housing prices peak 2
invite response
2022 Apr 29, 9:29pm 601,418 views 5,634 comments
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1900
AD
2023 Apr 6, 5:30pm
AD
2023 Apr 6, 5:30pm
B.A.C.A.H. says
That is very true, and property and sales tax is not very high here in Florida panhandle as well.
$15 an hour is entry level wage here and a 2 bedroom "luxury" apartment within 2 mile of beach rents for about $1600 a month (includes pool, gym, clubhouse, free water/sewer and internet) .. it takes 2 entry-level wage earners to afford the 2 bedroom apartment ...
And no State Income Tax.
That is very true, and property and sales tax is not very high here in Florida panhandle as well.
$15 an hour is entry level wage here and a 2 bedroom "luxury" apartment within 2 mile of beach rents for about $1600 a month (includes pool, gym, clubhouse, free water/sewer and internet) .. it takes 2 entry-level wage earners to afford the 2 bedroom apartment ...
1901
AD
2023 Apr 6, 5:32pm
AD
2023 Apr 6, 5:32pm
.
Professor Robert Shiller recommends delaying purchase of a home
https://nypost.com/2023/03/28/why-us-home-buyers-should-delay-purchases-yale-economist/
An ongoing plunge in US home prices represents an opportunity for patient house shoppers, famed Yale University economist Robert Shiller stated this week.
Home price declines are expected to accelerate this year as the Federal Reserve’s interest rate hikes weigh on the US economy and force sellers to sweeten the deal for buyers.
,
Professor Robert Shiller recommends delaying purchase of a home
https://nypost.com/2023/03/28/why-us-home-buyers-should-delay-purchases-yale-economist/
An ongoing plunge in US home prices represents an opportunity for patient house shoppers, famed Yale University economist Robert Shiller stated this week.
Home price declines are expected to accelerate this year as the Federal Reserve’s interest rate hikes weigh on the US economy and force sellers to sweeten the deal for buyers.
,
1902
Blue
2023 Apr 6, 5:58pm
Yes, it might go down but not much as there are no sellers. Cutting down regulations should make housing more affordable. We know it won’t happen. In either case free printing press at double digits inflation will not give much pause to housing prices.
1903
WookieMan
2023 Apr 6, 6:13pm
WookieMan
2023 Apr 6, 6:13pm
Blue says
Yup. If there's no homes for sale, the floor on price drops is pretty high, if at all. My town for example has 820 (ish) residential structures. There's 3 for sale... 2 are shit sellers testing the market out. The good one goes overnight. If there's no homes for sale, prices really can't drop.
This is different in shit holes with out migration to other areas and states. The media then focuses on those areas like we're in a fucking housing crash. People buy it and then no one moves. No one puts the house on the market. No one is looking to buy. Interest rates are up. We've reached the stall at this point. Outside of CA and NY prices should be sideways. They just have the highest prices that crater the median and average price of homes nationally making it look doom and gloom. It is for them, but not everyone else.
Yes, it might go down but not much as there are no sellers. Cutting down regulations should make housing more affordable. We know it won’t happen. In either case free printing press at double digits inflation will not give much pause to housing prices.
Yup. If there's no homes for sale, the floor on price drops is pretty high, if at all. My town for example has 820 (ish) residential structures. There's 3 for sale... 2 are shit sellers testing the market out. The good one goes overnight. If there's no homes for sale, prices really can't drop.
This is different in shit holes with out migration to other areas and states. The media then focuses on those areas like we're in a fucking housing crash. People buy it and then no one moves. No one puts the house on the market. No one is looking to buy. Interest rates are up. We've reached the stall at this point. Outside of CA and NY prices should be sideways. They just have the highest prices that crater the median and average price of homes nationally making it look doom and gloom. It is for them, but not everyone else.
1906
AD
2023 Apr 10, 2:43pm
AD
2023 Apr 10, 2:43pm
https://www.wptv.com/money/real-estate-news/federal-housing-administration-greenlights-40-year-mortgages
PORT ST. LUCIE, Fla. — This week the Federal Housing Administration gave the OK to 40-year mortgages. It's a move designed to try and make it easier for first-time home buyers.
"If it helps people get into a house, it's a good thing," Sonsire Gonzalez, a real estate agent in Port St Lucie, said.
The idea is to reduce monthly mortgage payments, which have been rising as mortgage rates go up.
PORT ST. LUCIE, Fla. — This week the Federal Housing Administration gave the OK to 40-year mortgages. It's a move designed to try and make it easier for first-time home buyers.
