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(BusinessWeek)   U.S.mortgage lending drops to a 17 year low. Apparently people are waiting a few years after going through foreclosure to get up the nerve to try it again   (businessweek.com) divider line 86
    More: Fail, US Mortgage Corp., mortgages, real estate investment trusts, fico credit score, fixed rate mortgage, Stephen Stanley, interest rates, Wells Fargo  
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661 clicks; posted to Business » on 17 Apr 2014 at 10:42 AM (49 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2014-04-17 08:55:19 AM  
We are in the process of selling one of our properties and there are no solidly middle class people looking at it, it's all been second or third homeowner types even though the price is well within what a middle class person could afford, luckily the property is in an area popular for people living in NYC and Boston to have a summer home. I don't think the issue is the slightly higher mortgage rates it's that lower middle class people simply can't get a loan and banks are not offering any creative way for them to put a downpayment. Any blip on their credit and it's "fark off" any less than 20% down and it's "fark off"
 
2014-04-17 09:17:14 AM  
House prices are WAY to high. Easy rates and no down payments have driven house prices up.  In Fly Over country where I live, the median price for a house in $230k and the avg income for a family of 4 is around $44k.   It used to be that you never bought a house that cost more than 2 years salary.

If you take home $1400 every 2 weeks, your house payment would be $1075 on a 30 year note.  That is almost 1/2 your income.
 
2014-04-17 09:17:24 AM  
The middle class died long ago.
 
2014-04-17 09:33:29 AM  

tobcc: House prices are WAY to high. Easy rates and no down payments have driven house prices up.  In Fly Over country where I live, the median price for a house in $230k and the avg income for a family of 4 is around $44k.   It used to be that you never bought a house that cost more than 2 years salary.

If you take home $1400 every 2 weeks, your house payment would be $1075 on a 30 year note.  That is almost 1/2 your income.


That family probably pays the other half in student loans and healthcare too. Its not even that housing costs are insanely high, everything else has shot the fark up like crazy
 
2014-04-17 10:30:27 AM  
I've been wanting to buy a house for over a year now. I took a hiatus after I fell in love with a $615k listed house, offered $640k, and lost out two days later to one of four separate counter offers.

There is no supply here in Los Angeles, the prices are too damn high, the demand is so high that a decent house is sold within half a week of listing, and if you even think of offering list price they practically spit in your face.

It's really frustrating to watch interest rates go up and house prices go up or stay, knowing I'm economically sound but can't buy a house because flippers and foreign nationals are buying what little there is.
 
2014-04-17 10:33:08 AM  
Last year I refinanced for 2.25% for 15 years with no fees or costs, and it took so long to process Wells Fargo sent me steaks. They're still writing, but I don't know to who
 
2014-04-17 10:48:10 AM  
Banks are in no mood to lend so easily anymore since they can't package them as sell them off without scrutiny.
 
2014-04-17 10:52:08 AM  
I refinanced last year at a 0.01875 rate for 15 years and got back $100,000 and the guy from Quicken let me punch him in the face as hard as I could just for S's and G's.

I don't even know why I did it. I only owed about twenty bucks on my mortgage.

My point is, I'm really good at money.
 
2014-04-17 10:52:40 AM  
Perhaps the economic recovery is going so well that home buyers don't NEED to take out a mortgage because they have so much cash.

/sarcasm
 
2014-04-17 10:55:27 AM  

Quasar: I've been wanting to buy a house for over a year now. I took a hiatus after I fell in love with a $615k listed house, offered $640k, and lost out two days later to one of four separate counter offers.

There is no supply here in Los Angeles, the prices are too damn high, the demand is so high that a decent house is sold within half a week of listing, and if you even think of offering list price they practically spit in your face.

It's really frustrating to watch interest rates go up and house prices go up or stay, knowing I'm economically sound but can't buy a house because flippers and foreign nationals are buying what little there is.


I'm looking for something in the 500/550k range down here.

I have the cash stored to make over a 20% down payment.
I also already own a condo outright (worth abotu 250k).

The problem is ... when I go look at a 500k house, I end up having this voice in the back of my head saying "this house doesn't look like it's worth half a million dollars".

