patrick.net

I’m in the process of refinance a 4-plex in San Jose, and these are the terms that were offered to me.

7/1 ARM IO (interest only) loan for 3.05%
10/1 ARM IO loan for 3.25%
No points.

Money is really cheap. I can see why people are paying stupid prices for real estate, but I wouldn’t. These prices don’t make any sense to me.

I already said this before. Retail buyers are the ones who drive up real estate prices, not investors. We investors want cheap real estate prices so don’t bark on the wrong tree.

NDrLoR says

No, I didn't want to fool with all the hassle.

You and my baby sis.

The areas we've been looking at in Florida have pretty much stalled.

I've seen a surge in listings in St Augustine as well.

I don't know if it'll collapse per say, but I think it's Flatlined for sure. I think July was peak.

joshuatrio says

I've seen a surge in listings in St Augustine as well.

There is a shitload of buildable land in St John's and Flagler county. And lots of building going on in the area as well. Any seasoned real estate investor will tell you to not buy in an area where there is lots of building.

just_passing_through says

Did you refinance when rates dropped?

I had only financed $25K since I'd put 50% down. It was 6463 Bordeaux, 75209. The last time it sold it went for over $200K, 1027 square feet. https://www.zillow.com/homes/6463-bordeaux-75209_rb/26904170_zpid/?source=patrick.net

NDrLoR says

Al_Sharpton_for_President says

As a result, 30-year fixed rates held above the 3%

What a difference 40 years makes! On January 10, 1981, I closed on my condo with a fixed rate of 12-3/4%, $50K financed for 20 years. I considered myself lucky because it was fixed. A lot of people had to get adjustable rate mortgages and by the time it adjusted, it would cost them $100 or more a month. I lived there 24 years.

Inflation adjusted, in real current dollars your condo was bought for $200k. At 12% interest, PITI would be about $2300/month. Can you TOUCH any real estate in California for $200k? It was a different time and people who bought houses back then were incredibly fortunate. Today that same condo would be $650k if not more. And the payment would be $3500 with 20% down.

Given that this condo was in Texas which still has normal housing prices, but anyway. California sucks
Things are so much worse now.

Eman says

These prices don’t make any sense to me.

A duplex in my hood sold for over $800 /sq.ft. I imagine they'll put an ADU in the backyard, but still... seems kinda crazy.

If we thought the 2006-2007 housing bubble was big, check out this one.

Eman says

If we thought the 2006-2007 housing bubble was big, check out this one.

Not sure how this works out but I thought printing $nT is to cover up all the bubbles.

https://www.ntd.com/china-cuts-key-interest-rates-as-economic-growth-wanes_728440.html?source=patrick.net

after Powell's comments today, do the people who hope for 10% mortgage rates still think this we happen in our lifetime?

I'll ask the same question after each future FED meeting :)

Bitcoin says

after Powell's comments today, do the people who hope for 10% mortgage rates still think this we happen in our lifetime?

No. But it would be nice if we had normal rates instead of near zero rates.

Eman says

If we thought the 2006-2007 housing bubble was big, check out this one.

I can't wait for this bubble to pop, because they all do. Also all of these RE investors, that are over leveraged with every SF home they could by to rent out. Many paid retail prices, unlike the folks that got the exclusive secret deals on the 2008-2010 Ghost inventory. For the last 10 years, it's been the investors driving the bidding wars against the first time home buyers.

Booger says

joshuatrio says

I've seen a surge in listings in St Augustine as well.

There is a shitload of buildable land in St John's and Flagler county. And lots of building going on in the area as well. Any seasoned real estate investor will tell you to not buy in an area where there is lots of building.

Why not?

WineHorror1 says

Any seasoned real estate investor will tell you to not buy in an area where there is lots of building

Why?
Many cities cant keep up building enough homes due to a severe shortage. Who knows how long this trend will last?

Booger says

No. But it would be nice if we had normal rates instead of near zero rates.

In Europe they have 1 - 1.75% mortgage rates. What's normal nowadays?

https://palaceintrigue.substack.com/p/low-interest-rates-are-the-root-of?source=patrick.net

Low Interest Rates Are the Root of All Economic Evil
And YOU are about to pay the price.

HunterTits says

Patrick says

Low Interest Rates Are the Root of All Economic Evil
And YOU are about to pay the price.

He gets a lot wrong. Like how we must begin immediately reshoring manufacturing. We have been. First under Trump and now accelerated because of COVID. And the collapse of the globalist world order will make this permanent. America is in a period of reindustrialization not seen since WW2.

But he's right about the debt.

The globalist world order is in collapse?

No more fwapping to my fiat appreciation? NOOOOOOOOOOOoooooooooo!

Don’t get cocky, what if the globalists eliminate or severely cripple the US and move on with their plans unhindered by American Exceptionalism.

The Fed lending rate and stock margin % can be controlled by the Federal Reserve.
However, to “control” the prices of US Government debt in the worldwide auction called the “bond market” requires the Federal Reserve to buy a ton of it.

They cannot do this forever, they own a lot of it already.