"If it helps people get into a house, it's a good thing," Sonsire Gonzalez, a real estate agent in Port St Lucie, said.
The idea is to reduce monthly mortgage payments, which have been rising as mortgage rates go up.
1907
Blue
2023 Apr 10, 3:05pm
10,15,20,30 now 40y. Sounds like on the way to complete with Japan 100y. More and longer debt is just nothing but slavery.
1908
AD
2023 Apr 10, 3:31pm
AD
2023 Apr 10, 3:31pm
Blue says
Stretching payments an extra 10 years helps even with a slightly higher interest rate:
https://www.mortgagecalculator.org/calcs/40-year.php
10,15,20,30 now 40y. Sounds like on the way to complete with Japan 100y. More and longer debt is just nothing but slavery.
Stretching payments an extra 10 years helps even with a slightly higher interest rate:
https://www.mortgagecalculator.org/calcs/40-year.php
1910
zzyzzx
2023 Apr 11, 7:16am
zzyzzx
2023 Apr 11, 7:16am
https://markets.businessinsider.com/news/commodities/us-housing-market-unaffordable-mortgage-rates-home-prices-inventory-demand-2023-4
Housing is so unaffordable that banks are losing money for each mortgage they finance for the first time ever
Housing is so unaffordable that banks are losing money for each mortgage they finance for the first time ever
1911
zzyzzx
2023 Apr 11, 7:17am
zzyzzx
2023 Apr 11, 7:17am
Misc says
A 40 year (or more) mortgage is almost the same thing as an interest only mortgage.
Still not as good as interest only like we had in Housing Bubble 1.0
A 40 year (or more) mortgage is almost the same thing as an interest only mortgage.
1912
fdhfoiehfeoi
2023 Apr 11, 7:37am
fdhfoiehfeoi
2023 Apr 11, 7:37am
California moves closer to Communism by taking a 20% stake in new home purchases...
https://www.zerohedge.com/personal-finance/california-front-20-down-payments-0-interest-homebuyers-incomes-211000
https://www.zerohedge.com/personal-finance/california-front-20-down-payments-0-interest-homebuyers-incomes-211000
1913
zzyzzx
2023 Apr 11, 7:43am
zzyzzx
2023 Apr 11, 7:43am
https://www.redfin.com/news/demand-down-second-homes-march-2023/
Demand For Vacation Homes Is Down More Than 50% From Pre-Pandemic Levels
Demand For Vacation Homes Is Down More Than 50% From Pre-Pandemic Levels
1914
WookieMan
2023 Apr 11, 7:54am
WookieMan
2023 Apr 11, 7:54am
NuttBoxer says
Nope. This is a means to keep people in the state. I lived it in IL. CA is going through the exodus phase. It's going to get bad as CA as a state is the 5th largest country on its own GDP wise. You guys are in for some rough times overall, not just real estate.
Get involved in government is all I'll say. You guys had 6' plus of snow in the mountains and will have water shortages because of some spider or beetle might die off or go extinct so they don't build more reservoirs. In one of the covid vax threads we saw human action make things happen with Mountain View. Something as simple as water for the people you're suppose to be governing you can't get done with copious amounts of water?
People would stay and move there in droves. I spent 20-30 hours on the math of moving there. It makes no sense to live in CA. I'd put it at 5% making sense and that's mostly athletes, Hollywood, wine and golf. A doctor or nurse makes the same here or in Texas. Same with a mechanic, HVAC, plumber, electrician, etc while the COL is 1/2.
CA has two AR's in their hands pointed at their feet and they can't let go of the trigger.
California moves closer to Communism by taking a 20% stake in new home purchases...
https://www.zerohedge.com/personal-finance/california-front-20-down-payments-0-interest-homebuyers-incomes-211000
Nope. This is a means to keep people in the state. I lived it in IL. CA is going through the exodus phase. It's going to get bad as CA as a state is the 5th largest country on its own GDP wise. You guys are in for some rough times overall, not just real estate.
Get involved in government is all I'll say. You guys had 6' plus of snow in the mountains and will have water shortages because of some spider or beetle might die off or go extinct so they don't build more reservoirs. In one of the covid vax threads we saw human action make things happen with Mountain View. Something as simple as water for the people you're suppose to be governing you can't get done with copious amounts of water?
People would stay and move there in droves. I spent 20-30 hours on the math of moving there. It makes no sense to live in CA. I'd put it at 5% making sense and that's mostly athletes, Hollywood, wine and golf. A doctor or nurse makes the same here or in Texas. Same with a mechanic, HVAC, plumber, electrician, etc while the COL is 1/2.
