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DemocratsAreTotallyFucked says

30 year mortgage rate is usually pegged to the US 10 Year Treasury, and about 1.5% to 2% more than the 10 Year Treasury rate.

The 10 Year Treasury is usually 1.5% more than annual inflation rate, and now the 10 Year Treasury rate is 4.2%.

If inflation is barely above 0%, then we could see the 30 year mortgage rate at 3%. But from what I've read of economists and Wall Street pundits, we will not see it at 3% for at least the next 20 years.

Perhaps if annual inflation's 12 month moving average is around 2.25%, then the 30 year mortgage rate will steady around 5.5%.

For some buyers, it would help to buy down 4 discount points to lower that rate from 5.5% to 4.5%.

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Ceffer says

Better get it built out before winter.

LOL, There's a Finnish joke about a guy who killed his nearest neighbor because he was two kilometers away and driving him crazy because he was right up his ass. And another one about "Why are you right on top of me? Find your own train car!"

Because of Halloween, here is a terrifying moment for Finns.

My father (Swedish Norwegian) whose parents immigrated from the old country said the Finns were the fiercest and most feared Scandi drunks and liked to fight in bars with knives. I have no idea if there is a reality behind that, but he also indicated that we could have some Laplander in the woodshed. So along with the Laplander and half Irish, maybe I am more than 50 percent subhuman.

https://wolfstreet.com/2024/10/21/mortgage-rates-explode-to-6-82-10-year-treasury-yield-jumps-to-4-20-55-basis-points-since-monster-rate-cut/

If you care about interest rates, you're likely below middle class. Even middle class. I give no shits about rates. I get what I want.

Last weekend a Sierra Foothills friend of mine told me her homeowners' policy was cancelled this summer. She found another policy but the premiums are higher. (Till they also cancel).

NAR: Existing-Home Sales Decreased to 3.84 million SAAR in September, New Cycle Low

Existing-home sales drew back in September, according to the National Association of REALTORS®. Three out of four major U.S. regions registered sales declines while the West experienced a sales bounce. Year-over-year, sales fell in three regions but grew in the West.

Total existing-home sales – completed transactions that include single-family homes, townhomes, condominiums and co-ops – receded 1.0% from August to a seasonally adjusted annual rate of 3.84 million in September. Year-over-year, sales waned 3.5% (down from 3.98 million in September 2023).
...
Total housing inventory registered at the end of September was 1.39 million units, up 1.5% from August and 23.0% from one year ago (1.13 million). Unsold inventory sits at a 4.3-month supply at the current sales pace, up from 4.2 months in August and 3.4 months in September 2023.
emphasis added

The sales rate was below the consensus forecast (but at housing economist Tom Lawler’s estimate).

Sales in September (3.84 million SAAR) were down 1.0% from the previous month and were 3.5% below the September 2023 sales rate.

Housing Inventory Increased in September

The second graph shows nationwide inventory for existing homes.

According to the NAR, inventory increased to 1.39 million in September from 1.37 million the previous month.

Headline inventory is not seasonally adjusted, and inventory usually decreases to the seasonal lows in December and January, and peaks in mid-to-late summer. The third graph shows the year-over-year (YoY) change in reported existing home inventory and months-of-supply. Since inventory is not seasonally adjusted, it really helps to look at the YoY change. Note: Months-of-supply is based on the seasonally adjusted sales and not seasonally adjusted inventory.

Inventory was up 23.0% year-over-year (blue) in September compared to September 2023. Months of supply (red) increased to 4.3 months in September from 4.2 months the previous month.

Looking back to pre-pandemic levels, in September 2019 months-of-supply was at 4.0 months, so there is more supply now, on a months-of-supply basis, than prior to the pandemic! Even though inventory has declined significantly compared to 2019, sales have fallen even more - pushing up months-of-supply.

Sales Year-over-Year and Not Seasonally Adjusted (NSA)

The fourth graph shows existing home sales by month for 2023 and 2024.

Sales declined 3.5% year-over-year compared to September 2023. This was the thirty-seventh consecutive month with sales down year-over-year.

https://calculatedrisk.substack.com/p/nar-existing-home-sales-decreased

B.A.C.A.H. says

Sierra Foothills

Beautiful country, significant fire risk.

https://finance.yahoo.com/news/existing-home-sales-in-september-fall-to-lowest-level-since-2010-151911420.html

Existing home sales in September fall to lowest level since 2010

zzyzzx says

https://finance.yahoo.com/news/existing-home-sales-in-september-fall-to-lowest-level-since-2010-151911420.html

Existing home sales in September fall to lowest level since 2010

Nooooooooo!

https://wolfstreet.com/2024/10/23/demand-destruction-for-existing-homes-sales-in-2024-to-plunge-below-4-million-homes-lowest-since-1995-as-supply-spikes/

https://wolfstreet.com/2024/10/23/demand-destruction-for-existing-homes-sales-in-2024-to-plunge-below-4-million-homes-lowest-since-1995-as-supply-spikes/

Demand Destruction for Existing Homes: Sales in 2024 to Plunge Below 4 Million Homes, Lowest since 1995, as Supply Spikes
by Wolf Richter • Oct 23, 2024 • 135 Comments

Because prices are way too high. Buyers’ Strike deepened even with mortgage rates at 2-year lows at the time of those sales. But rates have spiked since then. ...







