homer_simpson
Well-known member
Are the rates for loans under $417k significantly lower?
Housing about to Blowup
- Thread starter test
- Start date
NEW -> Contingent Buyer Assistance Program
Yeah...not enjoying the raise in interest rates as I can't lock for another 15-20 days. I wonder if it is worth the premium to get a 60-day lock rather than a 45 day lock.
I am hoping that it's a rise like what happened in February and it will level off or dip down in the next couple of weeks.
Most of the times no, but since the last two weeks they are 0.125% lower than loans over $417K
The interest rate rise was so fast that it went from 3.5% to 4.25% in a matter of just weeks (not normal at all!). The higher interest rates are going to increase payments by about 10%.
IHO and irvine commuter must be brothers. Higher rates will impact what buyers can afford. At first, sellers will refuse to drop prices which should lead to higher inventory. Then either they seller will have to give in and reduce the price or not sell the house.
What I consider as "pushing" inventory, or providing incentive for sellers to list, is a strong buyer pool and rising prices.
Loss of affordability seems counteractive to me. I think part of the reason we saw a jump from 200s to 300s in Irvine inventory recently are these ridiculous prices that previously underwater sellers can now sell at without a loss. If rising rates depress prices to the point where sellers can't sell at a profit, they won't list.
"Pushing some inventory back into the housing market" is a bit different from "keeping homes on the market because they are priced too high".
This is what I think will happen. Stalemate. People will just stay in their homes and not sell. The mortgage rate hikes will decrease demand but probably not affect supply.
I think they watch prices more and in places like Irvine, rising rates tend not to push down prices as fast as some people think (in part due to a good portion of transactions are not financed anyways).
That is what a thoughtful seller would think. However, do you guys really think the average Joe Blow Seller puts that much thought into it? Honestly, I don't have that much confidence in people. Most people are just not educated about how the market works, or "should" work, and how it impacts them indirectly. For example, I remember when I was studying journalism. We were taught to write news articles at a 9th grade literacy level because that's where the nation's adult readership level is. On average, they have just enough to get by. What about those sellers who are notorious for having WTF asking prices, thinking their tract home is super star special even if it's out of line with comps. I wouldn't put it past the average, ignorant, prideful Schmoe to expect potential buyers to beg, borrow, or steal to cough up the dough regardless of where interest rates are. Just my 2 cents.
Those underwater can't sell period...need bank approval and major credit hit. Better to just refinance or pay the mortgage.
If prices flatten out, those with low equity would also not be able to sell low and just better of continue to live in the house.
The thing about selling is that if you can afford the payments, there is no rush. People who couldn't make the payments have already been weeded out of the system.
LOL, no, most think they'll time the market and sell at peak and then buy back lower, not realizing that with financing, the transaction cost is going to be 10%. Which means the peak to secondary fall, really needs to be around 20% or more before you have a realistic chance of coming out ahead.
Overall the market is returning to the late 90s model. You may think you're getting a price deal, and you are, unfortunately, the move in ready quality will suffer with it.
Irvinecommuter
New member
daedalus said:
Yeah...not enjoying the raise in interest rates as I can't lock for another 15-20 days. I wonder if it is worth the premium to get a 60-day lock rather than a 45 day lock.
I am hoping that it's a rise like what happened in February and it will level off or dip down in the next couple of weeks.
irvinehomeowner
Well-known member
How will rising rates push more inventory back into the market?morekaos said:
quattroporte
New member
H O M E R said:
Most of the times no, but since the last two weeks they are 0.125% lower than loans over $417K
quattroporte
New member
Irvinecommuter said:
The interest rate rise was so fast that it went from 3.5% to 4.25% in a matter of just weeks (not normal at all!). The higher interest rates are going to increase payments by about 10%.
homer_simpson
Well-known member
ok. thanks 
qwerty
Well-known member
irvinehomeowner said:
IHO and irvine commuter must be brothers. Higher rates will impact what buyers can afford. At first, sellers will refuse to drop prices which should lead to higher inventory. Then either they seller will have to give in and reduce the price or not sell the house.
irvinehomeowner
Well-known member
What you are saying isn't "pushing" more homes "back" into inventory... it's keeping inventory out there.qwerty said:
What I consider as "pushing" inventory, or providing incentive for sellers to list, is a strong buyer pool and rising prices.
Loss of affordability seems counteractive to me. I think part of the reason we saw a jump from 200s to 300s in Irvine inventory recently are these ridiculous prices that previously underwater sellers can now sell at without a loss. If rising rates depress prices to the point where sellers can't sell at a profit, they won't list.
"Pushing some inventory back into the housing market" is a bit different from "keeping homes on the market because they are priced too high".