CA has two AR's in their hands pointed at their feet and they can't let go of the trigger.
1915
mell
2023 Apr 11, 8:35am
WookieMan says
As asinine and for some outrageous this program may sound, it's limited in funds, and it will only drive up house prices for those who already own, so it's going to be beneficial wrt driving up asset inflation. It will make purchasing a house for the majority who won't get into that program even harder though, but whatever. Those braintards voted for it, so we'll enjoy continued gains. Thanks! There will be no housing crash in CA, net people leaving don't make enough dents in the scarce inventory. Prices will continue to march up with inflation (lesser in shithole cities, more so in beautiful rural areas) as long as the same politics/policies stay in place.
NuttBoxer says
California moves closer to Communism by taking a 20% stake in new home purchases...
https://www.zerohedge.com/personal-finance/california-front-20-down-payments-0-interest-homebuyers-incomes-211000
Nope. This is a means to keep people in the state. I lived it in IL. CA is going through the exodus phase. It's going to get bad as CA as a state is the 5th largest country on its own GDP wise. You guys are in for some rough times overall, not just real estate.
Get involved in government is all I'll say. You guys had 6' plus of snow in the mountains and will have water shortages because of some spider or beetle might die off or go extinct so they don't build more reservoirs. In one of the covid vax threads we s...
As asinine and for some outrageous this program may sound, it's limited in funds, and it will only drive up house prices for those who already own, so it's going to be beneficial wrt driving up asset inflation. It will make purchasing a house for the majority who won't get into that program even harder though, but whatever. Those braintards voted for it, so we'll enjoy continued gains. Thanks! There will be no housing crash in CA, net people leaving don't make enough dents in the scarce inventory. Prices will continue to march up with inflation (lesser in shithole cities, more so in beautiful rural areas) as long as the same politics/policies stay in place.
1918
AD
2023 Apr 11, 12:52pm
AD
2023 Apr 11, 12:52pm
zzyzzx says
My townhome HOA about 2 miles from the beach in Florida panhandle started in 2004 and finished the last unit in 2017. There were 3 bedrm, 2.5 bath, 2 car garage townhomes that peaked around $285,000 in 2007. They then sold between $115,000 and $140,000 2010 to 2012.
The recent peak price has been around $330,000. I wonder if the they will crash and drop below $285,000. So the bottom of this real estate market (in 2024 ?) is equal to the peak or top in the last market (set 2007).
We bought a brand new one in 2016 for around $185,000 with a 3% mortgage with the Veteran Affairs and local bank.
.
My townhome HOA about 2 miles from the beach in Florida panhandle started in 2004 and finished the last unit in 2017. There were 3 bedrm, 2.5 bath, 2 car garage townhomes that peaked around $285,000 in 2007. They then sold between $115,000 and $140,000 2010 to 2012.
The recent peak price has been around $330,000. I wonder if the they will crash and drop below $285,000. So the bottom of this real estate market (in 2024 ?) is equal to the peak or top in the last market (set 2007).
We bought a brand new one in 2016 for around $185,000 with a 3% mortgage with the Veteran Affairs and local bank.
.
1919
Eman
2023 Apr 11, 2:59pm
Eman
2023 Apr 11, 2:59pm
NuttBoxer says
No need to get sensational with Communism stuff with this program. It’s a very generous program if you ask me. People are taking advantage of it. $300M program to help 2,300 home buyers. Hardly make a dent in the entire state purchases. At the same time, it helps to hold up the lower end real estate market for a few weeks.
California moves closer to Communism by taking a 20% stake in new home purchases...
https://www.zerohedge.com/personal-finance/california-front-20-down-payments-0-interest-homebuyers-incomes-211000
No need to get sensational with Communism stuff with this program. It’s a very generous program if you ask me. People are taking advantage of it. $300M program to help 2,300 home buyers. Hardly make a dent in the entire state purchases. At the same time, it helps to hold up the lower end real estate market for a few weeks.
1921
B.A.C.A.H.
2023 Apr 11, 3:22pm
B.A.C.A.H.
2023 Apr 11, 3:22pm
WookieMan says
Good. We need it.
The dysfunction about NIMBY, Proposition -13, tranny liberalism, etc etc just makes things even worse. It's too damn expensive here because it's too crowded. Traffic, high housing, fires, floods: those Four Horsemen trampling the state. Overcrowding, elbowing out one another, etc.
We're way beyond the carrying capacity for potable water. What you may call being in the sh*tter is a welcome, needed correction.
