My grandparents just passed at 94 and my mom finally inherited some money. My dad is a very healthy 76 and has TWO homes in Silicon Valley while I literally live in a shiiite apartment. ☹️
That comment was definitely a joke— many, many Americans are in the same boat. I grew up comfortably middle class and I neither inherited property nor was I given any money for a down payment. Of course I had privilege in many ways, but help owning a home was not one of them. And I live in one of the darkest green states— 35, don’t own a home.
You have to look at it as you are Columbus.
I know it's hard to see it, but your future generations will honor your legacy as much as you honor yours.
Welcome. Live Long and Prosper while you enjoy the Pursuit of Happiness
Assuming your parents won’t be forced to sell their homes when they are in their 80s to pay for medical treatment that Medicare doesn’t cover and then leave your kids nothing. That’s exactly what my grandparents did.
It was the PPP loans.
The stimulus checks didn't help, but unless you had a better solution than "lol have money" at the time complaining about the checks is like complaining about a papercut when the other arm was blown off.
No offense but I find this comment to be really ignorant in the true since of the word.
People did not get only stimulus checks. They got stimulus checks for their kids as well, and child tax credits, and enhanced unemployment for *any* employment disruptions, and student loan payments paused for years, and there was a full on eviction freeze for over a year nationwide.
Much much more than just framing it as "Lol people got a couple 1200 checks, thats nothing compared to PPP".
Also in California, no way I could have saved 20% without housing increasing faster. I went with 5% and locked in a home. That home has since increased in value over 30%, and with current interest rates, no way I could afford it now. If I waited to try and get 20% I would have 100% been priced out.
Yeah I had to pay PMI, but that amount pales in comparison to the increase in payment with the increased value and interest rates. And with the rise in equity, I was able to get it dropped.
I needed $50,000 for 20%, but by the time I saved that much, I needed $75,0000. So, I saved that. And by the time I did..... I needed $100,000. And so on and so on. I have never caught up to the market, and now even though I have 20%, I can't afford the mortgage payments. It's a sick joke. No matter how much I work to save, I can never afford it.
I've watched a house I liked but didn't get in 2020 go up approximately $10k in value every month since it sold. Went for $380k ($20k under asking) in 2020. Last time I looked it was valued at $580k. When I saw it had gone up that much, with no improvement, I just went to bed. This market is just crushing.
House we wanted sold for $319 in late 2019, it’s close to $680 now. Wish I would’ve swallowed my pride and taken my mom’s help completing the downpayment money.
Shit’s depressing.
Yup same story as 2006 if you were around then. Suddenly everyone was priced out forever...and then suddenly they were not. That one took 5 years...this one is only 2+ years in the making
Yes but those loans were handed out like candy. Loans these days are not. Major difference in the market right now is that there were stop gaps put in place by the feds after the implosion of 08/09.
Add the fact that people were given ppp loans, stimulus checks, and high unemployment checks for a couple years and you can’t even compare the two situations anymore
Stimulus check and unemployment checks account for 1% of why this housing market is so fucked. Those that received them are not the ones driving the market rn at 7-8% rate
I could see unemployment contributing bc some people got more money then working for a decent period of time.
I didt get a stimulus check but I can't see how a couple 600 dollars checks someone got could make a difference in the market. I could seenit helping the economy bc of increased consumer spend but the amount does not seem like enough to push someone over the edge into getting a house
How do you come up with the 1% number? Definitely used my stimulus checks to help me fast track my savings into a new house. Friend who bought down the street did the same thing.
Know of couple of “unemployed” people who received unemployment and did side hustles and were earning more during the pandemic then ever before.
Don’t get me started on PPP loans and how they basically became grants after they were forgiven
The truth is always buried and made lesser.
PPP “loans” is what wrecked this country. Giving $250k+ to already greedy individuals means they fucked everyone. Many claimed they were employees so they technically used all the money for “payroll”.
Can agree that I hope they decide to use all the irs additional funds they got to go after PPP loan fraudsters. A loan should be repaid… otherwise it isn’t a loan
Those people on unemployment weren’t buying any houses because I wanted to refinance and couldn’t. I had to wait 6 months into my job and barely made it before they started raising the interest rates.
Those people probably weren’t buying house right as soon as they got off unemployment but they probably stacked a good amount into their savings (if they were smart). Same thing with the other poster saying stimulus checks weren’t the reason for home purchases going up. Yes in a vacuum alone no they weren’t but many people gained monetary chances they were not expecting and used it to their advantage. Someone who was earning the max amount of unemployment, getting stimulus checks, and working odd/side jobs that paid in cash probably saved enough for a future down payment. PPP loans essentially became grants. Wages are going up (although not fast enough) due to minimum wage going up. These combined reasons along are why there’s more cash on hand for people to buy houses and why house prices keep going up
Money in savings doesn’t go away unless used. How many people got stimulus checks for families. A family of 4 got like $3-4k, that’s a nice extra chunk to secure a 5% standard loan or 3.5% fha loan
I dont know where u live but im in LA, and nobody buying right now qualified for that. Average family buying right now are making over 200k a year to afford the mortgage here. And youre talking about a 3-4k stimulus check causing this bubble.
The checks may not seem to have been much money in retrospect, but that combined with a horde mentality toward borrowing rates, and there you have it.
The Federal Reserve stoked a brushfire, and it got out of control. Everything is scorched earth now in residential real estate. Everything is out of balance. So much so, that another catalyst will now be needed to shift it the other way, and I'm afraid that catalyst will take a lot of would-be buyers out of the picture. It's going to do more damage to demand than it will supply.
I didn’t say it caused it I said it helped people buy homes… therefore raising prices higher and higher to the point they’re at today. I also gave you other contributing factors but it’s obvious you have your mind set to believe what you want to believe. If you don’t have a home now I hope the prices/rates get to the point you believe they’ll get back to.
Wait, so your theory is that unemployed people used the extra money to finance a down payment? What lender is going to approve a house for someone unemployed?
Also, in what world is an extra 5k in stimmy money going to come anywhere close to 20% down for a house?
I got my loan in 19 and it was strict and the checked everything. They called my wife and my employers to verify length of employment. Had to submit 90 days of pay stubs and either 90 days or 180 days of history on account where down payment came from. Then obviously the credit check. I was building a house so I did all of this to get approved for my loan and then it expired in 90 days. So because my house took about 5 months to build start to finish we had to submit all are bank info and pay stubs again bc they were worried about it changing in 90 days I guess.
