patrick.net

HeadSet says

consider that refi is not free. Loans involve origination fees and often points

If you walk into Bank of America (or similar) and ask for a refi, you'll pay up the wazoo and get a crappy rate too. Back when I had a mortgage I refinanced twice by using Zillow.com to find a fly-by-night refinance with no points and no fees. Did I get a lousy interest rate? I got a 1.875 5/1 ARM, so you be the judge. This was a decade ago.

And it is unlikely that if mortgage rates fall that savings interest rates will not fall as well. Your best bet if you have the cash is to pay down the high interest mortgage and leave it there. Rebuilt your cash by putting what would have been payments back in the bank.

If interest rates go down you might as well refinance. Then it's a free decision whether or not to cash out and put the money somewhere else. My experience is that people tend to think returns on the stock market are better than paying off a low-interest mortgage in a low-interest environment; for a high-interest environment, it's worth plowing money into paying off the mortgage.

But I think that we're on the same page with respect to the current situation: Liquidate mediocre-return investments and put it into paying off the mortgage, since that's effectively "earning" you a guaranteed 7% or 8%. I'm just pointing out that doing so isn't a permanent decision—you can cash out later if rates go down.

Considering how fucked the finances are of this country, is a replay of the Great Inflation of the 1970's, culminating in near 30% interest rates that killed the banking and industrial sectors of the economy, set for a replay? The aftermath (30% going down ultimately to ZIRP) provided a near 40-year boon to insurance companies.

I can't get a live agent with GEICO anymore. The insurance companies are completely fucked with rates going from ZIRP to over 6%. Let's see how well they do as rates go back up to 30%.

https://wolfstreet.com/2023/10/19/median-price-of-existing-homes-falls-further-peak-was-june-2022-demand-crashes-price-cuts-jump-supply-days-on-market-rise/

Home Prices Fall Further. Peak was June 2022. Demand Crashes, Price Cuts Jump, Supply & Days on Market Rise
by Wolf Richter • Oct 19, 2023

Patrick says

https://wolfstreet.com/2023/10/19/median-price-of-existing-homes-falls-further-peak-was-june-2022-demand-crashes-price-cuts-jump-supply-days-on-market-rise/

Home Prices Fall Further. Peak was June 2022. Demand Crashes, Price Cuts Jump, Supply & Days on Market Rise
by Wolf Richter • Oct 19, 2023

So, if I'm a chartist(?), I'm thinking to myself...prices be goin up by 10%+ by June 2023?

in our area it’s interesting. flippers bought houses when rates low, tried to flip for 300k profit because targeting ca/wa equity refugees. can’t sell because rates doubled and transplants aren’t all sitting on millions of equity. fun to watch price reduction of 100k from asking and still no offers.

FortwayeAsFuckJoeBiden says

in our area it’s interesting. flippers bought houses when rates low, tried to flip for 300k profit because targeting ca/wa equity refugees. can’t sell because rates doubled and transplants aren’t all sitting on millions of equity. fun to watch price reduction of 100k from asking and still no offers.

Examples?

Patrick says

Wolf Richter

Patrick, Wolf Richter runs a leftoid echo chamber comments section. Make any comment on how the not-based-on-science lockdowns harmed the economy, and it is disappeared, and future comments are subject to moderation. Also, he lacks a simple understanding that banks create money through handing out loans. If you are against Bootube posts, I suggest you consider applying the same scrutiny to Wolf as well.

GNL says

FortwayeAsFuckJoeBiden says

in our area it’s interesting. flippers bought houses when rates low, tried to flip for 300k profit because targeting ca/wa equity refugees. can’t sell because rates doubled and transplants aren’t all sitting on millions of equity. fun to watch price reduction of 100k from asking and still no offers.

Examples?

i’ll look tonight when i get home, or you can just redfin anything with acreage out here. its all flips sold in 22, trying hard to flip in 23.

they don’t flip smaller homes, those here get built a lot by local builders. so no value in flipping.

Patrick says

ad says

For example, he wants to give away money for reparations.

ad I'm pretty sure Kennedy did not actually say that. Please find me a quote if you can. I can't find it.

https://nypost.com/2023/10/18/rfk-jr-comes-out-for-reparations-forging-lane-to-bidens-left/

FortwayeAsFuckJoeBiden says

or you can just redfin anything with acreage out here.

Where is "out here"?

GNL says

FortwayeAsFuckJoeBiden says

or you can just redfin anything with acreage out here.

Where is "out here"?

idaho

FortwayeAsFuckJoeBiden says

GNL says

FortwayeAsFuckJoeBiden says

or you can just redfin anything with acreage out here.

Where is "out here"?

idaho

Awesome. You're in the redoubt.

