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UTPhil2006

By UTPhil2006
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mchookem
mchookem

alrighty...i haven't wanted to jinx anything so i've been pretty quiet... but we just closed on our new home in Denver this morning so i can now officially say YEAH! 😃 in a nutshell - we sold

Esque
Esque

Thank you for this - gave me a good laugh.  But also a good reminder of how the general public does not understand what is going on in real estate and thus why so many get caught offsides when the tid

Neonmoon
Neonmoon

Realtor: You should list your house at 500K Client: But three houses down the street sold for 700K Realtor: Yeah, but those are overvalued due to pandemic Fed policy and institutional invest

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Wulaw Horn

Wulaw Horn 19070

Posted
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2 hours ago, Neonmoon said:

This Housing Wire article was free, had some good info about inventory levels. March 2022 had lowest level ever recorded in history. Still not great inventory now.

Here is a good graph

image.png.d593ba376dfee11e54ad1222cbba2eb8.png. 
 

MBA Purchase Application Data

image.png.57a5233ce5c2a97ffd2d6f5f11e07ef6.png

Yep.  This is what makes me laugh about people who are waiting around for the bottom to fall out of the market on price- yeah- not going to happen when there isn't any inventory, even if rates are cursedly too high.  

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jimmyjazz

jimmyjazz 45958

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5 hours ago, Wulaw Horn said:

Yep.  This is what makes me laugh about people who are waiting around for the bottom to fall out of the market on price- yeah- not going to happen when there isn't any inventory, even if rates are cursedly too high.  

I wonder if people aren't starting to get used to rates in the 6.x% range.  Those of us who have been around for near forever know these aren't historically high rates.  If incomes aren't keeping up (and they aren't), it still puts downward pressure on what type of home a given individual might be interested in.

Weird times.

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Wulaw Horn

Wulaw Horn 19070

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7 minutes ago, jimmyjazz said:

I wonder if people aren't starting to get used to rates in the 6.x% range.  Those of us who have been around for near forever know these aren't historically high rates.  If incomes aren't keeping up (and they aren't), it still puts downward pressure on what type of home a given individual might be interested in.

Weird times.

Yeah, I see some extra people in the market- either I'm getting more as a percentage than I was earlier in the year or else there are more people in the market. I think eventually people are going to decide to pull the trigger regardless of rates if they need to.  But yeah, that's not pushing pricing down as a general rule.  Some areas may be different of course.  Austin might be one.  But overall appreciation is happening the last couple months and we are down something like less than 2% year over year.  On pace to be up 3 or 4% on the year last I saw. 

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UTPhil2006

UTPhil2006 3807

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19 hours ago, jimmyjazz said:

I wonder if people aren't starting to get used to rates in the 6.x% range.  Those of us who have been around for near forever know these aren't historically high rates.  If incomes aren't keeping up (and they aren't), it still puts downward pressure on what type of home a given individual might be interested in.

Weird times.

Yeah, it’s also a lot of younger buyers as well that never experienced the lower rates like you said. Also a decent amount of buyers are doing the 1/1, 2/1 etc buydowns and building it in to seller contributions 

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UT_OB1

UT_OB1 2223

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8 hours ago, UTPhil2006 said:

Yeah, it’s also a lot of younger buyers as well that never experienced the lower rates like you said. Also a decent amount of buyers are doing the 1/1, 2/1 etc buydowns and building it in to seller contributions 

What do you mean by 1/1 vs 2/1 buy down, and how is seller able to pay that?

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Neonmoon

Neonmoon 38129

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1 minute ago, UT_OB1 said:

What do you mean by 1/1 vs 2/1 buy down, and how is seller able to pay that?

3/2/1, 2/1, and 1/1 are all temporary interest rate buy downs. It’s just pre-paid interest that is escrowed. The buyer can pay the money or the seller can provide a seller concession in the contract. 

For example, if todays interest rate is 7%, a 2/1 buy down lowers your interest rate to 5% the first year, and 6% the second year. The interest between 7% and 5% the first year, and 7% and 6% the second year, is collected upfront at closing and put in an escrow. 

It lowers the buyers monthly payment in hopes they refinance in the next two years 

 

 

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Wulaw Horn

Wulaw Horn 19070

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The issue is the seller has to pay for the concession and with as little inventory as there is and as much competition as there is amongst buyers what seller wants to do that?  I’m way more likely to be working with a buyer competing with multiple offers than I am one with a chance in hell of getting the seller to shell out 10k or 15k in concessions. 

