Buying A House: C or D?

I think the problem the homebuyers face is that prices experienced such an extreme runup in the last two years that they could fall quite substantially and still be unaffordable. In fact they could fall all the way back to January 2020 levels and still be less affordable due to rate increases.

I also can't say I see evidence of any kind of major market correction in my area (NYC suburbs) but maybe evidence that things have peaked and are starting to roll off the craziness a little. It's also like prime season for people to be closing sales here (most people look for places in the Spring and close May-August to get their kids into schools) so it may take a little time to see any impact.

Price cuts driven by 2019-2021 buyers trying to cash out and setting greedy first prices.

It seems that Opendoor is offering $$ to sellers to cancel contracts.

If its just bc they think they missed on a valuations, then it’s smart to cut losses.

But the owner (an RE professional) says that the price was at/below market. So could be a more meaningful pullback. https://t.co/o6sIIuyp8X

— Bobby Fijan (@bobbyfijan) July 27, 2022

The housing boom ends, and nowhere in America boomed as much as Boise, Idaho

61% of listings in the metro area had a price cut in June, the highest rate out of 97 metro areas surveyed https://t.co/KRyYnqxyem

— Nick Timiraos (@NickTimiraos) July 27, 2022

What is OpenDoor? I assume they buy houses, like Zillow tried to do?

yeah ok guess that's what it is. It's a "WE PAY CASH $$$ 4 HOUSES" flyer on a national/corporate scale

yup, like zillow's ibuying business but that's all they do. they're allegedly slightly better at it than zillow were (their offers on my place are always lower than zillow's), but it's hard to do in a reversing market.

(1/6) U.S home prices fell 4.1% ($17,603) year over year in April. That’s the biggest dollar drop and the largest percentage decline since January 2012.

In pandemic boomtowns and pricey coastal markets, home prices are falling even further. #housingmarket

— Redfin (@Redfin) May 22, 2023

Hell yeah hook me up

you love to see it

Unfortunately interest rates aren't cooperating

Interest rates going up are the reason prices are going down. It's the monthly payment that determines yes/no on buying a house, unless you have a big wad of cash.

Prcey coastal markets soon to be nestling in the actual ocean could be one reason for the fall there

thing is that interest rates change, the price you paid for the house never does, so long term you could argue that lower price + higher rates might be better than if higher price + low rates were about the same monthly payment

what's wild is the *average rate* since 1971 is 7.75%

from the late 70s through early 80s they were just through the roof

Yeah but much lower prices

Yeah the monthly payments as a percentage of income was lower or the same despite the high rates

Prcey coastal markets soon to be nestling in the actual ocean could be one reason for the fall there

― purveyors of landfill zeuhl (Matt #2), Monday, May 22, 2023 7:02 PM (yesterday)

it's more along the lines of remote work means people can move to cheaper areas and have bigger houses for less money ... also crime + homelessness. at least as far as the west coast of the US is concerned

I've read that one reason housing prices haven't gone down despite the rise in interest rates is that the recession hasn't started yet - people aren't losing their jobs and being forced to sell their houses in firesales like in 2008. so, it's good because people with houses are keeping their jobs and not getting evicted by the banks, but it's bad because people who don't have houses yet all of a sudden are finding it much more expensive to buy

people also refinanced their already smaller mortgages at very low rates, making the threshold for firesale higher even in a recession.

In the US there is a multi-factor thing which is rather all intertwined. COVID created two years of very accelerated volume in house purchases. It would make sense that the market would be slower after those years. Then there is the fact that a very large number of home owners are locked in at extremely low rates which will also further reduce the willingness to sell / move.

So you have really low inventory which is basically holding prices up a lot, sometimes creating bidding wars even though interest rates have increased so much. The conforming mortgage level has basically increased 50% over the course of three years (from around $500k to $740k now).

It is a very unusual dynamic.

there's also stuff like aging baby boomers wanting to grow old at home, the increased ease in short-term rentals, and maybe(?) fewer traditional single family homes being built (there definitely wasn't as much construction during the height of covid), but people still want that? just spitballing

im not a fan to be honest. I mean it'll be nice getting some of the money back we put in, assuming I dont die first, but this being stuck in one place is the pits

Sometimes i daydream about a natural disaster that flattens our house when none of us are home and somehow all the animals are safe. oh the freedom.

https://www.homedepot.com/p/Getaway-Pad-540-sq-ft-1-Bed-and-Roof-Deck-Tiny-Home-Steel-Frame-Building-Kit-ADU-Cabin-Guest-house-GPRD540/320746688

So we've circled back to the Sears catalog.

Replacement cost seems reasonable. State Farm might even insure it.

Sometimes i daydream about a natural disaster that flattens our house when none of us are home and somehow all the animals are safe. oh the freedom.

