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Housing Crash | Incoming


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2021 Aug 27, 11:25am   8,161 views  102 comments

by joshuatrio   ➕follow (4)   💰tip   ignore  

From: http://housingbubble.blog/?p=5085

You Chose To Buy A Home That You Can’t Afford

August 26, 2021Ben JonesUncategorized133 Comments

A report from the Atlanta Journal Consitution in Georgia. “The metro Atlanta housing market clicked into balance in July: Supply met demand and home prices stopped their rapid rise. About 12,300 homes were listed for sale last month. In the city of Atlanta, home prices are up 20% from a year ago, according to Bill Adams, president of Adams Realtors. But the change in price ranges from a decline of 3% in Candler Park to a leap of 36% in Inman Park, he said. The trend of higher prices is going to continue because there won’t be a large increase in homes listed for sale, he predicted.”

From Market Watch. “‘Although housing is expected to remain sturdy for some time, several key gauges are cooling as the pandemic-induced buying frenzy eases and elevated prices cut into affordability, particularly for first-time homebuyers,’ Priscilla Thiagamoorthy, an economist with BMO Capital Markets, wrote in a research note.”

The Chicago Tribune on Illinois. “Seneca Oaddams, 44, bought his two-flat in Roseland for $132,000 a little over two years ago. The property, which he purchased as an investment and rental property, now has an estimated worth of $250,000, according to Redfin. But having endured 17 months of the pandemic, Oaddams says it’s hard to hold on to the building. His tenant, whose rent covers approximately half of Oaddams’ monthly mortgage, lost her job at the start of the pandemic and hasn’t been able to keep up her payments.”

“‘I’m actually hopeful for the future,’ Oaddams said. ‘I’m hopeful that it’s going to get better. … It needs to get better. Who doesn’t want to own property? Why not be able to help someone as well and lessen the load on your pocket with a building, so it’s a win-win for the renter and the tenant? The problem is when the rent can’t get paid.'”

The Norwich Bulletin in Connecticut. “Mark Kulos, president of the Norwich Property Owner’s Association and a landlord with 27 units, said while there are ways today for landlords to evict people, most won’t try because a misstep under the federal moratorium can lead to heavy fines. Kulos said this affects ‘mom and pop landlords,’ who have day jobs and have an operation of 50 units or smaller, as the landlord still has to pay for mortgage, taxes and upkeep without making a profit. ‘(The landlords) are working their other jobs to pay their bills, especially if the tenants aren’t paying,’ he said.”

From CBS DFW in Texas. “Clint Cash owns a handful of rental properties in the Dallas-Fort Worth area, some of whom have tenants impacted by the pandemic. Cash and other rental property owners believe the eviction moratorium that the Centers for Disease Control and Prevention enacted last year has gone on for too long with an expanding job market making it easier for people to find work. Cash says he’s sympathetic to those who still can’t pay their bills, but he says the government has put landlords in a position where they can’t either.”

“‘There’s not enough profit in it for these mom and pops to continue and pay their own bills and so they will lose their houses and those houses will thus go to foreclosure,’ he said.”

The Steamboat Pilot in Colorado. “Before casting their votes, members listened to nearly two hours of public comment from dozens of residents, most of whom were short-term rental owners, property managers or property owners who spoke in favor of short-term rentals. Michelle Williams bought her home on Bear Creek Drive in 2018, with a plan to retire in the home one day. Williams said she and her family spent four months in the home in 2020 and supported the city’s economy during the COVID-19 pandemic.”

“To supplement the cost of owning the home until she can retire in it, Williams rents her home out to nightly renters when she is not living in it. ‘We spent an absurd amount of money downtown, as we dined out almost every night,’ Williams said. ‘We’re really good people, and we want to do the right thing and abide by rules and regulations set forth.'”

“Debby Spiker, a resident on Meadow Wood Court, said she understands many property owners need to cater to short-term renters to help pay for their homes, but that choice infringes on her quality of life. ‘I’m hearing a lot of self interest and financial ‘woe is me,’ Spiker said. ‘It’s not my fault that you chose to buy a home that you can’t afford without renting it out to carry the cost.'”

