patrick.net

cisTits says

The hopes of an average 30-year fixed mortgage rate in the 5%-range that were widely bandied about in January have now vanished.

Maybe sign up for a 7 year ARM and then refinance before the expiration date for the mortgage. US Bank is advertising today a rate of 5.6% for a 7 year ARM.

Navy Federal Credit Union advertises a 4.75% rate for 5 year (5/5) conforming ARM.

I know the prime rate is usually about 2.25% greater than than Fed Funds rate, and the prime rate is used such as with HELOC's, business loans, etc.

The 30 year mortgage rate is a lot less reliable than the prime rate as far as tracking the Fed Funds rate, inflation rate, etc.

Anyone have any experience with Ally Bank? They have 5 year CD's for above 4% rate of interest

gabbar says

Anyone have any experience with Ally Bank? They have 5 year CD's for above 4% rate of interest

I've been banking with Ally for several years and almost did my home loan through them, but I got a better deal with a local bank. Ally is awesome. I've never invested in their CDs though.

gabbar says

Anyone have any experience with Ally Bank? They have 5 year CD's for above 4% rate of interest

You mean they have a rate below inflation and you'll be taxed on the interest you earn? Some deal.

gabbar says

Anyone have any experience with Ally Bank? They have 5 year CD's for above 4% rate of interest

The 3 year UST is yiielding 4.34%. And you can always sell it in the money if and when the Fed pivot occurs and rates go down. For example, it was around 1.5% in March 2022.

gabbar says

Anyone have any experience with Ally Bank? They have 5 year CD's for above 4% rate of interest

You may want to check local Credit Unions. This is a current offer from Langley FCU near me:



5% and no need to tie up money for 60 months.

6 month UST is yielding over 5% and you can roll it over into another 6 month that will probably be offering an even higher return.

Al_Sharpton_for_President says

6 month UST is yielding over 5% and you can roll it over into another 6 month that will probably be offering an even higher return.

How does one buy UST? Just want to learn. I want to put some money away and forget it for 5 years.

gabbar says

How does one buy UST?

You can buy them through your broker. You can also buy them direct from the gubberment. (https://www.treasurydirect.gov). I've only purchased through a broker, like Schwab, so I have no experience with buying direct.

BayArea says

Eman says

From my real estate network, the last 3-4 weeks suggested the market is in a holding pattern. Buyers, who used to qualify for $1.8-$2.2M, are getting bumped down to $1.5-$1.8M due to higher interest rate.

Buyers have become more selective. However, homes in good location still sell nicely. Does 2022 feel like 2006 now?

No because loans aren’t being written to people with nothing more than a pulse.

I agree with your mortgage qualification amounts however… And it happened very quickly too!

I have 60k in Roth IRA. Does it make sense to put it in a UST or CD for 5 years?

gabbar says

I have 60k in Roth IRA. Does it make sense to put it in a UST or CD for 5 years?

Max out the Roth annually if you can AND if you have an HSA max that out. Those are your best long term tax deferred vehicles. 401K's are good, but none of us know what taxes will be if retirement is 20-30 years out. Either way I'd max all three out.

Ultimately though your best return is going to be business or real estate. Risky, but the tax write offs are insane if you know what you're doing. As users here have mentioned, they have a vacation rental in Hawaii, guess what you can write off your travel to visit your own property. You get to depreciate it lowering your income taxes annually for 27.5 years. There's all sort of massive benefits to owning a business or real estate. It's just what is your risk tolerance.

WookieMan says

gabbar says

I have 60k in Roth IRA. Does it make sense to put it in a UST or CD for 5 years?

Max out the Roth annually if you can AND if you have an HSA max that out. Those are your best long term tax deferred vehicles. 401K's are good, but none of us know what taxes will be if retirement is 20-30 years out. Either way I'd max all three out.

Ultimately though your best return is going to be business or real estate. Risky, but the tax write offs are insane if you know what you're doing. As users here have mentioned, they have a vacation rental in Hawaii, guess what you can write off your travel to visit your own property. You get to depreciate it lowering your income taxes annually for 27.5 years. There's all sort of massive benefits to owning a business or real estate. It's just what is your risk tolerance.