Irvinecommuter
New member
irvinehomeowner said:
This is what I think will happen. Stalemate. People will just stay in their homes and not sell. The mortgage rate hikes will decrease demand but probably not affect supply.
morekaos
Well-known member
I respectfully disagree. I think there has been pent up sellers on the sidelines waiting to list while prices have risen. An increase in rates will induce them and press a panic button. If they don't sell soon there will be NO buyers left as rates lock more buyer out. That is the "push" I am referring to. Right now prices are being demand pushed, soon prices will get a supply push...down.
irvinehomeowner
Well-known member
This makes more sense... although I'm not so sure how many sellers watch interest rates as a listing indicator.morekaos said:
I think they watch prices more and in places like Irvine, rising rates tend not to push down prices as fast as some people think (in part due to a good portion of transactions are not financed anyways).
morekaos
Well-known member
socal78
Well-known member
morekaos said:
That is what a thoughtful seller would think. However, do you guys really think the average Joe Blow Seller puts that much thought into it? Honestly, I don't have that much confidence in people. Most people are just not educated about how the market works, or "should" work, and how it impacts them indirectly. For example, I remember when I was studying journalism. We were taught to write news articles at a 9th grade literacy level because that's where the nation's adult readership level is. On average, they have just enough to get by. What about those sellers who are notorious for having WTF asking prices, thinking their tract home is super star special even if it's out of line with comps. I wouldn't put it past the average, ignorant, prideful Schmoe to expect potential buyers to beg, borrow, or steal to cough up the dough regardless of where interest rates are. Just my 2 cents.
morekaos
Well-known member
But the average shmoe in the last few years has been stung hard by the realities of the market and leverage. I think those underwater are on a hair trigger to vamoose if they can with as many fingers and toes as possible. The average shmoe actually makes emotional and many times foolish and rash financial decisions.
Irvinecommuter
New member
morekaos said:
Those underwater can't sell period...need bank approval and major credit hit. Better to just refinance or pay the mortgage.
If prices flatten out, those with low equity would also not be able to sell low and just better of continue to live in the house.
The thing about selling is that if you can afford the payments, there is no rush. People who couldn't make the payments have already been weeded out of the system.
nosuchreality
Well-known member
SoCal said:
LOL, no, most think they'll time the market and sell at peak and then buy back lower, not realizing that with financing, the transaction cost is going to be 10%. Which means the peak to secondary fall, really needs to be around 20% or more before you have a realistic chance of coming out ahead.
Irvinecommuter said:
Overall the market is returning to the late 90s model. You may think you're getting a price deal, and you are, unfortunately, the move in ready quality will suffer with it.
quattroporte
New member
"The biggest risk is what will happen as interest rates rise, which they have started to do recently. Homes that drew a queue of buyers with mortgage rates at 3.5% might not be nearly as appealing if rates rise to 5%, 6% or 7%, because the monthly payments would be considerably higher and renting might seem like a better option. ?If the price of money goes up, you?ll price more people out of the home market,? Emile Haddad, CEO of real-estate management firm FivePoint Communities, said at the recent Milken Institute Global Conference. ?And if you create more-expensive mortgages, you?ll put underwater homeowners more underwater.?"
http://finance.yahoo.com/blogs/the-exchange/why-house-flippers-might-hosed-200844091.html
http://finance.yahoo.com/blogs/the-exchange/why-house-flippers-might-hosed-200844091.html
quattroporte
New member
Bad news after bad news. I thought things were starting to get better. :'(
"May 30 (Reuters) - Millions of U.S. homeowners are months behind on payments on government-backed mortgages, raising the risk federal housing agencies will end up facing the cost of managing a fresh flood of foreclosed homes, two government watchdogs said on Thursday.
Some 2.7 million borrowers have missed several payments on mortgages backed by the U.S. government, the inspectors general of the Federal Housing Finance Agency and Department of Housing and Urban Development said in a joint report."
"The report said the shadow inventory, which is made up of loans that have been delinquent for at least 90 days, is more than seven times the inventory of REOs that Fannie Mae, Freddie Mac and HUD currently own."
http://www.reuters.com/article/2013/05/30/usa-housing-idUSL2N0EB0U320130530?type=companyNews&feedType=RSS&feedName=companyNews&rpc=43
"May 30 (Reuters) - Millions of U.S. homeowners are months behind on payments on government-backed mortgages, raising the risk federal housing agencies will end up facing the cost of managing a fresh flood of foreclosed homes, two government watchdogs said on Thursday.
Some 2.7 million borrowers have missed several payments on mortgages backed by the U.S. government, the inspectors general of the Federal Housing Finance Agency and Department of Housing and Urban Development said in a joint report."
"The report said the shadow inventory, which is made up of loans that have been delinquent for at least 90 days, is more than seven times the inventory of REOs that Fannie Mae, Freddie Mac and HUD currently own."
http://www.reuters.com/article/2013/05/30/usa-housing-idUSL2N0EB0U320130530?type=companyNews&feedType=RSS&feedName=companyNews&rpc=43
Dow Jones U.S. Home Construction Index
about to fall off a cliff
http://advisorperspectives.com/dshort/guest/Chris-Kimble-130531-Friday-Real-Estate-Update.php
about to fall off a cliff
http://advisorperspectives.com/dshort/guest/Chris-Kimble-130531-Friday-Real-Estate-Update.php