Not gonna lie, I was thinking this in March when the tornado was going through town and we were in the bedroom closet. "Just leave the safe and my rum collection and take everything else, c'mon Mr. Tough Storm"

home insurance? what's that?

https://www.nytimes.com/2023/05/31/climate/climate-change-insurance-wildfires-california.html

im not a fan to be honest. I mean it'll be nice getting some of the money back we put in, assuming I dont die first, but this being stuck in one place is the pits

― But who are we doing it versus? (sunny successor), Friday, May 26, 2023 1:23 PM (six days ago) bookmarkflaglink

Sometimes i daydream about a natural disaster that flattens our house when none of us are home and somehow all the animals are safe. oh the freedom.

― But who are we doing it versus? (sunny successor), Friday, May 26, 2023 1:54 PM (six days ago) bookmarkflaglink

really hard to feel sympathetic tbh

state farm is our home insurer in CA. we're going to rent our place out (joining the landlord class), so i called our agent there to switch it to landlord insurance last month and they said "no, we're not doing any new policies insuring residential structures in CA, can't tell you why, but you'll see in a couple of weeks". haha.

what do they know?!

caek - you would probably want to contact CA Fair Plan - I mean, if you want to make sure you have insurance and the regular companies are denying you?

fire insurance is earthquake insurance now

(Though of course you won't even get a mortgage without fire insurance)

I've read that one reason housing prices haven't gone down despite the rise in interest rates is that the recession hasn't started yet - people aren't losing their jobs and being forced to sell their houses in firesales like in 2008. so, it's good because people with houses are keeping their jobs and not getting evicted by the banks, but it's bad because people who don't have houses yet all of a sudden are finding it much more expensive to buy

― 龜, Wednesday, May 24, 2023 1:34 PM (one week ago) bookmarkflaglink

So you have really low inventory which is basically holding prices up a lot, sometimes creating bidding wars even though interest rates have increased so much. The conforming mortgage level has basically increased 50% over the course of three years (from around $500k to $740k now).

It is a very unusual dynamic.

― horizontal, Thursday, May 25, 2023 1:52 PM (one week ago) bookmarkflaglink

right. there's this sense that prices should be down (via 7% mortgage rates), but apparent prices (well, zestimates) are being held up by a lack of homes on the market (i.e. comps). could change

What happens in Vegas doesn't always stay in Vegas. https://t.co/gZHRbsNxV9

— Aaron Layman (@dfwaaronlayman) June 5, 2023

it's probably Henderson and not actually Vegas but ...

If you bought a home anytime between 2010 and now, mortgage rates are meaningfully higher than whatever rate you have on your current home, so moving means paying more for the same amount of house (often hundreds or even thousands of dollars per month), even after you account for whatever equity you have accumulated from your own home's rising price. There are certain buying years in the past decade or so where your mortgage interest rate is likely half of current rates. So there's not a lot of incentive to sell your home as long as you can afford your payment. And there aren't a lot of current homeowners with ARMs or subprime mortgages that legit can't afford their homes. Hence low inventory.

well, yes. the point is inventory is rising.

Hmm. I’ll look into this tomorrow.

While active listings as tracked by https://t.co/tBRH4VE5ZA won’t be a perfect match with MLS data, it (Vegas) shouldn’t be off like this. https://t.co/96ADTWjv3O

— Lance Lambert (@NewsLambert) June 5, 2023

in one market, not nationally if you read the thread

(even putting aside the potential data issue, xp)

we all know inventory is low, and why it's low. you're missing the point.

but if you want to write a paragraph explaining why mortgage payments go up when mortgage rates go up then far be it from me to stand in your way.

new housing inventory due to suburban sprawl vs. less inventory in areas that won't/can't sprawl anymore ... is that the point?

kinda doubt caek would be a fan of the development model of Henderson, NV

I went to a house party in Henderson once

Lee Hazlewood spent his last years in Henderson.

im not a fan to be honest. I mean it'll be nice getting some of the money back we put in, assuming I dont die first, but this being stuck in one place is the pits

― But who are we doing it versus? (sunny successor), Friday, May 26, 2023 1:23 PM (six days ago) bookmarkflaglink

Sometimes i daydream about a natural disaster that flattens our house when none of us are home and somehow all the animals are safe. oh the freedom.

― But who are we doing it versus? (sunny successor), Friday, May 26, 2023 1:54 PM (six days ago) bookmarkflaglink

really hard to feel sympathetic tbh

― budo jeru, Thursday, June 1, 2023 10:46 AM (three weeks ago) bookmarkflaglink

Eh, your sympathy wasnt exactly my goal. if i still lived in the city/country i grew up in i would never even come close to being able to afford to buy a house. Doubtful on the renting without sharing too. However, i live in one of the poorest states in the US now and housing is ridiculously cheap. So, yeah, Id prefer renting for the ability to move about.

I'm now living in the model home version of my own condo, I had to put 98% of my stuff into storage but (hahaha) they let the vinyl stay because it looks cool. A giant wall of CDs however does not entice buyers I guess.

I love living in my house, but my current feeling is that I would have been fine not owning if there were stronger tenant protections and better/more rental houses available in my area.