Home prices in San Antonio- the outlook (foreclosure, rental)

[Bo]

Stick to the topic, please. Minute details about information sources is something that should be discussed only in the Real Estate forum. You've both stated your opinion, now let it go. This will be the last word on this subject.

[irishmom2]

Banker, The changes in FHA coming on Oct. 1 are an increase from 3%-3.5% down payment and sellers and non-profits can no longer gift the buyer the down payment, including first time buyers. I agree with you that there should be a higher down payment-people need to be invested in a house. However, my concern is the next 6-9 months. If the first-time buyers and the people who are moving for a job but have had all of the equity eaten up in their homes, there will be a delay in purchasing a home. Maybe I'm missing something.

[banker]

Originally Posted by irishmom2

Banker, The changes in FHA coming on Oct. 1 are an increase from 3%-3.5% down payment and sellers and non-profits can no longer gift the buyer the down payment, including first time buyers. I agree with you that there should be a higher down payment-people need to be invested in a house. However, my concern is the next 6-9 months. If the first-time buyers and the people who are moving for a job but have had all of the equity eaten up in their homes, there will be a delay in purchasing a home. Maybe I'm missing something.

No doubt that the people who have to move for job/family reasons will be hurt here...but if they put a good down payment down on their house they are selling then they should be able to get out of it...even if they don't gain any appreciation..

Several things have killed our economy (banks and consumers working together to do all of them....)
- 100% or near 100% financing. This has allowed people to buy homes they really can't afford
- Home equity loans - people have lost the goal that our parents generation had - that being to own their homes free and clear by they time they retire...65 years old. Now you see folks in their 50's and 60's buying expensive homes based on their current (most likely peak earning years) income and puting them on 30 year mortgages...where is the logic in this? It is feeding our greed for a bigger house!!!
- 30 year mortgages. It used to be that people bought homes on 15 and 20 year mortgages but in the last 20-30 years we have seen nearly all homes being purchased on 30 year mortgages. On those long term amortizations it is very hard to gain equity since for the first five -10 years you are paying nearly all interest.

On my first home, my wife and I put 20% down and got a 25 year mortgage. When rates dropped in 2002 we refinanced to a 15 year mortgage because our goal was to maximize our equity...even if the property did not appreciate. When we sold we had significant equity which allowed us to put 40% down on our current house. My goal is to have this one paid off by the time our daughter goes to college...about 15 years from now. We are on a three house plan which means that our last home which we will buy when we retire....will be paid for in cash when I am 55-60 years old...about 20-25 years from now.

I am not a genius and don't make a ton of money. In fact, my wife stays home. We just live on less than we make (most people don't) and prioritize saving and being debt free. If more people had this mind set our country wouldn't be in the mess it is in. Saddly the banking industry has facilitated the feeding frenzy of too much debt to live lives that most people can't afford.

Our society needs to return to a point where people take pride in having no debt. Where having a home that is paid for is a status symbol...not having a big fancy home (and mortgage)! Same goes for vehicles - we have two paid for vehicles and love it!!! Granted one is 13 years old and the other four years old...but still. It is great not having car debt.

Would it make it harder for regular folks to buy houses if things changed to big down payment requirements? Yes. But house prices would drop making it more affordable. And another thing...if people bought houses that were more in line with their season of life...then they would find those mortgages easier to handle. I am always surprised to find out that people (newly married kids) have fancier houses than I do being in my mid 30's or my parents and my dad is a Dentist! Most people have just lost perspective.

[banker]

Originally Posted by irishmom2

Banker, The changes in FHA coming on Oct. 1 are an increase from 3%-3.5% down payment and sellers and non-profits can no longer gift the buyer the down payment, including first time buyers.

If raising the downpayment requirement from 3% to 3.5% makes it where a person/family can't afford the home...then it was too expensive to begin with!!! For example. A 3% down payment on a $200,000 home is only $6,000. Raising it to 3.5% is still just $7,000!!! If someone is buying a $200,000 home and they can't come up with such a paltry downpayment they shouldn't being buying that house!!!

That isn't a big enough change FHA!!!!

[hello13685]

Excellent post, banker. I think that everyone should plan and execute as you have.

[wCat]

Originally Posted by banker

If raising the downpayment requirement from 3% to 3.5% makes it where a person/family can't afford the home...then it was too expensive to begin with!!! For example. A 3% down payment on a $200,000 home is only $6,000. Raising it to 3.5% is still just $7,000!!! If someone is buying a $200,000 home and they can't come up with such a paltry downpayment they shouldn't being buying that house!!!

