housing prices peak 2
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2022 Apr 29, 9:29pm 604,935 views 5,669 comments
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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.
1939
AD
2023 Apr 19, 11:16am
AD
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/
.
1940
AD
2023 Apr 19, 11:27am
AD
2023 Apr 19, 11:27am
zzyzzx says
Its a typical neo-Marxist / Democrat tactic as far as "transfer payments" just like with Obamacare / Affordable Care Act (ACA).
Examine how much it costs for ACA such as silver plan for single payers earning at least $60,000. The large premium is to subsidize the premium for those making $30,000 to $50,000.
I believe this is the same with the universal fee that is charged for cell phone service. I think it is around 45 cents which goes to subsidizing the Affordable Connectivity Program (or Obama-phone program).
And examine how California is going to apply a similar "transfer payment" system for electricity rates.
.,
Biden to hike payments for good-credit homebuyers to subsidize high-risk mortgages
Homebuyers with good credit scores will soon encounter a costly surprise
Its a typical neo-Marxist / Democrat tactic as far as "transfer payments" just like with Obamacare / Affordable Care Act (ACA).
Examine how much it costs for ACA such as silver plan for single payers earning at least $60,000. The large premium is to subsidize the premium for those making $30,000 to $50,000.
I believe this is the same with the universal fee that is charged for cell phone service. I think it is around 45 cents which goes to subsidizing the Affordable Connectivity Program (or Obama-phone program).
And examine how California is going to apply a similar "transfer payment" system for electricity rates.
.,
1944
mell
2023 Apr 19, 11:40am
GNL says
There is no bust in CA either, aside from shithole ultra-marxist cities. In fact we just reached an all time high valuation again in our rural area. All of this subsidy programs for lower income earners will keep demand and prices high.
I'm in northern Virginia, there's NO HOUSING BUST HERE.
There is no bust in CA either, aside from shithole ultra-marxist cities. In fact we just reached an all time high valuation again in our rural area. All of this subsidy programs for lower income earners will keep demand and prices high.
1946
1337irr
2023 Apr 19, 11:54am
1337irr
2023 Apr 19, 11:54am
Northern Virginia housing bubble burst when the government collapses.
1947
GNL
2023 Apr 19, 12:16pm
GNL
2023 Apr 19, 12:16pm
1337irr says
I think there's a lot of bullshit being spread about a housing bust period.
Northern Virginia housing bubble burst when the government collapses.
I think there's a lot of bullshit being spread about a housing bust period.
1948
SunnyvaleCA
2023 Apr 19, 12:41pm
Eman says
According to ZeroHedge, the program ran out of money in 12 days. 2400 people were helped, so that's $125,000 per person (not counting administration fees).
https://www.zerohedge.com/personal-finance/californias-dream-all-home-down-payment-program-ran-out-money-12-days
I want to know what happens if you default? The taxpayer is out of luck? Anyway, looks like the no-money-down type loans that caused the 2008 crash are effectively back!
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.
According to ZeroHedge, the program ran out of money in 12 days. 2400 people were helped, so that's $125,000 per person (not counting administration fees).
https://www.zerohedge.com/personal-finance/californias-dream-all-home-down-payment-program-ran-out-money-12-days
I want to know what happens if you default? The taxpayer is out of luck? Anyway, looks like the no-money-down type loans that caused the 2008 crash are effectively back!
1949
Misc
2023 Apr 20, 4:31am
Now is the time for people of color to get into real estate ownership, and start building generational wealth.
1950
RC2006
2023 Apr 20, 5:48am
RC2006
2023 Apr 20, 5:48am
Misc says
Barney Frank would approve.
Now is the time for people of color to get into real estate ownership, and start building generational wealth.
Barney Frank would approve.
1951
gabbar
2023 Apr 20, 7:34am
gabbar
2023 Apr 20, 7:34am
Misc says
Not if people of color have worked hard and saved some money
Now is the time for people of color to get into real estate ownership, and start building generational wealth.
Not if people of color have worked hard and saved some money
1952
Misc
2023 Apr 20, 7:41am
Why else would the government start subsidizing mortgage rates for those with poor credit, except to help them ??????