For half a million, I don't want to see an ugly tiled coutertop in the kitchen ... I've already gone through the whole home improvement thing with the condo, I don't want to drop half a million on a house and still have to make significant changes right out of the gate.
 
2014-04-17 10:59:35 AM  
In a shocking turn of events, it appears that home prices are far in excess of income levels.  Somehow this has not resulted in home prices coming down.  Care to provide any economic analysis, Bloomberg BusinessWeek?  What exactly, other than stating the obvious, is it that you do?
 
2014-04-17 11:00:27 AM  
I, for one, am glad housing prices are swinging back up. I bought my place for well under market value at the time, but the bottom dropped out all the same. We can afford our mortgage, so we're not in danger of losing the house, but we're kinda stuck there. While it was a good starter house in a good location for bachelor robertus, it's much less good for father robertus and the family.

We've been paying down the mortgage and hoping that housing prices increase enough to meet us in the middle somewhere. Been aiming for two years (let the wife get back to work, really start hitting the mortgage hard). The kid starts school about then.
 
2014-04-17 11:00:36 AM  
We´re near the end of another housing bubble.  The Fed gave out so much money that investment firms were buying up cheap houses to get rents.  Now that´s beyond saturation.  The housing recovery was never ordinary people buying houses.
 
2014-04-17 11:01:59 AM  
I'm looking for something akin to an Earthship. Something built into the side of a mountain, but also a place I can store my doubloons, gold chalices, and Spanish jewels. Something in the $80 million range.

It MUST have granite countertops, dual sinks in the en suite, and a landing pad for my heliosphan.
 
2014-04-17 11:07:15 AM  

lordargent: Quasar: I've been wanting to buy a house for over a year now. I took a hiatus after I fell in love with a $615k listed house, offered $640k, and lost out two days later to one of four separate counter offers.

There is no supply here in Los Angeles, the prices are too damn high, the demand is so high that a decent house is sold within half a week of listing, and if you even think of offering list price they practically spit in your face.

It's really frustrating to watch interest rates go up and house prices go up or stay, knowing I'm economically sound but can't buy a house because flippers and foreign nationals are buying what little there is.

I'm looking for something in the 500/550k range down here.

I have the cash stored to make over a 20% down payment.
I also already own a condo outright (worth abotu 250k).

The problem is ... when I go look at a 500k house, I end up having this voice in the back of my head saying "this house doesn't look like it's worth half a million dollars".

For half a million, I don't want to see an ugly tiled coutertop in the kitchen ... I've already gone through the whole home improvement thing with the condo, I don't want to drop half a million on a house and still have to make significant changes right out of the gate.


Exactly. It's a huge chunk of money and a major investment. The prices just don't match the quality, but the demand is so high they don't care. I saw a decent house that had been listed for 140 days. I put in a low but reasonable offer, figuring they would at least counter since they didn't have much luck, but didn't hear back. They'll just wait and wait because someone will eventually buy because of the supply.
 
2014-04-17 11:09:36 AM  

sigdiamond2000: I'm looking for something akin to an Earthship. Something built into the side of a mountain, but also a place I can store my doubloons, gold chalices, and Spanish jewels. Something in the $80 million range.

It MUST have granite countertops, dual sinks in the en suite, and a landing pad for my heliosphan.


Hollowed-out volcano?

Or moonbase (basalt instead of granite, is that okay)? I can get you a good deal if you bring your own water. And air.


i651.photobucket.com
 
2014-04-17 11:12:29 AM  
A surge in all-cash purchases to more than 40 percent has kept housing prices rising, squeezing more Americans out of the market.

The problem isn't that people can't afford houses.
 
2014-04-17 11:20:24 AM  

Mr. Coffee Nerves: Last year I refinanced for 2.25% for 15 years with no fees or costs, and it took so long to process Wells Fargo sent me steaks. They're still writing, but I don't know to who


You got the WF sorry steaks too?  Took me around 9 months if I remember correctly on mine.  You should have seen the letter I sent them when they were jerking us around.  I got so fed up with the process, I basically threatened to cancel the whole deal, and they all of a sudden had a closing date scheduled right away.
 
2014-04-17 11:24:30 AM  

sigdiamond2000: I refinanced last year at a 0.01875 rate for 15 years and got back $100,000 and the guy from Quicken let me punch him in the face as hard as I could just for S's and G's.

