Another article showing concern in the housing market- yet the author may have lacked critical thinking
- Thread starter GON
- Start date
Wow, we made it 39 pages without getting locked. Excellent patience from the moderators! Here is something from Canada. Yesterday the Bank of Canada Governor held interest rates where they are. Here’s what the inflation rate looks like. He thinks it’s like steering a big bus. Hope he’s right.
Home mortgage rates are still at and or below the historical average.
This is Bank of America, which has a great website and has rates updated every day.
30-year fixed
Rate 6.875%
APR 7.088%
Points 0.729
15-year fixed
Rate 5.875%
APR 6.252%
Points 0.988
This is Bank of America, which has a great website and has rates updated every day.
30-year fixed
Rate 6.875%
APR 7.088%
Points 0.729
15-year fixed
Rate 5.875%
APR 6.252%
Points 0.988
The rates are, but the home prices are very high compared to what the average household can afford, which is the difference. My parents bought their first house (brand new raised ranch, attached garage, on 2 acres) in 1988 on a $35k/year salary. Today that same house is $430k on zillow.
I can relate. In 1985 I travelled third class with a backpack and stayed in a “coffin house” in Hong Kong. It was an apartment on the 12th story of a high rise with a bathroom and a dozen bunk beds wrapped with chicken wire with a chicken wire door locked with your own padlock. These things still house thousands.
If people couldn’t afford the homes they wouldn’t be priced as they are,
simple math, if there was no one there to buy a house the house would be lower price.
Funny that you should mention 1988, I purchased my first house in 1990 and had an interest rate of 10.25% on the mortgage.
I still remember the real estate agent telling us how bad she felt for young couples today, because houses are so expensive and so few for sale.
This was Long Island, New York, 1990.
The bottom line is homes always sell at the price they sell for if not, the price would adjust downwards.
That same house in 1990 that so many people feel bad for young people is now worth Approximately 300 to 400% more, and I might be understating that.
That is what some might consider still a starter home, and still to this day young couples purchase these houses just the same as we did in 1990.
I understand what you’re saying, being older now and looking back homes look expensive, but they’re not expensive or nobody would live in them.
Another factual piece of data is the homeownership rate in the United States of America give or take a couple percentage points over 50 years Is unchanged.
The only thing and I think a dangerous thing is social media today makes people think the world is such a horrible place when life has never been more easy in mankind history.
That's about a $90K annual salary today inflation adjusted, which is definitely doable swinging a $430K home. Not comfortable I would imagine, but doable with priorities aligned and disciplined on spending.
Lots of Airbnb folks regret buying their ‘investment properties’ .
www.businessinsider.com
I bought a $775,000 Palm Springs house to rent on Airbnb when I was 25. It's not as profitable as I thought it would be.
Shelby Church, 28, bought a home near the Coachella festival to rent on Airbnb. She said it wouldn't be worth it if she didn't vacation there.
www.businessinsider.com
Just a few thoughts.... My first mortgage was 8.5% and I thought it was a great rate.
My parents bought a brand new house in the mid 60's. $18,000 got them a new three Br rancher on 10 acres of land. Price included a paved driveway and a full tank of heating oil. I think their rate was about 3.25%. The place is worth about 500K plus today.
My parents bought a brand new house in the mid 60's. $18,000 got them a new three Br rancher on 10 acres of land. Price included a paved driveway and a full tank of heating oil. I think their rate was about 3.25%. The place is worth about 500K plus today.
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90k household salary, 430k home, with the higher interest rates, living expenses, taxes, investments for retirement, etc. No, it is completely foolish and undisciplined to make that kind of purchase, period. It's exactly why the housing bubble burst in the first place. People trying to live waaayyyy above their means.
It pretty much depends on your priorities. With $50k down, P&I of $380k financed at 6%would be just under $2300. Add in taxes and insurance and you are just over 1/3rd of your gross income monthly (unless you are in a high tax or insurance location).
FWIW, in 1980 I was paying half my net income in housing payments on a new (to me) house. At that time I was living well within my means.
I will agree that 2013-2020 were golden years for home buying, but right now isn't all that bad when compared to historical norms.
Every situation is different. Some making 90K could never swing that due to excessive car payments, Starbucks every morning, and not living on a budget. How much you are taxed by the state, what is deducted from your gross pay, etc. all play a part in this scenario. As mentioned by @ArrestMeRedZ above, down payment is a huge variable too.
Are these numbers institutional investors only or are the "mom-n-pop" investor included? Mom-n-Pop are individuals who are limited to having only 10 financed properties but can have an unlimited number of non-financed properties. I've seen them with 50 or 100 properties.
Ask Redfin.
Interest rates are at there historical average. Living expenses no different than anybody else on a historical level
Taxes are the same or lower, investments and retirement are strictly optional to a new homebuyer.
You can’t buy above your means your debt income ratio is written in stone when applying for a mortgage and you can no longer exceed it
My first house my interest rate was 10 1/4% and my brother when he first purchased his home was 15 1/2%
The fact is historically the same amount of people own homes as they always have and recent statistics show young buyers of 25 years old own more homes than any point in history
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