I have been trying to max out those 3. What do you think is the best way to give cash to one's children or grandchildren?

gabbar says

What do you think is the best way to give cash to one's children or grandchildren?

In cash and in amounts that won't trigger the bank money laundering algorithm. Or just pay some of their bills directly.

gabbar says

I have been trying to max out those 3. What do you think is the best way to give cash to one's children or grandchildren?

Oxygen mask. Worry about taking care of yourself like you'll live to 100. Kids will become adults and figure it out if they have good family structure. If there's any inkling mom and dad or grandparents are going to pay for stuff it takes the drive out of them. I'm witnessing it right now with some peers that had kids at a very young age. It's a contentious topic, but until you are good, don't worry about it.

Obviously get a will in case you go early and the kids don't have to go through the whole probate process. I am not knowledgable at all in this, but I believe you want to set up any funds you do intend to leave them in a trust. If you're loaded you could also gift them the money tax free over the years as well. Again, giving away money enables people, generally speaking. Some can handle it. Most can't and become spoiled brats. Slippery slope.

But you can gift $17k a year now and the receiver of the gift pays no taxes on it. So if you're rolling in money and are good to 100 years of age, you could start offloading it to family. I wouldn't advise this though, but everyone has there reasons. Not my place to judge. Here's info on that. https://www.nerdwallet.com/article/taxes/gift-tax-rate

Key is the will. So if you die tomorrow there's not family infighting over your assets. My dad was an attorney and that shit destroys families after someone with solid finances dies without a will. It gets messy.

WookieMan says

Key is the will. So if you die tomorrow there's not family infighting over your assets. My dad was an attorney and that shit destroys families after someone with solid finances dies without a will. It gets messy.

That is sad unfortunately not uncommon.
Have a trust that (online DIY) can not cost you much and mention the equal! percentage to each child otherwise the most useless child hates you anyway as a passion. One other option is to max-out i-401k if you have a business or work on 1099. It can go up to $50k+/y.

Ceffer says

If they decide to fight over large amounts, it's usually the lawyers who win the estate through endless fees and procedures, while the relatives are left with their insane rages.

Valid points. It's not perfect, but that's why I said be careful with what you give while alive. Giving too much while alive and they'll all expect it when you're dead. It's just my sister and I, and anticipate getting a 50/50 split of what my mom has. But I don't need it and wouldn't have anger over it and I was left out. My sister and I are good with that.

My MIL on the other hand has 5 daughters and 10 grandkids. My wife and I don't need a dime, but it's going to be a complete shit show when MIL passes. Not for us because we don't care, but there's going to be a shit ton of infighting. She's handed out way too much to my SIL's and they just expect it at this point. My wife makes more than all 4 of her sisters combined. They're frankly helpless. And that's where the grift starts.

That's why I'd avoid giving family money unless it's contractual while you're alive. My one SIL is currently fucking that up to the tune of $60k. They're all 30+ and my wife is the only one that handles her own health insurance personally. Car insurance. Cell phone. It's disgusting. I try not to get angry but it pisses me off. I've cooled down over the years as I don't want the life they're living. The end is going to be messy. My dad didn't give client info, but he told me plenty of horror stories about people passing. As a kid of an attorney I had my fair share of death threats. Not being hyperbolic either.

https://www.cnbc.com/2023/02/16/consumer-debt-hits-record-16point9-trillion-as-delinquencies-rise-as-well.html

Consumer debt hits record $16.9 trillion as delinquencies also rise

https://finance.yahoo.com/m/95c0c8ff-a236-3f51-b32e-436f8f5f2079/zillow-signals-more-pain.html

Zillow Signals More Pain Ahead in Online Real Estate

Non paywall link:
https://archive.ph/IgFdU

People maxing out on their credit cards is one of the first things you should see before a housing crash:

https://www.bloomberg.com/news/articles/2023-02-15/starwood-single-family-rental-firm-stung-by-housing-market-slump

Starwood Single-Family Rental Firm Stung by Housing Market Slump

Retired baseball star Alex Rodriguez took to LinkedIn in late 2021 to ask for help: He’d invested alongside Starwood Capital Group in a single-family rental company that was buying 1,000 homes a month and needed to hire as many as 500 people to keep up.

