Smile homeowners! 5 months into the Pandemic and housing prices continue to rise!

bodyforlife · Aug 5, 2020

My wife and I were having quite a laugh yesterday. We knew we were going to move to Texas five years ago when we refinanced our home in the Bay Area. A good friend who's company own luxury condos all over the country and ownership of a couple of Four Seasons hotels told me to take an adjustable mortgage instead of a fixed rate (I tend to listen to successful people in the industry instead of blowhards on the internet). The rate was 2.875% at the time. It was due to adjust this year (it can adjust every 60 months). So we just got the letter on the adjustment and what happened? ROTFLMAO! IT WENT DOWN!!!! For the next 5 years, we will now pay 2.625% instead of 2.875%.

The other fun news is that home prices are actually increasing across the country. Historically low interest rates and very low housing supplies have kept prices climbing despite the pandemic. w-thumbs!^

https://money.com/home-price-forecasts/

Cue the Henny Pennys, LOL.

Willie99 · Aug 5, 2020

the housing market is crazy around here, especially for homes in the median price range

Don't think high end housing in CT has the same market

bodyforlife · Aug 5, 2020

Willie99 said:
the housing market is crazy around here, especially for homes in the median price range

Don't think high end housing in CT has the same market

The median home price in our neck of the woods in the Bay Area went from $1,620,000 to $1,735,000 (7% increase).

https://www.noradarealestate.com/blog/san-francisco-real-estate-market/

We certainly have more of a supply here in Texas, but my loan broker has us up a little over 1% (not a big deal to me as this is really our forever home so not looking to sell at all). This exact thing has happened in past Pandemics so the news shouldn't be all that surprising. Sales are down because not as many people are selling. Housing starts go down (January 1617....June 1186), keeping supply low. So people scream about sales numbers but seem to miss out on the pricing number. And of course, interest rates at historical lows.

https://fred.stlouisfed.org/series/HOUST

They'll clearly be pockets where these trend won't apply, but I think it's pretty cool to hear this news.

bodyforlife · Aug 5, 2020

And would you believe? I guess we'll see but I think people are stupid to think they'll ever get a 2010 again (that ship sailed and people that were laughing at homeowners missed the buying opportunity of a lifetime).

Willie99 · Aug 5, 2020

bodyforlife said:
The median home price in our neck of the woods in the Bay Area went from $1,620,000 to $1,735,000 (7% increase).

https://www.noradarealestate.com/blog/san-francisco-real-estate-market/

We certainly have more of a supply here in Texas, but my loan broker has us up a little over 1% (not a big deal to me as this is really our forever home so not looking to sell at all). This exact thing has happened in past Pandemics so the news shouldn't be all that surprising. Sales are down because not as many people are selling. Housing starts go down (January 1617....June 1186), keeping supply low. So people scream about sales numbers but seem to miss out on the pricing number. And of course, interest rates at historical lows.

https://fred.stlouisfed.org/series/HOUST

They'll clearly be pockets where these trend won't apply, but I think it's pretty cool to hear this news.

Greater SF has it's own unique market, nothing else quite like that little niche in the states

The average home price far exceeds what the average salary can afford, been that way for a while, can that phenomenon last forever? IDK, I'm not going to guess, obviously high tech jobs are driving this and there's no slow down in sight

Knightrofins · Aug 5, 2020

I have a few friends who sold their houses down here in the 4’s and 5’s and they received ABOVE asking price.

properties going up and interest rates going down. I remember this in the mid 2000’s.

(sorry to bring up politics) but I remember when a certain civilian was on the Stern show in 2003-4 and he mentioned how it was beneficial to someone in real estate when this occurs

bodyforlife · Aug 5, 2020

Knightrofins said:
I have a few friends who sold their houses down here in the 4’s and 5’s and they received ABOVE asking price.

properties going up and interest rates going down. I remember this in the mid 2000’s.

(sorry to bring up politics) but I remember when a certain civilian was on the Stern show in 2003-4 and he mentioned how it was beneficial to someone in real estate when this occurs

And those people that said that in 2003-4 are actually looking good right now if they did nothing but sit on their houses.

What people fail to realize is that the recession in 2008 was actually because of housing and that's why there was such an extreme hit to that sector.

