All Encompassing Mortgage and Real Estate Thread

[Sam Lin 3,597]

My ideal is more like 38% appreciation, but I'm already a homeowner.

[jimmyjazz 47,133]

Austin's latest YOY appreciation was 7.9%.  That roughly added my annual salary to my net worth, in one year.  It's insane.  I'm not arguing, but holy smokes, as many people who have been shut out, there are plenty of people who are benefitting (besides high taxes).

[closetohumping 17,810]

10 hours ago, jimmyjazz said:

Austin's latest YOY appreciation was 7.9%.  That roughly added my annual salary to my net worth, in one year.  It's insane.  I'm not arguing, but holy smokes, as many people who have been shut out, there are plenty of people who are benefitting (besides high taxes).

It's a conundrum for sure.

[royiv 9,777]

10 hours ago, jimmyjazz said:

Austin's latest YOY appreciation was 7.9%.  That roughly added my annual salary to my net worth, in one year.  It's insane.  I'm not arguing, but holy smokes, as many people who have been shut out, there are plenty of people who are benefitting (besides high taxes).

Property taxes are killing a lot of people in Austin, particularly those that are lower income or retired. Their income doesn't increase, but their taxes do. 

[pronghorn 44]

rents in austin per zillow so grain of salt is up 30%.

income of avg. tech worker in austin ~$150k vs across all industries is $75k.

 

[DefinitelyNotHollywoodColt 12,301]

19 hours ago, jimmyjazz said:

Austin's latest YOY appreciation was 7.9%.  That roughly added my annual salary to my net worth, in one year.  It's insane.  I'm not arguing, but holy smokes, as many people who have been shut out, there are plenty of people who are benefitting (besides high taxes).

Do you have a note on your house?

[Sbbruin 22,142]

SMH.  That's a pretty glaring mistake to make.  

Phil wouldn't never have done something as shit all stupid as that. They must have manure for brains

[UTPhil2006 3,930]

10 year down 0.12 to 2.79 getting down to couple month lows.

[52-80 19,377]

Where are people getting that housing supply is tight, and causing prices to ramp up?

Ive been looking at US census page on housing permits, time to completion, new property builds, etc - very cool source

The data says housing supply is as steady as ever, probably matching population growth (as a baseline)

My conjecture is that simply more people want to buy than is the trend, probably due to suppressed rates, which triggers a sort of fomo/momentum effect

Lumber price did spike the punchbowl, but that seemed a 2nd order effect

[Gil Bang 26,230]

3 minutes ago, 52-80 said:

Where are people getting that housing supply is tight, and causing prices to ramp up?

Ive been looking at US census page on housing permits, time to completion, new property builds, etc - very cool source

The data says housing supply is as steady as ever, probably matching population growth (as a baseline)

My conjecture is that simply more people want to buy than is the trend, probably due to suppressed rates, which triggers a sort of fomo/momentum effect

Lumber price did spike the punchbowl, but that seemed a 2nd order effect

Now do rentals

[Hefeweizen 5,444]

2 minutes ago, 52-80 said:

Where are people getting that housing supply is tight, and causing prices to ramp up?

Ive been looking at US census page on housing permits, time to completion, new property builds, etc - very cool source

The data says housing supply is as steady as ever, probably matching population growth (as a baseline)

My conjecture is that simply more people want to buy than is the trend, probably due to suppressed rates, which triggers a sort of fomo/momentum effect

Lumber price did spike the punchbowl, but that seemed a 2nd order effect

I think it’s in specific locations.  My company is in a lot of these markets and it is as tight as advertised.  I think inventory will catch up as demand slackens but it won’t happen in Austin, for example.  Just takes too long to get new permits and we’re not meeting demand yet.  I think we’re at least 18 months away from that point in central Texas.

[52-80 19,377]

22 minutes ago, Gil Bang said:

Now do rentals

Prob can be inferred from large multi-unit development, but i didnt find clean data around that

[Neonmoon 38,130]

If you are a renter. You are getting fucked. Had a client tell me they had Austin apartment increase rent by 20% and so they decided to GTFO 

[Pato del Muerto 53,459]

Haven’t read all the stuff being put out there, but headlines read like inventory was finally starting to catch up due to fewer mortgage apps from higher rates, and the builder response to that is to slow building down. 

[Neonmoon 38,130]

Builder confidence index dropped from 77 to 55, largest one month drop in history I think

[52-80 19,377]

Made this from the Building Permit Survey data

The % mix of new permits issued.  Multi-units (red) is slightly down.  Not sure if the count is per unit, or per building. 