1953
zzyzzx
2023 Apr 20, 10:13am
zzyzzx
2023 Apr 20, 10:13am
https://finance.yahoo.com/news/western-housing-market-recession-hit-093553018.html
The Western housing market recession hit so hard and fast that a Fortune 500 firm that was riding high at $34 per share has crashed to $1
Nestled in the sprawling desert community of North Las Vegas, the three-bedroom home at 6043 Clovelly St. perfectly embodies what has gone terribly wrong at Opendoor Technologies. Back in April 2022, Opendoor bought the home for $420,900. The company then flipped it back onto the market in May 2022 for $480,000, only it was too late: Las Vegas had already shifted from a housing boom into a sharp housing correction. By the time the home sold in January 2023, Opendoor only fetched $346,000—or 17.8% less than the purchase price.
On Tuesday, the company announced it would lay off another 560 staffers, or 22% of its remaining workforce.
The Western housing market recession hit so hard and fast that a Fortune 500 firm that was riding high at $34 per share has crashed to $1
Nestled in the sprawling desert community of North Las Vegas, the three-bedroom home at 6043 Clovelly St. perfectly embodies what has gone terribly wrong at Opendoor Technologies. Back in April 2022, Opendoor bought the home for $420,900. The company then flipped it back onto the market in May 2022 for $480,000, only it was too late: Las Vegas had already shifted from a housing boom into a sharp housing correction. By the time the home sold in January 2023, Opendoor only fetched $346,000—or 17.8% less than the purchase price.
On Tuesday, the company announced it would lay off another 560 staffers, or 22% of its remaining workforce.
1954
Blue
2023 Apr 20, 11:01am
Misc says
In one perspective, rich want their servant class to be around with gov money while they paying less for their services. Indirectly it’s a subsidy to the rich. That’s why they only pay to few folks. They don’t want to help all with less regulations to bring the affordability to many.
Why else would the government start subsidizing mortgage rates for those with poor credit, except to help them ??????
In one perspective, rich want their servant class to be around with gov money while they paying less for their services. Indirectly it’s a subsidy to the rich. That’s why they only pay to few folks. They don’t want to help all with less regulations to bring the affordability to many.
1955
GNL
2023 Apr 20, 2:32pm
GNL
2023 Apr 20, 2:32pm
Blue says
I believe TPTB do think this way. Whatever is best for them as long as they don't help too many people.
Misc says
Why else would the government start subsidizing mortgage rates for those with poor credit, except to help them ??????
In one perspective, rich want their servant class to be around with gov money while they paying less for their services. Indirectly it’s a subsidy to the rich. That’s why they only pay to few folks. They don’t want to help all with less regulations to bring the affordability to many.
I believe TPTB do think this way. Whatever is best for them as long as they don't help too many people.
1956
fdhfoiehfeoi
2023 Apr 20, 5:15pm
fdhfoiehfeoi
2023 Apr 20, 5:15pm
Eman says
I'm not focusing on the financials, I'm focusing on the ownership. Even if you pay off the house, the state still owns 20%. Do you really trust the government enough to give them 20% ownership of your private dwelling?
BTW, saw nobody posted, money ran out in 10 days!
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%
I'm not focusing on the financials, I'm focusing on the ownership. Even if you pay off the house, the state still owns 20%. Do you really trust the government enough to give them 20% ownership of your private dwelling?
BTW, saw nobody posted, money ran out in 10 days!
1957
SunnyvaleCA
2023 Apr 20, 7:49pm
NuttBoxer says
I'm not nobody, but please see post 1948.
BTW, saw nobody posted, money ran out in 10 days!
I'm not nobody, but please see post 1948.
1958
SunnyvaleCA
2023 Apr 20, 7:56pm
NuttBoxer says
I believe that when you sell, you hand over 20% of the after-expenses sales price. But if you never sell, then that was just free money. The benefits are not having to put any money in and also having basically no risk. If you default, the taxpayer is on the hook.
I sure hope you are required to pay off the 20% if you turn the place into a rental. Seems to me that not losing 20% of the sales price is a huge incentive to turn it into a rental. Yay, the policy is promoting turning California into a rental community, precisely the opposite of the purported intention. In some parts of the state (certainly not my place!) rental income exceeds the mortgage (well... back with 3% mortgages). In that case you could just put no money down, have the government pay the 20% down payment, and start collecting profitable rent immediately!