CA is going through the exodus phase
Good. We need it.
The dysfunction about NIMBY, Proposition -13, tranny liberalism, etc etc just makes things even worse. It's too damn expensive here because it's too crowded. Traffic, high housing, fires, floods: those Four Horsemen trampling the state. Overcrowding, elbowing out one another, etc.
We're way beyond the carrying capacity for potable water. What you may call being in the sh*tter is a welcome, needed correction.
1922
fdhfoiehfeoi
2023 Apr 11, 8:23pm
fdhfoiehfeoi
2023 Apr 11, 8:23pm
zzyzzx says
Checked out housing up in Arrowhead after visiting for vacation. For one, there were lots of properties available on short notice, and two, a lot of the vacation rentals are being turned into long-term rentals. Seems to confirm your link.
Demand For Vacation Homes Is Down More Than 50% From Pre-Pandemic Levels
Checked out housing up in Arrowhead after visiting for vacation. For one, there were lots of properties available on short notice, and two, a lot of the vacation rentals are being turned into long-term rentals. Seems to confirm your link.
1923
fdhfoiehfeoi
2023 Apr 11, 8:25pm
fdhfoiehfeoi
2023 Apr 11, 8:25pm
WookieMan says
How the fuck will that happen when they only have 300 million in the fund? We've signed our lease, moving out of state in June. Kiss my ass commie-fucks.
Nope. This is a means to keep people in the state.
How the fuck will that happen when they only have 300 million in the fund? We've signed our lease, moving out of state in June. Kiss my ass commie-fucks.
1924
fdhfoiehfeoi
2023 Apr 11, 8:27pm
fdhfoiehfeoi
2023 Apr 11, 8:27pm
Eman says
What do you call it when your property ownership is shared with the state?
No need to get sensational with Communism stuff with this program.
What do you call it when your property ownership is shared with the state?
1925
Eman
2023 Apr 11, 8:43pm
Eman
2023 Apr 11, 8:43pm
NuttBoxer says
Who will give you 20% in equity upfront with 0% interest for the duration of your ownership? All they ask is that they share 20% of the appreciation when you sell? It’s a very generous program IMO. They are basically a silent 2nd lender with 0% interest in exchange for future appreciation not to exceed 20%
Eman says
No need to get sensational with Communism stuff with this program.
What do you call it when your property ownership is shared with the state?
Who will give you 20% in equity upfront with 0% interest for the duration of your ownership? All they ask is that they share 20% of the appreciation when you sell? It’s a very generous program IMO. They are basically a silent 2nd lender with 0% interest in exchange for future appreciation not to exceed 20%
1926
mell
2023 Apr 11, 9:17pm
Eman says
It's completely misguided though and only props up existing home prices. The reason is nobody is their right mind would lend these people money at the going interest rates which are still not high enough to combat rampant inflation. Moral hazard 2.0, reloaded. People buy any property if they get into this program, because if they fuck up and can't pay at any point, they only lost a few months of mortgage payments. So it's like state sponsored rent to own. Of course they'll burn through that money quickly, which limits the overall impact, but it surely will stoke asset inflation.
NuttBoxer says
Eman says
No need to get sensational with Communism stuff with this program.
What do you call it when your property ownership is shared with the state?
Who will give you 20% in equity upfront with 0% interest for the duration of your ownership? All they ask is that they share 20% of the appreciation when you sell? It’s a very generous program IMO. They are basically a silent 2nd lender with 0% interest in exchange for future appreciation not to exceed 20%
It's completely misguided though and only props up existing home prices. The reason is nobody is their right mind would lend these people money at the going interest rates which are still not high enough to combat rampant inflation. Moral hazard 2.0, reloaded. People buy any property if they get into this program, because if they fuck up and can't pay at any point, they only lost a few months of mortgage payments. So it's like state sponsored rent to own. Of course they'll burn through that money quickly, which limits the overall impact, but it surely will stoke asset inflation.
1927
AD
2023 Apr 11, 11:50pm
AD
2023 Apr 11, 11:50pm
.
Mortgage demand for second homes has dropped 50% from pre pandemic levels.
https://www.usatoday.com/story/money/personalfinance/real-estate/2023/04/11/demand-second-homes-plummets-75-percent/11637036002/
.
Mortgage demand for second homes has dropped 50% from pre pandemic levels.
https://www.usatoday.com/story/money/personalfinance/real-estate/2023/04/11/demand-second-homes-plummets-75-percent/11637036002/
.
1929
Blue
2023 Apr 12, 12:48am
NuttBoxer says
LOL! CA state is adding new demand to housing that almost do not allow to build under commie Prop 13! that means, this can push the shack values up soon!
