patrick.net

HeadSet says

ad says

Housing market affordability is so bad that Zillow says it will take you 13.5 years to break even on a purchase from July onward

What does "break even" mean?

I assume it means selling at a high enough price that covers all years of maintenance + transaction fees without bringing $$ to closing.

GNL says

HeadSet says

ad says

Housing market affordability is so bad that Zillow says it will take you 13.5 years to break even on a purchase from July onward

What does "break even" mean?

I assume it means selling at a high enough price that covers all years of maintenance + transaction fees without bringing $$ to closing.

Yeah, likely to cover the operating and maintenance (O&M) costs. I view it as positive equity or book value. This would align with the use of the rent vs buy calculator.

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ad says

Yeah, likely to cover the operating and maintenance (O&M) costs. I view it as positive equity or book value. This would align with the use of the rent vs buy calculator.

Yes, I guess that would include interest paid also. Which I'd bet almost no one takes into consideration.

ad says

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https://fortune.com/2023/10/30/housing-market-recession-1980s-higher-for-longer-mortgage-rates-outlook-wells-fargo/

Despite countless recession calls from economists, analysts, and other experts this year and last, the U.S. economy as a whole has shown remarkable resiliency. The housing market, on the other hand, is a different story.

Mortgage rates hovering around 8% coupled with home prices that rose substantially during the pandemic have deteriorated housing affordability in the U.S. and frozen activity in some cases. The longer mortgage rates remain elevated, the higher borrowing costs become, and that could tip the housing market into a recession, according to Wells Fargo.

There are too many people with high paying jobs who will always keep prices elevated in desireable areas with top public schools. Unless we have a job-loss recession, desireable areas won't drop much IMO. Areas with mediocre or bad schools? All bets are off.

GNL says

ad says

Yeah, likely to cover the operating and maintenance (O&M) costs. I view it as positive equity or book value. This would align with the use of the rent vs buy calculator.

Yes, I guess that would include interest paid also. Which I'd bet almost no one takes into consideration.

Yes I would categorize the interest payments are carrying costs or operating costs.

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porkchopXpress says

There are too many people with high paying jobs who will always keep prices elevated in desireable areas with top public schools.

Yeah, like Ilene Mischeloff's parents did.

https://nypost.com/2023/11/02/business/hamptons-middle-class-homes-priced-below-5m-slammed-in-selling-frenzy/

Hamptons ‘middle class’ homes priced below $5M slammed in selling frenzy

The so-called “middle class” in the Hamptons – New Yorkers with second homes in the in the $2 million to $5 million range – are frantically slashing prices to offload their properties, real estate sources said.

https://www.nasdaq.com/articles/buyers-are-backing-out-of-home-purchases-at-an-incredibly-high-rate

Buyers Are Backing out of Home Purchases at an Incredibly High Rate

zzyzzx says

https://www.nasdaq.com/articles/buyers-are-backing-out-of-home-purchases-at-an-incredibly-high-rate

Buyers Are Backing out of Home Purchases at an Incredibly High Rate

That is a lie!

Because if true, then the Housing Experts of PatNet were full of shit.

https://www.reddit.com/r/florida/comments/17lejjw/my_monthly_hoa_fee_was_increased_by_240_since_i/

My monthly HOA fee was increased by 240% since I moved in. Can someone help me understand why?

zzyzzx says

My monthly HOA fee was increased by 240% since I moved in. Can someone help me understand why?

Because this person is a retard?

zzyzzx says

https://www.reddit.com/r/florida/comments/17lejjw/my_monthly_hoa_fee_was_increased_by_240_since_i/

My monthly HOA fee was increased by 240% since I moved in. Can someone help me understand why?

yep, its is about total ownership cost (TOC) or life cycle cost ...

principal + interest + property tax + property insurance + hoa fee + owner maintenance&repair

its tough in florida cause not only is insurance increasing, but labor costs (at a relatively higher rate than national rate) such as for landscaping, pool service, HOA community management, etc

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PumpingRedheads says

Because this person is a retard?

Pretty much. They either are totally oblivious to inflation / insurance / maintenance costs / reserve requirements, as in they have failed in being an adult.

That, and I'd have to think that any condo complex that's full of old people isn't going to want to properly fund their reserves anyway since over a certain age long term planning doesn't exist.