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Panama City Beach is a growing area and very popular ... look here at this recent sale ...

it was originally priced $345,000 in May 2023 and sold this month for $272,000 ... it sold new for $179.900 in 2013 ....

that means it appreciated about 4.25% annually since 2013 :-/

https://www.zillow.com/homedetails/1734-Annabellas-Dr-Panama-City-Beach-FL-32407/121152666_zpid/

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ad says

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Panama City Beach is a growing area and very popular ... look here at this recent sale ...

it was originally priced $345,000 in May 2023 and sold this month for $272,000 ... it sold new for $179.900 in 2013 ....

that means it appreciated about 4.25% annually since 2013 :-/

https://www.zillow.com/homedetails/1734-Annabellas-Dr-Panama-City-Beach-FL-32407/121152666_zpid/

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The Zillow Estimate or Zestimate shows a peak price around early 2023 of about $326,000 for this townhome.

The Zillow rent estimate of $2250 is somewhat accurate as they are renting in the range of $2100 to $2200.

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zzyzzx says

Hoom?

For new home sales, we record an increase of 33% over last year and we're at a 19 month high.

Median house price went down about 12% YoY because of builder incentives, smaller floorplans, less upgrades and smaller lots.

GDP NOW is forecasting an annualized increase in GDP of 5.4% for the 3rd quarter. So far, higher interest rates haven't slowed the economy.

Investors are demanding about 1.25% in higher spreads for mortgages over treasuries than historic levels because of the fear of the debtors refinancing when rates go lower.

https://www.reuters.com/markets/us/us-new-home-sales-accelerate-september-2023-10-25/

Home builders are also more aware of the Down Payment Assistance programs available to new buyers than the typical person selling an existing home.

https://homebuyer.com/learn/down-payment-assistance

Misc says

GDP NOW is forecasting an annualized increase in GDP of 5.4% for the 3rd quarter. So far, higher interest rates haven't slowed the economy.

Annndd....that means the Fed will raise rates higher. Because that is all they can do.

We're in the Trench Warfare Stalemate Stage between "Permanent Housing Plateau" vs. "Interest Rates Matter"

Eventually though, Interest Rates matter and the Demographics are working against Homeloaners.

The difference between 2008 and today is inflation, rates, and demography. The Plateauists are counting on NONE of those three having an impact.

AmericanKulak says

The difference between 2008 and today is inflation, rates, and demography. The Plateauists are counting on NONE of those three having an impact.

Housing stays flat while median income grows at least 2% annually greater than housing for the next 5 years.

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GasTheYoungTurks says

Misc says

GDP NOW is forecasting an annualized increase in GDP of 5.4% for the 3rd quarter. So far, higher interest rates haven't slowed the economy.

Annndd....that means the Fed will raise rates higher. Because that is all they can do.

Can have growth without annual inflation being above 3% to 3.5% annually. Productivity and innovation gains are at work.

I think 3% inflation is the new norm.

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PumpingRedheads says

zzyzzx says

Hoom?

Slang for home.

PumpingRedheads says

Annndd....that means the Fed will raise rates higher. Because that is all they can do.

They can sell off all their MBS's.

PumpingRedheads says

Annndd....that means the Fed will raise rates higher. Because that is all they can do.

The Fed is losing control of interest rates. They are going up irrespective of the Fed because federal government spending is way out of control, even moreso than in the past. This is rightly seen as inflationary and so rates are going up.

Al_Sharpton_for_President says

PumpingRedheads says

Annndd....that means the Fed will raise rates higher. Because that is all they can do.

The Fed is losing control of interest rates. They are going up irrespective of the Fed because federal government spending is way out of control, even moreso than in the past. This is rightly seen as inflationary and so rates are going up.

True as investors want a higher rate on Treasuries to ensure they realize a real return on investment.

Part of reason why the Chinese were selling off Treasuries starting in 2014 was that they were not making any money after inflation.
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Al_Sharpton_for_President says

The Fed is losing control of interest rates. They are going up irrespective of the Fed because federal government spending is way out of control, even moreso than in the past. This is rightly seen as inflationary and so rates are going up.

Yep. They have to raise rates whether they like it or not.

zzyzzx says

They can sell off all their MBS's.

I think they have been for two years now.

PumpingRedheads says

Al_Sharpton_for_President says

The Fed is losing control of interest rates. They are going up irrespective of the Fed because federal government spending is way out of control, even moreso than in the past. This is rightly seen as inflationary and so rates are going up.

Yep. They have to raise rates whether they like it or not.

Housing prices are going down, and rent appears to be holding steady, if not dropping. Check out WolfStreet website as Wolfman reported about housing prices dropping 15% so far.

I would like to see GDP grow at least 2% above annual inflation.

Let's wait for tomorrow's monthly PCE report as the Federal Reserve puts a lot of preference on PCE

https://www.bea.gov/data/personal-consumption-expenditures-price-index

I don't see PCE being above 3.8% in tomorrow's report. As long as PCE stays below 4% for the next 3 months then I don't see the Fed raising rates.

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PumpingRedheads says

zzyzzx says

They can sell off all their MBS's.

I think they have been for two years now.

Yep, albeit at a slow rate so they don't force a depression. The Fed has a long way to reaching a balance sheet at 2019 levels :-/
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PumpingRedheads says

Misc says

GDP NOW is forecasting an annualized increase in GDP of 5.4% for the 3rd quarter. So far, higher interest rates haven't slowed the economy.

Annndd....that means the Fed will raise rates higher. Because that is all they can do.

