In other news (apolitical thread)...

[utee94]

soak the blue hairs from NY & NJ

Nah they soak all the 8 year olds with mouse ears.

[FearlessF]

8-year olds, Dude

[betarhoalphadelta]

The housing market has cooled here for sure, but it was flaming hot for 4 years, so a cooldown was to be expected.

We do have low property taxes, but high insurance costs (unless you are up to current hurricane code, as are).

Most buyers today are cash. We'd have more buyers if the Fed would do the right thing, but I don't want to get too far into that.

IMHO we still have a massive affordability problem, no matter the rates. We have now about a 14+ year sustained run-up in housing prices, from the bottom in ~2011. Current home prices are an affordability problem whether we're talking 3% or 6.5% rates. Nobody w/o existing equity can enter the market at these prices. 

I feel like what will happen if rates drop is that we'll see people with equity buying, and more "churn" in the market and more sales. Maybe that'll be people cashing out of NY and CA and buying all cash where you live, but prices need to come down. 

As Gigem asks... Who can afford these houses? I know that no first-time buyers can. My wife and I are quite well to do income-wise, and we have ZERO chance. 

[Gigem]

IMHO we still have a massive affordability problem, no matter the rates. We have now about a 14+ year sustained run-up in housing prices, from the bottom in ~2011. Current home prices are an affordability problem whether we're talking 3% or 6.5% rates. Nobody w/o existing equity can enter the market at these prices.

I feel like what will happen if rates drop is that we'll see people with equity buying, and more "churn" in the market and more sales. Maybe that'll be people cashing out of NY and CA and buying all cash where you live, but prices need to come down.

As Gigem asks... Who can afford these houses? I know that no first-time buyers can. My wife and I are quite well to do income-wise, and we have ZERO chance.

Just curious, what is your living situation now?  Rent, own your current house, or ?  

My wife and I bought our current house (1972 built) a few years after we got married in 2003.  We paid $85K for it, but it needed extensive renovations.  Nothing serious, just outdated and worn stuff like old galvanized pipes.  Me and my cousin (he's a plumber) changed those out before we ever moved in.  Over the years we've remodeled the kitchen and living room, painted, replaced the carpet upstairs (2x) and just overall maintenance type stuff.  I did replace the driveway, cost almost $20K to demo and expand it.  We've lived here now for 22 years and counting, the house would probably sell for around $300K if we got everything up to date.  It's about 2400 sq ft, so a little larger than the newer one down the road and we have a full-size lot, the one I linked to is half the size of ours.  The neighborhood, when built in the 70's had 1/2 acre lots, and the houses were widely spaced.  Sometime within the last 10-15 years they've been splitting the lots and building homes on 1/4 acre lots or thereabouts.   

[betarhoalphadelta]

Just curious, what is your living situation now?  Rent, own your current house, or ? 

Rent.

I've owned two houses in the past. I owned a house in Georgia from 2005-07 as my ex-wife and I had intended to live there long term, but after two years she wanted to go "home" to CA. So we did. I saw what was happening in the housing market, so we rented for 3+ years and bought again at the end of 2010. Bought a house for $469K together. Unfortunately when the divorce came in 2016, I didn't have the financial ability buy her equity out and to keep the house (especially since I'd be paying alimony / child support), so we sold it. That house was sold again last June for $1.12M... So you can imagine how much equity I'd be sitting on if I'd been able to keep it 

I used my proceeds to get back on my feet and clear out debt, but every time I felt like my financial situation was improving in those last 9 years (and it has substantially), the housing market was accelerating even faster than that away from me. And it's doubly difficult as it's not just my wife and I; we've got my 3 kids almost half the time which means we need a house size that can accommodate 3 kids even though it's only the two of us >half the time. 

[847badgerfan]

Every time you tell that story, it makes me want to post in the grumpy old man thread.

[utee94]

[847badgerfan]

Just curious, what is your living situation now?  Rent, own your current house, or ? 

My wife and I bought our current house (1972 built) a few years after we got married in 2003.  We paid $85K for it, but it needed extensive renovations.  Nothing serious, just outdated and worn stuff like old galvanized pipes.  Me and my cousin (he's a plumber) changed those out before we ever moved in.  Over the years we've remodeled the kitchen and living room, painted, replaced the carpet upstairs (2x) and just overall maintenance type stuff.  I did replace the driveway, cost almost $20K to demo and expand it.  We've lived here now for 22 years and counting, the house would probably sell for around $300K if we got everything up to date.  It's about 2400 sq ft, so a little larger than the newer one down the road and we have a full-size lot, the one I linked to is half the size of ours.  The neighborhood, when built in the 70's had 1/2 acre lots, and the houses were widely spaced.  Sometime within the last 10-15 years they've been splitting the lots and building homes on 1/4 acre lots or thereabouts. 

