This insane housing market.

[Colleen27]

When we bought our first house prices were much lower but mortgage rates were 12%. Basically the first ten years you hardly paid off any principal

Ours wasn't quite that high, but my son spent 50% more than we did on our last house with a mortgage, in a city with higher property taxes and insurance, and his monthly payment is a few dollars a month less than ours was. Because his interest rate is about 1/3 of the rate we got in the early 2000s. He's paying an extra hundred some bucks a month on the mortgage because he'd like to shed the payment as soon as possible - the kid is a serious homebody and is thinking along the lines of this being both starter and forever house - but from a purely financial perspective, he'd probably be better off putting the extra into his 401K because that's getting a higher return than his interest rate.

 

[mrodgers]

I bought in 2007 so I felt the crunch of 2008. I think a lot of people panicked unnecessarily. Don't get me wrong, I didn't like paying a mortgage on a home that lost 30%-40% of it's value, but unless I sold I didn't actually lose that 30%. I just knew I needed to stay in it until it came back which it did long before the current housing inflation.

What, you mean you didn't just get upset, pack up your stuff, and walk away because the value dropped like everyone else did?

I have no sympathy for the folks in 2008. They could have just used the house as a home but they got greedy with the value and ran away from it.

I'm hoping for another 2008 and everyone walking away so I can afford to be in a house again.

 

[crjack]

Ours wasn't quite that high, but my son spent 50% more than we did on our last house with a mortgage, in a city with higher property taxes and insurance, and his monthly payment is a few dollars a month less than ours was. Because his interest rate is about 1/3 of the rate we got in the early 2000s. He's paying an extra hundred some bucks a month on the mortgage because he'd like to shed the payment as soon as possible - the kid is a serious homebody and is thinking along the lines of this being both starter and forever house - but from a purely financial perspective, he'd probably be better off putting the extra into his 401K because that's getting a higher return than his interest rate.

It's amazing what a difference the rates make, especially for those of us who have owned homes for many years.

Our original rate was somewhere in the mid to high 8's for an interest rate. Current rate on a seasonal cottage is 3%.

We've talked about putting extra $ on principle too and our financial advisor continues to discourage it. We gain equity with or without a mortgage and the extra $ invested has performed really well. It's also easy enough to adjust as conditions change.

I would consider adding more to a 401k though if I was young. The extra funds with many decades to grow can really add up.

Your son has accomplished quite a bit financially for a young man. Good for him!

 

[TipsyTraveler]

This popped up in my email today. I thought it was interesting to see the predictions for the housing market this year, as well as the areas of the country that are in highest demand. Perhaps unsurprisingly, people are migrating towards affordability and warm weather.

https://www.zillow.com/resources/st...tional_rng_22brand_emm&utm_content=herobutton

 

[Avery&Todd]

This popped up in my email today. I thought it was interesting to see the predictions for the housing market this year, as well as the areas of the country that are in highest demand. Perhaps unsurprisingly, people are migrating towards affordability and warm weather.

https://www.zillow.com/resources/st...tional_rng_22brand_emm&utm_content=herobutton

PERFECT!! I love being #3 on a list!!

Bring on the faster appreciate rate on my house!

 

[mefordis]

Florida went from 0 (Florida man jokes) to the hero -- the most desirable state to live in. Good for them. I'd love to have a house there some day. Not now - waiting for market to cool.

 

[LilyWDW]

0 of 7 on offers...

About to give up for now and try again later in the year.

 

[EACarlson]

I'm going to be in a position to buy in two months. Inventory is a lot looser now than it was just a few months ago. Properties are actually staying on the market for more than a week before going contingent. Prices have gone up about 30% since I moved to this area 5 years ago. It was severely undervalued then, now it's slightly overvalued in my mind. I can still get more house buying for the same payment I have now renting.

 

[DisneyHardin]

It's amazing what a difference the rates make, especially for those of us who have owned homes for many years.

