Everyone wants to make money for doing nothing. Learning about investing takes time and effort, and the results are far too slow to satisfy most people. Plus, you have to sell the investment and pay taxes on the gains. It’s too much hassle.
Real estate is so much better. Everyone is already an expert on real estate (or so they think) because they live in a house or condo. No learning is required, and when people get lucky and catch a bubble, they get to pat themselves on the back for their great financial prowess. And best of all, they don’t have to sell a house to get the cash. Banks will give them all the money they want with a HELOC. If the house keeps going up in value — and it can never go down, right? — then the bank will give them more and more money. There is no other investment that takes so little intelligence, research, learning or effort and produces such large and consistent returns. It’s a wonder everyone doesn’t want to own a house.
Home price rise fuels fear of boom mentality
Sharp increases in some markets could lead to a short-term mind-set, leading buyers to overextend themselves, some economists warn. The 20-city composite price is up 5.5% from a year ago.
By Alejandro Lazo, Los Angeles Times — January 30, 2013, 6:00 a.m.
Sharp home price increases — particularly in once-decimated cities such as Phoenix and Las Vegas — are raising concern among some economists that speculation could return to certain markets if such double-digit gains continue.
Prices jumped 22.8% in Phoenix and 10% in Las Vegas in a year, according to November data released Tuesday from the S&P/Case-Shiller indexes.
When I first started writing about buying Las Vegas real estate, people thought I was crazy. My thesis was simple, prices were depressed below fundamental values and were due to rebound when the foreclosures dried up.
Of course, I didn’t think the foreclosures would dry up for another two or three years because there are still tens of thousands of delinquent mortgages in Las Vegas, but when the Nevada Legislature changed the foreclosure laws in November of 2011, they legisltatively dried up the foreclosure pipeline. What was going to happen after the foreclosures dried up was easily foreseeable.
With supply of must-sell inventory declining, prices would bottom, particularly due to the increased activity of investors. Once prices bottomed and began to rise, the relative increases in price would be large. For example a $300,000 house selling for $80,000 at the bottom would easily be expected to see a $10,000 increase in price. That does little to recover the peak value, but it represents a greater than 10% increase off the bottom. Once that happens for a year or two, then speculators hoping to capture appreciation would enter the market and drive prices even higher– which is where we are now. The final stage will be the reentry of owner-occupants who lost homes during the bubble who will take prices back up to the affordability barrier. This is a natural recovery cycle for an undervalued market.
Notice the double-digit price increases that accompany the recovery from an undervalued state is very different from the double-digit gains we saw during the housing bubble. Those gains were predicated on unstable affordability products that artificially boosted prices. The gains today in beaten down markets like Phoenix or Las Vegas are being built upon fixed-rate amortizing mortgages. Even if interest rates go up, those markets will continue to do well because they are very, very affordable. 
Such increases could fuel a short-term mind-set, economists warned. California cities are also on the upswing, with San Diego rising 8%, Los Angeles up 7.7% and San Francisco increasing 12.7%.
Those gains are likely to grow when data for December are reported next month, economists said.
“It’s been a real roller-coaster,” said Karl E. Case, one of the creators of the index. “And there is a danger of igniting it again.”
There is no question kool-aid intoxication will become a problem again, particularly here in California. People take on completely unrealistic expectations for sustained appreciation. Over time, prices rise in tandem with wage inflation, not any faster. There are certainly periods when prices move up faster, but those are matched by periods when prices went to down to match wage inflation.
Some signs of consumer woe emerged Tuesday, even as major stock indexes flirted with new highs. Consumer confidence fell in January, reflecting concern over a hike in the payroll tax. And although home prices are rising, homeownership is slipping, an indication that well-heeled investors are playing a bigger part in fueling the market’s rebound than traditional buyers. The Census Bureau said Tuesday that national homeownership fell 0.6% to 65.4% in the fourth quarter compared with a year earlier.
The biggest concern people should have over the market is the potential for rising interest rates. The recent small uptick in interest rates caused a dramatic decline in both refinances and purchase originations. In most markets affordability is high, so a modest increase in interest rates won’t result in prices becoming out of reach, but in markets like Coastal California where the degree of undervaluation is less, rising interest rates will stall the advance of prices.
The census data point to a hard reality for many buyers these days: Getting a conventional home loan from a bank remains difficult because banks have tightened their standards since the bust.
