Home buying thread

Fucker

Fucker

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Jysin said:
The only thing I will say is the stock market is not the housing market. Stocks are fickle, liquid and can be panic sold at the push of a button. Housing? Not so much.

From the historical perspective of the last “crash” of the 2008 GFC / Housing Crisis:
Lehman collapse (alarm bells blared): Sept 2008
Stock market bottom: March 2009
Housing bottom: 2012

So, to even assume a housing crisis is unfolding, it can take YEARS to shake out. It moves at a glacial pace to get forced selling, comps to pull valuations down, etc.

I still don’t think we get any massive housing correction until there are mass layoffs, which don’t seem to be happening as of yet. We are seeing some anecdotal markets pull in that were the most overbought during the pandemic years. (TX & FL). Much of the NorthEast is doing nothing but going up in price.
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Yeah.

There will be localized housing corrections like we are seeing in Florida, but not a broad OMG collapse that we saw previously. In a lot of places, there are more asses than seats, and that drives up prices. Inflation, too. Housing prices here have tracked almost exactly the real rate of inflation Since 2020. This is never going to go away.
 
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Lambourne

Lambourne

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Fucker said:
Yeah.

There will be localized housing corrections like we are seeing in Florida, but not a broad OMG collapse that we saw previously. In a lot of places, there are more asses than seats, and that drives up prices. Inflation, too. Housing prices here have tracked almost exactly the real rate of inflation Since 2020. This is never going to go away.
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Inflation expectations also drive mortgage rates. People think "Fed cuts rates, my mortgage rate is going to drop too", but mortgage rates are far more closely linked to long term bond rates. Fed cut in 2024 and mortgage rates went up.


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Jysin

Jysin

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Exactly right. The people peddling Fed cuts = cheap mortgages are often in the RE sales industry. “Date the rate & marry the house” has been repeated over the last couple of years, making buyers believe you can just buy no matter what at elevated rates and “just refi later”.

Bottom line: Fed does NOT control the long end of the yield curve. Mortgages tend to follow the long end. When bond buyers start to doubt the fiscal path and future bond issuances, they are going to demand elevated rates on their risk. That is where we are at.

Ask the UK how their mortgage rates are doing. Their central bank has cut 5 times over the last 18 months. Their 30 year gilt (bond) just hit multi-decade highs! Same issues with UK debt and spending that are driving the long end of the curve. The US is facing the same fate unless they get their fiscal house in order.
 
Intrinsic

Intrinsic

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For what it is worth, I've spent the last week shopping around a LOT of Construction-to-perm and mortgage offerings from banks. We haven't taken it far enough to get contracts because we're still ironing out our total build price and amount we need, but the rates we're being quoted are dropping.

I've gone to probably 5-6 local / regional banks and larger ones such as Regions and Bank of America.

One local bank quoted us 9.5% on the construction loan, 2 closings and they don't offer an in-house perm option so we'd have to go elsewhere.
We've had most others return construction at 7.2% - 7.7% depending on 80% to 90% LTV/LTC.
One local bank came back at 6.5% but they were a one-time close product with no option to float down or refinance on conversion.

A friend just closed on his house ($250k) with a 5.9% mortgage, 0 points but I'm pretty sure he had 20% down, so not really a huge loan.

Not arguing about whether the fed controls those or anything but they are dropping. A little less than a year ago an acquaintance built their home and the best construction loan he found was a local bank at 8.5% (same one that quoted us 7.5% today).

It really seems like during the rising rate period most of the lenders swapped over to one-time close products and were selling the value of locking in the rate today since the hedge was rates were going up, and your conversion would be higher. These same banks haven't repositioned their offerings to either be a 2 close product or allow for a float down (either during the course of construction or at close). So, for the moment, we're focusing in on ones with a 2-close option.
 
TJT

TJT

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Well. Made it free and clear on my other house. So that's cool. This was my first house in the north Austin area. Renting it out for $2100/month for the past few years since I moved to my current place.

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