patrick.net

Mortgage rates inch closer to 7%, remain at 20-year high.

Mortgage rates inched closer to 7% this week, remaining at their highest point since April 2002 and driving more buyers and sellers from the market.

The average rate on the 30-year fixed mortgage edged up to 6.94% from 6.92% last week, according to Freddie Mac. Rates have increased more than a full point since the start of September and are now more than double where they were at the beginning of the year.

The rapid ascent, driven by the Federal Reserve’s actions to rein in runaway inflation, has smothered buyer demand, while homeowners hunker down, unwilling to give up their current ultra-low rate.

https://finance.yahoo.com/news/mortgage-rates-high-140023047.html

https://www.dailymail.co.uk/news/article-11334965/US-sees-RECORD-drop-house-sales-purchases-plummet-23-amid-skyrocketing-mortgage-rates.html

US sees RECORD drop in house sales as purchases plummet 23% and listings plunge 22% amid skyrocketing mortgage rates and crippling inflation

https://www.reddit.com/r/RealEstate/comments/y8khcj/question_regarding_arm_rates/

I bought a condo 4 years back with 5 yrs arm option to get good rates. Now, given ARM will expire in Dec 2023 for me and rates are through roof currently. Anything I could do in meanwhile? Secondly, is there a cap to how much APR will be Hiked by mortgage company ? Current rate for my 5 yr arm is 2.25%

HeadSet says

A "flat fee" without a commission to the buyer's agent means no agents will bring anyone to you house to show.

Flat Fee to list. Same commission to buyer's agent. Yes, they brought people to show.

HeadSet says

Notice that the typical "flat fee" listing is something like $2500 to get listed, then 3% to the selling agent.

$450 to list and 3% to buyers agent.

zzyzzx says

https://www.reddit.com/r/REBubble/comments/y7j284/8_months_ago_sellers_agent_called_my_offer_asking/

8 months ago, seller’s agent called my offer (asking price) “insultingly low”. This morning, same agent asked mine if I’m still interested.

And they’ve dropped their asking price by $15k since then.

I can put 30% down, maybe more, and I don’t have FOMO. I can easily afford the mortgage even at the higher rates. I’m looking for a place to call home for the next 20-25 years. Right now I’m renting month to month and I’m on great terms with my landlord as I’ve been here for years and he knows I’m looking to buy so I’m in no hurry.

This seller’s agent is about to see what “insultingly low” actually looks like.

Tell them you are considering amazing deals from 30 other sellers so you ...

Got an update on this one:
https://www.reddit.com/r/REBubble/comments/y8i0g3/update_8_months_ago_sellers_agent_called_my_offer/

My offer was something along the lines of this post where it was adjusted to account for the current rates:
I was offering $400k at 3% rates because my mortgage would be $250k and my payment would be $1100.
Now I can only offer $325k because my payment on a $175k loan at 7% is $1150.

Anyway, the seller's agent was livid and flipped out on my agent. She called my agent unprofessional and told her my offer was "more insulting than the original one".

Well my agent also found out through the grapevine the seller and his agent are 1) dating and 2) the seller is in the midst of a very messy divorce, his wife having left him since he cheated on her. With his agent, whom also represented him when he bought his Airbnb properties. Oh and he also recently lost his remote job in tech at the beginning of this year as well.

My agent laughed and took it in stride and she's pretty chill. We're walking away from this completely, but this guy is in quite the sticky situation.

Funny thing is after I told my landlord the deal isn't going to happen, he asked if I'd be interested in making an offer in the house I'm currently renting from him. He and his wife are retired, pretty wealthy, and super chill people and they don't need the money (hence why he's never raised my rent in years). I actually do really like the house I'm renting from him and he told me to sleep on it since he wasn't going to sell until next year (they want to move out of state), but if I was interested we could make something work out.

https://finance.yahoo.com/news/housing-existing-home-sales-drop-140004730.html

Existing home sales drop for 8th straight month in September

cisTits says

Housing
Experts
Of
PatNet

I would say at least 51% of housing market is driven by affordability such as housing cost is no more than 35% of monthly income.