“Spiker said nightly renters have brought ‘destruction’ into her neighborhood — as nightly renters are often loud, do not pick up trash and may cause other issues in neighborhoods traditionally home to full-time families and working residents. ‘I get you want to monetize your home, but it affects me personally,’ Spiker said.”

The New York Post on California. “There is really nothing Kate Beckinsale can’t do, including sell her longtime Los Angeles home after only weeks on the market. The Brentwood property, which was listed on Aug. 2 for $3.995 million, is already in contract after it found a buyer on Aug. 20, The Post has learned. The English-born actress has enjoyed a 15-year run in the four-bedroom, five-bathroom pad she purchased for $3.595 million in 2006.”

“But this also means that she won’t be leaving with that much of a profit, considering renovation projects over the years and broker fees.”

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51   Robert Sproul   2021 Oct 4, 10:15am  

MisdemeanorRebellionNoCoupForYou says
Don't you want large extended families to destroy the nuclear family in suburbia?

I think we are going to have to adapt and even then are going to be pretty quickly out done. The multi-generational Gringo households that I know are NOT everybody-is-working-multiple-paycheck houses.
52   Patrick   2021 Oct 28, 1:46am  

https://nitter.net/Not_Jim_Cramer/status/1453440421430919172#m


Not Jim Cramer
@Not_Jim_Cramer
13h
Why would margin debt and home prices have a 96% correlation?

Because they're both risk-on responses to Fed Policy (courtesy @hedgopia).



https://nitter.net/pic/media%2FFCunx1iUYAQiFWd.png


https://nitter.net/pic/media%2FFCuoHE0VkAEf1af.png
53   GNL   2021 Oct 28, 4:13am  

Patrick says
https://nitter.net/Not_Jim_Cramer/status/1453440421430919172#m


Not Jim Cramer
@Not_Jim_Cramer
13h
Why would margin debt and home prices have a 96% correlation?

Because they're both risk-on responses to Fed Policy (courtesy @hedgopia).



https://nitter.net/pic/media%2FFCunx1iUYAQiFWd.png


https://nitter.net/pic/media%2FFCuoHE0VkAEf1af.png

What does this data mean?
54   noobster   2021 Oct 28, 7:32am  

What exactly is fed MARGIN debt? Is it different than regular fed debt?
55   Patrick   2021 Oct 31, 9:58pm  

Right, but I think noobster was asking specifically how the Fed could have margin debt. Who would it borrow from?

The Fed literally creates money to lend to the government, so the idea that the Fed would borrow at all is odd.
56   porkchopXpress   2021 Oct 31, 10:12pm  

Lending Tree
58   just_passing_through   2021 Nov 7, 7:43pm  

porkchopexpress says
Lending Tree


I am literally 2 weeks away from getting my final payment from them. I quit making new loans 3 years ago. Too much work for too little gain. In particular once they started giving the best deals to banks.

My average is something like 9% though.
59   Eman   2021 Nov 7, 9:21pm  

GreaterNYCDude says
Short housing. Short banks. Then sit back, grab the popcorn and watch the movie.


Really? Is Michael Burry shorting the housing market this time? Nope, he’s been shorting TSLA and getting his ass kicked.

Home prices have been going up due to the lack of inventory coupled with super low interest rates and people have been making money from the stock market especially in the Bay Area. It’s the law of supply and demand.

It will be a slow bleed this time around. No crash
60   Eric Holder   2021 Nov 8, 12:45am  

Eman says
GreaterNYCDude says
Short housing. Short banks. Then sit back, grab the popcorn and watch the movie.


Really? Is Michael Burry shorting the housing market this time? Nope, he’s been shorting TSLA and getting his ass kicked.

Home prices have been going up due to the lack of inventory coupled with super low interest rates and people have been making money from the stock market especially in the Bay Area. It’s the law of supply and demand.

It will be a slow bleed this time around. No crash


And the fucking lenders really crawl up your ass this time to check whether you really-really capable of paying the fucking mortgage. I've just went through a refi - a refi! - which lowered my payments w/o cash-out or extending the length of the loan and they still put me through the ringer. I even had to write statements asserting that I have no financial interest in the houses I rented 10-15 years ago! It's a fucking madness.
61   zzyzzx   2021 Nov 8, 4:58am  

Eric Holder says
And the fucking lenders really crawl up your ass this time to check whether you really-really capable of paying the fucking mortgage. I've just went through a refi - a refi! - which lowered my payments w/o cash-out or extending the length of the loan and they still put me through the ringer. I even had to write statements asserting that I have no financial interest in the houses I rented 10-15 years ago! It's a fucking madness.


