Real Estate Crash thread

[Toadman]

Fed rate hikes don’t directly impact mortgage rates. Mortgage rates are loosely tied to the 10 year UST.

For reference: right now WSJ prime is 3.5% (prime is directly correlated to the Fed Funds rate). In December 2018 prime was 5.5% and mortgage rates were in the mid to high 4’s.


Sent from my iPhone using TGR Forums

Okay, I guess we shall see what happens with the Fed rate hikes vis a vis mortgage rates. Meanwhile, those mortgage rates are putting a damper on home prices. Seeing listings with price drops here in Central Oregon now.

12% of homes for sale had price drops in the past four weeks—the highest level since early December—suggesting that sellers’ tight grip on the market is starting to loosen.
A fast-growing share of home-sellers are dropping their prices, another sign that the early 2022 housing frenzy is starting to ease as mortgage rates approach 5%. Twelve percent of homes for sale had a price drop during the four weeks ending April 3, up from 9% a year earlier and the highest share since early December. The rate of sellers dropping their prices is growing faster month over month than it has since August.

“Price drops are still rare, but the fact that they are becoming more frequent is one clear sign that the housing market is cooling,” said Redfin Chief Economist Daryl Fairweather. “It goes to show that there’s a limit to sellers’ power. There is still way more demand than supply, and buyers are still sweating, but sellers can no longer overprice their home and still expect buyers to clamor at their door. That’s because higher mortgage rates are eating into homebuyers’ budgets. As the cooldown continues to set in, it is important that sellers price their home carefully. Homes that sit on the market for several days have a scarlet letter that makes them more difficult to sell. Buyers should be wary of bidding significantly over asking on newly listed homes, and to take a closer look at the homes that have been on the market for more than a week.”

[RootSkier]

He’s just the son of a blue collar machinist, folks.

$312,000 in today's dollars X 2 and then he doubled his money. Well done, Bunny's dad.

[Name Redacted]

A lot of times "cash buyers" aren't actually paying cash like the term cash buyer would imply. They are using a credit facility that's already in place and either secured by other properties or by their stock portfolio. So interest rates do affect their buying power as well.

Hard money loans, HELOCs, and a lot of lenders offering cash offer loans where a buyer can look like a cash buyer even if they aren’t one. Lots of options these days.

[Danno]

Interesting, never knew that about "cash offers". Always wondered how there were so many of them on super expensive places. Because I don't know many people that can cough up, say, $800k in cash.

[Core Shot]

Cash offer just means no finance contingency.

If you’re pre approved. You waive finance

I don’t get how many offers waive inspection
If it’s a new construction. Sure. But older homes have issues. Always.

[natty dread]

Okay, I guess we shall see what happens with the Fed rate hikes vis a vis mortgage rates. Meanwhile, those mortgage rates are putting a damper on home prices. Seeing listings with price drops here in Central Oregon now.

Yep. I just accepted an offer on my hood river house and ended up dropping my price 14% off asking to make it happen. 60 days on the market with no offers til now. Thought it would be snapped up in days. Relieved to be done w all the uncertainty rn.

[Benny Profane]

He’s just the son of a blue collar machinist, folks.

If I ever meet you motherfucker, do a 180 and run. I will pound your jaw on the closest curb. He was a finer person than most here, and would help me fuck you up if he could. For fun.

[Meadow Skipper]

^ triggered.

[Conundrum]

There it is.

[Core Shot]

Bunny. Chill

Humble bragging your dad had $200k in 1981 dollars to drop into a CD is bound to get you flamed.

I wish I had $200k in todays dollars to park in a bank.
I’ve got hard assets. But that $200k is still real dough.

[Danno]

Cash offer just means no finance contingency.

If you’re pre approved. You waive finance

I'm no expert (as indicated by my above post), but I think a cash offer is more than just being pre-approved and waiving the financing contingency.

[AK47bp]

^ triggered.

Careful.

Benny and his dad might tag team you.

NO EYE CONTACT!!


Sent from my iPhone using TGR Forums

[Core Shot]

Are people actually showing all cash?

Do you get a bank letter certified showing you have $800k just laying around?

I keep hearing about these cash offers with no inspection.

There can’t be that much loose change. Or is there?

[Mustonen]

Are people actually showing all cash?

Do you get a bank letter certified showing you have $800k just laying around?

I keep hearing about these cash offers with no inspection.

There can’t be that much loose change. Or is there?

I believe an account statement will suffice, in place of a pre approval letter. At least that’s all it took for the cash purchase of my house purchase in 2018 ($65k for 2,200 sqft). Larger dollar purchases might require a certified statement or some such.

[mcphee]

If I ever meet you motherfucker, do a 180 and run. I will pound your jaw on the closest curb. He was a finer person than most here, and would help me fuck you up if he could. For fun.

Your blue collar background is like stolen valor. Lol.