I don't even know why I did it. I only owed about twenty bucks on my mortgage.

My point is, I'm really good at money.


NFL owners look down at your terrible business ability from high atop their taxpayer funded stadiums.
 
2014-04-17 11:26:33 AM  

sendtodave: A surge in all-cash purchases to more than 40 percent has kept housing prices rising, squeezing more Americans out of the market.

The problem isn't that people can't afford houses.


My wife and I just bought our first house for all-cash. It's literally 1/5 the price of the houses that our friends are moving into. It's small, stuff inside is out of date, but solid and cheap. We'll probably have to move in 2-4 years when kids come along, but in the meantime we'll come out ahead $10-20K on rent, assuming we can sell it for the price we bought it for.
 
2014-04-17 11:27:44 AM  
Well yeah.
The hedge funders have been snapping up the properties (thus the surge in cash purchases).
Enjoy your financialized economy, serfs!
 
2014-04-17 11:29:44 AM  
Lot's of nice places with property here in small town Montana.  Most owners say no one looking.  Small town appeal is fading and anyone with money wanting to live here builds their own.
 
2014-04-17 11:31:44 AM  

Fubini: sendtodave: A surge in all-cash purchases to more than 40 percent has kept housing prices rising, squeezing more Americans out of the market.

The problem isn't that people can't afford houses.

My wife and I just bought our first house for all-cash. It's literally 1/5 the price of the houses that our friends are moving into. It's small, stuff inside is out of date, but solid and cheap. We'll probably have to move in 2-4 years when kids come along, but in the meantime we'll come out ahead $10-20K on rent, assuming we can sell it for the price we bought it for.


Am I still allowed to hate you for being able to afford something that I can't afford?

Oh, who am I kidding, this is Fark.

Screw you, Mr. Moneybags!
 
2014-04-17 11:31:57 AM  
Owning a home is a nice thing to have.  It can be beneficial in the long term economically.  But it is NOT worth what the current market is charging.  If renting a nice apartment costs $1800 /month in a metropolitan area, buying the same damn thing that will cost you $2800/month just for the privilege of ownership is insanity.
 
2014-04-17 11:37:58 AM  

Fubini: sendtodave: A surge in all-cash purchases to more than 40 percent has kept housing prices rising, squeezing more Americans out of the market.

The problem isn't that people can't afford houses.

My wife and I just bought our first house for all-cash. It's literally 1/5 the price of the houses that our friends are moving into. It's small, stuff inside is out of date, but solid and cheap. We'll probably have to move in 2-4 years when kids come along, but in the meantime we'll come out ahead $10-20K on rent, assuming we can sell it for the price we bought it for.


That's not what's typical when they say buying in all-cash, though.

Around here, every house I put an offer in on ended up being purchased by a company that turned them into rental homes, paid in cash, not contingent upon inspection, just enough over asking price that no bank would be willing to give a loan for that amount based off what the inspection would be for the house.

So....I stopped looking.
 
2014-04-17 11:38:19 AM  

safetycap: sigdiamond2000: I'm looking for something akin to an Earthship. Something built into the side of a mountain, but also a place I can store my doubloons, gold chalices, and Spanish jewels. Something in the $80 million range.

It MUST have granite countertops, dual sinks in the en suite, and a landing pad for my heliosphan.

Hollowed-out volcano?

Or moonbase (basalt instead of granite, is that okay)? I can get you a good deal if you bring your own water. And air.


[i651.photobucket.com image 300x300]


Sorry, lack of nearby dog park for my Kazakhstanian Mastiff is a deal-breaker. That's a have-to-have on my end.
 
2014-04-17 11:38:41 AM  

Fubini: We'll probably have to move in 2-4 years when kids come along, but in the meantime we'll come out ahead $10-20K on rent, assuming we can sell it for the price we bought it for.


This is basically how I got farked.
 
2014-04-17 11:39:14 AM  

cefm: Owning a home is a nice thing to have.  It can be beneficial in the long term economically.  But it is NOT worth what the current market is charging.  If renting a nice apartment costs $1800 /month in a metropolitan area, buying the same damn thing that will cost you $2800/month just for the privilege of ownership is insanity.