Are you fully compliant with current hurricane codes?

We did that after Ian in 2022. I already did the hurricane windows and doors when we bought, so that was done.

I reinforced the rear outside wall with concrete (the rear was constructed with wood for some reason - the rest of the house is concrete block). The wall made it through Ian, but it still was not in compliance, so I did the concrete.

When we got the new roof, I had extra tie downs and screws placed to get that into compliance.

Finally, I hired a structural engineer to do a wind mitigation report, which I submitted to our insurance company.

We went from $7,500/year to $4,200/year with the same company - after they paid a $140,000.00 claim!

[Gigem]

No, but it’s been through Alicia, Ike,, Harvey, Nick, and Beryl. No damage. 

[847badgerfan]

How's the insurance in your state? Do you have hurricane insurance?

[jgvol]

Rent.

I've owned two houses in the past. I owned a house in Georgia from 2005-07 as my ex-wife and I had intended to live there long term, but after two years she wanted to go "home" to CA. So we did. I saw what was happening in the housing market, so we rented for 3+ years and bought again at the end of 2010. Bought a house for $469K together. Unfortunately when the divorce came in 2016, I didn't have the financial ability buy her equity out and to keep the house (especially since I'd be paying alimony / child support), so we sold it. That house was sold again last June for $1.12M... So you can imagine how much equity I'd be sitting on if I'd been able to keep it

I used my proceeds to get back on my feet and clear out debt, but every time I felt like my financial situation was improving in those last 9 years (and it has substantially), the housing market was accelerating even faster than that away from me. And it's doubly difficult as it's not just my wife and I; we've got my 3 kids almost half the time which means we need a house size that can accommodate 3 kids even though it's only the two of us >half the time.

[Cincydawg]

Take a couple just starting out, salaries $70,000 each.  Taxes would take $35,000 Fed and lets sat $7,000 State.  They are used to living on much less and keep at it with occasional splurges, say their annual cost overall is $18,000 for rent and maybe $42,000 for all else.  That would leave $38,000 "profit".  Reasonable?

A one bedroom condo around here is $300,000, more or less, in a decent place, 1.5 baths.  Can they afford that with $38 K down payment?  Am I mathing OK?

So, loan of $262, 000, mortgage payment around $2,400 a month at 7.5%.  They were paying $1,500 rent.  At 6.5% it's $2,218.

So, it's doable, for a couple with no other loans, decent credit, after a year of hard saving.  I think.

[utee94]

Take a couple just starting out, salaries $70,000 each.  Taxes would take $35,000 Fed and lets sat $7,000 State.  They are used to living on much less and keep at it with occasional splurges, say their annual cost overall is $18,000 for rent and maybe $42,000 for all else.  That would leave $38,000 "profit".  Reasonable?

A one bedroom condo around here is $300,000, more or less, in a decent place, 1.5 baths.  Can they afford that with $38 K down payment?  Am I mathing OK?

So, loan of $262, 000, mortgage payment around $2,400 a month at 7.5%.  They were paying $1,500 rent.  At 6.5% it's $2,218.

So, it's doable, for a couple with no other loans, decent credit, after a year of hard saving.  I think.

Well I think your starting salary assumption is pretty optimistic.  Engineers and other STEM folks get that, while liberal arts types can be down in the 40-50K range.  You're really outlining a best case scenario, not an average or median one.

[Cincydawg]

Indeed, I looked up the starting salary of a computer engineer and used that, it's meant only to suggest it CAN be done, not that everyone can do it in one year around here.

One can of course use different figures throughout.  

I came out of school used to living on very little and I mostly adhered to that for a year building up a downpayment.  Granted, I was well paid, my wife didn't have a job at that time, I think she later got a job making rather little teaching aerobics.

I rented a nice two BDR apartment at the time, both cars were paid for, no student loans, we lived pretty sparsely.  Interest rates then were through the roof (1980).

Anyway, I think it possible, around here, with a pretty good job x 2.