This was the same decision my wife and I came to as we have no desire to move out of our area until the kids are through high school - youngest is only in 4th grade, so barring an extremely compelling reason to relocate, cashing out and hoping for a decline to get back in seems unwise while paying overinflated rent prices.
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Mortgage Rates (4 Viewers)
- Thread starter MechEng
- Start date
Chadstroma
Footballguy
Some of you might have remembered me talking about higher interest rates would mean many of these lenders would go out of business. It appears some CEO's are smart and selling out while the selling out is good. Two fairly large acquisition deals have been announced in the wholesale mortgage industry in the last week.
Dinsy Ejotuz
Footballguy
Meh.
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Chadstroma
Footballguy
There is a graph I just saw of homes built by decade. 30's 5.4 million, 40's 9.6, 50's 23.4, 60's 20.2, 70's 25.8, 80's 25.2, 90's 26.7, 00's 27.1.... and 10's 5.8
This explains it all
This explains it all
Chadstroma
Footballguy
More info...
Lumber cost to build a deck:
April 2020: $936
April 2021: $3,696
Using 2400 board feet = 200 square feet
Lumber cost to build a deck:
April 2020: $936
April 2021: $3,696
Using 2400 board feet = 200 square feet
Zegras11
Footballguy
firstseason1987
Footballguy
Ain't no lumber out there nowadays. Will be probably at least a year before prices "stabilize", but, I don't expect them to stabilize back to where they were before. I think lumber just jumped up to a new baseline level. The era of cheap trees may be over.
Dinsy Ejotuz
Footballguy
We signed a work order for a deck at the end of March, which seems to have locked in the price we were quoted. Dude mentioned they were adding language to contracts going forward to cover this, but ours didn't have anything that allowed them to recoup the increase.
Chadstroma
Footballguy
I just drove by a truck full of lumber and was thinking that truck is prob worth more than an armored truck carrying cash.
I haven't dived into the why's behind the lumber issues really but I have picked up on a few things that are contributing... obviously COVID was a big one that shut things down at the same time demand ramped up, also I thought I remember seeing something about issues with imports for some reason.
Chadstroma
Footballguy
Wow... must be a big company because I think most contractors would just walk away from it. It will likely end up costing the money now.
Dinsy Ejotuz
Footballguy
It is a big company. It's a big deck and we got three bids.
Bids #1/#2 = x
Bid #3 = 1.8x
At the time we figured the third company just didn't want our business since their bid was more than 20k higher, but now I wonder if they just saw what was coming.
FWIW, we don't have the permit or an actual schedule yet either. And they didn't plan to start work until the end of June or July. So there's plenty of time for them to try and revisit everything.
Zegras11
Footballguy
firstseason1987
Footballguy
https://www.bloomberg.com/news/audio/2021-04-25/why-the-price-of-lumber-has-soared-podcast
Pretty good podcast on the issue with a lumber broker. From what I remember... wholesale lumber yards need to predict orders 90 days in advance when they buy lumber in the futures market. They only keep 30-45 days worth in stock. They did not guess the pace at which things would re-open and construction would ramp up. They have contracts to deliver on and are now forced to pay higher prices to meet the demand. A classic short squeeze.
Additionally, we get (nearly) all our construction lumber from Canada. A small, small percentage can be from the pacific northwest but other than that, 90%+ comes from Canada. Other US-grown tree species do not work for construction without massive amounts of waste and cannot meet demand. A couple of years ago, Canada saw the rates of deforestation and severely cut back on the maximum allowable cut. Now they're only pulling trees on a much smaller scale because it takes 80 years to regrow a new one and unless they slow down there won't be any forest left soon.
Desert_Power
Footballguy
I'm never going to replace my deck, just going to put something over the holeChadstroma said:
Osaurus
Footballguy
Same thing happened to me today. I saw a flatbed full of trusses and told Mrs. O that’s probably $200k worth of lumber.
BassNBrew
Footballguy
Canadians don't need any trees. Fired up the saws.
I suspect everything deck wise will be Trex soon enough.
Chadstroma
Footballguy
Composites will get a huge boost from this. As always, major changes in the economics of things creates chaos and opportunity. Creativity and investment are encouraged. Things have a way of being different afterwards.
