patrick.net

landtof says

in fact, aren't some foreign capital flyers already getting spooked over mere rumor of regulation?

Not really, I have heard of a tax rumor but like a lot things with housing and government they will always do what they can to create demand because they need the revenue from housing for state budgets

Logan Mohtashami says

3. Sub Prime is not deemed to be illegal which can't come back unless Dodd Frank and CFPM rules are torn down

So no more 100% loan stated stated 2/28 3/27

Liar loans are here and have been for years. Actually just did a stated income recently myself. So, that isn't an issue unless you want 0% down stated income loans which isn't going to happen

Negative Am loans which were very popular with self employed have 0 chance of coming back as they have been deemed the worst toxic POS loan ever created in is form from 2000 and on, it was much different back in the 1980's and 1990's but on record it was such a bad loan that banks simply took existing no delinquent arms off that product as recasting rate would send families into foreclosure

There you are. This is what makes loans hard to get.
Even the liar loans are priced exorbitantly, essentially making it unavailable.
There is absolutely noting wrong with subprime, liar loans and neg am's as long as there is enough equity. It's pathetic.

Strategist says

There is absolutely noting wrong with subprime, liar loans and neg am's as long as there is enough equity. It's pathetic.

The thesis is flawed

A lot of sub prime expansion came with only less than 5% down, a lot with 100% lending

Also Option Arm negative Am loans had 20% down up until 2005 when they brought it with 10% down

So you had equity there to start and it was an epic disaster because everyone was paying the 1.25% rate which started the negative am trends.

Out of all the loans the Option Arm loan was the worst default one on record even with 10% -20% down. Hence why the banks quickly changed what was left from the carinage to a 30 year fix product

Logan Mohtashami says

Not really, I have heard of a tax rumor but like a lot things with housing and government they will always do what they can to create demand because they need the revenue from housing for state budgets

always do what they can to create demand - except for working americans... sounds like a wonderfully successful campaign slogan.

i know, i know, it's california - home of the 1 party system.

Logan Mohtashami says

Strategist says

There is absolutely noting wrong with subprime, liar loans and neg am's as long as there is enough equity. It's pathetic.

The thesis is flawed

A lot of sub prime expansion came with only less than 5% down, a lot with 100% lending

Also Option Arm negative Am loans had 20% down up until 2005 when they brought it with 10% down

So you had equity there to start and it was an epic disaster because everyone was paying the 1.25% rate which started the negative am trends.

Out of all the loans the Option Arm loan was the worst default one on record even with 10% -20% down. Hence why the banks quickly changed what was left from the carinage to a 30 year fix product

That's why I said bring back the standards prior to 2000. Minimum 25% equity.
There is an army of self employed and small business owners who have the 25% down with pristine credit, but can't prove the income.

Call it Crazy says

Strategist says

That's why I said bring back the standards prior to 2000. Minimum 25% equity.

There is an army of self employed and small business owners who have the 25% down with pristine credit, but can't prove the income.

See a problem yet??

How many of them lost that 25% during the last crash because they couldn't make their payments and got foreclosed?

If they maintained sensible underwriting instead of going to zero down, the crash would not have happened in the first place, because the bubble would not have happened.
This over reaction on being overly cautious is holding up the economic recovery

One thing I'm noticing here in the Bay Area is that typical starter homes, ones that may need renovations or repairs are virtually non-existent. Flippers have ruined first time home buying market here. Instead of previous generations that could buy a home that needed improvements at a reasonable price we are forced to pay $150k more to a flipper just for granite counter tops, new paint and a new yard.

cjogara says

One thing I'm noticing here in the Bay Area is that typical starter homes, ones that may need renovations or repairs are virtually non-existent. Flippers have ruined first time home buying market here. Instead of previous generations that could buy a home that needed improvements at a reasonable price we are forced to pay $150k more to a flipper just for granite counter tops, new paint and a new yard.

First-time homebuyers should not buy fixers. Even newish homes have enough headaches.

Why shouldn't first timers buy a fixer? Are you implying that flippers are providing a benefit for first timers? There's plenty of people able to do the work themselves and would enjoy the opportunity to make the place their own. My parents did this as well as did most of my friends parents. In fact this was a perfectly viable option for first timers up until the housing bubble. If it's a bad idea now why wasn't it a bad idea for generations past?

Let me be perfectly clear with this because I believe their is some confusion on this topics

Stated income loans are here in America today even thought they are illegal under CFPB

All CFPB says is that this loan of stated income has no legal protection for future lawsuits from anyone

If a Bank wanted to offer an option arm loan product they could do it today.

However, what bank in their right mind would offer such a product?

0... there is your answer

cjogara says

One thing I'm noticing here in the Bay Area is that typical starter homes, ones that may need renovations or repairs are virtually non-existent. Flippers have ruined first time home buying market here. Instead of previous generations that could buy a home that needed improvements at a reasonable price we are forced to pay $150k more to a flipper just for granite counter tops, new paint and a new yard.

i'm seeing $100k to $200k asking price gains even without the minor upgrades. just by virtue of purchasing 2-4 years ago.

Logan Mohtashami says

If a Bank wanted to offer an option arm loan product they could do it today.

However, what bank in their right mind would offer such a product?

true, they could do a lot of things - but aren't they are only conservative because they wouldn't be able to package and sell the loans, not because it would be risky for them? they only seem to want to sell loans that the taxpayer will back, if things go south.

landtof says

because it would be risky for them?