The NAR has been blaming everything it can drag by its hairs except the actual problem: Prices are too high and have killed demand. Much lower prices would stimulate demand – and commissions for Realtors because they’d make more sales. Why is this so hard to come to grips with?

Patrick says

Demand Destruction for Existing Homes

There still are not enough homes that are "priced to sell" :-(

The median home price needs to be at least 20% below 2022 all time high price level.

This is based on for every 1% increase in the 30 year mortgage rate, there should be a 10% decrease in price.

Also I adjusted down to 20% since household income and wages have increased since early 2022.

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AD says

household income and wages have increased since early 2022.

What about spending power being reduced by 25% because of Bidenflation during that time?

DemocratsAreTotallyFucked says

AD says

household income and wages have increased since early 2022.

What about spending power being reduced by 25% because of Bidenflation during that time?

Yes, but household income and wages have also increased while housing prices have at generally been at or below all time price levels set in 2022.

And income and wages have increased some to keep up with other living expenses like food, utilities, transportation, health care, etc

But I understand your point that housing needs to decrease even more given that more income is going to other living expenses.
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DemocratsAreTotallyFucked says

AD says

household income and wages have increased since early 2022.

What about spending power being reduced by 25% because of Bidenflation during that time?

For those that own homes housing inflation has been a boon for them, hence why they don't move. If they bought in 2010-2020 they borrow tax free on their home. They could pay themselves $20k per year or much more depending on value.

Yes they pay interest on it, but it's cheaper than income taxes if you make solid money. Pay it off and rinse and repeat. Slightly dangerous if you're not good with finances, but your house is now your bank. You can buy cars, toys, whatever than any rate a creditor can get you. Plus you get it cheaper walking in all cash.

Inflation is killing the poor people. And that's why I think Trump wins. Rich people know the game, but there's not enough of them to sway an election, just donate money. Kamala has nothing to say about anything. The rich want inflation because $3 more on milk or eggs is nothing to them. If their piggy bank keeps growing, house value, they make up the difference in their sleep doing nothing.

WookieMan says

Inflation is killing the poor people. And that's why I think Trump wins. Rich people know the game, but there's not enough of them to sway an election, just donate money. Kamala has nothing to say about anything. The rich want inflation because $3 more on milk or eggs is nothing to them. If their piggy bank keeps growing, house value, they make up the difference in their sleep doing nothing.

And this is a perfect example of one way to destabilize a society. Shit is fucked up and bullshit.

So don't be poor, duh!

RWSGFY says

So don't be poor, duh!

Concur. And I'm not so I'm good. Just saying Trump is going after the crowd that is poor. Democrats used to be that party. Now it's identity politics, handouts, yet they actually give zero fucks about the poor. People are waking up.

Should go in the predictions thread, I think IL will be the only state non-coastal that will be blue. And I'm even questioning that. Did it last time and I was wrong. I think this is going to be a historic election on a lot of levels. This is an unprecedented situation. Somehow Kamala is more unlikable than Trump.

WookieMan says

For those that own homes housing inflation has been a boon for them, hence why they don't move. If they bought in 2010-2020 they borrow tax free on their home.

First of all, borrowing is always tax free whether credit cards, signature loan, title loan, whatever. Secondly, inflation is not a "boon" for a homeowner as it causes property tax increases. My new assessment, for example, will cost me about $2,000 MORE per year in property taxes.

The only way to pull equity from a house is to sell. A loan is not suddenly equity just because your house is collateral.

HeadSet says

Secondly, inflation is not a "boon" for a homeowner as it causes property tax increases.

I agree 100%, even for landlords. Now I have to try to charge tenants more when I didn't want to raise rent. I did and it worked but I had one turn over this summer and had to drop the rent below what I'd raised it from due to the market conditions.

Inflation sucks all the way around.

HeadSet says

My new assessment, for example, will cost me about $2,000 MORE per year in property taxes.

Appeal. Do it every year. My taxes are $3,200 per year in IL for my value. That's unheard of. Gotta know what you're doing I guess. Not a knock, but the benefits of having attorneys in the family and learning from it.