California moves closer to Communism by taking a 20% stake in new home purchases...
https://www.zerohedge.com/personal-finance/california-front-20-down-payments-0-interest-homebuyers-incomes-211000
LOL! CA state is adding new demand to housing that almost do not allow to build under commie Prop 13! that means, this can push the shack values up soon!
1930
AD
2023 Apr 12, 12:51am
AD
2023 Apr 12, 12:51am
Blue says
I see a lot of coordination between blue states like California, Oregon, Washington, etc. and the Birdbrain Biden admin. They need to keep housing propped up at least until November 2024.
Just saw that the federal government has given approval for the 40 year mortgage. This will help also keep housing from crashing a lot.
.
LOL! CA state is adding new demand to housing that almost do not allow to build under commie Prop 13! that means, this can push the shack values up soon!
I see a lot of coordination between blue states like California, Oregon, Washington, etc. and the Birdbrain Biden admin. They need to keep housing propped up at least until November 2024.
Just saw that the federal government has given approval for the 40 year mortgage. This will help also keep housing from crashing a lot.
.
1931
Eman
2023 Apr 12, 4:14am
Eman
2023 Apr 12, 4:14am
mell says
I agree it’s misguided and only helps to prop up existing prices short-term, but it’s not communism. Communism only cheats and steals from others. I came from a communist country. I’ve witnessed it first hand.
Like any assistance program, the intention is good, but the end result is mixed. $300M is a drop in the bucket. I don’t expect it to make a dent in real estate prices.
It's completely misguided though and only props up existing home prices. The reason is nobody is their right mind would lend these people money at the going interest rates which a...
I agree it’s misguided and only helps to prop up existing prices short-term, but it’s not communism. Communism only cheats and steals from others. I came from a communist country. I’ve witnessed it first hand.
Like any assistance program, the intention is good, but the end result is mixed. $300M is a drop in the bucket. I don’t expect it to make a dent in real estate prices.
1932
WookieMan
2023 Apr 12, 4:56am
WookieMan
2023 Apr 12, 4:56am
Fuck building. I'm in progress of redacting the plans with my name and information and making a build post. If building costs as much as what we're quoted we're kind of fucked as a nation. $670k.... 2,200 sf ranch. New post coming soon. We're becoming a country of landlords. $670k where I live.... you can eat shit and die. This is a normal fucking house outside of the pool build. $400k tops.
I'm going to get fucked on this. So I'm prepared. I'll fuck them just as hard and make sure they're broke and family dies. Yes I'm a sick fuck.
I'm going to get fucked on this. So I'm prepared. I'll fuck them just as hard and make sure they're broke and family dies. Yes I'm a sick fuck.
1933
zzyzzx
2023 Apr 12, 5:28am
zzyzzx
2023 Apr 12, 5:28am
WookieMan says
Building costs are insane at the moment. Just got quoted 115K and at least 3 months out for a deck that would have been maybe 20K 3 years ago. I get it, they are busy and don't need to work now. They could have just told us that.
Fuck building. I'm in progress of redacting the plans with my name and information and making a build post. If building costs as much as what we're quoted we're kind of fucked as a nation. $670k.... 2,200 sf ranch. New post coming soon. We're becoming a country of landlords. $670k where I live.... you can eat shit and die. This is a normal fucking house outside of the pool build. $400k tops.
I'm going to get fucked on this. So I'm prepared. I'll fuck them just as hard and make sure they're broke and family dies. Yes I'm a sick fuck.
Building costs are insane at the moment. Just got quoted 115K and at least 3 months out for a deck that would have been maybe 20K 3 years ago. I get it, they are busy and don't need to work now. They could have just told us that.
1934
zzyzzx
2023 Apr 12, 11:37am
zzyzzx
2023 Apr 12, 11:37am
https://www.investopedia.com/underwater-mortgages-7377653
A Tenth of Recent Home Buyers Are Underwater on Mortgage
A Tenth of Recent Home Buyers Are Underwater on Mortgage
1935
GNL
2023 Apr 12, 12:09pm
GNL
2023 Apr 12, 12:09pm
zzyzzx says
So, 1%?
https://www.investopedia.com/underwater-mortgages-7377653
A Tenth of Recent Home Buyers Are Underwater on Mortgage
So, 1%?
1936
AD
2023 Apr 12, 1:41pm
AD
2023 Apr 12, 1:41pm
GNL says
Yep.
"About 11% of recent homebuyers had properties worth less than the debt owed on them in February."
