patrick.net

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https://www.cnbc.com/2023/09/05/mortgage-rate-tipping-point-homeowners-say-5percent-is-the-magic-number.html

" But there is a tipping point, recent reports found: Homeowners are nearly twice as willing to sell their home if their mortgage rate is 5% or higher, according to Zillow, and 71% of prospective homebuyers who plan to purchase their next home with a mortgage said they would not accept a rate above 5.5% — that is the “magic mortgage rate,” according to a survey by John Burns Research and Consulting. "

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SunnyvaleCA says

Eman says

The reality of MY market and buy/rent ratio disparity.

That's nothing! Check out my shack (and also don't forget a new buyer will be paying more than $2k/month in property taxes).

Thanks, good summary of my housing arguments right there.

Big_Johnson says

GNL says

Well, Rubicon is a VERY successful RE investor and he says to buy rental RE at any time, all the time and any time you see a house for sale you should buy it. Price, rates and the economy simply doesn't matter. I'm sure he knows what he's talking about.

Liar. Never said it that way ever. Show an example.

My mistake. I thought you were a cost averager. Also, I see you changed your name again.

ad says

Is this a joke? Even if such a modest home is worth $1.6 million, it is very difficult to get a bank to cash out rental property, or even just to refinance. Even if you did manage a loan, through compensating balances or other scheme, the interest rate will be higher. There are also points and origination fees.

HeadSet says

ad says

Is this a joke? Even if such a modest home is worth $1.6 million, it is very difficult to get a bank to cash out rental property, or even just to refinance. Even if you did manage a loan, through compensating balances or other scheme, the interest rate will be higher. There are also points and origination fees.

Interesting. The books and sites on the subject of RE investing are all braying about regularly refinancing rental properties and how easy it is.

RWSGFY says

Interesting. The books and sites on the subject of RE investing are all braying about regularly refinancing rental properties and how easy it is.

It is and it isn't. You need a banking relationship. We're not talking the VP of a Chase branch. You need to know the owner or primary shareholder of the bank. Not happening with Chase. You need to get in with the top commercial lending people at a small regional bank. Or OPM. There are ways. We'd cash out and buy another building after rehabbing it and getting it fully rented. It was a small bank on the South side of Chicago. As long as you perform on the loan and financials are solid, small banks will lend to you. Buying a couple dinners or taking people on vacations doesn't hurt either. Cost of doing business.

If you're doing Fannie/Freddie loans you're gonna find it harder. One your capped at 4 units. Two you can only have so many loans held by them. Can't remember if it's was 6 or 10. So if you want a RE empire, you're going to have to find a lender that can do more for you.

Acquaintance in Oakland put his home up for sale over a month ago. No bites and price was lowered a couple of weeks ago. His real estate professional said the whole area was the same. And so it begins?

ad says

It all works out very well unless it doesn't. That same leverage that allows for huge capital gains also means there's a chance you lose it all if things go only moderately downhill.

I know a person who had 3 highly-leveraged rentals. He might have pulled through the 2008-2009 meltdown except that his highest-paying renter decided to stop paying the rent. Without the cash flow, he lost that house and the two other condos.

There's plenty to be made in landlording and creating a rental empire, but beware of survivorship bias: We only hear about the success stories!

SunnyvaleCA says

ad says

It all works out very well unless it doesn't. That same leverage that allows for huge capital gains also means there's a chance you lose it all if things go only moderately downhill.

I know a person who had 3 highly-leveraged rentals. He might have pulled through the 2008-2009 meltdown except that his highest-paying renter decided to stop paying the rent. Without the cash flow, he lost that house and the two other condos.

There's plenty to be made in landlording and creating a rental empire, but beware of survivorship bias: We only hear about the success stories!

This is true...There were a lot of BKs. I worked at a servicer and there was one house that could have avoided foreclosure if their mineral rights were sold. The bank didn't want to bother with it and foreclosed anyway.

https://www.msn.com/en-us/money/realestate/housing-crisis-2023-why-home-prices-will-keep-surging-on-rising-rates/ar-AA1glwQW

Why housing will keep going up according to a mainstream media source.