That isn't a big enough change FHA!!!!

Banker....please remember this is a very public forum. You make some good points, but everyone wants to "own" and feel good about. You forgot the "sub prime" mortgage mess in your synopsis. I feel for young couples starting out wanting to get ahead of the game and just got sucked into something they didn't quite understand.

And while you may have your life in perfect financial order, please remember $6000 or $7000 is not "paltry" to some people. I agree that living within one's means is critical, but please be respectful of everyone's economic circumstances. Some people are purchasing homes for less than $100k....and they are proud to do it. It's not "paltry" to them.....they have a dream just like you.

My dad always said success is not measured by how much you make, but how you spend it! That goes for any socio-economic group.

[banker]

Originally Posted by wCat

Banker....please remember this is a very public forum. You make some good points, but everyone wants to "own" and feel good about. You forgot the "sub prime" mortgage mess in your synopsis. I feel for young couples starting out wanting to get ahead of the game and just got sucked into something they didn't quite understand.

And while you may have your life in perfect financial order, please remember $6000 or $7000 is not "paltry" to some people. I agree that living within one's means is critical, but please be respectful of everyone's economic circumstances. Some people are purchasing homes for less than $100k....and they are proud to do it. It's not "paltry" to them.....they have a dream just like you.

My dad always said success is not measured by how much you make, but how you spend it! That goes for any socio-economic group.

I used the $200K example as just that...an example. The down payment issue applies to all socioeconomic groups. Weather you are buying an $80,000 house on the south side or a $1,000,000 home in the Dominion - you should be bringing more to the table than a paltry 3%! The subprime mess is even worse. But the reality is that our society has gotten away from actually valuing true home ownership...that is owning your home free and clear. And this applies to all income groups. Look at Ed McMahon...he is rich and broke because he used home equity to finance a life he couldn't afford and nearly lost his house. Any self respecting person should own their home free and clear when they are his age!!

And please understand...I do not have my world in perfect financial order. But I am working to be responsible...there is a difference.

[kevcrawford]

I agree with you for the most part, but not entirely. 100% financing isn't ALWAYS bad. Personally, I financed my home 100% because I was getting great returns in other investments and don't want to tie it all up in the house. Especially since I'm not planning on staying here for more than a few years. I've got extremely high end clients that could pay cash for a million dollar home, but leave it in their investments and finance a large portion of the house because their money is doing so well elsewhere. Those that got financed on bad notes because they couldn't afford it otherwise are the ones that probably shouldn't have bought. I financed my very first home 100% because I wasn't able to come up with a down payment that large, but would have burned up the same size house payment renting and it would have been very hard to save up the amount for a down payment in that rut. We financed what we KNEW we could easily afford in a house payment, sold it 2 years later making $20,000 off of it and rolled that into investments, which put us in a better financial state and it's continued to get better every year.

100% financing can be a very strong financial tool if you use it correctly. However, it can also be a very dangerous one if you are using it to get something you can't afford.

[banker]

Originally Posted by kevcrawford

I agree with you for the most part, but not entirely. 100% financing isn't ALWAYS bad. Personally, I financed my home 100% because I was getting great returns in other investments and don't want to tie it all up in the house. Especially since I'm not planning on staying here for more than a few years. I've got extremely high end clients that could pay cash for a million dollar home, but leave it in their investments and finance a large portion of the house because their money is doing so well elsewhere. Those that got financed on bad notes because they couldn't afford it otherwise are the ones that probably shouldn't have bought. I financed my very first home 100% because I wasn't able to come up with a down payment that large, but would have burned up the same size house payment renting and it would have been very hard to save up the amount for a down payment in that rut. We financed what we KNEW we could easily afford in a house payment, sold it 2 years later making $20,000 off of it and rolled that into investments, which put us in a better financial state and it's continued to get better every year.

100% financing can be a very strong financial tool if you use it correctly. However, it can also be a very dangerous one if you are using it to get something you can't afford.

Well said. Working in financial circles I hear this argument a lot. And I will be the first to admit that it is a sound argument. The problem is that this applies to a very limited % of the home buying population.

[scuba steve]

I think if someone is incapable of saving 3% towards buying a house they really shouldn't be in the market for one purely because of the repair factor. Things get old. The roof, water heater, a/c, whatever. And if someone can really get in trouble if they can't save up enough to take care of things that may come along.