Posted on 01/16/2022 7:45:40 AM PST by Browns Ultra Fan
Mortgage Orb has the tantalizing headline: “Fannie Mae’s Financing for Multifamily Affordable Housing Grew Over 23%.” At first, this sounds amazing … until you realize how simply unaffordable housing is much of urban/suburban America.
If you look at the following chart, you can see multifamily (5+ unit) starts remain elevated (pink box) which is not surprising given that home prices at growing at 19.1% YoY nationally (orange circle) and REAL hourly earnings have declined (yellow triangle) thanks to reemergence of inflation after 40 years.
Then we have the humming dragon, rising mortgage rates, that will reduce housing affordability even further.
Home ownership has become simply unaffordable much like steaks. Doctor, doctor (Yellen), we got a bad case of unaffordable home ownership.
(Excerpt) Read more at confoundedinterest.net ...
The real problem: People buy a monthly payment - not a price. Rising mortgage rates kill prices. Frankly, if I had any “investment” property or lived in a home that is way beyond my means, I’d sell IMMEDIATELY. Let the high rates kill prices, get back in, and then refinance when rates come down.
As they do with cars.
, if I had any “investment” property or lived in a home that is way beyond my means, I’d sell IMMEDIATELY.
Roger that.
Which is why car loans are routinely calculated over 6 years vs. the traditional 3 or 4.
It’s OK, fearporn will save us.
Unaffordable for “average” people, but quite affordable for those who can get funds at negative real interest rates. The divide widens as if by design.
Currently selling our home and in the midst of a bidding war. It will sell for thousands more than asking price. Which is ridiculous! Not only are interest rates low but FHA is still doing low down payment options. Hmmm isnt that what got us into trouble the last time.
That's not the right way to think. First of all, if you are not renting a property out, it is NOT an investment - it is a speculation.
Is the asset cash-flowing, or not? If the asset is rented and delivering a positive cash flow, then who cares what the market price is? You are not selling and your tenant is paying the mortgage for you.
Does anyone seriously expect a massive crash in rental rates? Did we see one after 2008? No - rents went up, because mortgage lending ground to a halt.
Market crashes do give you the opportunity to acquire more assets if you have the liquidity, but selling even a highly appreciated asset in anticipation of a crash just triggers a big taxable event. And taxes always eat sellers alive.
Better to use the appreciated market value to put more debt on the property at these super low interest rates. Money from a cash-out refinance can be used to acquire more assets - and since the proceeds are borrowed, they are tax free. Our tax code richly rewards intelligent use of debt - and brutally punishes Depression-era savings-focused thinking.
Dave Ramsey give great advice for the kind of people who take out payday loans to buy cigarettes. But people who want to be successful need to learn how to use debt intelligently - not run in terror from it.
We just sold my Mom’s house across the street last week in one day at $22,000 above asking price. Now we are going to sell ours for the same amount or more and retire to the mountains.
FTA: Home ownership has become simply unaffordable
In California the average single home price is over $800,000 ! and that is a single story with no basement and not much of a yard.
Good for you. We are going to do alittle RVing til things cool off a bit. What goes up must come down.
We are thinking along that line. We are going to pick up a good sized travel trailer and a piece of property and start building something out of pocket. Its just us and a Chihuahua. We can live in a travel trailer for awhile just fine. No way are we going to try to buy something with a house on it at these prices.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.