Buh?

http://www.longandfoster.com/Market-Minute/VA/Loudoun-County.htm

Last March, the median sale price for Loudoun County Homes was $407,001. This March, the median sale price was $405,000, which is similar compared to a year ago.


That's about two grand a month to live in the county with the highest income in the country.  If you're paying more than that, you're living in the wrong place.
 
2014-04-17 11:41:26 AM  
sendtodave:   The problem isn't that people can't afford houses.

Mostly true.  Not the the whole story.   For sure, two generations of young people either can't afford or aren't interested in the sacrifices necessary for home ownership.  And there's a portion of their elders that are in the same boat.

However.

The Do Not Expect Social Security To Be There For You message was received by many of the 40+.  Many of those people, who might be in a position to move up a step in the housing market, are instead socking away every penny they can for retirement.

The housing market specifically, and the economy in general, reflects that.  You can blame Fox News and the GOP for the scare tactics, and they are guilty as charged, but when the President's own Treasury Secretary testifies before congress that:

A.)  Yes, our current spending levels are unsustainable
B.)  If allowed to continue the economy will shut down completely in 15 - 20 years
C.)  "We don't really have a plan, we just don't like yours"

and everyone get's to watch it, over and over again, you can't really blame people for being overly prudent.

Why are we doing everything we can to reduce consumption, and then biatching about reduced consumption?
 
2014-04-17 11:42:08 AM  

tobcc: House prices are WAY to high. Easy rates and no down payments have driven house prices up.  In Fly Over country where I live, the median price for a house in $230k and the avg income for a family of 4 is around $44k.   It used to be that you never bought a house that cost more than 2 years salary.

If you take home $1400 every 2 weeks, your house payment would be $1075 on a 30 year note.  That is almost 1/2 your income.


Your numbers are way off.  Maybe in some of the nicer suburbs houses cost that much, but the median home price in Kansas City is around $134,000.  And the median income for a family of 4 is $75,000.  With 20% down, you're looking at probably a $525 mortgage with another $250 or so in taxes and insurance.  For a family of 2, the median income is $50,489.  If you figure a quarter of that goes out to federal, state, and local taxes (it's probably less but let's go with a quarter), that leaves a monthly income of $3155 and a mortgage+taxes+insurance payment of about $779.

So a family of two making the median income for a family of two in Kansas City, MO can afford the median house in Kansas City with a monthly payment of just under 1/4 of their take-home pay.  That sounds about right to me.
 
2014-04-17 11:46:22 AM  
...well good thing everyone buying right now is paying in nothing but cash, locking out anyone who has potentially qualified for a traditional 30 year
 
2014-04-17 11:49:57 AM  

Zeb Hesselgresser: sendtodave:   The problem isn't that people can't afford houses.


The housing market specifically, and the economy in general, reflects that.  You can blame Fox News and the GOP for the scare tactics, and they are guilty as charged, but when the President's own Treasury Secretary testifies before congress that:

A.)  Yes, our current spending levels are unsustainable
B.)  If allowed to continue the economy will shut down completely in 15 - 20 years
C.)  "We don't really have a plan, we just don't like yours"

and everyone get's to watch it, over and over again, you can't really blame people for being overly prudent.

Why are we doing everything we can to reduce consumption, and then biatching about reduced consumption?



All three 'links' take you to a "debate" between Paul Ryan, Chief Potato Economist of the GOP, and Tim Geithner. (I say debate loosely because it's mostly just Paul Ryan interrupting and talking over Geitner and not allowing any real discussion.) Your video contains one graph that shows problems if nothing is done, but not complete economic shutdown.

That's not evidence of anything except the complete incompetence of Congress which is very very real.
 
2014-04-17 12:01:40 PM  
bdub77:   That's not evidence of anything except the complete incompetence of Congress which is very very real.

Yes.  Paul Ryan bad, Republicans are poo-heads.

theonlysanemanleft.files.wordpress.com
 
2014-04-17 12:19:27 PM  
I've found it to be the opposite.

I know two people who were foreclosed on in 2008, and both have already bought again.

I think the financially prudent are holding off. The fools have already rushed in again.
 
