[ntg44]

Originally Posted by gatorfast

Interest rates were super high in 1984 but $150k also bought you a nice house in a nice area. The recent large increase in rates combined with super high home prices makes a big difference in monthly payment.

Exactly.

A decent middle class home around me is 500k. For a house not even close to dream home status, but you'll be comfortable with your family of 4-5.

In my highly optimistic scenario, 40% down is 200k, so you finance 300k.

On a 30 year fixed at 7.5%, that loan becomes 755k. Add the 200k down payment, and you just paid 955k for a 500k home over 30 years. before any renovation budget.

Add some of the highest property taxes in the country, which on a house like this would be roughly 12-15k/year in my area. I just laugh. No f***ing way am I paying 1 mllion dollars for a 500k house. Massive correction needed, either in interest rates or housing prices.

[DETRoadster]

Originally Posted by ntg44

Exactly.

A decent middle class home around me is 500k. For a house not even close to dream home status, but you'll be comfortable with your family of 4-5.

Be thankful. $500k wont buy you a rat infested, complete tear down, in Seattle.

[ryan stewart]

Atlanta is a little better. I mean in the city its 400k for a builders spec, small townhome or condo. But if you go up into the burbs $500k can get you a nice, if albeit cookie cutter, house. But you get access to a metro job market.

What blows my mind is some of the prices I see back in Kansas. Kansas should not be expensive, ever. Its flat and land is easy and cheap. Also nobody is moving TO Kansas like they are Atlanta.

[dradernh]

In 1989, we paid $470K for a 2,000' home in San Francisco. The 20%-down first mortgage was at 10%, and each of the 2nd, 3rd, and 4th mortgages were at 12%. (We put 5% down.) Monthly PITI was just under $5K. We could handle it, but moving from a $1K rental within walking distance to work and with a gazillion dollar view required some adjusting.

We sold 8.5 years later for $575K. Today, Zillow values that home at $2,925,000. If you consider your home to be an investment, timing matters.

[Chick Webb]

Originally Posted by spazzyfry123

Will be fun buying here soon!

Yeah, I'll bet. What about selling your current house? Are you facing any issues there?

[UncleWede]

Originally Posted by Chick Webb

Yeah, I'll bet. What about selling your current house? Are you facing any issues there?

I've had my father's two properties for sale for MONTHS, not even an offer. Dropped one by 10K, and plan to rent the other until we get a hit.

[Chick Webb]

Originally Posted by UncleWede

Dropped one by 10K, and plan to rent the other until we get a hit.

In CA? Can you provide a percentage of original price for that $10k? That might be more informative than an absolute figure.

[UncleWede]

Originally Posted by Chick Webb

In CA? Can you provide a percentage of original price for that $10k? That might be more informative than an absolute figure.

Listed at 319, dropped to 309, in Bakersfield. 2+1 in gated community. We were just getting it listed as things started to turn. This is his estate, and I need the sale to balance the distribution to everyone.

[ShopVac]

'97, our first mortgage was 30yr and it was over 10% fixed

Refinanced to a 10 year in 2002, at 7% fixed. I swear payments were less and we knocked years off the mortgage.

Was about to have it paid off...when the wife decide to add an addition, which financed our house again in 2012 - 10 years at 2.1% fixed. Loved it over the last 10 years when folks said they could beat our current rate...when we told them what it was, they couldn't.

Done now...just need to pay taxes on my own & don't care what the house is worth...as wife won't let me move.

[XutvJet]

I personally think people have gotten way to comfortable with living beyond their means over the past 2 decades. I've lived in the same area in Kansas City for 40 years of my 48 year life. I live in historically the wealthiest county in the state. Growing up, there were only few areas in the county that had the big, 3,500 ft2+ fancy homes. Now a 3,500 ft2 home would be considered merely acceptable by most people I know. I'm sure most in this thread would think the same too. Large, fancy homes are everywhere in this county and $750-1M is not too uncommon anymore which to me, is astonishing because we don't make the kind of money folks do on the east and west coasts. Also, seeing a German car like a BMW, Porsche, or Benz was a rarity in my area back in the 1980s and early 1990s and seeing a Ferrari, much less a Lamborghini, was something you might see at a car show. Now German cars are everywhere and it's not uncommon to see exotics once or so a week.