I'm not focusing on the financials, I'm focusing on the ownership. Even if you pay off the house, the state still owns 20%. Do you really trust the government enough to give them 20% ownership of your private dwelling?
I believe that when you sell, you hand over 20% of the after-expenses sales price. But if you never sell, then that was just free money. The benefits are not having to put any money in and also having basically no risk. If you default, the taxpayer is on the hook.
I sure hope you are required to pay off the 20% if you turn the place into a rental. Seems to me that not losing 20% of the sales price is a huge incentive to turn it into a rental. Yay, the policy is promoting turning California into a rental community, precisely the opposite of the purported intention. In some parts of the state (certainly not my place!) rental income exceeds the mortgage (well... back with 3% mortgages). In that case you could just put no money down, have the government pay the 20% down payment, and start collecting profitable rent immediately!
1959
GNL
2023 Apr 21, 6:57am
GNL
2023 Apr 21, 6:57am
Can't we all simply state the fact that government is taking over the economy? That is the opposite of what we should all want. But no, G.R.E.E.D. Greed is what is going to turn this country into a shithole renter economy. And worse. Can't you see that?
1960
fdhfoiehfeoi
2023 Apr 21, 9:21am
fdhfoiehfeoi
2023 Apr 21, 9:21am
SunnyvaleCA says
You're still lost in buying and selling, without ever considering the ramifications of owning only 80% of your property. If you don't understand what happens when you give government a bigger foothold in your private home, I don't know what else to say.
And you talk about the taxpayer like he's not you...
I believe that when you sell, you hand over 20% of the after-expenses sales price. But if you never sell, then that was just free money. The benefits are not having to put any money in and also having basically no risk. If you default, the taxpayer is on the hook.
You're still lost in buying and selling, without ever considering the ramifications of owning only 80% of your property. If you don't understand what happens when you give government a bigger foothold in your private home, I don't know what else to say.
And you talk about the taxpayer like he's not you...
1961
fdhfoiehfeoi
2023 Apr 21, 9:22am
fdhfoiehfeoi
2023 Apr 21, 9:22am
GNL says
I did, it's called Communism...
Can't wait all simply staye the fact that government is taking over the economy?
I did, it's called Communism...
1962
SunnyvaleCA
2023 Apr 21, 1:47pm
NuttBoxer says
I'm not saying this is a good policy. It sure doesn't do anything to help me, since I already "own" a home. And I believe this policy will be destabilizing if it is rolled out on a massive scale.
But you never really own your house or the dirt it is on. If you don't believe me try putting in your own well and septic tank and stop paying your water and sewage bill. Or try skipping a few property tax payments... why should you continuously have to pay for something you own, right?
So, yeah, we here at PatNet all believe this is terrible policy. But, we can still have fun discussing it. And maybe we could even find creative ways that some people could take advantage of it (at the expense of society as a whole).
Seems like this could be a great way for someone to start landloarding. Find a house that you could rent out for more than the mortgage + taxes. That wouldn't be my shack, but I've seen some duplexes that would fit the bill nicely. Buy it with no money down and immediately turn it into a rental. Profitable from day one. If you go to sell, any gains — even if you lose 20% of those gains — are still infinite return on your $0 investment. If you're worried about losing that 20% when you sell, buy a house that is 20% more valuable to compensate. Since you put no money down, if something goes wrong you can just walk away. Presumably, there are rules in place to prevent exactly this, but a whole bunch of rentals are breaking a bunch of rules all over the place.
Or consider that maybe you actually do want to buy a house and you actually have the 20% downpayment. Now, get the taxpayers to fund the downpayment on a more expensive house than you were planning to buy. Use your money instead to pay for the increased mortgage and taxes. Since you bought a more expensive house, your gains will be similar to the base scenario of a cheaper house even if you give back 20% to the taxpayers. If you wind up underwater or just plain defaulting after a few years, you walk away with just having payed a larger mortgage for a few years. If you survive long-term, then you're living in a better house than the base scenario. Seems like this deal allows you to reduce risks and get a more expensive house for a modest monthly payment increase.
You're still lost in buying and selling, without ever considering the ramifications of owning only 80% of your property. If you don't understand what happens when you give government a bigger foothold in your private home, I don't know what else to say.
And you talk about the taxpayer like he's not you...
