Mortgage rates

[no1g8r]

Most of it's DTI issues on starter houses although rates will dampen the overall market.....The bigger problem as I see it is the geopolitical situation and the media hides it but who wants a new house when WW3 may be on our doorstep...until Ukraine is resolved the entire economy is going to suffer.

I wish I had the confidence that new home buyers are even remotely aware of the world political scene as you believe they are. Somehow I just can't picture the average 20 or 30-something thinking, "We really need to buy a house with this 2nd kid on the way, but it looks like Joe Biden is getting ready to start WW3, so I'll just renew the lease on our 2 BR apartment"

Maybe it's just me.

 

[FireFoley]

I wish I had the confidence that new home buyers are even remotely aware of the world political scene as you believe they are. Somehow I just can't picture the average 20 or 30-something thinking, "We really need to buy a house with this 2nd kid on the way, but it looks like Joe Biden is getting ready to start WW3, so I'll just renew the lease on our 2 BR apartment"

Maybe it's just me.

No you are correct. Most people any age do not know what day it is, much less anything else. If it is not happening in their silly little life, they do not care. But since this thread is mortgage rates, never fear, as the Gov't is on it. Every time house prices get out of reach for many or most, the geniuses have ideas. So now they are talking about being able to take your your mortgage with you if you sell and buy another house. I am sure the lenders will be on board with that. NOT. These idiots do everything they can to keep prices high when they are artificially high. When I sold my house in 2005 thinking we were going to have a housing crash, I went and obtained my realtor's license just so I could do my own deals if I saw any good values when the shyt hit the fan. So one day in one of the discussions, the question was asked who thought their was going to be a crash? I was the only one who raised my hand. It was then asked that if property taxes on these elevated values was lowered, would it help keep prices elevated? I was the only one who said it would not. The gist is that most people know nothing and when the gov't morons start meddling in the open market process the outcome is always the same.

 

[Concrete Helmet]

I wish I had the confidence that new home buyers are even remotely aware of the world political scene as you believe they are. Somehow I just can't picture the average 20 or 30-something thinking, "We really need to buy a house with this 2nd kid on the way, but it looks like Joe Biden is getting ready to start WW3, so I'll just renew the lease on our 2 BR apartment"

Maybe it's just me.

Most of those buyers are no longer qualified due to rate hikes.....long gone are the days of easy qualifying.....hell I had to give my lender whom I already bank with and have a first mortgage with on 2 properties everything but my 3rd grade report card....and I have a near 850 beacon....for a 40K HELOC.....

To your point buyers in Diddy's price range are typically a little more aware than the average 20-30 year old 1st time buyer.

 

[BMF]

I watch the real estate around my zip code (33707) - Gulfport, St. Pete, South Pasadena. I'm really surprised at how much real estate keeps moving - prices aren't going much higher, but they're really not dropping either. And this is over all price ranges - there are homes pending listed around $300k all the way up to over $2 million (waterfront homes). The homes that are in the "affordable" range ($300k-$550k) are still selling quickly - most are selling for asking price or maybe 2% under ($5k-$20K under asking), and some are over asking (not much, but still over asking). I figured by now - with rates over 6% for several months - prices would start to fall.

 

[GatorCatsi]

I watch the real estate around my zip code (33707) - Gulfport, St. Pete, South Pasadena. I'm really surprised at how much real estate keeps moving - prices aren't going much higher, but they're really not dropping either. And this is over all price ranges - there are homes pending listed around $300k all the way up to over $2 million (waterfront homes). The homes that are in the "affordable" range ($300k-$550k) are still selling quickly - most are selling for asking price or maybe 2% under ($5k-$20K under asking), and some are over asking (not much, but still over asking). I figured by now - with rates over 6% for several months - prices would start to fall.

I moved from the Gulf to Kansas City in mid 2021. Even here, my home's market value as listed on Zillow has increased by 26%.

I'm sceptical of Zillow's modeling, but still find that surprising.

 

[FireFoley]

I watch the real estate around my zip code (33707) - Gulfport, St. Pete, South Pasadena. I'm really surprised at how much real estate keeps moving - prices aren't going much higher, but they're really not dropping either. And this is over all price ranges - there are homes pending listed around $300k all the way up to over $2 million (waterfront homes). The homes that are in the "affordable" range ($300k-$550k) are still selling quickly - most are selling for asking price or maybe 2% under ($5k-$20K under asking), and some are over asking (not much, but still over asking). I figured by now - with rates over 6% for several months - prices would start to fall.

A little different in SE FL but also similar. Stuff is still selling, but most is in the 700K and below. Anything above is selling 10-30% below orignial ask, but the original ask was ridiculous at 7 figures which is what was happening during the Kung Flu. what I do notice is incredible movement in action even when there is a small downtick in rates. I know there is demand, but it is incredible how people pounce whem rates hit a level that allows them to meet the monthly payment, regardless of total price. People factor in no future changes in their lives etc. and may are paying upwards of 50% or their income/etc. on PITI. The future looks scary, IMO.

