Housing market is too far gone.

monolith

Hey, Herbie! How's life? Taking forever.
OT Supporter
May 9, 2004
44,604
Southern California
I've not seen a single mosquito since I moved to Reno so far. As someone that grew up in the souf and seems to attract mosquitos like a magnet any time I'm outdoors, it's been a nice change.
Wonder if they show up in the summer tho.
It’s because you’re soooo sweet
 
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Mejnoon

Well-Known Member
May 6, 2000
39,489
Omaha, NE
if there is a correction coming to RE, it will go largely unnoticed but once it starts it'll be very apparent and very hard to stop.
tho i'm sure the fed won't do anything idiotic like stepping into the markets with QE and restarting the problem all over again.
The residential market is already cooling off which was inevitable in light of the 200-250 basis point bump in rates that we’ve seen over the last few months.

Demand has not wained though and it won’t anytime soon - we are still in the midst of a significant housing shortage and new deliveries are insufficient to turn that around quickly.

I made a post several pages back about cap rates plateauing on retail properties; same story with residential. Interest rates have changed the affordability equation but that doesn’t alleviate pent up demand.

This is the shitty part. Rates on commercial paper have only climbed 50-75 basis points in the same time residential mortgage rates climbed 200-250. This is just making home buyers less competitive relative to corporate/institutional buyers who are ready and willing to take up any slack in the market.
 

intro_vert13

∞/21M
OT Supporter
Feb 26, 2005
35,957
an offshore haven somewhere
The residential market is already cooling off which was inevitable in light of the 200-250 basis point bump in rates that we’ve seen over the last few months.

Demand has not wained though and it won’t anytime soon - we are still in the midst of a significant housing shortage and new deliveries are insufficient to turn that around quickly.

I made a post several pages back about cap rates plateauing on retail properties; same story with residential. Interest rates have changed the affordability equation but that doesn’t alleviate pent up demand.

This is the shitty part. Rates on commercial paper have only climbed 50-75 basis points in the same time residential mortgage rates climbed 200-250. This is just making home buyers less competitive relative to corporate/institutional buyers who are ready and willing to take up any slack in the market.
true, for residential there needs to be some de/disinflation as wages are being outpaced. but regardless tutes will certainly be there in their absence, i just wonder what the jump in their cost of capital, if any, will be given P/Es are plummeting as well
 
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May 8, 2001
39,761
Colorado
Yeah I was surprised when we had to get a survey for a 1.2 acre property in CO. It’s in a rural development that’s about 40-50yrs old, and probably 20% of the lots have some structure
Some of the older neighborhoods in CO have some strange property lines. Not sure if that was your case or not.
 

Muddy Waters

Pronouns: They/Them
OT Supporter
Dec 12, 2007
54,100
Southern California
Ironically, my BIL lives there and it’s completely void of anything worth mentioning. I was shocked to see it mentioned on OT.

Ironically, my BIL lives there and it’s completely void of anything worth mentioning. I was shocked to see it mentioned on OT.
Midlothian is the new hot city for oters to move to
 

DaninTexas

Well-Known Member
Aug 20, 2004
10,487
Dallas, Tx
I 100% believe that. I sold my small house in 2019 for $305k. Similar houses in that neighborhood are now selling for $525k. Salt Lake is crazy, but it sounds like Idaho (Boise in particular) is on another level.
Sold last year a house in Ft Worth. $290k. Was happy with it. It is currently on the market now for $428k. HAHAHA Fuck me
 

stevezissou

OT Supporter
Jul 15, 2009
44,163
US
Sold last year a house in Ft Worth. $290k. Was happy with it. It is currently on the market now for $428k. HAHAHA Fuck me
PEYMpH7.gif
 

saabguy

Saab-free since 2013. Mortgage guru
OT Supporter
Aug 11, 2003
26,107
Loserville. Population: 1
Thoughts on getting an arm?

Is there a high potential to get screwed by it? I'm not 100% sure how they work
They are fine if used properly.

The ARMs that helped tank the economy in 2008 were only fixed for a very short period of time, had massive adjustments, and had pre-payment penalties if you tried to get out of them too soon. People made it work by refinancing over and over again from one shit loan to the next, until the equity dried up and they couldn't keep getting bailed out.

The average amount of time people live in their home is 7 years. The average amount of time people keep their same mortgage is about 4-5 years. If ARM rates are lower, then why pay a premium to lock in your rate for a 30 year term when you will most likely not be there for the full 30 years?

An ARM is a 30-year loan where the interest rate is fixed for the first 3, 5, 7, or 10 years. After the fixed period, it has the ability to adjust up or down, to align with where the costs of borrowing money are. It's not an automatic "FUCK YOU" trigger and all of the sudden your rate goes from 4.5% to 12%. There are caps and limits to the adjustments. If you are moving to a place and know you only plan on being there for 3-4 years, then a 5-yr ARM might be a good option. If you want to take the lower rate now, and think within the next 5-7 years, rates will improve to where you can lock in, then an ARM might be a good option. For the last several years it has been cheaper to do a 30yr fixed, so hardly anyone has done ARMs. Now that the rates are rising, there is a gap between ARM and fixed where some people are considering it, if it makes sense for their situation.
 
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CopenKagan

Well-Known Member
Feb 27, 2003
91,243
Salt Lake City, Utah
They are fine if used properly.

The ARMs that helped tank the economy in 2008 were only fixed for a very short period of time, had massive adjustments, and had pre-payment penalties if you tried to get out of them too soon. People made it work by refinancing over and over again from one shit loan to the next, until the equity dried up and they couldn't keep getting bailed out.

The average amount of time people live in their home is 7 years. The average amount of time people keep their same mortgage is about 4-5 years. If ARM rates are lower, then why pay a premium to lock in your rate for a 30 year term when you will most likely not be there for the full 30 years?

An ARM is a 30-year loan where the interest rate is fixed for the first 3, 5, 7, or 10 years. After the fixed period, it has the ability to adjust up or down, to align with where the costs of borrowing money are. It's not an automatic "FUCK YOU" trigger and all of the sudden your rate goes from 4.5% to 12%. There are caps and limits to the adjustments. If you are moving to a place and know you only plan on being there for 3-4 years, then a 5-yr ARM might be a good option. If you want to take the lower rate now, and think within the next 5-7 years, rates will improve to where you can lock in, then an ARM might be a good option. For the last several years it has been cheaper to do a 30yr fixed, so hardly anyone has done ARMs. Now that the rates are rising, there is a gap between ARM and fixed where some people are considering it, if it makes sense for their situation.
Quit shitting up this thread with well reasoned responses.
 

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