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https://www.mortgagenewsdaily.com/markets/mortgage-rates-11032023

Rates for 30 year mortgage recently peaked to 23 year high of 8% ...now sitting at 7.5%

I would not be surprised if the 30 year mortgage rate steadies between 5 and 6% by next spring

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ad says

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https://www.mortgagenewsdaily.com/markets/mortgage-rates-11032023

Rates for 30 year mortgage recently peaked to 23 year high of 8% ...now sitting at 7.5%

I would not be surprised if the 30 year mortgage rate steadies between 5 and 6% by next spring

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they won’t lend you at 6 and risk when treasuries give that without the risk.

FortwayeAsFuckJoeBiden says

ad says

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https://www.mortgagenewsdaily.com/markets/mortgage-rates-11032023

Rates for 30 year mortgage recently peaked to 23 year high of 8% ...now sitting at 7.5%

I would not be surprised if the 30 year mortgage rate steadies between 5 and 6% by next spring

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they won’t lend you at 6 and risk when treasuries give that without the risk.

I understand as far as risk premium, or risk vs reward or payoff.

The 10 Yr Treasury tends to track the 30 year mortgage rate. Also mortgages typically only last about every 8 years as people move and pay off their mortgages.

The 10 Year Treasury is at 4.5% so a 6% mortgage rate is offering a 1.5% risk premium.

https://www.cnbc.com/quotes/US10Y

When we got our 3% mortgage rate with the Veteran Affairs (VA) in August 2016, the 10 Year Treasury was around 1.6%.

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One of the houses in my neighborhood ( a twin of ours) just sold for a record high price. One has to wonder what exactly is going on, but the ones coming on market recently are snapped up right away now after a 9 month lax period when they languished and prices dropped.

It doesn't make any sense.

ad says

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

If what I heard on rumble.com yesterday is true UAW union won big time this past week and will now be making $89/hr which is about 185K/year. That's without overtime.

Okay, I can't find anything like that at all in the news, maybe he's mistaken and it's 89K/year, I do see some asked for that: https://rumble.com/v3svpqs-big-win-for-striking-auto-workers.html

Yeah, it's $42/hour which works out to 89K/year: https://www.cnbc.com/2023/10/30/gm-uaw-tentative-agreement-labor-strike.html

Jimmy has his comment section in an uproar.

https://www.businessinsider.com/lower-interest-rate-mortgage-new-construction-house-homebuilder-2023-11

it's possible to get a 4.8% mortgage today — here's how

High mortgage rates have deterred many would-be homebuyers from purchasing a property over the last year.

In September, according to the National Association of Realtors, the sales of existing homes in the US declined 15.4% from a year ago — a sign that buyers are continuing to balk at the high cost of homeownership.

But here may be a glimmer of hope: People may have more luck securing a lower mortgage rate if they buy a new-construction home. Mortgage industry veteran Tawn Kelley, the president of financial services at homebuilder Taylor Morrison, told Insider's Alex Nicoll that it's possible to secure a rate as low as 4.8% when buying a new home.

The typical rate right now is above 7%, according to Freddie Mac.

Kelley's tips include seriously considering taking out a mortgage with the builder of the new home and asking for every possible incentive.

Many builders can provide lower interest rates or financing assistance, she said. While that may sound too good to be true, Kelley advises buyers not to automatically dismiss their homebuilder's mortgage offerings as a marketing ploy.

At the end of the day, she added, builders just want to sell more houses. That's how they make the most profit. If offering a favorable mortgage helps them do that, don't second-guess the motivation.

"Finance sells homes, and a house doesn't become a home unless we have the ability to get that customer to the closing table, and they can qualify and confidently make their mortgage payments," Kelley said.

Kelley also suggested that buyers negotiate with builders for every available incentive, as they could add up to substantial savings. Builder incentives include rate buydowns, mortgage rate locks, and forward commitments. (Read more about these incentives and how to get them in Nicoll's story.)

Taylor Morrison has been able to help customers lower their rates from around 8% to 4.875%, Kelley said, reducing the total monthly payment by a third.

However, she warned that some financial incentives can increase over the course of the loan, including temporary rate buydowns.

Failing to budget or plan accordingly could put homebuyers at risk of experiencing problems that cropped up during the 2008 housing crisis, when many people who took out adjustable-rate mortgages failed to account for their monthly costs increasing as interest rates rose.

https://www.reddit.com/r/realtors/comments/17ns662/how_are_your_higher_end_listings_preforming_in/

How are your higher end listings preforming in this market?