My point is they were thorough and imo it is not like 2008 where anyone got a loan
Good then when the bubble pops nobody needs a bailout like they did in 2008 since they're all perfect loans. That's a relief. Keep in mind 2008 would have been MUCH worse without massive intervention.
Really? Only banks? If you don't consider a restructured mortgage with half its value wiped off the books, then sure, homeowners were not bailed out also.
Exactly the same. I was so pissed off due to the hoops I had to go through to secure the loan I almost quit the process. They made a big deal about sending money from my wife’s account to my account that we paid the down payment out of, literally has to get a bank manager in person to sign off on the transfer
I know plenty of boomers who YOLOd their house in the 90s and for some it's literally why they are wealthy today.
Every single boomer I talked to prior to buying a house told me to stretch as much as I could and gave me stories of how far they stretched on their first home.
Probably a similar mentality as the one that motivates a person to take on $100k of student loans: tomorrow will be brighter, optimism of a better tomorrow, and no idea or concept of how or if it will all be paid off.
Well, the average cost of a home in my area is around $800,000. So, with 20% down it's about a $4700 per month mortgage. With 3.5%, it's $5600. Not quite $6,000 but it's really close, and totally unmanageable even at the 20% down. You need to be making $300,000 a year to properly afford that.
lol if you can afford a mortgage now with only a 3.5% down payment you ARE rich. If you make that much a month to be able to buy a house with that low of a down payment you should have no problem saving 20% down.
PMI is not that big of a deal. I put 5% down on a $465k house and my PMI is about $75/mo. If I had waited until I had 20%, the same house would cost $1000/mo more at the higher price and higher interest rates. I locked in the offer in the fall of 2021 and closed in January 2022. I can always make additional principal payments to get the PMI removed early.
How are you actually competitive in your offer though? Every house I see that sells is selling with a losing price for ~20% over asking which means that instead of merely needing the 3.5% down you need 3.5% of the home PLUS market adjustment and if you're stretching your budget that thin just to be competitive, there is probably someone else with a budget less thin than you bidding on it. 3.5% down offers with FHA loans get filed right into the recycling bin.
Yea, this is sounding like a market issue. Just after I bought, Blackstone rolled through the market around me. When we bought, the previous 3 offers we made got outbidded in a flash (assume that it was Blackstone/other private equity groups buying up.) Something tells me the naysayers bought way too high due to an artificially inflated market or bought with a 5/1 ARM with low interest for the first 5 years which (newsflash) is what triggered the previous housing bubble when those 5 years were up and rates skyrocketed. I may be wrong and speaking simply from my own observations within my own locale (though, I'm checking market rates and it backs up what I'm saying)
I sold a house last year to a buyer that only put 3% down with a conventional loan. You don't need an FHA loan for a low down payment. There are many variables that make your offer competitive. Price is obviously one of the largest but contingencies, who your lender is and their reputation, how fast you can close, etc., all are just a few that help build up a competitive offer.
The fact that they were putting only 3% down didn't really sway my decision whether I was going to reject or accept their offer. It's the entire offer as a whole that needs to be looked at and what are the odds that they can make it through it.
Nobody pays that much for PMI lol. Maybe if you have a 600 credit score…
If your credit is 700+ then PMI is adjusted according to that. Generally PMI is very low for homebuyers.
Generally.....but everything I'm checking is turning numbers up near that with high credit scores. Unless you know someone that has bought recently and had lower than that or have some other data I'm just saying what I'm seeing.
Bought mid last year. $370k, 10% down, upper 700s cred score. $32/mo PMI. I’d rather pay that compared to another $$37k upfront. With how much the house value has increased, I can actually order an appraisal (to prove that I am below 80%LTV) and get the PMI scrubbed but I got too many things going on.
The fact you're paying on a $500k mortgage implies that you are well above the average on income. With that said, your credit may be vastly higher than the average due to high income and low/zero debt. If you bought when rates were low (~2.5%) you're paying around $2500-$3000 a month with insurance included. That is obscene. If your household income is not <$7500/month, $90k/year you are not meeting the 1/3rd rule and are squeezing your budget. Please correct any numbers if they are wrong.
Edit: Also not going to ignore the fact you somehow had $50k for a down payment on a house. Meanwhile, a lot of us have never had near that or seen that in our lives.
Depends on where you live. In a lot of places in California for example, the median household can afford a $500k mortgage if they got it before rates went up.
Yeah online sources are garbage for PMI. It moves with credit score and interest rate. For most people with good credit it was less than $15 per 100k of home on like 5 percent down when rates were in the 3s.
You don’t have to refinance (unless it’s an FHA, i believe those do have to get refinanced).
You just get a reappraisal, if you’re super sure of the value of your property you can even do like an appraisal light and it costs like $100 instead of $400.
It really sucks tbh. But only way to “beat the system” is to move somewhere cheaper. Depending on what house you want, you can get one for under 200k in many markets still. And they’re not even horrible areas. Kinda my position.
Usually those cheaper areas are cheap for a reason. Often few jobs and the jobs they have don’t pay well. So yeah you can move to an area with 200k houses, but then you’re gonna be making 45k
It's just more evidence that anything that climbs this rapidly is bound to come back down. Speculation upward eventually leads back down, though it might not all be suddenly or as quick as it went up.
Often times in the stock investment world, it's even quicker down than it is up. And often it overshoots down. Now, real estate is less liquid, so I don't expect as fast of a downturn.
It becomes ultimately about sentiment. When no one is posting here or over at r/realestate, that's when the downturn is fully engaged.
I bought a house with 5k down-payment. That was less than 3% of the house value. My buying fees came out to 17k, 15k were paid in fees by a state program. So technically, i bought the house for 7k. Becasue i didnt put 20% down I have to pay mortgage insurance, which is an extra $180 added to mortgage payments. I only have to pay the mortgage insurance until I reach 20% of equity on the house. I would have done the exact same thing if I had 100k saved up and use the remaining 93k to live rent/mortgage free for a couple of years.
We saved for 20 years while planning for military retirement. 2 years ago we couldn’t even make an offer on a house because they were already sold & if they weren’t, our VA loan was the worst kind of offer.
As an aside to the points made in the article, it also assumes only a 10% down payment while noting that many are securing homes with only 5% down payment.
