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re: Homebuyers are now spending 40% of their gross income on mortgage and interest costs
Posted on 7/22/23 at 9:32 am to fallguy_1978
Posted on 7/22/23 at 9:32 am to fallguy_1978
quote:I know several folks who bought places in college towns (condos or houses) for their kid(s) to use while attending college and the kids have graduated and left but the interest rate on the property’s mortgages are so cheap they won’t sell them.
Ours is 2.375%. It would sting to sell right now. I know we probably won't see those rates again though.
1
Posted on 7/22/23 at 9:33 am to BabyTac
quote:
Not sure if people like me who own their home outright is factored in.
That was addressed in the twitter thread.
Posted on 7/22/23 at 9:33 am to stout
Another problem is wages not keeping up with inflation. They never do, but the government Covid spending has made the issue grow. Housing costs rise (rentals as well, so harder to save the traditional 20% down) while wages grow more slowly.
Posted on 7/22/23 at 9:33 am to Undertow
We are right at 20% of net take home and that includes taxes and interest. That's on a 15 year with 2.875 interest. We owe 140k of the original 260k loan
This post was edited on 7/22/23 at 9:34 am
Posted on 7/22/23 at 9:34 am to stout
Something has to give. This is the most expensive housing market in history yet house prices have not come down.
Couple that with credit card debt being at an all time high and IMO it will break soon. People can only kick the can so far down the road.
Couple that with credit card debt being at an all time high and IMO it will break soon. People can only kick the can so far down the road.
Posted on 7/22/23 at 9:36 am to jbgleason
quote:
1. Buy now.
2. Rent something and wait for a potential crash? How long could that be? If there is a crash, what kind of advantage will cash give me? Is waiting going to be worth it?
3. If I wait and the market survives, what do I lose by waiting?
If I or anyone knew the answer to this we would be billionaires. It's a best guess honestly. There are indicators and shades of 2007-08 but at the same time, things are vastly different.
I could tell you to buy now and the market drops 20%
I could tell you to wait for a market adjustment (there will be no full-on crash IMO) then it never happens.
Posted on 7/22/23 at 9:39 am to stout
I'm so excited for this bubble to burst. I'm set up quite well to live comfortably through a recession. Thank you to all the idiots who vote Democrat.
This post was edited on 7/22/23 at 9:41 am
Posted on 7/22/23 at 9:43 am to stout
Nicely presented thread man. 
This post was edited on 7/22/23 at 9:44 am
Posted on 7/22/23 at 9:45 am to fallguy_1978
quote:
About 14% of all houses have a rate below 3%. Ours is 2.375%. It would sting to sell right now. I know we probably won't see those rates again though.
That’s not even close to being an accurate stat. More than 90% of homeowners bought their house prior to interest rates having gone up. Mortgage rates and opportunities to refinance over the past 10 years have resulted in the bulk of people having a low interest rate.
It’s also causing property prices higher because those people are selling their homes. Thus there is less inventory out there.
Posted on 7/22/23 at 9:45 am to imjustafatkid
I remember way back when I was at 40% Mortgage + Escrow. It was miserable.
Nice place but miserable even more so with kids in private school. Rice and beans. Beans and rice every night. Raman noodles for lunch. No breakfast.
Nice place but miserable even more so with kids in private school. Rice and beans. Beans and rice every night. Raman noodles for lunch. No breakfast.
This post was edited on 7/22/23 at 9:46 am
Posted on 7/22/23 at 9:46 am to stout
So what’s this mean? Will interest rates start going back down? Housing costs down?
Posted on 7/22/23 at 9:47 am to Raging Tiger
quote:
think it has to do with people not wanting to make their towns desirable. Aka… not caring about local politics, moving to the area more covenant, and sometimes not taking pride. Its easier to move than to fix the issues
Well yea. One person can’t change the culture of an entire city.
Posted on 7/22/23 at 9:50 am to TackySweater
It means a lot of people will have to make tough choices and have to figure out how to lower their housing cost and get out from under the note to have a life.
Sell, get roommates, become a roommate, burn it down, declare bankruptcy, get evicted or walk away.
Their choices sorta depend on if their income rises or falls, as well.
That may or may not lead to more housing inventory.