I've been told since about 2015 that the market was going to crash (know a few people that held off on buying because of that prediction). And when we get into a recession and get a 20% drop on the market, how'd they do? They clearly would have been better off not waiting the 5-6 years as they will come out behind on that deal with the amount of appreciation we've had.

bodyforlife · Aug 5, 2020

Willie99 said:
Greater SF has it's own unique market, nothing else quite like that little niche in the states

The average home price far exceeds what the average salary can afford, been that way for a while, can that phenomenon last forever? IDK, I'm not going to guess, obviously high tech jobs are driving this and there's no slow down in sight

Keep in mind Willie, that median home sales price doesn't mean everyone is paying that for a mortgage. That's really the only reason why there still is a Middle Class in places like the Bay Area. Plenty of people in my old neck of the woods that paid significantly less and often times passing on the home to their kids. We got our house in 1994 for $280k. My dang neighbor had bought theirs in the 1960's for I believe he said ...$28k. Some people doing the same thing we're doing and renting it for now and getting cash flow. Yeah it sucks to be buying now, but for those who are content renting, the market price on rentals works out. I've heard with so many working at home, rent prices have gone down as people don't need to live close to work right now. I don't know about that because my neighborhood is as competitive as ever on rentals (most homes not staying on the market for more than a week).

MattyMatt · Aug 5, 2020

Two of my rentals just got rented out after being advertised for less than 4 days...

Im looking to close on another by end of month, and I’ve already got people begging to rent it...

Bozzie · Aug 5, 2020

I've been trying to buy a second home here on the coast and have been in two bidding wars in the past few months.
One of the two we backed out on after the inspection the other was a dirty deal between the agent and owner to bait us in to bidding war.
We pulled our offer on the second and the deal between the other party went through but with our bid being pulled the owners got fucked after the inspection.

It's a bit insane if you're trying to buy right now....I've have decided to wait till next year, I doubt the housing market will escape the deep damage to the economy down the line but it may just take little while to trickle down.

TomGshotput · Aug 5, 2020

bodyforlife said:
My wife and I were having quite a laugh yesterday. We knew we were going to move to Texas five years ago when we refinanced our home in the Bay Area. A good friend who's company own luxury condos all over the country and ownership of a couple of Four Seasons hotels told me to take an adjustable mortgage instead of a fixed rate (I tend to listen to successful people in the industry instead of blowhards on the internet). The rate was 2.875% at the time. It was due to adjust this year (it can adjust every 60 months). So we just got the letter on the adjustment and what happened? ROTFLMAO! IT WENT DOWN!!!! For the next 5 years, we will now pay 2.625% instead of 2.875%.

The other fun news is that home prices are actually increasing across the country. Historically low interest rates and very low housing supplies have kept prices climbing despite the pandemic. w-thumbs!^

https://money.com/home-price-forecasts/

Cue the Henny Pennys, LOL.

This is great. That article shows that homeowners are better off now than they were one year ago. And most people who are not homeowners are also better off. There are virtually no examples of people who are worse off.

Knightrofins · Aug 5, 2020

bodyforlife said:
And those people that said that in 2003-4 are actually looking good right now if they did nothing but sit on their houses.

What people fail to realize is that the recession in 2008 was actually because of housing and that's why there was such an extreme hit to that sector.

I've been told since about 2015 that the market was going to crash (know a few people that held off on buying because of that prediction). And when we get into a recession and get a 20% drop on the market, how'd they do? They clearly would have been better off not waiting the 5-6 years as they will come out behind on that deal with the amount of appreciation we've had.

We actually didnt want to buy in 2016 b/c of the upcoming election (didnt matter who won) and were scared to pull the trigger.

We waited a year as we saw that everything is going well. Only 5 houses in my development have the same exact model as mine with the same amenities. 1 of the houses are on the market right now and being listed for 20% higher than what i paid for mine (and i have a nicer back yard)

Dr.Love · Aug 5, 2020

Bozzie said:
It's a bit insane if you're trying to buy right now....I've have decided to wait till next year, I doubt the housing market will escape the deep damage to the economy down the line but it may just take little while to trickle down.

