shelter. This does seem to be the missing link in the "hopeful renter, trying to buy" narrative. I'm going through this exercise with my little sister now (and still, I think it's been mentioned here). She's really at the top of the "I can outsave you and still live well" game and prospects for her are still grim.........unless she lowers her standards. Which she is not going to do because then she is buying a product she does not want. This is someone who can buy a house. Right now. But it's not what and where she wants, so she won't. Not someone desperate for basic shelter. Not a computer toucher. Not a college grad. Just a hard working person with a tech school education. On the sidelines because the market supply is not meeting her demand at an appropriate price.
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Oct 6, 2023 23:21
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I'm actually looking at condos not houses for myself, and let me tell you, condo prices, and rents for apartments and houses, aren't untethered from SFHs. House prices would fall if it was that much easier to get other shelter.
Ditocoaf fucked around with this message at 23:24 on Oct 6, 2023 |
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Oct 6, 2023 23:22
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Ditocoaf posted:I'm actually looking at condos, and let me tell you, condo prices, and rents for apartments and houses, aren't untethered from SFHs. House prices would fall if it was that much easier to get other shelter. Well of course they would. But it’s not something that can happen quickly, and with population grow and increasing concentration of city centers, it’s even more difficult.
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Oct 6, 2023 23:24
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Pilfered Pallbearers posted:Well of course they would. I was just responding to GoGoGadgetChris's idea that SFH prices can rise relative to inflation indefinitely while the cost of shelter in general doesn't. I think they're related closely enough to allow for talking about shelter in general like my earlier rambling post did. Ditocoaf fucked around with this message at 23:49 on Oct 6, 2023 |
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Oct 6, 2023 23:45
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Ditocoaf posted:I was just responding to GoGoGadgetChris's idea that SFH prices can rise relative to inflation indefinitely while the cost of shelter in general doesn't. I think they're related closely enough to allow for talking about shelter in general like my earlier rambling post did. Yeah, this seems to be an important point/distinction in the "surely the house I want to buy can't keep being more expensive than what I can afford" scenario. You just get less. And you don't get to own it.
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Oct 7, 2023 00:23
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Motronic posted:Yep, there are a lot of people who literally can't afford their own home if they were to have to buy it today. Kind of curious what % of the population this represents I know in my mom's town once you hit X age your property tax switches to a much more favorable schedule to avoid long time residents on fixed income getting priced out of their long time homes. California has some property tax swap deal where you can sell your house, buy a new one in a different city for < 20% more than you sold your old one for, and keep the old grandfathered tax bill I would guess for the over 55 crowd it's > 50% and over 70 crowd it's over 70% if not considerably higher
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Oct 7, 2023 00:24
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Hadlock posted:Kind of curious what % of the population this represents Just to be clear, this is not what I'm talking about. It's a thing, but not the thing I meant. I'm talking about so many of us buying home in the 3's that couldn't afford the payments on the same place when the mortgage is in the 7's.
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Oct 7, 2023 00:28
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I wonder how hard the realtors and lenders are whispering in customers' ears, "You just have to stretch yourself thin for a few months, a year maybe, and then when interest rates go down for the election year, you refi your payment in half!!" One of the few scenarios that I COULD see for a big home value collapse would be if large numbers of new owners are all foreclosed on. I know more than a few people who basically bet their financial wellbeing on a refinance within the next 24 months... GoGoGadgetChris fucked around with this message at 00:43 on Oct 7, 2023 |
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Oct 7, 2023 00:41
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GoGoGadgetChris posted:I wonder how hard the realtors and lenders are whispering in customers' ears, "You just have to stretch yourself thin for a few months, a year maybe, and then when interest rates go down for the election year, you refi your payment in half!!" This whisper is formalized in the ARM, which you plan refi out of before the rate adjusts e.g. "for the election year" or whatever. So ask: are ARM mortgages on the rise? https://www.corelogic.com/intelligence/rising-rates-lead-to-increase-in-adjustable-rate-mortgage-arm-activity/ Yes. They are correlated (but do not perfectly track) with how high interest rates are.  ARMs were at a low of 5% of mortgages (by dollar) in 2021 but have ramped up to looks like around 18% of mortgages today. Note this is by dollar, not by number of mortgages, and the subtitle of the first part of this article is that "ARMs are more common for homebuyers who take out large loans" which both suggests that they're a lower percentage of number of mortgages than they are dollar amount of mortgages, and, I would infer that they are a higher percentage of large loans in part because those are taken by borrowers stretching their budgets to the max. quote:The ARM share varies significantly based on location and loan amount. ARMs are more common for homebuyers taking out large loans, especially jumbo loans, compared to borrowers with smaller loans. Among mortgage originations exceeding $1 million in April 2023, ARMs comprised 45% of the dollar volume, a 6 percentage-point increase from April 2022 (Figure 2). Among mortgages in the $400,001 to $1 million range, the ARM share was approximately 17%, up by 4 percentage points from April 2022. For mortgages in the $200,001 to $400,000 range, the ARM share was only 10% in April 2023, up by 4 percentage points from April 2022.
