Buying A House: C or D?

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.

Out of curiosity just checked. For $1200/mo more than my current total cost, I could rent a shittier, smaller house in a worse location in my town.

owning a house really means something different depending on where you are living and who lives with you imo

OTM

Somebody on npr just said that divorce is down because ppl can't afford to move

Ugh

tbf, I think they meant, "If you are living in an upper-middle-class home and have a mortgage at 3%, it discourages you from taking out a new mortgage to buy YET ANOTHER upper-middle-class home at 6%."

tl;dr. They are talking mostly about rich people problems. No one knows what - gasp - RENTERS do when their marriages deteriorate. That is beyond our purview to contemplate.

NPR fucking sucks -- news at 11

would it not also....apply to renters

Budo you may be right, but I am not sure a better option arises in its absence (vs. a worse option).

Like, sure, like most of us I want better options than NPR, the Washington Post, the New York Times, and for that matter the Democratic Party.

Unlike most of us, I am not sure that the institutions that would/could rush in to fill the resultant vacuum would be better.

owning a house really means something different depending on where you are living and who lives with you imo

― mh, Monday, June 26, 2023 2:37 PM (five hours ago) bookmarkflaglink

There's definitely much more incentive to own one in that I have kids and want them to grow up in a place and not multiple places. I would consider renting again once they move out permanently.

Not convinced that inventories are low simply because selling would mean a higher interest rate mortgage. In Australia, inventories are low too, which is holding up prices. But we don't have mortgages with an interest rate fixed for the duration. Like the UK, most homeowners are on a variable rate mortgage or on 2 or 3 year fixed rate mortgages. But still we have the low inventory/prices holding up dynamic, so something else is going on.

well yeah it's never just one factor is it? where i live the mortgage interest rates plus lack of inventory are crippling the market, and there's no quick solution to the inventory problem.