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***OFFICIAL*** Bank Failure/Crisis Thread (2 Viewers)

Owners with fixed-rate mortgages will feel the pain of higher rates when they have to refinance.
I was going to counter this but then about two posts later, there was this
It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3
Which is where I'm at. Not that I would consider moving because I love where I live, my home, everything but why would fixed rate folks be forced to refinance unless they are getting now at 6+ and this comes back around in a few years.
As I made clear in my post, I was talking about commercial real estate owners. Commercial real estate funds/portfolios/REITs hold assets that are perpetually in need of refinancing.

As quoted, there are $270 billion in mortgage loans that are in need of refinancing this year alone, highest in history. If those assets are held onto and their loans refinanced, there will be a big hit to cash flow. If the asset is sold, then a big hit to valuation. Only owners with strong balance sheets will be able to ride through to the other side.

Residential real estate owners do not face the same refinancing risk unless they were on some sort of variable rate mortgage. Or forced to sell, which is still a big risk if unemployment rises dramatically.
 
Owners with fixed-rate mortgages will feel the pain of higher rates when they have to refinance.
I was going to counter this but then about two posts later, there was this
It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3
Which is where I'm at. Not that I would consider moving because I love where I live, my home, everything but why would fixed rate folks be forced to refinance unless they are getting now at 6+ and this comes back around in a few years.
I missed that... yea.... someone has to explain to me why someone with a fixed rate mortgage will "have" to refinance. I mean, I kind of am sort of familiar with this area of stuff and outside of outlier type situations (say buyout for divorce) I have no idea what they are talking about. The only thing that would make sense is if that was a typo and touching on those with ARMs but even they will not "have" to refi.
 
Owners with fixed-rate mortgages will feel the pain of higher rates when they have to refinance.
I was going to counter this but then about two posts later, there was this
It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3
Which is where I'm at. Not that I would consider moving because I love where I live, my home, everything but why would fixed rate folks be forced to refinance unless they are getting now at 6+ and this comes back around in a few years.
As I made clear in my post, I was talking about commercial real estate owners. Commercial real estate funds/portfolios/REITs hold assets that are perpetually in need of refinancing.

As quoted, there are $270 billion in mortgage loans that are in need of refinancing this year alone, highest in history. If those assets are held onto and their loans refinanced, there will be a big hit to cash flow. If the asset is sold, then a big hit to valuation. Only owners with strong balance sheets will be able to ride through to the other side.

Residential real estate owners do not face the same refinancing risk unless they were on some sort of variable rate mortgage. Or forced to sell, which is still a big risk if unemployment rises dramatically.
Oh, gotcha... commercial. Yea... whole different ball of wax.
 
Owners with fixed-rate mortgages will feel the pain of higher rates when they have to refinance.
I was going to counter this but then about two posts later, there was this
It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3
Which is where I'm at. Not that I would consider moving because I love where I live, my home, everything but why would fixed rate folks be forced to refinance unless they are getting now at 6+ and this comes back around in a few years.
As I made clear in my post, I was talking about commercial real estate owners. Commercial real estate funds/portfolios/REITs hold assets that are perpetually in need of refinancing.

As quoted, there are $270 billion in mortgage loans that are in need of refinancing this year alone, highest in history. If those assets are held onto and their loans refinanced, there will be a big hit to cash flow. If the asset is sold, then a big hit to valuation. Only owners with strong balance sheets will be able to ride through to the other side.

Residential real estate owners do not face the same refinancing risk unless they were on some sort of variable rate mortgage. Or forced to sell, which is still a big risk if unemployment rises dramatically.
Oh, gotcha... commercial. Yea... whole different ball of wax.
Yep, thanks for the clarification.

Good stuff guys, keep it going :thumbup:
 
Owners with fixed-rate mortgages will feel the pain of higher rates when they have to refinance.
I was going to counter this but then about two posts later, there was this
It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3
Which is where I'm at. Not that I would consider moving because I love where I live, my home, everything but why would fixed rate folks be forced to refinance unless they are getting now at 6+ and this comes back around in a few years.
As I made clear in my post, I was talking about commercial real estate owners. Commercial real estate funds/portfolios/REITs hold assets that are perpetually in need of refinancing.

As quoted, there are $270 billion in mortgage loans that are in need of refinancing this year alone, highest in history. If those assets are held onto and their loans refinanced, there will be a big hit to cash flow. If the asset is sold, then a big hit to valuation. Only owners with strong balance sheets will be able to ride through to the other side.