I have a handful of $700k-$900k (Close to luxury in my area) listings that have had 0 showings in the last 40 days, even with 5-10% price reductions and 2/1 buydown offers. Recent comps even justify a higher price, but its just been a dead stop.

I know this question is likely to be area specific. But in your experience, how is the Luxury market in your area, what are you doing to land showings/exposure with the higher rates bogging everything down? How have your new higher priced listings preformed? How did they sell?

https://www.reddit.com/r/realestateinvesting/comments/17ni3pg/should_i_rip_the_bandaid_off_and_sell_my_condo/

Should I rip the bandaid off and sell my condo?

I bought my condo in 2019 in Oakland for $405,000.

I lived in it for four years but decided to rent a place with my girlfriend.

I owe roughly $367,000. My payment is $3,400. The breakdown is $2,900 mortgage (taxes and insurance included) and $500 HOA. ~$670 goes to principal and $370 to PMI.

I tried to sell it from June-September for $390,000 (eventually lowered price) and got no offers. Condo prices dropped. My real estate agent and comps said it would be valued ~$350,000 leaving me with a large out of pocket sell price (which I can afford)

Since October I have been renting it out for $2,100. My gut tells me no and I should try and sell again once the lease is up but I’m wondering if there is any way this is justifiable?

I have also thought about a lump sum principal payment to get to the 20% LTV to get rid of the PMI.

zzyzzx says

have also thought about a lump sum principal payment to get to the 20% LTV to get rid of the PMI.

Ordinarily, I would say that might be his best option if he wants to hang in there for a while.

...but in this case, I think he's fucked. High interest rates (even if they lower they will still be higher than before) is fucking housing prices as people masturbated to. This is because Deglobalization adjustments and Boomers retiring and taking their money (aka Capital) out of their retirement investments over the next 10 years. Labor shortages will be with us for a while, too. Demographics are a bitch.

PumpingRedheads says

Labor shortages will be with us for a while, too. Demographics are a bitch.

That is why there needs to be more innovation and productivity. There needs to be better ways as far as caring for the elderly who do not have children and who can live in assisted living communities with the help of technology. This allows for more people to be cared for by 1 nurses assistant, by leveraging technology.

Robots will be of great value in our daily lives. Think about how the Internet has contributed to greater standard of living. Just look at the benefits of a simple security camera like through Wyze or Blink.

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zzyzzx's quotations from article

I bought my condo in 2019 in Oakland for $405,000.
I lived in it for four years but decided to rent a place with my girlfriend.

It seems like you made a long term decision (buying a condo) that didn't work with your long term needs.

I owe roughly $367,000. ...
I tried to sell it from June-September for $390,000 (eventually lowered price) and got no offers. Condo prices dropped. My real estate agent and comps said it would be valued ~$350,000 leaving me with a large out of pocket sell price (which I can afford)

Sounds like you are under water. Maybe contact the mortgage holder and work out a deal under pressure of a strategic default.

My payment is $3,400. The breakdown is $2,900 mortgage (taxes and insurance included) and $500 HOA. ~$670 goes to principal and $370 to PMI. ...
Since October I have been renting it out for $2,100. My gut tells me no and I should try and sell again once the lease is up but I’m wondering if there is any way this is justifiable?

You're probably not going to move back in, so that's not a reason to hold on. Also, paying $3400 and collecting $2100 while taking on all the risks of landlording and wear-and-tear of the place is a pretty bad monthly loss. Since you appear to be underwater, I don't think selling is the way to go; you may have better options. You've been paying PMI ... well, now it's time put that insurance to use!

I have also thought about a lump sum principal payment to get to the 20% LTV to get rid of the PMI.

I would say that you shouldn't have purchased the place at all if you couldn't make the down payment and get the best rate. But now you might have an advantage by not putting 20% down.

Overall, I'd say you should consult someone who can give you strategic options, given that you are underwater and going down pretty quickly with the current renter situation. Renters can also become a problem with whatever you decided to do.

ad says

That is why there needs to be more innovation and productivity

Older societies don't produce that.

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Fannie Mae, for example, projects 30-year fixed-rate mortgages will start 2024 at an average of 7.1% and fall to 6.7% by Q4 2024.

"In 2024, do not anticipate mortgage rates to drop significantly. The current market environment leans towards stability rather than volatility and fear," says Nathaniel Pitchon-Getzels, a buyer's agent and listing agent at Compass.