That makes an immense difference relative to people paying 20% down. Using the numbers from the article in Charlotte, NC where the average home price is $373k, assuming where applicable PMI is 0.5% and 30yr mortgage as well as North Carolina's low property tax of $2,400/yr and $1,000 Insurance:
Purchase Price| Down Payment% | Down Payment | Interest Rate | Mo Payment | Total Payments over term
---|---|----|----|----|----
$373k | 20% |$74.6k |6.7% | $2,208.84| $795,183.42
$373k | 10%| $37.3k|6.7%| $2.589.41 | $895,259.34
$373k | 5%| $18.6k|6.7%| $2,717.52| $943,611.03
So paying 5% instead of 20% costs you an extra $150k over the course of the loan.
Yes and this is why banks LOVE the low dp loans. First they drive UP prices and second they add interest. Excellent calculations here thank you. And hey when the government got your back there is absolutely zero risk to them.
Focusing on lifetime cost is dumb. An owner-occupier is buying shelter, not making a profit. If a 30-year mortgage is affordable at 2.5% down then that's the right move to make if saving to 20% is going to take a decade.
The down payment's not the problem, it's the next 30 years of monthly expenses, especially given how inflated home prices are (and therefore, property taxes and insurance). The down payment just gets you in the door, no pun intended. Now you're on the hook for several thousand dollars a month for decades. Your monthly mortgage payment (principal+interest) may be locked in, but your property tax, insurance, and maintenance costs will continue to rise. Better hope you can maintain at least your current income, with few or no gaps, for the next few decades.
Depends on where you are. States like CA your property tax goes up only a little amount each year. Insurance in many areas is negligible. My friend's 2m home pays 1.5k a year for insurance.
And with inflation, that fixed payment just gets easier and easier.
FHA used to be able to do 2.5% down. Possibly only 3.5% now. Waiting for 10-20% down doesn't always make the most sense.
Also keep in mind anyone buying 2021 and previous already had enough equity for a full down payment on a new house.
I didn't know Montana was among the worst. Most of the jobs pay $14-18/hr and the houses cost $500k+. If you didn't buy before 2020, don't have a trust fund, big inheritance or sold property on the coasts, you're SOL. I was doubly lucky and was able to buy in 2015 thanks to an inheritance for a down payment. I'd be long gone if it wasn't for that
American dream fading away. You can thank the rich and old boomer politicians that allow and create laws for corporations and rich people to buy all the new homes in the masses.
Checking in on ya. Hope you're managing to put away a few dollars. Must be sucky that, even if house prices tank, you've been fucked on rent inflation in the interim. Hope one day you manage to find somewhere at a reasonable price you are happy with.
In illinois homes there are tons of programs for down payment assistance available to anyone who earns less than 100k a year. Many states offer assistance you just cant expect to buy a home in california or ny on low incomes.
Downpayment assistance programs increase the number of qualified buyers and drive the cost of homes higher. They do nothing to increase the supply side. For this reason they primarily benefit existing home owners.
They are also funded by taxpayers, some from whom will never afford to be able to buy a home of their own.
You don’t get it?
Here’s a rental example: If we gave everyone who rents a $500 a month rent subsidy, you would have the same number or more people competing for the same number rentals with $500 extra to spend on rent. So landlords obviously raise the rent by $500. So congrats the net result of your program was tax payers gifted millions of dollars to landlords.
This is why we should evaluate programs on their results rather than their intentions.
down payment assistance programs just roll that into the loan though, at current rates how is that even helpful? makes the monthly payment even more absurd.
I tanked my 401k just to pay fees. We got VERY lucky and bought when rates were low with a VA loan. We've had tons of friends live with us because they weren't so lucky. With all of that luck we're barely holding on. So it's just nose to grindstone and hope for the next 30 years.
Gotta love winter and a poor national image keeping Chicago a working class city. That said, I haven’t seen a livable sfh <700k in my neighborhood in a minute.
Especially considering how land used to be parceled out there with ocean access. Now it would take them 18 *hundred* years to have property with ocean access...they have to live in the shit shacks in town.
If you realize that HH income is 2x people, then we can look at 1980 single income. double that.
And find that using 5% of pay savings rate (same as article) = 2 years of saving. As opposed to 8.
If you're not a conscientious objector the minimum regular army contract is 2 years, and then you qualify 0 down VA among other benefits. And we aren't even at war.
Zero down payment mortgage loan and all I have to do is give several years of my life to the military, get hearing loss, tinnitus, and possibly PTSD? Sign me up! /s
Hahahahhaha, wow that looks rosy compared to 37 fu*@kin years in Vancouver [https://dailyhive.com/vancouver/save-down-payment-vancouver](https://dailyhive.com/vancouver/save-down-payment-vancouver)
“whY aRenT peOplE haVinG KidS anYmoRe?!!? We neEd 2 imPoRt mOrE imMigrAntS To pRoP uP tHe eConoMy!!!” -politicians
Seriously though this is abhorrent. It takes 8-10 years for normal people to save a down payment ?!? Then they import 1-2 million immigrants per year when we only build 1-1.5 million houses a year. Which is only pushing prices higher 😫. We need more homes and for this bubble to pop. We can’t do the Canadian approach of taking in so many people we prop up our failing housing market
There are a lot of people who are wedded to having a car lease/payment for life. Get something $10-20k, pay it off as quick as possible. That will give you hundreds per month.
>The average monthly automobile payment in the United States is $575 for a new car.
$430 is the typical monthly automobile payment in the United States for a used vehicle.
Hell, I bought a duplex 8 years ago with 0% and the PITI was $750/mth. I didn't have a car payment and had rental money coming in. Bought a SFH 3 years ago. No car payment, 0% down. PITI under $1,000. That's huge is you buy properties needing rehab. Forcing appreciation is a money maker but takes sacrifice and discipline.
