Of course zero down is wrong. You literally have zero risk, and the lender has ALL the risk. If the property portfolio of the lender drops by 2%, they are suddenly upside down, unable to lend to other buyers, and in violation of banking regulations.
The only reason the GI bill works is because the loans are guaranteed by the credit of the US government.
In reply to frenchyd :
On the money. People should buy homes now rather than wait. If rates do go down refinance rather than sit on the sidelines and watch inflation raise the costs beyond affordability.
So that they can pay a high price AND get a high interest rate? Maybe waiting a bit for the cooling market to drop first would be a better strategy? Especially if you agree with docwyte that current rates are the norm- meaning no refinance to the rescue any time soon?
In reply to SV reX :
Of course zero down is wrong. You literally have zero risk, and the lender has ALL the risk. If the property portfolio of the lender drops by 2%, they are suddenly upside down, unable to lend to other buyers, and in violation of banking regulations.
The only reason the GI bill works is because the loans are guaranteed by the credit of the US government.
Plus it opens up the market to people otherwise unable to qualify, driving up home prices.
pheller said:People will always seek the easiest way to make a profit. If you make it more difficult to make a profit, they'll find other ways of doing so.
How do we make buying existing housing less "easy profit" than building new housing?
What's the end goal here, again?
Because making it artifically profitable to build new housing means that new housing construction will consume a HUGE amount of energy, natural resources, and probably virgin land.
If you are trying for LEED ("green") certification on a project, one of the main ways you can gain points is by renovating existing structures, which contain a gigantic amount of embodied energy that was already used to build them the first time.
That depends on if we believe home prices going up is a result of low rates, or FTHB or primary owner-occupants.
Maybe we put caps on such programs - loans based on whatever the local median income is relative to home prices. In a low wage ($60k household) housing market where the average home sells for $150k, you make $150k the cap on the program. In an area where the median household income is $80k, and the average home sells for $500k, maybe that threshold is much lower. Or maybe the down payment or interest rates vary based on the factors.
With thresholds on a homebuyer incentive program, people might be inclined to lower the prices in order to meet those buyers and have a larger market.
In reply to pheller :
Hahaha!
Are YOU gonna lower the sales price on your home just to be a nice guy?
Duke said:pheller said:People will always seek the easiest way to make a profit. If you make it more difficult to make a profit, they'll find other ways of doing so.
How do we make buying existing housing less "easy profit" than building new housing?
What's the end goal here, again?
Because making it artifically profitable to build new housing means that new housing construction will consume a HUGE amount of energy, natural resources, and probably virgin land.
In my area at least, we need more supply. We're building tons of apartments, but even with that added supply, there is no competition in town. Renters have no negotiating power, rents continue to climb. Even during COVID when our huge local college didn't have classes, rents stayed flat. Apartment owners didn't seem to mind vacancies.
We're expecting a few thousand new apartment units to come online within the next couple of years, but homes, whether they be attached or single family, are lagging. Builders/Developers are building a few demo homes and then waiting for buyers at a fixed rate. Seems like the only folks who can afford new SFH are new residents. There is no "climbing the housing ladder" because the houses that would be cheap are not coming on the market, and if they do, they are still so expensive because when the average SFH price is $500k, a $250k single bedroom condo is considered cheap.
Honestly, having apartments for sale isn't a bad thing either - but when a family has a choice of living in a two bedroom apartment for $2000/month or owning a two-bedroom apartment for $2000/month but years of saving for a down payment, I think many get stuck in the rentals.
Making it artificially more profitable to build new owner-occupied homes would better meet demand, perhaps create an oversupply of rentals, hopefully lowering rental prices, allowing more people to save for homes.
Don't prices need to come down (or wages up) in order for the cycle to start in a positive way?
SV reX said:In reply to pheller :
Hahaha!
Are YOU gonna lower the sales price on your home just to be a nice guy?
If the majority of buyers could afford to buy my house at $400k, but at $450k, the number of buyers drops due to higher market-rate interest, no down payment assistance, etc, then yea, I'd rather sell my house for $400k than not sell it for $450k.
Maybe in some situations, sellers will hold out for the rare person who can afford their home, but if you just lost your job or were offered a new one in a different state, or you just got a good deal on a new house, you're going to offload the old one as quickly as possible.
