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The house is the most valuable asset of the Boomer generation. And if there's one thing you can count on the Boomers for, it's that they'll see to themselves. Houses won't depreciate markedly until the boomers have cashed out. But - there are no young buyers? Enter Blackrock.
During the pandemic, the 1% gained about 4.8 trillion. That money has to go somewhere. And housing is a great investment - rent provides a steady income stream. People don't just up and leave on a whim. And ultimately, everybody needs some sort of roof over their head.
It wouldn't be hard to push back. Lower property taxes on your primary dwelling, boom. The attractiveness of a house as an investment just dropped. But that would lead to house prices falling, Boomers losing money, and they're not having that.
Not quite sure what you mean about lower property taxes on your primary house. Don't most states have some version of a homestead act that already does that? Plus, in some states like mine that have a lot of 2nd homes/vacation homes, the real estate tax rate is already higher than for primary residences. Maybe other states don't do that?
As to boomers, don't worry. We will start dying off in great numbers in the next few years. There will be a glut of homes to bring the prices down. Plus, our children will inherit most of the boomer homes... to live in or sell.
Is it the cost of construction or McMuffin Zoning responsible?
Quote:
Originally Posted by lovecrowds
In the Western USA $4,140 a mortgage now on the average $641,600 home and that is before utilities, property taxes, insurance, HOA's, updates, private mortgage insurance
'
In the Northeast USA $5,000 is now what the mortgage (principle+interest) would be on an average priced home.
I wonder what the property taxes are a $779,000 home in the Northeast, in addition to the $5,000 mortgage and interest alone
Car loans and home loans are more expensive with high interest rates, why is this a surprise. The move is to fight inflation and reduce demand, basic economics and math.
And who created the inflation the first place? And this same group is here to save us?
Who would have thought of having foxes guarding the henhouse is a good idea? The foxes did.
Mortgage rates have been far too low for far too long.
We should’ve been hovering around 7% for years.
But now we just had a tremendous increase in housing prices coupled with low interest rates.
Interest rates will not go down - but housing prices will.
I think we are getting ready to see people walking away from those huge mortgages they took out on houses that will eventually be worth about 1/2 of what they paid.
And they’ll rent from either the private landlord, or more and more likely the corporations who are buying (and building) single family homes and communities.
Those same corps will buy up those foreclosed houses at 1/2 of what they current owners bought them for - and rent them.
Lather, rinse, repeat.
You will own nothing
Well yes, the Fed kept rates at 0% for at least a year too long, which inflated the stock market and housing. I think 5%-6% mortgages over the last year would have prevented the massive boom caused by the fed.
I don't see many people walking away from homes purchased in the last 2 years.
That happened in 2008 because people put 0% down, had adjustable rate liar loans and NINJA loans. They had no skin in the game, no equity, and were seeing their adjustable rates leaping up to unaffordable levels. It was a no brainer for these people to walk away and rent in an era when rents were not soaring.
The single biggest difference between now and 2008 is that 80% of all home loan holders have a mortgage of 4% or less, with a significant amount with 3% or less. Most existing homeowners refinanced when rates were low. I think I heard that 30% of all homeowners with a mortgage had a rate of 3% or under.
For most homeowners with these low interest rates, they would pay more renting than servicing their low-rate mortgages.
Aslo over the past 2 years, most people buying homes paid adequate down payments, so they have skin in the game. Nobody with positive equity in their home would choose to walk away form it unless they simply have no other choice. Extreme financial
There are people who paid too much over what they could afford and may have to sell in a bad recession, but they should have added 20% to 30% in equity to their down payment, and should easily be able to sell at a price below market that still give them a profit. Why would they walk away? I don't see it.
House prices would have to crash maybe 40% to see any appreciable level of people walking away from their homes like 2008. Wages are up 10% this year alone due to inflation and the severe labor shortage. Homes are unaffordable but as long as inflation is high, wages are rising, and home prices are creeping downward -- wages and mortgage payments are going to eventually meet in the middle.
Housing is dead and prices are very slowly creeping down in some markets with 7% fixed mortgage rates, but I don't see a crash in prices or a lot of people walking away from a house with 3% and 4% mortgage rates while they are getting annual raises. They just won't sell with the lower house prices. They will sit tight. Inventory of home listings is going to go down.
2008 was a bunch of unqualified buyers getting 120% loan-to-value liar loans and NINJA loans with adjustable rate mortgages and no money down. 2008 was a bunch of qualified home owners using their homes as an ATM and sucking all of the equity out of them with refinance after refi, and never having more than 20% equity, which put them upsided down when the bubble popped. Meanwhile, builders built at a frantic pace all through the bubble and had massive excess inventory when the musical chairs stopped, which compounded with the huge foreclosure crisis when the unqualified buyers could no longer service their now-lofty mortgage rates after adjusting.
Over the past 2 years most buyers had good to great credit scores.
Most buyers put 3% to 20% down, mostly 20% down.
Few people have sucked cash-out equity from their homes and are not doing so today because it is not worth giving up a 3.5% fixed rate for a 7% fixed rate, just to have cash on hand.
