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DWCAP
Participant[quote=jimmyle]I only have 1/3 of the formula. And I am an above average saver. I doubt that even 10% of the 20s and 30s crowd meet the criteria.
For example,
30 year old guy making $80K needs $240K nest egg to meet the criteria. Let say he starts working at 23, he needs to save $35K a year while paying down his $20K+ college loan. Impossible.
Unless he bought a house on 0% down in 2002 and sold it in 2006.[/quote]
Add on to that fact that this guy didnt start at 80k when he was 23. He prob started at ~40k, and has been working his way up. So for the first few years he would have to be saving more than his after tax income.
Maybe we should use a real life example and modify the formula so that it is multiplied by 1/3. Meaning a 30 year old making 80k a year needs to have socked away 80k. It wouldnt be easy, but that is atleast in the ballpark of doable.
ParticipantIt is no different than the political threads, if you dont like them, dont read them.
News is slow and unreliable right now, even the most ardent RE pigs are bound to stray.
ParticipantIt is no different than the political threads, if you dont like them, dont read them.
News is slow and unreliable right now, even the most ardent RE pigs are bound to stray.
ParticipantIt is no different than the political threads, if you dont like them, dont read them.
News is slow and unreliable right now, even the most ardent RE pigs are bound to stray.
ParticipantIt is no different than the political threads, if you dont like them, dont read them.
News is slow and unreliable right now, even the most ardent RE pigs are bound to stray.
ParticipantIt is no different than the political threads, if you dont like them, dont read them.
News is slow and unreliable right now, even the most ardent RE pigs are bound to stray.
ParticipantIt isnt 2005, but I seem some simalarities. The BS loans have shifted from Private subprime lenders to Federal Subprime lenders. FHA and Dept of Ag (yah, look it up) loans have replaced the old subprime lenders. 125% LTV, yep. No down payment, Yep. Pressuring appraisers to ‘meet the number’, yep. Artifically low interest rates created by government intervention without regard to the wider costs to the economy, yep. They do a better job avoiding liar loans, but that is prob just a matter of time. Prices are lower now, so the loans prob wont be as bad as the 2006 variety, but that doesnt mean this is a healthy market based on sound lending practices.
It is those unsound lending practices, including the tax credit costing 5-10X the 8k per added house sold, that is keeping housing prices elevated above current fundamentals.Bad lending / economics keeping housing prices higher than fundamental prices dictate, sounds similar to the bubble years to me.
ParticipantIt isnt 2005, but I seem some simalarities. The BS loans have shifted from Private subprime lenders to Federal Subprime lenders. FHA and Dept of Ag (yah, look it up) loans have replaced the old subprime lenders. 125% LTV, yep. No down payment, Yep. Pressuring appraisers to ‘meet the number’, yep. Artifically low interest rates created by government intervention without regard to the wider costs to the economy, yep. They do a better job avoiding liar loans, but that is prob just a matter of time. Prices are lower now, so the loans prob wont be as bad as the 2006 variety, but that doesnt mean this is a healthy market based on sound lending practices.
It is those unsound lending practices, including the tax credit costing 5-10X the 8k per added house sold, that is keeping housing prices elevated above current fundamentals.Bad lending / economics keeping housing prices higher than fundamental prices dictate, sounds similar to the bubble years to me.
ParticipantIt isnt 2005, but I seem some simalarities. The BS loans have shifted from Private subprime lenders to Federal Subprime lenders. FHA and Dept of Ag (yah, look it up) loans have replaced the old subprime lenders. 125% LTV, yep. No down payment, Yep. Pressuring appraisers to ‘meet the number’, yep. Artifically low interest rates created by government intervention without regard to the wider costs to the economy, yep. They do a better job avoiding liar loans, but that is prob just a matter of time. Prices are lower now, so the loans prob wont be as bad as the 2006 variety, but that doesnt mean this is a healthy market based on sound lending practices.
It is those unsound lending practices, including the tax credit costing 5-10X the 8k per added house sold, that is keeping housing prices elevated above current fundamentals.Bad lending / economics keeping housing prices higher than fundamental prices dictate, sounds similar to the bubble years to me.
ParticipantIt isnt 2005, but I seem some simalarities. The BS loans have shifted from Private subprime lenders to Federal Subprime lenders. FHA and Dept of Ag (yah, look it up) loans have replaced the old subprime lenders. 125% LTV, yep. No down payment, Yep. Pressuring appraisers to ‘meet the number’, yep. Artifically low interest rates created by government intervention without regard to the wider costs to the economy, yep. They do a better job avoiding liar loans, but that is prob just a matter of time. Prices are lower now, so the loans prob wont be as bad as the 2006 variety, but that doesnt mean this is a healthy market based on sound lending practices.
It is those unsound lending practices, including the tax credit costing 5-10X the 8k per added house sold, that is keeping housing prices elevated above current fundamentals.Bad lending / economics keeping housing prices higher than fundamental prices dictate, sounds similar to the bubble years to me.