The Fed is trying to take us back to the late 1990s as far as paradigm with respect to interest rates. That is why I see condition settling where the 30 year mortgage
rate fluctuates between 5.5% and 6.5% in 2023.

.

https://www.reddit.com/r/RealEstate/comments/y91khr/cleared_to_close_on_a_house_that_we_can_longer/

Cleared to close on a house that we can longer realistically make work

Oddly enough, it's not about the price, but the comments make it relevant.

zzyzzx says

Cleared to close on a house that we can longer realistically make work

Yet another reason why Hit-Men-R-Us is the #1 franchsie in the world.

https://www.reddit.com/r/RealEstate/comments/y96879/should_i_just_lose_my_earnest_money/

Should I just lose my earnest money?

So I put down 12k deposit for a new build house I signed the papers like 10 days ago. Now I’m seeing literally the exact same house being listed for 50k less. Do I try to negotiate or just tell them I’m Walking. At this point I think I would be better off losing 12k then overpaying by that much more for the same house.

Everybody get familiar with this term:
https://en.wikipedia.org/wiki/Strategic_default

Strategic default

A strategic default is the decision by a borrower to stop making payments (i.e., to default) on a debt, despite having the financial ability to make the payments.

This is particularly associated with residential and commercial mortgages, in which case it usually occurs after a substantial drop in the house's price such that the debt owed is (considerably) greater than the value of the property — the property has negative equity or is underwater — and is expected to remain so for the foreseeable future, such as following the bursting of a real estate bubble. Such borrowers are called walkaways. The process of strategically defaulting on a home mortgage has been colloquially called "jingle mail" — metaphorically, one mails the keys to the bank.

zzyzzx says

Strategic default

I remember reading about this in the last housing crisis. Folks seeing the same house across the street as theirs selling for substantially less that their underwater-bought-at-the-peak-mortgage would buy the cheaper home and walk away from the albatross around thier neck.

There was definitely a double standard about this strategy, where developers like Tishman Speyer were lauded for the smart business move, but small time homeowners vilified, at the time.

"Tishman Speyer Properties, a big and you would think sophisticated real estate outfit, is doing the stroll on a $4.4 billion mortgage. The company is turning over the keys to more than 11,000 apartments in New York City’s sprawling Peter Cooper Village and Stuyvesant Town apartment complex in lower Manhattan, which it bought in 2006 through a partnership that includes investment firm Blackrock."

https://business.time.com/2010/01/25/tishman-speyer-the-grand-walkaway/

zzyzzx says

A strategic default is the decision by a borrower to stop making payments (i.e., to default) on a debt, despite having the financial ability to make the payments.

You short sell it. Mailing in the keys is the dumbest thing you can do. It's generally only a 3-4 year ding for a short sale versus 7 with a foreclosure. Basically without private financing or a personal relationship with a small bank, you ain't buying any property for 7 years. Obviously if you have cash you can buy, but banks can throw a lien on any other property you own. Might be in 3rd position, but it prevents you from selling it in the future.

No one reads loan paperwork. And I'm sure terms have shifted toward the lender side to have the ability to lien other properties an owner has. With a short sale you get a release from all obligations of that loan. A foreclosure just means you didn't pay and don't have to pay but they can come after other assets if they want. Never suggest anyone strategic default via foreclosure and mailing in the keys. You only have one life and close to a decade of it is now fucked up.

Short sales was our bread and butter 2007-2012. Were a total pain in the ass, but the owner could get back into owning much quicker. Never just walk away.

WookieMan says

but banks can throw a lien on any other property you own

In a non-recourse mortgage state?

https://www.reddit.com/r/realtors/comments/y4snh3/how_is_opendoor_still_in_business/

How is Opendoor still in business?

Prices are likely to drop further, but not by as much as they did during the housing bust. From the 2006 peak to the 2012 trough, national home prices fell by 27%, according to S&P CoreLogic Case-Shiller Indices, which measures US home prices.