[californiagrown]

I believe an account statement will suffice, in place of a pre approval letter. At least that’s all it took for the cash purchase of my house purchase in 2018 ($65k for 2,200 sqft). Larger dollar purchases might require a certified statement or some such.

We didn't have total assets equal to our house purchase price, but ours was a "all cash offer" too. It seems like it's a term where the lender trusted us enough to vouch for our ability to close the loan.

[PNWbrit]

If I ever meet you motherfucker, do a 180 and run. I will pound your jaw on the closest curb. He was a finer person than most here, and would help me fuck you up if he could. For fun.

He sure raised a cunt of a son.

[Harry]

RE Fanbois (liv2ski, et al) keep blaming the 2008 crash on “liar loans”.

If what people are posting about cash offers actually being backed by loans is true, this seems like liar loans on steroids. Waiving inspections in particular.

Someone is going to be left holding the bag on this practice. Most likely taxpayers.


Sent from my iPad using TGR Forums

[JaytaeMoney]

We didn't have total assets equal to our house purchase price, but ours was a "all cash offer" too. It seems like it's a term where the lender trusted us enough to vouch for our ability to close the loan.

If you sign a cash offer and the deal blows up because of anything loan or appraisal related, at the end of the day it's your ass (earnest money) on the line, not the lender's.

RE Fanbois (liv2ski, et al) keep blaming the 2008 crash on “liar loans”.

If what people are posting about cash offers actually being backed by loans is true, this seems like liar loans on steroids. Waiving inspections in particular.

Someone is going to be left holding the bag on this practice. Most likely taxpayers.

Nah. Stated income loans allowed people to buy homes with loans for which they did not really qualify. If you write a cash offer the only thing you are giving up is a way to get out of the contract if your loan falls through. You still have to qualify for the loan. Not even close to the same thing.

[DeepHelmet]

Are people actually showing all cash?

Do you get a bank letter certified showing you have $800k just laying around?

I keep hearing about these cash offers with no inspection.

There can’t be that much loose change. Or is there?

Did one a couple months ago, all cash. They just produced a bank statement showing the balance, that was good enough to do the deal. I don't get super excited about cash offers, seems to me about half of them get pulled when asked for hard earnest money upon acceptance. That tells me they're investors making offers on multiple properties. One good thing about a real cash offer is they can close extremely quickly. My last one was done and recorded in six days after acceptance.

[JaytaeMoney]

Did one a couple months ago, all cash. They just produced a bank statement showing the balance, that was good enough to do the deal. I don't get super excited about cash offers, seems to me about half of them get pulled when asked for hard earnest money upon acceptance. That tells me they're investors making offers on multiple properties. One good thing about a real cash offer is they can close extremely quickly. My last one was done and recorded in six days after acceptance.

Here in Aspen which is the cash offer capital of the world it's rare to have hard money upon acceptance. Most of those contracts still have an inspection contingency or a broader "due diligence deadline" and then the money goes hard after a couple weeks with a 21-30 day close. Hard $ after 14 days is enough for most sellers to not even ask for a proof of funds contingency. If you can't close they'll just take your earnest money and sell it to the next schmuck for more than your contract price.

[Harry]

Nah. Stated income loans allowed people to buy homes with loans for which they did not really qualify. If you write a cash offer the only thing you are giving up is a way to get out of the contract if your loan falls through. You still have to qualify for the loan. Not even close to the same thing.

That’s not what I’m talking about. I’m talking about the actual structure of the building not qualifying. 35+ y/o wood condo perched on the side of a mountain is bound to have problems. “Cash buyer” waives all contingencies, including any inspections. 3 years later building needs millions in repairs, “cash buyer” walks away. Somebody is going to get stuck with that.

I have no idea if these cash buyers are really relying on financing or not. But a number of people in this thread say they are.



Sent from my iPad using TGR Forums

[RootSkier]

If you sign a cash offer and the deal blows up because of anything loan or appraisal related, at the end of the day it's your ass (earnest money) on the line, not the lender's.



Nah. Stated income loans allowed people to buy homes with loans for which they did not really qualify. If you write a cash offer the only thing you are giving up is a way to get out of the contract if your loan falls through. You still have to qualify for the loan. Not even close to the same thing.

These are some of the most wrong paragraphs in this entire thread.

[Mazderati]

The whole concept of cash not being cash or cash not being your own does seem like it could eventually lead to trouble. Whiffs of margin buying. It's been a long time since I applied for financing but I vaguely remember a question asking if any portion of the down payment had to be paid back. It seems like the answer would be 'yes' in some of these cases but I don't know the intricacies. Hell, that question may not even be asked now.

[Foggy_Goggles]

I have no idea if these cash buyers are really relying on financing or not. But a number of people in this thread say they are.

Correct me if I am wrong. If at any point, a residential property is financed by by conventional mortgage sold into the secondary market with an agency wrapper, there will be an appraisal. That said, all the appraisal does is ensure that you are not paying above market via an analysis of the comps. There is no concept of a home having an intrinsic value.