2014-04-17 12:24:04 PM  

Zeb Hesselgresser: bdub77:   That's not evidence of anything except the complete incompetence of Congress which is very very real.

Yes.  Paul Ryan bad, Republicans are poo-heads.

[theonlysanemanleft.files.wordpress.com image 418x280]


Thanks, that's the executive summary. I would love to delve into a multi-faceted discussion on why Paul Ryan is bad but it's been fleshed out before on Fark multiple times and I don't have time to school you. The guy has no idea what he's talking about, even the GOP guy in charge of appropriations knows Ryan's budget proposal is completely unworkable.
 
2014-04-17 12:25:24 PM  

mcreadyblue: I've found it to be the opposite.

I know two people who were foreclosed on in 2008, and both have already bought again.

I think the financially prudent are holding off. The fools have already rushed in again.


If we use the above estimate of 1800 per month for rent, that's over $100K in five years that goes into someone else's pocket.

I, uh, guess that's prudent.
 
2014-04-17 12:27:13 PM  

rugman11: tobcc: House prices are WAY to high. Easy rates and no down payments have driven house prices up.  In Fly Over country where I live, the median price for a house in $230k and the avg income for a family of 4 is around $44k.   It used to be that you never bought a house that cost more than 2 years salary.

If you take home $1400 every 2 weeks, your house payment would be $1075 on a 30 year note.  That is almost 1/2 your income.

Your numbers are way off.  Maybe in some of the nicer suburbs houses cost that much, but the median home price in Kansas City is around $134,000.  And the median income for a family of 4 is $75,000.  With 20% down, you're looking at probably a $525 mortgage with another $250 or so in taxes and insurance.  For a family of 2, the median income is $50,489.  If you figure a quarter of that goes out to federal, state, and local taxes (it's probably less but let's go with a quarter), that leaves a monthly income of $3155 and a mortgage+taxes+insurance payment of about $779.

So a family of two making the median income for a family of two in Kansas City, MO can afford the median house in Kansas City with a monthly payment of just under 1/4 of their take-home pay.  That sounds about right to me.


In your link it says avg household income in KCMO is $43,810 and while you are right about the VALUE of current housing prices, if you look at the current listing avg in KCMO it is $173,000.   If you look at a family of 4, they still cant afford a house at the price.   While it is true you can buy a house in KCMO for less than $30k, you would end up in the ghetto.

I stand behind my statement that at a little more than $1400 a month take home for a family of 4 cant afford $810 a month (with 20% down and 3.75 apr) house payment.  Back before people "invested" in housing, most houses only appreciated with the level on inflation.

4.bp.blogspot.com
 
2014-04-17 12:34:17 PM  

cefm: Owning a home is a nice thing to have.  It can be beneficial in the long term economically.  But it is NOT worth what the current market is charging.  If renting a nice apartment costs $1800 /month in a metropolitan area, buying the same damn thing that will cost you $2800/month just for the privilege of ownership is insanity.


On a tax adjusted basis, that's pretty close to a wash.  And if you have a fixed rate mortgage, you don't have to worry about rent going up (but you do have to pay for maintenance).

In San Jose, we found it to actually be cheaper to buy rather than rent when we bought our place a couple years ago.  I'm pretty sure we could cover mortgage plus taxes if we wanted to rent it out.
 
2014-04-17 12:34:18 PM  

sendtodave: mcreadyblue: I've found it to be the opposite.

I know two people who were foreclosed on in 2008, and both have already bought again.

I think the financially prudent are holding off. The fools have already rushed in again.

If we use the above estimate of 1800 per month for rent, that's over $100K in five years that goes into someone else's pocket.

I, uh, guess that's prudent.


Buying a house you can't afford and planning on selling it in a couple of years after it appreciates in value dramatically only works in Canada.
 
2014-04-17 12:39:56 PM  

lordargent: The problem is ... when I go look at a 500k house, I end up having this voice in the back of my head saying "this house doesn't look like it's worth half a million dollars".

For half a million, I don't want to see an ugly tiled coutertop in the kitchen ... I've already gone through the whole home improvement thing with the condo, I don't want to drop half a million on a house and still have to make significant changes right out of the gate.


