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Strong sign that the US housing market is nearing another crash, especially for West Coast


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2019 Aug 21, 7:57pm   1,526 views  18 comments

by Patrick   ➕follow (55)   💰tip   ignore  

https://www.wsj.com/articles/mortgage-market-reopens-to-risky-borrowers-11566379802?mod=rsswn

The risky mortgage is making a comeback.

More than a decade after home loans triggered the worst financial crisis in a generation, the strict lending requirements put in place during its aftermath are starting to erode. Home buyers with low credit scores or high debt levels as well as those lacking traditional employment are finding it easier to get credit.

The loans have been rebranded. Largely gone are the monikers subprime and Alt-A, a type of mortgage that earned the nickname “liar loan” because so many borrowers faked their income and assets. Now they are called non-qualified, or non-QM, because they don’t comply with postcrisis standards set by the Consumer Financial Protection Bureau for preventing borrowers from getting loans they can’t afford.

Borrowers took out $45 billion of these unconventional loans in 2018, the most in a decade, and origination is on track to rise again in 2019, according to Inside Mortgage Finance, an industry research group. Such mortgages aren’t guaranteed by government agencies and typically charge higher interest rates than conventional loans. ...

In California and other coastal states, home prices have risen rapidly over the past decade, raising concern that much of the equity homeowners have built up could evaporate if market conditions turn. Recently, the housing market has shown signs of cooling on the West Coast.


Comments 1 - 18 of 18        Search these comments

1   BayArea   2019 Aug 21, 9:08pm  

I want to believe that there is doom and gloom coming for the housing market, but I just can’t because I am not convinced.
2   ForcedTQ   2019 Aug 21, 10:18pm  

So now it's HOARD BRICKS AND YAMS time, Right?
3   NuttBoxer   2019 Aug 22, 9:01am  

Took a quick look at Zillow houses listed in Pine Valley area of San Diego yesterday. Average price is $500k. Who the fuck would pay half a million to live an hour outside the city?
4   SunnyvaleCA   2019 Aug 22, 10:10am  

NuttBoxer says
Took a quick look at Zillow houses listed in Pine Valley area of San Diego yesterday. Average price is $500k. Who the fuck would pay half a million to live an hour outside the city?

You could instead pay $2 MM to live in Fremont and have an hour commute to Apple or Google during rush hour. (It's only 20 miles, but the roads are more like parking lots.)
5   HeadSet   2019 Aug 22, 10:12am  

(It's only 20 miles, but the roads are more like parking lots.)

So no telecommute and no air taxis?
6   clambo   2019 Aug 22, 12:47pm  

The people who are buying expensive places don't know what they're getting themselves into. It's already too late for most people except if you work at 1. google 2. facebook. 3. Apple 4.Amazon 5. eBay 6. a few others I don't recall now.

Have you been to Manhattan? See those nice places with views of Central Park? Once upon a time you could maybe afford one, but now you realize it's only for gazillonaires from other countries, Wall St., people on TV and in movies. You'd never even try to see what one costs because you know it's out of your reach.

But, people in California still think it's within their reach; it's likely not.
7   RC2006   2019 Aug 22, 12:53pm  

Big difference between 2008 and now is that rents are twice as much. I do believe it will crash but not as much I don't think you will see people walking away as much after they look at how much they will pay in rent, they have to live somewhere.
8   Shaman   2019 Aug 22, 1:13pm  

Silly con valley might see some declines. Prices went stupid there fast. Most places should hold pretty firm, no more than 5% one way or the other. I don’t see the problems we had in 2006-7.
9   RWSGFY   2019 Aug 22, 1:36pm  

HeadSet says
(It's only 20 miles, but the roads are more like parking lots.)

So no telecommute and no air taxis?


TC is strongly discouraged or outright banned in GOOG, AAPL and FB. Air taxis are out of question due to already very complicated and congested air traffic patterns in SFBA.
10   MisdemeanorRebel   2019 Aug 22, 2:47pm  

It could simply be normal regional real estate crashes. Without Being national.
11   Dholliday126   2019 Aug 22, 4:59pm  

Get fucked in a rental or get fucked owning a house...

House is my call.
12   EBGuy   2019 Aug 22, 5:11pm  

Dholliday126 says
House is my call.

Mortgage comes with an implied put option in CA.
13   RWSGFY   2019 Aug 22, 5:19pm  

NuttBoxer says
Took a quick look at Zillow houses listed in Pine Valley area of San Diego yesterday. Average price is $500k. Who the fuck would pay half a million to live an hour outside the city?


People who are not interested in commuting into the city?
14   FortwayeAsFuckJoeBiden   2019 Aug 22, 5:47pm  

It can’t be far off. Prices are high.
15   Patrick   2019 Aug 22, 8:06pm  

Dholliday126 says
Get fucked in a rental or get fucked owning a house...

House is my call.


What if the rental fucking is only half as expensive as the ownership fucking?
16   BayArea   2019 Aug 23, 6:34am  

Patrick says
Dholliday126 says
Get fucked in a rental or get fucked owning a house...

House is my call.


What if the rental fucking is only half as expensive as the ownership fucking?


Same boat... my unrecoverables (prop tax, repairs, mortgage interest) would be 50% higher on the house I live in today than my rent on the same house.

One of the most valuable points I learned on this site is recognizing what rent:buy ratios are in affluent Silicon Valley compared to less affluent places like Richmond, Vallejo, or parts of Oakland.

Thanks @Patrick

Rents in affluent areas are generally MUCH cheaper than home ownership unrecoverables. The opposite is true in less affluent areas.
17   NuttBoxer   2019 Aug 23, 8:03am  

Iranian_Oil_Burse says
People who are not interested in commuting into the city?


Sure, but they used to pay $200k for that, tops.
18   EBGuy   2019 Aug 23, 1:03pm  

Getting less crazy is a good thing, right?
Only 35 percent of offers written by Redfin agents for SF buyers faced a bidding war in July 2019, compared with a staggering 72 percent just one year earlier. The picture in San Jose is even more dire. It went from (eyeballing the chart) ~80% with multiple offers and has only rebounded to 13.3% with multiple bids.

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