In reply to pheller :
I'm not aware of anyone, anywhere at this time offloading cheap.
I put my house on the market for $60,000 more than I thought it was worth. On the first day I had 6 viewings and 2 offers. I accepted an all cash offer for $10,000 over my asking price and closed in 2 weeks.
Would I discount MY house? Hell no.
In reply to pheller :
I think I see the disconnect in your premise. It took me 28 pages, but I think I got it now. Correct me if I'm wrong, but you believe a family making the average income should be able to afford the average house. Which makes sense when you hear it. But average income includes a lot of non-home owners. The average house price includes all houses. I'd bet the average income of homeowners is higher than the average income overall. So someone who is a 5 out of 10 on the overall income scale, may only be a 3 among home owners. Expecting them to be able to afford a house that is a 5 is unrealistic.
Also, I'd argue that income alone is not the primary reason why many people don't own homes. In my area at least, it is more expensive to rent than own on a month to month basis- rent is higher than the mortgage paymebt on the same home. Now that doesn't count the down payment and other expenses but- many rental homes are far from entry level homes. The renters could afford to buy a smaller, older home but choose not to. Sort of like leasing a BMW Vs. buying a Toyota.
I would also add that the average US house is FAR more than the average family NEEDS.
Most of us choose to live in a house that is a little better than we actually need.
In reply to Boost_Crazy :
Your point takes us back to my Habitat for Humanity comment earlier...
Not everyone is able to be a homeowner.
I would agree. Not everyone is able to be a homeowner.
Does that mean that people should then be at the mercy of rental agencies who squeeze them for every spare cent?
The role of Habitat is to be a non-profit competitor. But even Habitat can't make a dent in rental prices in some cities. They just can't acquire enough land to create enough units to being a competitor.
Does the government need to get back in the business of creating projects as a means of producing adequate competition for the private sector to reduce rents?
- LAND AVAILABILITY AND LOCAL ZONING ARE THE MAIN OBSTACLES TO SUBSIDIZED HOUSING
- PUBLIC AGENCIES AREN’T DESIGNED TO BE REAL ESTATE DEVELOPERS
- HIGH-QUALITY SUBSIDIZED HOUSING NEEDS A LONG-TERM COMMITMENT, NOT A BRIEF FLIRTATION
- OTHER TYPES OF HOUSING SUBSIDY GIVE TAXPAYERS MORE BANG FOR THEIR BUCK
"If the goal of federal policymakers is to help as many low-income households as possible, then a strategy of newly constructed public housing is perhaps the least effective path. Increasing funds for housing vouchers or for the acquisition and rehabilitation of existing apartments through the National Housing Trust Fund would stretch subsidy dollars to cover many more households more quickly, and often in higher-opportunity neighborhoods. Shoring up the long-term physical and financial viability of existing subsidized properties—such as through HUD’s Rental Assistance Demonstration (RAD) program—would also be more cost effective than new construction."
frenchyd said:Water front will always be more valuable than homes away from the water.
Sounds like someone figured out the Hawaii vs West Virginia issue. Nice job!
In reply to pheller :
Have you ever lived or worked in government subsidized neighborhoods?
I have. I would MUCH rather live on the street. I have never seen one that is not horrible.
In reply to pheller :
I'll ask again (at the risk of being called a dick again for some reason), what have YOU done to try and help the problem in YOUR area? I see plenty of "someone should do something" posts, but not many solutions in 28 pages.
SV reX said:In reply to pheller :
Have you ever lived or worked in government subsidized neighborhoods?
I have. I would MUCH rather live on the street. I have never seen one that is not horrible.
After the third or fourth time patching bullet holes in the same apartment, I never wanted to see HUD or section 8 again. It was great for the company that owned the buildings though. 400 units across 6 buildings, $30/month from the Section 8 tenants, but charging the state more than double what they would a person not on Section 8.
That said, my mom moved into county housing after selling the house. She's the only person in the building paying full price rent, everyone else is on some sort of assistance. On move in day, I went around the apartment, and my only thought was "how is the newly built building, paid for by the county, NOT up to county standards?". I would have been severely reprimanded, if not fired, for leaving repairs the way they left the newly constructed building. Windows with gaps you could see light through, drywall bowed in at every stud, drywall dust and caulking all over the sinks and tubs, sink drain leaked on day one, outlets that didn't work, the list goes on.