Residential real estate owners do not face the same refinancing risk unless they were on some sort of variable rate mortgage. Or forced to sell, which is still a big risk if unemployment rises dramatically.

Yea. We have some floating rate debt that is an issue right now. Only one where we likley have to refinance, but others have such an increased requirement for the rate cap escrow deposit that cashflow is getting slammed. I have one property that went from $1800/mon to $9600/mon in October, that just increased again to $23k/mon. Another property goes from $30k/mon to $150k+/mon.
 
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I have one property that went from $1800/mon to $9600/mon in October, that just increased again to $23k/mon. Another property goes from $30k/mon to $177k/mon on 4/1.
So how exactly do they expect people/companies to shoulder those kind of increases? From $1800/mon to $23k/mon in 6 months
 
I have one property that went from $1800/mon to $9600/mon in October, that just increased again to $23k/mon. Another property goes from $30k/mon to $177k/mon on 4/1.
So how exactly do they expect people/companies to shoulder those kind of increases? From $1800/mon to $23k/mon in 6 months

The money is going into an escrow to buy a future interest rate cap, so it isn't "spent" really. So you can refi into fixed and get that cash back, buy a new cap now with a longer term (so less uncertainty so less escrow for now), or sell the property (and get the money back). If your cashflow can support it, you have to wait it out.

I am selling one asset and we are watching the market to buy a new cap on the other (but may sell that one too or bring in a new investor).
 
Many people (rightfully) claim that buying into CA is terribly difficult right now. So too is trading up for anyone who has experienced large valuation gains (updated property tax base) and/or locked in a sub 3% mortgage over the last few years. For a $500k mortgage every 1% increase in rate equates to ~$415/mo increased interest expense. Now multiply that figure by the 3-4% delta that currently exists between getting a new mortgage vs. existing ones, and you can easily see why trading up will be less a factor than it's been in times past. And that's not even including the doubling (or more) of property tax that anyone who bought prior to ~2016 would experience, or the cost of trading up itself. If a supply influx comes (particularly in CA), seems it'll have to be from job loss, divorce, death and other forced-selling situations.

That above said, recession seems imminent. We'll have to see how aggressive the Fed will be this time. Given the inflationary backdrop, they may be forced to let a recession play itself out some this time before opening the money spigots again. Forced selling may be on tap for later this year and in 2024.
 

Yea. We have some floating rate debt that is an issue right now. Only one where we likley have to refinance, but others have such an increased requirement for the rate cap escrow deposit that cashflow is getting slammed. I have one property that went from $1800/mon to $9600/mon in October, that just increased again to $23k/mon. Another property goes from $30k/mon to $150k+/mon.
Great insights. Thanks for the real-life anecdote. Best of luck riding out the storm.
 
All you finance guys in here -- what sites/periodicals do you like to read for insights and information?
I subscribe to John Mauldin’s free weekly newsletter and have been since 2002. It’s great. He saved me from buying a house during a real estate bubble.
And what's his current take on real estate?
I’ll have to go back over some recent newsletters. But guessing that indicators aren’t great.
I wonder what he will say about the 14.5% sales spike in Feb with the first median drop in value in a while.

Low inventory + high demand = no RE crash. Increase in rates have given a breather but so many are on the sidelines just waiting. I can't see significant unseasonal drops without massive shift in Increase of inventory. It isn't likely as people don't want to give up their mortgage that starts with a 2 or 3.

I have seen some prophecy a RE crash for over a decade now. If you keep saying it... and saying it... and saying it... eventually you will be right but it doesn't mean you were right.
I’ve owned the same house since 2010, and have zero plan to buy or sell, so I have zero emotional attachment to this topic.
 
From Matt Levine:
Silicon Valley Bank was shut down by the Federal Deposit Insurance Corp. on Friday, March 10, for running out of money. It is of course bad for a bank to run out of money. But it is also a little hard to understand how a bank like SVB could have run out of money, in the US, in 2023. The structure of the modern banking system is supposed to prevent that, and SVB seemed in some ways like a bank that was particularly unlikely to run out of money. But it did.

The very stylized facts of SVB are that it had about $190 billion of deposits and invested much of that money — call it $120 billion — in a portfolio of mostly Treasury and agency bonds. The rest was invested in more complicated, riskier, traditional banking assets (loans, etc.), but SVB actually did relatively little lending, for a bank, and had rather a lot of safe bonds.

