How low can we go? 30 yr fixed at 3.75% with no fees...

[Ready2Downsize]

You also lucked into your prime earning years corresponding with a 40 yr bull market in bonds and corresponding decline in long term int rates. Double coupons - I recall those were automatic at Ralphs. We used to use them in the mid 90s but our earnings have increased by almost 10x since then, reflective of the massive wage inflation skilled workers have seen in the Internet age, so I guess Gen X got something after all as my dad's best salary before retirement in the late 80s was 1/8 of what I made last year.

Because we were young and had entered the job market right near the top of interest rates we benefited by inflation ratcheting up or salaries, bigley but on the way there, Boomers had inflation for a decade, year in and year out. By 1984, nurses were being cancelled and sent home early. New RNs had to start out in nursing homes just to find a job.

My friend's dad was in aerospace and lost his job. I walked to high school and and we stopped by her house to "pick her up" and he was always sitting with the paper combing the job listings. I remember thinking, GET A JOB and thinking it was sad that his wife was picking up every substitute teaching job she could get (she had retired as a school principal), but my mom told me it's HARD to get an aerospace job not knowing my parents were worried my dad would lose HIS job which was tied to aerospace.

The builder gave us a loan of 12.5% straight 5 year balloon and I was always worried what would happen when 5 years was up. Luckily rates dropped to 10% and we were able to refinance but there were others in the neighborhood who lost their house with those loans.

When I was in grade school most moms were stay at home moms and had only one car. Somewhere around then, moms started getting a job for a few extras. Sad today double incomes are required.

I was able to save money other ways though. Since I worked evenings, I only paid for a babysitter for a couple hours when I went back to work and worked every weekend so we didn't spend a lot on childcare. We were lucky she didn't kick us to the curb because sometimes my hubby would be late if the bus was late or he missed a connection. The preschool we went to was a morning only mom participation so it was really cheap (I think we paid $20 a month, worked one morning per week, provided snack once a month) and we even got a disneyland tix for mom and child at the end of the year. I never thought my kids learned any less and was happy to watch what was going on in person.

It wasn't all rosy. Money was really tight for us for many years and we got absolutely NO help from any grandparents whose attitudes were that they put in their time and now it's my time to raise my kids by myself. Their loss. But we did benefit big time from inflation ramping up or salaries. We would have done better if we were a few years older but that's the way it goes. You make your own luck.

 

[Liar Loan]

I wonder if the supply of homes declined 3% over the past week to match the decline in purchase applications, or if maybe the highest rates in 13 years have something to do with it.

Surging interest rates push mortgage demand down more than 40% from a year ago

Mortgage applications to purchase a home declined 3% for the week and were 9% lower than the same week one year ago.
https://www.cnbc.com/2022/04/06/sur...down-more-than-40percent-from-a-year-ago.html

 

[irvinehomeowner]

So 4 years later we are finally going to see that Irvine pain?

 

[Liar Loan]

So 4 years later we are finally going to see that Irvine pain?

2018 was a housing recession localized to Irvine, CA. 

2022 will affect all housing markets nationally (and I expect internationally) to varying degrees.  Sunbelt cities like Phoenix and Tampa will get hit hard, as well as inland cities like Riverside, San Bernardino, and Stockton.  Coastal counties will fare better, but I would not expect them to escape unscathed.

Play financial defense (unlike your hoops game) over the next few years and retain as much powder as possible for the next round of opportunities when the dust settles.  You'll be able to give each of your kids a 3CWG in Irvine before this is all over, making you Irvine dad of the year.

 

[zubs]

I wished I had bought 10 more houses during the housing crash of 2018.


Could have sold or rented out for more than 20% plus today.

 

[irvinebullhousing]

So 4 years later we are finally going to see that Irvine pain?

2018 was a housing recession localized to Irvine, CA. 

2022 will affect all housing markets nationally (and I expect internationally) to varying degrees.  Sunbelt cities like Phoenix and Tampa will get hit hard, as well as inland cities like Riverside, San Bernardino, and Stockton.  Coastal counties will fare better, but I would not expect them to escape unscathed.

Play financial defense (unlike your hoops game) over the next few years and retain as much powder as possible for the next round of opportunities when the dust settles.  You'll be able to give each of your kids a 3CWG in Irvine before this is all over, making you Irvine dad of the year.

The homes closer to beach cities in socal will suffer worse than Irvine. The reasons are they have bought it at a much higher inflated prices compare to Irvine. As credit tighten the pool of buyers for these higher prices are becoming much smaller. And traditionally the demographic of Irvine buyers 50% Asians are much more conservative in financing vs other ethnic groups, whose use lower down payment and have many other debts on top of housing payment.

