Real Estate Crash thread

[XXX-er]

back in the day I knew rates would go down/ stay low so I would surf the rates on the variable product and isince I was in one of the 5 Canadian class A banks every day fixing one thing or another I was into keeping track of it, I'm fixn something when the mortgage broker sees me and sez " hey the rates are going up lock in ! " did it right then and there

but this last mortgage instead I locked in at the lowest monthly payment I could get which allowed me to just ski and not have a job while I wait fo 86 yr old mom to die, she lasts to 90 due to superiour AZN jeans fo hevan sake !

[liv2ski]

I am fairly certain this has been said before, but my first home loan was at 14% on a $200k purchase. Sure I wish homes still cost $200k but 14%? Don't cry about rates at 6%.

[4matic]

I am fairly certain this has been said before, but my first home loan was at 14% on a $200k purchase. Sure I wish homes still cost $200k but 14%? Don't cry about rates at 6%.

At 14% interest homes would cost a lot less than they do now.

[doebedoe]

At 14% interest homes would cost a lot less than they do now.

For reals.

The last time the prime rate in the US was 14% was 1984. That year, my current 950sq ft 2/1 house (which just appraised mid 500s) sold for 57k. It's had a few 10k improvements (windows, new HVAC, electrical) since then. Inflation-adjusted that 57k in 1984 is 160k in 2022 dollars. Lets call it 200k with improvements.

The payment on that 57k house @ 14% was about 575$. That is $1620 in today's dollars. The mortgage on my house for the appraised value as of last week is about 3,000 (550k @ 6.) That's a 88% increase inreal cost. Real wages have increased approx 15% in the same time frame.

Please tell me how bad housing affordability was in 1980s...

EDIT: Summer with the helpful post while I was ranting.

[MCS5280]

Now update the plot with the poor souls buying in 2022 and you will see how the wheels are about to fall off this wagon.

[Jax]

They forgot about Gen X in that article, right smack dab in the middle of boomers and millenials, as usual. It's like we don't even exist.

House down the road sold last summer for 875K, last of the cool, authentic ones on the block. 1918 rebuilt in 2020, tons of character, corner block, was owned by the local deputy sheriff and he did all the remodeling, lived there for decades.

Some Denverites (Littleton) bought it almost immediately, they had 2 Cayennes, no garage, parked under some sappy tree. A month later a brand new orange McLaren sat in the driveway, collected dust and sap until the snow started to gather and then it was finally gone, but not until the temp plates expired (I ride by it almost every day). I think I saw one of the Cayennes maybe two times over the winter. House has major ice dam formations on both east and west sides, nobody there basically all winter.

Just went on the market last week for 3.2M.

For sale signs starting to pop up and not disappear in the same week here. Bubble won't burst like other places but I do see some give starting to happen. Last winter wasn't even a hard one to get through either.

[subtle plague]

Wow that's crazy. I knew there was a reason I'm glad I don't live in Canada.

Huh. Fixed is pretty normal in Europe (Germany at least) too. Im at 1.6% until the end of my 20 year Montage. There will be something left, but I think I can manage 3 monthly incomes.

And I'm allowed to pay off up to 19k per year extra without penalties.

[Mustonen]

Interesting. Prepayment penalties at all are pretty rare here.

I don’t see much let up in pricing or inventory around here, though everything is moving slower. Feels like something has to give.

I’m glad I bought last summer.

[mattig]

Prepay penalties rare now due to their prevalence in the pre-meltdown days, but think of it like this:

If there is essentially no premium pricing right now due to MBS coupon compression in the upper stack, the only option for any deals with excessive LLPAs is to pay quite a few points to get certain deals done (because the premium just isn't there, no matter how much you jack up the rate).

So if you're having to pay 3 points up front, it's just another form of prepayment penalty, but paid upfront .

110% guaranteed if UMBS had a prepayment penalty feature, there would be ample premium in higher MBS coupons.

(apologies to those not in the industry or who are otherwise glazed over when trying to understand what I just wrote. I can break it down later if there's interest, but it would be sorta long, and still a bit esoteric).

[yeahman]

They forgot about Gen X in that article, right smack dab in the middle of boomers and millenials, as usual. It's like we don't even exist.

Funny. I'm a first year Gen Xer and I think we had it amazingly good compared to millenials. Bought our first house in 2001 for 5% down plus closing costs. I think we needed like 13k cash to get into that house. Had a view of the water and San Juan islands too.