Of course those bonds turned out to be risky, too, since interest rates went up, the market value of the bonds declined, the bank became insolvent on a mark-to-market basis, depositors noticed, and there was a run on the bank. About $42 billion of deposits fled on SVB’s worst day, Thursday, March 9, leaving the bank with “a negative cash balance of approximately $958 million”; it closed the next day. Fine. But SVB had invested about $120 billion in high-quality liquid bonds, and even after rates went up and the bonds lost value, they were probably still worth about $100 billion. But losing $42 billion of deposits broke the bank. These numbers are imprecise, they don’t account for outflows prior to that Thursday, etc., but still, 100 is a lot more than 42. If you have $100 billion of Treasuries, you can probably use them to acquire much more than $42 billion of cash.

You can sell them, for instance, though that might take a while. But more to the point you can borrow against them; you can post them as collateral to a lender to get cash. In particular, in modern banking systems, a bank can post Treasuries as collateral to borrow money from its lender of last resort, the central bank (in the US, the Federal Reserve); the Fed can just create money, so lending billions of dollars against good collateral is no sweat for it. In the US, there is also a “lender of next-to-last resort,” the Federal Home Loan Bank system, which will also lend cash to banks with Treasuries as collateral. If Silicon Valley Bank had had $190 billion of deposits and $190 billion of weird bespoke risky small-business loans, it might have had a hard time borrowing $42 billion against those loans to pay out fleeing depositors. But it had $100 billion-ish of simple high-quality Treasury and agency bonds, so it’s a little weird that it couldn’t find $42 billion.

These numbers are all approximate and hand-wave-y, and you could imagine a reasonable explanation like “sure it lost $42 billion of deposits that day, but it lost billions in the previous days too, and even if it had been able to borrow the $42 billion it would have lost billions more the next day, so the Fed and FHLB pulled the plug when they saw it was hopeless.” And I have vaguely assumed that was the explanation for why SVB couldn’t get the money to pay out its depositors.

But today at the Wall Street Journal Hannah Miao, Gregory Zuckerman and Ben Eisen have the actual, horrifying explanation, which is that the Fed’s computers go to bed at 4 p.m. and you can’t wake them up until the next morning:

Withdrawals accelerated late in the morning on the West Coast on Thursday, March 9. Executives paced the office on phone calls as employees watched and texted details to each other.
That is when SVB, at the time controlled by SVB Financial Group, started looking for help, only to run into the U.S.’s bank-funding system, which wasn’t built for speed. First it turned to the San Francisco Federal Home Loan Bank, asking for a $20 billion loan. …
It was already midday in California, and SVB’s unusually large request came too late for the San Francisco FHLB to process that day, people familiar with the matter said. It offered SVB a smaller loan but the bank turned that down, the people said.
SVB turned to plan B, asking the San Francisco FHLB to move $20 billion of collateral to the Federal Reserve’s discount window, where it could get emergency funding, the people said. SVB had roughly $20 billion available for financing at the San Francisco FHLB, according to the people familiar with the matter.
The bank hit another roadblock. The transfer required procedural steps. SVB had outstanding loans at the San Francisco FHLB, which had to determine how much collateral it needed to hold, the people familiar with the matter said.
SVB also tried to get $20 billion in assets to the Fed through Bank of New York Mellon Corp., one of its custodial banks. SVB was too late—it had missed BNY Mellon’s daily cutoff for instructions for Fed transfers from custodial accounts.
BNY tried to extend its cutoff, but:

The Fed needed a test trade to be run before the actual transfer could occur. That took time and the Fed didn’t extend its own daily deadline of 4 p.m. PT for collateral transfers to help SVB. Time ran out on the bankers and SVB couldn’t get the money that day.
It did get the money the next day, but by that point the FDIC had already seized it. Now, again, even if it had gotten the cash, it was facing continuing deposit flight, it seems to have been economically insolvent and it probably would not have survived the weekend. The Journal notes:

Some people at SVB remain angry about the takeover and frustrated that a possible rescue took so long. They say the bank was seized just before it got a lifeline from the Fed or a buyer, but they also acknowledge that the scale of withdrawals doomed the bank.
 
From Matt Levine:
Silicon Valley Bank was shut down by the Federal Deposit Insurance Corp. on Friday, March 10, for running out of money. It is of course bad for a bank to run out of money. But it is also a little hard to understand how a bank like SVB could have run out of money, in the US, in 2023. The structure of the modern banking system is supposed to prevent that, and SVB seemed in some ways like a bank that was particularly unlikely to run out of money. But it did.