Yet still another reason to pay cash.
62   Eman   2022 Mar 29, 3:49pm  

zzyzzx says
Yet still another reason to pay cash.


Come to the Bay Area and try to pay cash. 🤪
63   GNL   2022 Mar 29, 3:50pm  

I am a real estate photographer in the DC area. Today, I just had my first conversation with an agent about signs of a "changing" market. She said appraisals are starting to come in low. Some first time buyers have had to come up with significant cash to make up for low appraisals. One of her first time buyers had to come up with an additional $63,000 or they would have 1) lost the house and 2) lost their earnest money. However much that was, I do not know...didn't ask. How many first time buyers out there do you think can come up with an additional $63,000? Not too many, I'd bet. More rare than a 3-legged mule.
64   Eman   2022 Mar 29, 3:52pm  

WineHorror1 says
I am a real estate photographer in the DC area. I just had my first conversation with an agent about signs of a "changing" market. She said appraisals are starting to come in low. Some first time buyers have had to come up with significant cash to make up for low appraisals. One of her first time buyers had to come up with an additional $63,000 or they would have 1) lost the house and 2) lost their earnest money. However much that was, I do not know...didn't ask.


Earnest money is like 3% of the contract price. Buyer waived the appraisal contingency. That’s why they cannot use it to renegotiate the price. Seller knew appraisal would likely not going to come in so they asked the buyer to waive it.
65   GNL   2022 Mar 29, 3:55pm  

Eman says
WineHorror1 says
I am a real estate photographer in the DC area. I just had my first conversation with an agent about signs of a "changing" market. She said appraisals are starting to come in low. Some first time buyers have had to come up with significant cash to make up for low appraisals. One of her first time buyers had to come up with an additional $63,000 or they would have 1) lost the house and 2) lost their earnest money. However much that was, I do not know...didn't ask.


Earnest money is like 3% of the contract price. Buyer waived the appraisal contingency. That’s why they cannot use it to renegotiate the price. Seller knew appraisal would likely not going to come in so they asked the buyer to waive it.

Ok, so not too super significant of a sign of a changing market? Seller played the game and won?

Edit: The agent did say that she couldn't understand why the appraisal came in lower since there were 2 other offers above the appraisal as well. Her take on it was that the banks are starting to tighten up.
66   Eman   2022 Mar 29, 4:02pm  

WineHorror1 says
Her take on it was that the banks are starting to tighten up.


From a real estate perspective, “market price” is a price agreed by both the buyer and seller, which means the contract price. I won’t get into why the appraisal didn’t come in at contract price.
67   HeadSet   2022 Mar 29, 5:28pm  

Eman says
I won’t get into why the appraisal didn’t come in at contract price.

Long ago, when I was buying real estate, I noticed that appraisals always came in for exactly asking price. If the appraisal was above asking price, it would anger the banker. If the appraisal was below asking price, it would anger the realtor. No appraiser would do an appraisal without knowing the asking price. Things apparently have changed.
68   GNL   2022 Mar 29, 6:28pm  

HeadSet says
Eman says
I won’t get into why the appraisal didn’t come in at contract price.

Long ago, when I was buying real estate, I noticed that appraisals always came in for exactly asking price. If the appraisal was above asking price, it would anger the banker. If the appraisal was below asking price, it would anger the realtor. No appraiser would do an appraisal without knowing the asking price. Things apparently have changed.

I heard on talk radio this morning that congress is trying to pass a bill that would put valuations in the hands of the government.
69   B.A.C.A.H.   2022 Mar 29, 6:50pm  

WineHorror1 says
a bill that would put valuations in the hands of the government.


Ahem, it's called the County Tax Assessor.
70   WookieMan   2022 Mar 29, 7:32pm  

HeadSet says
No appraiser would do an appraisal without knowing the asking price.

