For the Real Estate Drop in sales and price Naysayers HOLD ONTO YOUR HATS

[C_J_J_C]

I recall in 2007 my buddy who was slinging mortgages out of the trunk of his car called me while I was walking a job site we were building models on in French Valley near Temecula/Murrieta/Hemet. I had inquired about buying another property and was curious if I would qualify.

It was at that moment I knew we were all totally screwed. When he told me to try and keep it around $1.5M and that he could get it done with zero down. It hit me like a ton of bricks I suddenly noticed all the new trucks, boats, sportscars, plastic surgery, landscape, pools, etc. There was no way I could swing that kind of payment. Unfortunately, I was too late and was not able to do anything with that knowledge except enjoy the flaming crash into dogshit we all deserved.

In 2007 we all had budies in morgage.

My favorite was a buddy (Cop who did mortgages on the side) saying if you had credit you didn't need to pay anything. Houses were free.
He honesty believed you could buy a house no money down and refinance every year using the refinance to pay the mortage. Rince and repeat.
The problem is other people thought the same and we all paid.

 

[OldSchoolBoats]

with the cost of homeowners insurance going to the moon in CA... that'll definitely put a ding into what someone can "qualify" for

Oh for sure. Premiums are averaging $100 - $200 more per month than a year ago and God help you if you need the CA Fair Plan.

 

[LargeOrangeFont]

This was us about 15 years ago. Had a price range of $450k and after 18 months of chasing the climbing market ended up paying $600k. I asked the finance person what I’d qualify for she noted over 7 figures. I was shocked and I expressed that it was a figure that I was not comfortable making that payment for 30 years. If I had been 12 months earlier the $450k would have been doable but the market ran away from us. I am a firm believer to just grab what you can as soon as you are able to make the move up when possible.

This. The time to buy is now if you can swing the price and payment.

 

[LargeOrangeFont]

In 2007 we all had budies in morgage.

My favorite was a buddy (Cop who did mortgages on the side) saying if you had credit you didn't need to pay anything. Houses were free.
He honesty believed you could buy a house no money down and refinance every year using the refinance to pay the mortage. Rince and repeat.
The problem is other people thought the same and we all paid.

The ones that bought with 0 down and then refied at 125% and walked were the smart ones. Easiest way to rob a bank I’ve ever seen.

 

[LargeOrangeFont]

What the hell is up with people. Why do I find this so mind boggling? Wish I could go through life nonchalantly.

They are the same people with 84 month truck payments.

Would you like that $125k truck for a year not have it at all? Some people like the ups and spend it while they have it, and sell it all when it goes down.

 

[Boatymcboatface]

Hold on to your Tesla’s!

Elon Musk warns house prices are set to plunge - and says commercial real estate is in meltdown

"Commercial real estate is melting down fast. Home values next," the Tesla and SpaceX chief tweeted on Monday.

www.yahoo.com

 

[Todd Mohr]

Tonopah is in the sticks but it comes with land and no HOAs, Buckeye seems to be a fast growing town, I’d bank on both Buckeye and Goodyear expanding until they meet as someone else had said in this thread.

The greater Phoenix area seems to be expanding on all sides, I would predict buying a house on the outskirts would mean you won’t be on the outskirts for very long. I could be wrong…

Tonapah is 20 years from being part of the Phoenix metro.

 

[attitude]

Tonapah is 20 years from being part of the Phoenix metro.

How about Buckeye?

 

[Todd Mohr]

How about Buckeye?

Buckeye has all the normal infrastucture of most suburbs, shopping, resturants, etc. If you ride dirt bikes, Arizona Cycle Park is close by to go turn laps at. Buckeye is an hour and a half from Parker, easy drive.

 

[yuppie]

Been holding onto my hat for 100+ pages of this thread! Where is the free fall? Inventory is still thin. What comes next?

 

[Havasu blue label]

Been holding onto my hat for 100+ pages of this thread! Where is the free fall? Inventory is still thin. What comes next?

what are you looking for

 

[yuppie]

what are you looking for

Looking for either dog to have it's day. Are we going to see a huge economic collapse and the housing market is going to fall out?

My guess: Havasu area continues increasing by at least 5% YOY for the next 5 years.

 

[2Driver]

The ones that bought with 0 down and then refied at 125% and walked were the smart ones. Easiest way to rob a bank I’ve ever seen.

LOL some say Banks are the bad guys?

In 06 a Neighbor pulled $250k HELOC ( already had an $600k first) out of his house before the bust. After foreclosure he kept those assets from the HELOC and thanks to Obama he didn’t have to pay unearned income tax on the 250K HELOC loan he walked on when the bank came for the house.