“The right time to get on board is now,” he wrote in a post.

More than a year later, the company, Tiber Capital Group, is pulling back, the victim of a sudden housing slowdown that caught many sophisticated players by surprise. The Capitol Heights, Maryland-based firm has sharply curtailed real estate purchases and fired hundreds of workers, according to people familiar with the business, who asked not to be named because the matter is private.

The rapid growth of companies such as Tiber has been one of the defining features of the US housing landscape in recent years, adding to a homebuying frenzy that peaked with the largest single-family landlords buying more than 10,000 homes a month. Now, Tiber and its peers have become symbols of a dizzying retrenchment — cutting jobs and slamming the brakes on buying while they wait for the market to improve.

Tiber, which had begun acquiring homes for Starwood by 2019, positioned itself for rapid growth as the pandemic supercharged the market and eventually attracted Rodriguez, whose real estate bets have stretched from Manhattan to Florida. Representatives for Rodriguez and Tiber didn’t respond to requests for comment. Starwood declined to comment.

The slowdown in buying has persisted. The 20 largest single-family rental firms, which bought more than 10,000 homes in September 2021, acquired about 850 properties in December 2022, according to data firm SFR Analytics.

Many landlords are still bullish on rental homes. They generally aim to hold onto properties for a longer length of time than other buyers, which can help insulate them from the price corrections that started to slam the market last year. But firms that earn fees for deploying capital are getting squeezed, and a dearth of deals has pushed many to cut staff.
Read more about the housing slump that has pummeled Wall Street and tech-backed buyers.

The job cuts have spread throughout the single-family rental space. Amherst, among the largest single-family landlords, laid off about 20% of its staff across two rounds of cuts, in November and January, people familiar with the matter said. A representative for Amherst said the layoffs didn’t affect the firm’s property-management capabilities, and that the company expects the industry to increase purchase activity this year.

It remains unclear when single-family rental companies will ramp up acquisitions. In the current environment, holding off from purchasing more homes makes sense, according to Jeff Langbaum, who covers publicly listed single-family landlords as an analyst at Bloomberg Intelligence.

Another company, Roofstock, laid off 20% of its staff late last year. Chief Executive Officer Gary Beasley said in an email that the layoffs were necessary to align costs with market activity. But the industry shakeout and recent price declines may create opportunities for investors who don’t rely on debt.

“Acquisition activity is indeed way down, driven principally by the run-up in borrowing costs,” said Beasley, Roofstock’s CEO. “There is a good opportunity emerging for unlevered buyers to come into the market and take advantage of a much less frothy environment.”

https://finance.yahoo.com/news/mortgage-rates-jump-higher-after-nearing-6-170015728.html

U.S. MORTGAGE RATES RISE FURTHER FROM 6%

zzyzzx says

U.S. MORTGAGE RATES RISE FURTHER FROM 6%

Duh! never believe fake gov inflation numbers. They are always busy printing stuff.

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/113sx2c/just_a_rant_wish_we_never_bought_a_house_and_just/

Just a rant — wish we never bought a house and just continued renting forever.

The story above illustrates how much depends on a good inspection.
That sounds like an expensive nightmare to me.

clambo says

The story above illustrates how much depends on a good inspection.
That sounds like an expensive nightmare to me.

And the homeonwer is a moron who doesn't know how to fix anything, or when a contractor is lying to them,

zzyzzx says

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/113sx2c/just_a_rant_wish_we_never_bought_a_house_and_just/

Just a rant — wish we never bought a house and just continued renting forever.

Should've bought a full-house warranty for a year. They are surprisingly affordable.

PS. We got one courtesy of the seller when we bought our shack. But that was in a verrrrrrry slooooooow market between two booms.

zzyzzx says

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/113sx2c/just_a_rant_wish_we_never_bought_a_house_and_just/

Just a rant — wish we never bought a house and just continued renting forever.