And the new qualified mortgage rules ensure standards won’t be getting looser any time soon. Thankfully, the new mortgage regulations will prevent future housing bubbles. Plus, the complaining about tight standards is a bit ridiculous anyway. It’s largely promoted by realtors who want to eliminate all standards to get in the way of more transactions. The reality is that Some creditworthy families will always be denied mortgages.
Getting a property appraised at a negotiated sales price also remains difficult. Both factors have led sellers to turn to investors who have all-cash offers.
With the super low inventory right now, the only way to get a deal in the resale market is to put more than 20% down. An FHA buyer doesn’t have much of a chance. First, for an FHA buyer to be considered, they must be the highest bidder. Since today that means bidding well over recent comps, there is a very good chance the property won’t appraise. It makes no sense for a seller to accept the bid from an FHA buyer who won’t be able to close when the appraisal comes in low, so instead, they take the strongest offer with the buyer who demonstrates the most financial reserves, preferably all cash.
Although it may be hard to imagine another boom-town mentality taking off in the West, the sharp rise in prices makes the possibility ever more real, said Case, a professor at Wellesley College in Massachusetts.
Having lived in California and seen extreme kool aid intoxication first hand, it’s not hard at all to imagine kool-aid intoxication taking over again soon. People will convince themselves the crash was an anomaly — despite the fact it’s the third crash in forty years — and that 10%+ appreciation rates are normal and to be expected. Pretty soon we’ll see Gary Watts explain how 15% appreciation is “in the bag.” Or perhaps we’ll see other local realtors explain California had no real estate bubble. Idiocy returns quickly among those who believe because they want to believe.
One concern, he said, is that limited inventory will drive prices up and lead buyers to overextend themselves while competing with other buyers for a property. Then if prices declined again, people would be left with homes that could be worth far less than they paid.
Shevy and I have consistently told people over the last five years — and probably forever — not to buy unless you plan to stay in the property long term. If you need to sell in the next three to five years, you could easily find yourself losing equity or needing to short sell.
The scenario outlined above could easily come to pass. If any of the prevailing market conditions from today changes, prices could reverse.
- What happens if the mortgage interest deduction is capped or eliminated?
- What happens if the conforming limit is lowered from $625,000 to $417,000?
- What happens if the FHA limit is lowered from $729,750 to $417,000?
- What happens when interest rates go up?
Other economists also advised caution in the fast-rising markets.
“It does concern me a bit,” said Zillow.com chief economist Stan Humphries. “It encourages people to think about housing as a short-term investment.”
Investment thinking is what creates volatility. When houses were looked as as a consumer good, people didn’t bid up the prices, but once they become viewed as an investment, people buy at stupid prices because they believe prices will go even higher.
The other creator of the index, Robert J. Shiller of Yale University, said that prices, when adjusted for inflation, have not risen as sharply as the big percentage increases may indicate, particularly in cities such as Phoenix. Those increases indicate that prices may have fallen too far during the housing crash. Nevertheless, cities can enter into a collectively risky mind-set, Shiller said, a mentality to guard against.
The recovery from a depressed valuation is the case I made above.
“Phoenix became a boom city,” Shiller said. “I was there in 2004, and I remember everywhere people were talking about real estate, even the cab driver.”
Since 2006, I’ve spoken with web designers, construction foremen, waiters, and many others who told me about losing their mortgage business. To me, the best indicator of a bubble is the mass entry into a particular business from people who know nothing about it. Have you ever noticed how many people get real estate licenses when there’s a boom?
The price jumps mask the continuing troubles of borrowers with underwater mortgages. In fact, the prices are driven in part by such homeowners being trapped in those homes, tightening supply.
Also helping home prices rise is a drop in foreclosure activity.
The rate at which lenders have foreclosed on mortgages in the Los Angeles area fell to 1.67% of all home loans in November, data firm CoreLogic said. That compares with 2.67% the same month a year ago. That rate was lower than the national average, which was 2.97% in November.
I can’t stress enough that the decline in foreclosure rates is not due to a lack of delinquent borrowers to foreclose on. Most people looking to buy houses today assume the mortgage mess is behind us, and that is just plain wrong.
Despite concerns over fast-rising prices, many economists call the increases a welcome trend.
“Rising house prices, in turn, are supporting broader economic growth,” wrote PNC Financial economists Tuesday. “As house prices increase homeowners are wealthier, inducing them to spend a bit more. Rising house prices also support the banking system as losses diminish and homeowner equity increases.”