The $2,000 can easily be wiped away due to inflation. Take out a $10k tax free equity loan. Your interest will be cheaper than using after tax dollars to pay taxes. You covered that tax increase for 5 years. You all realize this is all a ponzi scheme?

I also have never heard off $2k property tax increase. You own a $1M plus home? Your taxes likely went up from some referendum you didn't notice or vote on. Government is capped on annual increases. $2k would likely mean you own a $3M plus house in any state.

SoTex says

I agree 100%, even for landlords.

Non-primary is a different animal. You can still appeal the assessment though. Lower insurance. All this stuff should be done annually. Pain in the ass, but easy way to save a couple grand annually. Same with car insurance. They run in 4 year cycles based on when you started and start charging you more for no reason. Regardless of claims. This isn't debatable. It's what they do.

Every company is looking for a new customer. You'll get better rates when you jump ship.

I'm surprised you two don't know this. Again not a knock, if anything a compliment. You are two of the smarter members on this site. You guys or anyone reading this need to go torched earth with this stuff. Don't bend them, break them.

I just made my county clerk cry over my easement. Killing them with "kindness" is a bull shit phrase. Be an ass hole. Don't just cave. Keep it legal, but be aggressive. They will cave. Government workers don't want the hassle is all I'll say.

WookieMan says

You can still appeal the assessment though

I do every year lol..

WookieMan says

I'm surprised you two don't know this.

Um... Duh...

Doing that still doesn't negate the fact that inflation isn't good for anybody except for maybe something loan brokers can say to help them push product.

That and government debt.

SoTex says

Doing that still doesn't negate the fact that inflation isn't good for anybody except for maybe something loan brokers can say to help them push product.

Your property is worth more. Property inflation is 100% good for the owner. If you're not getting the appeals on taxes to your liking, you're doing it wrong to be blunt. Worse case, like I said you borrow income tax free loans to make up the difference for 5 years or more.

Let me know the last time anyone on this forum has ever gone to their county and done anything? My guess is a big 0. I am government. A lot of people bitch and do nothing. There are solutions.

WookieMan says

I also have never heard off $2k property tax increase. You own a $1M plus home?

Well now you have. My neighborhood is full of $1M plus homes who all got the $2k or so increase. Thing is, just 3 years ago these same homes were not $million homes. Now we are taxed like million-dollar homes. The mil rate here is 83 cents per hundred and I suspect the mil rate where you live is much higher.

WookieMan says

Appeal.

I called the county assessor when the lady next door appealed and got a lower assessment, and I left a message. He called me back and we had a 20-minute chat. The assessor was very familiar with the properties and explained why she got a reduction and I would not. He also thanked me for being civil since he was inundated with angry calls from residents of the county that just had a 22% increase in their taxes.

WookieMan says

Take out a $10k tax free equity loan

Why would anyone do that unless they are cash poor? My cash in the bank earns about 4% while equity loans are around 6%. "Tax free" has nothing to do with it.

HeadSet says

WookieMan says

Take out a $10k tax free equity loan

Why would anyone do that unless they are cash poor? My cash in the bank earns about 4% while equity loans are around 6%. "Tax free" has nothing to do with it.

Why spend your after tax dollars or capitals gains??? I think my point is obvious. I'm taxed around 20% federal alone. Varies year to year. The spread is 16% and I still get to keep the cash in the bank. Not sure what's confusing here. I'm losing 14-16% if I just pay the property as normal income. That $2k increase is costing you 3-4 times more than borrowing it and planning.

Borrow a tiny amount tax free to cover your new property tax rate for the next 5 years. Problem solved. Keep 1 years taxes liquid in a savings account and drop the next 4 years in a CD or a dividend yielding fund that will cover your interest. Your equity is now paying your taxes and you didn't have to earn more.

Also $2k is a trivial amount if you have a $1M valued house. That's like a direct tv subscription.

There's a reason I don't work much. 2nd I know the rules of the game to save me the most money. All legal. Live with 90% of your income coming in 3 months of they year. You'll HAVE to learn a lot. Point being you can have your taxes paid for you. You might be able to write it off if you itemize if you keep receipts for shit you already needed.

You should keep all receipts for anything really. My money is tied up in retirement funds to protect myself after the housing crash, but it's the reason I'm a millionaire already. I think outside the box.

From about 1870-1910, inflation in the US was minimal despite a boom in industrial capacity, population, etc. Didn't save the article, but basically it compared everyday items from bread, flour, lamp oil, coal, etc. and these staples barely moved.

All before the Fed was created by JP Morgan. State controlled banks for the win.

