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Triggers for a Housing Correction

By BayArea following x   2018 Mar 4, 6:49am 2,021 views   62 comments   watch   sfw   quote     share    


Hi guys,

Given that there is no subprime lending crisis like there was over a decade ago, any housing correction would come elsewhere.

What are the possible triggers:

Interest rate hikes - heard of plans to raise rate 4 times in 2018

New tax plan - in Jan and Feb I’ve seen absolutely no slowdown or concern with reduction in tax benefits

Recession or stock market correction

War

Natural Disaster - massive earthquake would certainly shake things up in the Bay Area (no pun)

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1   bob2356   ignore (1)   2018 Mar 4, 7:22am   ↑ like (0)   ↓ dislike (0)   quote        

You forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back.. When, not if but when, the economy goes south there will be a crash. Bonus points, the deficit will soar to 2t or higher. Good to have the party of fiscal responsibility in charge.
2   mell   ignore (1)   2018 Mar 4, 7:27am   ↑ like (2)   ↓ dislike (0)   quote        

bob2356 says
You forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back.. When, not if but when, the economy goes south there will be a crash. Bonus points, the deficit will soar to 2t or higher. Good to have the party of fiscal responsibility in charge.


I thought you hated the tea party. Can't have it both ways.
3   PrivilegedtobeWhite   ignore (1)   2018 Mar 4, 7:45am   ↑ like (0)   ↓ dislike (0)   quote        

My understanding is that subprime was only the catalyst. The vast majority of failed loans were prime loans, so I believe it's folly to assume less subprime means no housing correction.
4   Sniper   ignore (11)   2018 Mar 4, 9:07am   ↑ like (1)   ↓ dislike (0)   quote        

I track a bunch of houses sold in my area and look up the mortgages. By far, the majority are all going 3.5% down, FHA loans. Hardly any are putting down any substantial down payments. Plus, these new loans carry PMI for the life of the loan, unless they refi down the road.

These people are underwater the minute they walk into the house. Plus, the appreciation in the area has been marginal at best, so they're not playing the high leverage game to maximize their equity. Prices have moved sideways for many years.

This tells me that people are really stretched financially, and aren't saving money. Any downturn in the housing market, and all these people are screwed and underwater.

I've also looked at all my neighbors and many have refied and done cashouts on houses they've been in for decades. So any downturn and all these people will be underwater on houses they've lived in for a long time. Plus, if they are planning on using equity for retirement, they're fucked!
5   Strategist   ignore (1)   2018 Mar 4, 9:50am   ↑ like (0)   ↓ dislike (0)   quote        

BayArea says
Given that there is no subprime lending crisis like there was over a decade ago, any housing correction would come elsewhere.

What are the possible triggers:

Interest rate hikes - heard of plans to raise rate 4 times in 2018

Nope. Interest rate hikes have happened lots of times before. Rising rates does not cause a housing correction.

BayArea says

New tax plan - in Jan and Feb I’ve seen absolutely no slowdown or concern with reduction in tax benefits

Nope. Not enough to cause a housing correction. Besides, lowering the overall tax rates more than counters the negatives of mortgage deductions.


BayArea says
Recession or stock market correction

Could cause a housing correction, but the recession would have to be severe.

BayArea says
War

Nope, not a chance. We are already at war.

BayArea says

Natural Disaster - massive earthquake would certainly shake things up in the Bay Area (no pun)

Yes. Could cause a housing correction.
6   Tenpoundbass   ignore (10)   2018 Mar 4, 9:56am   ↑ like (0)   ↓ dislike (0)   quote        

Banks will figure out their future is in 12% mortgages and and the NAR will figure out their future is getting points of the Mortgage not the Sale of the house.
Med homes then return to $120K as the Historical norm value for your average house price.
7   Strategist   ignore (1)   2018 Mar 4, 9:59am   ↑ like (0)   ↓ dislike (0)   quote        

bob2356 says
You forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back


That was 2008, this is 2018. Homes are more affordable now, and those 2008 lending conditions do not exist anymore.
Home prices being overpriced or underpriced are in the eyes of the beholder. My eyes say, home prices are underpriced.
8   Patrick   ignore (0)   2018 Mar 4, 10:02am   ↑ like (3)   ↓ dislike (0)   quote        

I think the mere perception that housing is wobbly is enough to actually make it so, especially in the SF Bay Area, where prices are so far beyond the equivalent cost in rent that no landlord can cover the mortgage and taxes on newly purchased houses. Rents are high, but prices are even higher. There is no fundamental support.

