patrick.net

GNL says

mell says

GNL says

How many of these ARMS are out there and when do they adjust?

Depends, most every month, quarter or year. Some every 3 or 5 years. Not an expert on ARMs, but my friend's one already reset to his dismay

Any idea of the % increase in payment?

No expert, but I assume to the full extent the 30/15 year mortgage rise, so if it went from 3 to 7 %, the arm would rise say from 2.5 to 6.5%, but usually with a 5% or higher cap, and also often with a 2-3% yearly cap.

My opinion has been that there will not be any problems because inventory is tight and I believe it will stay tight for a very long time. But if there are a significant number of arms that will readjust long before rates come back down, this could cause some problems...if that number is high enough. Are payments going to go up 50%, 25% or only 10%? That's the question I believe is important. That and how many will readjust.

I had a realtor ask me to give 3 weeks of free rent to a buyer.

stfu says

The total value of us real estate as north of 40 trillion dollars. 108 billion is not even a rounding error. I am not deeply alarmed, not even mildly alarmed.

This is a great summary of why another crash is definitely going to repeat. I don't give a shit about the fraudulent method the bankers use to create their crashes, oil/gas in late 70's, SnL late 80', dotcom bust late 90's/early 2000's, housing bubble '08. I only care about the primary cause(central banking), and the impact(most people get screwed). Instead of using ridiculous evaluations to justify ignoring the issue, how 'bout asking yourself what is the market really worth?. I'll tell you what it's certainly fucking NOT worth, 40 trillion.

GNL says

Ok, but how many arms readjusting (or %) would it take to cause problems? Even in 08ish, there were tons of homes already paid off, no?

I don't know.

My point was that it's not just recent buiyers' debt problems that can drive the inventory of homes of which sellers will accept lower-than-peak prices to get a sale.

Maybe the ®realtors are agnostic. Volume likely means more to them than Best Prices.

Also for all the housing crash neigh-sayers, riddle me this. If '08 was a "housing crash", why did the market plunge 50%..? Not certain sectors, the entire-fucking-market. If you can't understand primary trends and big picture of how our economy is designed, you'll never see the crash coming, but you will repeatedly be caught by the fallout.

I doubt the next one will be called the housing crash, but housing will crash as part of it. Wait, you say the government fixed it? Can you point me to other examples of the government fixing anything, ever..?

Asset based loan. 40% LTV with a private lender. The borrower can use the cash out money however, s/he wishes.

Eman says

Asset based loan. 40% LTV with a private lender. The borrower can use the cash out money however, s/he wishes.

So, correct me if I'm wrong but, it looks as though banks are willing to lend for anything as long as there is an asset with significant equity in it? The equity will save the bank in case of borrower default, correct? IF, and as you see I did capitalize "IF", RE is in a classic ponzi, that equity can go poof in an instant, correct? And paper wealth is simply used to create more and more and more debt which causes prices to climb and round and round we go, correct? Where it stops nobody knows, correct?

But, muh inventory. That does seem to be the one thing that keeps this thing afloat. And it is also why I have been predicting RE will forever from now on be inventory light. Constraining inventory to cause RE to climb to the highest levels ever will be the greatest way to become rich for those who control those levers. Sinister fo sho.

Btw, I am also predicting this for education, healthcare, cars/travel and food. You know, the things everyone NEEDS. This is how the few at the top with become insanely rich.

@GNL,

Lenders are in the business of lending, not foreclosing. Borrowing cost/interest rate varies based on the perceived risk. The asset is the collateral.

For the lowest rate/borrowing cost, the underwriting tends to be the most stringent. Borrowing cost goes up to adjust for the risk accordingly. In this case, the lender said 9%. My guess this was an asset based lending, not based on income or other qualifications.

If anyone wants to put 50% down and borrow 50% for residential real estate, plenty of Chinese banks are willing to lend. No doc’s required. This is how some foreigners do it as they don’t have credit/FICO score, or income to qualify for anything.

Rubicon says

zombie apocalypse

Zombies aren't real and apocalypse is a religious thing.

Cannibal anarchy is more likely.

Rubicon says

Onvacation says

Rubicon says

zombie apocalypse

Zombies aren't real

Boy, Lemme show ya

These are birth persons with bonus holes, not zombies.

Al_Sharpton_for_President says

In the financial fraud crash of ’08, before walking away from their underwater home, people were buying the same model in the same development, at the readjusted market price, then walking away from the underwater home.

