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Demand From First Time Home Buyers Hits 21st Century Low
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2014 Nov 3, 8:50pm 21,039 views 76 comments
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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.
_
2014 Nov 4, 2:50am
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
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.
_
2014 Nov 4, 3:40am
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...
Heraclitusstudent
2014 Nov 4, 4:07am
However, Irvine has the Chinese which keeps the values going
Chinese people are not counted as first time buyers?
_
2014 Nov 4, 4:10am
Chinese people are not counted as first time buyers?
Foreign Buyers ( Cash Buyers) That is the group they would be in.
FortWayne
2014 Nov 4, 7:30am
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.
Heraclitusstudent
2014 Nov 4, 7:34am
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.
hanera
2014 Nov 4, 8:55am
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.
_
2014 Nov 4, 9:25am
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
Heraclitusstudent
2014 Nov 4, 9:31am
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.
Do you think it's families being priced out by investors?
absolutely yes. california has gone feudal with no end in sight.
_
2014 Nov 5, 12:24am
Today's data, just no YoY traction even with lower comps to work from. This has even surprised me
FortWayne
2014 Nov 5, 12:41am
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.
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://www.biggerpockets.coms/79/topics/71349-free-than-merril-seminar---free
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.
_
2014 Nov 7, 3:20am
Tell that to the banks that are sitting on all the shadow inventory that they won't foreclose on...
We still have more than 3 millions homes in delinquency or in a state of foreclosure that is not on the market
Tell that to the banks that are sitting on all the shadow inventory that they won't foreclose on...
We still have more than 3 millions homes in delinquency or in a state of foreclosure that is not on the market
What will it take to get them to market?
_
2014 Nov 7, 4:02am
What will it take to get them to market?
Less than a million are in foreclosure process.
3 Million are in some stage of delinquency 30-90 days. Depending on which state you live in it can take 100 days -1,000 days to foreclosure on your home . Big gap between judicial and non judicial states
What will it take to get them to market?
3 Million are in some stage of delinquency 30-90 days. Depending on which state you live in it can take 100 days -1,000 days to foreclosure on your home . Big gap between judicial and non judicial states
The banks have to decide to move forward on them and stop sitting on them.
I have two houses in my neighborhood which have been sitting vacant for two years with no activity besides the default notice.
There's another one in pre-foreclosure where the owners haven't made a mortgage payment in 4 years (since 2010) and are still living in the house...
I would consider taking the credit hit if I did not have to pay a mortgage for 4 years...............
_
2014 Nov 7, 6:01am
I would consider taking the credit hit if I did not have to pay a mortgage for 4 years...............
Many Americans went for years without making a payment. Cost of shelter is usually number 1 on the monthly list of expenses so you can see why it benefited many Americans in financial stress to try this
_
2014 Nov 7, 6:15am
It was one of the easiest white collar crimes ever developed!
The banks didn't care really because they knew the home would be taken care off and they didn't have the legal authority to take repossesion of the home
So, a Lot of this delay was legal, the states that had a judicial process and making illegal for the banks to take control of the property.
New York, New Jersey and Florida were the highest turn time, 800-1,100 days to foreclosure on a home due to legal timelines
The charts are this are very telling between Judicial and Nonjudicial states
I would consider taking the credit hit if I did not have to pay a mortgage for 4 years...............
Many Americans went for years without making a payment. Cost of shelter is usually number 1 on the monthly list of expenses so you can see why it benefited many Americans in financial stress to try this
It was one of the easiest white collar crimes ever developed!
Apparently nothing illegal about it.
_
2014 Nov 7, 6:52am
But, in a bunch of cases here, the banks let the houses sit without filing any default notices for years.
Yes the NOD filling were all over the place. Robo signing drama put everything in a legal frenzy mess and then on top of that the loan modification was a disaster when it first started as well
Good info Logan thanks, That home ownership rate chart tells me the future but those other charts tell me were in another bubble....pop...if they can sell those shadow reo properties they may be out of the woods but not with bad loans...pop
_
2014 Nov 7, 10:40pm
e....pop...if they can sell those shadow reo properties they may be out of the woods
In my first article I ever wrote in 2010 I said it will take 8-9 years to get rid of this inventory due to the timeline created by the market place.
We probably have 4 years left to get that inventory down to a million.
The question is do we hit a recession before 2018
_
2014 Nov 8, 1:28am
Good chance we do.
3% Fed Funds Rate
4.7% on the 10 year is a recessionary level of the cost of debt
Unless wages pick up 2017 would be my target year for a recession
Longer this cycle goes the more income will need. I do believe 2015 we should see positive YoY Wage growth but only 2.4%
hanera
2014 Nov 10, 7:46am
The huge demand for sales associates, waiters/waitresses and similar jobs have driven wages up in Bay Area. Big box retailers, restaurants, supermarket and similar businesses have raised prices.
_
2014 Nov 11, 1:07am
Big box retailers, restaurants, supermarket and similar businesses have raised prices
We are missing a lot construction jobs and government jobs have hit a 1966 low
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