I'm not saying this is a good policy. It sure doesn't do anything to help me, since I already "own" a home. And I believe this policy will be destabilizing if it is rolled out on a massive scale.
But you never really own your house or the dirt it is on. If you don't believe me try putting in your own well and septic tank and stop paying your water and sewage bill. Or try skipping a few property tax payments... why should you continuously have to pay for something you own, right?
So, yeah, we here at PatNet all believe this is terrible policy. But, we can still have fun discussing it. And maybe we could even find creative ways that some people could take advantage of it (at the expense of society as a whole).
Seems like this could be a great way for someone to start landloarding. Find a house that you could rent out for more than the mortgage + taxes. That wouldn't be my shack, but I've seen some duplexes that would fit the bill nicely. Buy it with no money down and immediately turn it into a rental. Profitable from day one. If you go to sell, any gains — even if you lose 20% of those gains — are still infinite return on your $0 investment. If you're worried about losing that 20% when you sell, buy a house that is 20% more valuable to compensate. Since you put no money down, if something goes wrong you can just walk away. Presumably, there are rules in place to prevent exactly this, but a whole bunch of rentals are breaking a bunch of rules all over the place.
Or consider that maybe you actually do want to buy a house and you actually have the 20% downpayment. Now, get the taxpayers to fund the downpayment on a more expensive house than you were planning to buy. Use your money instead to pay for the increased mortgage and taxes. Since you bought a more expensive house, your gains will be similar to the base scenario of a cheaper house even if you give back 20% to the taxpayers. If you wind up underwater or just plain defaulting after a few years, you walk away with just having payed a larger mortgage for a few years. If you survive long-term, then you're living in a better house than the base scenario. Seems like this deal allows you to reduce risks and get a more expensive house for a modest monthly payment increase.
1963
fdhfoiehfeoi
2023 Apr 21, 2:25pm
fdhfoiehfeoi
2023 Apr 21, 2:25pm
SunnyvaleCA says
That's up to you. There are a number of states with no property tax. And if you live in the country, you have to have a well, septic, and may even use propane/solar for power.
Not against picking the bones, but I think it's important to point out Communism when I see it.
But you never really own your house or the dirt it is on. If you don't believe me try putting in your own well and septic tank and stop paying your water and sewage bill. Or try skipping a few property tax payments... why should you continuously have to pay for something you own, right?
That's up to you. There are a number of states with no property tax. And if you live in the country, you have to have a well, septic, and may even use propane/solar for power.
Not against picking the bones, but I think it's important to point out Communism when I see it.
1964
Eman
2023 Apr 21, 3:27pm
Eman
2023 Apr 21, 3:27pm
Very interesting take/info from Compass CEO Robert Reffkin. I haven’t bought anything since 2020. 🤔
Thoughts on the Spring Market
1. Buyers have accepted 6% mortgage rates as the new normal.
2. Mortgage purchase applications have increased 8 out of the past 10 weeks.
3. There is a lack of inventory, however, inventory is 60% higher compared to this time last year.
4. Buyer demand continues to be strong, with home prices up in both March and February sequentially.
5. Open house traffic has picked up dramatically, with multiple offer situations becoming more common in markets across the country.
https://www.cnbc.com/video/2023/04/20/buyers-have-accepted-6-percent-mortgage-rates-as-the-new-normal-compass-co-founder-and-ceo.html
Thoughts on the Spring Market
1. Buyers have accepted 6% mortgage rates as the new normal.
2. Mortgage purchase applications have increased 8 out of the past 10 weeks.
3. There is a lack of inventory, however, inventory is 60% higher compared to this time last year.
4. Buyer demand continues to be strong, with home prices up in both March and February sequentially.
5. Open house traffic has picked up dramatically, with multiple offer situations becoming more common in markets across the country.
https://www.cnbc.com/video/2023/04/20/buyers-have-accepted-6-percent-mortgage-rates-as-the-new-normal-compass-co-founder-and-ceo.html
1965
GNL
2023 Apr 21, 5:13pm
GNL
2023 Apr 21, 5:13pm
Eman says
Makes perfect sense...higher rates + higher inventory + higher prices = higher demand.
