Here we go again. Housing bubble. This reminds me of 2005...

[SomethingNew]

Construction prices are over the top outrageous right now.

And prices not coming down anytime soon, will take years back to the new normal.

 

[Dancing Fire]

Make the living room or the dining room into a bedroom. I know people who have done that.

She don't need an extra BR. 3BR is enough since she only have 1 child. She doesn't need to go up stair very often during the day.

 

[MRBXXXFVVS1]

Life is short, she should do what makes her happy, as long as she can afford to! If the housing market is hot where she is, she can negotiate with the buyer of her house for a rent back until she closes on her new house. She can also take advantage of tax free capital gains on this house (and hopefully the next one).

 

[Hera]

Depends on the area of course but I don't think the bubble will burst in So Cal (though it will slow eventually). In my area of San Diego, they aren't building much - a combination of NIMBYS (not in my backyard people who don't want more building in their area) and a reduction is building after the Great Recession.

People now have equity so that means if they are behind in their payments, they can sell rather than foreclose. Most people can do this even if it was recent. I bought in 2018 and my house is now worth 200K more than I spent. We'll see what happens when the 6 mo forbearance ends on people who got it.

A major difference between 2008 and now is that people qualify for their homes. There are more stringent credit terms than in 2004. Plus, in order to by a house right now, you probably can't be the 3.5% down person. These are people with cash flow.

The tide has changed and as more businesses allow their employees to work from home, the home is going to be more important. They are going to go to areas they want to live in. For example, I'm hearing that people are moving from the San Francisco area to San Diego because we're a coastal town that is considered a bargain still.

So, until either people foreclose in a couple of years (I dunno-maybe they hate their house), the people in forbearance sell or the building starts increasing, prices are going to stay high. I think it will stop accelerating in the near future and then it will hold the price.

 

[Dancing Fire]

Life is short, she should do what makes her happy, as long as she can afford to! If the housing market is hot where she is, she can negotiate with the buyer of her house for a rent back until she closes on her new house. She can also take advantage of tax free capital gains on this house (and hopefully the next one).

That's the BIG Q. Her current mortgage is 220K and if she buys a 750K house her mortgage will double, not only her mortgage payment will double she also will be paying more on property tax and insurance.

 

[ForteKitty]

That's the BIG Q. Her current mortgage is 220K and if she buys a 750K house her mortgage will double, not only her mortgage payment will double she also will be paying more on property tax and insurance.

I wouldn't do it, even with a bad knee and I hate stairs. Property tax is for the lifetime of her ownership of that house, and with the SALT cap, she won't be able to deduct the extra. Her prop tax is probably around $6500 now? it'll jump up to $9700+ a year. Not worth it to me.

 

[Dancing Fire]

I wouldn't do it, even with a bad knee and I hate stairs. Property tax is for the lifetime of her ownership of that house, and with the SALT cap, she won't be able to deduct the extra. Her prop tax is probably around $6500 now? it'll jump up to $9700+ a year. Not worth it to me.

I'm not sure...I think is lower than $6500. ..

 

[ForteKitty]

I'm not sure...I think is lower than $6500. ..

It probably is. I calculated 1.29% on 500k but she probably paid much less for her house. $4k increase in prop tax is a lot. Plus insurance.

 

[Dancing Fire]

It probably is. I calculated 1.29% on 500k but she probably paid much less for her house. $4k increase in prop tax is a lot. Plus insurance.

We paid $3400 in property tax for our house. The value of our house is about the same as our daughter's. Would it make any difference since we purchased our house 34 yrs ago?

On second thought ...maybe our house is worth more than 500k in this crazy market.

 

[kenny]

I'm not sure...I think is lower than $6500. ..

I'm pretty sure P tax is public record that you can look it up since you know her address.
Mine is online with a simple Google.
It might even be on websites like Zillow.

 

[ForteKitty]

We paid $3400 in property tax for our house. The value of our house is about the same as our daughter's. Would it make any difference since we purchased our house 34 yrs ago?

On second thought ...maybe our house is worth more than 500k in this crazy market.

