Softening in RE market?? (Dallas: buying a house, school, health)

[MinesotaUser1]

Housing Bubble. DFW in top 5 in the list.

https://www.nationalmortgagenews.com...rs-are-growing

5. Dallas-Fort Worth-Arlington, Texas
Denton County
Median sales price: $312,188 (+12% YoY)
Local average income: $50,102 (+1% YoY)
Actual income needed to afford a home: $100,255
Share of local average income needed to buy a home (3Q18): 56%
Share of local average income needed to buy a home (historic): 42.6%
Difference: 13.5 percentage points

[houstonview]

we will see what happens in the fall & spring

[houstonview]

Originally Posted by Katana49

At 6%? Very little change in pricing. 6% is a very good rate historically, and realtors and lenders would be advising their clients as such. At 8.5%? You might see a bit of a price pullback, but most likely what you'll see is a rise in 40 year mortgages vs 30 year. Such products didn't exist the last time that rates were in the 9-10% area, but there's a lot of banks offering them now.

So a home someone got at 3.5% for $300k A couple years ago, now worth $350k and rates going up to 6%, you think the market will continue to go up at that rate?

FYI it’s already been a pull back in a lot of areas you can get some deals a lot of homes aren’t selling near asking and have been sitting with price drops, yes they’re some still coming in market at all time high and sell in a week but that’s not the norm At all, that’s not a smart buyer.m making those purchases.

New home community I saw 2 months ago $357k no upgrade credit, I went back they’re offering same price but with a $25k upgrade credit now.

I’m recommending buyers to not pay full asking and try to find something that has been on the market for awhile and see if you can get a deal.

Sellers aren’t having it easy these days, no one has spoke up this thread though.

[serger]

Originally Posted by Katana49

At 6%? Very little change in pricing. 6% is a very good rate historically, and realtors and lenders would be advising their clients as such. At 8.5%? You might see a bit of a price pullback, but most likely what you'll see is a rise in 40 year mortgages vs 30 year. Such products didn't exist the last time that rates were in the 9-10% area, but there's a lot of banks offering them now.

For each 100k borrowed on a 30 year loan the monthly payments (principal and interest) would be approx.:



3.5% 6% 8.5%
$450 $600 $770


These are pretty sharp increases.



Personally, I would never even consider a 40 year term, but that's just me. Still, the 8.5% on a 40 year only drops to $730 or so.

[EDS_]

Originally Posted by serger

For each 100k borrowed on a 30 year loan the monthly payments (principal and interest) would be approx.:



3.5% 6% 8.5%
$450 $600 $770


These are pretty sharp increases.



Personally, I would never even consider a 40 year term, but that's just me. Still, the 8.5% on a 40 year only drops to $730 or so.

That's a good post.
There is so much worldwide demand for longer term US based debt instruments of all kinds - that puts something of a soft cap on all longish rates. It hard to imagine mortgage rates over 6% any time soon. Heck there's real pressure at 5%.

[Katana49]

Originally Posted by EDS_

That's a good post.
There is so much worldwide demand for longer term US based debt instruments of all kinds - that puts something of a soft cap on all longish rates. It hard to imagine mortgage rates over 6% any time soon. Heck there's real pressure at 5%.

Exactly.

Originally Posted by houstonview

So a home someone got at 3.5% for $300k A couple years ago, now worth $350k and rates going up to 6%, you think the market will continue to go up at that rate?

Yes, the overall market will continue to rise. What will happen is people will devote a larger percentage of their income to housing, longer term loans, or the opposite... if they had a 30yr mortgage, they'll get a 15 year to keep the rates as low as possible.

6% is not a threat to the housing market, and as EDS said, we're still got a LONG way to go before that is even relevant to a housing discussion.

[hbdwihdh378y9]

Originally Posted by MinesotaUser1

Housing Bubble. DFW in top 5 in the list.

https://www.nationalmortgagenews.com...rs-are-growing

Insanity. Stupidity. Mendacity.

