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Are the people that paid over asking price for homes getting a little nervous now?
Posted on 9/22/22 at 12:36 pm
Posted on 9/22/22 at 12:36 pm
We are now officially in a housing recession. We were last month but this month the media and the Fed are finally admitting it. Are the people with negative equity nervous yet?
US ‘housing recession’ could send prices 20% lower by mid-2023
New home starts rose last month but only because of multi-family properties.
US Housing Starts Rise Unexpectedly Though Building Permits Drop
"You Will Own Nothing And You Will Be Happy”
The number of homes still in forbearance isn't changing much and in fact, creeped up for Ginnie Mae
Ginnie Mae Loans in Forbearance Rise in August
MS and LA say F Paying the mortgage on time!
US ‘housing recession’ could send prices 20% lower by mid-2023
quote:
US home prices are now “clearly falling” and could plummet by as much as 20% by mid-2023 as the Fed continues its aggressive push to hike interest rates, according to a prominent economist.
Ian Shepherdson, the chief economist at Pantheon Macroeconomics, said his firm’s estimates suggest home prices have already declined by about 5% from their May peak.
His projections showed seasonally adjusted existing-home sale prices sank by 0.7% in August and have now declined for three straight months.
“The very low level of inventory means that a headlong collapse in prices is unlikely, but we still expect a total decline of up to 20% by the middle of next year,” Shepherdson said in a note to clients.
“Housing, in short, is in recession, and everything connected to housing either is in recession now or soon will be,” Shepherdson added.
Long-term mortgage rates have jumped by more than 3% since January and have eclipsed 6% for the first time since the Great Recession of 2008. The higher rates have forced many prospective homebuyers to the sidelines until conditions improve.
New home starts rose last month but only because of multi-family properties.
US Housing Starts Rise Unexpectedly Though Building Permits Drop
quote:
New US home construction rose unexpectedly in August, though the slowest pace of building permits in more than two years underscores how higher mortgage rates are weighing on demand.
Residential starts increased 12.2% last month to a 1.58 million annualized rate, led by a jump in multifamily projects, according to government data released Tuesday. The pace of starts topped all estimates in a Bloomberg survey of economists.
Applications to build, a proxy for future construction, declined to an annualized 1.52 million units, the fewest since June 2020.
"You Will Own Nothing And You Will Be Happy”
The number of homes still in forbearance isn't changing much and in fact, creeped up for Ginnie Mae
Ginnie Mae Loans in Forbearance Rise in August
quote:
The Mortgage Bankers Association’s (MBA) monthly Loan Monitoring Survey found that the total number of loans now in forbearance decreased by two basis points, dropping from 0.74% of mortgage servicers’ portfolio volume nationwide in July 2022 to 0.72%, as of August 31, 2022. The MBA estimates that approximately 360,000 U.S. homeowners are currently in forbearance plans.
By loan type, the number of Fannie Mae and Freddie Mac loans (GSE) in forbearance also decreased two basis points from 0.34% to 0.32% in August 2022, while Ginnie Mae loans in forbearance increased from 1.26% to 1.32%. The forbearance share for portfolio loans and private-label securities (PLS) declined eight basis points, from 1.34% to 1.26%.
quote:
The five states with the lowest share of loans that were current as a percent of servicing portfolio included:
Mississippi
Louisiana
New York
West Virginia
Oklahoma
MS and LA say F Paying the mortgage on time!
36
Posted on 9/22/22 at 12:38 pm to stout
Joe said it's only up an inch and it's not a spike!
Posted on 9/22/22 at 12:38 pm to stout
If they can continue to afford the payment, why would they be nervous about it?
The interest rates were so low that their monthly notes are probably still lower than someone buying a house today.
The interest rates were so low that their monthly notes are probably still lower than someone buying a house today.
Posted on 9/22/22 at 12:38 pm to stout
tell me when to buy, daddy, i got the equity to cash out and scoop up some stuff
Posted on 9/22/22 at 12:39 pm to stout
I would assume they're either shitting their pants or contemplating suicide
Posted on 9/22/22 at 12:39 pm to stout
Overpaying isn’t necessarily horrible IF you paid cash and aren’t planning on going anywhere for probably a decade or so.
The houses themselves don’t necessarily depreciate but it will take quite a while for the market to recover, especially if interest rates continue to spike.
The houses themselves don’t necessarily depreciate but it will take quite a while for the market to recover, especially if interest rates continue to spike.
Posted on 9/22/22 at 12:39 pm to stout
I don't think the majority of people who bought within the last year or so are already looking to sell. So no, it probably doesn't affect 99% of homeowners with unrealized negative equity.