[fastfred]

Funny. I'm a first year Gen Xer and I think we had it amazingly good compared to millenials. Bought our first house in 2001 for 5% down plus closing costs. I think we needed like 13k cash to get into that house. Had a view of the water and San Juan islands too.

yeah dog
we are the lost generation I think squeezed in btween the boomers who love to hate on millenials forgotten about cause most of us a grew up way to cynical at least I am

but yeah those liar loans in the early 2000 totally winning on that shit
sorry you had to put down 5% plus closing costs I didn't put anything down and didn't pay any closing costs and bought an uninhabitable house for 200k interest was right around 7% can't remember I didn't cry about it cause it all seemed aok to me but those were the days I think I was making around 35k or 40k a year late twenties pretty much commited fraud on all the paper work and hey twenty years later I'm still in the house

[Whiteroom_Guardian]

Been keeping an eye on the recent solds to get an idea of what's really going on. With 15-30 day close times this is about the most up to date data we can get on what's actually happening. Just about everything is still going above asking ($5 - 25k over) or at asking price. Conventional or cash. Very few recent sales below asking price.

So things are "relaxing" for sure since there aren't 20 offers on every property and things aren't going for $200k+ over ask, but there also aren't all kinds of deals happening......yet. Changing week by week though.

[sirbumpsalot]

Been keeping an eye on the recent solds to get an idea of what's really going on. With 15-30 day close times this is about the most up to date data we can get on what's actually happening. Just about everything is still going above asking ($5 - 25k over) or at asking price. Conventional or cash. Very few recent sales below asking price.

So things are "relaxing" for sure since there aren't 20 offers on every property and things aren't going for $200k+ over ask, but there also aren't all kinds of deals happening......yet. Changing week by week though.

You never know....people locking in that 6% rate today might be looking good a year+ out....

[Whiteroom_Guardian]

Everyone is in a holding pattern right now. That's the consensus in the office. Many buyers are holding off and back to seriously kicking tires and not wanting to write offers. Expecting the crash or something to change with interest rates. Many sellers are hesitant to list since they only wanted to sell if they were gonna get just crazy FOMO type offers or they are just not willing to "only" make 300% on their investment. Good problem to have I suppose!

[skaredshtles]

yeah dog
we are the lost generation I think squeezed in btween the boomers who love to hate on millenials forgotten about cause most of us a grew up way to cynical at least I am

I like to think we're flying under the radar... been doing it my whole life.

[Jax]

we are the lost generation.... forgotten about cause most of us a grew up way to cynical...

Perhaps.

[rideit]

I bet there will be a few bargains in Gardner and Red Lodge coming up.

[skaredshtles]

I bet there will be a few bargains in Gardner and Red Lodge coming up.

And Cooke City... assuming people eventually are able to back in there.

ETA: looks like the road from the Cody direction is still open to Cooke City...

[Whiteroom_Guardian]

I bet there will be a few bargains in Gardner and Red Lodge coming up.

I already have clients asking me to look.

[The Reverend Floater]

I drove through Gardiner last Wednesday after spending a few days in Pray. Really wild stuff and very sad.

[rideit]

You at Chico? That has to be a madhouse right now.

[The Reverend Floater]

You at Chico? That has to be a madhouse right now.

I was, yeah. It was fine then. Did a dinner at the swankfest Sage Lodge as well.

[rideit]

Now all I can think of is a flaming orange...

[muted reborn]

I already have clients asking me to look.

Did you tell them they are piece of shit human beings?

[Kevo]

Hearing rumblings that a lot of people with construction loans are screwed because either they won't be able to close on a mortgage following the completion of the house or that closing on a mortgage will be way more expensive and burdensome.

This Reddit post seems to confirm that- "I started building a house when rates were 3%. Now they're 6% and my monthly payment is over $800 more each month."

A custom house is being built next door to me. The couple building are $1.2MM deep in construction loans and made the decision to move forward when interest rates were sub-3%. They told me they plan to be here a couple months a year and AirBnB the rest of the year. A comparable house down the street came on the market 45 days ago and just reduced their asking price below $900k.

I really wonder if the couple building next door will be able to close at >6% interest and whether doing so will throw off their STR cash flow. Glad it isn't my problem.