Total new units is increasing... although this is not adjusted against existing units that may have been demolished

 

 

 

[UTPhil2006 3,930]

On 7/22/2022 at 10:23 AM, UTPhil2006 said:

10 year down 0.12 to 2.79 getting down to couple month lows.

A little up yesterday, more down today to 2.75

[Wulaw Horn 19,582]

Currently stock market down, mortgage backed securities down, 10 year down. That’s an odd day right there. 

[Incredulity 11,875]

10 hours ago, Wulaw Horn said:

Currently stock market down, mortgage backed securities down, 10 year down. That’s an odd day right there. 

Prepare thy anus 

[UTPhil2006 3,930]

12 hours ago, Incredulity said:

Prepare thy anus 

Flat today so far

[Pato del Muerto 53,459]

Just now, UTPhil2006 said:

Flat today so far

Your anus?

[Hefeweizen 5,444]

5 minutes ago, UTPhil2006 said:

Flat today so far

lol he was preparing his anus.  I am disapoint.

[UTPhil2006 3,930]

1 hour ago, Hefeweizen said:

lol he was preparing his anus.  I am disapoint.

I can still get some JITB tacos and change the course 

[UTPhil2006 3,930]

Flat but down so far.  Will gladly take an end of the week/month 10 year at 2.67

[jimmyjazz 47,133]

For no particular reason, I'm curious:  how does lender profit vary with mortgage rates to the consumer?

[UTPhil2006 3,930]

32 minutes ago, jimmyjazz said:

For no particular reason, I'm curious:  how does lender profit vary with mortgage rates to the consumer?

If I'm understanding your question right, the higher the rate the more the LO makes.  But different lenders have different payouts, if that's what you're asking.  For instance a 5.25 may pay 160 bps at CMG but may pay 195 bps at UWM.  Lenders compete with each other as well.

[jimmyjazz 47,133]

3 minutes ago, UTPhil2006 said:

If I'm understanding your question right, the higher the rate the more the LO makes.  But different lenders have different payouts, if that's what you're asking.  For instance a 5.25 may pay 160 bps at CMG but may pay 195 bps at UWM.  Lenders compete with each other as well.

No, not the latter -- let's take your 5.25/160 example at CMG.  What were they making when the rate was 3.75?

[LCHorn 2,751]

30 minutes ago, jimmyjazz said:

No, not the latter -- let's take your 5.25/160 example at CMG.  What were they making when the rate was 3.75?

It doesn’t change (or shouldn’t thanks to Dodd-Frank).  Lenders are expected to charge the same margin on every loan (that’s what Phil was quoting in bps).  That said, we obviously compete with each other so need to adjust pricing accordingly.  The originator, however, must be paid the same on every loan absent a couple of exceptions (I.e., the regulators wanted to remove the incentive for an LO to charge extra so they could make more).  

Last week’s optimal blue survey (that’s a pricing engine or software in common use) reported the national average yield spread premium on conventional loans at 350 bps.  I’m not clear whether that’s including or excluding points but it also exceeds the market in Austin.

[Wulaw Horn 19,582]

21 minutes ago, LCHorn said:

It doesn’t change (or shouldn’t thanks to Dodd-Frank).  Lenders are expected to charge the same margin on every loan (that’s what Phil was quoting in bps).  That said, we obviously compete with each other so need to adjust pricing accordingly.  The originator, however, must be paid the same on every loan absent a couple of exceptions (I.e., the regulators wanted to remove the incentive for an LO to charge extra so they could make more).  

Last week’s optimal blue survey (that’s a pricing engine or software in common use) reported the national average yield spread premium on conventional loans at 350 bps.  I’m not clear whether that’s including or excluding points but it also exceeds the market in Austin.

That seems incredibly high to me. Rates going up, for my business and anecdotally from many I talk to, seems to be squeezing margins as more people are willing to do loans for less money increasing competition. 

[Wulaw Horn 19,582]

1 hour ago, jimmyjazz said:

For no particular reason, I'm curious:  how does lender profit vary with mortgage rates to the consumer?

For me personally I think the higher rates are losing comp for lenders massively. You just weren’t getting shopped at 2.75% the way you do at 5.5%. 
Also, because there were so many deals, more than could be handled well by the system, you had plenty of mortgage guys refusing to do small loans, poor credit, anyone who seemed like it might be a hassle bc there was so much going on in the system.  In a world where everyone is hungry and competing with higher rates it just seems likely margins will decrease. 
but if optimal blue is saying the average spread is 3.5% I guess I’m just a dumbass, because the house makes less than 2% on my average deal. 