Mortgage rates rising will slow down the rise of house prices, which rose quickly lately.

Low interest rates are not a bad thing, neither are a low price of oil or low taxes.

clambo says

Low interest rates are not a bad thing

Yes, low interest rates are a bad thing. Easy credit has bid up the price of housing and education, and has devastated savers. Responsible consumers must compete with irresponsible adolescent types who do not care about taking on absurd debts, just so long as they can have it now.

clambo says

Mortgage rates rising will slow down the rise of house prices, which rose quickly lately.

Low interest rates are not a bad thing

yep, housing bears hope that a rate increases will reduce RE prices. However, RE prices will continue to rise but the growth rate slows which is healthy for the market.
First time home buyers are f'ed as the increase in rates and the increase in prices will continue to crush their affordability.

I know a guy who sold his house before covid and rented since then because he thought he can time the market. Worst decision in his life time. The house he sold exploded in price since covid while his rent went up as well. Now he cant afford to buy the same house he sold 3 years ago. He lost big time by sitting on cash. It hurts him so much that he cant even talk about it anymore. Some people only learn the hard way:

>>Time in the market beats timing the market<<

Sitting on cash is about as useless as it can get.

Bitcoin says

yep, housing bears hope that a rate increases will reduce RE prices. However, RE prices will continue to rise but the growth rate slows which is healthy for the market.
First time home buyers are f'ed as the increase in rates and the increase in prices will continue to crush their affordability.

Most people, and almost all first time buyers, buy the monthly payment, not the total price.

The lower end of RE will never drop in our lifetime. You simply can't build the lower end homes anymore because the construction costs are too high. I see no end to that.
The Bay area however could definitely take a nosedive. All real estate is locaL

HunterTits says

PeopleUnited says

Don’t get cocky, what if the globalists eliminate or severely cripple the US and move on with their plans unhindered by American Exceptionalism.

They can not maintain the world order let alone expand it w/o the US.




When you start to think you are all powerful and irreplaceable...

HunterTits says

WineHorror1 says

The globalist world order is in collapse?

Yup. Going to take 5 years. Covid accelerated the process.

The Order requires ongoing active US support. That's no longer happening notwithstanding the goons running the Biden shit show.

Why would the globalists bring about the Covid scam if it didn't play into their plans?

HeadSet says

clambo says

Low interest rates are not a bad thing

Yes, low interest rates are a bad thing. Easy credit has bid up the price of housing and education, and has devastated savers. Responsible consumers must compete with irresponsible adolescent types who do not care about taking on absurd debts, just so long as they can have it now.

Yeah, aren't low rates currency devaluation?

Housing Unit Permits Reach Pre-Housing Crash Levels: Rising Interest Rates, Forbearance Moratoriums, and Interest Rates.



























http://www.doctorhousingbubble.com/housing-unit-permits-reach-pre-housing-crash-levels-rising-interest-rates-forbearance-moratoriums-and-interest-rates/?source=patrick.net

The natural rate for fixed 30yr loans was 5-6 % before the Carter inflation that ushered in the 18%ARM loans, expecting interest to drop in the future. With the current mortgage money well below the cost of inflation, rates can only go up.
Better to pay more for the money and less for the house, than cheap money for bloated priced property.

Mortgage Rates Hit 4.0% For First Time Since May 2019

There are many different ways to track mortgage rates and several different sources quoted in the news. For decades, the most prevalently-quoted source has been Freddie Mac's weekly primary mortgage market survey. It consists of a questionnaire sent out to loan officers at the beginning of every week. They can respond as late as Wednesday, but the responses are heavily front-loaded (most respondents simply fire right back when they see the email).

As such, Freddie's weekly rate survey, which is reported every Thursday, is best thought of as measuring the change in top tier mortgage rates from one Monday to the next, perhaps with some Tuesday influence sprinkled in. That's fine on weeks where there isn't much volatility, but it can end up sending very mixed messages otherwise. Much of 2022 has been "otherwise" and today is not only no exception, it's probably the starkest example.

Freddie's survey showed an increase from 3.55 last week to 3.69 this week. This assumes a best case scenario 30yr fixed with 0.8 points paid upfront. I don't love the idea of building points into rate indices if points can change over time. I'd rather just adjust the rates to reflect the points since there's reliable math for that purpose.

For example, at most lenders right now, you'd pay 1 point to drop the rate by 0.25%. If Freddie made that adjustment, their 3.69 would rise to 3.89. But remember, that would have applied to Monday/Tuesday based on Freddie's methodology. Lo and behold, the rates I calculate every day were at 3.87% and 3.89% on Mon/Tue respectively.

All that to say that our daily rate is reliably in line with the industry standard, but on an up-to-the-hour basis (I adjust mid-day if rates change) as opposed to once a week. I never go to lengths to explain this reliability because it's one of those "is what it is" sort of things in my mind. I only do it today because our daily rate is quite the departure from Freddie in addition to being just a hair above a significant psychological ceiling.

