Housing Prices Trending Higher (jumbo loan, home builders, transfer)

[expatCA]

Originally Posted by jamsifoes

Sounds like a bunch of sour grapes here who can't afford to buy now so instead you wish the price will come down. It's not going to come down much from here if it comes down at all. Inflation is going to hit in a few years, wage will rise and house prices will stay afloat. It's all going to be a wash.

The problem is they are not doing so to a degree that would make a difference for the vast majority.

[jamsifoes]

When inflation hits, everything is going to become more expensive including housing. This is when the fed increase interest rate to stop the price increase. They tend to increase the rate to halt the price increase but careful not to cause a deflation. There is no clear correlation between interest rate raise and house price decline.

In the 80s' high inflation environment, interest rate go up, but so do people's wages. Remember those twice a year wage ajustments?

My point is... the current high price is a result of having too much liquidity in the market. I fully expect inflation to hit. But if you think high interest is going to lower house prices, you may be in for a rude awakening.

[LuvSouthOC]

Originally Posted by jamsifoes

When inflation hits, everything is going to become more expensive including housing. This is when the fed increase interest rate to stop the price increase. They tend to increase the rate to halt the price increase but careful not to cause a deflation. There is no clear correlation between interest rate raise and house price decline.

In the 80s' high inflation environment, interest rate go up, but so do people's wages. Remember those twice a year wage ajustments?

My point is... the current high price is a result of having too much liquidity in the market. I fully expect inflation to hit. But if you think high interest is going to lower house prices, you may be in for a rude awakening.

I agree with this. The only distinction I can draw is that I believe there may be a drop in home prices when interest rates rise, it's just that it'll be less than most anticipate. People will be poorer across the board once that inflation really hits.

[thelopez2]

Inflation has hit, have you seen home, fuel, and food prices. They are shrinking package sizes to increase prices.

[Electrician4you]

Originally Posted by jamsifoes

Sounds like a bunch of sour grapes here who can't afford to buy now so instead you wish the price will come down. It's not going to come down much from here if it comes down at all. Inflation is going to hit in a few years, wage will rise and house prices will stay afloat. It's all going to be a wash.

Right now prices are dropping. We have no idea what is gonna happen in a few years. I'm not sour at all. The houses that I consider affordable need 100k rehabs and the real choices I you don't want a rehab is a high priced 1950s ranch that last saw a contractors hammer in the early 80s or a complete flip with all new jazz but in some cases shoddy workmanship. And all of the above are overpriced for what they are. I'm seeing 10% price drops in my area. If something comes along and it's Nair that great I'm not afraid to buy. I'm just not gonna overspend.

[sammy1224]

I have definitely seen a trend reversal since the start this thread. I've been receiving Redfin email notifications on a daily basis, and the vast majority of them are price drops. I've seen cases where drops were in excess of 10% from the original list price.

I don't claim to know what next year will bring, and I don't believe that anyone can predict with any level of certainty. I can only say that, as it stands today, I will not buy this market. The reason in not that I believe that OC housing is "overpriced" but, rather, I simply do not want to pay so much for a SFH. If the herd mentality holds true, I'm guessing that there are many other prospective buyers out there that feel the same.

Just my 2 cents.

- Sammy

[jamsifoes]

Originally Posted by Electrician4you

And all of the above are overpriced for what they are. I'm seeing 10% price drops in my area. If something comes along and it's Nair that great I'm not afraid to buy. I'm just not gonna overspend.

It's always good to have time on your side. When I purchased my first one, I was forced to buy. I was getting married at the time. If I had waited one more year, I would have paid 50k less.

This time around, we decided to trade up because our condo has appreciated and the appreciation plus our original equity gave us a good downpayment for our dream house. We sold and bought at the same time so market timing is a none issue. If we had overpaid for our new house, it's offset by someone overpaid to get our old house. It's a wash.

I look at the rent vs our mortgage payment. Even with the high prices now, our mortgage payment at 4.125% fixed is still cheaper than we would have paid renting a similar property. So this puts me at ease.