He had stopped paying his 1st and 2nd mortgage hoping the bank would cave to a short sale. For a year he lived in the casita and rented the home for $3,500 a month cash. This went on for over a year until he was foreclosed on then he just moved to his plush vacation home in Colorado.

Fast forward….Guess who applied and got 2 nice PPP loans forgiven and 2 more SBA loans at 3%.

 

[Havasu blue label]

Looking for either dog to have it's day. Are we going to see a huge economic collapse and the housing market is going to fall out?

My guess: Havasu area continues increasing by at least 5% YOY for the next 5 years.

Good luck on your purchase the deals are there

 

[Havasu blue label]

Looking for either dog to have it's day. Are we going to see a huge economic collapse and the housing market is going to fall out?

My guess: Havasu area continues increasing by at least 5% YOY for the next 5 years.

hopefully my properties where all purchased 1999 to 2003

 

[Sportin' Wood]

Been holding onto my hat for 100+ pages of this thread! Where is the free fall? Inventory is still thin. What comes next?

I believe I have asked this before about 30 pages back. What is the RDP definition of a housing crash? Is it a percentage depreciation and from what number? The OP made a statement that in my mind came true. If you wanted to get top dollar you should consider selling as the FOMO was going to be disrupted.

IMHO it is a little more complicated in one dog or the other having its day. It seems the question is when does that day come and how much discount?

The 2008 crash did not yield immediate housing price reductions, it took time for blighted vacant homes to be processed into resale and then contributed to the downward spiral. If I'm not mistaken it took about 15 years for housing prices to rebound into the 2008 territory from peak to trough and back to the 2008 number which it blew right past.

There are deals to be had right now even in this tight inventory. This is something I can't say I would believe two years ago.

Rising interest rates, rising insurance costs, and rising prices don't make for a healthy housing market. Something is going to give, but when and how much who knows?
Accepting a $ 5,000-a-month mortgage as the new normal is a frightening idea to me. I can't see how we sustain that without catastrophic inflation.

We have our eye on another purchase right now and it is an anxious time for me. It is hard to find a home that checks all the boxes. There are going to be some serious negotiations on this one and the realtors are going to play an interesting role in that because it could potentially disrupt the comps. I've tried to stick with price per SqFt to add some normalcy into a chaotic world, but in the end, I think @LargeOrangeFont does make some sense when he says it is always a good time to buy. You have to have an objective plan, not just go crazy. Even a person who bought in 2008 would have made a boatload of money selling in 2021. They also would have recovered over 12 years of rent.

No matter what Zillow says, you have to sell or buy to take advantage of the opportunity.

 

[angiebaby]

Is Zillow decently accurate when it comes to rates and PMI? It shows PMI in the mid $300 range.

What Zillow is not accurate about is taxes. I suspect because they are a California company, they assume every state is like CA and uses purchase price to set property taxes. While in CA it is @ 1% of the sale price (plus local county and mello roos-type taxes and assessments), in Montana, it is about .7% of assessed value, no matter the price paid. If you're buying in CA the estimate may be close, but in other states, it may not be. Instead, look at the property tax history to estimate your monthly payment if you are rolling that into an impound account. Ex: a $750K house in CA would be minimum $7500 taxes. In the county we are in, that amount is closer to $2600. That is a considerable difference to many people.

 

[THE WIDGE]

Oh for sure. Premiums are averaging $100 - $200 more per month than a year ago and God help you if you need the CA Fair Plan.

My renewal went to $8700 from $2700 in chino hills. F- me!

 

[LargeOrangeFont]

I believe I have asked this before about 30 pages back. What is the RDP definition of a housing crash? Is it a percentage depreciation and from what number? The OP made a statement that in my mind came true. If you wanted to get top dollar you should consider selling as the FOMO was going to be disrupted.

IMHO it is a little more complicated in one dog or the other having its day. It seems the question is when does that day come and how much discount?

The 2008 crash did not yield immediate housing price reductions, it took time for blighted vacant homes to be processed into resale and then contributed to the downward spiral. If I'm not mistaken it took about 15 years for housing prices to rebound into the 2008 territory from peak to trough and back to the 2008 number which it blew right past.

There are deals to be had right now even in this tight inventory. This is something I can't say I would believe two years ago.

Rising interest rates, rising insurance costs, and rising prices don't make for a healthy housing market. Something is going to give, but when and how much who knows?
Accepting a $ 5,000-a-month mortgage as the new normal is a frightening idea to me. I can't see how we sustain that without catastrophic inflation.