Overall for the entire housing inventory of the USA, the underwater rate is 1.42%.
I go back to the 1990s when I bought my first home and the median home price to household income ratio was around 3.
It has risen to 5 as that was the ratio which applied to our purchase of a townhome in 2016.
.
,
So, 1%?
Yep.
"About 11% of recent homebuyers had properties worth less than the debt owed on them in February."
Overall for the entire housing inventory of the USA, the underwater rate is 1.42%.
I go back to the 1990s when I bought my first home and the median home price to household income ratio was around 3.
It has risen to 5 as that was the ratio which applied to our purchase of a townhome in 2016.
.
,
1937
zzyzzx
2023 Apr 19, 10:09am
zzyzzx
2023 Apr 19, 10:09am
https://www.bloomberg.com/news/articles/2023-04-19/foreclosures-on-us-properties-continued-to-rise-in-first-quarter
More Americans Are Losing Their Homes as Foreclosures on US Properties Rise
More Americans Are Losing Their Homes as Foreclosures on US Properties Rise
1938
zzyzzx
2023 Apr 19, 10:13am
zzyzzx
2023 Apr 19, 10:13am
https://www.washingtontimes.com/news/2023/apr/18/joe-biden-hike-payments-good-credit-homebuyers-sub/
Biden to hike payments for good-credit homebuyers to subsidize high-risk mortgages
Homebuyers with good credit scores will soon encounter a costly surprise: a new federal rule forcing them to pay higher mortgage rates and fees to subsidize people with riskier credit ratings who are also in the market to buy houses.
The fee changes will go into effect May 1 as part of the Federal Housing Finance Agency’s push for affordable housing, and they will affect mortgages originating at private banks across the country. The federally backed home mortgage companies Fannie Mae and Freddie Mac will enact the loan-level price adjustments, or LLPAs.
Mortgage industry specialists say homebuyers with credit scores of 680 or higher will pay, for example, about $40 per month more on a home loan of $400,000. Homebuyers who make down payments of 15% to 20% will get socked with the largest fees.
The new fees will apply only to Americans buying houses or refinancing after May 1.
Lenders and real estate agents say the changes will frustrate homebuyers with high credit scores and homeowners seeking to refinance because the rule punishes them for their relatively strong financial positions.
“The changes do not make sense. Penalizing borrowers with larger down payments and credit scores will not go over well,” Ian Wright, a senior loan officer at Bay Equity Home Loans in the San Francisco Bay Area, told The Washington Times in an email message. “It overcomplicates things for consumers during a process that can already feel overwhelming with the amount of paperwork, jargon, etc. Confusing the borrower is never a good thing.”
He said the rule will “cause customer-service issues for lenders and individual loan officers when a consumer won’t understand why their interest rate and fees suddenly changed.”
“I am all for the first-time buyer having a chance to get into the market, but it’s clear these decisions aren’t being made by folks that understand the entire mortgage process,” Mr. Wright said.
The new fees “will create extreme confusion as we enter the traditional spring home purchase season,” said David Stevens, a former head of the Mortgage Bankers Association who served as commissioner of the Federal Housing Administration during the Obama administration.
“This confusing approach won’t work and more importantly couldn’t come at a worse time for an industry struggling to get back on its feet after these past 12 months,” Mr. Stevens wrote in a recent social media post. “To do this at the onset of the spring market is almost offensive to the market, consumers, and lenders.”
The housing market has been hit hard by a series of Federal Reserve interest rate hikes that have driven mortgage rates above 6%, roughly double the level from early 2022. The Fed has raised rates rapidly to bring down inflation, which hit a four-decade high of 9.1% last summer.
“In the wake of a 3-percentage-point increase in mortgage rates, now is not the time to raise fees on homebuyers,” Kenny Parcell, president of the National Association of Realtors, told the Federal Housing Finance Agency earlier this year.
Under the new mortgage financing rules, homebuyers with riskier credit ratings and lower down payments will qualify for better mortgage rates and discounted fees.
Federal Housing Finance Agency Director Sandra Thompson, a Biden appointee, said the fee changes will “increase pricing support for purchase borrowers limited by income or by wealth.” The agency calls the overall fee changes “minimal” and said the moves will ensure market stability.
After a storm of criticism, the agency delayed to Aug. 1 an upfront fee for debt-to-income ratios of 40% or more. The ratio is calculated by dividing the homebuyer’s monthly debt payments by gross income. It’s one of the key measures lenders use to determine whether a mortgage applicant qualifies for a loan.