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SunnyvaleCA says

ad says

It all works out very well unless it doesn't. That same leverage that allows for huge capital gains also means there's a chance you lose it all if things go only moderately downhill.

I know a person who had 3 highly-leveraged rentals. He might have pulled through the 2008-2009 meltdown except that his highest-paying renter decided to stop paying the rent. Without the cash flow, he lost that house and the two other condos.

There's plenty to be made in landlording and creating a rental empire, but beware of survivorship bias: We only hear about the success stories!

Well, we DO remember Casey Sirin.

https://www.reddit.com/r/realestateinvesting/comments/16ayk8g/whats_the_longest_your_property_was_cash_flow/

What's the longest your property was cash flow negative?

1337irr says

This is true...There were a lot of BKs. I worked at a servicer and there was one house that could have avoided foreclosure if their mineral rights were sold. The bank didn't want to bother with it and foreclosed anyway.

They won't foreclose this time, unless the owner goes completely off the grid. Banks lost exponentially more during the housing crisis by foreclosing and managing and then trying to sell homes in a corporate manner. Remember amortization. After two years of on time payments it's a near impossibility for them to have a loss. Forebearance will be the new method to handle a housing crash. Banks screwed everything up from the word go, but then made it worse foreclosing on people.

Put this way way the entire world shut down for 2 years practically because of covid. Pushing a loan payment back 1-2 months is a nothing burger as someone finds a new job in a low unemployment market. You're an idiot if you cannot get a job currently. I'd also venture to guess 90% of loans have 5% or less interest on them. Defaulting doesn't seem to be in the cards. It just sucks for those looking to buy. The future is foggy. If it's a primary buy and hold for a decade, I think you'll be fine long term. Just don't buy if you think you might move or need to upsize due to lifestyle changes.

A GAUGE of US mortgage applications for home purchases fell to a 28-year low last week, underscoring the stifling effect of high mortgage rates on buyer demand. The Mortgage Bankers Association index of home-purchase applications decreased 2.1 per cent to 141.9, the lowest level since April 1995, according to data out on Wednesday (Sep 6).

zzyzzx says

Obligatory:

1 in 8 San Francisco Home Sellers Is Losing Money—the Highest Share in the Nation
Roughly one of every eight (12.3%) homes that sold in San Francisco during the three months ending July 31 was purchased for less than the seller bought it for, up from 5% a year earlier. That’s a higher share than any other major U.S. metro and is quadruple the national rate of 3%.

EBGuy says

1 in 8 San Francisco Home Sellers Is Losing Money—the Highest Share in the Nation
Roughly one of every eight (12.3%) homes that sold in San Francisco during the three months ending July 31 was purchased for less than the seller bought it for, up from 5% a year earlier. That’s a higher share than any other major U.S. metro and is quadruple the national rate of 3%.

Interesting article. Oakland and San Jose are also listed in their table, and aren't outliers within the country with respect to percentage of houses sold at a loss. SF's woes don't seem to be related to overall high prices, as San Jose's median profit per sale is actually higher! Another realization is that "sold at a loss" — mere sale price minus purchase price — is probably not even quite the right metric, as selling costs can be really add up quickly. If you added in selling costs and also all the banking costs associated with getting a mortgage on a different house (presumably yoou're moving from from one house to another) and the 1-in-8 figure is probably a lot worse.

EBGuy says

1 in 8 San Francisco Home Sellers Is Losing Money—the Highest Share in the Nation
Roughly one of every eight (12.3%) homes that sold in San Francisco during the three months ending July 31 was purchased for less than the seller bought it for, up from 5% a year earlier. That’s a higher share than any other major U.S. metro and is quadruple the national rate of 3%.

Also from the article:

“Even though home prices have fallen from their peak, a majority of home sellers are still reaping significant financial gains. Nationwide, 97% of home sellers sold for a profit during the three months ending July 31, with the typical home that sold going for 78.4% ($203,232) more than the seller bought it for.

Even in San Francisco, most homeowners are still making a lot of money. The typical home that sold in the metro went for 70.5% ($625,500) more than the seller bought it for.”

The late buyers tend to get screwed.

Big_Johnson says

Forget about this timing the market BS and all the noise. If you can comfortably afford a house to live in for the long term. Buy and enjoy being a homeowner.

