Burn That Belly
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At what point in the rate cycle would you pass on home buying?
- Thread starter sgip
- Start date
NEW -> Contingent Buyer Assistance Program
Soylent refer to the 10 T-bill rate at which is approaching 3 percent or 2.96 % to be exact on April 20, 2018. The 10 yrs T-Bill is a correlation to mortgage rate increase. This will hit and push rate to 5 % for jumbo loan by summer.
Isn?t that (not apples to apples) what i said
. But you had to make a point using Manhattan which is NOT what I used as example .
West LA is proximate enough both in terms of geography and underlying dynamics (distance from coastal areas) that it can be a good comp down the road . The thing is I don?t know the future - neither do you .
All we can do is make educated guesses about the future . And in that realm of probabilities great park multi level homes are not something you can totally dismiss as having no relevance .
Then that?s a double whammy.
As a potential trade up buyer, higher home price makes me think twice about trading up. With the home prices continue going up, on one hand my asset goes up but on the other hand, it will cost me a lot more to trade up. When you trade up, it?s not just simply the price difference between the two products. The trade up home will have a significant higher property tax, maybe also higher MR, and the new property tax deduction limits plus the higher interest rate doesn?t help either.
Thankfully I think my next move won't be until retirement. But to answer the original question, it comes down to some sort of NPV calculation. Depending on the lender I can sometimes buy the rate down. If my desired rate costs me $20k to get, then that's the extra cost, which has to come out of somewhere. If my desired rate can't be bought, then I have to come up with a NPV calc of my own. The banks are typically more aggressive than I am, so my own calcs will assign a higher NPV.
irvinebullhousing
Well-known member
Burn That Belly said:
Soylent refer to the 10 T-bill rate at which is approaching 3 percent or 2.96 % to be exact on April 20, 2018. The 10 yrs T-Bill is a correlation to mortgage rate increase. This will hit and push rate to 5 % for jumbo loan by summer.
Burn That Belly
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Burn That Belly said:
Isn?t that (not apples to apples) what i said
. But you had to make a point using Manhattan which is NOT what I used as example . West LA is proximate enough both in terms of geography and underlying dynamics (distance from coastal areas) that it can be a good comp down the road . The thing is I don?t know the future - neither do you .
All we can do is make educated guesses about the future . And in that realm of probabilities great park multi level homes are not something you can totally dismiss as having no relevance .
Compressed-Village said:
Then that?s a double whammy.
As a potential trade up buyer, higher home price makes me think twice about trading up. With the home prices continue going up, on one hand my asset goes up but on the other hand, it will cost me a lot more to trade up. When you trade up, it?s not just simply the price difference between the two products. The trade up home will have a significant higher property tax, maybe also higher MR, and the new property tax deduction limits plus the higher interest rate doesn?t help either.
nosuchreality
Well-known member
Interest rates and price are irrelevant. The math is simple, population growth is greater than housing growth. Until the economy runs a ground, price increases will continue until people self select into greater occupant density. Moving to Riverside is just a stratification of occupant density.
If you build 1000 housing units with a currennt, (and target density) of 2.3 people but your population increases by 30,000 people you have an issue. This is what we've been doing for two decades across the entire five county region.
If you build 1000 housing units with a currennt, (and target density) of 2.3 people but your population increases by 30,000 people you have an issue. This is what we've been doing for two decades across the entire five county region.
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Liar Loan
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I have to make this decision sometime in the next 4-5 years. Should I stay put with a 3.66% mortgage that is paid off in 12 years, or move up to a larger place paying a much higher interest rate? If I stay put, then I would probably need to add-on an additional 1,200+ sq ft to our living space.
paperboyNC
New member
I think ironically, higher interest rates decrease the supply of starter homes. As Liar Loan pointed out, he has less incentive to move up.
My scenario:
Stay in my 2.75% mortgage with 2011 property tax rates and mello-roos that starts expiring in 2020?
Total Cost: $2,800/mo
Move up with a home that "costs" 50% more:
- Borrow the "transaction costs": $200/mo
- Additional mortgage on the 50% higher cost: $1,800/mo
- Interest rate goes up to 4.25%: $700/mo
- Property tax on the 50% higher cost: $400/mo
- Property tax on the additional mello roos: $300/mo
- Property tax on the value reset: $250/mo
- Property tax for the higher base mellos roos: $350/mo
New total with rolling 100% home equity into the new home, but no additional money down: $6,800.
If I could move up to a larger house for around 50% more ($4,500/mo) I'd consider it in a couple years. But for 150% more for 50% more expensive home? Heck no..
My scenario:
Stay in my 2.75% mortgage with 2011 property tax rates and mello-roos that starts expiring in 2020?
Total Cost: $2,800/mo
Move up with a home that "costs" 50% more:
- Borrow the "transaction costs": $200/mo
- Additional mortgage on the 50% higher cost: $1,800/mo
- Interest rate goes up to 4.25%: $700/mo
- Property tax on the 50% higher cost: $400/mo
- Property tax on the additional mello roos: $300/mo
- Property tax on the value reset: $250/mo
- Property tax for the higher base mellos roos: $350/mo
New total with rolling 100% home equity into the new home, but no additional money down: $6,800.
If I could move up to a larger house for around 50% more ($4,500/mo) I'd consider it in a couple years. But for 150% more for 50% more expensive home? Heck no..
As soon as law makers figure this out, expect some form of repeal of Prop 13.paperboyNC said:
Thankfully I think my next move won't be until retirement. But to answer the original question, it comes down to some sort of NPV calculation. Depending on the lender I can sometimes buy the rate down. If my desired rate costs me $20k to get, then that's the extra cost, which has to come out of somewhere. If my desired rate can't be bought, then I have to come up with a NPV calc of my own. The banks are typically more aggressive than I am, so my own calcs will assign a higher NPV.
Rates and tax law changes seem to have had zero impact in the Bay area market. A comp down the street from us just closed for 30% increase over our purchase price a year ago, reflecting the 30% YoY median increase in Santa Clara County. This is nuts!https://www.mercurynews.com/2018/04/24/bay-area-home-sales-go-only-one-direction-up/
Burn That Belly
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