Ms. Thompson said the postponement will help “to ensure a level playing field for all lenders to have sufficient time to deploy the fee.”
The fee changes are intended to subsidize higher-risk borrowers by imposing “an intentional disruption to traditional risk-based pricing,” Mr. Stevens said.
“Why was this done? The answer is simple, it was to try to narrow the gap in access to credit especially for minority home buyers who often have lower down payments and lower credit scores,” he wrote in a post on LinkedIn. “The gap in homeownership opportunity is real. America is facing a severe shortage of affordable homes for sales combined with excessive demand causing an imbalance. But convoluting pricing and credit is not the way to solve this problem.”
He predicted that the Federal Reserve will soon complete its course of tightening its balance sheet and mortgage rates will fall.
“Demand for homes will begin to rise and the same challenges for first-time homebuyers will return,” he said.
Lenders also are worried about the impact of the debt-to-income fee that takes effect in August because homebuyers might feel as if they are in a game of “bait and switch” on their projected borrowing costs.
“When a lender is quoting a borrower, there’s a lot they don’t know yet, such as what the property taxes and insurance payments are per month,” Mr. Wright said. “Changes happen to the mortgage payment and income during escrow, so this will cause frustration to borrowers and lenders for the sudden rate/fee changes. Most of us loan officers will then say let’s ‘eat’ the cost for the borrower to keep them happy (resulting in losses for the lender and loan officer).”
He said the added uncertainty will cause delays “during an already competitive real estate market lacking inventory.”
“For example, due to the low inventory and fierce competition, many buyers must close their transactions in less than 30 days to get their offer accepted,” Mr. Wright said. “The sudden rate changes will cause lenders to ‘re-disclose,’ adding additional days to the transaction. This puts extreme timeline pressure on the buyer and lenders forced to re-underwrite the file for the changes.”
In a letter to Ms. Thompson in February, Mortgage Bankers Association President Bob Broeksmit said the timing of the fee changes was “especially troubling” and that the debt-to-income ratio fee creates “operational issues and quality control” for lenders.
“A borrower’s income and expenses can change several times throughout the loan application and underwriting process, especially considering evolving assumptions concerning the nature of debt and income, and the growth in self-employment, part-time employment, and ‘gig economy’ employment,” Mr. Broeksmit said.
Biden to hike payments for good-credit homebuyers to subsidize high-risk mortgages
Homebuyers with good credit scores will soon encounter a costly surprise: a new federal rule forcing them to pay higher mortgage rates and fees to subsidize people with riskier credit ratings who are also in the market to buy houses.
The fee changes will go into effect May 1 as part of the Federal Housing Finance Agency’s push for affordable housing, and they will affect mortgages originating at private banks across the country. The federally backed home mortgage companies Fannie Mae and Freddie Mac will enact the loan-level price adjustments, or LLPAs.
Mortgage industry specialists say homebuyers with credit scores of 680 or higher will pay, for example, about $40 per month more on a home loan of $400,000. Homebuyers who make down payments of 15% to 20% will get socked with the largest fees.
The new fees will apply only to Americans buying houses or refinancing after May 1.
Lenders and real estate agents say the changes will frustrate homebuyers with high credit scores and homeowners seeking to refinance because the rule punishes them for their relatively strong financial positions.
“The changes do not make sense. Penalizing borrowers with larger down payments and credit scores will not go over well,” Ian Wright, a senior loan officer at Bay Equity Home Loans in the San Francisco Bay Area, told The Washington Times in an email message. “It overcomplicates things for consumers during a process that can already feel overwhelming with the amount of paperwork, jargon, etc. Confusing the borrower is never a good thing.”
He said the rule will “cause customer-service issues for lenders and individual loan officers when a consumer won’t understand why their interest rate and fees suddenly changed.”
“I am all for the first-time buyer having a chance to get into the market, but it’s clear these decisions aren’t being made by folks that understand the entire mortgage process,” Mr. Wright said.
The new fees “will create extreme confusion as we enter the traditional spring home purchase season,” said David Stevens, a former head of the Mortgage Bankers Association who served as commissioner of the Federal Housing Administration during the Obama administration.
“This confusing approach won’t work and more importantly couldn’t come at a worse time for an industry struggling to get back on its feet after these past 12 months,” Mr. Stevens wrote in a recent social media post. “To do this at the onset of the spring market is almost offensive to the market, consumers, and lenders.”
The housing market has been hit hard by a series of Federal Reserve interest rate hikes that have driven mortgage rates above 6%, roughly double the level from early 2022. The Fed has raised rates rapidly to bring down inflation, which hit a four-decade high of 9.1% last summer.