One man’s mortgage debt is an entire neighborhood’s equity. Let’s be realistic, this is all being done to bail out the banks. Prices will rise for the short term. They will go up until we reach the limits of income affordability. When this happens depends on mortgage interest rates. If rates remain at record lows over the next three years, prices locally could rise another 25%. If interest rates rise, then the price appreciation could flag much sooner. After that, it depends on wage growth. And with high unemployment, wages won’t be going up significantly any time soon.
Jumboland: Four years squatting and a year in REO inventory
The people squatting in $1,000,000 homes really got a sweet deal. Many of these people extracted hundreds of thousands of dollars in mortgage equity withdrawal, and they got to squat much longer than their subprime brethren. Today’s featured property didn’t extract much equity as they bought late in the bubble rally, but they quit paying their mortgage in early 2008, and they weren’t pushed out until late 2011.
Wouldn't you be embarrassed to overpay by $100,000? Only fools buy houses without knowing neighborhood values. Don't be a fool. Don't suffer the pain of an underwater mortgage. The surest way to lose your house is to overpay for it. Our reports identify overvalued and undervalued neighborhoods. Use it to broaden or narrow your search area. Savvy buyers work with us to find bargains. We've saved thousands from financial ruin. Let us save you too. If you want peace of mind while shopping for your next home, sign up for our monthly market newsletter.
We're sorry, but we couldn't find MLS # P846481 in our database. This property may be a new listing or possibly taken off the market. Please check back again.
Proprietary OC Housing News home purchase analysis
$899,900 …….. Asking Price
$1,000,000 ………. Purchase Price
5/26/2004 ………. Purchase Date
($100,100) ………. Gross Gain (Loss)
($71,992) ………… Commissions and Costs at 8%
============================================
($172,092) ………. Net Gain (Loss)
============================================
-10.0% ………. Gross Percent Change
-17.2% ………. Net Percent Change
-1.2% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$899,900 …….. Asking Price
$179,980 ………… 20% Down Conventional
3.46% …………. Mortgage Interest Rate
30 ……………… Number of Years
$719,920 …….. Mortgage
$176,888 ………. Income Requirement
$3,217 ………… Monthly Mortgage Payment
$780 ………… Property Tax at 1.04%
$250 ………… Mello Roos & Special Taxes
$225 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$98 ………… Homeowners Association Fees
============================================
$4,570 ………. Monthly Cash Outlays
($714) ………. Tax Savings
($1,141) ………. Equity Hidden in Payment
$196 ………….. Lost Income to Down Payment
$132 ………….. Maintenance and Replacement Reserves
============================================
$3,043 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$10,499 ………… Furnishing and Move In at 1% + $1,500
$10,499 ………… Closing Costs at 1% + $1,500
$7,199 ………… Interest Points
$179,980 ………… Down Payment
============================================
$208,177 ………. Total Cash Costs
$46,600 ………. Emergency Cash Reserves
============================================
$254,777 ………. Total Savings Needed
The property above is available for sale on the MLS.
Contact us for a comparative market analysis, a cost of ownership analysis, or information on how you can make an offer today!
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Gain a competitive advantage over other buyers. By locating distressed properties -- before they hit the MLS -- you can discover where tomorrow's REOs and short sales will appear. Most of these properties are not listed on the MLS, but they will be soon. Research properties in advance and get a jump on your competition. Don't miss out on another deal because you couldn't act quickly. Use this tool to your advantage! The red properties are already bank owned. As soon as REO asset managers prepare them for sale, they will be on the MLS. Get ready! The green and blue properties have owners who are not paying their mortgages. They may be offered as short sales, or they may go through foreclosure and become REO. Either way, they will also likely be available on the MLS soon. Find your next home! Be prepared to offer on these properties by researching them in advance or risk losing out to buyers who are have done their homework. Start your research today! To find distressed properties, enter your desired location and press search. Scroll through list by pressing "next."
28 Responses to “Rising prices stoke fears of kool aid intoxication”
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As you can clearly see, whether it pertains to personal/household income or even home prices, chasing nominal #’s is nothing more than an exercise in self-delusion.
http://advisorperspectives.com/dshort/charts/index.html?census/household-income-monthly-median-growth-since-2000.gif
That’s a great chart. Thanks.
To get real income growth, we need real increases in productivity plus low unemployment. High unemployment will keep wages down for another five years.