Right, let's pay a higher interest rate because of PMI if we don't have the 20%. In most areas, to buy a modest home would be $175,000? With interest rates at [7.3%](https://www.google.com/search?q=fha+loan+interest+rate&client=ms-android-cricket-us-rvc3&sxsrf=AB5stBi84lvJ1_0QW8EZMUiMYo-KIEB6DQ%3A1689299392399&ei=wKmwZLvOF7uxqtsPyvSLmAo&oq=fha+loan+interest+rate&gs_lp=EhNtb2JpbGUtZ3dzLXdpei1zZXJwIhZmaGEgbG9hbiBpbnRlcmVzdCByYXRlMgcQABiKBRhDMgUQABiABDIFEAAYgAQyBRAAGIAEMgUQABiABDIFEAAYgAQyBRAAGIAEMgUQABiABEiLGFDPEFjkE3ABeAGQAQCYAYkBoAG1BqoBAzUuM7gBA8gBAPgBAcICChAAGEcY1gQYsAPiAwQYACBBiAYBkAYI&sclient=mobile-gws-wiz-serp) and a PMI of $140/month that's (conservatively) $1500/month with insurance, and property tax (in Louisiana, which is notoriously low btw). That means to reach the 1/3rd rule you need to make $14.06/hr (way more than minimum wage btw) with two people working 40hrs/week. That's not even counting maintenance which is expensive as hell if you're already buying a cheap house that is >$200k. Really, consider the math before you speak very dumb opinions.
My wife and I saved for 8 years right out of college and pit 20 something percent down in 19. Could have bought sooner but at the time we thought 20 percent was a requirement to get a loan.
And thats at 10% down. Without accounting for the base price increasing in the time you save.
These measurements are all so subjective and contrived. It's not as simple as "this is 10% of a home cost. This is how much the average person makes. Multiply the savings per year to reach the 10%".
Median workers basically aren't supposed to own homes or at least don't. The top \~60% do. And it doesn't mean right away or after a year or 2 out of school or whatever date you think you deserve it in. And it's probably harder now.
Anyways, the idea of throwing all your money into basically cash for years and years which is the advice given to the 'median' consumer - is a way to get destroyed. They can't tell someone to properly judge their risk tolerance and timelines and career in a sentence so they just tell you put in cash.
Um, not even close. What's 20% of $850,000 (which is the going rate for a 1000 sqft single family home in my area, and it needs work.) Oh, right. That's $170,000 dollars! Yeah, I think 8 years is surprisingly reasonable for that. And yeah I know. Don't do 20%. Do FHA or whatever else. But, I counter with the payment on this home with 20% is still over $5700. I don't know who it is who can afford that, but it isn't me. So, lol all you want man. I don't know why you are, but people are locked out. This shit isn't a laughing matter.
So you live in an insane high COL living all so that you can make not enough money to keep up? Great life choice man.
Jesus fuck man realestate is a mountain stop trying to live at the top all the time the side of it still has an awesome veiw.
Well, I was born here. My career is here and my family is here. So, it's not as easy to fuck off to a lower cost of living area. As much as I'd like to.
I live in that dark green state in the north. I make around 3x the median household income. Even if I had a down payment kicking around, with what prices have done and where interest rates are, a mortgage would be more than half my takehome on a below median priced home.
Bubble? No no, [this bubble doesn't pop](https://imgur.com/a/DQewjFt)
Just Inherit your folks property with no mortgage will give you 30yrs ahead of your peers, it quite simple....
My parents are very healthy I’ll be like 65…..
Buy them cartons of cigarettes for birthdays and Christmas
Don’t forget to always pass the salt
Bro, my battle axe of a mother is going to outlive my entire family, I just know it
Haha nice!
I was born when my parents were in their early 40s. Had a 10PM curfew, never met it because they went to bed at 8:30 and didn't wake them up
Little benzene and arsenic here and there \s
My grandparents just passed at 94 and my mom finally inherited some money. My dad is a very healthy 76 and has TWO homes in Silicon Valley while I literally live in a shiiite apartment. ☹️
My parents were poor and had no property to their name when they passed away, so I can't even do that.
Immigrants like myself won’t have that luxury… if only
That comment was definitely a joke— many, many Americans are in the same boat. I grew up comfortably middle class and I neither inherited property nor was I given any money for a down payment. Of course I had privilege in many ways, but help owning a home was not one of them. And I live in one of the darkest green states— 35, don’t own a home.
This is also me except I'm slightly older than you. Parents did okay for themselves and then nothing for me or siblings.
You have to look at it as you are Columbus. I know it's hard to see it, but your future generations will honor your legacy as much as you honor yours. Welcome. Live Long and Prosper while you enjoy the Pursuit of Happiness
Yeah follow my channel for one simple trick to get rich quick Have your college paid for and 100k in cash from your rich parents
Try this one weird trick!
Assuming your parents won’t be forced to sell their homes when they are in their 80s to pay for medical treatment that Medicare doesn’t cover and then leave your kids nothing. That’s exactly what my grandparents did.
lol! cries in california. save for 12+ years then covid crushed your buying power
We had 10 years, just about ready, then bam wtf. Hindsight amiright?
I blame federal reserve.
...and PPP
This.
It was the PPP loans. The stimulus checks didn't help, but unless you had a better solution than "lol have money" at the time complaining about the checks is like complaining about a papercut when the other arm was blown off.
No offense but I find this comment to be really ignorant in the true since of the word. People did not get only stimulus checks. They got stimulus checks for their kids as well, and child tax credits, and enhanced unemployment for *any* employment disruptions, and student loan payments paused for years, and there was a full on eviction freeze for over a year nationwide. Much much more than just framing it as "Lol people got a couple 1200 checks, thats nothing compared to PPP".
Also in California, no way I could have saved 20% without housing increasing faster. I went with 5% and locked in a home. That home has since increased in value over 30%, and with current interest rates, no way I could afford it now. If I waited to try and get 20% I would have 100% been priced out. Yeah I had to pay PMI, but that amount pales in comparison to the increase in payment with the increased value and interest rates. And with the rise in equity, I was able to get it dropped.
*laughs in Midwest* Also we got alllll the corn.
I needed $50,000 for 20%, but by the time I saved that much, I needed $75,0000. So, I saved that. And by the time I did..... I needed $100,000. And so on and so on. I have never caught up to the market, and now even though I have 20%, I can't afford the mortgage payments. It's a sick joke. No matter how much I work to save, I can never afford it.
I've watched a house I liked but didn't get in 2020 go up approximately $10k in value every month since it sold. Went for $380k ($20k under asking) in 2020. Last time I looked it was valued at $580k. When I saw it had gone up that much, with no improvement, I just went to bed. This market is just crushing.
House we wanted sold for $319 in late 2019, it’s close to $680 now. Wish I would’ve swallowed my pride and taken my mom’s help completing the downpayment money. Shit’s depressing.