The very stylized facts of SVB are that it had about $190 billion of deposits and invested much of that money — call it $120 billion — in a portfolio of mostly Treasury and agency bonds. The rest was invested in more complicated, riskier, traditional banking assets (loans, etc.), but SVB actually did relatively little lending, for a bank, and had rather a lot of safe bonds.

Of course those bonds turned out to be risky, too, since interest rates went up, the market value of the bonds declined, the bank became insolvent on a mark-to-market basis, depositors noticed, and there was a run on the bank. About $42 billion of deposits fled on SVB’s worst day, Thursday, March 9, leaving the bank with “a negative cash balance of approximately $958 million”; it closed the next day. Fine. But SVB had invested about $120 billion in high-quality liquid bonds, and even after rates went up and the bonds lost value, they were probably still worth about $100 billion. But losing $42 billion of deposits broke the bank. These numbers are imprecise, they don’t account for outflows prior to that Thursday, etc., but still, 100 is a lot more than 42. If you have $100 billion of Treasuries, you can probably use them to acquire much more than $42 billion of cash.

You can sell them, for instance, though that might take a while. But more to the point you can borrow against them; you can post them as collateral to a lender to get cash. In particular, in modern banking systems, a bank can post Treasuries as collateral to borrow money from its lender of last resort, the central bank (in the US, the Federal Reserve); the Fed can just create money, so lending billions of dollars against good collateral is no sweat for it. In the US, there is also a “lender of next-to-last resort,” the Federal Home Loan Bank system, which will also lend cash to banks with Treasuries as collateral. If Silicon Valley Bank had had $190 billion of deposits and $190 billion of weird bespoke risky small-business loans, it might have had a hard time borrowing $42 billion against those loans to pay out fleeing depositors. But it had $100 billion-ish of simple high-quality Treasury and agency bonds, so it’s a little weird that it couldn’t find $42 billion.

These numbers are all approximate and hand-wave-y, and you could imagine a reasonable explanation like “sure it lost $42 billion of deposits that day, but it lost billions in the previous days too, and even if it had been able to borrow the $42 billion it would have lost billions more the next day, so the Fed and FHLB pulled the plug when they saw it was hopeless.” And I have vaguely assumed that was the explanation for why SVB couldn’t get the money to pay out its depositors.

But today at the Wall Street Journal Hannah Miao, Gregory Zuckerman and Ben Eisen have the actual, horrifying explanation, which is that the Fed’s computers go to bed at 4 p.m. and you can’t wake them up until the next morning:

Withdrawals accelerated late in the morning on the West Coast on Thursday, March 9. Executives paced the office on phone calls as employees watched and texted details to each other.
That is when SVB, at the time controlled by SVB Financial Group, started looking for help, only to run into the U.S.’s bank-funding system, which wasn’t built for speed. First it turned to the San Francisco Federal Home Loan Bank, asking for a $20 billion loan. …
It was already midday in California, and SVB’s unusually large request came too late for the San Francisco FHLB to process that day, people familiar with the matter said. It offered SVB a smaller loan but the bank turned that down, the people said.
SVB turned to plan B, asking the San Francisco FHLB to move $20 billion of collateral to the Federal Reserve’s discount window, where it could get emergency funding, the people said. SVB had roughly $20 billion available for financing at the San Francisco FHLB, according to the people familiar with the matter.
The bank hit another roadblock. The transfer required procedural steps. SVB had outstanding loans at the San Francisco FHLB, which had to determine how much collateral it needed to hold, the people familiar with the matter said.
SVB also tried to get $20 billion in assets to the Fed through Bank of New York Mellon Corp., one of its custodial banks. SVB was too late—it had missed BNY Mellon’s daily cutoff for instructions for Fed transfers from custodial accounts.
BNY tried to extend its cutoff, but:

The Fed needed a test trade to be run before the actual transfer could occur. That took time and the Fed didn’t extend its own daily deadline of 4 p.m. PT for collateral transfers to help SVB. Time ran out on the bankers and SVB couldn’t get the money that day.
It did get the money the next day, but by that point the FDIC had already seized it. Now, again, even if it had gotten the cash, it was facing continuing deposit flight, it seems to have been economically insolvent and it probably would not have survived the weekend. The Journal notes:

