Los Angeles housing mania is back. But without loose lending...bubble, or new reality? (sales, credit)

[Lovehound]

Originally Posted by jm1982

This is definitely people don't think about much. They think the 3% down makes the house 'affordable' but it really inflates the prices because it means more people can 'afford' homes.

People can purchase a $600,000 house with a downpayment that is less than the price of most new cars. At 3.5% on $600,000 would be $21,000.

I was surprised to hear recently that people can now but such a little amount down even on conventional loans.
Of course just like high prices this is good if you are selling because it means more people can buy your home and it will be on the market less time.

Just noting this post and a tip o' the hat to the other responses to my earlier post, and I agree with most of the comments in the intervening posts.

When you put it like that, hell yes the 3% down inflates the cost of the house to the buyer, and the PMI stuff too. PPL if you want more affordable houses put more money down.

What I want is a STABLE market. IMO that 3% is an instability inducing factor because those buyers do not have enough to lose if times get bad, and they just walk.

If it were in my power I'd get of all sub-10% loans except that I respect those who have served our country in the military and in any case they can't be a very big part of the market. I don't know if it's a requirement now, but if it's not I would make that a FIRST HOUSE ONLY deal for VA loans. Once a vet has bought their starter house they are in the same population as everybody else.

Again, I want a STABLE market. I want the norm to be 10% down (impound account, PMI if required) and 20% for smart buyers who can handle their own insurance and property tax payments.

THAT is at least contributory to not having another bubble. I think they already got rid of the mortgage bundle derivatives. (You'll recall that the derivatives were the trigger that detonated the burst of the bubble, when derivatives tanked.)

[jm1982]

Originally Posted by Des-Lab

Buy now or be priced out forever!

It's different this time.

Prices have nowhere to go but up up up!

It's always 'different this time' right?

[Lovehound]

Originally Posted by jm1982

It's always 'different this time' right?

I'll get back to you in a few years and give you an answer.

Really, and my crystal ball is just an ordinary glass ball full of ordinary smoke sitting on a plastic ring, but I think prices are in a long market upturn barring catastrophes such as war or a setback in the economy.

To put it your way is to say that we learned NOTHING from the 2007 bubble. In fact, somebody, were there other bubbles? If so, when?

[thelopez2]

Originally Posted by jm1982

You can only have one FHA loan at a time though.

That is also a misconception

[jm1982]

Originally Posted by thelopez2

That is also a misconception

You can have more than one FHA loan at a time ?

[thelopez2]

Originally Posted by Des-Lab

Prices have nowhere to go but up up up!

Interest has nowhere to go but up

[thelopez2]

Originally Posted by Lovehound

What I want is a STABLE market. IMO that 3% is an instability inducing factor because those buyers do not have enough to lose if times get bad, and they just walk.

What will happen when people walk?

[Lovehound]

Originally Posted by jm1982

You can have more than one FHA loan at a time ?

Is there an echo?

Originally Posted by thelopez2

Interest has nowhere to go but up

I think it is in everybody's interest including the Fed and the economy to limit the growth to modest increases, so as to cause any instability.

FWIW I'm practically decided to invest a large sum in an indexed annuity tied to the T-bill rates. It already pays way and above my money market and CDs, so as interest rates go up my annuity interest returns will go up too. In other words I'm putting my money where my mouth is.

[thelopez2]

Originally Posted by jm1982

You can have more than one FHA loan at a time ?

Yes there are exceptions.

Speaking of FHA 5% down on 1Mil 4 plex

[69Charger]

Interest can't go too high, the Fed has to be able to service the debt. People are reluctant to sell for less than they paid, so it takes a job loss recession or crisis to really smash homes. But historically the prices always come back up and exceed the previous boom prices.

Trump will repeal Dodd Frank or do some other thing to help juice prices and the economy. If prices fall some day, it will be from a peak that's 2 to 3 years from now.

Even if you bought a home today, with 3% down, and they went up 10 to 15% from today, you're still better off holding on to the home in a down cycle. If you put $20k down, and paid down $20k the next 3 years, and the fall is from 10% higher than what you paid, it would take a 15% fall to become underwater. And then what...pay a landlord? It would take a major natural disaster to render the area useless to justify walking away, IF you're able to pay on your loan. Otherwise just keep paying, after 15 to 30 years you're done, versus paying rent forever.