patrick.net

Eman says

Who will give you 20% in equity upfront with 0% interest for the duration of your ownership? All they ask is that they share 20% of the appreciation when you sell? It’s a very generous program IMO. They are basically a silent 2nd lender with 0% interest in exchange for future appreciation not to exceed 20%

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!

NuttBoxer says

BTW, saw nobody posted, money ran out in 10 days!

I'm not nobody, but please see post 1948.

NuttBoxer 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?

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!

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?

SunnyvaleCA 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.

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...

GNL says

Can't wait all simply staye the fact that government is taking over the economy?

I did, it's called Communism...

NuttBoxer 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'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.

SunnyvaleCA says

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.

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

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-as-the-new-normal-compass-co-founder-and-ceo.html

Makes perfect sense...higher rates + higher inventory + higher prices = higher demand.

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.

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.

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?

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.

Patrick says

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.

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".

WookieMan says

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/

https://twitter.com/WallStreetSilv/status/1651039681407078400?ref_src=patrick.net

SunnyvaleCA says

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

https://thehill.com/business/3981734-foreclosures-are-up-but-is-the-housing-market-headed-for-a-crash/

Foreclosures are up

Foreclosure notices ticked up nationwide in the first quarter of the year with more than 65,000 properties beginning to go through the process.

There were 36,617 new filings in March, which marks the 23rd consecutive month with a year-over-year increase in foreclosure activity, according to a recent report from ATTOM. They were up 3 percent from the previous quarter and 29 percent year-over-year.

ATTOM’s report shows that 1 in every 1,459 housing units across the country had a foreclosure start in the first quarter. California, Texas, Florida, New York and Illinois were among the states with the highest number of foreclosure filings while the highest rate was in Illinois. Banks repossessed 12,518 properties via foreclosure in the first quarter — up 8 percent from the previous quarter.

“This unfortunate trend can be attributed to a variety of factors, such as rising unemployment rates, foreclosure filings making their way through the pipeline after two years of government intervention, and other ongoing economic challenges,” Barber added.

The federal moratorium on foreclosures throughout the pandemic expired last June. Even so, Barber said the equity homeowners built in recent years could keep a crisis at bay.

https://www.reddit.com/r/FirstTimeHomeBuyer/comments/134puir/mortgage_company_closed_a_week_before_closing/

Mortgage Company Closed A Week Before Closing

https://www.reddit.com/r/homeowners/comments/1345gqf/new_homeowners_insurance_policy_will_be_more_than/

New homeowner's insurance policy will be more than my mortgage. What would you do?

zzyzzx says

So the bottom for U.S. median home price in the upcoming housing crash will be near the peak at the last housing boom (~2009-2011) ?

Looks like the bottom for the the 2009-2011 housing crash was near the peak for the housing boom in 1989.

.

https://www.cnbc.com/2023/05/03/mortgage-demand-drops-as-bank-failures-hit-jumbo-loan-rates.html

Mortgage demand drops as bank failures hit jumbo loan rates

Bitcoiner says

Totally, this couldn’t be more different than 07/08. What happened in 05-07 was a once in a lifetime occurrence (ninja loans and stated income + arm loans). Owners back then should never have been allowed to buy and owners today are in the best shape ever. Inventory (active listings) was rising to 4M back then while inventory today is at all time lows. Too funny that some people still compare this to today.

History often "rhymes" instead of simply repeating. Higher interest rates are going to have an effect on housing prices at some point, as is the insane P/E ratios of housing (price of housing compared to average earnings in a given area). Everyone isn't going to pay California prices forever. Also, given the recalculation of credit scores causing credit score inflation you really can't compare those from back then to now. Credit tightening also suggests a smaller pool of potential new buyers. I'm looking to sell while the market is still bloated, but I expect the market to stay bloated for some time still.

https://www.calculatedriskblog.com/2023/05/lawler-invitation-homes-net-seller-of.html

Invitation Homes Net Seller of Single-Family Properties for Second Straight Quarter

https://www.redfin.com/news/homes-cost-less-than-year-ago-2023/

Roughly 1 in 4 Homes for Sale in Austin and Seattle Cost Less Than They Would Have a Year Ago

ad says

So the bottom for U.S. median home price in the upcoming housing crash will be near the peak at the last housing boom (~2009-2011) ?

Looks like the bottom for the the 2009-2011 housing crash was near the peak for the housing boom in 1989.

Yes.

That's how inflation distorts trying to tell a story with a simple plot.

