So About This Frozen Housing Situation...

[katya422]

From another thread:

It's a quagmire. Between price and mortgage increases if I tried to buy my house today the mortgage would be 3x higher than when we moved in 4 yrs ago. With no kids we could still swing that difference, but with 3 kids ($35-40K a year on daycare and camps, let alone other child expenses) we couldn't make up that difference now.

There's no demand, but there's also no supply of existing houses for sale because sellers don't want to move and take on a 7-8% mortgage when they have a 3% rate where they are. Golden handcuffs as they say. A lot of people thought we'd have a crash but the high mortgage rates are keeping would-be sellers off the market since they will be buyers too. Absent a moderate to bad recession I'd now bet on average prices will simply go down 1-3% for several years in a row. So affordability will get a little better, but it will take years.

Besides recession a possible source of price decreases is Airbnb/VRBO homes. The owners made good money in the past but there are so many nowadays that a schit ton of them are losing money every month. Some of the owners will sell, adding to supply, but more than likely most of them will become long-term rentals. Hopefully the big money financial groups don't swoop up and buy most of them or nobody wins except them.

I'm old enough to remember something called assumable mortgages. Those used to be a thing. A seller could let a buyer pick up their existing mortgage with a lower interest rate.

I suspect those went away due to a lack of demand.

Now we again have a pretty big spread between many existing mortgages and the current market rate.

Could this be an opportunity for a middle man to act as a sort of factor in exchange for a bite of the spread? Would it be worth it?

Say the seller has a mortgage @ 3% while the current rate is 7%. Could a factor step in to take over responsibility for the mortgage as a third party shielding the seller from credit risk and pass through that portion of the mortgage at 4% or 5%? The buyer would have to have cash or take on a second mortgage to cover the difference between the outstanding mortgage and the sale price. The seller would be hit for an upfront fee to set everything rolling and pad the bottom line for the factor.

Maybe this could provide more liquidity to the market if rates remain highly elevated? A seller would be out a fee, but on the other end if they were able to purchase a property which is also being handled by a factor + they have equity = they could change properties without increasing their payment to a ludicrous level.

This might be totally retarded and I've not even tried to figure the math, but if it pays it seems like there would be a lot of customers who need to move or really want to, but can't afford a chunkier monthly payment.

[OffwhiteBrah]

dont matter to me, imma die in my house, no plans on selling or upgrading

[RICHSTRONG]

Got friends in the Bizz...word on the street ain't hardly anyone buying.

[OliverHeldens]

There are still assumable mortgages, but they're just a pain the the ass to originate so noboday wants to do them.

[ACEofBASED]

Nobody's house costs 4x now than 2019.

[katya422]

There are still assumable mortgages, but they're just a pain the the ass to originate so noboday wants to do them.

Yes, so I presume that very very few people who presently have low rates also have assumable mortgages.

I mean in a sane world I would think that a continuously increasing money supply would mean that lenders would demand higher rates so as not to take a loss against their loans. OTOH I know our system isn't sane and banks write loans out of thin air based on no real assets. So it's in a sense money for nothing on their end.

Imagine having the legal right to make an entry into your own data base and *poof* money appears.

[friesbruh]

assumable mortgages are everywhere. look at some of my posts from the last couple years and i mention em. my mortgage is. i do believe all government backed loans are by default assumable but they have to be caught up in order to be assumed and the new mortgage for the difference is likely to stay with the same bank as they won't willingly take second position.

difference between asking price and assumable amount is at current rates. tons and tons of people have assumable mortgages they just don't know about it or have looked in to it. for anyone trying to buy look for houses bought or sold within the past two years. it is almost guaranteed to be less than 4% and have the loan payoff almost equal to purchase price.

i got a zillow search set up that's for a key word "assumable."

[OliverHeldens]

Yes, so I presume that very very few people who presently have low rates also have assumable mortgages.

I mean in a sane world I would think that a continuously increasing money supply would mean that lenders would demand higher rates so as not to take a loss against their loans. OTOH I know our system isn't sane and banks write loans out of thin air based on no real assets. So it's in a sense money for nothing on their end.

Imagine having the legal right to make an entry into your own data base and *poof* money appears.

All VA Loans are assumable, and many Commercial as well. Commercial aren't as big a deal though because it's usually only a 5 year fixed term.

[stevenmurray198]

I'm getting my house ready to sell right now, hoping to list about this time next year. If anyone wants to move to Iowa let me know. Probably list around 230k.

[katya422]

assumable mortgages are everywhere. Look at some of my posts from the last couple years and i mention em. My mortgage is. I do believe all government backed loans are by default assumable but they have to be caught up in order to be assumed and the new mortgage for the difference is likely to stay with the same bank as they won't willingly take second position.

Difference between asking price and assumable amount is at current rates.

i got a zillow search set up that's for a key word "assumable."

til

[PShift5]

Just bought a house in the frozen market

[Destor]

[katya422]

Just bought a house in the frozen market

[OliverHeldens]

Properties are still moving right now, just not at the values people are expecting generally. It's a sign of healthy market, and most people who bought in 2022 are underwater by 20% already and they might not know it.