This is really all it's about. My mortgage payment is trivial at $1,300 PITI. It's so low I don't even think about it. That's changing, but it's still under 10% of debt to income. Fact is until lending gets out of control again or everyone decides to move, there's not much downside for the foreseeable future. High interest rates will slow the uptick and some hipster areas will eat shit price wise, but nationally I still don't see anything negative. By that I mean a 10% plus correction nationwide.

That said I wouldn't want to be a buyer right now. You're going to pay a touch more than you should. But if you stay 7+ years and keep your job you'll do fine with lending standards now. Real estate isn't about "timing" it's about "time." Big distinction there. I'm not sure of a point in history outside of maybe a Detroit or something where if you held onto a home 10 years, you came out with less.

https://finance.yahoo.com/news/americans-really-hate-the-idea-of-buying-a-house-right-now-152340819.html

Americans really hate the idea of buying a house right now

https://www.redfin.com/news/homeowners-selling-at-a-loss-2023/

1 in 8 San Francisco Home Sellers Is Losing Money—the Highest Share in the Nation

zzyzzx says

https://www.redfin.com/news/homeowners-selling-at-a-loss-2023/

1 in 8 San Francisco Home Sellers Is Losing Money—the Highest Share in the Nation

Nooooooooooo!

https://www.reddit.com/r/realestateinvesting/comments/16bxxs6/this_guy_purchased_a_home_and_is_now_renting_it/

This guy purchased a home and is now renting it out $800 less then what the mortgage is!

zzyzzx says

https://www.reddit.com/r/realestateinvesting/comments/16bxxs6/this_guy_purchased_a_home_and_is_now_renting_it/

This guy purchased a home and is now renting it out $800 less then what the mortgage is!

WHY DO YOU HATE APPRECIATION?!!!!

zzyzzx says

1 in 8 San Francisco Home Sellers Is Losing Money—the Highest Share in the Nation

Good. Fucking insane market crap has to end. Even mounds of shit, being mugged by homeless and psychotic, and installed political puppets are just grazing it.

https://www.msn.com/en-us/money/realestate/the-us-is-dealing-with-a-very-savagely-unhealthy-housing-market-says-this-real-estate-expert-here-s-why-and-what-to-do-about-it/ar-AA1gqhq3

Is the housing market officially on ice? Or rapidly moving toward a deep freeze? While no formal benchmark for a real estate recession may exist, make no mistake — skyrocketing mortgage rates and dwindling supplies are sending chills through this crucial sector of the U.S. economy.

When mortgage rates exceeded 6% in 2022, the nation experienced a historic drop in home sales. Now, with rates solidly in the 7% range, real estate analyst Logan Mohtashami of HousingWire warns that 8% isn’t far behind — a potentially prohibitive rate that would fuel a “very savagely unhealthy” market for buyers and sellers alike.

I wonder what Logan's forecast is for the Fed Funds rate and the 30 year mortgage rate for spring and summer 2024 leading to Biden's reelection bid.

https://sfstandard.com/2023/09/07/san-francisco-home-sellers-lose-money/

San Francisco Home Sellers Losing Most Money in the Nation, Report Says
Written by Lydia You
Published Sep. 07, 2023

San Franciscans lead the nation in home sales losses and are four times as likely to lose money when selling a home as the national average, according to a Redfin report.

Roughly one in eight, or 12.3%, of home sellers in San Francisco lost money on home sales in the three-month period ending July 31, according to the report.

People in Canada tell me there's a shitton of land in Ottawa, but enviro rules keep it undeveloped to maximize used home prices for realtors and land prices to keep out new development.

Come, come, buy my 1959 home that last sold for $147,000 when interest rates were around 3.5% in 2018

For $275k just a few years later with 7% interest rates.

Better hurry, this low price won't last until, uh, just buy it now.



"There isn't much inventory"

"Because homeloaners are being stubborn, demanding 2020 Blue State COVID Refugee era pricing with 3.5% loans in a 7% environment"

It's not inflation. The house should still be under $200k accounting for Bideninflation and a 1-2% YoY increase on top.

It's going to be so much FUN when the boomers have to sell to retire or they pass and their kids sell off these places they don't want to move to. When it goes, it's going to collapse.