Some people at SVB remain angry about the takeover and frustrated that a possible rescue took so long. They say the bank was seized just before it got a lifeline from the Fed or a buyer, but they also acknowledge that the scale of withdrawals doomed the bank.
that's a lot to read that SVB didn't have a workable plan in place for a bank run.
 
this thread makes my heart break nothing more to say about it take that to the bank bromigos
Why? All those Silicon Valley venture capitalists were made whole. Alms for the poor in Silicon Valley achieved!
 
local to me first citizens buys svb. privately held authoritarian run bank. no one i know even remotely liked working there. good for them.
Is it? This publicly traded First Citizens is up over 50% on the news.

my understanding is that it on nasdaq, but the holding family owns most if not all of the stock. i didn’t care much to ever investigate, but that is what i recall.
That is the right bank... no idea how it is held though.
 
local to me first citizens buys svb. privately held authoritarian run bank. no one i know even remotely liked working there. good for them.
Is it? This publicly traded First Citizens is up over 50% on the news.
This kind of tells you all you needed to know about SVB failing because of them being morons and not about their business. The market just said, with actual adults in control of these assets, this bank is going to EXPLODE! (in a good way)
 
local to me first citizens buys svb. privately held authoritarian run bank. no one i know even remotely liked working there. good for them.
Is it? This publicly traded First Citizens is up over 50% on the news.

my understanding is that it on nasdaq, but the holding family owns most if not all of the stock. i didn’t care much to ever investigate, but that is what i recall.

The Holding family appears to own just over 11% of the stock, but there's another family with the last name of Bristow that owns just less than 8%. If they're cousins or something maybe the family as a whole has 20%.
 
local to me first citizens buys svb. privately held authoritarian run bank. no one i know even remotely liked working there. good for them.
Is it? This publicly traded First Citizens is up over 50% on the news.

my understanding is that it on nasdaq, but the holding family owns most if not all of the stock. i didn’t care much to ever investigate, but that is what i recall.

The Holding family appears to own just over 11% of the stock, but there's another family with the last name of Bristow that owns just less than 8%. If they're cousins or something maybe the family as a whole has 20%.
Can you imagine how much money they made today?!
 
local to me first citizens buys svb. privately held authoritarian run bank. no one i know even remotely liked working there. good for them.
Is it? This publicly traded First Citizens is up over 50% on the news.

my understanding is that it on nasdaq, but the holding family owns most if not all of the stock. i didn’t care much to ever investigate, but that is what i recall.

The Holding family appears to own just over 11% of the stock, but there's another family with the last name of Bristow that owns just less than 8%. If they're cousins or something maybe the family as a whole has 20%.
Can you imagine how much money they made today?!

I'd rather not, if they're as awful as Chem X said. But it's gotta be an insane haul for them.
 
Chairman and CEO Frank Holding Jr. and his four sisters Olivia Holding, Hope Bryant, Carson Brice and Claire Bristow collectively own about 20% of First Citizens’ stock and have close to 50% voting power in the company, according to SEC filings, for a cumulative stake worth $2.7 billion thanks to Monday’s 54% stock gain following the deal. The surge erased all of the stock’s year-to-date losses in the regional bank selloff stemming from SVB’s failure and contagion fears.
 
also saw this from 5 years ago, so who knows……but major nepotism at this bank. everyone is a family member;

First Citizens BancShares Inc., which for 50 years ran separate banks in the Carolinas, has grown by pouncing on similar, often low-risk opportunities to create the nation’s biggest family-owned bank. The Holding family controls more than 70% of the Raleigh-based company, which had a market value of $5.3 billion in mid-May. Among the lesser-known of the family members, at least in North Carolina, may be Bristow, who is now president and oversees the company’s Carolinas operations, along with parts of Georgia, Virginia, West Virginia and Wisconsin. He also leads the mortgage and sales finance businesses.
 
also saw this from 5 years ago, so who knows……but major nepotism at this bank. everyone is a family member;

First Citizens BancShares Inc., which for 50 years ran separate banks in the Carolinas, has grown by pouncing on similar, often low-risk opportunities to create the nation’s biggest family-owned bank. The Holding family controls more than 70% of the Raleigh-based company, which had a market value of $5.3 billion in mid-May. Among the lesser-known of the family members, at least in North Carolina, may be Bristow, who is now president and oversees the company’s Carolinas operations, along with parts of Georgia, Virginia, West Virginia and Wisconsin. He also leads the mortgage and sales finance businesses.
well.... it is a bank in the south.
 