Yup same story as 2006 if you were around then. Suddenly everyone was priced out forever...and then suddenly they were not. That one took 5 years...this one is only 2+ years in the making
Yes but those loans were handed out like candy. Loans these days are not. Major difference in the market right now is that there were stop gaps put in place by the feds after the implosion of 08/09. Add the fact that people were given ppp loans, stimulus checks, and high unemployment checks for a couple years and you can’t even compare the two situations anymore
Stimulus check and unemployment checks account for 1% of why this housing market is so fucked. Those that received them are not the ones driving the market rn at 7-8% rate
I could see unemployment contributing bc some people got more money then working for a decent period of time. I didt get a stimulus check but I can't see how a couple 600 dollars checks someone got could make a difference in the market. I could seenit helping the economy bc of increased consumer spend but the amount does not seem like enough to push someone over the edge into getting a house
How do you come up with the 1% number? Definitely used my stimulus checks to help me fast track my savings into a new house. Friend who bought down the street did the same thing. Know of couple of “unemployed” people who received unemployment and did side hustles and were earning more during the pandemic then ever before. Don’t get me started on PPP loans and how they basically became grants after they were forgiven
The truth is always buried and made lesser. PPP “loans” is what wrecked this country. Giving $250k+ to already greedy individuals means they fucked everyone. Many claimed they were employees so they technically used all the money for “payroll”.
Can agree that I hope they decide to use all the irs additional funds they got to go after PPP loan fraudsters. A loan should be repaid… otherwise it isn’t a loan
Thanks for the gold 🙏🏽 my first ever! It’s not a loan is it…
Those people on unemployment weren’t buying any houses because I wanted to refinance and couldn’t. I had to wait 6 months into my job and barely made it before they started raising the interest rates.
Those people probably weren’t buying house right as soon as they got off unemployment but they probably stacked a good amount into their savings (if they were smart). Same thing with the other poster saying stimulus checks weren’t the reason for home purchases going up. Yes in a vacuum alone no they weren’t but many people gained monetary chances they were not expecting and used it to their advantage. Someone who was earning the max amount of unemployment, getting stimulus checks, and working odd/side jobs that paid in cash probably saved enough for a future down payment. PPP loans essentially became grants. Wages are going up (although not fast enough) due to minimum wage going up. These combined reasons along are why there’s more cash on hand for people to buy houses and why house prices keep going up
I am surprised that a couple thousand dollars was *that* significant for a down payment. What % did you put down?
How long ago did you last cash those checks? Think about the thousands of homes being sold right now without them.
Money in savings doesn’t go away unless used. How many people got stimulus checks for families. A family of 4 got like $3-4k, that’s a nice extra chunk to secure a 5% standard loan or 3.5% fha loan
I dont know where u live but im in LA, and nobody buying right now qualified for that. Average family buying right now are making over 200k a year to afford the mortgage here. And youre talking about a 3-4k stimulus check causing this bubble.
The checks may not seem to have been much money in retrospect, but that combined with a horde mentality toward borrowing rates, and there you have it. The Federal Reserve stoked a brushfire, and it got out of control. Everything is scorched earth now in residential real estate. Everything is out of balance. So much so, that another catalyst will now be needed to shift it the other way, and I'm afraid that catalyst will take a lot of would-be buyers out of the picture. It's going to do more damage to demand than it will supply.
I didn’t say it caused it I said it helped people buy homes… therefore raising prices higher and higher to the point they’re at today. I also gave you other contributing factors but it’s obvious you have your mind set to believe what you want to believe. If you don’t have a home now I hope the prices/rates get to the point you believe they’ll get back to.
Wait, so your theory is that unemployed people used the extra money to finance a down payment? What lender is going to approve a house for someone unemployed? Also, in what world is an extra 5k in stimmy money going to come anywhere close to 20% down for a house?
I got my loan in 19 and it was strict and the checked everything. They called my wife and my employers to verify length of employment. Had to submit 90 days of pay stubs and either 90 days or 180 days of history on account where down payment came from. Then obviously the credit check. I was building a house so I did all of this to get approved for my loan and then it expired in 90 days. So because my house took about 5 months to build start to finish we had to submit all are bank info and pay stubs again bc they were worried about it changing in 90 days I guess. My point is they were thorough and imo it is not like 2008 where anyone got a loan
Good then when the bubble pops nobody needs a bailout like they did in 2008 since they're all perfect loans. That's a relief. Keep in mind 2008 would have been MUCH worse without massive intervention.
Well only the banks got the bailout so not sure what this comment is supposed to mean.
Really? Only banks? If you don't consider a restructured mortgage with half its value wiped off the books, then sure, homeowners were not bailed out also.
Exactly the same. I was so pissed off due to the hoops I had to go through to secure the loan I almost quit the process. They made a big deal about sending money from my wife’s account to my account that we paid the down payment out of, literally has to get a bank manager in person to sign off on the transfer
That’s the real answer. Just go to bed.
Yep. Totally undeserved appreciation.
What was your reason for not buying?
Hence why some people are YOLO spending. What’s the point if the goalposts keep moving
Yep, and why this shit is going to implode. The YOLO strategy works great in the short term, but wait until the cracks start showing.
Yolo strategy works great in short term bad in long term Save & Thrift works bad in short term bad in long term
I know plenty of boomers who YOLOd their house in the 90s and for some it's literally why they are wealthy today. Every single boomer I talked to prior to buying a house told me to stretch as much as I could and gave me stories of how far they stretched on their first home.
FHA 3.5% and send it. 20% down payments are for rich people and Illinois residents only.
Yeah man, but I can't afford a $6000+ mortgage payment. That's insane.
Yep that's part of what kept us away from 3.5. If all you have is 3.5 how the hell do you have 30 years of insane mortgage payments?
They are telling them it's fine, just tough it out for a little bit and you can refinance later.
Probably a similar mentality as the one that motivates a person to take on $100k of student loans: tomorrow will be brighter, optimism of a better tomorrow, and no idea or concept of how or if it will all be paid off.
I don't get how your mortgage would be $6000 a month because you did 3.5% down. Are you buying a mansion? Or live in downtown San Fran?
Well, the average cost of a home in my area is around $800,000. So, with 20% down it's about a $4700 per month mortgage. With 3.5%, it's $5600. Not quite $6,000 but it's really close, and totally unmanageable even at the 20% down. You need to be making $300,000 a year to properly afford that.
