Want to buy a home now? Prepare to offer cash

[A dot Ham]

Like I stated in another thread, in some areas the housing market has become a sellers market. People have become accustomed to a buyers market. It will eventually even itself out. Developers will start building too much affordable housing and we will have a buyers market again.

All of this would be true except you have missed something. Bank owned homes.

Banks fabricated a shortage (thus creating demand) by only releasing a few bank owned homes a month. This has caused developers to begin building again... adding to the surplus of supply.

What you are seeing is another bubble.

Typically an increase in supply drives costs down (that isn't happening) even with the excess housing prices are continuing to rise.

Very few people actually have the cash to buy a home outright. These homes that are selling are going to investors who are turning around and renting at or above what a mortgage would be.

This is not sustainable.

In 2007 the housing market and its prices weren't sustainable.

What has changed that today in 2017 that those same prices have somehow become sustainable?

[derpkitteh]

idk why anyone would want to buy a house on a mortgage, tbh. it's like renting only so much worse.

why not just rent until you can buy the house outright?

[Elegiac]

idk why anyone would want to buy a house on a mortgage, tbh. it's like renting only so much worse.

why not just rent until you can buy the house outright?

Largely because having a mortgage generates a considerable amount of credit and is good debt provided the property is appreciating in value. When a house is held under mortgage the bank holds a significant amount of its liability; when you own it outright you are fully responsible for any liabilities in addition to the costs of maintenance. As for renting, you generate very little in the way of positive credit, don't actually have a stake in the property as an asset, as well as the fact that rents tend to be unpredictable unless you've got excellent rent control - with a mortgage, getting a fixed rate makes it financially more stable in the long term.

[cuafpr]

no way i'd pay over appraisal for a house, insurance could also be an issue.

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idk why anyone would want to buy a house on a mortgage, tbh. it's like renting only so much worse.

why not just rent until you can buy the house outright?

b.c. that's damn near impossible to do in a time frame that would allow you to enjoy the house, and having a house (And making payments) is a huge credit boost and tax breaks from pay mortgage interest

[derpkitteh]

Largely because having a mortgage generates a considerable amount of credit and is good debt provided the property is appreciating in value. When a house is held under mortgage the bank holds a significant amount of its liability; when you own it outright you are fully responsible for any liabilities in addition to the costs of maintenance. As for renting, you generate very little in the way of positive credit, don't actually have a stake in the property as an asset, as well as the fact that rents tend to be unpredictable unless you've got excellent rent control - with a mortgage, getting a fixed rate makes it financially more stable in the long term.

on a mortgage, you're stuck with the repairs. the bank ain't paying anything to fix shit that goes wrong.

with renting, your landlord will usually help with repair costs. like, i get that credit thing, but that seems like the only positive.

you can't just up and move if you need to, stuck with all the maintenance, and if shit goes down the bank will take it from you asap.

[Elegiac]

on a mortgage, you're stuck with the repairs. the bank ain't paying anything to fix shit that goes wrong.

with renting, your landlord will usually help with repair costs. like, i get that credit thing, but that seems like the only positive.

you can't just up and move if you need to, stuck with all the maintenance, and if shit goes down the bank will take it from you asap.

Quite a lot in the way of maintenance costs can be waived on taxes, point in fact. And as mentioned previously, so can the interest on the mortgage. With renting, the landlord is deriving the entirety of these benefits while being able to raise the cost of rent pretty much at will provided there's no rent control in place; banks can't do that on a fixed rate mortgage.

[derpkitteh]

Quite a lot in the way of maintenance costs can be waived on taxes, point in fact. And as mentioned previously, so can the interest on the mortgage. With renting, the landlord is deriving the entirety of these benefits while being able to raise the cost of rent pretty much at will provided there's no rent control in place; banks can't do that on a fixed rate mortgage.

eh, still sounds risky. like something that you should only do if you're entirely stable in life.

[Argarock]

I am in a three bedroom two level house on an acre with a garage, den downstairs that I use for my wow room, fireplace, kitchen, dining room, three bathrooms, shower in garage. 187k. so next exhageration.

and you live in the middle of bum-€#@!-no-where? anywhere close to any city in my country, 187k would get you a medium-sized appartment, at best.

[Cruor]

I am in a three bedroom two level house on an acre with a garage, den downstairs that I use for my wow room, fireplace, kitchen, dining room, three bathrooms, shower in garage. 187k. so next exhageration.

Where exactly? 187k for an acre of land and three bedrooms would not buy a house in an area I would want to live in, at least nowhere I have seen on the East Coast. either your neighbors are not the best people, or you are miles away from good places to eat and work. Price is three factors. Location, location, location.

[Thetruth1400]

Has the housing market not recouperated yet?

Just for shits and giggles, I looked up the house I grew up in. My dad sold it for $290,000 in 2005 (bought brand new in 1986 for about $70,000, IIRC). Current value of the house is listed at $114,000, last appraised in 2014.

Depends on what you consider recuperated.

It's fairly stable; used house sales are up and new home sales are up even more so. Interest rates are fairly stable, around 3.5 - 4% which is good if not a little low.

If you think price the house is selling for, then no, that bubble burst. House prices skyrocketed because of the extremely low interest rates and banks just giving out subprime loans. Frankly, in your example, a house bought for 70K in the 80's, with average home repair / upgrades is only worth around the $110K range it's sitting at now. The housing bubble is how your dad got away with making almost 2.5 times that. Current home buyers (mostly young people) are realizing that houses built 30+ years ago with little to average maintenance done to them just aren't worth the price being asked.

The "but a house is an investment" argument only goes so far. Yes, it's an investment, but like any investment you need to keep up on it.

No one wants a house that has a value of 100K, but the owner is asking even 125K and on top of that it has another 50K worth of modernization that needs to be done. Sorry, but your 80's rustic country kitchen with it's orange plastic laminate counter tops and pastel colors throughout the rest of the house isn't going to cut it today.

A place like my area, they changed how the septic systems need to be installed, so to even be able sell your house you have to have a new, modern system installed first, which runs $10K in the least. The person selling that is going to try to inflate the price of their sale by that amount because to them, "Hey, it's a brand new system" not "Hey, this is maintenance that needed to be done before I could sell it for it's listed value."

[Vash The Stampede]

not really

the crisis in 2009 was caused by bank speculation in securities leading to pressure to issue mortgages unlikely to mature (and then misrepresenting the nature of those mortgages)

They did that in order to prevent the devaluing of those homes. Which in many ways the banks are responsible for the rapid increase in value of homes.