[coast2coastam]

It'll be interesting to see what happens once student loans restart. It's almost impressive how quickly things got so out of hand, but even more so how people seem to be able to tolerate all of it. I guess enough people owned pre-lockdowns and refinanced at 3% to offset the absolute madness that's going on now.

[ACEofBASED]

I'm getting my house ready to sell right now, hoping to list about this time next year. If anyone wants to move to Iowa let me know. Probably list around 230k.

Wtf is there to "get ready" in a 230k property?

Almost certainly wasted effort. Srs.

[jamalfudge]

Funny how the idea that an average family with average, stagnant income couldn't use equity in their current home to upgrade to a 2x bigger house every 2 years like everyone thought.

[stevenmurray198]

Wtf is there to "get ready" in a 230k property?

Almost certainly wasted effort. Srs.

Just updating bathrooms, paint, clean, declutter. Stuff along those lines. You guys would be surprised what 230k gets you in Iowa.

https://ibb.co/F0TFsPw

[ACEofBASED]

Just updating bathrooms, paint, clean, declutter. Stuff along those lines.

https://ibb.co/F0TFsPw

Not worth the time or money in a 230k property.

Maybe paint, but updating bathrooms won't even return 1:1 at that price point.

[SaviorSelfJT]

Where I live it is absolutely frozen. Recently

I checked the stats for my area

Within the past 14 days. There are only SIX transactions. Over the past year there are 1300

Something huge is happening right now

[ZioTech]

Here's a crazy idea: make more money or stop bishting.

Just lol @ people complaining about things like this.

[katya422]

Here's a crazy idea: make more money or stop bishting.

Just lol @ people complaining about things like this.

Eh, I just like to understand systems and figure out how to make them function better.

"This appears to be broken. Why? Is there a fix?"

or

"This looks totally screwed. How the heck is it still going?"

[jamalfudge]

Here's a crazy idea: make more money or stop bishting.

Just lol @ people complaining about things like this.

[OliverHeldens]

Not worth the time or money in a 230k property.

Maybe paint, but updating bathrooms won't even return 1:1 at that price point.

Nah, it makes sense to do it. Tile is cheap, and something that's move in ready will sell way easier than something that needs work.

[WoofieNugget]

And you guys don't have to worry about increasing rates because you can lock in for periods of time.

The main issue in Canada is all the people who have million dollar homes looking at their interest rate going from 2% to 7% upon renewal after 5 years. So either you pony up another thousand bucks a month or you're forced to sell or figure something else out. Only paying interest charges (so renting from the bank) and dropping equity is starting to happen in places like Toronto. Anyone who bought in 2019-2021 and overpaid without having a big increase in household income are going to be in trouble. So a lot of places will be forced to turn over simply because people can't afford or qualify for their adjusted mortgage.

Average house price in Toronto in March 2022 was 1.3 million and it's dropped to just over a million after 18 months. Still a 20% increase over 2018 though when it was about 850k.

[Godfrd824]

Wtf is there to "get ready" in a 230k property?

Almost certainly wasted effort. Srs.

That's a 14k sq ft mansion in Alabama.

I'm waiting to buy, hopefully the interest goes down within the next 18 months. If it doesn't I'll still buy. The longer you wait, the more money you lose out on.

[Destor]

And you guys don't have to worry about increasing rates because you can lock in for periods of time.

The main issue in Canada is all the people who have million dollar homes looking at their interest rate going from 2% to 7% upon renewal after 5 years. So either you pony up another thousand bucks a month or you're forced to sell or figure something else out. Only paying interest charges (so renting from the bank) and dropping equity is starting to happen in places like Toronto. Anyone who bought in 2019-2021 and overpaid without having a big increase in household income are going to be in trouble. So a lot of places will be forced to turn over simply because people can't afford or qualify for their adjusted mortgage.

Average house price in Toronto in March 2022 was 1.3 million and it's dropped to just over a million after 18 months. Still a 20% increase over 2018 though when it was about 850k.

Someone who bought in 2019 would have been approved only for what they could afford at as much as 5.3% via the stress tests

Canadian wages in 2023 alone are +5% year over year, much less going back to 2019

[Dan_S]

Where I live it is absolutely frozen. Recently

I checked the stats for my area

Within the past 14 days. There are only SIX transactions. Over the past year there are 1300

Something huge is happening right now

Probably live in an undesirable area.

In my small town in Florida, there were 44 sales in the past week. 185 in the last month.

[SaviorSelfJT]

Probably live in an undesirable area.

In my small town in Florida, there were 44 sales in the past week. 185 in the last month.

Not going to say it’s not an undesirable area

But the prices don’t reflect that

[Lefticle]

All VA Loans are assumable, and many Commercial as well. Commercial aren't as big a deal though because it's usually only a 5 year fixed term.

......in beaverland