 

[BMF]

A little different in SE FL but also similar. Stuff is still selling, but most is in the 700K and below. Anything above is selling 10-30% below orignial ask, but the original ask was ridiculous at 7 figures which is what was happening during the Kung Flu. what I do notice is incredible movement in action even when there is a small downtick in rates. I know there is demand, but it is incredible how people pounce whem rates hit a level that allows them to meet the monthly payment, regardless of total price. People factor in no future changes in their lives etc. and may are paying upwards of 50% or their income/etc. on PITI. The future looks scary, IMO.

There are a few here that are sitting - because they got greedy and significantly over-priced the initial listing. Some are sitting longer than usual (upwards of 30 days) and many are lowering asking price. But there are quite a few pending/selling, which just surprises me with the market conditions.

 

[URGatorBait]

We are the most free state in the land and people are still moving here.
That's why you won't see much in price reductions.

If you want to try to see that, look in other states to gauge the market fluctuations..Florida will lag behind it because we're still a hot market

 

[FireFoley]

We are the most free state in the land and people are still moving here.
That's why you won't see much in price reductions.

If you want to try to see that, look in other states to gauge the market fluctuations..Florida will lag behind it because we're still a hot market

Very good point. Yesterday the median price for an existing home dropped for the first time in ELEVEN years, but that is a national number. Robert Shiller of the Case-Shiller index and the inventor of the CAPE ratio was on the blower months ago and said that since June 2022, house prices are down 6% or so nationally and inflation adjusted they are down over 10%. I know I have predicted it is going to be a 10-15 year slow bleed and I think it is happening, but it is not equal in all places. The level of interest rates and the length they stay there will be the largest factor, IMO. With over 90% of existing mortgages below the current level, we will probably be stuck in gridlock regarding existing homes as long as rates remain here or higher.

 

[Concrete Helmet]

Just saw data today that shows existing home sales are projected for March(based on the number sold and remaining pending contracts) to be the biggest increase in volume since 2020 ...we're certainly seeing about 3X as many purchase contracts coming in over the last couple of weeks compared to anything in the last 10-12 months.

Still a ton of pent up demand out there.

 

[FireFoley]

Just saw data today that shows existing home sales are projected for March(based on the number sold and remaining pending contracts) to be the biggest increase in volume since 2020 ...we're certainly seeing about 3X as many purchase contracts coming in over the last couple of weeks compared to anything in the last 10-12 months.

Still a ton of pent up demand out there.

Do you think this surge in mortgage applications has to do with the fact that cost of all banking is about to increase? The regional bank fallout if and when it ends, is going to increase the cost of everything. There is no way the banks will absorb these costs and not pass it along. So as wide is the spread is berween the 10YR and Mortgage rates, that spread will only get larger b/c the MBS market is not coming in which will lead to even higher rates borrowing rates, unless of course Grand Master J and his minions cease the balnce sheet runoff and begin QE again.

 

[soflagator]

There are a few here that are sitting - because they got greedy and significantly over-priced the initial listing. Some are sitting longer than usual (upwards of 30 days) and many are lowering asking price. But there are quite a few pending/selling, which just surprises me with the market conditions.

My sister listed and was given full offer cash the next day. And a home across from me just sold after sitting since the summer. But it was similar to what you described in that they overpriced and had updated nothing inside. Spent the last 8 months remodeling, and it went. The funny part is it’s an Indian doctor who got a new job in Atlanta. My family offered around 20k under ask when they first listed it last July and they scoffed. Within a month they were calling us to negotiate, but it no longer made sense for us so they dropped their pants. Fortunately they didn’t get bites, so they took our initial advice/critiquing to heart and poured money into it. So it ended up increasing our comp, but they lost 30-40k minimum.

There is still demand but it’s becoming a lot more particular and a significant portion of the market has been priced out(and not just homes). So the good areas will hang in as I’ve predicted, but the garbage is taking a hit already and will continue.

 

[Concrete Helmet]

Do you think this surge in mortgage applications has to do with the fact that cost of all banking is about to increase? The regional bank fallout if and when it ends, is going to increase the cost of everything. There is no way the banks will absorb these costs and not pass it along. So as wide is the spread is berween the 10YR and Mortgage rates, that spread will only get larger b/c the MBS market is not coming in which will lead to even higher rates borrowing rates, unless of course Grand Master J and his minions cease the balnce sheet runoff and begin QE again.

Some of them are still cash purchases....older people downsizing paying in cash. The rest.....Pavlov's Dog....Why not buy and refi later is the conditioned thought process. There are also "programs" from builders and Mortgage Brokers and incentivized sellers. Buydown is the term I'm looking for.

I still think you might be underestimating the pent up demand from 1st time buyers. I'd rather buy into a $2500 mortgage payment knowing in all likelihood I can refi when the rates go down than pay $2k a month to rent an apartment or someone elses rundown house.
I've kept a database of every financed purchase we done since rates went above 5.5% reminding them how much money we can save them since we already have their title search on file and how they will get reduced closing cost, reissue credit and such for using us, and will send them out as soon as Jerome hits the button.....