Essentially every real estate article in the San Jose Mercury News or SF Chronicle is simply a puff piece written by realtors and spoon-fed to reporters, breathlessly proclaiming that prices will rise ever faster, when in reality, according to the Case-Shiller index, Bay Area prices have risen 2.93% on average for the last 10 years.

Here is a typical puff piece: https://www.mercurynews.com/2018/03/02/sunnyvale-home-shatters-new-record-with-enormous-price-tag/
The formula is to feign amazement at the price per square foot, and then show lots of pictures of the house. It is never mentioned that the house itself is essentially irrelevant, and that the price paid around here was really for the land alone.

To suggest that house prices could fall would be bad for business. That's why this site was important - because it simply is never possible to get the truth from a realtor. It's exactly like interviewing used car salesmen for his opinion on whether it's a good time to buy a used car, and then publishing his recommendation to buy now! as the unbiased recommendation of an "expert". Lol.
9   Malcolm   ignore (1)   2018 Mar 4, 10:25am   ↑ like (2)   ↓ dislike (0)   quote        

Subprime vs prime had little to nothing to do with the overall crash. Lenders learned the hard way that human psychology doesn't like paying for things when there is no upside. During the 2009 crash people did simple math, they could rent for a third of what they were paying, or they could walk away from a non-recourse loan, made worse by debt forgiveness laws being suspended for other loans, give the house back to the bank and go across the street to buy a similar house for half the price.

I like the original premise of the question though, what is different this time? The initial price correction, last time, happened when junk loans with time bomb rate hikes made a predictable class of borrowers, who had taken out loans based on short term speculation of flipping, finally reached price resistance and couldn't pay the loans when their 1% rate jumped to 8%. (BUT THOSE WERE SUBPRIME BORROWERS!!!! some were, but read on please.) The reason you can't just wide-brush blame subprime borrowers is because it wasn't their character that made them default, it was the psychology of the whole market. In a normal So Cal. and blue state market, houses only go up during normal periods. Foreclosures are rare. So, in theory, expanding lending shouldn't break the streak, a prime or subprime speculator is still betting on the same sure thing. There was nothing wrong with someone subprime leveraging, just as everyone else was at the time. You can validate this theory by simply observing that lowering interest rates back to zero pushed the values back up, and eliminating the Leonardo DaVinci level of creative financing, teaser rate loans, tempered a runaway pace of appreciation, in fact, under Obama, our house prices rose pretty smoothly over his term, up until last year.

Yikes, sorry, very passionate on this issue. So, what is different now? Instead of resetting time bomb rates, we have the opposite problem of wages not sustaining high prices. We had the same phenomenon this time, like last time, where using median sales price as a measure, the decline is not noticed until it is already well under way and volume all of a sudden stops and we go from shortage to glut of homes.

