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Old 05-18-2014, 01:15 PM
 
Location: in the miseries
3,302 posts, read 3,587,787 times
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Quote:
Originally Posted by TuborgP View Post
Perhaps it had to do with their research skills!

Foster City, California - Wikipedia, the free encyclopedia



Heck what do those folks know anyway, I prefer Forum posters. Slapping yourself can often hinder critical thinking.
Slapping yourself can knock you out!
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Old 05-18-2014, 01:17 PM
 
Location: Pac. NW
2,022 posts, read 1,529,068 times
Reputation: 3601
Quote:
Originally Posted by Electrician4you View Post
Does anyone wonder how many of these front cash buyers are leveraging on the back end? And how many cash buyers are not buying as a primary residence.
Banks can't be happy with this cash buyer arrangement. Banks don't make money on the sale. Banks make money on loaning and the interest of that loan. Banks don't like cash buyers. They don't make any money off cash buyers. Nice they payment is made the bank is completely cut out.
And since banks are stingy with loaning to Mr Normal Buyer who can't cash purchase and must borrow who in turn is getting cut out by the cash buyer, banks are basically cutting their throats while slicing their wrists.
I haven't looked lately but what are loan originations at today from last quarter or from last year. I still get updates for housing in my area. What I'm seeing is ( weekly) lots of new listings but also lots of price drops. But not many going pending as say early 2013 when they were selling like hot cakes. Yes prices are going up, underwater homeowners can now sell, but what good is it when you go above what buyers can afford.

This house I was interested in has been on the market for 12 weeks. Its in a nice area but its also 850,000 asking price. This isn't a McMansion. Its a house built in the 50s. It's been remodeled but not 850k worth. You would need a 150-170k income to buy this house. My income notwithstanding there is no way I would saddle myself with that much risk. But I'm sure someone will buy it.
The banks don't need anymore distressed properties on their books, that'd rather opt out of a lot of these deals than do 'em and have them default. That's why they're stingy, and god bless 'em for it.

Mr Normal Buyer will have to deal with the rental market until the mess is absorbed.

This is good for the market because it keeps people out who aren't financially solid enough to buy, and cash buyers are at least doing something to make the properties move.

My big question is how long will it take for the market to adjust to what the average wage earner can afford? Will they be locked into renting forever? What will household formation mean to the "Gen-Y" generation?

If the average person can't get financed to buy in this market, at these mortgage rates, when will they ever?
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Old 05-18-2014, 02:00 PM
 
29,838 posts, read 34,924,704 times
Reputation: 11760
Quote:
Originally Posted by Electrician4you View Post
Does anyone wonder how many of these front cash buyers are leveraging on the back end? And how many cash buyers are not buying as a primary residence.
Banks can't be happy with this cash buyer arrangement. Banks don't make money on the sale. Banks make money on loaning and the interest of that loan. Banks don't like cash buyers. They don't make any money off cash buyers. Nice they payment is made the bank is completely cut out.
And since banks are stingy with loaning to Mr Normal Buyer who can't cash purchase and must borrow who in turn is getting cut out by the cash buyer, banks are basically cutting their throats while slicing their wrists.
I haven't looked lately but what are loan originations at today from last quarter or from last year. I still get updates for housing in my area. What I'm seeing is ( weekly) lots of new listings but also lots of price drops. But not many going pending as say early 2013 when they were selling like hot cakes. Yes prices are going up, underwater homeowners can now sell, but what good is it when you go above what buyers can afford.

This house I was interested in has been on the market for 12 weeks. Its in a nice area but its also 850,000 asking price. This isn't a McMansion. Its a house built in the 50s. It's been remodeled but not 850k worth. You would need a 150-170k income to buy this house. My income notwithstanding there is no way I would saddle myself with that much risk. But I'm sure someone will buy it.
Unless the money prior to settlement was being held in a bank they play little if any role in a cash transaction. In fact because a cash buy is less in settlement fees it leaves more money for a more expensive home.
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Old 05-18-2014, 03:11 PM
 
