I had a look at some town houses in Calgary, two story, three bedroom with walk out finished basements or else full finished basements. They start at $500,000 CDN ( $350,000 US).
Another article showing concern in the housing market- yet the author may have lacked critical thinking
- Thread starter GON
- Start date
https://www.cnn.com/2024/07/01/business/adjustable-rate-mortgages-higher-payments/index.html
Thousands of homeowners are about to get slammed with higher monthly payments
Last year, when Jennifer Hernandez received notice that the mortgage payments on her Houston home would jump about $2,000 per month, she was stunned.
Hernandez refinanced her home loan in 2016 using an adjustable-rate mortgage loan, which has a low introductory rate for a fixed initial period.
Hernandez, who is herself a loan officer, had misremembered the terms of her $1.1 million loan: rather than a 10/1 ARM, which has a fixed rate for the first ten years and resets every year after that, Hernandez had taken out a 7/1 loan.
“I just got caught blindsided,” she said. “Life gets in the way, and you get busy. I’ve been slammed with kids and work for the last seven years.”
Last October, Hernandez’s mortgage rate jumped by 2% to 5.125%, the maximum allowed in the first adjustment year, according to her loan terms.
Most ARM loans come with an interest rate cap to prevent costs from spiraling out of control. Hernandez said her ARM is capped at 8.125%, five percentage points above her initial fixed rate.
Interest rates can be unpredictable. Hernandez said she saved money in the initial seven years of her loan, but if she could have a do-over, she likely would not have chosen an adjustable-rate mortgage in 2016.
Thousands of homeowners are about to get slammed with higher monthly payments
Last year, when Jennifer Hernandez received notice that the mortgage payments on her Houston home would jump about $2,000 per month, she was stunned.
Hernandez refinanced her home loan in 2016 using an adjustable-rate mortgage loan, which has a low introductory rate for a fixed initial period.
Hernandez, who is herself a loan officer, had misremembered the terms of her $1.1 million loan: rather than a 10/1 ARM, which has a fixed rate for the first ten years and resets every year after that, Hernandez had taken out a 7/1 loan.
“I just got caught blindsided,” she said. “Life gets in the way, and you get busy. I’ve been slammed with kids and work for the last seven years.”
Last October, Hernandez’s mortgage rate jumped by 2% to 5.125%, the maximum allowed in the first adjustment year, according to her loan terms.
Most ARM loans come with an interest rate cap to prevent costs from spiraling out of control. Hernandez said her ARM is capped at 8.125%, five percentage points above her initial fixed rate.
Interest rates can be unpredictable. Hernandez said she saved money in the initial seven years of her loan, but if she could have a do-over, she likely would not have chosen an adjustable-rate mortgage in 2016.
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ARMS have always been a risky loan. People who really couldn't/shouldn't for the most part get those and buy over their heads.
I would not purchase a house today at all for anyone that wants my opinion. Debt service is out pacing appreciation and expense. Now is the time to sit back and watch and wait.
I would not purchase a house today at all for anyone that wants my opinion. Debt service is out pacing appreciation and expense. Now is the time to sit back and watch and wait.
GON
$150 Site Donor 2025
Find it very weird the subject of the article is herself a loan officer.
If you want to find out what it's like to be homeless, get an adjustable rate mortgage.
I sorta agree, sorta not. If no market correction occurs, there is a risk that rent will just continue to climb--insisting that "this can't go on forever" won't actually cause a change. During the Great Recession, house prices dropped. They also recovered (long before this current run-up), if I'm not mistaken, acting a bit like the stock market in a sense, rebounding to where they were.
But yeah, I am very glad that I have no plans to move, and that I got into my house when I did.
GON
$150 Site Donor 2025
Studying the inflationary times of the late 1970s-early 1980s, house prices never flinched, even at 18 percent interest rates for mortgages. Not one year during the high interest rate times of that era did housing prices decline. Look at Illinois, 11 continual years of population decline. Housing prices in Illinois were static for over 15 years. Once the USD began being aggressively devalued, Illinois housing prices appreciated.
What I am coming to think/ believe; as long as the USD is being devalued, it is more likely than not that housing prices will be static and/ or rise. Housing is actually a solid hedge against inflation/ continual currency devaluation.
https://edition.cnn.com/2024/06/27/economy/housing-market-prices-inflation/index.html
The housing market is ‘stuck’ until at least 2026, Bank of America warns
Real estate agents and media are our least trusted occupations, and gap is growing wider
https://www.inqld.com.au/business/2...-trusted-occupations-and-gap-is-growing-wider
^^^ This.
Housing prices tripled in the 1970's. It was an stagflationary time.
Housing prices collapsed in 2009 - which was a deflationary bust.
Care to guess what we get next time? I have no clue. There a lot closer to each other than most people realize.
In the end I still think there is a big difference between buying a place to hang your hat vs buying something as an investment.
That is 100% true. But a lot of people also wanted to get any savings they had out of cash and into a tangible asset at that time. There was no consumer stock market / ETF / Mutual funds (and the market did poor anyway), and bonds did worse. People understood inflation in the 1970's. I still don't think a lot of people do now.
I also think that is why Wall Street is piling in now also.
Obligatory I know what I got!!!
https://www.axios.com/2024/08/12/new-existing-home-price-difference
https://www.axios.com/2024/08/12/new-existing-home-price-difference
New houses now cost less per square foot than old houses
Can't get far in that link.
Question: does this factor in all details? I mean, are new houses on smaller plots of land, perhaps located in less desirable locations? Or is new home construction starting to cut costs in other places so as to compete (more contractor grade appliances, use less nails, more particle board)?
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