Then you have a shitty Realtor on your hands. Appraisals were the biggest bitch coming out of the housing crash as prices increased. Worst part of my job. Not joking when I say we lost close to 100 deals or more from shit appraisals. Hell, my current house I was close to suing the appraiser for a refi. No joke. It was malpractice on levels I've never seen on an appraisal. I'm in a small town, I literally had been inside all the comps. Appraisers are the worst when they fuck up something that is mathematically and visually obvious with comps. Reported the guy to the licensing board here in IL (IDFPR) and nothing came of it.
71   BayArea   2022 Mar 29, 7:39pm  

Appraisers are scum - the industry is full of fraud.
72   HeadSet   2022 Mar 29, 8:04pm  

WookieMan says
HeadSet says
No appraiser would do an appraisal without knowing the asking price.

Then you have a shitty Realtor on your hands.

That was true in both OK and VA and with or without a Realtor.
73   richwicks   2022 Mar 29, 8:07pm  

BayArea says
Appraisers are scum - the industry is full of fraud.


Not filled with fraud, is fraud.

The purpose of raising housing prices is a federal policy. It allows the old to spend with abandon, and impoverishes the young, and increases tax revenue of local municipalities. Eventually the young will be so destitute trying to just afford a condo, that they will welcome wealth redistribution and they will be calling on government intervention for it.

Home prices are now based entirely on land valuations which are totally artificial, it has nothing to do with the structure on the land. The old are parasites on the young. The federal government is very intentionally creating a generational conflict.
74   SunnyvaleCA   2022 Mar 29, 10:49pm  

HeadSet says
I noticed that appraisals always came in for exactly asking price.
Out here in crazy silicon valley, houses often sell for well above "asking" price since that price is set artificially low to create a bidding war. So, houses appraise for exactly the sale price, not the asking price. That's fortunate because, otherwise, buyer would have to make up the difference at closing. My shack was $720k asking and I paid $770k. My appraisal for the loan came in at precisely $770k, which is exactly what my real estate agent said would happen. In some ways, I guess if a house sells for some amount, then that should be the likely appraisal, since that's what the market will bear.
75   joshuatrio   2022 Mar 30, 5:08am  

Interesting to watch this play out. 30 year fixed is hovering around 5% now.

Demand looks like it dropping, but supply is so low that it's hard to tell.

Anecdotally, I'm seeing homes on acreage down here with some significant price cuts (ATL). Homes with lowered entry points seem to be selling normally though.
76   HeadSet   2022 Mar 30, 6:41am  

SunnyvaleCA says
HeadSet says
I noticed that appraisals always came in for exactly asking price.
Out here in crazy silicon valley, houses often sell for well above "asking" price since that price is set artificially low to create a bidding war. So, houses appraise for exactly the sale price, not the asking price. That's fortunate because, otherwise, buyer would have to make up the difference at closing. My shack was $720k asking and I paid $770k. My appraisal for the loan came in at precisely $770k, which is exactly what my real estate agent said would happen. In some ways, I guess if a house sells for some amount, then that should be the likely appraisal, since that's what the market will bear.

By "asking price" I meant the price on the accepted offer, not the listing price. So, we are saying the same thing.
77   zzyzzx   2022 Mar 30, 6:45am  

https://www.youtube.com/watch?v=4F2e92wAoE4&source=patrick.net

If the FED actually sells all their MBS securities, as they should, watch mortgage interest rates skyrocket. Now I know they won't be selling them all at once, but nobody wants to buy these unless they get get them at a good price. Actually even if they simply stopped buying MBS (assuming that they haven't already??) that would be a win since they can just just let the balance drop off over time.
78   Cash   2022 Mar 30, 7:50am  

zzyzzx says
Actually even if they simply stopped buying MBS (assuming that they haven't already??)
They did... Phased it out 40billion a month early in Mar. MBSs best recover and get above that trend line or several pts will be added to Mortgagee loans.



And the yield curve has inverted...
https://stockcharts.com/freecharts/yieldcurve.php
79   zzyzzx   2022 Mar 30, 9:32am  

Cash says
They did... Phased it out 40billion a month early in Mar.


That's weak. It should be zero.
80   zzyzzx   2022 Mar 30, 9:36am  

One more thing, some of those "cash buyers" really have a mortgage but are using a company to make it look like a cash offer.

https://www.npr.org/2021/12/06/1061896221/everyday-people-can-buy-a-house-with-cash-with-this-new-type-of-loan?source=patrick.net
So some companies have come up with this fix where they say they'll buy the house with cash and wrap up the loan part with you later.