[Gil Bang 26,230]

Hey @Wulaw Horn, my kid is buying again, and has 10% down.  Is he better off Conventional vs. VA?  What's the spread these days?

Edited July 30, 2022 by Gil Bang

[Wulaw Horn 19,582]

4 minutes ago, Gil Bang said:

Hey Wu, my kid is buying again, and has 10% down.  Is he better off Conventional vs. VA?  What's the spread these days. 

Sent you a PM. Need a handful of answers to know for sure. 

[Neonmoon 38,130]

2 hours ago, jimmyjazz said:

For no particular reason, I'm curious:  how does lender profit vary with mortgage rates to the consumer?

Mortgages are sold to investors, mainly Fannie/Freddie, but others buy mortgages too. Fannie/Freddie bundle these mortgages and sell them as Mortage Backed Securities in the bond market. Investors pay a certain amount of basis points to buy each loan, let’s say 350. This fee is then split between the lender/broker/LO however they have agreed in contract. The splits don’t change per loan. It’s the same for every loan unless you renegotiate your contracts. Rates don’t matter. 
 

Now, does that answer your question? Or do you mean, does the yield paid by an investor, the hypothetical 350 basis points, change because of the market? That answer is a little more complicated, but at the end of the day, not really, but a little depending on bond markets. 
 

[Gil Bang 26,230]

Thanks for the PM, but there's no problem keeping it on here so others can learn.

He's selling in AL, buying in NC.  Price point 275,000.  Currently in a VA loan that will be paid off. 

Spoiler

``

 

[Gil Bang 26,230]

Hey Wu, just checked, score is 780+

[Dbeasy 15,581]

Just a reminder that large increases in your home value only translate into true additional wealth IF and WHEN you decide to live somewhere where home appreciation and values are much less.

It’s not quite the incredible lottery ticket many people think it is if they want to live somewhere comparable after they cash out. In fact, because of property taxes and the need for home loans, increased values could actually reduce usable wealth. It’s counterintuitive for sure. 

[jimmyjazz 47,133]

27 minutes ago, Dbeasy said:

Just a reminder that large increases in your home value only translate into true additional wealth IF and WHEN you decide to live somewhere where home appreciation and values are much less.

It’s not quite the incredible lottery ticket many people think it is if they want to live somewhere comparable after they cash out. In fact, because of property taxes and the need for home loans, increased values could actually reduce usable wealth. It’s counterintuitive for sure. 

That tends to imply one would buy a similar house when they move.  If I'm downsizing, even at higher rates, if my monthly nut is similar and I bank the equity from the last home (minus fees and taxes, if any), then I think there is a least some benefit to getting out.  We're going through this calculus now, and we aren't totally sure what we'll do.

[Neonmoon 38,130]

39 minutes ago, Gil Bang said:

Thanks for the PM, but there's no problem keeping it on here so others can learn.

He's selling in AL, buying in NC.  Price point 275,000.  Currently in a VA loan that will be paid off. 

  Reveal hidden contents

``

 

Why would he want to put money down to do a conventional? Just curious 

Even with the VA funding fee, he could get around 0.50% better on rates

[Wulaw Horn 19,582]

20 minutes ago, Neonmoon said:

Why would he want to put money down to do a conventional? Just curious 

Even with the VA funding fee, he could get around 0.50% better on rates

Because in a VA active duty military situation it’s likely he gets shipped out in less than 3 years, so he’s out the funding fee and the savings aren’t going to make up for that funding fee if he’s on a 2 year time frame or something like that. 

[Wulaw Horn 19,582]

59 minutes ago, Gil Bang said:

Hey Wu, just checked, score is 780+

No difference in analysis from the 740 I used. Maybe slides it ever so slightly to conventional being closer in monthly payment if that causes PMI to go down but it would be minor- like 10 a month minor. 

1 hour ago, Gil Bang said:

Thanks for the PM, but there's no problem keeping it on here so others can learn.

He's selling in AL, buying in NC.  Price point 275,000.  Currently in a VA loan that will be paid off. 

  Reveal hidden contents

``

 

You can post it. I didn’t want to put his stuff on blast if there was any issue that came up. 

[closetohumping 17,810]

2 hours ago, Dbeasy said:

Just a reminder that large increases in your home value only translate into true additional wealth IF and WHEN you decide to live somewhere where home appreciation and values are much less.