We have our eye on another purchase right now and it is an anxious time for me. It is hard to find a home that checks all the boxes. There are going to be some serious negotiations on this one and the realtors are going to play an interesting role in that because it could potentially disrupt the comps. I've tried to stick with price per SqFt to add some normalcy into a chaotic world, but in the end, I think @LargeOrangeFont does make some sense when he says it is always a good time to buy. You have to have an objective plan, not just go crazy. Even a person who bought in 2008 would have made a boatload of money selling in 2021. They also would have recovered over 12 years of rent.

No matter what Zillow says, you have to sell or buy to take advantage of the opportunity.

In my mind nothing has really happened. The claims were the sky is falling.. great deals around the corner… Havasu down 50% in 90 days, RE market down double digits, you ain’t seen nothing yet.

If you were selling you should have sold a year ago. No one disagrees there, you’d have made a little more cash. But you are still better selling now than you were in 2020, and certainly 2019. And you are way worse off buying.

If you aren’t a cash buyer, you are in a worse position now than you were just a year ago. The great prices that were forecasted have not happened. In fact they have bottomed and have now started creeping upwards.

I’ve watched 2 sales personally. My MIL and my parents. My MIL was talked into marketing her house at a lower price so it would move quickly, it did. She probably left $30k on the table. They convinced her they made her an extra $30k by selling it quick.

The same realtor then talked to my parents and tried to talk them into the same strategy. They got another realtor. It took 2 months in total but they got another $50k more than what my MIL realtor wanted to sell their place for.

The younger generation is looking at $5k mortgages. They have no choice when the option is $4k rents. 40 year mortgages will become the norm.

If something does give it will be for a short time and ever rising costs will heal all wounds. Remember how many people said housing will “never recover” in 2009? I do.

When rates do drop there is going to be an increase in prices and another small refi boom for everyone that has bought in the last year. Hopefully those people will get out of PMI and will be in a better position.

I’m glad we made our move when we did.

 

[DWC]

My renewal went to $8700 from $2700 in chino hills. F- me!

You lost me.

Never mind. Thanks @angiebaby

 

[LargeOrangeFont]

What Zillow is NOT accurate about is taxes. I suspect because they are a California company, they assume every state is like CA and uses purchase price to set property taxes. While in CA it is @ 1% of the sale price (plus local county and mello roos-type taxes and assessments), in Montana, it is about .7% of assessed value, no matter the price paid. If you're buying in CA the estimate may be close, but in other states, it may not be. Instead, look at the property tax history to estimate your monthly payment if you are rolling that into an impound account. Ex: a $750K house in CA would be minimum $7500 taxes. In the county we are in, that amount is closer to $2600. That is a considerable difference to many people.

In UT you get a discount on the taxes for your primary residence that isn’t factored in either.

 

[angiebaby]

You lost me.

I had to read it twice. He's talking about insurance. It was $2700 and it went up to $8700 this year.

 

[OldSchoolBoats]

My renewal went to $8700 from $2700 in chino hills. F- me!

Saw that in the other thread. Not sure how that's legal. Just another way to abolish the middle class. If there is no oversight to these practices, then people will lose everything trying to pay insurance for a "what if"......

 

[Sportin' Wood]

In my mind nothing has really happened. The claims were the sky is falling.. great deals around the corner… Havasu down 50% in 90 days, RE market down double digits, you ain’t seen nothing yet.

If you were selling you should have sold a year ago. No one disagrees there, you’d have made a little more cash. But you are still better selling now than you were in 2020, and certainly 2019. And you are way worse off buying.

If you aren’t a cash buyer, you are in a worse position now than you were just a year ago. The great prices that were forecasted have not happened. In fact they have bottomed and have now started creeping upwards.

I’ve watched 2 sales personally. My MIL and my parents. My MIL was talked into marketing her house at a lower price so it would move quickly, it did. She probably left $30k on the table. They convinced her they made her an extra $30k by selling it quick.

The same realtor then talked to my parents and tried to talk them into the same strategy. They got another realtor. It took 2 months in total but they got another $50k more than what my MIL realtor wanted to sell their place for.

The younger generation is looking at $5k mortgages. They have no choice when the option is $4k rents. 40 year mortgages will become the norm.

If something does give it will be for a short time and ever rising costs will heal all wounds. Remember how many people said housing will “never recover” in 2009? I do.

When rates do drop there is going to be an increase in prices and another small refi boom for everyone that has bought in the last year. Hopefully those people will get out of PMI and will be in a better position.

I’m glad we made our move when we did.

I can't say you are wrong on these points.