Take your pick.

There is no bubble here. That's an absolute fact.

[wheelsup]

What I'm finding is the vast majority of homes I save on Zillow and then go back and look a month later have sold and become rentals. It seems Dallas is one of the cities hedge funds have taken aim at to acquire large amounts of rental property. Rents are very strong there which allows turnkey profit on these homes. As interest rates rise this will only get worse as housing costs will go up either in rent or if you want to purchase a home. Maybe it will help slow the wide scale buying by the hedge funds, who knows.

I noticed my neighborhood in Raleigh has also attracted the attention of these same hedge funds, most homes are snapped up and then immediately rented.

Over time however this will lead to decline in neighborhoods as renters do not take care of their homes nearly as well as owners.

Rising rates are normally indicative of a strong economy, as long as people continue moving to Dallas area and job growth remains strong you won't see any sort of wide scale reduction in prices.

[kyam11]

Originally Posted by hbdwihdh378y9

Insanity. Stupidity. Mendacity.

Take your pick.

There is no bubble here. That's an absolute fact.

Stop with the logic here.

DO people really not understand what a bubble is and what happened in SF?

In SF you had people in houses they could barely afford (think 50% of income going to a mortgage) and they could get those loans because they had liar loans (stated income meaning I am a teacher and I make $250,000 is what you said to the bank). They also put nothing down or if they put something down they got the money from a second mortgage. They also signed up for low teaser rates that would adjust upward drastically.

Here today in Dallas we have homes that are higher than they used to be however they almost all have:

1) fixed rates
2) 20%+ in equity
3) Are no where near 50% of income but in the 20-30% range max
4) Have loans attached where income had to be proven.


I would love one poster to tell me that they know someone with a house where they put nothing down, stated their income instead of having to prove it, and have an adjustable mortgage that will go up 2-3% when it adjusts in a few years.

I'll wait but I will be waiting until the end of time.

Do people also not understand the fed does not make mortgage rates. For the fed to get the fed rate to 6% it would take 1/2 point adjustments up for 4 years straight every quarter. That will never ever ever happen. Even if the fed rate was 6% mortgage rates would be higher than 6%. IMO a healthy mortgage rate is in the 5% range.

[jiping]

Originally Posted by kyam11

Stop with the logic here.

DO people really not understand what a bubble is and what happened in SF?

In SF you had people in houses they could barely afford (think 50% of income going to a mortgage) and they could get those loans because they had liar loans (stated income meaning I am a teacher and I make $250,000 is what you said to the bank). They also put nothing down or if they put something down they got the money from a second mortgage. They also signed up for low teaser rates that would adjust upward drastically.

Here today in Dallas we have homes that are higher than they used to be however they almost all have:

1) fixed rates
2) 20%+ in equity
3) Are no where near 50% of income but in the 20-30% range max
4) Have loans attached where income had to be proven.


I would love one poster to tell me that they know someone with a house where they put nothing down, stated their income instead of having to prove it, and have an adjustable mortgage that will go up 2-3% when it adjusts in a few years.

I'll wait but I will be waiting until the end of time.

Do people also not understand the fed does not make mortgage rates. For the fed to get the fed rate to 6% it would take 1/2 point adjustments up for 4 years straight every quarter. That will never ever ever happen. Even if the fed rate was 6% mortgage rates would be higher than 6%. IMO a healthy mortgage rate is in the 5% range.

I mostly agree, but the "liar loan" part is silly. At the end, people buy houses because they can afford.

A fresh software engineer in SF could make $120K, as well as $250K stock rsu fully vested in 4 years.
Change jobs every few years and that's how people under 30 can afford $1-2 million house.

San Francisco’s median house price
2013: $850,000, up 27.8 percent
2014: $971,000, up 14.23 percent
2015: $1.1 million, up 13.28 percent
2016: $1.31 million, up 19 percent
2017: $1.3 million, down 0.76 percent
2018 first half: $1.62 million