I don't see the price appreciate drastically in the near future. Maybe you are right, it can drop 20% next year. The price fluctuation is all on paper to me. I am living in the house, enjoying it with my family, seeing my kids play in the backyard. To me, you can't put a price on that. I will worry about the house price 30 years from now when I am downsizing.

[Electrician4you]

Originally Posted by jamsifoes

It's always good to have time on your side. When I purchased my first one, I was forced to buy. I was getting married at the time. If I had waited one more year, I would have paid 50k less.

Yeah you could of saved 50k but maybe wouldn't find the right house. I was looking in 10-11-12 and man the absolute crap that was available was astonishing. I mean just beat to absolute hell. One house I looked at was a complete tear out. You're talking 60k for a basic remodel at that point. And f I'm gonna live in it for 15-20 years m sure as hell not going to go with bargain basement work and materials.

Originally Posted by jamsifoes

This time around, we decided to trade up because our condo has appreciated and the appreciation plus our original equity gave us a good downpayment for our dream house. We sold and bought at the same time so market timing is a none issue. If we had overpaid for our new house, it's offset by someone overpaid to get our old house. It's a wash.

Yup. The problem is that there aren't many trade up sales. There just aren't. Very few first time home buyers. The house prices are right now in that trade up pricing but there is no trade up market. The houses that normally would be purchased by first time buyers got bought by investors and speculators big and small

Originally Posted by jamsifoes

I look at the rent vs our mortgage payment. Even with the high prices now, our mortgage payment at 4.125% fixed is still cheaper than we would have paid renting a similar property. So this puts me at ease.

That's good. Just make sure you set money aside for big repairs.

Originally Posted by jamsifoes

I don't see the price appreciate drastically in the near future. Maybe you are right, it can drop 20% next year. The price fluctuation is all on paper to me. I am living in the house, enjoying it with my family, seeing my kids play in the backyard. To me, you can't put a price on that. I will worry about the house price 30 years from now when I am downsizing.

No I'm in the same mindset. Prices will not reach 00s bubble prices (at I east not everywhere in the country like last time) . In some select areas yes they already are at or over but those are IMO really investor driven prices. These prices are not home grown by any means.
The 4-600k houses were moving. Anything past that pretty much slowed down. Maybe next year housing will pick up. But this year the market just IMO never got off the ground like early '13 did, which slowed as soon as PMI went lifetime of loan for a FHA.

[LuvSouthOC]

Originally Posted by jamsifoes

Sounds like a bunch of sour grapes here who can't afford to buy now so instead you wish the price will come down. It's not going to come down much from here if it comes down at all. Inflation is going to hit in a few years, wage will rise and house prices will stay afloat. It's all going to be a wash.

It will not be a wash. There are pressures keeping wages low. The rises won't keep up with price increases and people will be poorer still. Home prices rises might stop but with more immigrants coming, demand will continue to slowly rise. Once people realize that home prices were cheap until 2012, they will get frustrated with the market maintaining high prices. It won't be pretty.

[Electrician4you]

Originally Posted by jamsifoes

My point is... the current high price is a result of having too much liquidity in the market. I fully expect inflation to hit. But if you think high interest is going to lower house prices, you may be in for a rude awakening.

High interest rates will lower house prices, at some point affordability WILL come into play. A buyer can stretch but inky do much before they simply stop or eventually break. If you can swing 300k you may be able to stretch 350k. Maybe as far as 375k. But eventually the house price will be cine unfeasible. A paycheck can only stretch so far.
In order to make houses affordable back in the bubble days they made crazy loans. They can't do that right now ALTHOUGH I just had a flier rubber banded to my door knob and right there on the back it said stated income loans and some percentage rates. I still have the ad.

In order to keep the house prices where they are or go higher they will need to either drop the rate further or go back to relaxing loan standards. Or we have the market we have now where it's moving like molasses in January.

The Feds have pretty much ran out of ideas. QE simply has not worked as they wanted it to.