Do you have a source for this? Do you know of a single instance of this actually occurring or are you just throwing shit against the wall? The reason I ask is because your claim would suggest that banks are more ignorant about the home lending process than joe sixpack who bought more house than he could afford but somehow had the financial acumen to outsmart his lender.

https://www.msn.com/en-us/money/markets/senators-say-corporate-investors-are-driving-up-home-prices/ar-AA1dJ0Zs?cvid=97ba2b81c5ba49b58eaab13d550127a0&ei=32

Senators Say Corporate Investors Are Driving Up Home Prices

(Bloomberg) -- Democratic senators including Banking Chair Sherrod Brown and Elizabeth Warren want to restrict tax breaks for large corporate investors that buy local homes and often drive up costs.

The Stop Predatory Investing Act would prohibit an investor who acquires 50 or more single-family rental homes from deducting interest or depreciation on those properties.

In too many communities, “big investors funded by Wall Street buy up homes that could have gone to first-time home buyers, then jack up rent, neglect repairs, and threaten families with eviction,” said Ohio Senator Brown in a statement.

The legislation would also encourage big investors to sell single-family rental homes back to homeowners or nonprofits in the community.

Rubicon says

Eman says

Rubicon says

Onvacation says

Rubicon says

zombie apocalypse

Zombies aren't real

Boy, Lemme show ya

These are birth persons with bonus holes, not zombies.

Ah! My bad, how confusing!

Don't forget about Nancy. Thanks for reminding me.

stfu says

Do you have a source for this?

2008 was 15 years ago, so no saved links. Banks were notorious for getting shitty loans off their books, selling them to investment banks who would bundle them into lead-to-gold MBS.

Rubicon says

Prices go down when supply goes up significantly, exceeding demand. You saw 4M active listings in 2008 and prices plummeted. We are at 1M active listings currently.

Another great example of why the market will crash. Micro-focus instead of understanding the big picture of how central banking economies run. Central banking economies are built around a myriad of lies in order to disguise the theft being perpetrated. Prussian education is a big piece of this, because unlike Austrian economics, it's creates artificial silos where the big picture, and causation are lost as people muddle in mindless details. It requires our participation to succeed for any amount of time. But, as the system is designed to boom/bust as a key method of theft, this necessitates endless crashes.

Instead of reading RE articles, try reading Rothbard...

Rubicon says

Until then, let’s follow the data.

Don't you mean "Trust the science!". I've shown you numerous examples of a market in crisis, real houses in real specific locations. you've ignored every data point. This is why people tend to confuse religion with cults and people enslaved by propaganda. They can all share fanatical beliefs irrespective of reason or logic.

stfu says

Al_Sharpton_for_President says

In the financial fraud crash of ’08, before walking away from their underwater home, people were buying the same model in the same development, at the readjusted market price, then walking away from the underwater home.

Do you have a source for this? Do you know of a single instance of this actually occurring or are you just throwing shit against the wall? The reason I ask is because your claim would suggest that banks are more ignorant about the home lending process than joe sixpack who bought more house than he could afford but somehow had the financial acumen to outsmart his lender.

Why does it fucking matter? In this situation the person would potentially be making two down payments, and still end up with two loans. One they don't pay, and reap all the penalties for failing to, and one they have to pay if they want to keep the new place. The end results is still the same, they are debt slaves with nothing real to show for the time they've invested into either house.

Rubicon says

There has only been one major RE bubble fueled by loose lending. Even if you had bought during the peak of 2006 you would be doing well today.

Because you CHOOSE to ignore history, it does not disappear. Housing busts go back to the 1800's at least in this country. That lack of perspective fuels your entire greed centered approach. Don't feel too bad about this, that's by design. Greed is another key component that makes the theft possible. Inflation makes you THINK you are better off, but you spend more time to gain the same necessities. I make six figures, and in any scenario I could have imagined with that number 20 years ago, I'd be rich. But I'm not. Part of that is the place we've chosen to live, part of that is the design of the system, and my lack of knowledge of that design until recently.

The bankers have you Neo...

Joe sixpack seems to be doing quite well against the Banksters. He refinanced about $2.6 trillion of mortgages in 2020 & about $2.7 trillion in 2021. He has a 30 year fixed rate loan at 3% or less. The Banksters on the other hand are sitting on unrealized losses on the loans they bought during that time frame of about $520 billion. As far as those super intelligent, manipulators at the Federal Reserve, they are sitting on unrealized losses of about $1 trillion.

There is no IQ test to be a Bankster.

Just tell me this - Who holds the bag for Joe when he fucks up his finances? And for the bankers..?

Rubicon says

“Because you CHOOSE to ignore history, it does not disappear. Housing busts go back to the 1800's at least in this country.”

In your lifetime, besides 2008, when was there another major housing bust?

So it only matters if it happens when we're alive? That's the way most people approach history, we are very ego-centric. But really it's about you were wrong, so you want to move the tape to still seem right...