Sell, get roommates, become a roommate, burn it down, declare bankruptcy, get evicted or walk away.
Their choices sorta depend on if their income rises or falls, as well.
That may or may not lead to more housing inventory.
This post was edited on 7/22/23 at 9:52 am
Posted on 7/22/23 at 9:51 am to soccerfüt
quote:
I know several folks who bought places in college towns (condos or houses) for their kid(s) to use while attending college and the kids have graduated and left but the interest rate on the property’s mortgages are so cheap they won’t sell them.
I have two investment properties in two different college towns. Bought them years ago. Because they were investment properties I couldn’t get better than a 5% mortgage on either. One is right at 5% and the other 5.35%. In the decade or more of buying investment properties I never saw a rate lower than 5%.
Posted on 7/22/23 at 9:53 am to Motownsix
quote:
More than 90% of homeowners bought their house prior to interest rates having gone up. Mortgage rates and opportunities to refinance over the past 10 years have resulted in the bulk of people having a low interest rate.
Are you saying 90% are below 3% because if you are that would be wrong. The info in my OP says 14% are under 3% but I think that number is a little low. I just copied what he stated.
Here is an article from Redfin about it.
quote:
Roughly 4 in 5 homeowners with mortgages have an interest rate below 5%, and nearly one-quarter have a rate below 3%.
With rates now close to 7%, many homeowners aren’t moving, which is intensifying a shortage of homes for sale.
Rates would need to fall quite a bit to motivate homeowners to put their home on the market. Roughly one-quarter of likely home sellers say they would feel more urgency to sell if rates were to drop to 5% or lower, according to a recent Redfin survey. The share increases to nearly 80% if rates were to 3% or lower.
More than nine of every 10 (91.8%) U.S. homeowners with mortgages have an interest rate below 6%. That’s down just slightly from the record high of 92.9% hit in mid-2022.
quote:
Here’s the full breakdown of where today’s homeowners fall on the mortgage-rate spectrum:
Below 6%: 91.8% of U.S. mortgaged homeowners have a rate below 6%, down from a record high of 92.9% in the second quarter of 2022, as noted above.
Below 5%: 82.4% have a rate below 5%. That’s down from a peak of 85.7% in the first quarter of 2022.
Below 4%: 62% have a rate below 4%, also down from a record high (65.3%) hit in the first quarter of 2022.
Below 3%: 23.5% an interest rate below 3%, near the highest share on record. The highest was 24.6% in the first quarter of 2022.
LINK
This post was edited on 7/22/23 at 9:53 am
Posted on 7/22/23 at 9:54 am to Motownsix
quote:this is temporary but most people can’t see past their own nose. Interest rates have been so low for so long that a healthy lending environment is alien to the lifestyle most think is “normal”. Debt is not “normal”.
It’s also causing property prices higher because those people are selling their homes. Thus there is less inventory out there.
smart people will come in and tell you that “using other people’s money” is the only way to go, because they’ve lived through a generation or more of free money.
Pay as you go, live simply, finance as little as possible and strive for self sufficiency is the way it used to be and for me at least, the key to happiness
My mortgage is long gone not because I’m wealthy but because I didn’t owe very much in the first place
Posted on 7/22/23 at 9:54 am to imjustafatkid
quote:
I'm so excited for this bubble to burst. I'm set up quite well to live comfortably through a recession. Thank you to all the idiots who vote Democrat.
You’re clearly poor. If you had money you’d have better insight into the current economy. If you’re not making out really well right now, you’re doing something seriously wrong.
Posted on 7/22/23 at 9:57 am to Motownsix
quote:absolutely true
If you’re not making out really well right now, you’re doing something seriously wrong.
wealth building has never been more accessible than it is right now
Posted on 7/22/23 at 9:58 am to cgrand
quote:
don’t buy a house you can’t afford /fixed
Yes, some of the problem is the “gotta have it all crowd” spend everything they make (and can finance) on house, car, boat, RV ect
But, for a lot of people they spend more then they want to in order to get in a better school district or for an area that they feel safer
Posted on 7/22/23 at 10:00 am to stout
quote:
Homebuyers are now spending 40% of their gross income on mortgage
And another 40% on taxes.
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