Despite Covid, there are under a million homeowners at risk of foreclosure. After 2008, it was much larger, around 4 million. Lenders are much more likely to work with homeowners today to keep getting something from them rather than go through the money losing foreclosure process this time around.
There was a housing glut in 2008. We have a housing shortage today. Home builders never ramped up to the heady levels of 2002/2006. They learned their lesson and have built much smaller phases more gradually to keep from over-building. Many builders improved lots but did not begin building stick buildings until homes were pre-sold. Among the builders who tried to over-build "while the iron was hot", they were all severely restricted by supply chain issues that put a bottleneck on their receiving components, so they were essentially saved from themselves by the supply chain problems.
As far as I know, the banks have been more responsible this time around and have assumed less risk with prospective home buyers, so far at least. That could change the next 2 years if they get stupid again, but so far so good.
This is not 2008. Not even close. It is more like 2005 and it remains to be seen if we get the same kind of end-of-bubble stupidity. I can't see it. I like to think some of the parties have learned their lesson from 2008. We will see.
The house is the most valuable asset of the Boomer generation. And if there's one thing you can count on the Boomers for, it's that they'll see to themselves. Houses won't depreciate markedly until the boomers have cashed out. But - there are no young buyers?
The home equity the Boomers had in their homes doesn’t just vanish after they die but rather gets passed down to their heirs. We’re seeing the early stags of the greatest transfer of intergenerational wealth in human history.
It’s not great to have a society where your ability to buy a house is based on your parents buying a home in Glendale, California instead of Detroit, Michigan in 1966 but I’m not sure how you can correct for that either.
The home equity the Boomers had in their homes doesn’t just vanish after they die but rather gets passed down to their heirs. We’re seeing the early stags of the greatest transfer of intergenerational wealth in human history.
It’s not great to have a society where your ability to buy a house is based on your parents buying a home in Glendale, California instead of Detroit, Michigan in 1966 but I’m not sure how you can correct for that either.
No, it's not, but it's the only thing that will permit my children to continue living in the region where they grew up, which is out of reach even for relatively well-paid professionals. Starter homes? What starter homes? We don't have any.
Well yes, the Fed kept rates at 0% for at least a year too long, which inflated the stock market and housing. I think 5%-6% mortgages over the last year would have prevented the massive boom caused by the fed.
I don't see many people walking away from homes purchased in the last 2 years.
That happened in 2008 because people put 0% down, had adjustable rate liar loans and NINJA loans. They had no skin in the game, no equity, and were seeing their adjustable rates leaping up to unaffordable levels. It was a no brainer for these people to walk away and rent in an era when rents were not soaring.
The single biggest difference between now and 2008 is that 80% of all home loan holders have a mortgage of 4% or less, with a significant amount with 3% or less. Most existing homeowners refinanced when rates were low. I think I heard that 30% of all homeowners with a mortgage had a rate of 3% or under.
For most homeowners with these low interest rates, they would pay more renting than servicing their low-rate mortgages.
Aslo over the past 2 years, most people buying homes paid adequate down payments, so they have skin in the game. Nobody with positive equity in their home would choose to walk away form it unless they simply have no other choice. Extreme financial
There are people who paid too much over what they could afford and may have to sell in a bad recession, but they should have added 20% to 30% in equity to their down payment, and should easily be able to sell at a price below market that still give them a profit. Why would they walk away? I don't see it.
House prices would have to crash maybe 40% to see any appreciable level of people walking away from their homes like 2008. Wages are up 10% this year alone due to inflation and the severe labor shortage. Homes are unaffordable but as long as inflation is high, wages are rising, and home prices are creeping downward -- wages and mortgage payments are going to eventually meet in the middle.
Housing is dead and prices are very slowly creeping down in some markets with 7% fixed mortgage rates, but I don't see a crash in prices or a lot of people walking away from a house with 3% and 4% mortgage rates while they are getting annual raises. They just won't sell with the lower house prices. They will sit tight. Inventory of home listings is going to go down.
I actually do see housing crashing 40-50%+ across the board. Will there be pockets that don't? Yes.
Most areas in 2007-2008 didn't see the insane appreciation.
It's different this time.
As for if it will be more affordable for people to rent ... yes. And I think that will be by design.
Housing market will crash and people will be driven to rental home communities. And then big real estate investors will buy up those foreclosures.
We have a rental home community being built near me. 200+ homes. In Crown Point Indiana. It's bizarre.
I hate to be the tin foil hat person but like the WEF: "you will own nothing and be happy."
Car loans and home loans are more expensive with high interest rates, why is this a surprise. The move is to fight inflation and reduce demand, basic economics and math.
True and this level of inflation was absolutely not necessary but certainly was by design. There are more lying entitled thrives in Washington now than in the history of this country. Trillion upon trillions given to millionaires and billionaires. It’s sickening..
Question - if the dollar is backed by oil, then why isn’t the price of gas either static or near static? It doubling in price over six months because liberals are obsessed with pedophiles shouldn’t be possible if the dollar was actually backed by oil.
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Is it the cost of construction or McMuffin Zoning responsible?