It took me a while to get over that as well, but our initial tax assessment after buying our house really clarified it:  We didn't spend $550K on a 75 year old 2 bedroom bungalow with a small kitchen and many needs, we bought a $150K bungalow that happens to sit on a $400K piece of land.  In expensive markets (silicon valley here), the house itself is borderline irrelevant to the price as long as it isn't a complete teardown.
 
2014-04-17 12:39:58 PM  

bdub77: Zeb Hesselgresser: bdub77:   That's not evidence of anything except the complete incompetence of Congress which is very very real.

Yes.  Paul Ryan bad, Republicans are poo-heads.

[theonlysanemanleft.files.wordpress.com image 418x280]

Thanks, that's the executive summary. I would love to delve into a multi-faceted discussion on why Paul Ryan is bad but it's been fleshed out before on Fark multiple times and I don't have time to school you. The guy has no idea what he's talking about, even the GOP guy in charge of appropriations knows Ryan's budget proposal is completely unworkable.


My initial comment had nothing to do with Paul Ryan.  The applicable part of that video was Geithner.

Unsustainable, Catastrophic, and No Plan.  That scared people.  They are still scared.   However, I get that you'd rather not talk about that, so yes, Paul Ryan, because stoopid.
 
2014-04-17 12:55:31 PM  

mcreadyblue: sendtodave: mcreadyblue: I've found it to be the opposite.

I know two people who were foreclosed on in 2008, and both have already bought again.

I think the financially prudent are holding off. The fools have already rushed in again.

If we use the above estimate of 1800 per month for rent, that's over $100K in five years that goes into someone else's pocket.

I, uh, guess that's prudent.

Buying a house you can't afford and planning on selling it in a couple of years after it appreciates in value dramatically only works in Canada.


Well, it seems to happen in every market, whenever there's a large bubble.

But, yeah, I see your point.  If you can't afford 1800 in rent, you also can't afford 1800 in mortgage.  But, if you can afford either one, which would you say is the better option?
 
2014-04-17 01:00:20 PM  

Quasar: lordargent: Quasar: I've been wanting to buy a house for over a year now. I took a hiatus after I fell in love with a $615k listed house, offered $640k, and lost out two days later to one of four separate counter offers.

There is no supply here in Los Angeles, the prices are too damn high, the demand is so high that a decent house is sold within half a week of listing, and if you even think of offering list price they practically spit in your face.

It's really frustrating to watch interest rates go up and house prices go up or stay, knowing I'm economically sound but can't buy a house because flippers and foreign nationals are buying what little there is.

I'm looking for something in the 500/550k range down here.

I have the cash stored to make over a 20% down payment.
I also already own a condo outright (worth abotu 250k).

The problem is ... when I go look at a 500k house, I end up having this voice in the back of my head saying "this house doesn't look like it's worth half a million dollars".

For half a million, I don't want to see an ugly tiled coutertop in the kitchen ... I've already gone through the whole home improvement thing with the condo, I don't want to drop half a million on a house and still have to make significant changes right out of the gate.

Exactly. It's a huge chunk of money and a major investment. The prices just don't match the quality, but the demand is so high they don't care. I saw a decent house that had been listed for 140 days. I put in a low but reasonable offer, figuring they would at least counter since they didn't have much luck, but didn't hear back. They'll just wait and wait because someone will eventually buy because of the supply.


Sounds like what I experienced in southern california/ LA sprawl/inland empire area... Guy I knew bought a million dollar house, and kind of bragged about it.  Went over for dinner one night and laughed.  It was just a basic two-story, 3-bedroom on a postage stamp of a lawn.  He had really bought a $100,000 house on a piece of $900,000 real estate.  Go to flyover country and look at $1million dollar houses and you will see the mansion/compound look one would expect.
 
2014-04-17 01:03:54 PM  
I still say we're in for another housing bubble burst and another Great Recession. The problem is the stupid housing values are only on the coasts but the rest of us in flyover country are going to pay the price.

2 bed/1 bath 900 sq ft houses shouldn't cost $500,000 just because they're within a 30 mile radius of Silicon Valley.
 
2014-04-17 01:10:46 PM  
Maybe people will wise up and not live outside their means again?