 

[evantwheeler]

What Zillow is NOT accurate about is taxes. I suspect because they are a California company, they assume every state is like CA and uses purchase price to set property taxes. While in CA it is @ 1% of the sale price (plus local county and mello roos-type taxes and assessments), in Montana, it is about .7% of assessed value, no matter the price paid. If you're buying in CA the estimate may be close, but in other states, it may not be. Instead, look at the property tax history to estimate your monthly payment if you are rolling that into an impound account. Ex: a $750K house in CA would be minimum $7500 taxes. In the county we are in, that amount is closer to $2600. That is a considerable difference to many people.

@attitude this may be what Angie meant, but if there is a home you're interested in purchasing, go to the county tax assessors website and do a property tax search. Look up the property by address and view the most recent tax bill. Itll give a break down of all the taxes owed line by line as a percentage of property value and also any special assessments. Some are not purely a function of property value, like say the Mello Roos taxes in CA. There is zero reason to estimate anything, you can and should calculate to the cent what your taxes will be at the purchase price you are comfortable paying.

 

[LargeOrangeFont]

I can't say you are wrong on these points.

Best of luck with this new deal you have brewing.

I have no idea how a commercial RE “crash” translates to a residential RE crash if there are not job losses. That is the biggest question mark for me presently.

 

[Gonefishin5555]

State Farm stops writing new policies for homeowners insurance in Ca. I think the reason boils down to the states regulation of the insurance industry making it difficult to make a profit in CA. I have State Farm and my premium barely went up but I live a few miles from the beach and no fire danger. Just a glancing blow to the nuts any good MMA fighter can shake it off.

So I played Laughlin Ranch for the first time this past weekend. Back 9 had several large and I mean rifldiculously big homes that had been recently built or were under construction. The one house had a 50+ panel solar system. Did not expect to see that in bullhead. Also plenty of vacant lots on the golf course still so they aren’t running out of buildable lots in my lifetime. I got the locals rate of $45 including cart and they let you hit some warmup range balls included. That was a really good value for a nice course I’m gonna be sure to play it in the fall before the high season rate kicks back in.

 

[Paradox]

Hoping for some input from those in the know relative the Phoenix market. We’re helping our Daughter and her boyfriend out (both in their mid 20s) on the purchase of a small house. Their offer has been accepted and the total down is 20%. They are pre-approved.

Any thoughts on the price (slightly less than asking) and area?

2350 E Gelding Dr, Phoenix, AZ 85022 | Zillow

2350 E Gelding Dr, Phoenix AZ, is a Single Family home that contains 1438 sq ft and was built in 1992.It contains 3 bedrooms and 2 bathrooms.This home last sold for $398,000 in June 2023. The Zestimate for this Single Family is $410,100, which has decreased by $4,677 in the last 30 days.The...

www.zillow.com

 

[Sportin' Wood]

Best of luck with this new deal you have brewing.

I have no idea how a commercial RE “crash” translates to a residential RE crash if there are not job losses. That is the biggest question mark for me presently.

In my mind nothing has really happened. The claims were the sky is falling.. great deals around the corner… Havasu down 50% in 90 days, RE market down double digits, you ain’t seen nothing yet.

If you were selling you should have sold a year ago. No one disagrees there, you’d have made a little more cash. But you are still better selling now than you were in 2020, and certainly 2019. And you are way worse off buying.

If you aren’t a cash buyer, you are in a worse position now than you were just a year ago. The great prices that were forecasted have not happened. In fact they have bottomed and have now started creeping upwards.

I’ve watched 2 sales personally. My MIL and my parents. My MIL was talked into marketing her house at a lower price so it would move quickly, it did. She probably left $30k on the table. They convinced her they made her an extra $30k by selling it quick.

The same realtor then talked to my parents and tried to talk them into the same strategy. They got another realtor. It took 2 months in total but they got another $50k more than what my MIL realtor wanted to sell their place for.

The younger generation is looking at $5k mortgages. They have no choice when the option is $4k rents. 40 year mortgages will become the norm.

If something does give it will be for a short time and ever rising costs will heal all wounds. Remember how many people said housing will “never recover” in 2009? I do.

When rates do drop there is going to be an increase in prices and another small refi boom for everyone that has bought in the last year. Hopefully those people will get out of PMI and will be in a better position.

I’m glad we made our move when we did.

I was giving this some more thought. I want to share an example that helped me decide if we are better or worse off today. This obviously won't work everywhere regionally as the price delta is highly dependent on local situations.

Hypothetical house. (But loosely based on one I'm considering an offer on.)

Sale Price. 20% Down Payment. Rate. P&I payment
$845K. $169K 2.5%. $2,677
$845K. $169K. 3.5%. $3,036
$845K. $169K. 4.5%. $3,425

Market Cooling as rates go up last summer
$745K. $149K. 5.5%. $3,384
$645K. $129K. 5.5%. $2,930
$645K. $129K. 6.5%. $3,261

In this example; as the asking price (assumed sale price) of houses comes down and interest rates go up, the payment delta is less than $750 a month, and that delta is driven by the interest rate without a price reduction.