Why I think this time it will could be worse:

1. I am noticing banks don't want to hold onto foreclosures, they are going to take what they can get to avoid holding a property at auction, NOT possess and list. They found out, the hard way, that holding a foreclosed property will pretty much double their losses due to vandalism and deterioration.
2. There is no fix to a fundamental pricing problem. Interest rates are already at the bottom and can't go lower, certainly not enough to ease the payment to value ratio.
3. The tax cuts made owing overpriced real estate in blue states even less desirable.
4. As I've read from Patrick's threads, I too believe that there is a growing cultural change where people would rather downsize and have more freedom to enjoy life from a condo that owning a mcmansion. As they get older, the maintenance is just horrendous.
10   WookieMan   ignore (0)   2018 Mar 4, 11:09am   ↑ like (1)   ↓ dislike (0)   quote        

Malcolm says
Yikes, sorry, very passionate on this issue. So, what is different now? Instead of resetting time bomb rates, we have the opposite problem of wages not sustaining high prices. We had the same phenomenon this time, like last time, where using median sales price as a measure, the decline is not noticed until it is already well under way and volume all of a sudden stops and we go from shortage to glut of homes.


I appreciate the passion. A couple questions though. I agree incomes/wages have not been increasing at what would be normal rates historically. But it technically doesn't matter (they are higher, just not sure if they are if adjusted for inflation). We did have shitty loans and borrowers in 2006, something I think we can agree on that. The difference now is we sit at 4% interest rates versus 6.25% roughly around the peak. http://www.freddiemac.com/pmms/pmms30.html

Ignore values for a second, you're buying a payment. We're still technically 33% lower then the peak on interest rates (payment), with better borrowers. Most areas nationally just passed peak prices from the bubble, but payments, at a minimum are 33% lower for new buyers. Factor in the debt unloaded during the crash, buyers that got in low during the crash and those paying down principle holding and you're got owners with some solid LTV. So payments are lower comparatively and equity is probably substantially higher than 2006.

Based on housing alone and no outside interference, I'm not seeing any signs of a housing correction or downturn. Even if we had the shit loans now, which we don't, we've still got 33% higher to go on interest rates until we touch the housing bubble in terms of payment. I of course could be wrong and this is strictly in the national sense. Bay Area is a whole other story that I don't research that much.
11   WookieMan   ignore (0)   2018 Mar 4, 11:17am   ↑ like (0)   ↓ dislike (0)   quote        

FYI, I'm not a housing bull. I think prices slide sideways for a while. 4ish years is my guess. After that, I think they start to take off once Millennial's grow up and start buying houses. All dependent on interest rates, but as a former user has said here (occasionally stopping by) it's hard to break the long term trend on interest rates. So Millennial's starting to buy and low interest rates in 2022ish is when I think it starts to take off after a slow period here.
12   APOCALYPSEFUCKisShostikovitch   ignore (30)   2018 Mar 4, 11:22am   ↑ like (3)   ↓ dislike (0)   quote        

LONG:

FACE! Marinades.

Yams.

Belt-fed ammo.

Belt-fed ordnance.

Still, once the ammo factories and yam canneries collapse, we have to be ready.

Which is why I am now long pitch forks - on the logic that no one will hand you their face to eat when you run out of ammo.
13   PrivilegedtobeWhite   ignore (1)   2018 Mar 4, 11:33am   ↑ like (0)   ↓ dislike (0)   quote        

When (not if) we have a job-loss recession, housing will tank. Prices are way into speculation territory merely by looking at equivalent rents, which means prices will plummet once the mania reverses.
14   Strategist   ignore (1)   2018 Mar 4, 12:28pm   ↑ like (0)   ↓ dislike (0)   quote        

All you housing bears crack me up. The last few years since i've been here, I hear of hundreds of reasons why housing is about to crash. Yet, housing continues to skyrocket.
Best advise you guys can get is.........Please don't take your own advise.
15   FortWayne   ignore (1)   2018 Mar 4, 1:13pm   ↑ like (0)   ↓ dislike (0)   quote        

I see signs of a bubble again.

Overstretched borrowers, realtors spamming us with advertising on how much more we can sell for today. Government paying some people’s mortgages.

It’s not as bad as it was during 06. But prices already surpassed the bubble years in some neighborhoods.

As long as Reseda is still not at peak. Once places like our hood become unaffordable, shit will hit the fan.