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Oct 7, 2023 01:02
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Leperflesh posted:
I think this is code for "first time home buyers in california, new york, and seattle"
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Oct 7, 2023 01:08
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Thanks for the input, all.Pilfered Pallbearers posted:What rule of thumb are you talking about? Home value being 4x gross isn’t a super typical barometer. The typical barometer is max 30% of monthly income on monthly housing costs. Even these kinds of rules of thumb could change in 5-10 years. moana posted:Step 2 Pilfered Pallbearers posted:With the purchase that far out, the only thing you really should be doing is building your savings. You can have a 50% down payment if you want to. Higher down payment = lower monthly cost which = lower monthly payment. Plus the bonus of paying less overall interest, which at current rates could be saving you 100’s of thousands of $. Without raising your income, this is the way to safely stretch your buying power upwards. Shifty Pony posted:Additionally what you'll need as a backstop for savings will depend greatly upon your career and industry. You will want a larger fund if you are in a cyclical field (like oil and gas) or have a job where significant amounts of your income are commission (like sales). Condo tangents: I'm strongly inclined toward a condo or townhome, but some of the HOA fees I see listed are extreme. On the one hand, I'd certainly be more confident about moving into a building where residents are putting in the money to theoretically proactively maintain things rather than get slammed with unexpected special assessments, but I don't have good scope into how to meaningfully assess that, probably even if I'm at the point where I'm getting a look at the association's finances. Any tips? I'm also looking to make any purchase my home for the foreseeable future, so I suspect I'd want to stick to buildings with very strict rental caps, just on the assumption that absentee landlords are more likely to prefer not investing in building upkeep than actual long-term residents. Does that seem fair?
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Oct 7, 2023 02:07
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Cugel the Clever posted:Thanks for the input, all. 5-10 years is a long enough timeframe where none of this matters now. Regulations, local laws, and climate change are violate enough where all of those things may be wildly different. Most of that is also hyper-local, and you shouldn’t start to think about it until you 100% know what town or city or county you’re shopping in. With regards to lenders, they don’t give a gently caress what your down payment is. They only care if they think you can afford the monthly payment, and the down payment is a lever that makes that number go up or down.
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Oct 7, 2023 02:15
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Are you in the Seattle area? Yeah you need 20% down or a way to convincingly lie* about your down payment. Ignore my 10% down ideas. There's no way you'll be able to competitively bid there with anything less than 20% down. At least not anything acceptably livable inside or in a halfway ok neighborhood *Edit before sixer: this is mortgage fraud, don't do this Second edit: I was alluding to the mythical "cash offer financing" loophole which apparently isn't yet considered fraud Hadlock fucked around with this message at 02:31 on Oct 7, 2023 |
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Oct 7, 2023 02:25
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RSUs are tricky for lenders. On the one hand, there’s definitely a lot more awareness of them these days, especially in tech-heavy markets. On the other hand, they’re not guaranteed, and that’s not a theoretical distinction — it’s common for RSU grants to vary a lot based on company health and how they’re feeling about you, and even your existing grants can rise or fall a lot based on market conditions. If you can point to a long-ish history of getting consistent RSU grants, you should be able to find a lender who’ll factor that in as part of your income, maybe not at full value but not completely dismissing it. But it is much safer to plan without relying on RSUs at all and treat them as a bonus that you can probably rely on to let you pay down your principal much, much faster than you otherwise would.
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Oct 7, 2023 02:37
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Hadlock posted:Are you in the Seattle area? Yeah you need 20% down or a way to convincingly lie about your down payment. Ignore my 10% down ideas. There's no way you'll be able to competitively bid there with anything less than 20% down. At least not anything acceptably livable inside or in a halfway ok neighborhood
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Oct 7, 2023 02:40
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Hadlock posted:Are you in the Seattle area? Yeah you need 20% down or a way to convincingly lie* about your down payment. Ignore my 10% down ideas. There's no way you'll be able to competitively bid there with anything less than 20% down. At least not anything acceptably livable inside or in a halfway ok neighborhood As a buyer in the Seattle area, this is what my agent told me, but as a seller in the Seattle area two months later, the same agent had no particular argument for why I shouldn't accept the highest (financed, 5% down) offer over an all-cash offer for $20k less.