 

[BMF]

My sister listed and was given full offer cash the next day. And a home across from me just sold after sitting since the summer. But it was similar to what you described in that they overpriced and had updated nothing inside. Spent the last 8 months remodeling, and it went. The funny part is it’s an Indian doctor who got a new job in Atlanta. My family offered around 20k under ask when they first listed it last July and they scoffed. Within a month they were calling us to negotiate, but it no longer made sense for us so they dropped their pants. Fortunately they didn’t get bites, so they took our initial advice/critiquing to heart and poured money into it. So it ended up increasing our comp, but they lost 30-40k minimum.

There is still demand but it’s becoming a lot more particular and a significant portion of the market has been priced out(and not just homes). So the good areas will hang in as I’ve predicted, but the garbage is taking a hit already and will continue.

You're in Palm Beach County? (I forget) As you said about renovations - mostly anything that is renovated will sell, some might not go as quickly because the flipper is greedy w/ the asking price, but around here (south Pinellas, St. Pete/Gulfport) if it's renovated it usually sells quickly. Another thing I've noticed - anything that is a complete sh*thole, in need of a full reno that is listed under $300k will usually sell day of listing (because flippers are desperate to land something in that price range -they'll dump $50k-80k into it and list it for $150-$200k more than they paid - it's ridiculous looking at "last sold for" and the current asking price, knowing good and well they only put in $50k-ish).

 

[soflagator]

You're in Palm Beach County? (I forget) As you said about renovations - mostly anything that is renovated will sell, some might not go as quickly because the flipper is greedy w/ the asking price, but around here (south Pinellas, St. Pete/Gulfport) if it's renovated it usually sells quickly. Another thing I've noticed - anything that is a complete sh*thole, in need of a full reno that is listed under $300k will usually sell day of listing (because flippers are desperate to land something in that price range -they'll dump $50k-80k into it and list it for $150-$200k more than they paid - it's ridiculous looking at "last sold for" and the current asking price, knowing good and well they only put in $50k-ish).

We have the house there, but I’m in Gainesville right now. So both of the examples I gave were here. Some areas here are up 5% over last year and not slowing. Other parts of town, I’m sure have felt it. Contractors are also still ridiculously high.

In the case of the neighbor, when they balked at the offer, I assumed he was just going to keep it and rent it. My area brings in a lot of UF/Shands people that often have 1-2 years stints. So that made sense. Young doctor, only one kid, he could afford to float it if need be. The moment he started calling us daily, and small cracks in housing plus rate hikes were rumored, I realized he was just an idiot. Wouldn’t even counter a 10k under offer on a home he had to sell to move out of state. Ended up costing himself easily 4 times that and had the headache of doing it all from 5 hours away.

 

[CDGator]

In LA several owners of mansions are trying to unload multi-million dollar homes before April 1st. The city voted for a "mansion tax" in November so sellers are accepting millions under asking price.

Trying to unload an expensive mansion in the midst of a banking crisis with the LA real estate market softening and uncertainty looming large isn’t exactly great timing.

Feinberg, like all luxury mansion sellers in LA, is also contending with the new mansion tax approved by voters in November. The ULA tax, as it’s called, was designed to “fund affordable housing projects and provide resources to tenants at risk of homelessness,” according to the city of Los Angeles website.

It’s levied on the seller as a transfer tax upon the sale of a home, or any real property, that trades for $5 million or more.
For homes priced between $5 million and $10 million, sellers will have to pay the city 4% of the total sale price. For real estate trading north of $10 million, the rate increases to 5.5%.

The new tax is on top of the city’s current 0.45% transfer tax. And it’s levied based on sale price, not profit, which means sellers will have to pay up even if they’re already taking a loss, as could be the case with the Star Resort.

The city’s website includes a tax calculator, which estimates ULA and city transfer taxes owed on a $38 million deal at $2,261,000, or just under 6% of the total deal.

 

[MJMGator]

In LA several owners of mansions are trying to unload multi-million dollar homes before April 1st. The city voted for a "mansion tax" in November so sellers are accepting millions under asking price.

Why not just take any home worth over $5m and give it to a homeless person?

 

[CDGator]

Why not just take any home worth over $5m and give it to a homeless person?

Awesome, put that on the next ballot!

 

[Concrete Helmet]

Why not just take any home worth over $5m and give it to a homeless person?

That seems quite a waste....I mean you could probably fit a couple hundred homeless in each one of those mansions...

 

[FireFoley]

I watch the real estate around my zip code (33707) - Gulfport, St. Pete, South Pasadena. I'm really surprised at how much real estate keeps moving - prices aren't going much higher, but they're really not dropping either. And this is over all price ranges - there are homes pending listed around $300k all the way up to over $2 million (waterfront homes). The homes that are in the "affordable" range ($300k-$550k) are still selling quickly - most are selling for asking price or maybe 2% under ($5k-$20K under asking), and some are over asking (not much, but still over asking). I figured by now - with rates over 6% for several months - prices would start to fall.

Here is a good example of what I am talking about what is happening over here in PBC. Very nice home listed in Dec. for 950K Probably would have sold 2 years ago at the price in 1-5 days. 45 days later dropped the price by 25K. Now 45 days later, again, just dropped the price by 125K. Rough math says that is about 15% drop from initial list price. That is very common right now around here.