churn in housing

[moneymaker]

Have heard the average person stays in their home 7 years before moving, what is the average time between refinancing?

[Coronita]

For me..when rates fall .50% or more AND if mortgage balance is > $200K

[an]

For me, when rates fall .125% or more and I can do so with no cost.

[The-Shoveler]

Once rates start to go up the time between refinancing could be maybe 15-20 years?

[Coronita]

[quote=The-Shoveler]Once rates start to go up the time between refinancing could be maybe 15-20 years?[/quote]

Once rates start trickling up, I can’t think of a reason for me to refinance my primary. Although my outstanding loan amount would be less, and refinancing at a higher rate would only lower my monthly payments at the trade off of restarting another 15 or 30 year loan and paying more at the end of the term. Hopefully if things work out well, I’ll be done with this mortgage anyway.

Refinancing a rental for a cashout to buy other things or taking out a new loan to buy another primary, is something different though. That, I guess, would depend on the current market rate for mortgages.

[The-Shoveler]

The Rates are so low right now that no one will want to refi out of their existing loan (unless they absolutely have too IMO).

I see this also affecting the average time between moves and maybe more people holding onto their primary as a rental if they do.

It is a once in a life time event IMO,

[spdrun]

Or banks will quietly make existing loans assumable, as was done in the 1980s.

[Coronita]

[quote=The-Shoveler]The Rates are so low right now that no one will want to refi out of their existing loan (unless they absolutely have too IMO).

I see this also affecting the average time between moves and maybe more people holding onto their primary as a rental if they do.

It is a once in a life time event IMO,[/quote]

That’s one of the reasons why I’m inclined to think home prices are not going to crater once rates do start to rise if they do rise slowly, provided the rest of the economy doesn’t go south. I think the majority of the buyers (at least in the more higher end homes) are probably well financed since loan requirements are still pretty stringent. I don’t think we see too many people putting <20% down for more expensive homes. I don't see a mass panic for people to sell when their payments are locked in at a historical low rate. It would be different if the buying pool were weak buyers with questionable finances, but I don't think the majority of buyers are in this category, at least not in the higher end. Things probably will trickle down when rates go up, but that seems like it might be a slow drip down...So for example, I think I'm going to end up keeping my primary and if were to sell, I probably wouldn't need to desperately drastically drop my price in a higher interest environment, since I would most likely just end up keeping it. The payments are so low and/or maybe by that time, I have no payments on this house since I was able to get a 15 year with payments that are lower than what monthly rent rates would be.

[an]

I agree with opinion that the buyers in the last few years have been very strong buyers with large amount of down payment. I too don’t see price cratering, unless there’s another economic collapse.
As for myself, my payment is much less than the rental of the same property. So, there’s absolutely no reason for me to sell if I buy another.

[Coronita]

I do think home prices in the bay area will correct though once tech goes into decline.

[bearishgurl]

[quote=spdrun]Or banks will quietly make existing loans assumable, as was done in the 1980s.[/quote]

spdrun, lenders cannot do anything other than what is already written in the original note, nor can their successors (other lenders down the line who purchased these notes). Virtually zero conventional loans made since about 2002 had any assumability provisions in them.

In the era you are referring to, mortgage loans already had assumability provisions and instructions written into them. Virtually all mortgage loans made in the last 14-15 years have alienation clauses built into them (due on sale/refinance clauses).

If interest rates rose, lenders could begin to OFFER assumable loans again (to keep within their portfolios), but those would be new (purchase-money or refinance) loans. However, I don’t see this taking place unless fixed mortgage rates soar past 10%.

And I don’t see mortgages with assumability provisions offered except to the most worthy borrowers. It is far easier and less headache for a Big Bank, mortgage bank or servicer to (immediately or within a year or two of origination) sell a mortgage they originated than to keep it in their portfolio.

[bearishgurl]

My monthly PITI outlay is currently about 68% of what I could get for monthly rent and over half of it is applied to the principle.

[spdrun]

[quote=bearishgurl][quote=spdrun]Or banks will quietly make existing loans assumable, as was done in the 1980s.[/quote]

spdrun, lenders cannot do anything other than what is already written in the original note, nor can their successors (other lenders down the line who purchased these notes). Virtually zero conventional loans made since about 2002 had any assumability provisions in them. [/quote]

Sure they can. It’s called a loan modification. Principal modifications are frowned upon. But any other term is fair game with the consent of the mortgagee.

[bearishgurl]

[quote=flu]I do think home prices in the bay area will correct though once tech goes into decline.[/quote]

I saw your thread thread this morning which turned into a “bay area” discussion.

http://piggington.com/damn_these_low_quality_tract_homes

I see only certain parts of the bay area eventually falling in price but it will NOT be the uber-established, desirable areas such as SF and Palo Alto, Los Altos, Atherton, etc. It will primarily be the areas where the tech “worker bees” bought into since about 2000 or so.

Since the areas listed above have a preponderance or “old money” and all-cash buyers, I just don’t see them falling in value because these types of buyers will never be desperate to sell. The worker-bees who are laid off will be desperate to sell.

And SF isn’t going to get any cheaper. There is only ONE in the world and its economy is tied to many other industries besides tech. It is also self-contained separate and aside from SM and SC counties.

[spdrun]

SF will decline, too. Not by 50%. Maybe by 10-20%. That was the pattern, even in established parts of NYC, in during the last housing crash.

I’d suspect the effect would be more pronounced in SF than NYC. Unlike NYC, most of the housing stock in SF isn’t co-ops or condos, thus no HOA boards to police what kind of loans people can take.

[Author]

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