Bitcoiner says

Totally, this couldn’t be more different than 07/08. What happened in 05-07 was a once in a lifetime occurrence (ninja loans and stated income + arm loans). Owners back then should never have been allowed to buy and owners today are in the best shape ever. Inventory (active listings) was rising to 4M back then while inventory today is at all time lows. Too funny that some people still compare this to today.

Great example of how central banking fools people. While you spend your time digging through the weeds justifying the greed and making money by doing nothing, your lifestyle tightens a little more, your quality of life continues dropping, until you are a slave in the country your fore-fathers fought for.

Bitcoiner says

Buying houses was the best investment besides crypto.

You're back... I actually agree with everything in your comment besides this. Most crypto is down 50-60% from peak. It's likely the cause of the recent bank failures it just trailed the trading for a couple months. And alas, urban areas popular with crypto are losing banks. They're also losing population. Cities are going to get fucked over the next decade.

I think housing is fine. It's going to stagnate but as you say there's nothing there to cause a crash. People that bought in the last 18 months and got laid off might be in a tough spot. That's 1-2% of the buying population best case. I don't think there's much upside for a while, but the floor on prices is pretty high if they drop at all. We'd need double digit interest rates for a true negative move.

WookieMan says

I don't think there's much upside for a while, but the floor on prices is pretty high if they drop at all. We'd need double digit interest rates for a true negative move.

Double digit inflation can not pull the prices down for too long.

Blue says

WookieMan says

I don't think there's much upside for a while, but the floor on prices is pretty high if they drop at all. We'd need double digit interest rates for a true negative move.

Double digit inflation can not pull the prices down for too long.

Wages will not pace with inflation though. That's where there could be a problem. I don't like the current economy, but for some reason I'm not overly pessimistic. We'll see. I dislike making predictions. I for sure am not seeing a crash on the horizon. Current loans are generally solid unless you bought in the last year or so. Even then it's qualified and not 2005 style with no doc loans.

Bitcoiner says

Too funny that some people still compare this to today.

Yup.

Like ®ealtors say, "It's Different This Time."

Bitcoiner says

WookieMan says

You're back...


Yep, hi Wookie and Patnet :)

Keep it to housing. I can agree on some things there. Otherwise I'll try to ignore any crypto threads. You piss me off on those.

If the entire MMT fiat economic system is based on credit and it needs and demands constant credit creation to function, how will this effect housing? With sales, inventory and housing construction down, credit cannot expand, correct? What happens? Especially seeing that rates will(?) climb.

Bitcoiner says

You can’t seriously suggest that todays market rhymes with what happened in 07/08!

Probably not. So what is the telephone pole that the corrupt greed-drunk Central Bankers will crash the car into this time?
Some call it the 'everything bubble' which I guess implies a monetary collapse.

Bitcoiner says

nuttboxer, My lifestyle? Buying a house opens a lot more opportunities. First of all you save and build wealth. The rent for my house would be triple of my mortgage!! Renting longterm in states like CA is financial suicide. Buying houses was the best investment besides crypto. It’s really not that complicated: rents go up long term. A mortgage remains stable and goes down when you refi. Inflation is your best friend when you own assets like real estate. what I really don’t get with your comment is, don’t you realize you pay waaaay more in the long run in renting instead of owning but the worst part is: not only did you pay more in rent compared to a mortgage but at the end you have nothing to show for. Makes me think how thankful I am for long term renters who pay off my houses. I really shouldnt try to convince them to change their lifestyle.

How much money do you owe? I don't owe anything. If you had to get some money together today for some emergency, could you? I could. Most people I know left a while ago. Those who stayed are drowning in debt(and they all own). During the 20+ years I've lived in California I've never paid more than $1,900 a month, and have averaged closer to $1,300. And the majority of that time was living in houses.
I'm moving to a 4/3, 2,300 sqft two story with a pool this summer. Decided this just a few months ago. I don't have to list anything, don't have to drop my asking price $50k after two weeks when no one bites.

I've seen multiple places drop rent hundreds of dollars because no one is paying. Housing on average is dropping $40k because no one is buying. Economy is in the shitter, banks collapsing left and right, everyone working two jobs, paying more for poisoned food, more for poisoned medical treatment. But as long as you make money for doing nothing, who cares right? As long as you can keep leveraging yourself up the ass, everything will be fine. Until it's not...

NuttBoxer says

Renting longterm in states like CA is financial suicide.

Not necessarily. I did quite well by renting.