Max annual increase is 2% so if you paid a lot less for your house 34 years ago, then prop tax would have been very low and each annual increase would have been tiny. I'd kill to pay $3400 in prop taxes! You said your house is single story and same size as your daughter's so it'd be closer to 750k?

Has she refinanced? We bought in 2012 and we refi'd twice already, no closing cost both times. This time to a 15 year loan. Our monthly payment is close to what our original payment was for a 30 year loan and I'm doubling payments so we can be done in 7 years.

 

[Dancing Fire]

Max annual increase is 2% so if you paid a lot less for your house 34 years ago, then prop tax would have been very low and each annual increase would have been tiny. I'd kill to pay $3400 in prop taxes! You said your house is single story and same size as your daughter's so it'd be closer to 750k?

Has she refinanced? We bought in 2012 and we refi'd twice already, no closing cost both times. This time to a 15 year loan. Our monthly payment is close to what our original payment was for a 30 year loan and I'm doubling payments so we can be done in 7 years.

Yeah we paid $147K for our 2350 sq ft single story home in 1986. Probably worth about 500-530k b/c it needs a big remodeling job.

She haven't re-fi'd yet, since her 30 yr loan is like 3.18%, not really that high, and why bother if she is looking for another house.

 

[ForteKitty]

Yeah we paid $147K for our 2350 sq ft single story home in 1986. Probably worth about 500-530k b/c it needs a big remodeling job.

She haven't re-fi'd yet, since her 30 yr loan is like 3.18%, not really that high, and why bother if she is looking for another house.

We refi'd @ 2% for 15 yr last Aug. It was no-cost to us so why not. I hope to have the house paid off before 48. We did consider getting a slightly larger house, but an extra 500 sq ft will end up increasing prop tax by about $3500-4k since we bought at the bottom of the market. Even if monthly payment doesn't increase much, I couldn't justify the extra prop tax for one extra room that's probably not gonna be used.

Sounds like you can't talk her out of the new house though. 4k extra a year in prop tax is a lot, esp if she isn't even getting extra sq footage out of it. Plus the extra mortgage. She'd get so much more if she invested that money instead.

 

[Lisa Loves Shiny]

Things have definitely changed. There is only one home for sale in my zip code and only 4 houses for sale in the burb next to mine. It looks like people in my neck of the woods are staying put. I checked on Zillow to see the prices of homes that have sold in the last year and they were much higher than a few years back.

 

[nala]

Just found out that a house like mine in my neighborhood was listed at 779 and sold for 870k. Wtf. I paid 300k for mine in 2001 and it will be paid off shortly. I should add that I upgraded to this home bc my first was what I considered my starter home. We kept if for 3 years and sold at profit and used down payment for this upgrade. Best decision ever. I love my house and I can’t imagine having to be unhappy in my home— if there was a possibility to upgrade it—so I can see why your DD is fixated on that idea. It might not make sense to you @Dancing Fire but you don’t have to live in that house for the rest of your life. If it can be fixed with money, it’s not a problem. I recall my mom dissuading me from trading up bc the idea of a starter home for her was foreign, but I’m glad that I went with my gut. It also helped that I didn’t need her financially so there’s that.

 

[Miss Marple]

I’ll go against the grain. There’s something to be said for increased satisfaction in everyday life. We bought a house that we didn’t really like because of the great neighborhood. Remodeling to something that suited us better would have been really expensive.

After 10+ years, we bought a house that suited us much better but doubled our mortgage and property taxes. It’s also more expensive to maintain. 5+ years later and we still enjoy the house very single day and still talk about how much we prefer the new house to the old house.

Financially we would have been better off staying put—and I’d probably have more bling. But it’s hard to quantify the life satisfaction.

Future salary prospects and lifestyle will play a role of course.

 

[Dancing Fire]

It might not make sense to you @Dancing Fire but you don’t have to live in that house for the rest of your life. If it can be fixed with money, it’s not a problem. I recall my mom dissuading me from trading up bc the idea of a starter home for her was foreign, but I’m glad that I went with my gut. It also helped that I didn’t need her financially so there’s that.

It is if she can't afford it.

 

[Missy]

I know things are different now but we were able to buy a "starter" home so to speak and by selling that home we were able to buy our "forever" dream home. It was a great way to build equity and finances by starting with a home we could afford and selling that home years later to afford a larger home where we wanted to be.