No losses associated with the resolution of Silicon Valley Bank will be borne by the taxpayer.
This is ********.
Just to back up on this. Now that SVB has been bailed out and bought with a blanket guarantee from the FDIC to cover bond losses, this has now become the most costly bank failure in US history.

And yes, taxpayers are on the hook. First Citizen's Bank got a massive windfall. Absolutely infuriating - privatized profits and public losses.
 
And yes, taxpayers are on the hook.
Can you explain how?
FDIC trust fund is a public fund. That fund will be a ~20B hit due to the guarantees in that takeover. This will circle back around to the taxpayer.
Isn't it paid by the FDIC member banks? Sure they might get hit with a bill and then pass that on to their customers, but by no means is that the "taxpayers". At least not directly.

Not to say that a large % of the population won't get hit by increased fees, if that's what you mean.
 
And yes, taxpayers are on the hook.
Can you explain how?
FDIC trust fund is a public fund. That fund will be a ~20B hit due to the guarantees in that takeover. This will circle back around to the taxpayer.
Isn't it paid by the FDIC member banks? Sure they might get hit with a bill and then pass that on to their customers, but by no means is that the "taxpayers". At least not directly.

Not to say that a large % of the population won't get hit by increased fees, if that's what you mean.
Companies don't pay taxes. Those all eventually filter through to the taxpayer/consumer.
 
To the consumer or public, yes. And how much $ will FCB make on the assests it bought if they sold right now? I'm not talking about the rise in stock price of the company but the assets it took over.
 
To the consumer or public, yes. And how much $ will FCB make on the assests it bought if they sold right now? I'm not talking about the rise in stock price of the company but the assets it took over.
Net negative - those are well below par thanks to the Fed freaking out once they got past their transitory phase and raising rates rocketship style. And I'll bet, but obviously can't prove, that the net at maturity will also be negative on a real dollar basis.
 
Why are people saying they made out then?
Maybe the markets think they'll make money on the bonds? If inflation stays high I don't see how they can, though. Liquidating now is for sure losing (and is why the run on SVB started in the first place).

They do, however, take over a very nice business - SVB's core business of catering to VCs and startups was thriving. I think they make out here big time.
 
Why are people saying they made out then?
Maybe the markets think they'll make money on the bonds? If inflation stays high I don't see how they can, though. Liquidating now is for sure losing (and is why the run on SVB started in the first place).

They do, however, take over a very nice business - SVB's core business of catering to VCs and startups was thriving. I think they make out here big time.
But who's to say those VCs and Startup founders are going to want to work with a bank based in NC? Why won't another regional bank in CA take that business?
 
Why are people saying they made out then?
Maybe the markets think they'll make money on the bonds? If inflation stays high I don't see how they can, though. Liquidating now is for sure losing (and is why the run on SVB started in the first place).

They do, however, take over a very nice business - SVB's core business of catering to VCs and startups was thriving. I think they make out here big time.
But who's to say those VCs and Startup founders are going to want to work with a bank based in NC? Why won't another regional bank in CA take that business?
Great question. One wonders why another CA bank didn't end up the high bidder. I'm sure the story will come out at some point. This is bound to be a Netflix documentary.
 
Companies don't pay taxes. Those all eventually filter through to the taxpayer/consumer.
This is baloney. Like saying individuals don't pay taxes, they just withhold that money from restaurants and Amazon and grocery stores, etc., who actually pay them.
 
Many people (rightfully) claim that buying into CA is terribly difficult right now. So too is trading up for anyone who has experienced large valuation gains (updated property tax base) and/or locked in a sub 3% mortgage over the last few years. For a $500k mortgage every 1% increase in rate equates to ~$415/mo increased interest expense. Now multiply that figure by the 3-4% delta that currently exists between getting a new mortgage vs. existing ones, and you can easily see why trading up will be less a factor than it's been in times past. And that's not even including the doubling (or more) of property tax that anyone who bought prior to ~2016 would experience, or the cost of trading up itself. If a supply influx comes (particularly in CA), seems it'll have to be from job loss, divorce, death and other forced-selling situations.

we live in CA, owe 900K with ~1.7 in equity and are stuck even though we want to trade up.

We will likely have to just keep this home and buy a second home because the current mortgage is just too valuable to let go. Another jumbo down payment will eat up some serious cash is the obvious downside but better than letting go of the amazing financing. Really odd.
 

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