Our original rate was somewhere in the mid to high 8's for an interest rate. Current rate on a seasonal cottage is 3%.

I was shocked at how much lowering our interest rate affected our monthly payment and we didn't even have that high of one to start with. In summer of 2020, we had 19 years left on a 30 year mortgage at 4.2% and had about a $7000 balance on a HELOC. We refinanced to a 15 year mortgage and rolled the HELOC into the new mortgage with 2.75% interest and our payments stayed within a few dollars of our previous one.

 

[CO2CA]

It makes me sad looking on Zillow at housing costs. I'm graduating from grad school this year and it almost seems like I'll never be able to afford to own a home. For those more experienced, do you think this trend will eventually slow down and homes will become more affordable? Or do we expect things to just keep going up? I just don't understand how the median home price in my metropolitan area is $400K-$500K while the median household income is $90K. How are these people affording this?

 

[NFLDERS]

Around here (Toronto GTA) dilapidated structures, never mind something one could live in sometimes command 1M.

It reminds me of a quote of Mark Twain's said about land:
"Buy land, they are not making it anymore".

 

[DLgal]

It makes me sad looking on Zillow at housing costs. I'm graduating from grad school this year and it almost seems like I'll never be able to afford to own a home. For those more experienced, do you think this trend will eventually slow down and homes will become more affordable? Or do we expect things to just keep going up? I just don't understand how the median home price in my metropolitan area is $400K-$500K while the median household income is $90K. How are these people affording this?

I don't know either. Our median income is also around $95k and the median home price is $925k as of Dec 2021. Literally 10x the median income.

It doesn't make any sense. Homes in my city are going for over $700/sq ft at this point.

 

[barkley]

anyone else seeing the skyrocketing prices having a significant impact on their 2022 property taxes? ours statements were just released for 2022 and taxes have increased about 10%. i personally can't complain too much though-my current home is valued for tax purposes at 50% HIGHER than my former california home was under prop. 13 rules yet i'm paying LESS than 50% of what i was paying there over 15 years ago.

 

[mrodgers]

It makes me sad looking on Zillow at housing costs. I'm graduating from grad school this year and it almost seems like I'll never be able to afford to own a home. For those more experienced, do you think this trend will eventually slow down and homes will become more affordable? Or do we expect things to just keep going up? I just don't understand how the median home price in my metropolitan area is $400K-$500K while the median household income is $90K. How are these people affording this?

I'm in the same boat except I'm old and lost my home to divorce. Youngest graduates in June and I'll be able to save up a down payment, but it seems I'm going to need a year's salary for a down payment.

I gave up a mortgage to support. Now that it's almost done, it isn't enough to cover half a mortgage.

I figure I'll be in my 60's with a fresh new 30 year mortgage, if I make it that long.

 

[Miffy]

I'm going to be in a position to buy in two months. Inventory is a lot looser now than it was just a few months ago. Properties are actually staying on the market for more than a week before going contingent. Prices have gone up about 30% since I moved to this area 5 years ago. It was severely undervalued then, now it's slightly overvalued in my mind. I can still get more house buying for the same payment I have now renting.

This made me laugh. Contingent? Hah! Where I live in upstate NY, there's no "contingent." Houses go from For Sale to In Contract to Pending to Sold. No stopping for Contingent along the way.

I've seen only one house in our area post Contingent in the last 8 months, and that was because the house's owner was still looking for a new place to live (the Realtor told me--that's the only reason I know). Buyers get no such luxury.

I don't really know how people do it. Honestly, I'm not exactly sure how we were able to buy a house last year but somehow it worked out.

 

[RangerPooh]

It makes me sad looking on Zillow at housing costs. I'm graduating from grad school this year and it almost seems like I'll never be able to afford to own a home. For those more experienced, do you think this trend will eventually slow down and homes will become more affordable? Or do we expect things to just keep going up? I just don't understand how the median home price in my metropolitan area is $400K-$500K while the median household income is $90K. How are these people affording this?