It’s not quite the incredible lottery ticket many people think it is if they want to live somewhere comparable after they cash out. In fact, because of property taxes and the need for home loans, increased values could actually reduce usable wealth. It’s counterintuitive for sure. 

This needs to be emphasized.  You’re gonna have to “downgrade” your life to save money.  And remember home equity is great….if you use it.  Otherwise you’re just living in an expensive house

[LCHorn 2,751]

4 hours ago, Wulaw Horn said:

In a world where everyone is hungry and competing with higher rates it just seems likely margins will decrease. 
but if optimal blue is saying the average spread is 3.5% I guess I’m just a dumbass, because the house makes less than 2% on my average deal

2-2.5% is about the gross we are making most of the time but our average loan is close to $500k.  I did get beat by some out of town lender on a $800k loan the other day and my gross was 83 bps to match (I can’t get quite that cheap on jumbo).  

[Wulaw Horn 19,582]

10 minutes ago, LCHorn said:

2-2.5% is about the gross we are making most of the time but our average loan is close to $500k.  I did get beat by some out of town lender on a $800k loan the other day and my gross was 83 bps to match (I can’t get quite that cheap on jumbo).  

Yeah that’s crazy how often you make less on a 900k deal than a 500k deal. 

[Dbeasy 15,581]

20 hours ago, jimmyjazz said:

That tends to imply one would buy a similar house when they move.  If I'm downsizing, even at higher rates, if my monthly nut is similar and I bank the equity from the last home (minus fees and taxes, if any), then I think there is a least some benefit to getting out.  We're going through this calculus now, and we aren't totally sure what we'll do.

Agree, when I said lower value I was including the scenario of moving into a smaller home, but my post didn’t make that very clear. 

Interesting side note, when we downsized we ended up in a house that was almost as big, and because we were moving from Dallas/Houston to Austin we didn’t unlock much home value.

Of course, I’ve always chosen to live in smaller, less expensive homes because I liked the freedom of having more wealth outside my primary residence.

[closetohumping 17,810]

20 hours ago, jimmyjazz said:

That tends to imply one would buy a similar house when they move.  If I'm downsizing, even at higher rates, if my monthly nut is similar and I bank the equity from the last home (minus fees and taxes, if any), then I think there is a least some benefit to getting out.  We're going through this calculus now, and we aren't totally sure what we'll do.

Us too.  A downgrade for us would be to leave California and get a bigger house, yard, etc in another state.  But with higher interest rates, it sort of evens it out.  Could I refi later?  Sure.  Will I ever see 2.5% again?  Hard to say.

 

So we're basically frozen.  Plus what we owe on our California house is probably less than what a house in flyover country would cost. Caveat being I'm not going to move to Houston or wherever and live in a townhouse or the hood.

 

 

Also saw 1/3 of listings in Austin were reduced in June.  Boise, SF and Phoenix had major reductions as well.  Essentially the hottest markets are seeing pullbacks, now that also has to do with buyers who are just pricing for "I want stupid money or I ain't leaving." 

[UTPhil2006 3,930]

On 7/29/2022 at 9:45 AM, UTPhil2006 said:

Flat but down so far.  Will gladly take an end of the week/month 10 year at 2.67

Went down some more on Friday and down .04 to 2.60 today so far.  Last time we were at 2.60 was mid April.

Also we're listing this for a buddy if anyone is interested - https://www.redfin.com/TX/Liberty-Hill/104-Stag-Leap-Ct-78642/home/112999340

[closetohumping 17,810]

55 minutes ago, UTPhil2006 said:

Went down some more on Friday and down .04 to 2.60 today so far.  Last time we were at 2.60 was mid April.

Also we're listing this for a buddy if anyone is interested - https://www.redfin.com/TX/Liberty-Hill/104-Stag-Leap-Ct-78642/home/112999340

It's beautiful but holy crap isn't LH way out there?

[Neonmoon 38,130]

2 minutes ago, closetohumping said:

It's beautiful but holy crap isn't LH way out there?

Laughs in Houston

[StruggleBus 3,922]

23 minutes ago, closetohumping said:

It's beautiful but holy crap isn't LH way out there?

Same thought I had

[TKthunder2 5,059]

7 hours ago, closetohumping said:

It's beautiful but holy crap isn't LH way out there?

45 minutes to downtown paying the 183A and Mopac tolls and soon to be 183 North tolls. 60 minutes without tolls.