Per Newsweek;
A new report from San Jose found builders are facing numerous challenges due to economic pressures, from high interest rates to skyrocketing material and labor costs.
The cost of building one unit of affordable housing in San Jose grew by 24 percent over the past year, surging from $757,900 to $938,700, the city said.
Louis Mirante, vice president of public policy at the Bay Area Council, described the problem to MSN: "The fewer projects, the less labor there is. The less labor there is, the fewer projects there are. That death spiral is going on."
San Jose's issues are more concentrated due to the scarce land, higher costs of labor and "bureaucratic roadblocks," Adrian Pedraza, a real estate broker who owns house flipping company The California Homebuyer, said.

Cost of "one unit of affordable housing", ??, smell like big corruption.

REpro says

San Jose's issues are more concentrated due to the scarce land, higher costs of labor and "bureaucratic roadblocks," Adrian Pedraza, a real estate broker who owns house flipping company The California Homebuyer, said.

I read the Newsom passed some reforms as far as encouraging affordable housing: https://www.novoco.com/news/california-governor-signs-series-affordable-housing-related-bills

As far as labor, the construction industries needs to innovate and gain more productivity such as using 3D printing technology, etc.

How about constructing pre-fab homes in cheaper zip codes and then sent the pre-fab home kits to California via trucks and/or rail ?

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ad says

REpro says

San Jose's issues are more concentrated due to the scarce land, higher costs of labor and "bureaucratic roadblocks," Adrian Pedraza, a real estate broker who owns house flipping company The California Homebuyer, said.

I read the Newsom passed some reforms as far as encouraging affordable housing: https://www.novoco.com/news/california-governor-signs-series-affordable-housing-related-bills

As far as labor, the construction industries needs to innovate and gain more productivity such as using 3D printing technology, etc.

How about constructing pre-fab homes in cheaper zip codes and then sent the pre-fab home kits to California via trucks and/or rail ?

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3D printing is great, you still need electricians, plumbers and installers for floors, cabinets and what not. Almost viable...
https://www.iconbuild.com/projects/community-first-village

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interesting as it does seem like rent is cooling down in Panama City Beach ... I noticed apartments are offering 1 month free ( https://www.urbanbluliving.com/ )

https://www.zillow.com/rental-manager/market-trends/32407/

also, Colorado Springs has cooled off

https://www.zillow.com/rental-manager/market-trends/colorado-springs-co/

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ad says

How about constructing pre-fab homes in cheaper zip codes and then sent the pre-fab home kits to California via trucks and/or rail ?

San Francisco, trade unions at odds over modular construction — even for homeless projects

Modular housing could be an answer
Factory OS uses unionized workers, but through an agreement with the carpenters’ union, workers perform a variety of tasks on the housing assembly line, rather than having the work divvied up among specialists, and the company employs many former prison inmates.
Politically influential construction trades unions are pushing San Francisco’s city officials to make 833 Bryant St. a one-time event rather than the beginning of a trend.
Larry Mazzola Jr., president of the San Francisco Building and Construction Trades Council, is sending a letter to Mayor London Breed and city supervisors criticizing the project’s “mistakes and over-costs.”

Supportive housing for 39 formerly homeless residents breaks ground on University Avenue
The project was initially supposed to be wholly constructed of prefabricated all-steel modular units like another of Kennedy’s buildings on Shattuck Avenue, but after 18 months working with a construction firm — the quoted price doubled, Kennedy said, partially due to the pandemic and supply chain issues. Ultimately, he said the company “couldn’t pull it together” on quality.
Developers shifted to Pleasanton-based Hawk Development, and the building will now have prefabricated components, but it will no longer be fully modular. Kennedy said the delays pushed up the cost of the project by about $2 million.
But because it’s still partially modular, the project will still cost below the per-unit average for building housing in the Bay Area. Each unit is expected to cost about $400,000, according to city officials. It will cost about $2 million annually to operate once it’s open, split between funding from Berkeley’s Measure P and Alameda County. Kaiser Permanente put about $500,000 toward the project.

EBGuy says

San Francisco, trade unions at odds over modular construction — even for homeless projects

thats a good article EB

i was thinking how a tiny home (i.e., ~120 sq foot) could be built on a trailer frame and used for basic shelter ...

...

No municipality wants "cheap" housing. Property tax money is what they want. Higher value = higher tax. Maybe?

GNL says

No municipality wants "cheap" housing. Property tax money is what they want. Higher value = higher tax. Maybe?

yes and that is what is happening in LA (lower alabama) also known as Florida panhandle

they are building what they call "affordable housing" but it is marketed as "luxury apartments" like Urban Blu in Panama City Beach

the new housings being built by St Joe are crap shacks priced at least $450,000 where the average hourly rate is around $17 + tips for an assistant general manager at a Chicken Salad Chick restaurant

but I agree as they want the tax base so they want the income stream from property taxes

so what gives as far as the working class being near the jobs from restaurants to assisted living and nursing homes ?

what I am seeing is 3 bedroom townhomes in Panama City Beach being rented for $2100 a month by 3 restaurant service workers each making about $500 a week

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