Wells Fargo’s economists estimate that the median price for an existing single family home to be $385,000 this year, up 7.8% from last year, but the growth will be a lot less than the 19% year-over-year increase seen in 2021.

The economists anticipate the median home price will fall to $364,000, a decline of 5.5% from this year. They predict prices will rebound and rise again in 2024, with the median price ticking up 3.3% to 376,000 by the end of 2024.

https://www.cnn.com/2022/10/22/homes/us-home-prices-falling/index.html

Austin, Texas was ranked as the number one city experiencing declines in home prices. The median home price in the city is $558,275, which is 10.3% lower than where it was in June. Since September 2021, home prices in Austin have increased 2.2%.

Phoenix, Arizona ranked second on the list.

Stockton, located in San Joaquin County in Northern California, was ranked as the 8th city to experience notable home price reductions. According to the website, the median home price in Stockton is $581,725, a 7.7% decrease from home prices in June.

https://ktla.com/news/california/california-home-prices-have-fallen-most-in-this-city-since-june-study/

In our area prices started rising again, we're maybe 5% off the peak now. Inventory is tightening again but that's normal for fall. It's a pretty normal market here right now, neither buyers nor sellers market.

I was in Austin in the early naughties. Housing prices were increasing at ridiculous rates. Finally I said "Fuck it!" and just continued to rent. Because I was in TX at the time, I didn't get to enjoy the full extent of the "cash-out" refi housing bust - TX does not allow cash-out refis.

If I'm lucky, 30-year fixed rate MTG will top 8% and persist for at least 2-3 years. That might be enough to bring prices down to where I can hold my nose and pony up cash.

stereotomy says

I was in Austin in the early naughties. Housing prices were increasing at ridiculous rates. Finally I said "Fuck it!" and just continued to rent. Because I was in TX at the time, I didn't get to enjoy the full extent of the "cash-out" refi housing bust - TX does not allow cash-out refis.

If I'm lucky, 30-year fixed rate MTG will top 8% and persist for at least 2-3 years. That might be enough to bring prices down to where I can hold my nose and pony up cash.

I know a few who sold into the craziness in Austin and relocated. Austin was definitely more overheated than any city in CA.

mell says

I know a few who sold into the craziness in Austin and relocated. Austin was definitely more overheated than any city in CA.

I used to go to Austin 3-4 times a year since Keller Williams RE was based out of there for their national training. Sat at 10 top wedding style tables with Gary Keller,
Jay Papasan, and Dave Jenks. It was interesting to say the least. They were businessmen and not real estate brokers. They have the game down of fleecing their brokers of their commissions. It was kind of funny that all these morons didn't realize what they were doing.

Tangent aside, Austin sucks. I don't like any major metro in Texas. San Antonio I haven't been to, but I've heard good things. I imagine I'd like rural TX, but fuck Austin. Houston is a shit pit. Haven't been to Dallas since I was a kid, but I'm pretty sure it sucks. I think I'd like some of the border towns. I know enough Spanish to get by and between BBQ and Mexican/Central American food I'd be in heaven.

Not that I'm moving out of state, but I'm down on popular states. Places like TN, TX, ID, MT, etc. Basically if a great job opportunity came up to move to them I'd probably decline. My state is fucked, but it's just not worth moving. My buddy has been in MT for 5-6 years now. He really has no friends. He's a super social dude too. You'll shoot the shit with people on the trail, fly fishing, etc. but it has a lonely vibe to it. Bozeman and Missoula specifically.

https://finance.yahoo.com/news/not-time-greedy-home-flippers-110000999.html

'Not the time to get greedy': Home flippers are now getting burned by the US housing downturn, slashing prices to cut losses — here are two big reasons why

https://thepricklypear.org/housing-bubble-woes-plunge-in-buyer-traffic-homebuilder-confidence-a-lot-faster-than-during-housing-bust-1/

Holy-moly mortgage rates of 7% slash demand for new houses due to super-inflated prices, but prices are now coming down.

Traffic of prospective buyers of new single-family houses plunged to the lowest since 2012, excluding the two lockdown months April and May, and is now approaching even the levels of those two lockdown months, according to data today from the National Association of Home Builders.