Very interesting take/info from Compass CEO Robert Reffkin. I haven’t bought anything since 2020. 🤔
Thoughts on the Spring Market
1. Buyers have accepted 6% mortgage rates as the new normal.
2. Mortgage purchase applications have increased 8 out of the past 10 weeks.
3. There is a lack of inventory, however, inventory is 60% higher compared to this time last year.
4. Buyer demand continues to be strong, with home prices up in both March and February sequentially.
5. Open house traffic has picked up dramatically, with multiple offer situations becoming more common in markets across the country.
https://www.cnbc.com/video/2023/04/20/buyers-have-accepted-6-percent-mortgage-rates-as-the-new-normal-compass-co-founder-and-ceo.html
Makes perfect sense...higher rates + higher inventory + higher prices = higher demand.
1966
Eman
2023 Apr 21, 7:22pm
Eman
2023 Apr 21, 7:22pm
GNL says
Eman says
Very interesting take/info from Compass CEO Robert Reffkin. I haven’t bought anything since 2020. 🤔
Thoughts on the Spring Market
1. Buyers have accepted 6% mortgage rates as the new normal.
2. Mortgage purchase applications have increased 8 out of the past 10 weeks.
3. There is a lack of inventory, however, inventory is 60% higher compared to this time last year.
4. Buyer demand continues to be strong, with home prices up in both March and February sequentially.
5. Open house traffic has picked up dramatically, with multiple offer situations becoming more common in markets across the country.
https://www.cnbc.com/video/2023/04/20/buyers-have-accepted-6-percent-mortgage-rates...
I guess you’re being sarcastic? Higher inventory usually means lower prices. However, inventory was super low last spring so a 60% increase from last spring is not much. Last spring was a perfect storm. Historically low inventory coupled with super low mortgage rates drove prices so high.
Things have been kind of stuck in no man’s land. As much as some people want to upgrade, they can’t afford to pay the 6% rate while giving up their sub 3% mortgage. Only the people who have to sell, sell. Also no distressed sales. That’s why inventory is still relatively low.
1967
WookieMan
2023 Apr 21, 7:31pm
WookieMan
2023 Apr 21, 7:31pm
NuttBoxer says
Let me know the state? I've yet to hear of this. Income tax for sure isn't assessed in every state, so not sure if it was a typo. Make me look like an idiot but every state has property tax. And all the low property tax states are in brutal areas generally. Super cold or super hot.
That's up to you. There are a number of states with no property tax. And if you live in the country, you have to have a well, septic, and may even use propane/solar for power.
Let me know the state? I've yet to hear of this. Income tax for sure isn't assessed in every state, so not sure if it was a typo. Make me look like an idiot but every state has property tax. And all the low property tax states are in brutal areas generally. Super cold or super hot.
1968
Patrick
2023 Apr 21, 8:42pm
Patrick
2023 Apr 21, 8:42pm
https://sfstandard.com/politics/to-jump-start-housing-san-francisco-could-cut-affordability-quotas/
What, a glimmer of sanity in San Francisco?
As part of an effort to make it more financially feasible to build housing in the city, an advisory committee on San Francisco’s affordable housing policy has recommended a significant cut in the percentage of required affordable units in condominium projects.
What, a glimmer of sanity in San Francisco?
1969
SunnyvaleCA
2023 Apr 21, 8:52pm
WookieMan says
Yep. Me too. I'm still looking for that mythical no-property-tax state.
NuttBoxer says
That's up to you. There are a number of states with no property tax. And if you live in the country, you have to have a well, septic, and may even use propane/solar for power.
Let me know the state? I've yet to hear of this. Income tax for sure isn't assessed in every state, so not sure if it was a typo. Make me look like an idiot but every state has property tax. And all the low property tax states are in brutal areas generally. Super cold or super hot.
Yep. Me too. I'm still looking for that mythical no-property-tax state.
1970
WookieMan
2023 Apr 22, 3:28am
WookieMan
2023 Apr 22, 3:28am
Patrick says
These have always been dumb quotas. What happens is the developers grab shit land thinking they'll sell for good area prices because they're new and in a gentrifying pocket. I'm not living across the hall or next door to a piece of trash that doesn't maintain and brings their trash with them as in friends and has parties till 3am because they have the nicest place.
