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housing prices

By AD following x   2018 Dec 9, 6:15pm 877 views   7 comments   watch   nsfw   quote     share    


The S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index is 205.

It last peaked at 185 back in July 2006.

It was 100 on Jan 1, 2000.

*** Hence according to Shiller, the median USA home increased in value about 4% annually since 2000. *

Yet, I think average wages increased only by 2% or less since 2000. That is why I think interest rates (i.e., mortgage rate) has to stay low compared to previous periods, in order to compensate for low wage increases, and ensure affordability with the principal/interest/taxes/insurance (PITI) + hoa fee + maintenance. One option is the no-principal mortgage in order to lower the monthly cost.

Shiller is right, that the median USA home increased from the bottom of 2012 to current day by 53%.
reference: https://www.nytimes.com/2018/12/07/business/housing-boom-how-long-can-it-last.html

That is because by 2012 there was a lot more confidence in the real estate market. And also low mortgage rates were assisting the real estate market. I remember learning of someone securing a 3% rate (no points) 30 year mortgage thru the Veterans Administration back in 2016.

Now the 30 year rate is about 5% and likely to continuing to peak around 6.5% within the next 18 months. Back in 1998 the 30 year mortgage rate was about 6.5%.
1   AD   ignore (0)   2018 Dec 9, 6:17pm   ↑ like (2)   ↓ dislike (0)   quote   flag        

I think Patrick said it during his interview on TV about 11 years ago (was it on ABC's 20/20?) that you are buying a monthly payment when you buy a home.

Its all about the monthly cost versus the household income, or cost to income ratio.
2   AD   ignore (0)   2018 Dec 9, 6:20pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

Lennar is down about 40% and the ETF for US Home Construction (symbol ITB) is down about 35%.

I think it may be a good time to buy ITB now (or when it drops about 40%) if you plan on going long on it for 5 years or more.
3   Strategist   ignore (2)   2018 Dec 9, 7:48pm   ↑ like (2)   ↓ dislike (0)   quote   flag        

adarmiento says
That is because by 2012 there was a lot more confidence in the real estate market.


Most people thought 2012 was a bad time to buy a home. Record foreclosure rates. Record mortgage defaults. Depression expected by many. High unemployment rate.
Perfect time to buy property.
4   AD   ignore (0)   2018 Dec 9, 8:23pm   ↑ like (0)   ↓ dislike (0)   quote   flag        

True. What can you tell us about the stock market ? Do you think Goldman Sachs (which is down 40%) is a good buy ? How about Lennar ?
5   Patrick   ignore (1)   2018 Dec 10, 8:37am   ↑ like (1)   ↓ dislike (0)   quote   flag        

adarmiento says
I think Patrick said it during his interview on TV about 11 years ago (was it on ABC's 20/20?) that you are buying a monthly payment when you buy a home.


It was Nightline. Ah the good old days.

I probably said that, but don't remember specifically. Anyway, it's true.
6   APOCALYPSEFUCKisShostikovitch   ignore (38)   2018 Dec 10, 8:44am   ↑ like (0)   ↓ dislike (0)   quote   flag        

A bank only lends normal people money when their dicks come away bloody
7   AD   ignore (0)   2018 Dec 10, 8:50am   ↑ like (0)   ↓ dislike (0)   quote   flag        

A bank will lend mortgage money based on the total monthly payments (i.e., Principal/Interest/Taxes/Insurance + HOA fee) being less than 35 to 40% of the gross household monthly income, as well as based on the household's credit rating.

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