"Before we see rates come down, it's possible we'll experience another rate increase. If they do decrease, it's likely to be a gradual shift, possibly occurring at the end of the second quarter or the beginning of the third quarter," he adds.

https://www.cbsnews.com/news/will-mortgage-rates-go-down-in-2024/

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PumpingRedheads says

ad says

That is why there needs to be more innovation and productivity

Older societies don't produce that.

Well America has gone through an industrial revolution and then the internet and computer revolution starting in late 1990s.

So I don't see a reason for another period of innovation like we had in the late 1990s that led to the smartphone, videoconferencing, internet security cameras, etc.

There is enough of a population pool that is smart to foster new inventions and concepts that promote innovation which improve our quality of life and standard of living.

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Before there was Sam Bankman-Fried...there was WeWork!

WeWork Finally Files for Bankruptcy two Years after Going Public via SPAC. Office Landlords, CMBS Holders Face the Music, Stockholders Wiped Out

https://wolfstreet.com/2023/11/07/wework-finally-files-for-bankruptcy-2-years-after-going-public-via-spac-office-landlords-cmbs-holders-face-music-stockholders-wiped-out/

Not sure if this was posted on this thread or another Pat.net thread.

I read this on MishTalk. This is a way to bailout some commercial RE given trends such as work from home.

Hope this leads to 2 bedroom apartments costing $200,000 so that $45 billion will lead to 225,000 new apartments.

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Biden is funneling $45 billion from clean energy incentives in the ridiculously named Inflation Reduction Act (IRA) into housing conversions.

https://www.wsj.com/real-estate/commercial/turning-empty-offices-into-apartments-is-getting-even-harder-b6659020

ad says

Biden is funneling $45 billion from clean energy incentives in the ridiculously named Inflation Reduction Act (IRA) into housing conversions.

Translation - Warehouse accommodations for mass illegals.

PumpingRedheads says

Before there was Sam Bankman-Fried...there was WeWork!

WeWork Finally Files for Bankruptcy two Years after Going Public via SPAC. Office Landlords, CMBS Holders Face the Music, Stockholders Wiped Out

https://wolfstreet.com/2023/11/07/wework-finally-files-for-bankruptcy-2-years-after-going-public-via-spac-office-landlords-cmbs-holders-face-music-stockholders-wiped-out/

Its founder (https://en.wikipedia.org/wiki/Adam_Neumann) was paid at least $1.5 billion before being pushed out.

I bet he was happy he got pushed out and not holding the bag as far as worthless stock in WeWork. Who were the fools who bought WeWork when it was within $300 to $500 range ?

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ad says

Its founder (https://en.wikipedia.org/wiki/Adam_Neumann) was paid at least $1.5 billion before being pushed out.

I bet he was happy he got pushed out and not holding the bag as far as worthless stock in WeWork. Who were the fools who bought WeWork when it was within $300 to $500 range ?

Who was smart enough to buy it at $50?

https://www.reddit.com/r/RealEstate/comments/17psis6/trouble_selling_socal_condo/

Trouble selling SoCal condo

zzyzzx says

https://www.reddit.com/r/RealEstate/comments/17psis6/trouble_selling_socal_condo/

Trouble selling SoCal condo

The price is too damn high.

RWSGFY says

The price is too damn high.

I don't know why so many people can be so dumb as to not understand that.

zzyzzx says

https://www.reddit.com/r/RealEstate/comments/17psis6/trouble_selling_socal_condo/

Trouble selling SoCal condo

AND this is why the housing market is fucked, despite some 'housing experts' claim that inventory will remain locked.

Renting the place out is not an option; without selling we can’t buy another home, and the likelihood of selling is dwindling for the aforementioned reasons, not to mention insurance companies pulling out of California.

For there will always be people forced to sell. And over time, that number will grow. And so their sales will be the ones that set market prices, which will lead to more falling home values. Then there will be an exit stampede. Lot of short sales and all the rest we saw on 2009 - 2011, etc.

Sure, condos are getting hit badly at first. That is the canary in the coal mine.

An aside: How come you never hear about housing coops having the same problems as condos in the news? Anyone know?

PumpingRedheads says

An aside: How come you never hear about housing coops having the same problems as condos in the news? Anyone know?

Housing coops do not allow renters and also buyers have to get approved by the board.

Condos allow renters and the HOA boards do not approve buyers. Some HOA boards of condos may have restrictions on percentage of condos allowed to rent to ensure there is a desired balance between renter-occupied units and owner-occupied units.

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