We simply need more housing as a state, more water, more energy.
16   Sniper   ignore (11)   2018 Mar 4, 3:00pm   ↑ like (1)   ↓ dislike (0)   quote        

WookieMan says
FYI, I'm not a housing bull. I think prices slide sideways for a while. 4ish years is my guess. After that, I think they start to take off once Millennial's grow up and start buying houses.


Not going to happen.

If you're waiting for Millennials to step up and start buying, you have a really looonnggg wait. They have no money saved up, 75% have less than $5K in the bank, and the majority live paycheck to paycheck with no emergency savings. Plus, many have sub-standard FICOs and can't get approved for a mortgage.

Like I mentioned above, the ones who are buying, are buying FHA with very little down (probably borrowing the down payment from mommy and daddy). They have no slack in the event of a downturn in prices.

WookieMan says
So Millennial's starting to buy and low interest rates in 2022ish is when I think it starts to take off after a slow period here.


We've had the lowest rates in history the last several years. If they were going to buy, they would have already. Many reports recently have stated that new mortgage applications have slowed way down, and rates have only gone up like 0.5% recently. If rates get another point higher, the housing market comes to a big halt.
17   Sniper   ignore (11)   2018 Mar 4, 3:00pm   ↑ like (0)   ↓ dislike (0)   quote        

Malcolm says
I am noticing banks don't want to hold onto foreclosures, they are going to take what they can get to avoid holding a property at auction, NOT possess and list. They found out, the hard way, that holding a foreclosed property will pretty much double their losses due to vandalism and deterioration.


That might be on the West coast, but over here on the East coast, the banks sit on them for years before unloading them. The banks pay maintainance, winterizing, taxes, etc, while the houses just sit and rot. In many cases, they waited multiple years to kick out the squatters, so the house was trashed before the "tenants" were kicked out. Then there's the issues with ripped out appliances, cabinets, copper and any else of value by vandals.

I look at foreclosures all the time to flip, and maybe half of them are so bad, they should be bulldozed instead of renovated.
18   TwoScoopsOfDragonEnergy   ignore (1)   2018 Mar 4, 3:21pm   ↑ like (0)   ↓ dislike (0)   quote        

Sniper says
I look at foreclosures all the time to flip, and maybe half of them are so bad, they should be bulldozed instead of renovated.


South Florida is a living museum to Bronx Baroque furnishing style. In fairness, some of that 40s-60s stuff is amazing craftsmanship, that you couldn't touch a similar quality build for a few thousands a piece.

Also, some people are really snobby. There's a perfectly good places with good bones that people pass up because they're no brand spanking new and you might have to take out some mirrors and crystal overload chandeliers.
19   BayArea   ignore (0)   2018 Mar 4, 5:20pm   ↑ like (2)   ↓ dislike (0)   quote        

Patrick says
Essentially every real estate article in the San Jose Mercury News or SF Chronicle is simply a puff piece written by realtors and spoon-fed to reporters, breathlessly proclaiming that prices will rise ever faster, when in reality, according to the Case-Shiller index, Bay Area prices have risen 2.93% on average for the last 10 years.


Last 10yrs starting at what month? As we know, there was a crash in 2008. The reference point you take here to arrive at 2.93% can have huge impact.

Patrick, one eye opening detail I learned from this site years ago had to do with annual rent:price ratios. In lower class areas like Vallejo or East Oakland, that ratio could be over 10% while in higher class areas like Palo Alto or Burlingame it could be as low as 4%. That means it's typically cheaper to rent in higher class areas like the Peninsula. And of course when I say "cheaper" it's in comparison to buying the same thing.

I live in Belmont/San Carlos and pay close attention to the real estate here. A typical 2bdrm house will sell for $1.3-1.4M here these days. That house will rent for around $3,750/mo.

A $1.4M house will have a mortgage (principle and interest) of $5,500/mo and a prop tax of $1,300/mo. An investor won't even come close to breaking even here.