This is why DH and I resigned ourselves to relocating. We were watching our salary stagnate (salary freeze) yet the local housing market continued to increase. We did not have support in a down payment, and knew that it was going to have to wait. Even after we relocated we still had to save, and home prices climbed in that period of time. What was new construction priced at $350-450k when we moved here 5 years ago is $550+ now. The home we bought in the same community is 40 years old, not new construction. Needs some work, but keeps our kids in one of the best school districts in the state. Had we remained where we were we'd probably be renting for the rest of our lives or moving to an outside community where we'd be unhappy.

 

[barkley]

It makes me sad looking on Zillow at housing costs. I'm graduating from grad school this year and it almost seems like I'll never be able to afford to own a home. For those more experienced, do you think this trend will eventually slow down and homes will become more affordable? Or do we expect things to just keep going up? I just don't understand how the median home price in my metropolitan area is $400K-$500K while the median household income is $90K. How are these people affording this?

i think there will be a downward adjustment in prices. we've owned homes since 1991. seen buyer's markets and seller's markets, seen prices skyrocket due to crazy (now illegal) lending practices as well as simply due to demand outpacing supply. seen prices plummet. i suspect that as interest rates increase there will be some decreased demand, i also believe that as all the rental eviction prohibition issues start resolving the fallout is going to be more homes placed on the market (i know people who have been LONG term landlords who have/are planning once they can get tenants out to sell their properties-they don't want to be put into the position they've been in with this ever again). we are seeing construction pick up on new homes, not back to pre-pandemic pace but getting there. i suspect that if you wait and save what you can there may be some great deals a few years down the line.

p.s. how do people afford those houses on those incomes? we are seeing allot of multi generational households buying in but with the singletons/younger couples-i'm not sure how they swing qualifying in the first place but they are working themselves to death with side gigs, and in the neighborhood we lived in previously-the minute they decided (or found out) they were having a child they inevitably moved or lost the home b/c they either lost a source of income due to one becoming a stay at home parent or the horrific cost of daycare (in the 90's in that area infant/toddler care ran us $1000 per month)

 

[Miffy]

I, too, wonder how people can afford the big prices. I saw an article a couple of days ago that estimated how much house one could afford. The article said something along the lines of if your household income is $75K (before taxes) you could afford a $350K house. Really? Is this because you'd never eat or buy another pair of pants again? Or because your kids make so much money mowing lawns and being social media influencers that they buy the groceries?

 

[DLgal]

I, too, wonder how people can afford the big prices. I saw an article a couple of days ago that estimated how much house one could afford. The article said something along the lines of if your household income is $75K (before taxes) you could afford a $350K house. Really? Is this because you'd never eat or buy another pair of pants again? Or because your kids make so much money mowing lawns and being social media influencers that they buy the groceries?

It's kind of always been the case that a house should ideally cost around 4x your annual income, so at $75k, that price is reasonable.

You have to remember that these estimates usually include a 20% down payment. With that, a monthly mortgage including taxes would be about $1500. Someone making $75k nets about $5000/month. That housing cost is absolutely reasonable at 30% of take home pay.

 

[Miffy]

It's kind of always been the case that a house should ideally cost around 4x your annual income, so at $75k, that price is reasonable.

You have to remember that these estimates usually include a 20% down payment. With that, a monthly mortgage including taxes would be about $1500. Someone making $75k nets about $5000/month. That housing cost is absolutely reasonable at 30% of take home pay.

I just looked up what a $280K mortgage (that's the $350K house with a 20% down payment) would be at current rates--$1,364/month. Around here the property taxes on a $350K house would be close to $12K/year, so another $1K/month = $2,364/month without house insurance, utilities, etc. That's nearly half the take-home pay. Add in a couple of kids, and this is quite a bunch of money.