Is the Austin real estate estate market about to fall off a cliff? (Post: mortgage, month to)

[TerryDactyls]

As long as it stays hot until next September, I'm happy. My place will be on the market next summer when I retire and head for a colder climate.

[alwaysmiling]

Originally Posted by TerryDactyls

As long as it stays hot until next September, I'm happy. My place will be on the market next summer when I retire and head for a colder climate.

Oh yeah? Where you thinking?

[Kosmonaut]

Originally Posted by Komeht

Still predicting home sales will fall off a cliff soon huh?

Don't have to predict anymore because it's starting to happen.

Rate of new home sales drops in July as mortgage rates rise - The Washington Post

The rate at which new homes sold across the country plunged in July, falling 13.4 percent compared with the previous month, the biggest decline in more than three years,

The decline was deeper than analysts expected.

Yes, this must news to the *analysts* here on the board. It's just the beginning, a 1% rise has already caused a violent reaction to the housing market, because it represents a 20% rise in interest to a homebuyer. We're on our way up to 8%, and it's gonna hurt. Funny thing is, the cheaper housing in town is doing much better than the 300K+ market. People are shielding themselves from losses by going the affordable route. it's the smart play in times like these.

[centralaustinite]

Real estate is local. National trends aren't much use. Got any local stats?

Like this maybe:

Central Texas’ housing market hit a milestone in July, as sales of existing houses soared to their highest monthly level on record.
The Austin Board of Realtors said 3,135 homes were sold in July in the Austin area, making it the highest-performing month since the board began tracking sales in the 1960s. The previous monthly record was 2,993 sales in June 2006, the board said.


Read the whole story here:
Austin-area home sales hit all-time record in July | www.statesman.com

[austin-steve]

Originally Posted by Kosmonaut

Don't have to predict anymore because it's starting to happen.

Rate of new home sales drops in July as mortgage rates rise - The Washington Post

The rate at which new homes sold across the country plunged in July, falling 13.4 percent compared with the previous month, the biggest decline in more than three years,

The decline was deeper than analysts expected.

Yes, this must news to the *analysts* here on the board. It's just the beginning, a 1% rise has already caused a violent reaction to the housing market, because it represents a 20% rise in interest to a homebuyer. We're on our way up to 8%, and it's gonna hurt. Funny thing is, the cheaper housing in town is doing much better than the 300K+ market. People are shielding themselves from losses by going the affordable route. it's the smart play in times like these.

Define "violent reaction". Where, and by what measure?

What is the average historic mortgage interest rate and how does 4.5% compare?

What is your advice to those thinking of buying? Since, according to you, "we're on our way up to 8%, and it's gonna hurt."

Has "cheaper housing" ever done worse than more expensive housing? Why is it "funny" that it does?

Steve

[Novacek]

Originally Posted by Kosmonaut

We're on our way up to 8%, and it's gonna hurt.

No, we're not. Rates haven't been at 8 since 2000. When the fed rate was ~6% (currently ~0%). They're starting to back off QE, but they haven't even _started_ talking about raising the fed rate.

Originally Posted by Kosmonaut

Funny thing is, the cheaper housing in town is doing much better than the 300K+ market

Then why is the median price still going up?

[Trainwreck20]

I did see an interesting article on how various proposals to eliminate freddie mac/fannie mae would almost spell the end of 30 year mortgages. That was still some years out, though. Anyway, it would be a new dynamic, as interest rates would theoretically go up to cover the risk.

[Kosmonaut]

New home sales are more real time data, whereas existing home sales give sale data that is 2 months old, or before the mortgage rates rose. See below for explanation.

http://www.reuters.com/video/2013/08/23/we-are-seeing-the-impact-of-higher-rates?videoId=256454448&videoChannel=5

[Kosmonaut]

Originally Posted by Trainwreck20

I did see an interesting article on how various proposals to eliminate freddie mac/fannie mae would almost spell the end of 30 year mortgages. That was still some years out, though. Anyway, it would be a new dynamic, as interest rates would theoretically go up to cover the risk.

This would be the best thing to ever happen to the market. People pay monthly payments, and the terms don't matter to them. Take 200K worth of land and materials, and how do you turn them into a 400K house? Have the borrower pay over 30 years. Want to turn it into a 500K house? Have the borrower pay over 40 years. Want to turn it into a 600 or 700K house? Sky's the limit when you want to pay 2K/month - the terms are flexible. H***, let's make 100 year notes, then we can all live in *million-dollar* houses.

The current debtor class is assuming they will be pardoned by the next generation of debtor class when they take their homes off their hands. This is why no one wants to pay off houses, andno one wants 15 year notes. When buying a 15 year note, you can guarantee that everyone around you is of lower SE status, as they are leveraging 30 and 40 year notes to be in your neighborhood. Everyone has to play the debtor game and drag it out to the end, or they won't be able to live in the neighborhoods they *deserve* and their egos will implode.

[EzPeterson]

Originally Posted by Kosmonaut

This would be the best thing to ever happen to the market. People pay monthly payments, and the terms don't matter to them. Take 200K worth of land and materials, and how do you turn them into a 400K house? Have the borrower pay over 30 years. Want to turn it into a 500K house? Have the borrower pay over 40 years. Want to turn it into a 600 or 700K house? Sky's the limit when you want to pay 2K/month - the terms are flexible. H***, let's make 100 year notes, then we can all live in *million-dollar* houses.

The current debtor class is assuming they will be pardoned by the next generation of debtor class when they take their homes off their hands. This is why no one wants to pay off houses, andno one wants 15 year notes. When buying a 15 year note, you can guarantee that everyone around you is of lower SE status, as they are leveraging 30 and 40 year notes to be in your neighborhood. Everyone has to play the debtor game and drag it out to the end, or they won't be able to live in the neighborhoods they *deserve* and their egos will implode.

Wrong again. But what's new?

Hope they don't run out of tin foil at your nearest HEB.