IR,
What you wrote is the real plan. With high unemployment, the Fed can print so the the special borrower can buy the income producing assets (stocks) while it is depressed. Once employment rises, the wage earners will start buy the stocks and allow the special borrowers to exit and repeat start another cycle. The banksters game is in the juice on each transaction. The greater the velocity of money the fees that can be collected.
Yep. That is exactly what will happen. It’s not just stocks. It’s also happening with single-family homes as evidenced by all the hedge funds buying rentals now.
Like your article states above we are seeing an uptick in mortgage and interest rates. Is it permanent? It’s already slowing down the refinances and the purchase loans activity. We might have bottom out on mortgage rates in January. I though the rates would have bottomed out a little bit later in the year.
I think we will see bouncing along the bottom all year. The sharp drop in refinances and purchase originations will cause rates to drop. Only a crash in bond prices would cause rates to go up without an increase in demand.
”Is it permanent”?
——————————–
Time will tell, but, take a look at what the ‘bond king’ thinks about that prospect….
Even despite his public ”looming inflation” warning delivered on Jan 3rd, low and behold, bonds (2,5,10 and 30′s) were selling off a bit in Dec, yet PIMCO was buying ‘em up at reduced prices (increased its gov bond holdings in the flagship fund PTTRX, from 23% to 26% MoM).
http://investments.pimco.com/Products/pages/346.aspx?selectedtab=3
On a side note, their MBS related holdings are still quite strong at 42%, so 68% of the instruments in the fund relate to mort rates. And, since ”looming inflation” would destroy Treasury and MBS bond values, do they really think inflation is looming?
For further clarity, stay tuned for the Jan allocation % update.
Interesting. Pimco clearly doesn’t think inflation is coming any time soon. The bond bubble probably won’t crash until they make their exit.
Q4 GDP Falls for First Time Since Recession Ended
Battered by storms and droughts, real gross domestic product (GDP) fell 0.1 percent in the fourth quarter, the Bureau of Economic Analysis reported Wednesday. The decrease marks the first “negative growth” since the end of the Great Recession in mid-2009. Economists had expected a weak 1.0 percent growth compared with the 3.1 percent annualized growth rate in the third quarter.
For the full year, GDP rose 2.2 percent compared with an increase of 1.8 percent in 2011.
BEA, in reporting GDP—the broadest measure of the nation’s economy—“emphasized that the fourth-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency.”
The GDP downturn does not automatically signal a return to recession, which is loosely defined as two consecutive quarters of negative growth. That said, in the six quarter recession, which began at the tail end of 2007, GDP fell in Q1 2008, but rose in the second before remaining negative for the next four quarters.
The first revision of Q4 data will be reported at the end of February.
The biggest hits to fourth quarter GDP came from a sharp drop in government spending, which fell 6.6 percent from the third quarter, primarily federal government spending, which dropped 15.0 percent quarter-to-quarter. Private investment fell 0.6 percent, primarily inventory investments and a fall-off in exports. Imports, which in GDP accounting are a subtraction from GDP, also fell, but not enough to offset the drop in exports.
Personal consumption expenditures—the largest component of GDP—grew 2.2 percent in the fourth quarter, faster than the 1.6 percent growth in the third. Non-residential fixed investment grew based on stronger investment in equipment; spending on non-resident structures fell 1.1 percent in the fourth quarter.
Residential fixed investment improved 15.3 percent in the fourth quarter, the strongest growth since the first quarter.
RealtyTrac Ranks Best Metros to Buy Foreclosures in 2013
While the national trend shows home prices are rising and the supply of foreclosures is shrinking, on a more microscopic level, there are still metros where investors can find foreclosures at steep discounts and in greater abundance.
RealtyTrac compiled a list of the 20 best (and worst) metro areas to buy foreclosures in 2013. The online foreclosure marketplace took into account four factors: months’ supply of foreclosure inventory, percentage of foreclosure sales, foreclosure discount, and percentage increase in foreclosure activity in from 2011 to 2012. All metros also had a population of 500,000 or more.
In its metro foreclosure report, RealtyTrac ranked Palm Bay, Florida as the No. 1 metro for foreclosure purchases.
From 2011 to 2012, the metro saw foreclosure activity increase 308 percent, and it has a 34 months’ supply of foreclosure inventory. In addition, foreclosure discounts average 28 percent and foreclosure sales represent 24 percent of all sales.