In case it wasn't already clear based on the headline, the average is currently up to 4.02%. Keep in mind that is is an average among top tier scenarios. It means that some lenders are quoting 3.625% and others are up to 4.375%. Adding any complexity to the scenario would mean a different rate. Also keep in mind that lenders are MUCH more widely stratified than normal, which is often the case when we've seen as much volatility as we have so far in 2022.

https://www.mortgagenewsdaily.com/markets/mortgage-rates-02102022?source=patrick.net

Funny how since the bubble collapse they consider anything above 3% as soaring interest rates. Soaring interest rates before then was anything over 8%.
Anything under 6% was considered extremely low.

Black Knight publishes a monthly Mortgage Monitor report that contains interesting information on the mortgage market and housing.

Press Release: Black Knight: 2021 Sees Record $2.6 Trillion Tappable Equity Gain; Home Prices Reaccelerate on Continued Inventory Shortfall as Rising Rates Increase Affordability Pressures

Today, the Data & Analytics division of Black Knight, Inc. (NYSE:BKI) released its latest Mortgage Monitor Report, based upon the company's industry-leading mortgage, real estate and public records datasets. After a year of historic home price gains, homeowners' tappable equity – the amount available for a mortgage-holder to access while retaining at least a 20% equity stake in their home – has hit yet another record high. According to Black Knight Data & Analytics President Ben Graboske, Q4 2021's nearly half-billion-dollar increase in tappable equity has also resulted in the lowest total market leverage on record.

"Home price appreciation over the course of 2021 was unlike anything that's come before, and the incredible growth we've seen in homeowner equity is testament to that fact," said Graboske. "The aggregate total of $9.9 trillion represents an astounding 35% annual growth rate – which works out to an increase of $2.6 trillion in tappable equity in a single year. …

"The interplay between prices and rates has significantly impacted affordability and borrower buying power in recent weeks. It now takes 25.8% of the median household income to purchase the average-priced home with 20% down and a 30-year mortgage, up from the 22.4% required at the end of Q3 2021. Interest rate jumps in recent weeks have pushed us – and quite quickly – above the long-term, pre-Great Recession average payment-to-income ratio of 25%, straight to the worst affordability levels since 2008.”
emphasis added

Here is a graph on delinquencies from Black Knight:

• At 3.38%, the national delinquency rate is within 0.1% of its pre-pandemic level and very near the record low set in January 2020

• There are 35% fewer early-stage delinquencies than at the start of the pandemic, but nearly 2.5 times as many serious ones – although that metric is improving as well, albeit more slowly

• The decline in serious delinquencies has been slower than might be expected given the large number of borrowers who have exited forbearance plans in recent months and remain in loss mitigation

• The share of borrowers who have exited forbearance but are unable to make full or modified mortgage payments is worth watching

• At 946K, there are still at least half a million more seriously delinquent mortgages (including those in active forbearance plans) than prior to the pandemic

And on the payment to income ratio:

• It now takes 25.8% of the median household income to purchase the average home with 20% down and a 30-year mortgage, up from the 22.4% required at the end of Q3 2021

• Interest rate jumps in recent weeks have pushed us rapidly above the long-term, pre-Great Recession average payment-to-income ratio of 25%, resulting in the worst affordability levels since 2008

• While a 20.5% ratio has been the tipping point between market acceleration and deceleration over the past decade, severe inventory shortfalls are keeping home prices running hotter than they might otherwise

There is much more in the mortgage monitor.

https://calculatedrisk.substack.com/p/black-knight-mortgage-monitor-for?source=patrick.net

I'll take 100k house at 12%+ than fucking 700k+ at 3%. It'ss way out if whack.

RC2006 says

I'll take 100k house at 12%+ than fucking 700k+ at 3%. It'ss way out if whack.

Who wouldnt.
But it cant happen. Imagine interest rates would go to 12% and houses cost 100k.....Many, me included, could just buy houses with all cash. Obviously, the market would adjust overnight and you end up with a 500k house + 12% interest.
The real "problem" is the wealth transfer. Its all about the haves and dont haves. My neighbor put his house on the market last week. 6 showings and 5 offers on the first day. 3 out of state with all cash. We are talking 1M + price tag.

Most people in the US just cant afford to buy anymore....those days are gone no matter what interest rates do. On the other hand you have people who are swimming in cash and who accumulate houses like there is no tomorrow.

This has been a reality in Europe for decades now. The well-off people get rich and the middle class gets poorer.

RC2006 says

I'll take 100k house at 12%+ than fucking 700k+ at 3%. It'ss way out if whack.

Yep. And you just refinance when the rates drop.

AmericanKulak says

ep. And you just refinance when the rates drop.

Plus, the lower cost is easier to pay off outright.

"Houses aren't expensive, they just cost more than you can afford (borrow)".

Normally as mortgage rates rise, house prices fall, but maybe not now.

My friend was recently complaining about his Santa Cruz property taxes, he's years older than I and still goes down in the salt mines. Poor guy.

If I can't continue to fwap on the Prop.13 fiat value of my crap shacks, life has no meaning!