I have felt all along that I would rather pay a higher interest rate for a lower sale price and this graph helps me see why. Lower down payment and lower overall debt burden of the total price of the house. $100K less mortgage and $20K less down payment with a small increase in the monthly payment.

I assume age plays a significant role in the strategy of a home purchase. Younger people might only look at the barrier to entry and the monthly costs, but older buyers might consider how they will actually pay off the mortgage and prepare for retirement.

Obviously, property taxes and insurance would play a contributing role in this that I have not considered for the example, but the top-line price reduction could reduce the tax burden for some regions.

I would say a 20% reduction in house price (as in this example) would be considered a correction, not a crash. Empty houses that are blighted and sold at auction in my eyes would be a housing crash and I don't see that happening.

What say you?

Edit: It's always a good time to buy if you can make the right deal.

 

[LargeOrangeFont]

I was giving this some more thought. I want to share an example that helped me decide if we are better or worse off today. This obviously won't work everywhere regionally as the price delta is highly dependent on local situations.

Hypothetical house. (But loosely based on one I'm considering an offer on.)

Sale Price. 20% Down Payment. Rate. P&I payment
$845K. $169K 2.5%. $2,677
$845K. $169K. 3.5%. $3,036
$845K. $169K. 4.5%. $3,425

Market Cooling as rates go up last summer
$745K. $149K. 5.5%. $3,384
$645K. $129K. 5.5%. $2,930
$645K. $129K. 6.5%. $3,261

In this example; as the asking price (assumed sale price) of houses comes down and interest rates go up, the payment delta is less than $750 a month, and that delta is driven by the interest rate without a price reduction.

I have felt all along that I would rather pay a higher interest rate for a lower sale price and this graph helps me see why. Lower down payment and lower overall debt burden of the total price of the house. $100K less mortgage and $20K less down payment with a small increase in the monthly payment.

I assume age plays a significant role in the strategy of a home purchase. Younger people might only look at the barrier to entry and the monthly costs, but older buyers might consider how they will actually pay off the mortgage and prepare for retirement.

Obviously, property taxes and insurance would play a contributing role in this that I have not considered for the example, but the top-line price reduction could reduce the tax burden for some regions.

I would say a 20% reduction in house price (as in this example) would be considered a correction, not a crash. Empty houses that are blighted and sold at auction in my eyes would be a housing crash and I don't see that happening.

What say you?

Edit: It's always a good time to buy if you can make the right deal.

I agree with all of that.

The rate is a gamble that it will be lower at some point in the near future while you are stuck with the price forever. I am with you, that rates will eventually go back down somewhat and at that point you are better off.

Myself and others have said in this thread that if we were lucky or unlucky enough to see 2020 prices ever again that would be a debatable “crash” and probably the floor of what could happen if there is fallout.

Again I don’t think anyone here will or did deny that there was a “correction” “cooling” whatever we want to to call it when rates started to rise a year ago. Knowing that was on the horizon is what made me sell in March 22.

I’d love a 20% correction. The longer we remain in this state of low inventory, low unemployment, and high rates, I don’t know how anything meaningful changes.

Something has to give as you say.. and if we don’t shed jobs, prices are only going up from here (generally). I think you will have areas that soften more than average.

But unless a problem with commercial RE tanks the economy and jobs start going away.. how does this change? We are headed into an election year. They will defer anything that affects residential RE to 2025 if we hit headwinds in the next 12 months.

Great conversation.

 

[EmpirE231]

Saw that in the other thread. Not sure how that's legal. Just another way to abolish the middle class. If there is no oversight to these practices, then people will lose everything trying to pay insurance for a "what if"......

Problem is, too much oversight, is what caused the problem we have in CA. Careful what you ask for.

 

[530RL]

I believe I have asked this before about 30 pages back. What is the RDP definition of a housing crash? Is it a percentage depreciation and from what number? The OP made a statement that in my mind came true. If you wanted to get top dollar you should consider selling as the FOMO was going to be disrupted.

IMHO it is a little more complicated in one dog or the other having its day. It seems the question is when does that day come and how much discount?

The 2008 crash did not yield immediate housing price reductions, it took time for blighted vacant homes to be processed into resale and then contributed to the downward spiral. If I'm not mistaken it took about 15 years for housing prices to rebound into the 2008 territory from peak to trough and back to the 2008 number which it blew right past.

There are deals to be had right now even in this tight inventory. This is something I can't say I would believe two years ago.