But what's interesting is that we've seen plenty of vacant homes in our neighborhood bought with foreign money where the owner is banking on the equity growth. The ones that bought in the last several years are making a killing on their unoccupied homes (at least on paper). It's amazing, truly.
20   FortWayne   ignore (1)   2018 Mar 4, 5:35pm   ↑ like (3)   ↓ dislike (0)   quote        

BayArea says
Patrick says
Essentially every real estate article in the San Jose Mercury News or SF Chronicle is simply a puff piece written by realtors and spoon-fed to reporters, breathlessly proclaiming that prices will rise ever faster, when in reality, according to the Case-Shiller index, Bay Area prices have risen 2.93% on average for the last 10 years.


Last 10yrs starting at what month? As we know, there was a crash in 2008. The reference point you take here to arrive at 2.93% can have huge impact.

Patrick, one eye opening detail I learned from this site years ago had to do with annual rent:price ratios. In lower class areas like Vallejo or East Oakland, that ratio could be over 10% while in higher class areas like Palo Alto or Burlingame it could be as low as 4%. That means it's typically cheaper to rent in higher class areas like the Peni...


We really should not allow foreign money to own American land.
21   bob2356   ignore (1)   2018 Mar 4, 6:02pm   ↑ like (0)   ↓ dislike (0)   quote        

mell says
bob2356 says
You forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back.. When, not if but when, the economy goes south there will be a crash. Bonus points, the deficit will soar to 2t or higher. Good to have the party of fiscal responsibility in charge.


I thought you hated the tea party. Can't have it both ways.


I'm hoping that this is return sarcasm and that no one could have possibly missed my point.
22   Hircus   ignore (0)   2018 Mar 4, 6:04pm   ↑ like (0)   ↓ dislike (0)   quote        

Sniper says


I've also looked at all my neighbors and many have refied and done cashouts on houses they've been in for decades.


How do you find this out? Do you have access to non-public data?
23   bob2356   ignore (1)   2018 Mar 4, 6:13pm   ↑ like (0)   ↓ dislike (0)   quote        

Strategist says
bob2356 says
You forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back


That was 2008, this is 2018. Homes are more affordable now, and those 2008 lending conditions do not exist anymore.
Home prices being overpriced or underpriced are in the eyes of the beholder. My eyes say, home prices are underpriced.


I for one am far from a housing bear. I've been buying steadily for 6 years now. But I'm getting out of Vegas for sure, it's getting frothier by the day. Moving into markets that are undervalued and not changing much.

So people are putting almost nothing down and paying PMI because they enjoy paying extra? Non bank mortgage lenders with pretty loose criteria are growing like mad because people have such secure credit and financial situations? Housing in most major markets have blown way past traditional rent to purchase ratio's because they are underpriced? How does all that work?
24   bob2356   ignore (1)   2018 Mar 4, 6:17pm   ↑ like (0)   ↓ dislike (0)   quote        

BayArea says

But what's interesting is that we've seen plenty of vacant homes in our neighborhood bought with foreign money where the owner is banking on the equity growth. The ones that bought in the last several years are making a killing on their unoccupied homes (at least on paper). It's amazing, truly.


How did you determine the citizenship of the buyers of "plenty" of houses? That's amazing, truly.

The foreign buyer boogey man keeps popping up time and time again. Yet the percentage of real estate owned by foreigners has remained the same for decades.
25   Sniper   ignore (11)   2018 Mar 4, 6:29pm   ↑ like (1)   ↓ dislike (0)   quote        

goat says
Sniper says


I've also looked at all my neighbors and many have refied and done cashouts on houses they've been in for decades.


How do you find this out? Do you have access to non-public data?


Deeds and mortgages are public records available online at the county clerk's office.
26   BayArea   ignore (0)   2018 Mar 4, 6:49pm   ↑ like (1)   ↓ dislike (0)   quote        

bob2356 says
BayArea says

But what's interesting is that we've seen plenty of vacant homes in our neighborhood bought with foreign money where the owner is banking on the equity growth. The ones that bought in the last several years are making a killing on their unoccupied homes (at least on paper). It's amazing, truly.