Location: I live wherever I am.
1,935 posts, read 3,751,341 times
Reputation: 3235
Quote:
Originally Posted by Electrician4you View Post
Does anyone wonder how many of these front cash buyers are leveraging on the back end? And how many cash buyers are not buying as a primary residence.
Banks can't be happy with this cash buyer arrangement. Banks don't make money on the sale. Banks make money on loaning and the interest of that loan. Banks don't like cash buyers. They don't make any money off cash buyers. Nice they payment is made the bank is completely cut out.
And since banks are stingy with loaning to Mr Normal Buyer who can't cash purchase and must borrow who in turn is getting cut out by the cash buyer, banks are basically cutting their throats while slicing their wrists.
I haven't looked lately but what are loan originations at today from last quarter or from last year. I still get updates for housing in my area. What I'm seeing is ( weekly) lots of new listings but also lots of price drops. But not many going pending as say early 2013 when they were selling like hot cakes. Yes prices are going up, underwater homeowners can now sell, but what good is it when you go above what buyers can afford.

This house I was interested in has been on the market for 12 weeks. Its in a nice area but its also 850,000 asking price. This isn't a McMansion. Its a house built in the 50s. It's been remodeled but not 850k worth. You would need a 150-170k income to buy this house. My income notwithstanding there is no way I would saddle myself with that much risk. But I'm sure someone will buy it.
What banks like even less is having the properties on their books. With the properties on their books, and technically in their possession, they have to pay the property taxes, pay for security monitoring, pay for minimal upkeep, etc.

I think that the reason why banks hate the mortgage business is because the government is so heavily involved. Try to buy a car and you'll figure out how easily banks will loan money when they're not strangled by the government.
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Old 05-18-2014, 03:19 PM
 
Location: State of Being
35,885 posts, read 67,242,482 times
Reputation: 22391
Quote:
Originally Posted by tommy64 View Post
The banks don't need anymore distressed properties on their books, that'd rather opt out of a lot of these deals than do 'em and have them default. That's why they're stingy, and god bless 'em for it.

Mr Normal Buyer will have to deal with the rental market until the mess is absorbed.

This is good for the market because it keeps people out who aren't financially solid enough to buy, and cash buyers are at least doing something to make the properties move.

My big question is how long will it take for the market to adjust to what the average wage earner can afford? Will they be locked into renting forever? What will household formation mean to the "Gen-Y" generation?

If the average person can't get financed to buy in this market, at these mortgage rates, when will they ever?
What amount of a mortgage is it that you think the "average wage earner" can afford? If a person is paying $900-1000 in rent, then they can afford the payments on a $150-170K house (of course, variances on HO insurance and taxes, but that would be the approx. range @ 5% rate).

First time homebuyers can qualify for all sorts of special loans . . . and so don't necessarily need to have that $30-35K (20%) downpayment.

How did we do it? We bought starter houses, fixer uppers or something old and small.

How many folks do you know who are willing to purchase the same types of properties we all bought when we were starting out?
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Old 05-18-2014, 03:26 PM
 
Location: Pac. NW
2,022 posts, read 1,529,068 times
Reputation: 3601
Quote:
Originally Posted by anifani821 View Post
What amount of a mortgage is it that you think the "average wage earner" can afford? If a person is paying $900-1000 in rent, then they can afford the payments on a $150-170K house (of course, variances on HO insurance and taxes, but that would be the approx. range @ 5% rate).

First time homebuyers can qualify for all sorts of special loans . . . and so don't necessarily need to have that $30-35K (20%) downpayment.

How did we do it? We bought starter houses, fixer uppers or something old and small.

How many folks do you know who are willing to purchase the same types of properties we all bought when we were starting out?
Student loan debt and sub-par credit are what I'm seeing that's keeping people out.
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Old 05-18-2014, 03:34 PM
 
29,838 posts, read 34,924,704 times
Reputation: 11760
Quote:
Originally Posted by tommy64 View Post
Student loan debt and sub-par credit are what I'm seeing that's keeping people out.
How long will it be? For the individual it will probably depend on long it takes them to get their debt ratio down to lending standards. Advance career wise to where the can afford market prices and get their credit score up to standard. Will vary with the individual.
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Old 05-18-2014, 04:18 PM
 
Location: State of Being
35,885 posts, read 67,242,482 times
Reputation: 22391
Quote:
Originally Posted by tommy64 View Post
Student loan debt and sub-par credit are what I'm seeing that's keeping people out.
I feel sure that you are right - those have to be two of the big reasons.