Chadstroma
Footballguy
BTW, rates are doing good right now.
Chadstroma
Footballguy
Reach out to banks. Seriously. They can often do better than brokers, it is the only area banks actually are worth anything in morgtages. 10% down makes it rough for me... prob high 3's. 15% opens up more opportunity and prob mid 3's. 20% prob get into low 3's.
dkp993
Footballguy
Chadstroma
Footballguy
Zegras11
Footballguy
Chadstroma
Footballguy
Yup... if you bought a 2020 car new..... it would cost less than buying a used 2020 of the same make and model. The world is upside down. lol
flapgreen
Footballguy
Guy looked at our house today and wants it. About 25k over current value and both using a lawyer so saving about 25k in realtor fees. He's paying all the closing and title.
He runs a business in New York and apparently trying to offload some cash I assume he didn't claim, so he's giving us 25k in cash before we sign anything and the rest through a loan.
He runs a business in New York and apparently trying to offload some cash I assume he didn't claim, so he's giving us 25k in cash before we sign anything and the rest through a loan.
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-OZ-
Footballguy
The house 8 doors down, exact same floor plan but we have a better backyard and they have an above ground pool just went on the market.
We bought 5 years ago for $320k. They listed at $475k. They'll get it, our neighbor already sold for $450 with 700 less feet. (3500' for us, theirs is 2800')
We bought 5 years ago for $320k. They listed at $475k. They'll get it, our neighbor already sold for $450 with 700 less feet. (3500' for us, theirs is 2800')
firstseason1987
Footballguy
Bought at 415, eight years ago. Same floor plans sold on my block and one over for 780 maybe six months ago and 820 last month.
culdeus
Footballguy
flapgreen
Footballguy
Pretty much. He asked if he could pay 75 in cash and we said no. Can't exactly just go deposit 75k out of the blue into the bank. We said 25 is as much as we could take that way. I've known people who run businesses to do that before, so it didn't shock me that much. He drove his car down here from New York. Thinking he's crazy carrying around that much cash.
Chadstroma
Footballguy
Chadstroma
Footballguy
Chadstroma
Footballguy
Crazy things going on... just heard a story from a broker. Short version is this:
Seller was moving to VA and had a house being built, backed out of that and then can not find a house to buy. So.... he has been trying to kill the deal. Offered the buyer $7K to walk away, a bunch of other things.... even had someone go up to the roof after the appraisal was done (VA loan) and remove shingles, took pics and then sent it to the VA to get the deal killed.
Seller was moving to VA and had a house being built, backed out of that and then can not find a house to buy. So.... he has been trying to kill the deal. Offered the buyer $7K to walk away, a bunch of other things.... even had someone go up to the roof after the appraisal was done (VA loan) and remove shingles, took pics and then sent it to the VA to get the deal killed.
flapgreen
Footballguy
flapgreen
Footballguy
WtfCrazy things going on... just heard a story from a broker. Short version is this:
Seller was moving to VA and had a house being built, backed out of that and then can not find a house to buy. So.... he has been trying to kill the deal. Offered the buyer $7K to walk away, a bunch of other things.... even had someone go up to the roof after the appraisal was done (VA loan) and remove shingles, took pics and then sent it to the VA to get the deal killed.
culdeus
Footballguy
This is not unusual. I have heard of a few similar stories where the seller offers huge money to the buyer to back out, because they can't qualify for the loan on on the homes they were (in theory) moving into and would otherwise be more or less homeless.Crazy things going on... just heard a story from a broker. Short version is this:
Seller was moving to VA and had a house being built, backed out of that and then can not find a house to buy. So.... he has been trying to kill the deal. Offered the buyer $7K to walk away, a bunch of other things.... even had someone go up to the roof after the appraisal was done (VA loan) and remove shingles, took pics and then sent it to the VA to get the deal killed.
skol asylum
Footballguy
dkp993
Footballguy
culdeus
Footballguy
I mean it's not really laundering, as he isn't getting a liquid instrument out of it.