Rich Americans are getting stated income loans and these banks are holding these loans on their books.

Tight Lending Thesis is so flawed in many ways because it's being told by people who have 0 financial lending background and can't see what's going on today

Option Arm loan is garbage, what person would even get it at this stage of the cycle. Banks haven't heard any demand cry for this loan so they have stuck to traditional stated income loans with big down payments

well hold on - and i know CA is insane, but banks are refusing to lend me 95% conventional because of agency limits (presumably because they wouldn't be able to sell my loan onto someone else).

if they would issue me this loan, my DTI and credit would be in check and i would be in a new house in a few months.

1.) prices are too high in CA and sellers need to adjust
2.) agency limits for CA need to be raised so that people can get 95% conventional and banks can freely sell it on with taxpayer backstop.

is this way off?

i have a feeling the banking industry is lobbying hardcore for #2 above

thanks for the charts btw.

landtof says

well hold on - and i know CA is insane, but banks are refusing to lend me 95% conventional because of agency limits (presumably because they wouldn't be able to sell my loan onto someone else).

Your loan is above $417,000 with 5% down. You need another 5% down and you can go up to 1,100,000

Agency Jumbo doesn't allow 5% down, risk level because a lot people bought homes with high loan limits with 5% down and it cost the GSE big time and a lot big loan limits caused the massive hit on reserves.

89.90% lending is here in CA

In fact it's my most popular loan but you have to make money and have 10%

$625,500 first mortgage
Today they have limited the 2nd loan piggy back now up to $1,100,000

Yes Piggy Back loans are back in CA

Logan Mohtashami says

Your loan is above $417,000 with 5% down. You need another 5% down and you can go up to 1,100,000

gotta love it... sad truth is that i would cash out for irvine! but not for san diego.

landtof says

irvine!

I lived in Irvine since 2004 and some of numbers to own the debt here on the loans I am doing is getting crazy. However, Irvine has the Chinese which keeps the values going

Thirty years of Prop 13; what could go wrong? I'm predicting that Jerry will take out Prop 13 Commercial before he rides off into the sunset...

Logan Mohtashami says

However, Irvine has the Chinese which keeps the values going

Chinese people are not counted as first time buyers?

Heraclitusstudent says

Chinese people are not counted as first time buyers?

Foreign Buyers ( Cash Buyers) That is the group they would be in.

Do you think it's families being priced out by investors?

My view has been is that we need to just double the taxes on investment properties to make housing more affordable for families. But it's not realistic in this political climate, even in liberal land of CA.

FortWayne says

My view has been is that we need to just double the taxes on investment properties to make housing more affordable for families.

It would just discourage residential investment by the people who have the money.

Nope, we just need to make it easier to build more.

Two questions:

Why are high ownership so important?

Why the downpayment for a house is so low? Shouldn't it be at least 40%? I believe low downpayment has a long term inflationary effect.

FortWayne says

Do you think it's families being priced out by investors?

CA has been impacted greatly by cash buyers and the rich buying a lot of the homes in a low inventory cycle

Cash + 180K plus household in a state where Median roughly 60K

Call it Crazy says

Why do we need to build more and make it easier?? There are millions of houses currently sitting empty with no one in them. Fill them first....

If the people that own empty houses were seeing a lot more being built, they would realize that they can't make a capital gain on a depreciating commodity. As a result they would panic and sell.

FortWayne says

Do you think it's families being priced out by investors?

absolutely yes. california has gone feudal with no end in sight.

Today's data, just no YoY traction even with lower comps to work from. This has even surprised me

Heraclitusstudent says

FortWayne says

My view has been is that we need to just double the taxes on investment properties to make housing more affordable for families.

It would just discourage residential investment by the people who have the money.

Nope, we just need to make it easier to build more.

Housing should not be about investment, rentals and flips. If investors are pricing out average working Americans, than free market policies aren't working.

As far as building, it's already very easy to get a permit and build.

Here is how our neighborhood goes lately:
1) Old man dies and his house sells to some investor for cash, families can't compete with that.
2) Investor paints the house, adds new carpet and attempst to flip it for 100k+ profit.
3) House stays on the market for a really long while. One house down the street is on the market for well over a year now.
4) Investor turns it either into a rental, or keeps waiting for it to sell.

With that my feeling is that something is really going to give, either prices will really crash once wall street cycles again. Or we'll just have a lot of rental properties everywhere. This ain't America with pink houses for you and me.

cjogara says

One thing I'm noticing here in the Bay Area is that typical starter homes, ones that may need renovations or repairs are virtually non-existent. Flippers have ruined first time home buying market here. Instead of previous generations that could buy a home that needed improvements at a reasonable price we are forced to pay $150k more to a flipper just for granite counter tops, new paint and a new yard.

$150k is conservative. Maybe its time to grab the pitchforks and march down to these "free seminars"? Demand flipping be outlawed?

http://www9.buyerpricer.com/landing.aspx?slk=flip+this+house+seminar+than+merrill&iscid=20000007&nid=2&cid=3458238967&kwid=20494100950&dmt=b&bmt=bb&dist=s&uq=than%20merrill%20seminar&param1=&param2=&param3=&vx=0

http://www.biggerpockets.coms/79/topics/71349-free-than-merril-seminar---free

FortWayne says

This ain't America with pink houses for you and me.

the same issues in europe, which this country originally sought to avoid - concentration of ownership and wealth into the hands of the few, perpetuated largely through the mere accident of birth - are now running amok in california.

landtof says

are now running amok in california.