I'll meet you half way and only focus on the 20th century. By CPI, you can see a drop of 1/3 of the value in '08. And if you look at 1916-1921, you see the same drop by 1/3. Definitely don't zoom in on the end of that chart, might freak you out..

https://www.longtermtrends.net/home-price-vs-inflation/

NuttBoxer says

Rubicon says

Prices go down when supply goes up significantly, exceeding demand. You saw 4M active listings in 2008 and prices plummeted. We are at 1M active listings currently.

Another great example of why the market will crash. Micro-focus instead of understanding the big picture of how central banking economies run. Central banking economies are built around a myriad of lies in order to disguise the theft being perpetrated. Prussian education is a big piece of this, because unlike Austrian economics, it's creates artificial silos where the big picture, and causation are lost as people muddle in mindless details. It requires our participation to succeed for any amount of time. But, as the system is designed to boom/bust as a key method of theft, this necessitates endless crashes.

Instead of reading RE articles, try reading Rothbard...

Yes, my parents experienced one in the late 80s, early 90s. They bought a home for $220,000 and sold it 8 years later for $219,000. Maybe it was 10 years. I remember they had difficulty selling.

Misc says

Joe sixpack seems to be doing quite well against the Banksters. He refinanced about $2.6 trillion of mortgages in 2020 & about $2.7 trillion in 2021. He has a 30 year fixed rate loan at 3% or less. The Banksters on the other hand are sitting on unrealized losses on the loans they bought during that time frame of about $520 billion. As far as those super intelligent, manipulators at the Federal Reserve, they are sitting on unrealized losses of about $1 trillion.

There is no IQ test to be a Bankster.

Yet, they will forever be bailed out. Bankers don't lose.

"Yet, they will forever be bailed out. Bankers don't lose."

Nope. If a TBTF fails, it's gonna get Nationalized.

Until people realize that fiat is a scam and the road to ruin...

It's theft and we have people here who celebrate it?

Anyone want to explain the significance of "The yellow brick road"?

Yep, the Federal Reserve was started right about the same time as indoor plumbing started becoming a thing.

I think both have their uses, and I don't see either as being a fad.

If going by historical data and charts, all previous cycles seemed to make higher highs before a correction/drop. The current cycle hasn’t made a higher high….yet. Does this mean the housing has more upside before we see the drop @NuttBoxer?

GNL says

Until people realize that fiat is a scam and the road to ruin...

It's theft and we have people here who celebrate it?

Anyone want to explain the significance of "The yellow brick road"?

I’m not smart enough to know fiat is a scam. I’m not sure who celebrate it. I don’t know what the yellow brick road is, but I know I’m not a buyer in the current market. I will focus on what I can control. I can’t control what the market and the Fed will do.

Misc says

Nope. If a TBTF fails, it's gonna get Nationalized.

Do you know what happens in those situations? Shareholders, at the least the big ones are made whole, but everyone else takes a bath. And nationalized is just another way to say perpetual bail-out. Amtrak is a great example.

NuttBoxer says

Misc says

Nope. If a TBTF fails, it's gonna get Nationalized.

Do you know what happens in those situations? Shareholders, at the least the big ones are made whole, but everyone else takes a bath. And nationalized is just another way to say perpetual bail-out. Amtrak is a great example.

You should brush up on Bankruptcy proceedings.

Rubicon says

Thank you. Looking at the charts on your link. I see higher highs and higher lows. Are you saying any pull back on the chart is a bust?

Any yes, I think looking at a timeframe that captures your lifetime matters. I want to raise kids and my dog in my own house with a yard, good location etc. I don’t care if there was a bust in the 1800’s or if the next bust will be in 2080. I also think about retirement. The rentals I own will secure a comfortable retirement for me and provides generational wealth. Waiting for a bust like 2008 might mean I never buy.

You already know the answer, I specifically looked for a bust that dropped the market the same percentage as '08. Still trying to sidle out of your initial statement huh? If you consider the basic tenants of inflation and the boom/bust cycle, the increase in the rises and dips makes perfect sense.

I think if I want to build wealth for my family, I first need to understand the difference between real wealth, and paper. Then if I want to keep it, I need to study history to anticipate situations that often repeat, like market collapses. But mostly, I need to understand the nature of men who attempt to rule over other men, as they are my biggest threat, my greatest enemy.

Certainly none of us will perfectly time the market, unless we're big enough to rig it. If we buy close to the bottom, and sell close to the top, that's the best we can hope for.

Eman says

GNL says

Until people realize that fiat is a scam and the road to ruin...

It's theft and we have people here who celebrate it?