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Neonmoon

Neonmoon 38129

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We’re still seeing seller concessions as we do have some older homes. We also have realtors that structure the offer with 10K in seller concessions and 10K over ask. It’s a risk with the appraisal, but homes appraising over ask is common in our area with limited inventory and still positive appreciation 

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UTPhil2006

UTPhil2006 3807

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1 hour ago, Neonmoon said:

We’re still seeing seller concessions as we do have some older homes. We also have realtors that structure the offer with 10K in seller concessions and 10K over ask. It’s a risk with the appraisal, but homes appraising over ask is common in our area with limited inventory and still positive appreciation 

This. Basically whatever you need/want you just go up by that. Almost every time we’ve negotiated it or used it the seller was amenable. They’re still netting the same. As long as it’s not a stupid high amount over usually it stays within the appraisal. We have a shaggy guy doing it right now and it was zero issue. 

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Incredulity

Incredulity 11674

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So buyers are financing pre-payment of interest to improve monthly cashflow in the hopes that in 24 months they are in a place to lock in that monthly payment long term.  correct?

 

Can't wait to hear the howling from the MSM and stunned borrowers who are surprised to learn what they really signed up for if it doesn't work out.

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Wulaw Horn

Wulaw Horn 19070

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4 minutes ago, Incredulity said:

So buyers are financing pre-payment of interest to improve monthly cashflow in the hopes that in 24 months they are in a place to lock in that monthly payment long term.  correct?

 

Can't wait to hear the howling from the MSM and stunned borrowers who are surprised to learn what they really signed up for if it doesn't work out.

Yes.  But, you have to qualify on the real number, so it shouldn't be a problem beyond psychology if the play doesn't work. There should be affordability and ability to pay. 

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Wulaw Horn

Wulaw Horn 19070

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1 hour ago, UTPhil2006 said:

This. Basically whatever you need/want you just go up by that. Almost every time we’ve negotiated it or used it the seller was amenable. They’re still netting the same. As long as it’s not a stupid high amount over usually it stays within the appraisal. We have a shaggy guy doing it right now and it was zero issue. 

Last week I had 3 buyers put in offers.  They all came back with highest and best multiple situations. I hope I start running into some of this but haven't seen it much yet.  I'm ready to have a buyer submit a solid offer and get the house 8/10 or 9/10 like it used to be.  

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Neonmoon

Neonmoon 38129

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The Dodd-Frank act amended TILA (Regulation Z) to require lenders to make sure the borrower has the ability to repay the loan based on the full note. It doesn't matter if you're selling an ARM or a Temporary Buydown, they borrower must be qualified and have the ability to repay on the fully indexed rate. Not only that, Dodd-Frank required lenders to provide Disclosures within 3 days of application. 

If a borrower is "stunned" by the full rate after agreeing to the particular product, having their LO explain multiple times, their attorney explaining it, and signing upwards of 30 documents about it, then we probably should just stop allowing people to obtain loans under their own volition. 

 

 

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Wulaw Horn

Wulaw Horn 19070

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4 minutes ago, Neonmoon said:

The Dodd-Frank act amended TILA (Regulation Z) to require lenders to make sure the borrower has the ability to repay the loan based on the full note. It doesn't matter if you're selling an ARM or a Temporary Buydown, they borrower must be qualified and have the ability to repay on the fully indexed rate. Not only that, Dodd-Frank required lenders to provide Disclosures within 3 days of application. 

If a borrower is "stunned" by the full rate after agreeing to the particular product, having their LO explain multiple times, their attorney explaining it, and signing upwards of 30 documents about it, then we probably should just stop allowing people to obtain loans under their own volition. 

 

 

Counterpoint- I ran a fee attorney closing shop for 5 years.  Borrowers eyes glass over the second you start to explain a document to them and they go into a coma where they sign and pay no attention to anything for an hour.  Not all, but many.  But yeah, I agree with your general point for sure but there will still be some that just don't get it/ don't understand why their payment goes up in 2 years... 

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Incredulity

Incredulity 11674

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1 minute ago, Neonmoon said:

If a borrower is "stunned" by the full rate after agreeing to the particular product, having their LO explain multiple times, their attorney explaining it, and signing upwards of 30 documents about it, then we probably should just stop allowing people to obtain loans under their own volition. 

I agree totally.  I am fine with people having access to alternative loan products and making informed decisions about what suits their needs.  Yes, the disclosures are ad-nauseum.  IMPO they were even before Dodd-Frank.  

 

You know damn well there will be crying foul/"i didn't know" if it doesn't work out.  Doesn't matter how many forms some people sign.

 

 

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BearSchlong

BearSchlong 8098

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Unpopular opinion, and I promise I’m saying this in good faith and not as a criticism of people just trying to do business: holy shit, people are essentially rolling negative equity into mortgages even though rates haven’t eclipsed 7.5%

What could possibly go wrong?

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Wulaw Horn

Wulaw Horn 19070

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8 minutes ago, BearSchlong said:

Unpopular opinion, and I promise I’m saying this in good faith and not as a criticism of people just trying to do business: holy shit, people are essentially rolling negative equity into mortgages even though rates haven’t eclipsed 7.5%

What could possibly go wrong?