How did you determine the citizenship of the buyers of "plenty" of houses? That's amazing, truly.

The foreign buyer boogey man keeps popping up time and time again. Yet the percentage of real estate owned by foreigners has remained the same for decades.


Because I know the realtors personally who sold the houses. Got it Bob? Still amazing?
27   Strategist   ignore (1)   2018 Mar 4, 6:55pm   ↑ like (1)   ↓ dislike (0)   quote        

bob2356 says
I for one am far from a housing bear. I've been buying steadily for 6 years now. But I'm getting out of Vegas for sure, it's getting frothier by the day. Moving into markets that are undervalued and not changing much.


I'm certain any home buying strategy will work well as long as home prices keep going up. I'm biased towards high end California properties, but looking into Hawaii too. I don't have a ton of money, but I have a bunch of vacant lots in the Puna district of Big Island Hawaii. I was there all of last week, looking into building something. Airbnb is booming like crazy out there. I could easily build 4 plexes on some of the lots and rent it out to vacationers. Building cost if you use a contractor is $150.00 per square foot. Don't expect good quality California type of construction.
Just imagine.....four 800 sq ft cabin like homes in a heavily forested 1 acre lot, walking distance to the ocean. You will easily get $125 per night per cabin for 15 days a month. That's roughly $80,000+ per year, with a construction cost of almost $500K. Add $80,000 for the lot, and your total payback ends up being 7 years. Do this on two or three lots, and you churn out one helluva profit plus appreciation. It's best to manage it yourself, or someone you can trust.
I talked to contractors, home owners, airbnb landlords, those in the middle of construction, and those who recently completed construction. The numbers very conservatively matched what I stated.
Imagine living in Paradise and making a good living at the same time.
28   WookieMan   ignore (0)   2018 Mar 4, 7:13pm   ↑ like (0)   ↓ dislike (0)   quote        

Sniper says
Not going to happen.


Cool. Then we're all fucked. An entire generation won't be buying houses. I feel bad for older people because then there's not a chance in hell they can sell the complete garbage they built in the 90's, when they were what, 35 years old and so much more advanced then Millennial's who are just now starting to hit 35 on the front end.

So the values on the old folks homes will plummet, stocks will plummet and unless someone's retirement is all in cash (which $ value will also crash), they'll be broke in pretty short order. Sounds like the future is pretty bleak for old people and young people combined. Good thing we were raised so well.

Sniper says

Deeds and mortgages are public records available online at the county clerk's office.


Deed and mortgages are public record and generally searchable, so correct. How would you determine on a mortgage or deed document if it's FHA or not? Just searched some I know are FHA in my area, there's no indication of down payment or type of loan. If you have a link to the site in your area I'd love to see the different public documentation displaying down payment and type of loan (fannie, freddie, fha, private, etc).
29   HowdyThere   ignore (0)   2018 Mar 4, 7:14pm   ↑ like (0)   ↓ dislike (0)   quote        

Strategist says
Nope. Interest rate hikes have happened lots of times before. Rising rates does not cause a housing correction.


Rising interest rates are looking to be a significant factor in popping the Toronto/Vancouver markets.
30   Strategist   ignore (1)   2018 Mar 4, 7:25pm   ↑ like (0)   ↓ dislike (0)   quote        

HowdyThere says
Strategist says
Nope. Interest rate hikes have happened lots of times before. Rising rates does not cause a housing correction.


Rising interest rates are looking to be a significant factor in popping the Toronto/Vancouver markets.


Rising rates, especially steep increases in a short period of time, can slow a housing market. A housing crash or a correction will require a severe recession.
31   Sniper   ignore (11)   2018 Mar 4, 8:00pm   ↑ like (0)   ↓ dislike (0)   quote        

WookieMan says
How would you determine on a mortgage or deed document if it's FHA or not? Just searched some I know are FHA in my area, there's no indication of down payment or type of loan.