Anyone want to explain the significance of "The yellow brick road"?

I’m not smart enough to know fiat is a scam. I’m not sure who celebrate it. I don’t know what the yellow brick road is, but I know I’m not a buyer in the current market. I will focus on what I can control. I can’t control what the market and the Fed will do.

Don't get me wrong, You are a smart guy. Yes, we all need to take care of ourselves and do what we can to create our best life. History tells us many many things about fiat though. Fiat is inherently unfair and keeps most of humanity on the treadmill. Our economy would die without debt and more and more "value" is driven by debt accumulation. Why is the American Debt so large? Who benefits?

Eman says

If going by historical data and charts, all previous cycles seemed to make higher highs before a correction/drop. The current cycle hasn’t made a higher high….yet. Does this mean the housing has more upside before we see the drop NuttBoxer?

Not sure what site you used, but I see a top in April of last year, and a downward trend since then. That top was indeed higher than the top in '06. Pretty easy to see using the link I provided and the 30 year view, though you could certainly start at January 2006.

NuttBoxer says

Eman says

If going by historical data and charts, all previous cycles seemed to make higher highs before a correction/drop. The current cycle hasn’t made a higher high….yet. Does this mean the housing has more upside before we see the drop NuttBoxer?

Not sure what site you used, but I see a top in April of last year, and a downward trend since then. That top was indeed higher than the top in '06. Pretty easy to see using the link I provided and the 30 year view, though you could certainly start at January 2006.

I see the screen shot shared by Rubicon got cropped. I analyzed that chart going back to prior to the Great Depression. Look at that run up in 1941 to 1946, and then the subsequent drop.

If I have to make an educated guess, I’d say a drop to 0.8 is possible. If you expect a crash like 2008-2009, I wish you the best of luck. Knowing what I know now, I’m a buyer whenever the numbers pencil out or close to it. I wouldn’t be hang up on timing the top and bottom. I know I’m not a buyer in the current market, or anywhere close to being one though. Good luck with waiting. I hope the patience will payoff.

@GNL,

Thanks for the compliment. I used to hang out with retirees and older gentlemen to learn about history and real estate for the Bay Area. A few take away nuggets for me:

1) one guy complained about the national debt being unsustainable, sold his house in 1989, became a renter. Never bought back and eventually moved out of state as Bay Area prices got away from him.

2) another gentleman said if he knew what he had known now, he would have bought 5 SFHs in Cupertino, and he would be set. No need to mess with 401k.

3) billionaire George Marcus invested in Houston and lost money during the oil bust in the 1980’s. He told us to stay and invest in the Bay Area. This market is supply constraint due to its geography. It’s almost a sure bet long term.

Regardless of what the circumstances are, history suggests investing in Bay Area real estate has a high probability of being profitable. Tune out the noise a little and focus on the numbers and value we can create, or extract. This national debt has been going on since Regan? Regardless if it’s a Ponzi scheme or not, it’s still going on after 4 decades. It may continue long after we’re dead, and it’s something we have no control over.

@Eman
Good points...I believe NYC, Chicago and Detroit will want a word with you eventually.

Remote work is here to stay. I have friends pushing a Costa Rica WeWork commune village.

1337irr says

Eman
Good points...I believe NYC, Chicago and Detroit will want a word with you eventually.

Remote work is here to stay. I have friends pushing a Costa Rica WeWork commune village.

I'm pretty sure any company that moves to Puerto Rico does not have to pay taxes. Special program.

GNL says

1337irr says

Eman
Good points...I believe NYC, Chicago and Detroit will want a word with you eventually.

Remote work is here to stay. I have friends pushing a Costa Rica WeWork commune village.

I'm pretty sure any company that moves to Puerto Rico does not have to pay taxes. Special program.

My biz partner told me this once. Something along the line “if we moved to Puerto Rico and lived there for 6 months, we wouldn’t have to pay capital gains.”

Home is where our family is so we’re not moving anywhere anytime. Once the time is right, I’ll look into it. Talking about another loophole in our tax code, which was designed by…… and for………?

Rubicon says

And the funniest thing is, even if you would have bought at the worst possible time (peak of 2006) you would be totally fine today. Those prices in 2006 are dirt cheap compared to today’s prices.

1. Hardly anyone stays in their home that long anymore.
2. You're timing the market with your statement BUT with the benefit of hindsight.
3. Both 06 and covid were unknowable events and how they would play out. Well, most "financial" people should have known 06 would happen. Peter Schiff was screaming from the hilltops.
4. I still say inventory is the metric to watch. These high rates have not destroyed equity anywhere near where I would have thought they would. However, the fat lady hasn't sung yet.