ParticipantIt isnt 2005, but I seem some simalarities. The BS loans have shifted from Private subprime lenders to Federal Subprime lenders. FHA and Dept of Ag (yah, look it up) loans have replaced the old subprime lenders. 125% LTV, yep. No down payment, Yep. Pressuring appraisers to ‘meet the number’, yep. Artifically low interest rates created by government intervention without regard to the wider costs to the economy, yep. They do a better job avoiding liar loans, but that is prob just a matter of time. Prices are lower now, so the loans prob wont be as bad as the 2006 variety, but that doesnt mean this is a healthy market based on sound lending practices.
It is those unsound lending practices, including the tax credit costing 5-10X the 8k per added house sold, that is keeping housing prices elevated above current fundamentals.Bad lending / economics keeping housing prices higher than fundamental prices dictate, sounds similar to the bubble years to me.
Participant[quote=Scarlett]Forgive me for a dumb question, theoretical speculation is great, but why not envision a scenarion in which the rate does go up 2-4%, but guess what, the prices don’t go down nearly as much to make the waiting for higher rate/lower price worth your while? (in which case it would be better to buy now w/ 20% down – not talking large downs). I am just asking, isn’t that a good possibility? Is that a carved in stone rule??
We’ve already seen that the overall prices didn’t fall back to fundamentals (in the areas mentioned by OP) and they are rising yet again. Just a couple % increase in interest rate may slow then down or stop them, but may not lower the price much….in these areas (and 20% down)…. I am just saying….[/quote]
The majority of buyers dont consider price, they consider monthly payment. They find a house that they like (hopefully) at a monthly payment they can swing (hopefully). If rates go up, then payments go up if principal doesnt go down. Simple as that, dumb as that.
Now that isnt a perfectly sliding scale, nothing in RE is. Seasonality, boom/bust, location location location, and a billion other factors pay into it, so it isnt an exact math formula. So you are correct. If the economy was adding jobs and humming along, sales would rise and prop prices too even if interest rates were increasing.
So basically, your suggestion is a possibilty. Not the only one, but one. As always people need to put their money on the table and let the wheel spin, even if your money is sitting on ‘Wait’.
Participant[quote=Scarlett]Forgive me for a dumb question, theoretical speculation is great, but why not envision a scenarion in which the rate does go up 2-4%, but guess what, the prices don’t go down nearly as much to make the waiting for higher rate/lower price worth your while? (in which case it would be better to buy now w/ 20% down – not talking large downs). I am just asking, isn’t that a good possibility? Is that a carved in stone rule??
We’ve already seen that the overall prices didn’t fall back to fundamentals (in the areas mentioned by OP) and they are rising yet again. Just a couple % increase in interest rate may slow then down or stop them, but may not lower the price much….in these areas (and 20% down)…. I am just saying….[/quote]
The majority of buyers dont consider price, they consider monthly payment. They find a house that they like (hopefully) at a monthly payment they can swing (hopefully). If rates go up, then payments go up if principal doesnt go down. Simple as that, dumb as that.
Now that isnt a perfectly sliding scale, nothing in RE is. Seasonality, boom/bust, location location location, and a billion other factors pay into it, so it isnt an exact math formula. So you are correct. If the economy was adding jobs and humming along, sales would rise and prop prices too even if interest rates were increasing.
So basically, your suggestion is a possibilty. Not the only one, but one. As always people need to put their money on the table and let the wheel spin, even if your money is sitting on ‘Wait’.
Participant[quote=Scarlett]Forgive me for a dumb question, theoretical speculation is great, but why not envision a scenarion in which the rate does go up 2-4%, but guess what, the prices don’t go down nearly as much to make the waiting for higher rate/lower price worth your while? (in which case it would be better to buy now w/ 20% down – not talking large downs). I am just asking, isn’t that a good possibility? Is that a carved in stone rule??
We’ve already seen that the overall prices didn’t fall back to fundamentals (in the areas mentioned by OP) and they are rising yet again. Just a couple % increase in interest rate may slow then down or stop them, but may not lower the price much….in these areas (and 20% down)…. I am just saying….[/quote]
The majority of buyers dont consider price, they consider monthly payment. They find a house that they like (hopefully) at a monthly payment they can swing (hopefully). If rates go up, then payments go up if principal doesnt go down. Simple as that, dumb as that.
Now that isnt a perfectly sliding scale, nothing in RE is. Seasonality, boom/bust, location location location, and a billion other factors pay into it, so it isnt an exact math formula. So you are correct. If the economy was adding jobs and humming along, sales would rise and prop prices too even if interest rates were increasing.
So basically, your suggestion is a possibilty. Not the only one, but one. As always people need to put their money on the table and let the wheel spin, even if your money is sitting on ‘Wait’.
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