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I live in austin 15-20 minutes from downtown. my neighbors are overwhelmingly retired professional state government employees who bought their homes in the 80s and raised their kids 20 years ago. we are one of only three couples, the other two are transplants from california and DC, who moved to this street within the last 10 years. there isn't much turnover.
state employees with kids could not afford to buy a home in my neighborhood now. i find that amazing....and sad.
Austin is the state capital, thus likely to have more state employees than other areas of the state, no?
Austin metro has experienced tremendous growth over the past 20 years. It has been named top city for:
Brain Magnet
Jobs
Small Businesses
Quality of Life
More
Bunch of older moms sitting at the pool watching the young couples mortgaging themselves to the max to buy their dream home and we all just shook our heads and said -- this is not going to end well. That was 2003.....lol.
Needless to say -- 2008 many of those folks ended up being underwater, in trouble and moving back in with Mom and Dad.
As bad as it was, most homeowners rode it out.
The crash was not even across the US nor was recovery. Many highly desirable areas did not decline as much as others and recovered quicker than others. Swaths of the Midwest have not yet fully recovered.
2010+/- was perhaps a once in the lifetime buying opportunity for some, in some areas. Stay put a decade, sell in the midst of a global pandemic and reinvest profit into something else. That mortgage interest rates are almost half of what they were in 2010 and the monthly nut is lower than it was a decade ago.
What goes up must come down like a silly clown. Gonna be a hard fall not very far off.
Growing up, my parents ( depression era kids whose respective families lost their homes to foreclosure) were ownership adverse and we moved every year when the rent increased. They were fond of cute sayings like the one you offered.
Over the long haul, they were wrong, very, very wrong.
Having said this, renting makes more sense for some people.
The Mortgage Interest tax deduction is a big reason house prices are so high. It allows the whole population to spend more, so they do. Who ends up benefiting? Banks get more interest, and tax payers pay for it.
Given current rates, that deduction is not what it used to be.
Money is cheap, right now and mortgage interest rates are at historical lows.
( I may be the only licensed broker opposed to the mortgage interest rate deduction. Then again, I also am not fond of the child tax credit which was doubled by a Republican majority in 2017, effective 2018.)
Don’t assume most lenders hold the notes for mortgages or other loans they issue.
another sign of how broken our system is. you could own your house outright and still lose possession because they keep increasing property taxes.
Property taxes in one form or another are as old as the US. At certain point, the Federal Government imposed the tax.
In most places the majority of property taxes are imposed to fund schools, physical infrastructure, wages, benefits and pensions. Then there’s LE and Fire protection, local roads, parks/ recreation, libraries etc.
It matters not that an owner may not have children or children attend private school or use local services.
As I understand it, there are a few counties in Alabama that exempt seniors from the school assessment portion of property tax.
The Villages in Florida is the largest over 55 community in the US. There are no children in residence. Yet the property tax includes an assessment to fund a highly regarded charter school for the children of employees who don’t live within the community. It is an employee benefit.
School boards, library trustees, park district trustees, local governments etc are elected by the people.
Rarely do those running for these oftentimes unpaid positions run on platforms of cutting costs or when they do, they tend not to understand the finances.
It is always possible to move to areas that imposes lower property taxes, if that is the primary objective.
The secret about Idaho is that most of it is public land. The private land areas are pretty urban in many cases. Look at CDA, Boise, Twin, Idaho Falls. I cannot believe what has happened to Boise and Twin in the past 30 years.
There is a definite crash coming.
Once interest rates start rising you will see home prices decreasing at a rapid clip. Having lived through several real estate crashes it will be a surprise to folks when they cannot sell their house. It took me six years to sell my house in CDA in the early 1980's.
One item not discussed is second homes. In my county, 40% of the homes are second homes. I think I saw an article in the WSJ that 25% of Americans own second homes.
I own a second home 10 miles from my primary home and a somewhat "third home" in Arizona.
Everything is owned free and clear, so I will be comfortable watching it play out. But other folks might not be so lucky.
Will the Federal government "save" the banks once again and their mortgage losses or will they help the American people??
It will be interesting times.
25% of Americans owning second homes? I don’t think so. Something seems to have gotten lost in the translation.
The WSJ did report the purchases of secondary homes has soared during the pandemic with 5% of locked- in mortgages attributed to purchases of secondary homes. Record low interest rates have a lot to do with this.
I'm no expert in mortgaging (LOL) but this reeks of 2008 pending. No one is going to be able to afford anything with this massive inflation thats incoming.
Fed uses interest rates to manage inflation.
Imagine being locked into say a 2.78 % fixed rate mortgage for 30 years in the midst of “ massive inflation”.
I was among the handful of buyers who bought in the early 80’s and carried a 16.5% mortgage. It was still cheaper than renting a comparable property at the time. The principal/ interest payment was higher then, than it would be today, despite nearly 40 years of modest appreciation.
Does anybody else remember back in 2010, when people were saying homes would never again be a good investment because the low birth rate combined with Boomers dying off and Millenials being uninterested in owning. They said it would create a perfect demographic storm of empty homes to depress market prices for the next 20 years. I mean, I heard this over and over from many people.
LOL
"It is different this time". Famous last words.
give it time.
when the depression goes into full swing, we will have high unemployment and people will be forced to consolidate and multi-generational living will be common again (it's started already).
our days of purchasing the biggest and fanciest homes/goods that were already well beyond our means is coming to an end.
Yeah, and what is the crime rate and school level rating in those areas with very cheap housing prices? Median household income level?
There is such a place here in Utah (several, actually). Crime rate is nearly non-existent. School rating is above state average. Population is about 1500. Homes range from around 30K to 80K. Household income is significantly lower than the average. But then, how much money do you need to have coming in when your home was 30K, paid-off, and the cost of living is very low?
Quote:
Originally Posted by GraniteStater
I did some cursory research earlier this year that showed a huge majority of counties in the US have a very high likelihood of population declines to a great extent if the median house price is $100K or less. The correlation is quite strong.
I don't see that as a bad thing at all. That is certainly the case in the area I was talking about. Its population is steady at this point, but long-term trend is decrease. And that is exactly why I bought a building lot in that town. Property tax is around $13 a year.
Lenders are not combining no doc/ loc doc, zero down, cash back, teaser rate, interest only mortgage terms like was common place as the bubble peaked. Wall Street is not buying dark sub primes and creating private label securities the way it once did. Nearly anyone with a pulse qualified for a mortgage back then.
The independent credit rating agencies have a better understanding of mortgage and underlying loans than it did. They are not rating junk bonds as investment grade.
The number of home equity loans/ second mortgages is a fraction of what it once was.
What has changed includes interest rates and the aging of millennials and the tail end of Gen X. They previously delayed marriage, having children and buying real estate. To some extent, baby boomers are down sizing and/ or moving to places with milder winters and/ or following their adult children and/ or returning to the city after the kids leave the nest.
In some cases/ areas, owners simply refinance at better rates and stay put which means fewer homes for sale than the demand which gooses the market.
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