The deed shows the purchase price, the filed mortgage shows the financed amount. Doing the quick math, I see they put approx. 3% down.
32   Sniper   ignore (11)   2018 Mar 4, 8:00pm   ↑ like (0)   ↓ dislike (0)   quote        

WookieMan says
Cool. Then we're all fucked. An entire generation won't be buying houses. I feel bad for older people because then there's not a chance in hell they can sell the complete garbage they built in the 90's, when they were what, 35 years old and so much more advanced then Millennial's who are just now starting to hit 35 on the front end.


Yes, we are fucked.

Millennials will be renting for a lot longer.

The U.S. housing market continues to move ahead, but a generation of homebuyers is being left behind.

Homeownership rates have fallen across all age groups since the housing collapse in 2009, but the biggest drop has been among the millennial generation.

Burns predicts the homeownership rate will continue to fall through 2025. Which means that millennials will be renting for a lot longer than their parents' generation did.


Today, with mortgages harder to get and memories of the housing bust fresh in buyers' minds, the homeownership rate among 25–34-year-olds has fallen to just 39 percent.

https://www.cnbc.com/2016/09/09/millennials-will-be-renting-for-a-lot-longer.html
33   WookieMan   ignore (0)   2018 Mar 4, 9:08pm   ↑ like (0)   ↓ dislike (0)   quote        

Sniper says

The deed shows the purchase price, the filed mortgage shows the financed amount. Doing the quick math, I see they put approx. 3% down.


Are you looking around your house or some other area? While the search itself is most certainly simple, you're not aggregating enough data to come out with any true trend searching on a clerks or recorder of deeds site. I'm in a small town, but for me to search all 800 or so residential addresses to figure out the mortgage and purchase price based on these records would take probably 40 hours or so of work and probably much more. Also assuming that data is accurate. That's just my one small town and does not represent a trend by any means, anywhere else in the country.

It's fine you live in an area with primarily FHA loans, but that doesn't translate across the country. You're also in NJ which is high property tax and I believe income tax. So why would anyone with a brain sink a huge down payment into a home in that area? Leverage is king in a high COLA area when you can dump and run if you don't want to pay your mortgage.

Not going to give away my work life here, but haven't seen an FHA loan closed in 3 years on 60 properties roughly. Again, this doesn't represent a trend either, but there are two sides to the market. Be wary of any media or publication that "tells" you what is going on with the market. FHA buyers are the offers of LAST resort on almost any property. Their offers aren't worth the paper they're printed on unless it's a desperate seller or a ghetto.
34   just_passing_through   ignore (0)   2018 Mar 4, 9:46pm   ↑ like (1)   ↓ dislike (0)   quote        

Strategist says
You will easily get $125 per night per cabin for 15 days a month.


Given my 8 month experience leasing out a condo on Maui via VRBO (and shared knowledge from friends who've done so) that sounds reasonable. If you're not on the water I wouldn't raise that estimate much though. (days or price)

Hawaii is one place you can do good business year around with phenomenal business during the high season. I wish I could pick up a beach condo here in San Diego for short term rentals but it would sit empty half of the year...

Airlines are in a price war with respect to HI lately as well.
35   Sniper   ignore (11)   2018 Mar 4, 10:49pm   ↑ like (0)   ↓ dislike (0)   quote        

WookieMan says
Are you looking around your house or some other area? While the search itself is most certainly simple, you're not aggregating enough data to come out with any true trend searching on a clerks or recorder of deeds site.


I first looked around at my neighborhood and neighbors, just for the hell of it to see where everybody is at. All the actually deeds and mortgages are recorded, so it's easy to pull them based on name, lot/block, or whatever.

WookieMan says
Also assuming that data is accurate.


It's the hard copy deeds and signed mortgages, they're accurate.

WookieMan says
That's just my one small town and does not represent a trend by any means, anywhere else in the country.