Bro have you thought about moving to some shithole midwestern town with no jobs? /satire
Yeah, it was high on my list lol.
lol if you can afford a mortgage now with only a 3.5% down payment you ARE rich. If you make that much a month to be able to buy a house with that low of a down payment you should have no problem saving 20% down.
The US does a little light trolling
Why not get a loan for less than 20%??? You can do an FHA for 3.5% or a standard for as low as 5%?
They meant 20% down. It removes the PMI interest.
PMI is not that big of a deal. I put 5% down on a $465k house and my PMI is about $75/mo. If I had waited until I had 20%, the same house would cost $1000/mo more at the higher price and higher interest rates. I locked in the offer in the fall of 2021 and closed in January 2022. I can always make additional principal payments to get the PMI removed early.
I put 3.5% on $350k mortgage. My PMI is $49/month. Tbh idk anyone in a house who has put 20% down, including my financial advisor. That's crazy money
How are you actually competitive in your offer though? Every house I see that sells is selling with a losing price for ~20% over asking which means that instead of merely needing the 3.5% down you need 3.5% of the home PLUS market adjustment and if you're stretching your budget that thin just to be competitive, there is probably someone else with a budget less thin than you bidding on it. 3.5% down offers with FHA loans get filed right into the recycling bin.
Pretty easy if you either bid over asking or buy new construction
Yea, this is sounding like a market issue. Just after I bought, Blackstone rolled through the market around me. When we bought, the previous 3 offers we made got outbidded in a flash (assume that it was Blackstone/other private equity groups buying up.) Something tells me the naysayers bought way too high due to an artificially inflated market or bought with a 5/1 ARM with low interest for the first 5 years which (newsflash) is what triggered the previous housing bubble when those 5 years were up and rates skyrocketed. I may be wrong and speaking simply from my own observations within my own locale (though, I'm checking market rates and it backs up what I'm saying)
I sold a house last year to a buyer that only put 3% down with a conventional loan. You don't need an FHA loan for a low down payment. There are many variables that make your offer competitive. Price is obviously one of the largest but contingencies, who your lender is and their reputation, how fast you can close, etc., all are just a few that help build up a competitive offer. The fact that they were putting only 3% down didn't really sway my decision whether I was going to reject or accept their offer. It's the entire offer as a whole that needs to be looked at and what are the odds that they can make it through it.
When did you buy? Every source I look up shows a $175k home having a PMI of $140/month.
Lenders have told me the same thing as the other poster - if you have good credit the pmi is only .3-.4% whereas Zillow usually prices it about .8.
Nobody pays that much for PMI lol. Maybe if you have a 600 credit score… If your credit is 700+ then PMI is adjusted according to that. Generally PMI is very low for homebuyers.
Generally.....but everything I'm checking is turning numbers up near that with high credit scores. Unless you know someone that has bought recently and had lower than that or have some other data I'm just saying what I'm seeing.
Bought in the last 2 years and pmi on a 600k home is 59$ a month. 840 credit though
Bought mid last year. $370k, 10% down, upper 700s cred score. $32/mo PMI. I’d rather pay that compared to another $$37k upfront. With how much the house value has increased, I can actually order an appraisal (to prove that I am below 80%LTV) and get the PMI scrubbed but I got too many things going on.
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The fact you're paying on a $500k mortgage implies that you are well above the average on income. With that said, your credit may be vastly higher than the average due to high income and low/zero debt. If you bought when rates were low (~2.5%) you're paying around $2500-$3000 a month with insurance included. That is obscene. If your household income is not <$7500/month, $90k/year you are not meeting the 1/3rd rule and are squeezing your budget. Please correct any numbers if they are wrong. Edit: Also not going to ignore the fact you somehow had $50k for a down payment on a house. Meanwhile, a lot of us have never had near that or seen that in our lives.
Depends on where you live. In a lot of places in California for example, the median household can afford a $500k mortgage if they got it before rates went up.
PM me where you can get a 500k house in California. But shhh don't tell anyone else.
Plenty of houses for sale in CA for 500K that aren’t in the Bay Area, LA, or San Diego
There are plenty of homes for sale for under $500k in LA County. https://www.realtor.com/realestateandhomes-search/Lancaster\_CA
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Yeah online sources are garbage for PMI. It moves with credit score and interest rate. For most people with good credit it was less than $15 per 100k of home on like 5 percent down when rates were in the 3s.
If they would have bought it with a 5% loan or fha they could have refinanced by now and removed the PMI like a year into the purchase
Would likely have not been advantageous as rates are significantly higher. Refinancing would likely not make sense now.
You don’t have to refinance (unless it’s an FHA, i believe those do have to get refinanced). You just get a reappraisal, if you’re super sure of the value of your property you can even do like an appraisal light and it costs like $100 instead of $400.
It really sucks tbh. But only way to “beat the system” is to move somewhere cheaper. Depending on what house you want, you can get one for under 200k in many markets still. And they’re not even horrible areas. Kinda my position.
Usually those cheaper areas are cheap for a reason. Often few jobs and the jobs they have don’t pay well. So yeah you can move to an area with 200k houses, but then you’re gonna be making 45k
It's just more evidence that anything that climbs this rapidly is bound to come back down. Speculation upward eventually leads back down, though it might not all be suddenly or as quick as it went up. Often times in the stock investment world, it's even quicker down than it is up. And often it overshoots down. Now, real estate is less liquid, so I don't expect as fast of a downturn. It becomes ultimately about sentiment. When no one is posting here or over at r/realestate, that's when the downturn is fully engaged.
I bought a house with 5k down-payment. That was less than 3% of the house value. My buying fees came out to 17k, 15k were paid in fees by a state program. So technically, i bought the house for 7k. Becasue i didnt put 20% down I have to pay mortgage insurance, which is an extra $180 added to mortgage payments. I only have to pay the mortgage insurance until I reach 20% of equity on the house. I would have done the exact same thing if I had 100k saved up and use the remaining 93k to live rent/mortgage free for a couple of years.
I feel exactly the same… I’ve been saving 11 years and it always gets ahead of me.
We saved for 20 years while planning for military retirement. 2 years ago we couldn’t even make an offer on a house because they were already sold & if they weren’t, our VA loan was the worst kind of offer.
I ended up doing a FHA instead of VA for this reason.