WookieMan says

Why spend your after tax dollars or capitals gains??? I think my point is obvious. I'm taxed around 20% federal alone. Varies year to year. The spread is 16% and I still get to keep the cash in the bank. Not sure what's confusing here. I'm losing 14-16% if I just pay the property as normal income. That $2k increase is costing you 3-4 times more than borrowing it and planning.

When you make payments on that loan, aren't you paying each installment with "after tax income?" Still cheaper to pay the $2k with "after tax income" up front than to make a series of "after tax income" payments that amount to the that $2k plus added interest.

HeadSet says

When you make payments on that loan, aren't you paying each installment with "after tax income?" Still cheaper to pay the $2k with "after tax income" up front than to make a series of "after tax income" payments that amount to the that $2k plus added interest.

Sure, but you invest the next 4 years of future taxes payments. If in the right situation you can write the loan off and the gains will out pace the after tax money and interest. By any metric it would be a 50-70% reduction in that new $2k property add on tax bill. Or just pay it with full after tax if you're so inclined.

I've found ways to avoid taxes as much as possible over the last decade. Our travel is not with after tax dollars. I didn't "work" this year to save us $30k in fed and state taxes. I still get cash work. The joys of not working is I can research this stuff hours a day/night and I'm essentially paid for it. I save our family $50k a year roughly sitting at this computer. I may not articulate what I'm doing well, but I make money for the lifestyle we have in a big way.

There aren't any situations where helocs are a good idea unless you're distressed and are trying a gamble to get out of it. Interest rates suck atm and your home is the collateral (with the risk of sinkiging equity value), can terms be any worse? Lol why not get 0% CC offers or take an emergency 401k loan.

mell says

Lol why not get 0% CC offers or take an emergency 401k loan.

You can't pay property taxes with a CC in any county I've lived in. There's no CC with 0% cash advances. 401k loans come out of your pay IF your employer even provides the ability to do it so no different than a HELOC.

A HELOC is a 2nd or 3rd lien position. Can't foreclose on you, so don't pay if you don't want to. It's the safest way to borrow money if you get hit with a tax bill increase and the mortgage goes up or if you own the home outright, cash to pay for it. If your house has equity, you'll eventually sell it and can pay the HELOC off whenever.

Again, you invest the extra you pulled out on the HELOC that wipes out the higher payment. Your property tax raise is erased. Again you're planning 5 years in advance in my scenario.

Either way, I'll state again $2k is trivial. I'm just pointing out a way to float the higher payment for 5 years with less impact on finances. Ultimately you need to move if they're bumping annual tax payments $2k. That's not normal at all unless in a $2-3M neighborhood in almost any state. If $2k makes you blink, I'd get out.

WookieMan says

Sure, but you invest the next 4 years of future taxes payments.

I knew this would boil down to that tired argument promoted by realtors and bankers who profit from one borrowing as much as possible. "Get an equity loan at 6% plus fees but make money by investing with an 8% return." Trouble is, you cannot borrow at current mortgage rates and invest in CDs, bonds, MMAs, or other risk-free investments that beat the mortgage rate. The follow on to my response is usually something like "If you were as skilled as me, you would find these high return investments." Oh yeah? Name them. I would be glad to take cash money out of my 4% and 5% accounts to put in a higher return.

WookieMan says

Either way, I'll state again $2k is trivial.

True, which is why that $2k was never the issue. Our discussion concerns the flawed logic of using a home equity loan to pay it versus using cash on hand.

HeadSet says

Oh yeah? Name them. I would be glad to take cash money out of my 4% and 5% accounts to put in a higher return.

No one is getting my point. You take out $50k and invest it. You cover your new $2k in taxes, with TAX FREE money. You saved yourself 20% if you make good money. Yes you have to pay the HELOC at 7-10%. But you invest the other $48k in the meantime.

Why would you pay 20-30% more on a $2k tax increase depending on income in federal taxes? That's the point. You're going to have to pay more either way, but you can reduce your tax burden doing what I'm saying. Tax free loan that you can potentially write off the interest if you itemize. This isn't complicated.

HeadSet says

Well now you have. My neighborhood is full of $1M plus homes who all got the $2k or so increase. Thing is, just 3 years ago these same homes were not $million homes. Now we are taxed like million-dollar homes. The mil rate here is 83 cents per hundred and I suspect the mil rate where you live is much higher.

Taxes on a 500K house in San Antonio is nearly 12K. In the county. It's a lot worse in the city limits.

AmericanKulak says

From about 1870-1910, inflation in the US was minimal despite a boom in industrial capacity, population, etc.

Boom? Weren't 1873-79 years of so-called "Long Depression"? Then there was the Panic of 1893 which kicked off another depression lasting until 1897-ish. This can explain the lack of inflation.