 

[Liar Loan]

I wished I had bought 10 more houses during the housing crash of 2018.


Could have sold or rented out for more than 20% plus today.

8% transaction fees
2% property tax per year
High HOA
High insurance costs
Management costs

With the negative cash flow each month you would not have come out ahead.  Just about any other asset class would have outperformed.  A simple stock portfolio would have netted you over 70%.

 

[daedalus]

Should move this to another thread since it's not so much about rates at this moment - 5.5 to 6.0% perhaps in the coming weeks! YOW!!

We need a "How high can we go?" thread.

 

[sgip]

@LL Yep, needed to add an APR there before the Trolls run to the FDIC about out of compliance quotes.

@Ready2Downsize - Yes, there are many people who were not handed generational wealth. As I grew up in a very large family (8 kids, 2 parents) there wasn't much available between us once the breadwinner went on before us. We were at least instilled with the right outlook on life and have been blessed with some success. That said, we are for the most part in the minority of the Me Generation who squandered what they had and spawned an entire new set of problems with what I call Generation Gimmie - those who feel everything is owed to them, not earned.

@Daedalus - My vote is a low 7 worst case fixed. By then the ensuing crash will result in a reversion to what we've become used to these many years - an accommodative Fed sometime during late 2023.

We shall see, won't we!

 

[Ready2Downsize]

@LL Yep, needed to add an APR there before the Trolls run to the FDIC about out of compliance quotes.

@Ready2Downsize - Yes, there are many people who were not handed generational wealth. As I grew up in a very large family (8 kids, 2 parents) there wasn't much available between us once the breadwinner went on before us. We were at least instilled with the right outlook on life and have been blessed with some success. That said, we are for the most part in the minority of the Me Generation who squandered what they had and spawned an entire new set of problems with what I call Generation Gimmie - those who feel everything is owed to them, not earned.

@Daedalus - My vote is a low 7 worst case fixed. By then the ensuing crash will result in a reversion to what we've become used to these many years - an accommodative Fed sometime during late 2023.

We shall see, won't we!

There was a big difference between what our generation got. Some of us got harsh parents who beat us. I had lots of friends in that category. At that time u just didn't say anything and in fact parents could sign authorization for corporal punishment in grade school. If u were one of those kids u got the paddle at school.

Others got parents who never laid a hand on them. I had one friend who claimed this to be true. None of us believed her.

Most were somewhere in between. I know of no one who was "given" anything of value. I didn't live in a poor area. I grew up in Fountain Valley. It's just how it was. I'm towards the end of the boomer generation but there were some who came after me. Maybe they got better treatment and "stuff" handed to them. I knew what my life had ahead was my responsibility and I better get moving if I wanted to make anything of it.

Millenials stand to be the wealthiest generation after the boomers die off leaving their "wealth" to the kids.
https://www.kasasa.com/exchange/articles/generations/gen-x-gen-y-gen-z

Before u complain the boomers are hoarding their cash, medical bills can really cause a major problem. I took a big hit when I had cancer and bills have only gotten more expensive.

I had been saving thru an HSA for years and last year went thru the entire account plus the FSA just for me and we didn't even go to the dentist on diagnostic tests and never even found out the cause of my issues. I'm still trying to find that out and all that is expensive.

When u get older u will know what I mean from personal experience most likely and think several times about passing on wealth to the kids as u age and then you'll say well the boomers actually do need that cash.

 

[daedalus]

@Daedalus - My vote is a low 7 worst case fixed. By then the ensuing crash will result in a reversion to what we've become used to these many years - an accommodative Fed sometime during late 2023.

Lordy, I don't think rates can get that high before the "ensuing crash" occurs.  And I'm not talking just real estate...all the governments will go bankrupt just trying to cover their debts.  Gold might become en vogue once again!

 

[Ready2Downsize]

@Daedalus - My vote is a low 7 worst case fixed. By then the ensuing crash will result in a reversion to what we've become used to these many years - an accommodative Fed sometime during late 2023.

Lordy, I don't think rates can get that high before the "ensuing crash" occurs.  And I'm not talking just real estate...all the governments will go bankrupt just trying to cover their debts.  Gold might become en vogue once again!

How can the government service their own debt with rates that high? Print more money obviously but really.... how can rates go that high with governments in so much debt? And when r savings accounts going to see higher rates?