My town is small too, and I've been following the real estate sales for four years, since I moved here. I've been watching certain areas where we looked originally, watched what some flippers were buying and selling, and other houses of interest. No, it's not 800 houses, but all the ones that have sold in this area of the town in the last few years, so it's an accurate cross section.

WookieMan says
Not going to give away my work life here, but haven't seen an FHA loan closed in 3 years on 60 properties roughly.


Why do you base everything going on across the country on what's going on in your neighborhood? You seem to think if it's not happening in your backyard, it doesn't happen anywhere.

WookieMan says
You're also in NJ which is high property tax and I believe income tax. So why would anyone with a brain sink a huge down payment into a home in that area?


They're not, that's what I've been saying. They don't have the money. I finally saw one house that sold two weeks ago where the guy put down 20%. That's a rareity.

WookieMan says
Leverage is king in a high COLA area when you can dump and run if you don't want to pay your mortgage.


Is that the criteria and plans when buying today? Put down the minimum so you can cut and run and fuck the bankers? Sounds like some questionable morals. I guess people in your world aren't buying houses to secure their future and families and have a nice place to live long term. Strange on how things change with different generations.
36   ThreeBays   ignore (0)   2018 Mar 5, 12:29am   ↑ like (0)   ↓ dislike (0)   quote        

Sniper says
I track a bunch of houses sold in my area and look up the mortgages. By far, the majority are all going 3.5% down, FHA loans. Hardly any are putting down any substantial down payments. Plus, these new loans carry PMI for the life of the loan, unless they refi down the road.

These people are underwater the minute they walk into the house. Plus, the appreciation in the area has been marginal at best, so they're not playing the high leverage game to maximize their equity. Prices have moved sideways for many years.

This tells me that people are really stretched financially, and aren't saving money. Any downturn in the housing market, and all these people are screwed and underwater.

I've also looked at all my neighbors and many have refied and done cashouts on houses they've been in for decades. So any downturn and all these people will be underwater on houses they've lived in for a long time. Plus, if they are planning on using equity for retirement, they're fucked!


Here in the Bay Area, I've been tracking sales near my home and I haven't seen so much competition in years. Prices are on track to climb over 15% this year. Buyers are very well qualified, that bid far over asking with no loan contingencies.
37   Malcolm   ignore (1)   2018 Mar 5, 7:33am   ↑ like (0)   ↓ dislike (0)   quote        

The State’s Keep Your Home commercials are literally running in every commercial break this morning.

“Julio can get up to $100,000 for mortgage assistance.’
38   drB6   ignore (1)   2018 Mar 5, 8:10am   ↑ like (3)   ↓ dislike (0)   quote        

FortWayne says
We really should not allow foreign money to own American land.

Impossible to define what is American money vs. foreign money these days. Foreign company will incorporate in Redneck Paradise, NV and will buy as much as they want.
A more realistic solution would be to have minuscule or no taxes on ONE house per family (declare homestead and have to live there), but much, much higher tax on next property someone owns. May be a cap on tax exemption for the homestead as well so that some Hollywood type would not be able to avoid tax on $100M mansion.
39   Strategist   ignore (1)   2018 Mar 5, 9:41am   ↑ like (0)   ↓ dislike (0)   quote        

just_passing_through says
Airlines are in a price war with respect to HI lately as well.


Southwest is starting flights to Hawaii this year. That will really bring down prices with cut throat competition. Awesome.
40   rootvg   ignore (0)   2018 Mar 5, 9:52am   ↑ like (0)   ↓ dislike (0)   quote        

bob2356 says
You forgot the real 2008 problem. Overpriced housing with overstretched borrowers. Many markets are/have returned to that with creative financing creeping back.. When, not if but when, the economy goes south there will be a crash. Bonus points, the deficit will soar to 2t or higher. Good to have the party of fiscal responsibility in charge.

When Trump gets his second term, we'll have another downturn. For sure. The lesser of the Millenials will get shit hammered by it.

My wife and I are preparing now, given that the Fed says we could see even more rate increases this year than the predicted three. I'm thinking five.

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