Posted on 9/22/22 at 12:40 pm to stout
IMO it depends and is similar to 2008 (not in terms of the crisis, but the security of one's decision making).
If you overpaid in an established, landlocked, long term desirable area - you're probably not that worried. Basically if you can't be undercut by new development at considerably lower numbers. These areas bounced back fine from 2008.
If you overpaid in new build suburbia where there are vacant neighborhood tracts all around and nothing to keep that area inherently hot/desirable/inflated, then yeah, you're probably worried. These places (think new growth burbs in central FL, Phoenix, Vegas, Atlanta, etc.) took a bath.
It also just so happens that the type of people buying in the first category are probably better set up to weather a storm than the people in the latter.
If you overpaid in an established, landlocked, long term desirable area - you're probably not that worried. Basically if you can't be undercut by new development at considerably lower numbers. These areas bounced back fine from 2008.
If you overpaid in new build suburbia where there are vacant neighborhood tracts all around and nothing to keep that area inherently hot/desirable/inflated, then yeah, you're probably worried. These places (think new growth burbs in central FL, Phoenix, Vegas, Atlanta, etc.) took a bath.
It also just so happens that the type of people buying in the first category are probably better set up to weather a storm than the people in the latter.
Posted on 9/22/22 at 12:41 pm to xXLSUXx
quote:
I don't think the majority of people who bought within the last year or so are already looking to sell.
Plenty of people move within a year or two. Job transfer, divorce, etc. It happens more than you think.
Posted on 9/22/22 at 12:42 pm to upgrayedd
quote:
Joe said it's only up an inch and it's not a spike!
He was quoting Dr Jill
Posted on 9/22/22 at 12:42 pm to teke184
Being underwater on a house sucks though but it probably won't matter if you plan on staying there a long time. We bought our first house in 2006 near the top and sold it for a loss in 2013.
Posted on 9/22/22 at 12:45 pm to Pettifogger
quote:
These areas bounced back fine from 2008.
Not all of them but to be fair some of these areas were on a decline prior to 2008 and the crash accelerated their decline.
quote:
If you overpaid in new build suburbia where there are vacant neighborhood tracts all around and nothing to keep that area inherently hot/desirable/inflated, then yeah, you're probably worried. These places (think new growth burbs in central FL, Phoenix, Vegas, Atlanta, etc.) took a bath.
Yea I feel bad for the tract home buyers in LA. You have a poorly built house on a postage stamp lot in the middle of a rice field you overpaid for and insurance rates keep going up. Good luck moving that house within the next 4 to 5 years.
Posted on 9/22/22 at 12:45 pm to fallguy_1978
I closed about a month before the covid shite hit the fan. My property value spiked and I'd make good money selling now but I'd be paying over twice the interest rate I am now. I'd imagine that is also going to be a significant factor in people staying put for a while.
Posted on 9/22/22 at 12:45 pm to stout
Nope. Bought my current home in 2020, 2k over the asking price and it appraised for 20k over asking. Low intereset rate means I'm paying less per month than if I'd bought it a lot cheaper now.
Posted on 9/22/22 at 12:46 pm to stout
The decline isn’t going to stop at 20% either, since Powell/Fed have committed to stopping inflation, ‘whatever it takes’. That’s another 2008 recession or depression.
Posted on 9/22/22 at 12:47 pm to BeepNode
quote:
If they can continue to afford the payment, why would they be nervous about it?
It’s not about making the payment. It’s about maintaining equity in the event you want to sell. If the bubble bursts and appraised values decline, people will be forced to come out of pocket, be foreclosed on, or short sale.
Do y’all even 2008-2012?
Posted on 9/22/22 at 12:48 pm to Loup
quote:
2k over the asking price
You didn't really pay over the asking price. That is nothing. I am talking about the bidding wars of $40K+ over people were doing.
quote:
Low intereset rate means I'm paying less per month than if I'd bought it a lot cheaper now.
This is the huge benefit of getting in last year if you are not going to sell within the next 4 to 5 years.
Posted on 9/22/22 at 12:48 pm to upgrayedd
quote:
I closed about a month before the covid shite hit the fan. My property value spiked and I'd make good money selling now but I'd be paying over twice the interest rate I am now. I'd imagine that is also going to be a significant factor in people staying put for a while.
Yeah we sold our first one for a loss but also bought this one when prices were still down a bit.
We plan on buying one more house in about 3 years but that'll likely be the last one.
Posted on 9/22/22 at 12:48 pm to Rhino5
Plus the job losses haven’t started yet.
Posted on 9/22/22 at 12:48 pm to Rhino5
It isn’t a problem until you want to cash out.
The problem is when circumstances arise that make you cash out while the property is underwater.
The problem is when circumstances arise that make you cash out while the property is underwater.
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