The student loan trap was not a biggie for Boomers, as loans were not available for most of us.

You either had the GI Bill, a scholarship or your parents paid, or you had a job and went to school part time.

In addition, not everyone felt they were entitled to a college degree . . .

Today, it seems that folks for the most part think they are entitled to a lot -- everyone believes they are entitled to a middleclass lifestyle, even if they have done nothing to earn it.

Parents should know better than "allow" their children to become debtors in their 20s. Too often, ego is involved . . . students would do well to think about the debt before they fill out a college application.

There are few degrees that wouldn't allow a person to attend a junior/community college (low cost tuition!) for the first two years, and then transfer to a more "prestigious" university/college their junior year.

And how about doing what my generation did? Get a tech degree in two years or less, get a job, save one's money, and then go back to school - or take night classes. Yes, that won't work for medical school but most of the folks complaining about unaffordable housing or mortgage lending practices (and/or who are paying off student loans) are not med students, lol.

Seems to me that in many cases, the reasons people are not buying homes have less to do with availability of credit, inventory and downpayment $$$ than it does with poor planning and being unwilling to lower their expectations about where they call home.
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Old 05-18-2014, 06:27 PM
 
14,276 posts, read 24,038,486 times
Reputation: 20111
Quote:
Originally Posted by anifani821 View Post
I feel sure that you are right - those have to be two of the big reasons.

The student loan trap was not a biggie for Boomers, as loans were not available for most of us.
....

Seems to me that in many cases, the reasons people are not buying homes have less to do with availability of credit, inventory and downpayment $$$ than it does with poor planning and being unwilling to lower their expectations about where they call home.

Two observtions:

1) I was digging through my papers this morning as I finally located them as we are packing out. One page that I never saw was my mother's notes looking for student loans for my education. Twelve banks, one loan of $2,500. Loans for education were minimal ... that forced universities to manage their costs as opposed to building the luxury campuses that some offer.

2) My aunts and uncles raised their families of 5-7 in homes that ranged from 700-1200 sq feet. my siblings and cousins raise their families of 3 to 5 in homes of 2400-3500 sq feet.
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Old 05-18-2014, 08:16 PM
 
Location: SW Florida
9,780 posts, read 7,067,088 times
Reputation: 14355
Quote:
Originally Posted by Gandalara View Post
This was just reported on our local news within the past week. They followed a young couple (late 20's? early 30's?) with 2 young children. They followed a retired couple also.
The young couple kept losing bids - to retired people with cash.
(Note - they never reported how financially qualified the young couple was, just that they had a 5 to 10% downpayment)
The program proceeded to make it sound like it was the fault of the retired people.

I don't think it's right to try and establish blame on another buyer for the inability of a buyer(s) to make a successful bid, but I sure can see how difficult it would be for a young couple ( or any buyer dependent on a mortgage to finance a house purchase) to compete with cash buyers. And I'd understand the frustration of the young couple at being outbid for every property they were interested in. And I know that when a property goes up for sale, the cash buyers will be given first consideration, for no other reason that the red tape, hassles and delays of the mortgage approval process are circumvented by paying with cash.



In March, the LA Times reported in an article that . . .
"Chinese buyers bought 12% of all U.S. homes purchased by foreign citizens last year, up from 5% in 2007, according to the National Assn. of Realtors. More than half their home purchases were in California. And more than two-thirds of them paid cash, the trade group said."

But that 12% is a percent of what amount?
If foreign citizens bought 5% (example purposes, don't know actual percent) of the total houses in the US ... 12% of that 5% isn't really very much.
To take it further, 1/2 of that 12% of that 5% is California.
And 2/3 of that 1/2 of that 12% of that 5% was cash.
(I hope that makes sense to more than just me! )

The news media loves to make statistics = exaggerated alarm
That's for sure, and it may be that the foreign cash buyers reported in the media aren't in the massive numbers implied in news media. And I have no first hand knowledge of the number of Chinese nationals who pay cash for properties in the US. But I have been told by realtors in the Miami area that there have been a lot of apparently very wealthy folks from Latin and South America that have bought up the condos and luxury homes in that area. For cash.
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