We also paid our mortgages off much more quickly than the 30 year mortgage we originally started with by adding to our monthly payments as much as we could - putting it all towards the principal. You save a lot of interest expenses in the long run by doing that.

Generally buying real estate is one of the ways to really increase one's financial health. It is regional however and you have to wait it out at times but generally I think the idea still holds. Buying within your means is a good way to increase your equity.

Since we get great enjoyment from our homes I always look at it (for us) as a worthwhile investment. NO question. But it does involve sacrifice even when we did it. I went without extras for many years to be able to pay off my first mortgage when I was single. And I would do it all over again.

 

[Daisys and Diamonds]

This is why we had to move
ok for me because i really dodnt like Wellington all that much but Gary grew up there and he misses it

Stuff

i.stuff.co.nz

Stuff

i.stuff.co.nz

The average NZ wage is $53 K
i was never even close to that

 

[wildcatz]

I am curious, do you feel the need to help your kids to pay the down payment in order for them to own a house? Or if you are looking for your first home now, do you wish your parents can help?

My kids are only in elementary school, not only I have to worry about college, I have to worry about their future down payment. There should be a 529 alike for home ownership for kids. That'll much more useful than 529.

We didn’t feel that we ‘needed’ to help our daughter buy a house but she and her future husband didn’t want to get married and have kids until they were in a house. We offered to give them a down payment when they got married and boy did they jump on that offer. A year later we have our first grandchild and couldn’t be happier. Family > money in the bank.

 

[Snowdrop13]

I haven’t been in the market for a house for many years, thank goodness, and don’t expect to be for a long time to come! However, where I live, most houses are put on the market for an “offers over” price. In a lively market a closing date is set and you place your bid, highest one wins. When I bought my first flat it cost about 15% over the suggested price. And that was 20 years ago.

However, I’m more upset by the idea that cars that can only do 16 MPG are still being made, let alone driven about.................. Guess lots of folk still don’t believe in the environment.

 

[Daisys and Diamonds]

Did some sums today
Fimally something in our favor
In just over 3 years we have paid off slightly more than the 20% deposit we had from mum's money
and we are not on the very lowest interest rates available since covid, but when our rates were up for renewal by paying the same anount we did manage to cut 7 years off the morgage
We are really happy with that
Thanks goodness we did not over extend ourselves and bought something nicer or in a more upmarket area

In years past i know it took people years to start seeing the principle to reduce but we see it drop every so a lightly every fortnight

Does everywhere in the world have low interest rates right now ?

 

[mom2dolls]

Hubby & I were reading about a couple that bought their dream home here in California, and when the day came to get the keys and have the owner move out, he refuses to leave. With Covid eviction guidelines in place, they are powerless.

They have filed a lawsuit to remove him from the property, again Covid delays. Called the police, nothing they can do.

Can you even imagine?? All grass, flowers, palm trees, vegetation is dying because nothing is being cared for. Everything that drew them to the home is waisting away. The couple scrapped all their life savings, hard money loan to purchase this home.

 

[Daisys and Diamonds]

Hubby & I were reading about a couple that bought their dream home here in California, and when the day came to get the keys and have the owner move out, he refuses to leave. With Covid eviction guidelines in place, they are powerless.

They have filed a lawsuit to remove him from the property, again Covid delays. Called the police, nothing they can do.

Can you even imagine?? All grass, flowers, palm trees, vegetation is dying because nothing is being cared for. Everything that drew them to the home is waisting away. The couple scrapped all their life savings, hard money loan to purchase this home.

That's terrible
I have heard of similar things happening elsewhere over covid

But that's in American
Can't they sue ?

 

[Dancing Fire]

However, I’m more upset by the idea that cars that can only do 16 MPG are still being made, let alone driven about.................. Guess lots of folk still don’t believe in the environment.

Mine is a 2005, so if you are willing to loan me the $$$ for a new car then I'll be happy to help the environment. Please let me know when???, so that I can start looking for a new car...