Rising interest rates, rising insurance costs, and rising prices don't make for a healthy housing market. Something is going to give, but when and how much who knows?
Accepting a $ 5,000-a-month mortgage as the new normal is a frightening idea to me. I can't see how we sustain that without catastrophic inflation.

We have our eye on another purchase right now and it is an anxious time for me. It is hard to find a home that checks all the boxes. There are going to be some serious negotiations on this one and the realtors are going to play an interesting role in that because it could potentially disrupt the comps. I've tried to stick with price per SqFt to add some normalcy into a chaotic world, but in the end, I think @LargeOrangeFont does make some sense when he says it is always a good time to buy. You have to have an objective plan, not just go crazy. Even a person who bought in 2008 would have made a boatload of money selling in 2021. They also would have recovered over 12 years of rent.

No matter what Zillow says, you have to sell or buy to take advantage of the opportunity.

Although 5,000 a month may seem frightening, it is not lost on me that 95k for a new F250 is an equal head scratcher.

In 1987 I bought a brand new loaded 3/4 ton Chevy 4x4 for 13,700. 30 year mortgages were 11 percent.

What seems like a lot to an older generation may be shrugged off by others.

 

[Sportin' Wood]

Although 5,000 a month may seem frightening, it is not lost on me that 95k for a new F250 is an equal head scratcher.

In 1987 I bought a brand new loaded 3/4 ton Chevy 4x4 for 13,700. 30 year mortgages were 11 percent.

What seems like a lot to an older generation may be shrugged off by others.

I think I've reached a point in my life at which a brand-new $100K truck is not attractive.

 

[LargeOrangeFont]

I think I've reached a point in my life at which a brand-new $100K truck is not attractive.

You and I are in the minority .

 

[530RL]

I think I've reached a point in my life at which a brand-new $100K truck is not attractive.

That is what my father said when I paid 13,700 for a new truck in 87.

For comparison, I spent 150,000 for a house in 1987. 11 percent mortgage, 5 percent down, P&I was 1,250 a month.

Today if put into a CPI calculator, the 1,250 a month is 3,410.

3,410 payment of P&I at 6% today is 568,000. With 5% down, that is 598,000, lets round up to 600k.

600 grand today gets me a hell of a lot nicer house in a lot nicer neighborhood than the 150 did in 1987, at least in Phoenix.

So I guess it is all relative, and even at 6%, it is immensely more affordable than 11%.

 

[attitude]

Hoping for some input from those in the know relative the Phoenix market. We’re helping our Daughter and her boyfriend out (both in their mid 20s) on the purchase of a small house. Their offer has been accepted and the total down is 20%. They are pre-approved.

Any thoughts on the price (slightly less than asking) and area?

2350 E Gelding Dr, Phoenix, AZ 85022 | Zillow

2350 E Gelding Dr, Phoenix AZ, is a Single Family home that contains 1438 sq ft and was built in 1992.It contains 3 bedrooms and 2 bathrooms.This home last sold for $398,000 in June 2023. The Zestimate for this Single Family is $410,100, which has decreased by $4,677 in the last 30 days.The...

www.zillow.com

While I’m not a Phoenix expert I have been looking around for the last week. There is lots to choose from in the 400k range. Is a tiny two story with no land what they want? If they have little kids or a baby is in the near future I would advise against a two story. There will be lots of trips to and from the bedrooms, if their kids are anything like mine baby gates will be required which will cause them to need to climb over baby gates and then climb up the stairs every time a diaper change, a nap, or checking on the baby is needed. The back yard will be sufficient to play in but for 400k you can find bigger.

 

[530RL]

Today's data by state.

House Price Index Datasets | FEDERAL HOUSING FINANCE AGENCY

www.fhfa.gov

 

[EmpirE231]

On one hand, I still think the "prices" of things is gonna crash

on the other hand, I think the crash has already happened, but it wasn't the "prices" of things.... it was the value of our money / dollars. If 500-700K is the norm for mid level homes and 80-100K trucks is the norm.... then we've just settled into a huge step of inflation that will stick. At the end of the day, if this is the case.... it sucks for everyone except the legit wealthy. It sucks for the person who couldn't afford these things 3-5 years ago... it sucks for the people who can still "comfortably" afford these things today. The only people it doesn't really suck for are the ones that have already owned massive amounts of these assets for decades.

at the end of the day, figure out a way to make more money. If you're not making more money in an inflationary period, you're going backwards.