/doubtful
 
2014-04-17 01:17:45 PM  

Hyjamon: Quasar: lordargent: Quasar: I've been wanting to buy a house for over a year now. I took a hiatus after I fell in love with a $615k listed house, offered $640k, and lost out two days later to one of four separate counter offers.

There is no supply here in Los Angeles, the prices are too damn high, the demand is so high that a decent house is sold within half a week of listing, and if you even think of offering list price they practically spit in your face.

It's really frustrating to watch interest rates go up and house prices go up or stay, knowing I'm economically sound but can't buy a house because flippers and foreign nationals are buying what little there is.

I'm looking for something in the 500/550k range down here.

I have the cash stored to make over a 20% down payment.
I also already own a condo outright (worth abotu 250k).

The problem is ... when I go look at a 500k house, I end up having this voice in the back of my head saying "this house doesn't look like it's worth half a million dollars".

For half a million, I don't want to see an ugly tiled coutertop in the kitchen ... I've already gone through the whole home improvement thing with the condo, I don't want to drop half a million on a house and still have to make significant changes right out of the gate.

Exactly. It's a huge chunk of money and a major investment. The prices just don't match the quality, but the demand is so high they don't care. I saw a decent house that had been listed for 140 days. I put in a low but reasonable offer, figuring they would at least counter since they didn't have much luck, but didn't hear back. They'll just wait and wait because someone will eventually buy because of the supply.

Sounds like what I experienced in southern california/ LA sprawl/inland empire area... Guy I knew bought a million dollar house, and kind of bragged about it.  Went over for dinner one night and laughed.  It was just a basic two-story, 3-bedroom on a postage stamp of a lawn.  He had real ...


$1.1 million gets you this in St. Louis.
http://www.realtor.com/realestateandhomes-detail/14-Briarcliff_Ladue _M O_63124_M87694-86708?row=2
http://www.realtor.com/realestateandhomes-detail/9-Bellerive-Country -C lb_Town-And-Country_MO_63141_M72030-01443?row=9

$1.1 million gets you this in San Diego
http://www.realtor.com/realestateandhomes-detail/1161-Opal-St_San-Di eg o_CA_92109_M19720-06667?row=16
http://www.realtor.com/realestateandhomes-detail/1052-Loring-St_San- Di ego_CA_92109_M19579-94673?row=51
 
2014-04-17 01:18:12 PM  

tobcc: rugman11: tobcc: House prices are WAY to high. Easy rates and no down payments have driven house prices up.  In Fly Over country where I live, the median price for a house in $230k and the avg income for a family of 4 is around $44k.   It used to be that you never bought a house that cost more than 2 years salary.

If you take home $1400 every 2 weeks, your house payment would be $1075 on a 30 year note.  That is almost 1/2 your income.

Your numbers are way off.  Maybe in some of the nicer suburbs houses cost that much, but the median home price in Kansas City is around $134,000.  And the median income for a family of 4 is $75,000.  With 20% down, you're looking at probably a $525 mortgage with another $250 or so in taxes and insurance.  For a family of 2, the median income is $50,489.  If you figure a quarter of that goes out to federal, state, and local taxes (it's probably less but let's go with a quarter), that leaves a monthly income of $3155 and a mortgage+taxes+insurance payment of about $779.

So a family of two making the median income for a family of two in Kansas City, MO can afford the median house in Kansas City with a monthly payment of just under 1/4 of their take-home pay.  That sounds about right to me.

In your link it says avg household income in KCMO is $43,810 and while you are right about the VALUE of current housing prices, if you look at the current listing avg in KCMO it is $173,000.   If you look at a family of 4, they still cant afford a house at the price.   While it is true you can buy a house in KCMO for less than $30k, you would end up in the ghetto.

I stand behind my statement that at a little more than $1400 a month take home for a family of 4 cant afford $810 a month (with 20% down and 3.75 apr) house payment.  Back before people "invested" in housing, most houses only appreciated with the level on inflation.

[4.bp.blogspot.com image 850x605]



We can play around with these numbers all you like.  Household income is a tricky number because it includes college students and retirees, who currently make up around 20% of the American population.  If you look at the second link in my post, down a little ways it shows the Median Income by Family Size (I can't copy and paste it here), and the median income for a four-person family is $75,000.  Or you can look at the Census information, which shows that the median income for a married couple family is over $78,000 (and would include all couples regardless of the number of children).