Maybe? Maybe not? Maybe go fuck yourself.  

It's not really as bad as all that imo (and I've not done one of these merely b/c we've never been in the situation to do one- we are perfectly capable of doing them) b/c the money sits there and goes to the borrower anyway if and when they refinance, and if they don't and it all gets spent it's not technically negative equity b/c the property appraised for that value (though you and I both know the seller would have sold it for 10k less regardless of what it appraised for).  Probably nobody is getting hurt.  Probably.  

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jimmyjazz

jimmyjazz 45958

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No kidding.  My stepdaughter went to buy a new car.  I told her to have a pre-approved loan from a credit union and to only haggle price.  First thing that happens -- "so what's your monthly budget"?

I'm sure you can imagine what transpired from there.

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Neonmoon

Neonmoon 38129

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5 minutes ago, jimmyjazz said:

No kidding.  My stepdaughter went to buy a new car.  I told her to have a pre-approved loan from a credit union and to only haggle price.  First thing that happens -- "so what's your monthly budget"?

I'm sure you can imagine what transpired from there.

She fixes the cable?

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Wulaw Horn

Wulaw Horn 19070

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47 minutes ago, Incredulity said:
  • The Wire GIF

Home purchasing is absolutely becoming(has been) like car purchasing.

 

What can i afford???

Nahhhh....

 

What PAYMENT can i afford???

It’s something that I always have to ask though. And it’s basically a sanity check on the buyer. Ok Mr. buyer- what is the price point of your house?  300k?  Cool. What kind of payment were you expecting on that?  1200 huh?  Alright- you planning on putting down 250k then as a downpayment?  

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BearSchlong

BearSchlong 8098

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Maybe? Maybe not? Maybe go fuck yourself.  
It's not really as bad as all that imo (and I've not done one of these merely b/c we've never been in the situation to do one- we are perfectly capable of doing them) b/c the money sits there and goes to the borrower anyway if and when they refinance, and if they don't and it all gets spent it's not technically negative equity b/c the property appraised for that value (though you and I both know the seller would have sold it for 10k less regardless of what it appraised for).  Probably nobody is getting hurt.  Probably.  

Yeah you’re right, it’s harmless unless it becomes popular.

Context: my grandfather, father, and uncle built 6000 homes from 1945-2009. They saw everything. From sleeping on rail cars of “their” lumber in the lumberyard siding in 1947 to 19.5% rates during the Volker stagflation. 2009 unable to get buyers financed at more than break-even prices, owned and lost an S&L in the early 80s.

I really need to ask my 81 year old uncle what kinds of stuff they did over the years to get stuff sold.
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Wulaw Horn

Wulaw Horn 19070

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19 minutes ago, BearSchlong said:


Yeah you’re right, it’s harmless unless it becomes popular.

Context: my grandfather, father, and uncle built 6000 homes from 1945-2009. They saw everything. From sleeping on rail cars of “their” lumber in the lumberyard siding in 1947 to 19.5% rates during the Volker stagflation. 2009 unable to get buyers financed at more than break-even prices, owned and lost an S&L in the early 80s.

I really need to ask my 81 year old uncle what kinds of stuff they did over the years to get stuff sold.

If it’s interesting hope you share it here. 

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Wulaw Horn

Wulaw Horn 19070

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Holy shot. Down 64 basis points today in the market at the opening bell. This is going to be the worst pricing we’ve seen in this run. Unbelievable how bad shit is right now the last 3-5 days, for no reason other than fed fuckery. Inflation has created. An economy contraction is coming. That will lead to job losses and the like. The fed is driving by looking at the rear view mirror not the windshield. 
ADP reported 500k new jobs. Really interested to read the underlying on that. Continuing claims and new claims were actually worse than expectations. I can’t fathom 500k new jobs in this environment. 

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Captainant

Captainant 27673

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1 hour ago, Wulaw Horn said:

ADP reported 500k new jobs. Really interested to read the underlying on that. Continuing claims and new claims were actually worse than expectations. I can’t fathom 500k new jobs in this environment. 

I'd bet the pay on those new jobs is <$40k/yr (<$20ish/hr), which isn't enough to really do much of anything these days

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UTPhil2006

UTPhil2006 3807

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12 hours ago, Wulaw Horn said:

If it’s interesting hope you share it here. 

It’s whatever is above ZJs because the 10 year is above 4.00 again 

2 minutes ago, Captainant said:

I'd bet the pay on those new jobs is <$40k/yr (<$20ish/hr), which isn't enough to really do much of anything these days

That or people taking a second or third job.

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UTPhil2006

UTPhil2006 3807

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1 hour ago, Neonmoon said:

Bonds down 92 basis points. Brutal

Might just take the next week off. I doubt anyone would notice

Yeah I’m about to email these lenders and be like just stop sending me your rates are rising here’s the new rate sheet emails. 

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