Then the market rate units don't sell and the developer drops the prices as first in owners see their values drop right away. It's like a $10 IPO. Regular traders pay $10. This special class gets the shares at $2 because they're poor. These projects are almost always a failure once the developer breaks even and starts a fire sale to rinse his hands of the remaining units.
We can't steer in real estate. So we'd show these place, but just mention the negatives. Generally really cheap construction and the aforementioned problems. Once a building or homes are settled it gets rough around the edges even if nice in the surround community.
https://sfstandard.com/politics/to-jump-start-housing-san-francisco-could-cut-affordability-quotas/
As part of an effort to make it more financially feasible to build housing in the city, an advisory committee on San Francisco’s affordable housing policy has recommended a significant cut in the percentage of required affordable units in condominium projects.
What, a glimmer of sanity in San Francisco?
These have always been dumb quotas. What happens is the developers grab shit land thinking they'll sell for good area prices because they're new and in a gentrifying pocket. I'm not living across the hall or next door to a piece of trash that doesn't maintain and brings their trash with them as in friends and has parties till 3am because they have the nicest place.
Then the market rate units don't sell and the developer drops the prices as first in owners see their values drop right away. It's like a $10 IPO. Regular traders pay $10. This special class gets the shares at $2 because they're poor. These projects are almost always a failure once the developer breaks even and starts a fire sale to rinse his hands of the remaining units.
We can't steer in real estate. So we'd show these place, but just mention the negatives. Generally really cheap construction and the aforementioned problems. Once a building or homes are settled it gets rough around the edges even if nice in the surround community.
1971
porkchopXpress
2023 Apr 22, 6:02am
porkchopXpress
2023 Apr 22, 6:02am
As some of you may know, I bought a house in a great area of middle TN. We were renting in San Diego for years and the madness and vaccine mandates allowed me to convince my wife and two sons to get the hell out. I truly thought we were buying at the peak last Summer but I didn't care at this point and wanted to own our home and not stress about rising rents, getting kicked out, etc.
Almost a year later, prices haven't hard dropped at all and we're now at least 2% higher interest rates. I thought buying a house last year was hard...this year is twice as bad. Even though I wish I had moved away from CA years before and bought a house, I can honestly say I'm so happy we bought last year. No rent increase letter this year. No threat of getting kicked out of our rental. No more shitty appliances we can't upgrade.
Having said that, we bought well within our means and with lots of cash to upgrade the house, so we're loving that part. Anyone who stretched their budgets to buy a house may get totally screwed especially if it's in an undesirable location or "Zoom town".
Almost a year later, prices haven't hard dropped at all and we're now at least 2% higher interest rates. I thought buying a house last year was hard...this year is twice as bad. Even though I wish I had moved away from CA years before and bought a house, I can honestly say I'm so happy we bought last year. No rent increase letter this year. No threat of getting kicked out of our rental. No more shitty appliances we can't upgrade.
Having said that, we bought well within our means and with lots of cash to upgrade the house, so we're loving that part. Anyone who stretched their budgets to buy a house may get totally screwed especially if it's in an undesirable location or "Zoom town".
1972
fdhfoiehfeoi
2023 Apr 22, 8:32am
fdhfoiehfeoi
2023 Apr 22, 8:32am
WookieMan says
SunnyvaleCA says
I saw South Dakota before, but apparently that is a over 65 exemption, which is shared with a number of other states. Now outside the US:
https://www.globalfromasia.com/tax-free-countries/
Let me know the state?
SunnyvaleCA says
Yep. Me too. I'm still looking for that mythical no-property-tax state.
I saw South Dakota before, but apparently that is a over 65 exemption, which is shared with a number of other states. Now outside the US:
https://www.globalfromasia.com/tax-free-countries/
1974
Eric Holder
2023 Apr 26, 3:38pm
Eric Holder
2023 Apr 26, 3:38pm
SunnyvaleCA says
ROTFLMAO
WookieMan says
NuttBoxer says
That's up to you. There are a number of states with no property tax. And if you live in the country, you have to have a well, septic, and may even use propane/solar for power.
Let me know the state? I've yet to hear of this. Income tax for sure isn't assessed in every state, so not sure if it was a typo. Make me look like an idiot but every state has property tax. And all the low property tax states are in brutal areas generally. Super cold or super hot.
Yep. Me too. I'm still looking for that mythical no-property-tax state.
ROTFLMAO
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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.