“In the wake of a 3-percentage-point increase in mortgage rates, now is not the time to raise fees on homebuyers,” Kenny Parcell, president of the National Association of Realtors, told the Federal Housing Finance Agency earlier this year.
Under the new mortgage financing rules, homebuyers with riskier credit ratings and lower down payments will qualify for better mortgage rates and discounted fees.
Federal Housing Finance Agency Director Sandra Thompson, a Biden appointee, said the fee changes will “increase pricing support for purchase borrowers limited by income or by wealth.” The agency calls the overall fee changes “minimal” and said the moves will ensure market stability.
After a storm of criticism, the agency delayed to Aug. 1 an upfront fee for debt-to-income ratios of 40% or more. The ratio is calculated by dividing the homebuyer’s monthly debt payments by gross income. It’s one of the key measures lenders use to determine whether a mortgage applicant qualifies for a loan.
Ms. Thompson said the postponement will help “to ensure a level playing field for all lenders to have sufficient time to deploy the fee.”
The fee changes are intended to subsidize higher-risk borrowers by imposing “an intentional disruption to traditional risk-based pricing,” Mr. Stevens said.
“Why was this done? The answer is simple, it was to try to narrow the gap in access to credit especially for minority home buyers who often have lower down payments and lower credit scores,” he wrote in a post on LinkedIn. “The gap in homeownership opportunity is real. America is facing a severe shortage of affordable homes for sales combined with excessive demand causing an imbalance. But convoluting pricing and credit is not the way to solve this problem.”
He predicted that the Federal Reserve will soon complete its course of tightening its balance sheet and mortgage rates will fall.
“Demand for homes will begin to rise and the same challenges for first-time homebuyers will return,” he said.
Lenders also are worried about the impact of the debt-to-income fee that takes effect in August because homebuyers might feel as if they are in a game of “bait and switch” on their projected borrowing costs.
“When a lender is quoting a borrower, there’s a lot they don’t know yet, such as what the property taxes and insurance payments are per month,” Mr. Wright said. “Changes happen to the mortgage payment and income during escrow, so this will cause frustration to borrowers and lenders for the sudden rate/fee changes. Most of us loan officers will then say let’s ‘eat’ the cost for the borrower to keep them happy (resulting in losses for the lender and loan officer).”
He said the added uncertainty will cause delays “during an already competitive real estate market lacking inventory.”
“For example, due to the low inventory and fierce competition, many buyers must close their transactions in less than 30 days to get their offer accepted,” Mr. Wright said. “The sudden rate changes will cause lenders to ‘re-disclose,’ adding additional days to the transaction. This puts extreme timeline pressure on the buyer and lenders forced to re-underwrite the file for the changes.”
In a letter to Ms. Thompson in February, Mortgage Bankers Association President Bob Broeksmit said the timing of the fee changes was “especially troubling” and that the debt-to-income ratio fee creates “operational issues and quality control” for lenders.
“A borrower’s income and expenses can change several times throughout the loan application and underwriting process, especially considering evolving assumptions concerning the nature of debt and income, and the growth in self-employment, part-time employment, and ‘gig economy’ employment,” Mr. Broeksmit said.
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2023 Apr 19, 11:16am
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2023 Apr 19, 11:16am
zzyzzx says
I saw on news that FHA has approved the 40 year mortgage for those who have mortgages and are having trouble paying for them.
By the way, Ocala Florida is a great location for working and middle class to buy a home:
https://www.usatoday.com/story/money/personalfinance/real-estate/2023/04/18/homeowners-wealth-vs-renting-housing-market/11683922002/
.
https://www.bloomberg.com/news/articles/2023-04-19/foreclosures-on-us-properties-continued-to-rise-in-first-quarter
More Americans Are Losing Their Homes as Foreclosures on US Properties Rise
I saw on news that FHA has approved the 40 year mortgage for those who have mortgages and are having trouble paying for them.
By the way, Ocala Florida is a great location for working and middle class to buy a home:
https://www.usatoday.com/story/money/personalfinance/real-estate/2023/04/18/homeowners-wealth-vs-renting-housing-market/11683922002/
.
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https://finance.yahoo.com/news/pimco-kiesel-called-housing-top-160339396.html?source=patrick.net
Bond manager Mark Kiesel sold his California home in 2006, when he presciently predicted the housing bubble would pop. He bought again in 2012, after U.S. prices fell more than 30% and found a floor.
Now, after a record surge in prices, Kiesel says the time to sell is once again at hand.