Real Estate Crash thread

[AdironRider]

They have clicks to collect and ad revenue to generate. They were full of shit, no Delta.

And you have mortgages to sell.

5.5% here in NH today, 5/1 ARM still at 3.625.

[liv2ski]

And you have mortgages to sell.

5.5% here in NH today, 5/1 ARM still at 3.625.

Glad to hear they are bending you over. Us damn commies in CA are giving the people to good of a deal.

[Kevo]

Glad to hear they are bending you over. Us damn commies in CA are giving the people to good of a deal.

Are CA rates lower than elsewhere because of more competition from brokers? More competition from originators? Institutional investors thinking CA based MBS require less risk premium?

[AdironRider]

I'm going with he's just as full of shit and trying to sell mortgages for 1000 Alex

[Kevo]

I'm going with he's just as full of shit and trying to sell mortgages for 1000 Alex

Nah, Liv2ski is a good dude and he's just quoting rates out of his broker system. He could lock those rates today for anyone in CA.

The topic of mortgage rate differences between states has come up in discussion here before, but I don't think we've ever talked about why there is a difference.

[VTeton]

Cali should be more expensive than other states because their mortgages are non recourse where other states are recourse.

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[rideit]

And you have mortgages to sell.

5.5% here in NH today, 5/1 ARM still at 3.625.

Anyone who plays with an ARM deserves what they get, in *most* cases. (There are outliers)

[Name Redacted]

Anyone who plays with an ARM deserves what they get, in *most* cases. (There are outliers)

For the last ten+ years who didn’t refi out of an arm? Of course now you are playing with fire. We had an arm when we bought a nonconforming property. 7/1 at 4.25%. Sold it 4 years in though.

[simple]

The fact that ARM are back in discussion tells me the crash is coming. People are so desperate to get real estate they have been waiving inspections for a while. The scammers know to strike when people are this way. Scammers come in all forms....

[dunfree]

The fact that ARM are back in discussion tells me the crash is coming. People are so desperate to get real estate they have been waiving inspections for a while. The scammers know to strike when people are this way. Scammers come in all forms....

I knew several people who took out arms bitd and none of them had a problem meeting them; it was the people who would have that were the problem. There’s some really rich people now, including many posters on this thread. There’s a difference between “it hurts my portfolio” and “I can’t make payments”

[alias_rice]

I'm going with he's just as full of shit and trying to sell mortgages for 1000 Alex

Nope. Utah is still in the high 4’s, and I’m guessing most of the country is still sub 5% as well. I’m still doing commercial loans at 4.5%, though I’d guess we will be at 4.75% or 5% by the end of April. CAP rates so far are still not showing any signs of increasing though, especially in multifamily deals. Low CAP rates and increasing interest rates are definitely squeezing the middle class investor out of the market though.

[Name Redacted]

Nope. Utah is still in the high 4’s, and I’m guessing most of the country is still sub 5% as well. I’m still doing commercial loans at 4.5%, though I’d guess we will be at 4.75% or 5% by the end of April. CAP rates so far are still not showing any signs of increasing though, especially in multifamily deals. Low CAP rates and increasing interest rates are definitely squeezing the middle class investor out of the market though.

I feel like the biggest difference the slight rise of rates will have is it will prevent people from changing homes, effectively locking them in place as they won't want to give up the 2.75% rate they refinanced to last year for a 5% APR loan. Enter the age of the remodel and maybe the returning popularity of HELOCs. $200k @ an adjustable prime+ .35% isn't nearly as scary as a $1M @ 5%.

[goldenboy]

I feel like the biggest difference the slight rise of rates will have is it will prevent people from changing homes, effectively locking them in place as they won't want to give up the 2.75% rate they refinanced to last year for a 5% APR loan. Enter the age of the remodel and maybe the returning popularity of HELOCs. $200k @ an adjustable prime+ .35% isn't nearly as scary as a $1M @ 5%.

No one is selling right now for a bunch of reasons. I actually think the rising rates will add to that, just like you said. If the supply remains limited, falling buyer demand with the higher rates will just cool things off a bit.

[Name Redacted]

No one is selling right now for a bunch of reasons. I actually think the rising rates will add to that, just like you said. If the supply remains limited, falling buyer demand with the higher rates will just cool things off a bit.

Funny how a few years ago, 4.5% was a great rate and people were tripping over themselves to get in on it. Now in a rising rate environment people are freaking out over 4.5% like it is crazy high. Consumers will just take a little time to adjust. Considering the fact that high inflation favors the borrower, 4.5% is still getting ahead. Home prices OTOH...

[goldenboy]

Funny how a few years ago, 4.5% was a great rate and people were tripping over themselves to get in on it. Now in a rising rate environment people are freaking out over 4.5% like it is crazy high. Consumers will just take a little time to adjust. Considering the fact that high inflation favors the borrower, 4.5% is still getting ahead. Home prices OTOH...

yeah, the rapid rate of change is hard for people to wrap their heads around, it was a lot less just a few weeks ago. 4.5% is still great. But it also means that buyers won't be able to qualify for as much.

Personally I'm not worried about it and still want to buy a rental, I just can't find the right one. And when I do it gets 20 offers.

[4matic]

13 year high in mortgage rates. At least. It’s always a good time to buy!

https://www.freddiemac.com/pmms/pmms30

[rideit]

Just for pedantry, time for this old chestnut.

[Mustonen]

My father bought two 100 grand CDs at two different banks (100 grand was max for fed coverage) at 15% for five years in 1981. Double your money, no risk. Good times.

D’oh!

And there is risk, just no risk to principal.

[Mustonen]

Five years. Government backed. About as safe as possible.

Oh jeez. Read that completely backwards.

The dividend isn’t government backed though. Still pretty safe, just sayin.

[Talisman]

Did the banks call your father back when the prime dropped and offer a buy out? Those were the good old days for CDs and a world of hurt for those getting mortgages, for the short term. The interest rates dropped and house prices took off. I lay awake at night concerned about my 15.5% mortgage and would it even be possible to sell a house for $200,000 once it was paid off to break even.

My father bought two 100 grand CDs at two different banks (100 grand was max for fed coverage) at 15% for five years in 1981. Double your money, no risk. Good times.

[Toadman]

I feel like the biggest difference the slight rise of rates will have is it will prevent people from changing homes, effectively locking them in place as they won't want to give up the 2.75% rate they refinanced to last year for a 5% APR loan. Enter the age of the remodel and maybe the returning popularity of HELOCs. $200k @ an adjustable prime+ .35% isn't nearly as scary as a $1M @ 5%.

Avg. home equity is around $185k. So, maybe people tap into it again. Fed will be looking at a 50 basis point bump in May. Would not be surprised to see close to 6% mortgages be end of May.

[JaytaeMoney]

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.


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[Danno]

What is the recent percentage of cash buyers to financed buyers? How rising rates impact the market depends in part on how many cash buyers there are, no?

[mcphee]

My father bought two 100 grand CDs at two different banks (100 grand was max for fed coverage) at 15% for five years in 1981. Double your money, no risk. Good times.

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

[JaytaeMoney]

What is the recent percentage of cash buyers to financed buyers? How rising rates impact the market depends in part on how many cash buyers there are, no?

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.