Five other Florida metros were represented on the top 20 list, with Lakeland at No. 5, followed by Tampa (No. 6), Jacksonville (No. 7), Orlando (No. 9), and Miami (No. 12). Florida metros had an especially high percentage of foreclosure sales compared to other metros, with all of them averaging above 20 percent.
New York—a state known for its longer foreclosure timeline—also held a handful of metros on the list. The cities were Rochester (No. 2), Albany (No. 3), New York (No. 4), Poughkeepsie (No. 8), and Syracuse (No. 17). New York metros had an especially large months’ supply of inventory, with Rochester at 78 months, Albany at 86, and New York at 97, the most out of any on the list.
The metro with the highest foreclosure discount was Bridgeport, Connecticut, where foreclosure discounts average 52 percent. Overall, the metro’s ranking was No. 16. Cleveland, Ohio, also offers a notably high discount—47 percent—as well as Chicago (46 percent) and Philadelphia (43 percent).
Other cities that made the list were El Paso, Texas (No. 11); Allentown, Pennsylvania (No. 14); Youngstown, Ohio (No. 15); New Haven, Connecticut (No. 19); and Indianapolis, Indiana (No. 20).
Among the worst metros to buy foreclosures, McAllen, Texas, took the lead with its 12-month supply of foreclosure inventory. The metro has also seen a 66 percent decrease in foreclosure activity over a one-year period.
Other metros in the top five were Ogden, Utah; Little Rock, Arkansas; Las Vegas; and Salt Lake City. Hard-hit metro Phoenix also made the list and ranked No. 8.
The FHA loan is about to become very undesirable.
FHA Insurance Premiums to Remain for Life of Loan
Keeping her promise to Senator Bob Corker (R-Tennessee), Federal Housing Administration commissioner Carol Galante announced Wednesday a series of changes to be issued this week that will allow the agency to better manage risk and strengthen its anemic Mutual Mortgage Insurance (MMI) Fund.
“These are essential and appropriate measures to manage and protect FHA’s single-family insurance programs,” Galante said. “In addition to protecting the MMI Fund, these changes will encourage the return of private capital to the housing market, and make sure FHA remains a vital source of affordable and sustainable mortgage financing for future generations of American homebuyers.”
… Those changes (which will be effective for FHA case numbers assigned on or after April 1 of this year) are discussed in greater detail in FHA’s HECM Mortgagee Letter.
In addition, the agency plans to increase its annual mortgage insurance premium (MIP) by 0.10 percent for most new mortgages and by 0.05 percent for jumbo loans. The premium increases exclude certain streamline refinance transactions.
FHA will also require most of its borrowers to continue paying annual premiums for the life of their mortgage loans. The agency previously canceled required MIP on loans when the outstanding principal balance reached 78 percent of the original principal.
“FHA remains responsible for insuring 100 percent of the outstanding loan balance throughout the entire life of the loan, a term which often extends far beyond the cessation of these MIP payments,” the agency said in a release. “FHA’s Office of Risk Management and Regulatory Affairs estimates that the MMI Fund has foregone billions of dollars in premium revenue on mortgages endorsed from 2010 through 2012 because of this automatic cancellation policy.”
As the cost of borrowing as decreased 36% over last 5 years the cost of mortgage insurance has skyrocketed. The cost of mortgage insurance rarely discussed. The private mortgage insurance companies took a beating I wonder if this cue to get back into the game.
On the FHA piece, the MMI is for the life of the loan…assuming that you’ve hit 78% LTV and don’t refinance. I think there will be legislation to prevent MMI from being put to borrowers after they hit 78% LTV so this will be more like a tempest in a teapot than anything else. Note that HUD is finally asking for higher FICO scores. About time!
On the charts, was the cost of sale (4-5% on average) added into the equity growth figures? I’m sure that retards the upward rise in real values over time.
On prices: 2010 OC sales: 29k, 2011 sales: 29k, 2012 sales: 23k. Yes, values have risen however would they have risen as sharply if another 6,000 homes were sold as they are in a “normal” market?
” I think there will be legislation to prevent MMI from being put to borrowers after they hit 78% LTV so this will be more like a tempest in a teapot than anything else.”
What makes you think this? I am very concerned about this change. It completely rules out an FHA loan for me. If you borrow $700,000, you end up paying $800 per month to the FHA. If it goes away after 5 years, it’s onerous but manageable. If the $800 monthly payment lasts for 30 years, it’s far too high a cost.