Most of my 40+ y/o friends live in big, nice and newer homes (way nicer than what I live in and 2X/3X the value). Many have second homes, other property, multiple $50K+ cars, boats, etc. Most have loans on everything and work damn hard to pay those loans every month. When they land a better paying job, most tend to buy another big toy, do a major renovation, etc. They also have little in retirement. $55-80K trucks and SUVs are the norm in my neighborhood that is comprised of $260K-$330K homes. That's bonkers to me.

Same goes for eating. Going out to eat for dinner was a rarity for most of us growing up in the 1980s and 1990s. That's not the case anymore, including myself and my family. Going out to eat is monumentally more expensive than making something yourself.

I get that things are more expensive, but from what I see, more people in this country have become quite accustomed to a more extravagant life style. I have a hard time feeling sorry for the ones bitching about costs because they choose to live outside their means.

[XutvJet]

Originally Posted by ryan stewart

What blows my mind is some of the prices I see back in Kansas. Kansas should not be expensive, ever. Its flat and land is easy and cheap. Also nobody is moving TO Kansas like they are Atlanta.

All the apartment, townhome, and condo builders didn't get that memo because construction of those types of dwellings has been full tilt for the 5+ years in Johnson Country, KS. I don't understand where all these people are coming from, but once these complexes are built, they're full in a year.

[spazzyfry123]

Originally Posted by Chick Webb

Yeah, I'll bet. What about selling your current house? Are you facing any issues there?

We’ll be selling, yes. Market has cooled, but is still warm enough. We’re in a desirable neighborhood that rarely has anything for sale and likely the cheapest in an otherwise expensive neighborhood. We should fare out well, but definitely don’t want to count the chickens just yet…

[x622]

I look forward to the housing market taking a fat dump.

The result of the fed rates being so low is that people got loans for nothing on houses, which put more people in the market since they could qualify for them, thus driving up pricing - the "inflation" that people are too scared to discuss.

I'm waiting for the contagion to spread and '23 to be the real shit show. I hope you guys are ready sitting with cash to buy these distressed assets.

[dradernh]

Originally Posted by XutvJet

They...have little in retirement.

That was always JOB ONE in our household, and it's why we retired at ages 45 and 50. Granted, no kids, but still.

Originally Posted by x622

I look forward to the housing market taking a fat dump.

Why do you think it will do that? And, do you think it will do that everywhere, generally, or will it be concentrated in the regions where the housing market is typically hammered severely in every down-cycle?

[2008M36MT]

I bought my $305K first home outright in 2017, have since bought a $200K investment home which since been paid off and have saved $50K for my next home but can't justify a 7% mortgage. Waiting for rates and prices to drop so I could get into a nicer home and turn the current into a rental, wife and I are the only ones living in it but I don't want to be as close as I am to the neighbors. I live in a cookie cutter Lennar, but it was new and the cheapest home in the community in a good school district, so if I have to sell should go fast.

[dreamingat30fps]

Originally Posted by dradernh

Why do you think it will do that? And, do you think it will do that everywhere, generally, or will it be concentrated in the regions where the housing market is typically hammered severely in every down-cycle?

I can't comment on other areas, but it's already starting to do that here in SFL. In my community not many houses go up for sale. In the past 3 years the ones that do sold so fast that I would not even see them go up for sale and each one would break records for price. I think the highest one sold for like $700k. There are now at least 3 for sale as of the last time I looked. All have been dropping in price and I believe they are all under $700k now. I believe one of them is now $600k or less. There are also a lot more homes for sale in the general area than there were before.

Are they pre 2020 prices? No. Will it ever go back to those prices? Probably not but I have no idea. All I know is there is definitely more inventory, houses are sitting longer and prices are going lowered.