SFBayDuck
Footballguy
flapgreen
Footballguy
dkp993
Footballguy
flapgreen
Footballguy
Chadstroma
Footballguy
(and old ex-employee posted on FB about how the RE market is crazy but remember 2006-2008 and what goes up, must come down.... I had some thoughts to respond and thought that you guys might find it interesting as well)
I have seen this thinking come up about waiting to buy a home because home values have gone up so much so quickly and the market is crazy... all of that is true... but then people equate that to what happened in 2008 and think "just wait, the prices will come crashing down"
There is a SIGNIFICANT difference between 2006-2008 and now.
1) Supply and demand. The reason for the difference is based on the most basic of economics. There is just not any houses available. Inventory is ridiculously low. People are not selling and new construction has been lower through the 10's than any other decade since the 30's. 5.4 million in the 30's versus 5.8 million last decade. For reference, every decade since the 50's has had 20+ million new construction.
2) Costs. Material has skyrocketed. Any new builds will be significantly costlier now than even a year ago. The typical home, just for the increased cost of lumber, takes $34K more now than just a year ago to build.
3) COVID. People invested in their homes more. They were stuck in it so they decided to make it better and now they are less likely to move.
4) Many new buyers. At the time all these new buyers are wanting to buy, the older buyers are not wanting to sell. (see the supply and demand above)
5) Inflation. With all of the government spending and low-interest rates, inflation is here. That will devalue the current home prices and be a stopgap on any future market corrections. The more the inflation hits the more that current home values will be 'cheap' and therefore will not go down.
6) Mortgage quality. Unlike before when a lot of the property values were being increased by an influx of those who should not have qualified, there is not a significant amount of 'sub-prime' loans. The vast majority of lending is conventional or government-backed. Underwriting, even for non-QM loans (what was called sub-prime back in 2006) has much better risk management built into them. 2008 happened because of poor underwriting on mortgages and it broke the system. That is not the case now.
All real estate is local and there are some crazy things going on. But just because home values are increasing similar to how they did in 2006 does not mean that now is a similar situation. There could be some market corrections in the not too distant future but I don't think there is any reason to expect home values to crash down like they did in 2008. I am not saying you must buy now but I am saying that waiting for home values to come way back down may end up resulting in you waiting a very, very, very, very long time.
I have seen this thinking come up about waiting to buy a home because home values have gone up so much so quickly and the market is crazy... all of that is true... but then people equate that to what happened in 2008 and think "just wait, the prices will come crashing down"
There is a SIGNIFICANT difference between 2006-2008 and now.
1) Supply and demand. The reason for the difference is based on the most basic of economics. There is just not any houses available. Inventory is ridiculously low. People are not selling and new construction has been lower through the 10's than any other decade since the 30's. 5.4 million in the 30's versus 5.8 million last decade. For reference, every decade since the 50's has had 20+ million new construction.
2) Costs. Material has skyrocketed. Any new builds will be significantly costlier now than even a year ago. The typical home, just for the increased cost of lumber, takes $34K more now than just a year ago to build.
3) COVID. People invested in their homes more. They were stuck in it so they decided to make it better and now they are less likely to move.
4) Many new buyers. At the time all these new buyers are wanting to buy, the older buyers are not wanting to sell. (see the supply and demand above)
5) Inflation. With all of the government spending and low-interest rates, inflation is here. That will devalue the current home prices and be a stopgap on any future market corrections. The more the inflation hits the more that current home values will be 'cheap' and therefore will not go down.
6) Mortgage quality. Unlike before when a lot of the property values were being increased by an influx of those who should not have qualified, there is not a significant amount of 'sub-prime' loans. The vast majority of lending is conventional or government-backed. Underwriting, even for non-QM loans (what was called sub-prime back in 2006) has much better risk management built into them. 2008 happened because of poor underwriting on mortgages and it broke the system. That is not the case now.
All real estate is local and there are some crazy things going on. But just because home values are increasing similar to how they did in 2006 does not mean that now is a similar situation. There could be some market corrections in the not too distant future but I don't think there is any reason to expect home values to crash down like they did in 2008. I am not saying you must buy now but I am saying that waiting for home values to come way back down may end up resulting in you waiting a very, very, very, very long time.
I envy people who don’t really pay taxes. It sucks to be on a W-2 and know you have to actually pay what you owe.