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Oct 7, 2023 02:41
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Hadlock posted:Are you in the Seattle area? Yeah you need 20% down or a way to convincingly lie* about your down payment. Ignore my 10% down ideas. There's no way you'll be able to competitively bid there with anything less than 20% down. At least not anything acceptably livable inside or in a halfway ok neighborhood This isn’t true unless you have different opinions of what ok neighborhoods are…which I would not be surprised by. The seller doesn’t really care that much how much you are putting down if you are waiving financing contingencies anyway, which is what you need to do to be competitive in the entry level of the King county market. E: was just a buyer for 8 months in the Seattle area, initially with 5% down offers.
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Oct 7, 2023 02:45
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As a seller, you care about buyer financing only to the degree that you’re worried it might fall apart before closing (or just take longer to close). If you’re not in a rush, and it’s a seller’s market, you should generally just take the best offer; worst case, you have to re-list. Seller’s agents will make advice with this in mind, and their incentives align with yours — they want a good offer but also don’t want their time to be wasted and especially don’t want to have to list/show the house more than necessary. A buyer’s agent is at least theoretically supposed to encourage you to make good decisions and not buy a house you can’t afford. How much they actually live up to that, well, y’know. But that’s why they’re giving you different advice.
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Oct 7, 2023 02:57
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Hadlock posted:I think this is code for "first time home buyers in california, new york, and seattle" Yeah, I'll be pretty sad if rates don't go down within 7 years. I could still afford whatever the adjusted rate would be though, within reason. Or just sell.
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Oct 7, 2023 03:02
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Yeah we just bought this year with only 10% down but house had failed to trigger a bidding war and got relisted during what was basically a hurricane and didn't have any bidding competition In a situation where you have multiple bidders going above ask less than 20% down, especially being a first time buyer, at least in the SF proper market, can hurt you. SF condo market has uh, evolved a lot since then though
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Oct 7, 2023 03:12
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Pilfered Pallbearers posted:Especially after the Supreme Court just agreed to leave New York’s rent control alone.
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Oct 7, 2023 03:14
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Ditocoaf posted:I mean, every time the cost of shelter goes up relative to inflation, a smaller portion of people can afford shelter. If we're never going to see a price drop, that's basically an apocalyptic scenario. It's not apocalyptic, it's merely dystopian. And it's what we've been going through for what, 50 years now? With the exception of a couple of one off crashes, home prices have been growing faster than wages for many decades, and it sucks rear end
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Oct 7, 2023 04:33
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Ditocoaf posted:I mean, every time the cost of shelter goes up relative to inflation, a smaller portion of people can afford shelter. If we're never going to see a price drop, that's basically an apocalyptic scenario. And maybe even a likely one, but mass homelessness can't keep worsening forever without other things changing in ways I'm not going to try to predict. This is a greatly oversimplified and inaccurate doomer take. Cost of shelter may go up vs inflation, but you can’t ignore income gains. For example, https://fred.stlouisfed.org/graph/fredgraph.png?g=19Pzf Income gains have really outpaced shelter cost rise over the decades. Real income has went up a lot over the decades. It also ignores incentives for first time buyers, availability of entry level housing, prices outside of desirable urban centers, and probably a zillion other things. I get that condo shopping sucks but please take a deep breath before posting about how you hope everyone’s home values fall in a thread that is just here to help fellow goons deal with a stressful and complicated process.