 

[Havasu blue label]

Correct make more money and pay the 6 percent to buy homes

 

[yuppie]

On one hand, I still think the "prices" of things is gonna crash

on the other hand, I think the crash has already happened, but it wasn't the "prices" of things.... it was the value of our money / dollars. If 500-700K is the norm for mid level homes and 80-100K trucks is the norm.... then we've just settled into a huge step of inflation that will stick. At the end of the day, if this is the case.... it sucks for everyone except the legit wealthy. It sucks for the person who couldn't afford these things 3-5 years ago... it sucks for the people who can still "comfortably" afford these things today. The only people it doesn't really suck for are the ones that have already owned massive amounts of these assets for decades.

at the end of the day, figure out a way to make more money. If you're not making more money in an inflationary period, you're going backwards.

If you accept this reality then it's more likely you'll agree that this trend will continue. They will continue to print more and devalue the dollar more and more. This just means prices on all assets go up. Cash is trash.

 

[Cdog]

If you accept this reality then it's more likely you'll agree that this trend will continue. They will continue to print more and devalue the dollar more and more. This just means prices on all assets go up. Cash is trash.

That’s where I’m at too. Rates will be in the 4’s next year this time as pedo joe touts he fixed everything. Our savior pedo joe & da hoe

 

[yuppie]

That’s where I’m at too. Rates will be in the 4’s next year this time as pedo joe touts he fixed everything. Our savior pedo joe & da hoe

I'm not sure if they will cut rates that quickly, but a pause would get a good reaction from the market. Cuts would be super positive for all markets. We're at 7% now, let's say we're in the 5's sometime next year, prices start going back up... Makes sense to place a couple bets here.

 

[Gonefishin5555]

I think I've reached a point in my life at which a brand-new $100K truck is not attractive.

I can't believe how many trucks cruisin the 40 back to socal this past weekend. I feel like I need to own one to even post on here. My instagram feed had an ad for .9% financing for GMC trucks right now. I am on the interest list to get a Ram EV truck when it comes out in late 24, don't know if I will follow through depends on the price and the real life range of the thing maybe at 65-70K I would cause i would write the thing off on my business anyways so its really just a 40-45K net of tax savings

On one hand, I still think the "prices" of things is gonna crash

on the other hand, I think the crash has already happened, but it wasn't the "prices" of things.... it was the value of our money / dollars. If 500-700K is the norm for mid level homes and 80-100K trucks is the norm.... then we've just settled into a huge step of inflation that will stick. At the end of the day, if this is the case.... it sucks for everyone except the legit wealthy. It sucks for the person who couldn't afford these things 3-5 years ago... it sucks for the people who can still "comfortably" afford these things today. The only people it doesn't really suck for are the ones that have already owned massive amounts of these assets for decades.

at the end of the day, figure out a way to make more money. If you're not making more money in an inflationary period, you're going backwards.

Inflation and its effect on everything needs to be included in any analysis of the economy. Real interest is the actual rate minus inflation. So when rates were 3% and inflation was creeping up the real interest rate was actually negative. Right now if mtg rate is 6.5 and inflation is 5% its still a low rate vs a 5% mortgage and a 2% inflation rate. So if the feds drive inflation down to 2 and keep rates at 6% in theory that would really slow down housing more than what has happened in the last year. The elephant in the room is still everyone holding onto their 3% mortgage no one wants to let go of that so interest rate spreads doesn't have the effect it should. The only thing to really move house prices and other luxury items lower is a shock to the system. What that is I don't know but it is not 6% interest loans in a high inflation economy. So my conclusion is that rates are still going higher in the next 6-18 months. Yeah you can see them trying to cut rates right before the election but in the interim they will first go higher. Buy now if you can afford it I think you come out ahead vs waiting 3 or 4 years.

 

[Sportin' Wood]

On one hand, I still think the "prices" of things is gonna crash

on the other hand, I think the crash has already happened, but it wasn't the "prices" of things.... it was the value of our money / dollars. If 500-700K is the norm for mid level homes and 80-100K trucks is the norm.... then we've just settled into a huge step of inflation that will stick. At the end of the day, if this is the case.... it sucks for everyone except the legit wealthy. It sucks for the person who couldn't afford these things 3-5 years ago... it sucks for the people who can still "comfortably" afford these things today. The only people it doesn't really suck for are the ones that have already owned massive amounts of these assets for decades.

at the end of the day, figure out a way to make more money. If you're not making more money in an inflationary period, you're going backwards.

That is what my father said when I paid 13,700 for a new truck in 87.

For comparison, I spent 150,000 for a house in 1987. 11 percent mortgage, 5 percent down, P&I was 1,250 a month.

Today if put into a CPI calculator, the 1,250 a month is 3,410.

3,410 payment of P&I at 6% today is 568,000. With 5% down, that is 598,000, lets round up to 600k.