AmericanKulak says

It's going to be so much FUN when the boomers have to sell to retire or they pass and their kids sell off these places they don't want to move to. When it goes, it's going to collapse.

Depends on inventory versus demand. Look at new housing starts and see if they continue to lag compared to 2000 to 2008, for example.

Also depends on work from home and job availability in locations where housing inventory is being sold by the heirs of the baby boomers.

If the heirs are selling homes in Colorado mountain towns such as a 5 acre, 3 bedroom home for $750,000, it may not be that hard if there are enough white liberal hipster$ willing to spend that money to live and work from home.
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I dunno...looks like you can fit 3 families of illegals into it, or with 20% down you can AirBnB it for $150 per night and cashflow positive.

Can always put down 3.5% (less than $10k) and have a hedge against hyperinflation.

We may think it is overpriced, but some Chinese commie thinks damn I gotta get all the money I can out of mainland China before it goes to zero.

One of the "It's gonna be different this time" sayings is gonna be wrong. Higher interest rates have shot the affordability outta reach for the same properties for people with similar incomes. Therefore, prices should go down to match people's more or less constant income. However, prices of real assets historically have gone up during periods of inflation. - So one or the other "this time is different"; will be different.

Misc says

Higher interest rates have shot the affordability outta reach for the same properties for people with similar incomes.

Depends on interest rates as the 30-year rate may drop by next March to 5.5% from 7.25% now. I'm hoping there is some conversion of vacation rentals to at least long-term rentals. I'm seeing rents holding steady for last 18 months in the Florida panhandle, with a lot of offers of free 1st month rent for a 13 month lease.

If I buy, then I'd pay 4 discount points to lower the rate to 4.5% (from 5.5%) if I'm going to live at least 7 years in the home.

If we sell our townhome for $310,000, we'd offer our assumable VA mortgage (at 3% and $155,000 balance) as well as would offer to pay up to 4 discount points to lowering the buyer's rate. That is why I hope the 30 year mortgage rate is down to at least 6% by next summer.

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Misc says

We may think it is overpriced, but some Chinese commie thinks damn I gotta get all the money I can out of mainland China before it goes to zero.

Yeah, there are a few on Patnet who think that foreign investors (Chinese, Indian, etc.) are going to continue to prop up the California real estate market.

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ad says

Misc says

We may think it is overpriced, but some Chinese commie thinks damn I gotta get all the money I can out of mainland China before it goes to zero.

Yeah, there are a few on Patnet who think that foreign investors (Chinese, Indian, etc.) are going to continue to prop up the California real estate market.

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In San Francisco the homeownership rate is 35%. The average San Francisco home value is $1,269,632, down 11.5% over the past year and goes to pending in around 20 days. I am guessing that the decrease in average price has to do with more lower priced homes selling instead of lower prices for the same house. It takes about 40% down to qualify for Freddie.Fannie becuase of the price caps, so most buyers have to go with Jumbo mortgages if they do financing because coming up with $480k down to just have it sit there doesn't make sense to most people. Even so, with a Jumbo you are looking at about $250k down, needing solid employment and a strong position in other financial assets. It is next to impossible for regular folk to get a foot onto the property ladder Still...houses go pending in 20 days.

While it doesn't make sense for a W2 employee...for Commies trying to get coin outta China before it goes to zero,,,well...

Most boomers I know as a geezer millennial have already downsized and sold off. I think that wave has passed at this point. Older boomers are nearing 80 at this point. They can't manage 3,500+ square feet. They sold already. My own mother is a prime example of this.

From 2015-2020 boomers did sell off at good prices. And younger people bought at low interest rates in homes that are likely lifetime (20 year) homes. The "no one is going to buy the boomer homes" is over already. Millennials that could buy already bought. This is exactly why inventory is going to stay low for the foreseeable future. Appreciation will hit a ceiling but there's no crash coming. We'd have to build 5x's more than we are now and that's not going to happen. Housing will be expensive for the next decade and maybe longer. We haven't even hit double digit interest rates. People are freaking out over below historic normal interest rates. Calm your ponies. Give me a call when they hit 15%. Demographically we're growing and not building at pace to keep up. Higher home prices. That's all there is to it.