Shit... I could refi to that AGAIN and still end up net positive. Even after the recent fees I paid. WTF is wrong with this world?
More real estate doom and gloom
- Thread starter Toshi
- Start date
I'm closing on yet another refi on the Denver house very soon. 1.75%, cash out to get back to just under conforming limit, $778 in points, $1,900 in other various and sundry loan fees then the prepaids.
:notbadobama:
Housing: Here are the U.S.'s most overvalued markets | Fortune
A new real estate survey from Florida Atlantic University and Florida International University looks at the nation’s most overvalued homes, with Boise City, Idaho, topping the list
fortune.com
I'm sure this time is different.
www.cnbc.com
Soaring home prices shattered another record in June, S&P Case-Shiller says
Home prices in the U.S. are now 41% higher than their last peak during the housing boom in 2006.
www.cnbc.com
"This time" is *always* different.I'm sure this time is different.
Soaring home prices shattered another record in June, S&P Case-Shiller says
Home prices in the U.S. are now 41% higher than their last peak during the housing boom in 2006.
"This time" is *always* different.
The cost of a $100,000 mortgage in 2006 was $225,654. The cost of a $141,000 mortgage today would be $211,822.
So houses are a lot more expensive if you're paying cash, possibly cheaper if you are borrowing.
That's all well and good, except where in contiguous united states is any house selling for 100K? Sure, borrowing is cheaper, but that doesn't mean much when a shitbox anywhere outside of Bumblefuck Nebrahoma has gone up in price exponentially over the last 8 years.
Those prices scale up per $100k multiple
Yea, but median household income from 2006 -> 2019 (latest year for which I could find data) was up 12%! I'm sure that more than offsets a 41% increase in house prices.I'm sure this time is different.
Soaring home prices shattered another record in June, S&P Case-Shiller says
Home prices in the U.S. are now 41% higher than their last peak during the housing boom in 2006.
100k is just a nice even number to play with. Move the decimal point to the right one digit of it makes you feel better. The resulting cost is ten times more then, because math.
Obviously things are very different by region, but price is not equal to cost. With significantly lower interest rates compared to 2006, buying power for the average schmuck in Meanviille USA has gone up about 45%.Yea, but median household income from 2006 -> 2019 (latest year for which I could find data) was up 12%! I'm sure that more than offsets a 41% increase in house prices.
Sure. But the point I was trying to make is, what does it matter how cheap borrowing is if the price of a home is simply out of reach?
But that's why Westy picked those numbers. Even at a nominal 41% increase the dollar cost is less due to rates (if he did his math right).
Because people don't buy houses based on the price. They buy based on the monthly payment. A $1000 monthly payment will get you a $240,000 mortgage today. In 2006 that would only get you about $160,000.
Now that down payment will be a little harder to come by about $4,000.
I am not doing any math, just using the Google mortgage calculator and using interest rates of 2.9% for today and 6.4% for 2006. 30 year fixed rate.
Which brings me back to, where exactly can you find a home for that cheap? Not in this town, and certainly not in Seattle. Hell, you probably would have had a hard time finding a 240k house in Seattle when I left the PNW 18 years ago.
The whole attitude of "I can afford the monthly payment!" is why there are 8 year car loans and a huge part of how we got into the housing collapse of 07/08. Price matters, or it should. Because these are exactly the sort of dummies who will stretch themselves so thin to make that 1000 a month, and not factor in escrow, insurance, wear and tear, etc, etc and then default in 6-7 years.
Edit: I'm not claiming the math is wrong, I'm saying it doesn't matter. Or it won't, soon enough.
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Again I am just using nice round numbers not saying there are $160,000 houses to be had in most markets. Multiply that mortgage payment and the mortgage amount by the same number and the math is the same. Or lets make it simpler. In 2006 a monthly mortgage payment of $X would get you a $160X house (less down payment) Today a mortgage payment of $X will get you a house of $240X.
And this is an apples to apples comparison, same 30 year fixed mortgage. Not a comparison with some new financial scam. The total cost of the house is simply the mortgage payment x 360 plus the down payment.
Unless you are paying cash, no one can afford the "price" of the house. You afford the "cost" of the house with a mortgage. There are a lot of forces that are driving up home prices, but lets be clear, lower interests rates are a significant force in that increase.
"Buy a house," they said. 
Would be interesting to see inflation along with that, I believe it was rather high starting in the late 70's.Over a longer period of time the relationship is not as clear. Perhaps the moral of this is that the horse was already far out of the barn since the 1980s.
Yes... yes it was...
Subscription business models for everything!!!
But it is not the same thing. Posted earlier was about how the average size home has almost doubled. There is also the HGTV effect where everyone NEEDs those marble countertops and travertine tile vs formica and linoleum. There has also been significant changes in zoning in a lot of areas requiring certain levels of
Salaries may not have gone up that much but household income has with a lot more dual income families than in the past.
But no one (developers, contractors) builds "normal" homes anymore. There's no incentive to do so. So effectively, 4x as much.
There are more dual income families these days because there is often no other way to make it work.
Around here, even when they do build more "normal" sized homes (~1700 sqft), they usually start at $400K.
There are however, plenty of developments that are $800K+.
Very true. Only a single couple (other than ourselves, for the time being) among my wife and my network isn't a dual income household.
Pretty typical really, the good doctors are always "Out of network" ..... and overpriced.I am not part of your network anymore?
August 18th, I received a check from the United States treasury for $1,400, "relief payment". Not needing relief, and having scratched my nose for too long, I just donated $1,400 to Habitat for Humanity.
No, that is exactly how it works. Multiply the input of the function by a value (mortgage amount) and the resulting output (total mortgage cost) is multiplied by that same value
The total cost of a 30 year mortgage for various loan amounts at 3.92%
$100->$170
$1,000->$1,702
$10,000->$17,021
$100,000->$170,213
$200,000->$340,427
$300,000->$510,640
Works the exact same way for the monthly payment.
r = Monthly Interest Rate (in Decimal Form) =
(Yearly Interest Rate/100) / 12
P = Principal Amount on the Loan
N = Total # of Months for the loan ( Years on the loan x 12)
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Yes for a lot of people. No for a lot of other people. There are people who need multiple jobs to pay the bills to put food on the table and roof over their heads. Then there are families that have multiple incomes so they can have nice big house in a nice neighborhood in a nice school district and have a 3 row German SUV. But I am sure if you asked those people they would claim that they NEED those things. That second group is a contributing factor to higher housing prices because they have the capacity to pay more and the number of those families has increased over the years.
These are the people who have been gentrifying areas all over the country for years, driving people out of their neighborhoods for decades. Only now, in some areas, those same people are getting gentrified out of places they feel entitled to be and suddenly now it is a problem.
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I’m definitely in a tough place as a single income household, even though I’ve got a white collar paycheck. I’ve hesitated in the housing market knowing that if I ever lost my job I’d be going from some income to no income. Two income households have a better safety net in that regard.
Oddly enough, my hesitation to buy a house 5 years ago might’ve been a smart move. I changed jobs 2.5 years ago, but if I had stayed with that company I’d be in trouble, as the axe is falling on that company now. Of course now I can’t get into neighborhoods I was considering 5 years ago since prices are up 50+%.
DINK households aren’t uncommon in these parts, and it certainly shapes the market.