600 grand today gets me a hell of a lot nicer house in a lot nicer neighborhood than the 150 did in 1987, at least in Phoenix.

So I guess it is all relative, and even at 6%, it is immensely more affordable than 11%.

@530RL I really like what you did here.

@EmpirE231 I wonder how much our unrealistic expectations drive satisfaction?
We always seem to want more or better. I'm sitting here looking at my cell phone wondering if I really need this thing and if it makes my life better. I think of multiple generations who stay in the same small house passing it down and wonder if they care what the mortgage interest rate is on a new home. New trucks, boats, offroad toys?

Last month we were shopping for a house in a rural farm community in Montana, the average household income was $25K a year. They had massive farms with third and fourth generations living on that land, with plenty of expensive farm equipment and decent old trucks. The modest houses might have been the same one great grandpa homesteaded. They all seemed plenty happy with their 9 kids, fresh food, God, and guns. A day off spent floating a river or hunting game makes them happy.

If only I could grow a beard like that.

 

[hallett21]

I’ve probably posted 4-5 ADU rentals for over 2k in the last 30-45 days. All of them have been removed and there are 2-3 new ones for rent at $2,500 a month.

Absolutely wild to me. We’re talking 350-700 sq ft.

 

[EmpirE231]

@530RL I really like what you did here.

@EmpirE231 I wonder how much our unrealistic expectations drive satisfaction?
We always seem to want more or better. I'm sitting here looking at my cell phone wondering if I really need this thing and if it makes my life better. I think of multiple generations who stay in the same small house passing it down and wonder if they care what the mortgage interest rate is on a new home. New trucks, boats, offroad toys?

Last month we were shopping for a house in a rural farm community in Montana, the average household income was $25K a year. They had massive farms with third and fourth generations living on that land, with plenty of expensive farm equipment and decent old trucks. The modest houses might have been the same one great grandpa homesteaded. They all seemed plenty happy with their 9 kids, fresh food, God, and guns. A day off spent floating a river or hunting game makes them happy.

If only I could grow a beard like that.

I agree..... unfortunately being stuck in SoCal for the time being.... means if you're not earning more every year, you're going backwards.

There are a lot of things we can live without, but usually tend to be the more minor overall expenses day to day, month to month.

1. We have fairly shitty public schools with a woke agenda, hence we have our kids in private school. Expensive, and the cost continues to rise year after year
2. Insurance costs for the average family here are going up thousands of dollars this year (auto, home and health)
3. fuel is still expensive
4. high taxes
etc etc

Unfortunately being a 1st generation immigrant here, I have zero generational wealth to build on / benefit from. I am trying to build that for my kids, but shit is expensive lol

but yes.... generally only update our phones when they crap out, can make a pair of $50 jeans last 5 years etc etc. Dumbest financial purchase I've had to make in the last 10 years was this year buying one of those new 70k+ 1/2 ton trucks, after my 18YO truck crapped out @ 230K miles. Hoping this one lasts me as long as the last one.

until we get outa this asylum, I am in the rat race.

 

[DC-88]

I’ve probably posted 4-5 ADU rentals for over 2k in the last 30-45 days. All of them have been removed and there are 2-3 new ones for rent at $2,500 a month.

Absolutely wild to me. We’re talking 350-700 sq ft.

I just started this one in a buddy’s back yard right by my house / 690 sq.ft. + loft that actually will be pretty nice with roll in shower, line drain, a little folding la cantina door, dormers , part vaulted etc. It doesn’t show from the crappy pics but it’s only about 500’ to a nice beach access. The day we broke ground people started hitting me up about if they could be candidates to rent it lol. What a joke it is just throwing away all the zoning rules imo

 

[hallett21]

I just started this one in a buddy’s back yard right by my house / 690 sq.ft. + loft that actually will be pretty nice with roll in shower, line drain, a little folding la cantina door, dormers , part vaulted etc. It doesn’t show from the crappy pics but it’s only about 500’ to a nice beach access. The day we broke ground people started hitting me up about if they could be candidates to rent it lol. What a joke it is just throwing away all the zoning rules imo
View attachment 1236860 View attachment 1236861

Lol so that’ll rent for 5k a month

 

[Englewood]

That’s where I’m at too. Rates will be in the 4’s next year this time as pedo joe touts he fixed everything. Our savior pedo joe & da hoe

Exactly what I’ve been saying too. We’ll be climbing again once Joe and the Hoe start campaigning.

 

[hallett21]

Exactly what I’ve been saying too. We’ll be climbing again once Joe and the Hoe start campaigning.

If we can get back into the 4s or low 3s prices will rise another 5-10% easily.