 

[daedalus]

Re: demographics and wealth and opportunities, I agree that wealth transfer will be a huge windfall for the younger generation, but from a social safety net standpoint, every generation has had it tougher than the one before.  R2D, you mentioned getting a free bus pass...is that even a thing anymore?  If you're a millennial or an alpha that isn't getting an inheritance, then it's already strike two for you.  I'm squarely in the Gen X pool, and even I had it easy, comparatively, and was in college when state subsidies started getting cut en masse.  My first tuition bill for 3 classes at my state school was $184.  My last tuition bill 5 semesters later was around $2k.  It's much higher now of course.  Back in the boomer's and many gex-xs' day you could "work your way through school" for pretty much any public in-state tuition.  Today, that's just not happening without a really good story and/or a fairly risque gig.  Back then, a degree was a high probability ticket to a better life with a solid impact on lifetime earnings; today it's a bare minimum requirement to roll the dice in the hopes of getting a good job, and not ending up a statistic as an over-educated barista. 

 

[irvinebullhousing]

@Daedalus - My vote is a low 7 worst case fixed. By then the ensuing crash will result in a reversion to what we've become used to these many years - an accommodative Fed sometime during late 2023.

Lordy, I don't think rates can get that high before the "ensuing crash" occurs.  And I'm not talking just real estate...all the governments will go bankrupt just trying to cover their debts.  Gold might become en vogue once again!

Brenton Wood III, is in the making. The Great Reset.

 

[sgip]

This will be my 4th significant recession. Yes, I was in the biz when double digit rates ("teens") existed, and in the grand scheme of things, it really wasn't that long ago.

Everyone made it out alive, albeit with scratches and contusions. The same will happen this go 'round so be ready, not surprised.

My .002c

 

[irvinehomeowner]

So 4 years later we are finally going to see that Irvine pain?

2018 was a housing recession localized to Irvine, CA. 

So now it was a housing recession? Just because you keep saying it doesn't make it true.

What was the percentage drop again? And did you count new home sales?

Post a chart that shows us this so-called "recession" (or "pain").

Coastal counties will fare better, but I would not expect them to escape unscathed.

So not your safe havens anymore? Did you find your posts on this? Didn't put any words in your mouth... just showed your assertion was flawed.

As for rates... companies will get creative, Owning is now advertising a 3.75% 10-year fixed (ARM variant) so there is still ways for people to finance.

 

[daedalus]

As for rates... companies will get creative

I'm not sure you realize how scary that prospect is.  The last time "creative financing" was all the rage, things didn't end well. 

 

[sgip]

Thankfully most of the "Creative" (AKA "Dangerous") stuff has been verboten for Banks and the GSE's to create and sell - even though in hindsight allowing a 49.9 DTI on GSE loans looks pretty stoopid now. Sure, it was OK at $2.25 gas and $2.00 bread. Most would agree it's not OK at $6.25 gas and $4.00 bread.

You will start to see rate buydowns (permanent and temporary) offered in lieu of price reductions. Another likely offer will be to offer "upgrades" if you finance and obtain a long term rate lock with the in-house lender. After that it may be a 3x rate handle fixed or 2x handle ARM if you buy at list price. At least in the new construction world, price reductions are considered the Nuclear Option as it can run the risk of in-contract, but not delivered home buyers to revolt.

During the 1992 recession a number of homebuyers who closed at the pricing peak would put signs on their garage doors saying "I GOT SCREWED BY BUILDER XYZ". Imagine if you were to see those pop up today!

It's an unlikely scenario, but not completely out of the question to occur should things were to spin drastically out of control.

Buckle up!

 

[irvinebullhousing]

I am going to keep a tight tab on coastal homes, both new and existing home sale begin April 1 to compare against Irvine this next go round to see who fare better. My money is on Irvine to comes out on top.

 

[irvinehomeowner]

As for rates... companies will get creative

I'm not sure you realize how scary that prospect is.  The last time "creative financing" was all the rage, things didn't end well. 

It depends on the product but also on the underwriting.

O-ARMs (the ones with option payments and deferred interest) is actually okay if used responsibly and people really qualify for the P&I payment (not the minimum).

Today, underwriting is more stringent (although I hear ads for "undocumented income" loans) and the ARMs are "safer".

I've used various mortgage products through my lifetime (for a long time I was non-W2 worker)... if you know your finances... you can find a something that fits in your budget even in a high interest environment.

The dangerous part is the people who don't actually qualify or can't manage their money. Less of those today... but yes, the danger is still there.