I know the historically low rates are helping drive this. But I wonder if all the uncertainty in the world is also helping drive this. Everyone scrambling to make that move they were thinking of, before they possibly lose their jobs. Figure if they are going to lose their jobs anyway, might as well qualify for that loan first. Hard to close on a mortgage with no job.

bodyforlife · Aug 5, 2020

Knightrofins said:
We actually didnt want to buy in 2016 b/c of the upcoming election (didnt matter who won) and were scared to pull the trigger.

We waited a year as we saw that everything is going well. Only 5 houses in my development have the same exact model as mine with the same amenities. 1 of the houses are on the market right now and being listed for 20% higher than what i paid for mine (and i have a nicer back yard)

Nice, congrats!

Bozzie · Aug 5, 2020

Dr. Love said:
I know the historically low rates are helping drive this. But I wonder if all the uncertainty in the world is also helping drive this. Everyone scrambling to make that move they were thinking of, before they possibly lose their jobs. Figure if they are going to lose their jobs anyway, might as well qualify for that loan first. Hard to close on a mortgage with no job.

Here it's people playing musical chairs with housing.. selling in Portland to land on the coast.
eventually the music will stop and if your not seated.. well then....it might not be a bad thing going forward in 2021.
I think value wise it'll be a better time to buy.
But who knows..the economy is mystifying by any normal measure.

bodyforlife · Aug 5, 2020

Bozzie said:
Here it's people playing musical chairs with housing.. selling in Portland to land on the coast.
eventually the music will stop and if your not seated.. well then....it might not be a bad thing going forward in 2021.
I think value wise it'll be a better time to buy.
But who knows..the economy is mystifying by any normal measure.

Might be. No one really knows. And as you said (and I'm also in agreement with you), crashes don't happen overnight. It took 2 1/2 years to hit the bottom in 2008. Add to that the forbearance plan in place and you can add another year to the process. Right now, I could literally only pay property tax and insurance for the next 12 months if I wanted and finally start having to pay the extra after that. A lot can happen over that period of time.

bigwang · Aug 5, 2020

Dr. Love said:
I know the historically low rates are helping drive this. But I wonder if all the uncertainty in the world is also helping drive this. Everyone scrambling to make that move they were thinking of, before they possibly lose their jobs. Figure if they are going to lose their jobs anyway, might as well qualify for that loan first. Hard to close on a mortgage with no job.

My neighbor operates a decent sized mortgage company and is non stop busy. Said a lot of people getting denied recently especially on cash out refis but those who can qualify are in great shape. Too many people probably read headlines and expect to just be handed these low rates without knowing to shop around and get credit and paperwork ready.

Commercial real estate is in for some rough times. Obviously some markets will be hit much harder than others.

bodyforlife · Aug 5, 2020

big wang said:
Commercial real estate is in for some rough times. Obviously some markets will be hit much harder than others.

This conversation is about residential

Dr.Love · Aug 5, 2020

Bozzie said:
Here it's people playing musical chairs with housing..

I think this is basically what's happening everywhere.

People thinking of taking the plunge as a first time homebuyer are finally pulling the trigger. Do it now with the low rates and uncertain future. Leaving apartments for houses.

People in the city moving to the suburbs.

People in the suburbs moving out of the larger metro areas to smaller towns.

People in blue states heading for the hills to red states. Etc etc et.

seldomseen · Aug 5, 2020

big wang said:
My neighbor operates a decent sized mortgage company and is non stop busy. Said a lot of people getting denied recently especially on cash out refis but those who can qualify are in great shape. Too many people probably read headlines and expect to just be handed these low rates without knowing to shop around and get credit and paperwork ready.

Commercial real estate is in for some rough times. Obviously some markets will be hit much harder than others.

All mortgage companies are insanely busy right now. What's crazy is FNMA and FHLMC are offering additional liquidity to lenders who lend to borrowers who are in forbearance. We're automatically denying borrowers who are in forbearance (or the process of applying for a forbearance) with the only exception being the account has been brought current and consecutive monthly payments are documented. I'm not seeing anyone who qualifies getting denied for a cash out but they've restricted the amount you can borrower against your home. Not 100% sure if thats an investor requirement or us being more conservative with all the uncertainty. Purchase and refi volume is staying through at least this time next year, at least in my opinion. After next year you might see things getting a little bumpy.

Smile homeowners! 5 months into the Pandemic and housing prices continue to rise!

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