Apartments are bad enough, actual houses? It's amazing they done fall over when a truck drives buy.
SV reX said:I would also add that the average US house is FAR more than the average family NEEDS.
Most of us choose to live in a house that is a little better than we actually need.
And many Americans choose to put themselves at the absolute limit of what the bank says they can afford, then any problem causes a PROBLEM....a la 2008.
My previous house and this house (closed Sept 2017), the budget was kept to "What can we afford if one of us loses our job? Become injured? Decides this relationship isn't working out?" My fiance's name isn't on this house (because when she was moving in we hadn't made it to that point yet, even though that was the eventual plan).
The bank pre-approved me for $325k, which is frankly insane. I spent $156k for a completely renovated 1815 sq ft, 3/2/2 home in a quiet, established neighborhood. And I was even a bit uncomfortable with that, even though it was/is far below what's considered acceptable to spend on a home.
I love 0 down payment loans. I finally found a home 2 weeks ago after searching for a year. 0 down and seller is paying closing cost. I did buy some mortgage points cause damn lol
SV reX said:In reply to pheller :
Have you ever lived or worked in government subsidized neighborhoods?
I have. I would MUCH rather live on the street. I have never seen one that is not horrible.
THIS. I grew up in the projects. The last place I'd ever want to raise my kids.
In reply to yupididit :
Congrats man! Garage?
z31maniac said:SV reX said:I would also add that the average US house is FAR more than the average family NEEDS.
Most of us choose to live in a house that is a little better than we actually need.
And many Americans choose to put themselves at the absolute limit of what the bank says they can afford, then any problem causes a PROBLEM....a la 2008.
My previous house and this house (closed Sept 2017), the budget was kept to "What can we afford if one of us loses our job? Become injured? Decides this relationship isn't working out?" My fiance's name isn't on this house (because when she was moving in we hadn't made it to that point yet, even though that was the eventual plan).
The bank pre-approved me for $325k, which is frankly insane. I spent $156k for a completely renovated 1815 sq ft, 3/2/2 home in a quiet, established neighborhood. And I was even a bit uncomfortable with that, even though it was/is far below what's considered acceptable to spend on a home.
You have to follow what your heart tells you to do. If you are always this cautious then you did right.
My dad came from the wrong side of the tracks. But he always reached for the stars. Successful until cancer got him at 48. I followed his example.
The concern about your life changing is legitimate. Change happens. My suggestion is make friends with a local Banker. ( Credit Union) They can do a lot for you that makes business sense to them as well has helps you out.
Borrow money for car loans, open a credit card, have a checking account and maybe a savings account. Deposit your check there etc. but always deal with that person.
Boost_Crazy said:In reply to pheller :
I think I see the disconnect in your premise. It took me 28 pages, but I think I got it now. Correct me if I'm wrong, but you believe a family making the average income should be able to afford the average house. Which makes sense when you hear it. But average income includes a lot of non-home owners. The average house price includes all houses. I'd bet the average income of homeowners is higher than the average income overall. So someone who is a 5 out of 10 on the overall income scale, may only be a 3 among home owners. Expecting them to be able to afford a house that is a 5 is unrealistic.
Also, I'd argue that income alone is not the primary reason why many people don't own homes. In my area at least, it is more expensive to rent than own on a month to month basis- rent is higher than the mortgage paymebt on the same home. Now that doesn't count the down payment and other expenses but- many rental homes are far from entry level homes. The renters could afford to buy a smaller, older home but choose not to. Sort of like leasing a BMW Vs. buying a Toyota.
Boost crazy,
More than a few renters can't buy. They've got bad credit, judgements, no down payment, not going to remain in the area long enough . Maybe they are a contractor employee or temporary hire.
Maybe they are commitment phobic and the idea of signing papers for over an hour not really knowing or understanding what you are signing terrifies them.
Whatever. Others are focused on the short term. This apartment is stylish and in the happening part of town.
But whatever the reason they rent.
In reply to yupididit :
Congratulations! Well done!
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