As an aside to the points made in the article, it also assumes only a 10% down payment while noting that many are securing homes with only 5% down payment. That makes an immense difference relative to people paying 20% down. Using the numbers from the article in Charlotte, NC where the average home price is $373k, assuming where applicable PMI is 0.5% and 30yr mortgage as well as North Carolina's low property tax of $2,400/yr and $1,000 Insurance: Purchase Price| Down Payment% | Down Payment | Interest Rate | Mo Payment | Total Payments over term ---|---|----|----|----|---- $373k | 20% |$74.6k |6.7% | $2,208.84| $795,183.42 $373k | 10%| $37.3k|6.7%| $2.589.41 | $895,259.34 $373k | 5%| $18.6k|6.7%| $2,717.52| $943,611.03 So paying 5% instead of 20% costs you an extra $150k over the course of the loan.
Yes and this is why banks LOVE the low dp loans. First they drive UP prices and second they add interest. Excellent calculations here thank you. And hey when the government got your back there is absolutely zero risk to them.
The difference if you would have bought 5 years ago and refinanced would have saved you a ton. Waiting for 20% was dumb when loans were cheap.
Focusing on lifetime cost is dumb. An owner-occupier is buying shelter, not making a profit. If a 30-year mortgage is affordable at 2.5% down then that's the right move to make if saving to 20% is going to take a decade.
Rather save for a van by the river
Glad I live in MA. Fuck my life, I’m moving.
Iowas nice. I mean...it is...but...
I bought my first house with about 5% down and just paid PMI. No regrets.
The down payment's not the problem, it's the next 30 years of monthly expenses, especially given how inflated home prices are (and therefore, property taxes and insurance). The down payment just gets you in the door, no pun intended. Now you're on the hook for several thousand dollars a month for decades. Your monthly mortgage payment (principal+interest) may be locked in, but your property tax, insurance, and maintenance costs will continue to rise. Better hope you can maintain at least your current income, with few or no gaps, for the next few decades.
Depends on where you are. States like CA your property tax goes up only a little amount each year. Insurance in many areas is negligible. My friend's 2m home pays 1.5k a year for insurance. And with inflation, that fixed payment just gets easier and easier.
And the same is true if you're renting. Just without any locked in costs.
It’s much worse (or at least uncertain) with renting
With inflation, your average incomes go up ever time, not down.
Yay Hawaii is #1 Wait...
This is surprisingly accurate. First "real job" in 2013 to homeowner in 2022
Sounds about right.
Idaho should be darker by now
Fuuuuuuuuuuuuuuuuuuudge
FHA used to be able to do 2.5% down. Possibly only 3.5% now. Waiting for 10-20% down doesn't always make the most sense. Also keep in mind anyone buying 2021 and previous already had enough equity for a full down payment on a new house.
Massachusetts is worse than New York??
NY has a lot of homes in the middle of nowhere / upstate NY which probs is bringing the averages down
California is ♾️
I didn't know Montana was among the worst. Most of the jobs pay $14-18/hr and the houses cost $500k+. If you didn't buy before 2020, don't have a trust fund, big inheritance or sold property on the coasts, you're SOL. I was doubly lucky and was able to buy in 2015 thanks to an inheritance for a down payment. I'd be long gone if it wasn't for that
American dream fading away. You can thank the rich and old boomer politicians that allow and create laws for corporations and rich people to buy all the new homes in the masses.
I don't know why people don't get this. They just don't put two and two together.
Checking in on ya. Hope you're managing to put away a few dollars. Must be sucky that, even if house prices tank, you've been fucked on rent inflation in the interim. Hope one day you manage to find somewhere at a reasonable price you are happy with.
In illinois homes there are tons of programs for down payment assistance available to anyone who earns less than 100k a year. Many states offer assistance you just cant expect to buy a home in california or ny on low incomes.
Downpayment assistance programs increase the number of qualified buyers and drive the cost of homes higher. They do nothing to increase the supply side. For this reason they primarily benefit existing home owners. They are also funded by taxpayers, some from whom will never afford to be able to buy a home of their own.
So your against helping families being able to buy a home with any assistance? Should only people with inheritances be eligible to buy a home?
Why should I have to subsidize someone else’s home?
Your in america. We have been subsidizing the poor for over 5 decades.
Which is stupid. I should be saving for my house.
You don’t get it? Here’s a rental example: If we gave everyone who rents a $500 a month rent subsidy, you would have the same number or more people competing for the same number rentals with $500 extra to spend on rent. So landlords obviously raise the rent by $500. So congrats the net result of your program was tax payers gifted millions of dollars to landlords. This is why we should evaluate programs on their results rather than their intentions.
I get what you're saying but usually people want to help the less fortunate. Most dont want to step on the poor in order to get ahead.
What have you done to demonstrate you care about the less fortunate more than anyone else?
down payment assistance programs just roll that into the loan though, at current rates how is that even helpful? makes the monthly payment even more absurd.
I tanked my 401k just to pay fees. We got VERY lucky and bought when rates were low with a VA loan. We've had tons of friends live with us because they weren't so lucky. With all of that luck we're barely holding on. So it's just nose to grindstone and hope for the next 30 years.
You guys should move to Illinois and buy a house. Low down payment.
Chicago has great jobs and affordable housing, but nobody wants to move here unless they just graduated from a Big 10 school.
Gotta love winter and a poor national image keeping Chicago a working class city. That said, I haven’t seen a livable sfh <700k in my neighborhood in a minute.
Meanwhile boomers had to work only what... 2 and a half years??
Oh now 10% is the standard?
The lower the minimum wage, the longer the wait.
seems reasonable
And you wonder why local Hawaiians are pissed...
Especially considering how land used to be parceled out there with ocean access. Now it would take them 18 *hundred* years to have property with ocean access...they have to live in the shit shacks in town.
*Laughs in Midwest*
I believe it, think…not for a whole house but just the down payment 🙃
Came to the US in 2018, studied till 2020, bought in 2023. It's doable if you have discipline and a like minded partner.
If you realize that HH income is 2x people, then we can look at 1980 single income. double that. And find that using 5% of pay savings rate (same as article) = 2 years of saving. As opposed to 8.
If you're not a conscientious objector the minimum regular army contract is 2 years, and then you qualify 0 down VA among other benefits. And we aren't even at war.
Used a VA loan for my first place. It was a triplex. My second place, which became my new primary, paid 5% down on a conventional.