Additionally, according to your Trulia link, while the median home listing is $173k, that appears to be heavily skewed by the prices of large homes.  The median price of a 3BR home in Kansas City, MO is currently 127k.

So, again, the median family of four (with a post-tax income of roughly $5000 assuming a 20% total tax rate) can easily afford the payment on a median 3BR home in Kansas City, MO.

Now, I'm from Wichita, so I don't know all the neighborhoods in Kansas City.  It's possible that it's nothing but super high-end, frou-frou districts and dirt poor districts with no real median in-between.  But at that income, they could even move to Olathe or one of the other suburbs and have no real problem affording the mortgage on a 3BR house (median listing price $180k).

I think the real question is who should be able to afford the "median house"?  Right now, in Kansas City, it appears that the median family of two ($50,489 annual income) can probably barely afford the median two-bedroom house ($117k) at a house payment of 25% of take-home but they can't afford the median 3BR house (and neither can the median family of three).  The median family of four, however, can afford the median 3BR house.  The question then becomes "what about single people"?  Should the median single person be able to afford a decent house?  Because right now they probably can't.

Like I said, we can play around with these numbers all day.  I think mine are better since they account for family size and house size, whereas the median household figures can be skewed by the young and the elderly.
 
2014-04-17 01:18:56 PM  

Best Princess Celestia: Maybe people will wise up and not live outside their means again?

/doubtful


In some locations, I'm not sure there's really much choice, outside of moving away.

Hmm.  I guess from that point of view, if you can't afford rent prices, nor can you afford to buy, you'd be better off trying to buy.

At least if you got "lucky," you'd have a place to live.
 
2014-04-17 01:22:09 PM  

mjohnson71: $1.1 million gets you this in St. Louis.
http://www.realtor.com/realestateandhomes-detail/14-Briarcliff_Ladue _M O_63124_M87694-86708?row=2
http://www.realtor.com/realestateandhomes-detail/9-Bellerive-Country -C lb_Town-And-Country_MO_63141_M72030-01443?row=9

$1.1 million gets you this in San Diego
http://www.realtor.com/realestateandhomes-detail/1161-Opal-St_San-Di eg o_CA_92109_M19720-06667?row=16
http://www.realtor.com/realestateandhomes-detail/1052-Loring-St_San- Di ego_CA_92109_M19579-94673?row=51



Imagine what $1.1 million could get you in the third world!

Oh, wait, those already are in Missouri.
 
2014-04-17 01:23:20 PM  

sendtodave: mcreadyblue: sendtodave: mcreadyblue: I've found it to be the opposite.

I know two people who were foreclosed on in 2008, and both have already bought again.

I think the financially prudent are holding off. The fools have already rushed in again.

If we use the above estimate of 1800 per month for rent, that's over $100K in five years that goes into someone else's pocket.

I, uh, guess that's prudent.

Buying a house you can't afford and planning on selling it in a couple of years after it appreciates in value dramatically only works in Canada.

Well, it seems to happen in every market, whenever there's a large bubble.

But, yeah, I see your point.  If you can't afford 1800 in rent, you also can't afford 1800 in mortgage.  But, if you can afford either one, which would you say is the better option?


It's a no-brainer.  You buy.  Or maybe even buy a little less house.  Something in the 1500 range so you have money to put away for property taxes.  I'll never understand these farkers who advocate renting IF you can afford to buy.   And they all drag out the same idiotic arguments like 'I don't pay property taxes'  (yeah, ya do) and 'if an appliance goes, the landlord will replace it so it doesn't cost me anything'.  (yes it does).  Your landlord knows that he'll have to replace some appliances along the way, and probably a roof eventually, and he's figured all that in along with YOUR share of HIS property taxes when he set your rent.  And what do you have after 10-20 years of renting?  Nothing.  If you buy, at least you have some equity.  We've been in this house since '86.  Paid it off last year.  Figuring in the interest we paid over the years and what we could reasonably expect to sell for, it's cost us roughly 550/month to live here.  Not to mention the 240K we could easily walk away with if we sold tomorrow.  How much rent does one get back when they walk away?  Right. 0
 
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