[dradernh]

Originally Posted by dreamingat30fps

I can't comment on other areas, but it's already starting to do that here in SFL.

SFL has been at the top or near the top on the list of regions that take a real hit during every major downturn. IIRC, SoCal and the Phoenix area tend to be near the top, too.

Assuming we're going to experience another major downturn, I'm not qualified to suggest where it will hit and where it will do so hardest. I was just curious what x622 thought.

[2008M36MT]

Originally Posted by dreamingat30fps

I can't comment on other areas, but it's already starting to do that here in SFL. In my community not many houses go up for sale. In the past 3 years the ones that do sold so fast that I would not even see them go up for sale and each one would break records for price. I think the highest one sold for like $700k. There are now at least 3 for sale as of the last time I looked. All have been dropping in price and I believe they are all under $700k now. I believe one of them is now $600k or less. There are also a lot more homes for sale in the general area than there were before.

Are they pre 2020 prices? No. Will it ever go back to those prices? Probably not but I have no idea. All I know is there is definitely more inventory, houses are sitting longer and prices are going lowered.

I'm looking in San Diego and it's holding up, saw a CNBC that it's one of the markets where people want to move, guess I'm one of them. I think it'll hold up since it's one of those markets with a military presence so buyers with 0% down are aplenty. Question is how many of them can afford the payments on a military salary.

[zx10guy]

Originally Posted by dradernh

In 1989, we paid $470K for a 2,000' home in San Francisco. The 20%-down first mortgage was at 10%, and each of the 2nd, 3rd, and 4th mortgages were at 12%. (We put 5% down.) Monthly PITI was just under $5K. We could handle it, but moving from a $1K rental within walking distance to work and with a gazillion dollar view required some adjusting.

We sold 8.5 years later for $575K. Today, Zillow values that home at $2,925,000. If you consider your home to be an investment, timing matters.

I actually think time in the market matters more than timing. Of course you have to be smart with where you buy, type of property, etc, etc.

[dradernh]

Originally Posted by 2008M36MT

I'm looking in San Diego and it's holding up, saw a CNBC that it's one of the markets where people want to move, guess I'm one of them. I think it'll hold up since it's one of those markets with a military presence so buyers with 0% down are aplenty. Question is how many of them can afford the payments on a military salary.

That's going to be ~$4.7K+/mo for principal, interest, and taxes. Wild guess, but I'm thinking...what...a minimum grade of major/light colonel to handle that (or the navy's equivalent grades)? Maybe military personnel get help living in a high-cost area like SD, too?

[2008M36MT]

Originally Posted by dradernh

That's going to be ~$4.7K+/mo for principal, interest, and taxes. Wild guess, but I'm thinking...what...a minimum grade of major/light colonel to handle that (or the navy's equivalent grades)? Maybe military personnel get help living in a high-cost area like SD, too?

I would agree but would imagine the number of majors and colonels are low, and many of them aren't buying their first home so they wouldn't get the no interest mortgage. I want to know what all those buyers are doing that I'm not. $500K doesn't buy anything in SD, a single family in the traditional sense starts at $850K.

[dradernh]

Originally Posted by zx10guy

I actually think time in the market matters more than timing. Of course you have to be smart with where you buy, type of property, etc, etc.

Clearly, 8.5 years wasn't nearly long enough for us to cash-in during one of CA's periodic updrafts. The neighborhood was fine (hence todays $2.9 million est. value), it was a single family dwelling, which are not thick on the ground in San Francisco, etc., etc.

Bottom line, if we'd stayed in the rental and put the $4K/mo. difference into an S&P 500 index fund during those years, we would have come out with so much more cash that it wouldn't have been remotely funny.

Here's the kicker, though: why did we move from what was a to-die-for, rent-controlled apartment? Because the wife, who had been working in Hong Kong for 2.5 years, returned with so much clothing that we had to turn the rental's second bedroom into a walk-in closet!