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Oct 7, 2023 05:03
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pmchem posted:This is a greatly oversimplified and inaccurate doomer take. Cost of shelter may go up vs inflation, but you can’t ignore income gains. For example, Here are real wages, the shelter CPI, and the all-goods CPI. Real-wages is the flattest curve, the shelter CPI is the steepest curve.  They're basically 3 linear lines, which reflects what's really happening in the market. Real wages are measured relative to the all-goods CPI, so the flat real wages curve means that personal income is growing at roughly the same rate as the price of goods in the all-goods CPI. The question you've posed is: has personal income been growing faster than the shelter CPI? You can find that answer by comparing the shelter CPI to the all-goods CPI. The shelter CPI is growing faster than the all-goods CPI, therefore personal income is growing slower than housing prices. e: Put another way, you said "Cost of shelter may go up vs inflation, but you can’t ignore income gains." But real income has not been growing, it's been stagnant for decades. If the cost of shelter is going up vs inflation (it is), and real income is not going up vs inflation (true), then the cost of shelter is going up vs real income (also true) QuarkJets fucked around with this message at 06:43 on Oct 7, 2023 |
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Oct 7, 2023 06:41
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Cugel the Clever posted:Condo tangents: I'm strongly inclined toward a condo or townhome, but some of the HOA fees I see listed are extreme. On the one hand, I'd certainly be more confident about moving into a building where residents are putting in the money to theoretically proactively maintain things rather than get slammed with unexpected special assessments, but I don't have good scope into how to meaningfully assess that, probably even if I'm at the point where I'm getting a look at the association's finances. Any tips? I bought a townhouse in the Seattle eastside last summer, and when I started shopping I was similarly unsure about how to assess an HOA. But it became fairly clear to me after seeing a few HOA packets. Here are a few things to consider:
As far as rental caps go, my anecdotal experience is that complexes with rental caps were notably higher quality than complexes without rental caps. Nicer units, better maintained buildings, etc. From what I understand, banks won't even give regular mortgages for condos/townhouses in complexes with too high a percentage of rental units.
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Oct 7, 2023 07:27
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QuarkJets posted:Here are real wages, the shelter CPI, and the all-goods CPI. Real-wages is the flattest curve, the shelter CPI is the steepest curve. I like the argument, but you're comparing inflation adjusted wages against a major component of inflation. You gotta use nominal wages to make the comparison.  I think there is a discussion to be had over the inequality of who is getting that wage growth (definitely seems like most haven't seen 60% wage growth in the past 15 years!), how the shelter cpi is calculated, etc etc - but maybe the general economic discussion thead is better for that before we get too off track here. How expensive houses are is sort of relevant to the house buying thread, and I've contributed to that discussion.... but we're getting way into the weeds for what is supposed to be an advice thread.... https://forums.somethingawful.com/showthread.php?threadid=4027219
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Oct 7, 2023 08:30
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rjmccall posted:RSUs are tricky for lenders. On the one hand, there’s definitely a lot more awareness of them these days, especially in tech-heavy markets. On the other hand, they’re not guaranteed, and that’s not a theoretical distinction — it’s common for RSU grants to vary a lot based on company health and how they’re feeling about you, and even your existing grants can rise or fall a lot based on market conditions. If you can point to a long-ish history of getting consistent RSU grants, you should be able to find a lender who’ll factor that in as part of your income, maybe not at full value but not completely dismissing it. But it is much safer to plan without relying on RSUs at all and treat them as a bonus that you can probably rely on to let you pay down your principal much, much faster than you otherwise would. My experience with lenders and RSUs is the same as any investment income: show me predictable steady income over 2 or 3 years minimum and they will count. This is easy with RSUs because they are on your W2. So if you consistently get them and vest them for long enough it's just part of your income at that point. Unvested/never vested RSUs? Lottery tickets on a company that isn't public and with no liquidity event? lol, no. They don't even care all that much about big piles of cash or stock because you can spend that. They are concerned with your ability to pay over the course of 30 years, and the best way they have found to do that is by looking at the income you claim on your taxes. Anything else is pretty irrelevant.
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Oct 7, 2023 15:03
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Motronic posted:My experience with lenders and RSUs is the same as any investment income: show me predictable steady income over 2 or 3 years minimum and they will count. This is easy with RSUs because they are on your W2. So if you consistently get them and vest them for long enough it's just part of your income at that point. Yeah exactly. The lenders care about (in order): currently liquid cash available Funds that can be liquidated by closing date Income over the last few years Things that cannot be liquidated don't really factor.
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Oct 7, 2023 15:19
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And they only care about those first two as a function of down payment. Anything over that does not "help" you. Only DTI and income does.
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Oct 7, 2023 15:23
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Baddog posted:I like the argument, but you're comparing inflation adjusted wages against a major component of inflation. You gotta use nominal wages to make the comparison. No, I'm not. Read my post again. Real wages are flat. Real estate costs have been growing faster than other costs. Therefore real estate buying power has been going down, not up
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Oct 7, 2023 15:59
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QuarkJets posted:No, I'm not. Read my post again. I took my response to the global econ thread. But baddog and I are right.
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Oct 7, 2023 16:26
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