 

[Elizabeth35]

Depends on the area of course but I don't think the bubble will burst in So Cal (though it will slow eventually). In my area of San Diego, they aren't building much - a combination of NIMBYS (not in my backyard people who don't want more building in their area) and a reduction is building after the Great Recession.

People now have equity so that means if they are behind in their payments, they can sell rather than foreclose. Most people can do this even if it was recent. I bought in 2018 and my house is now worth 200K more than I spent. We'll see what happens when the 6 mo forbearance ends on people who got it.

A major difference between 2008 and now is that people qualify for their homes. There are more stringent credit terms than in 2004. Plus, in order to by a house right now, you probably can't be the 3.5% down person. These are people with cash flow.

The tide has changed and as more businesses allow their employees to work from home, the home is going to be more important. They are going to go to areas they want to live in. For example, I'm hearing that people are moving from the San Francisco area to San Diego because we're a coastal town that is considered a bargain still.

So, until either people foreclose in a couple of years (I dunno-maybe they hate their house), the people in forbearance sell or the building starts increasing, prices are going to stay high. I think it will stop accelerating in the near future and then it will hold the price.

I have to point out--you can absolutely buy with 3.5% down. FHA minimum DP is 3.5%.
We have rentals and flip at the lower end of the market in our area and most of our sales are to FHA buyers. Not only is it 3.5% down payment, frequently they get seller concessions to make part of the 3.5%.
For example, we list a house for $200K (yeah, we are in the Midwest). Buyer makes an offer of $205K with $5K back at closing to cover some of the down payment and closing costs. This is an issue on several fronts. They have no $ to put down and are buying by the skin of their teeth.
And we now have to get our house to appraise out via FHA for an above market price. And--the FHA appraisal 'sticks' to the property for 120 days. So in our example, if FHA appraised the house at $185K, nobody could purchase via FHA for over $185K for 4 months.
Additionally, in the Chicago area there are first time home buyer grants for $7K for DP and closing costs.
So you can literally purchase with almost no money down.
Difference between now and 2007 is that they are fixed rate mortgages and there are no longer no documentation and negative amortization mortgages. More underwriting so you can't get a rental property mortgage in your dogs name.

Edit to add--in SoCal you have I'm sure price limits that exclude 3.5% DP. FHA price limits vary by region.

 

[Hera]

"I have to point out--you can absolutely buy with 3.5% down. FHA minimum DP is 3.5%.
We have rentals and flip at the lower end of the market in our area and most of our sales are to FHA buyers. Not only is it 3.5% down payment, frequently they get seller concessions to make part of the 3.5%.
For example, we list a house for $200K (yeah, we are in the Midwest). Buyer makes an offer of $205K with $5K back at closing to cover some of the down payment and closing costs. This is an issue on several fronts. They have no $ to put down and are buying by the skin of their teeth.
And we now have to get our house to appraise out via FHA for an above market price. And--the FHA appraisal 'sticks' to the property for 120 days. So in our example, if FHA appraised the house at $185K, nobody could purchase via FHA for over $185K for 4 months.
Additionally, in the Chicago area there are first time home buyer grants for $7K for DP and closing costs.
So you can literally purchase with almost no money down.
Difference between now and 2007 is that they are fixed rate mortgages and there are no longer no documentation and negative amortization mortgages. More underwriting so you can't get a rental property mortgage in your dogs name.

Edit to add--in SoCal you have I'm sure price limits that exclude 3.5% DP. FHA price limits vary by region."


Hi, I wasn't saying you CAN'T buy with 3.5% FHA right now, I was saying that the offers accepted right now may be less with 3.5% FHA buyers as they are taking offers from the best candidates with larger down payments. I used to run into this problem when I was just starting out with my 0% VA loan as sellers want the best offers possible, with the most down payment money.

I also was speaking of of my area in SO Ca that is super hot right now. I can tell you right now, that less offers are being taken from FHA and VA buyers at the moment IN MY AREA.

 

[nala]

@Dancing Fire what did your daughter decide?

 

[VRBeauty]

Three words - or is it two? -

in-home elevator.

 

[Dancing Fire]

@Dancing Fire what did your daughter decide?

Haven't heard her talk much about houses lately maybe she'll start looking again since springtime is here now. There should be more homes going up for sale.