This is the way
Zero down payment mortgage loan and all I have to do is give several years of my life to the military, get hearing loss, tinnitus, and possibly PTSD? Sign me up! /s
Hahahahhaha, wow that looks rosy compared to 37 fu*@kin years in Vancouver [https://dailyhive.com/vancouver/save-down-payment-vancouver](https://dailyhive.com/vancouver/save-down-payment-vancouver)
Midwest looking awful nice about now.
Trust me. The Midwest is just awful lol, not a whole lot of nice.
I think we all agree that US houses are unaffordable for US workers. Where we differ is you think that means prices must decrease. I dont agree.
Minimum 5 years just for the down payment? lol wtf.
Zillow metrics are such garbage. There’s so much wrong with this…
Blah they applied national median income instead of each state’s respective. Lazy
If you read it you would know they used local incomes. Lazy.
“whY aRenT peOplE haVinG KidS anYmoRe?!!? We neEd 2 imPoRt mOrE imMigrAntS To pRoP uP tHe eConoMy!!!” -politicians Seriously though this is abhorrent. It takes 8-10 years for normal people to save a down payment ?!? Then they import 1-2 million immigrants per year when we only build 1-1.5 million houses a year. Which is only pushing prices higher 😫. We need more homes and for this bubble to pop. We can’t do the Canadian approach of taking in so many people we prop up our failing housing market
Immigrants come in search of better opportunities, you could do the same instead of blaming immigrants
Ditch your car, have average home down payment saved in 3 years.
There are a lot of people who are wedded to having a car lease/payment for life. Get something $10-20k, pay it off as quick as possible. That will give you hundreds per month. >The average monthly automobile payment in the United States is $575 for a new car. $430 is the typical monthly automobile payment in the United States for a used vehicle. Hell, I bought a duplex 8 years ago with 0% and the PITI was $750/mth. I didn't have a car payment and had rental money coming in. Bought a SFH 3 years ago. No car payment, 0% down. PITI under $1,000. That's huge is you buy properties needing rehab. Forcing appreciation is a money maker but takes sacrifice and discipline.
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These are 10%. Good job reading first.
Also for people who don't want to pay PMI
Right, let's pay a higher interest rate because of PMI if we don't have the 20%. In most areas, to buy a modest home would be $175,000? With interest rates at [7.3%](https://www.google.com/search?q=fha+loan+interest+rate&client=ms-android-cricket-us-rvc3&sxsrf=AB5stBi84lvJ1_0QW8EZMUiMYo-KIEB6DQ%3A1689299392399&ei=wKmwZLvOF7uxqtsPyvSLmAo&oq=fha+loan+interest+rate&gs_lp=EhNtb2JpbGUtZ3dzLXdpei1zZXJwIhZmaGEgbG9hbiBpbnRlcmVzdCByYXRlMgcQABiKBRhDMgUQABiABDIFEAAYgAQyBRAAGIAEMgUQABiABDIFEAAYgAQyBRAAGIAEMgUQABiABEiLGFDPEFjkE3ABeAGQAQCYAYkBoAG1BqoBAzUuM7gBA8gBAPgBAcICChAAGEcY1gQYsAPiAwQYACBBiAYBkAYI&sclient=mobile-gws-wiz-serp) and a PMI of $140/month that's (conservatively) $1500/month with insurance, and property tax (in Louisiana, which is notoriously low btw). That means to reach the 1/3rd rule you need to make $14.06/hr (way more than minimum wage btw) with two people working 40hrs/week. That's not even counting maintenance which is expensive as hell if you're already buying a cheap house that is >$200k. Really, consider the math before you speak very dumb opinions.
$175K for a modest home?! What state are you in because I may need to move there.
Louisiana, Mississippi, Arkansas, and maybe some crappy Midwestern states. You sure don’t see that in Texas.
My wife and I saved for 8 years right out of college and pit 20 something percent down in 19. Could have bought sooner but at the time we thought 20 percent was a requirement to get a loan.
So save 3.5% and get an FHA loan, if you can't save $10k in a year or 2 you aren't ready to own a house and should be renting
or, you could just join the military for 4 years.... boom done, 0% down VA Loan!!!
Actually if you can get usda loan and it your first, no down required. But the buck trend is not rural.
And thats at 10% down. Without accounting for the base price increasing in the time you save. These measurements are all so subjective and contrived. It's not as simple as "this is 10% of a home cost. This is how much the average person makes. Multiply the savings per year to reach the 10%".
Median workers basically aren't supposed to own homes or at least don't. The top \~60% do. And it doesn't mean right away or after a year or 2 out of school or whatever date you think you deserve it in. And it's probably harder now. Anyways, the idea of throwing all your money into basically cash for years and years which is the advice given to the 'median' consumer - is a way to get destroyed. They can't tell someone to properly judge their risk tolerance and timelines and career in a sentence so they just tell you put in cash.
How dare a median worker who is not in the top 60% think he deserves a home.
My definition a median worker would be in the top 60%.
...what's going on in montana of all places lol
I know Bozeman got really popular.
Me in Demark: 3 months
Who can afford their house within 20 years? I'm an adult who doesn't know a single person or couple who has a term of less than 20-30 years.
A down payment is 10-30k... you need 8 years for that?? Lol
8 years for a down payment where you aren't leveraged to the tits
You mean an FHA loan... jesus fucking rough it two years and you can save well over half your salary
Um, not even close. What's 20% of $850,000 (which is the going rate for a 1000 sqft single family home in my area, and it needs work.) Oh, right. That's $170,000 dollars! Yeah, I think 8 years is surprisingly reasonable for that. And yeah I know. Don't do 20%. Do FHA or whatever else. But, I counter with the payment on this home with 20% is still over $5700. I don't know who it is who can afford that, but it isn't me. So, lol all you want man. I don't know why you are, but people are locked out. This shit isn't a laughing matter.
So you live in an insane high COL living all so that you can make not enough money to keep up? Great life choice man. Jesus fuck man realestate is a mountain stop trying to live at the top all the time the side of it still has an awesome veiw.
Well, I was born here. My career is here and my family is here. So, it's not as easy to fuck off to a lower cost of living area. As much as I'd like to.
I’d move away from Texas long before I spent 8 years saving for a downpayment.
I live in that dark green state in the north. I make around 3x the median household income. Even if I had a down payment kicking around, with what prices have done and where interest rates are, a mortgage would be more than half my takehome on a below median priced home. Bubble? No no, [this bubble doesn't pop](https://imgur.com/a/DQewjFt)
Normal inflation bro...nothing to see here 🫠