With the likelihood of rising interest rates in the future, it probably won’t be cost effective to refinance out even to get a conventional loan because the higher interest rate will take away the advantage of removing the $800 fee.
I won’t be surprised if you’ll see a 10% down payment for a QRM loan backed by Fannie Mae and Freddie Mac but with higher G-fees than the 20% down payment program. Granted it’s not the same as a 3.5% FHA program, but still gets some people in the game.
I’ve reading there is this push by some members in Congress for the GSEs to originate more loans and collect more fees and more mortgage taxes.
The FHA Annual MIP (paid monthly) is a rate (1.40% on $700k 30-year loan soon). The annual amount is determined by taking the projected year’s average balance and applying the rate, then dividing that amount by 12 months. After each year of your mortgage, the monthly MIP amount is recalculated (and lowered). Long story short – the monthly MIP will decrease every 12 month period just like the amount going to interest decreases.
But still, the fact that it never drops-off is nearly a complete bar to considering an FHA 30-year mortgage. However, your mortgage broker might promise you, “You can always refi out of it!”
3.5% + 1.4% MMI is roughly 4.9%. A refi to 4.5% 30 fixed is still a step in the right direction. Many borrowers will gladly exchange a low rate 3.5% loan with non-deductible MMI for a higher rate loan. Even though rates are to be suppressed until 2014, now that the market has gotten a sip of that sweet ZIRP nectar, it’s not going to react well to any change in rates come 2015.
You can’t “always refi out of it” as I caution all of my clients. Betting the house on an uncertain future event is peak foolishness. Weighing it as a possible option is not relying on it to happen. Sadly, my industry will continue to push the “refi out of it” meme to the detriment of the consumer.
There aren’t that many Jumbo FHA purchase loans compared to standard conforming loans. True Jumbo lending is coming back. It’s possible to get a 90% Combined Loan To Value loan over $729,750 (FHA current maximum) so the number of loans this MMI change is going to impact is relatively minimal. Same is to be said about standard $625,500 and below FHA purchase closings. PMI companies are getting very aggressive with their MI options. It’s possible again to get 97% Conventional loans up to $417k today. Seller’s aren’t that thrilled with offers anyway from borrowers with FHA insured loans. The market is going to reduce FHA’s share of closings more than these MI increases.
Laws were changed by Congress that forced lenders to remove PMI once the equity in the home had hit 78%. I don’t believe it applies to government insured loans (haven’t checked yet….) but since the laws pre-exist the coming HUD changes in MMI removal, one can assume that a Congressperson from some under served area will get the rules changed for MI removal to also include FHA insured loans. Yes, I’m speaking about you Ms. Waters.
Not sure I like hearing that jumbo (above FHA’s $729k) 90% LTV is returning. That means more competition when bidding for these homes. Also, don’t tell my wife. I’ve told her having 20% down for the move-up is mandatory, not only because it’s prudent, but also because there are no reasonable loans available at high amounts without 20% down.
It’s not 78% equity that allows you to cancel PMI, it’s 78% of the original purchase price. It’s an important distinction. You can’t use appreciation to let you cancel PMI earlier than it’s scheduled to go off — you can only pay down the loan balance faster.
“It’s not 78% equity that allows you to cancel PMI, it’s 78% of the original purchase price. It’s an important distinction.”
Yes, that is a huge distinction. It will take many years of amortization to get to 78% of the original purchase price.
I could also see it becoming cost effective for borrowers to take on second mortgages or HELOCs specifically to pay down the first mortgage to get to the 78% threshold.
This secret dies with me.
Soylent, Perspective,
I tell my wife all the time if you don’t have a 20% down payment it cost X amount of cars over the life of the loan.
Maybe we should have a post. “Wives emotional pressure to purchase homes results in low down payment loans.” Maybe not a good idea to do this post.
If you want to write a post like that, I’m sure there’s room for it here. I just don’t want to be nearby when that high level of angry pushback detonates.
“The recent small uptick in interest rates caused a dramatic decline in both refinances and purchase originations.”
Sorry, but this happens every time there’s a 4-day work week due to a holiday, in this case MLK Jr. The 5 bps increase in rates may be affecting refis to some extent, but not purchases, and therefore not prices.
Next week purchase apps will “miraculously” increase and the media will rejoice that mortgage demand is immune to rising interest rates, all the while not mentioning that they are comparing to a shortened work week.
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