Yet still another sign of a housing bubble, and yet another thing that we didn't have during the previous housing bubble.

Fake Cash Offers:
https://www.youtube.com/watch?v=V8AxqZZGAAE
82   SunnyvaleCA   2022 Mar 30, 12:11pm  

joshuatrio says
Demand looks like it dropping, but supply is so low that it's hard to tell.

With higher rates, supply might drop because people can't afford to move out of their old home, freeing up something for sale. If you're in a 30-year mortgage at 4% and sell to move somewhere else, you won't be able to afford a similar house at 5%. Or, even if the bank will give you the loan, paying that higher monthly payment (or having the payoff time extended back to 30 years) looks like a painful financial step backwards. Or, at the very least, since your current mortgage is better than any available mortgage, you feel content to stay with what you have.
83   porkchopXpress   2022 Mar 30, 2:19pm  

SunnyvaleCA says
With higher rates, supply might drop because people can't afford to move out of their old home, freeing up something for sale. If you're in a 30-year mortgage at 4% and sell to move somewhere else, you won't be able to afford a similar house at 5%.
True if people keep their salaries and jobs. If we enter a job-loss recession, watch out below.
84   richwicks   2022 Mar 30, 2:27pm  

joshuatrio says
Demand looks like it dropping, but supply is so low that it's hard to tell.


It's said there is a 10% non occupancy rate in Silicon Valley - homes that aren't occupied, purchased exclusively as an investment.

This is a ponzi scheme.

Chinese people buy apartments in China for investment purposes - but they basically have to pay the place off in like 3 YEARS. Here, it can be 20-30-50 years.
85   RC2006   2022 Mar 30, 2:34pm  

richwicks says
joshuatrio says
Demand looks like it dropping, but supply is so low that it's hard to tell.


It's said there is a 10% non occupancy rate in Silicon Valley - homes that aren't occupied, purchased exclusively as an investment.

This is a ponzi scheme.

Chinese people buy apartments in China for investment purposes - but they basically have to pay the place off in like 3 YEARS. Here, it can be 20-30-50 years.


Just offsoring money away from CCP.
86   Booger   2022 Mar 30, 3:11pm  

richwicks says
It's said there is a 10% non occupancy rate in Silicon Valley - homes that aren't occupied, purchased exclusively as an investment.


Sounds like an opportunity for squatters.
87   Eman   2022 Mar 30, 3:55pm  

zzyzzx says
So some companies have come up with this fix where they say they'll buy the house with cash and wrap up the loan part with you later.


They show they have the cash in the POF. They waive the financing contingency. As long as they close with CASH by the closing date, who cares if the cash is coming from a lender, or their bank account?
88   Booger   2022 Mar 30, 4:23pm  

Eman says
They show they have the cash in the POF. They waive the financing contingency. As long as they close with CASH by the closing date, who cares if the cash is coming from a lender, or their bank account?


From the sellers perspective, these fake cash loans should be fine. But they probably bloat the "cash buyer" stats that supposedly make the housing market look more sustainable than it really is. I'm also guessing that these fake cash loans people have very little or no equity.
89   B.A.C.A.H.   2022 Mar 30, 4:29pm  

Booger says
they probably bloat the "cash buyer" stats that supposedly make the housing market look more sustainable

Absolutely.
90   Eman   2022 Mar 30, 4:33pm  

Booger says
From the sellers perspective, these fake cash loans should be fine. But they probably bloat the "cash buyer" stats that supposedly make the housing market look more sustainable than it really is. I'm also guessing that these fake cash loans people have very little or no equity.


Unless they fake the POF (Proof of Funds), the equity is real. Buyer will bring the cash to close if they can’t get the loan within the specified time frame. There’s no reason to pay all cash. Then refinance to pull out the equity and pay 2 closing costs.

I operate in this space so I know. We offer $3M cash with no loan contingency. We show our POF. We have the right to obtain a loan within this time frame to close the deal. If for whatever reason we can’t obtain the loan, we’ll bring in the cash to close. Loan hiccup happens. Happened to us a couple times, but we have a portfolio lender who can close within a couple weeks if need be.

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