Sounds like everyone got their pound of flesh off of this home buyer. In my opinion, if it makes financial sense, home buyers should just stop paying their mortgages and do what is in their best interests.

zzyzzx says

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/113sx2c/just_a_rant_wish_we_never_bought_a_house_and_just/

Just a rant — wish we never bought a house and just continued renting forever.

This story sounds like a troll. It has obvious "continuity" errors. For example, the guy living in it for 10 years before selling never took a shower? Why wasn't the 40 gallon hot water tank just replaced with tankless rather than moving it and building a garage drain? How did a home inspection not catch any of this?

Wolf wrote this for his blog this morning:

There better be a halfway decent spring selling season, which is supposed to already have started in San Francisco and Silicon Valley, because this is getting pretty bad, pretty fast. But it’s hard to imagine just how good the spring selling season can be amid countless reports of layoffs, working from home somewhere else, with big numbers being thrown around about how many people have left Silicon Valley and San Francisco. The City of San Francisco alone lost about 56,000 residents, or about 6.3% of its population, in the period of 2020 through 2022, according to Census data, even as about 12,000 new housing units were completed over the same period.

The median price in the nine-county Bay Area plunged by another 8% in January from December, by 17% year-over-year, and by 35%, or by $540,000, in 10 months from the crazy peak in March 2022, from $1.54 million to $1.00 million, according to the California Association of Realtors.

https://wolfstreet.com/2023/02/17/san-francisco-bay-area-housing-market-crashes-prices-plunge-35-from-crazy-peak-where-is-demand-supposed-to-come-from/

Party On, Hipsters.

The Bay area is down 35%?

https://www.reddit.com/r/realestateinvesting/comments/1148yx8/im_in_the_red_every_month_in_a_hcol_city_do_i_sell/

I’m in the red every month in a HCOL city. Do I sell?

https://www.reddit.com/r/REBubble/comments/1143yr7/the_builder_i_offended_with_a_low_ball_offer_last/

The builder I offended with a "low ball" offer last month reached out today

cisTits says

If SFBA is your market, sorry. Most of the country is completely fine. A 10-30% drop in the midwest is maybe $60-80k on solid loans. Not $500k on $1.5M loans. Most are under 5% interest. People will just stay, so inventory doesn't rise, so the floor on prices is much higher than CA. 10-20% doesn't move the needle here. We don't care. I'm sorry people lost 10, 20, 30% on a $2M property, we simply don't give a shit. Wa wa.

Sick of CA being essentially the dictator of the country. It is NOT how the rest of the country works. I hope everyone loses 50% out there. Might be the awakening you all need.

cisTits says

Just falling back to get in-line with historical appreciation rates…

WookieMan says

I'm sorry people lost 10, 20, 30% on a $2M property, we simply don't give a shit. Wa wa

One reason the prices were too high is because inventory was too low. Said differently, very few, a miniscule portion, of homeowners in the region, "lost" anything more than "vapor equity".

The drop is not bad news for the region. More affordability is good for everyone, even ®ealtors. Hopefully we're just getting started on the trend Wolf wrote about.

WookieMan says

Sick of CA being essentially the dictator of the country. It is NOT how the rest of the country works.

Ahem, Patrick is a long-time resident of the SF Bay Area, his blog has a focus on his back yard. Wolf Richter, the author of the piece, is a resident of SF who sometimes writes about housing in the region. How does this make California dictator of the country? If you're sick of it maybe you will feel better if you don't read a Bay Arean's blog that has a linked article by a different Bay Arean.

cisTits says

WookieMan says

If SFBA is your market, sorry. Most of the country is completely fine.

Cut the 'Housing Expert' crap.

Nope. I know more than pretty much anyone here beside probably Eman. You know zilch about the market I KNOW. I don't give a shit about CA. It's fucked. The rest of the country outside of cities and hipster spots is totally fine if not appreciating. YOU don't know what you're talking about. CA is NOT the rest of the country. There are NO houses for sale in flyover country. What don't you get about inventory?

If one person has 2 AA batteries and 10 people need 2 AA batteries WTF happens to the price? CA is not the rest of the country. We don't give a fuck. No one want to move there anymore domestically. California dreaming is over. And so is their real estate. Other places, nope. Give me stats outside of CA. Otherwise you're just talking shit.