WookieMan says

Tangent aside, Austin sucks. I don't like any major metro in Texas. San Antonio I haven't been to, but I've heard good things. I imagine I'd like rural TX, but fuck Austin. Houston is a shit pit. Haven't been to Dallas since I was a kid, but I'm pretty sure it sucks. I think I'd like some of the border towns. I know enough Spanish to get by and between BBQ and Mexican/Central American food I'd be in heaven.

It has some nice hoods and summer party ropftop bar lanes, like the Domain, and some nice mansion on the hills, and a good yuppie scene, though too gay for me. I wouldn't say it sucks but it's def overpriced. Downtown is filthy like SF, and the rest is just urban sprawl, not that pretty.

Property tax increases basically turn any conventional loan into an ARM-like situation where homeowners are seeing a huge increase in their monthly payments.

https://www.reddit.com/r/RealEstate/comments/yb91se/bought_in_april_2022_hate_it_want_to_sell_how/

Bought in April 2022. Hate it. Want to sell. How fucked am I?

I live in a really rural area about 1.5 hours outside Chicago. Not a nice neighborhood but not bad. Typical smaller town vibes. Nothing to do. Kinda hickish.

I bought in April for 330k which was actually fair at that time. Comps at the time in the same neighborhood were selling at 335-340k. It’s a 1600 sqft ranch on about 1/4 acre in a typical suburb like cul de sac. My property taxes are killing me and already went up from $700ish/month to 800/month.

I also fucking hate this house. It just sucks. Problem is, comps for my house right now are selling for 300-305k. I owe 305k. A neighbor 2 houses down has basically the exact same copy of my house just styled a little different but size, yard, layout, all the same and listed for 295k this week.

So basically my home has lost over 10% of its value from when I bought but I want out. How fucked am I?

zzyzzx says

My property taxes are killing me and already went up from $700ish/month to 800/month.

Da Fuq? In a rural area?

I pay less than $1000/YEAR on a beachside apartment. And no income taxes at all.

WookieMan says

San Antonio I haven't been to, but I've heard good things

Nice but on the way to becoming Austin II. Will take a decade or so to be Austinized. Increasingly woke policies and dictatorship of the Homeless Drug Addicts.

https://www.reddit.com/r/RealEstate/comments/ybj6me/stressed_seller_looking_for_advice/

Stressed seller looking for advice

zzyzzx says

Stressed seller looking for advice

Isn't that called 'lowering your asking price' to obtain instant relief?

It's interesting in California watching the die hards, clinging to their fiat equities, try to command imaginary prices while stubbornly holding on to their swanning delusions of brilliance and wealth. The wailing and gnashing of teeth this winter will be legendary.

Real estate hoarders will be putting their stuff on the market, trying to capture an equity chair when the music stop. Recent buyers will be going into default and handing the keys back as they pay inflated taxes on negative valued properties that swallowed up their down payments. Happened before, will happen again.

zzyzzx says

I live in a really rural area about 1.5 hours outside Chicago. Not a nice neighborhood but not bad. Typical smaller town vibes. Nothing to do. Kinda hickish.

Nope. No way that person bought a house for $330k 90 minutes outside of Chicago. Yes there are big houses and acreage, but no, not a 1,600sf ranch for $340k. That's 250-280k all day. Even new construction. Once you're past 50 miles of Chicago prices plummet. North of Chicago into Wisconsin and South to Indiana are the only exceptions.

Where I'm at $350k gets you a 4/3.1 with a 3 car garage. Probably 3,200sf. Sure taxes are a cunt, but price wise it's not what this guy is talking about. He bought a hill billy McMansion if he paid $330k. That's on him.

We were close 6 years ago to buying 14 acres with a 4k sq ft. home with walkout basement on a pond. Gated. Tennis court. $650k list. I regret not doing it. That reddit dude is full of shit unless it's a legit ghetto rural area and overpaid. And that's 48 miles from Chicago, or 50-60 minutes.