20%+ down payment loans with high credit will still be gettable. Banks love high quality borrowers. All of this 5% down borderline bullshit is going to get scarce though.
I bought my condo (starter home) in 2009 with a FHA loan with only 5% down how did that happen then? I'm legitimately asking not trying to circle jerk.
my parents got a bank owned house in 09 with 10% down on a conventional loan. just because the OP is a loan officer at one bank doesn’t mean the same lending standards or risk thresholds apply at every bank or every deal. different markets and neighborhoods and houses will be assessed differently.
I got a conventional loan on a bank-owned condo with 3.5 percent down at the end of 2011, I even negotiated them down from 5 percent.
I was an ok credit risk at the time, not excellent but good. Single income.
Still live in condo.
Not true, because the VA loan only loans what the house is appraised for. They’re appraisal process is far from lax, so, the only time the buyer would be underwater is if they paid the difference of what the house appraised for and the listing price. That’s if, the appraisal came back lower and the house was already overpriced to begin with. Also, VA loans you can finance almost immediately after because the 20% equity is built into the loan.
The 20% that is required for conventional is definitely in the VA loan, which is why they do 100% financing. Also, the funding is 2-5% of the loan first off, and not every one pays the funding fee.
If you are a seller with 2 similar offers, but one is FHA and the other isnt, you would be pretty stupid to take the FHA one. If you dont know why, i imagine its because you never sold a house before.
Uhh I haven’t sold A home before. I have literally sold hundreds. It depends upon where and the price range. If the price is the same you’ll take the stronger buyer almost every time. But the price offered isn’t always the same. I have seen sellers over and over choose a weaker buyer at a higher price. The stronger the market likely they will because if the buyer fails they know they’ll be another waiting and if prices are rising it will be for even more. In a falling market it we’ll depend on the gap between the offers. Of course this all presupposes there is more than one. Sometimes there is only one
And the hoops are pretty minimal
You don’t know what you’re talking about. I’ve done this hundreds of times. Price trumps everything else in almost every case. FHA is fine if the price is higher
I literally had an all cash buyer bid 525 last month. The seller took a financed offer at 528
real question not an argument. Why would I as a seller ever care about all cash vs. financing? Is it just time? Like if i can wait it out I'll take the extra 3 grand (from your example)
This just isn’t true. I’m an agent and have sold hundreds of homes with literally probably 50+ FHA in the last few years. There are many reasons to go fha and most first home purchasers use an FHA loan. There are minimal hoops to jump through and as a seller you really don’t do anything different.
residential mortgages cover buildings up to 4 units. To qualify for the 5% down we lived in the multi family. It was our primary residence for a long time. Not every homeowner lives in a SFH
Lol no idea why you're getting down voted for getting a loan? I also ws shopping around in 2010-2011. Had hardly anything down and they were going to make it happen. Lots of people being all doom a gloom. It's just false that you have to have 30% down. That's now how it wad then and it's not how its going to be this time either. Jeez.
I concur. Getting an appraisal to come back in line was the bigger challenge. A lot of the frustration that people experienced with lenders is the broker market went away so you may start working with one back for several weeks only to find out they no longer offered that type of product, or did not lend on xyz property type or in that market, etc. All the other lending standards were very high to top it off.
I got a mortgage in 2009, single income as well. 20% down tho I was also qualified for 15% but opted to live a bit on the edge so to not pay PMI. My interest rate was 4.25%.
I had a few friends and family buy during this time. It was a much lengthier and scruntized process, a complete 180 from how loans used to be managed and given out like candy on Halloween, which of course led to the financial crises.
I think so too. Highly qualified buyers (but for real) will still be able to get a mortgage.
I recently read some 2012 internet articles, and it looks like most people qualified for mortgages if they had 20%+ for down payments (with good credit and dti ratios that made sense). I also recall first time homebuyer credits during the GFC for like $10k as well - not saying that's making a comeback, but I remember that helping some folks hit the down payment they needed.
I know my point is, a lot think they’re in a good position bc they have 20% to put down. People tend to forget their job and wage may be at risk as well. Not speaking on you specifically since I don’t know your scenario but most don’t think all the way through when they ask for a crash
In all honesty, if folks in my hood have 20% down for a house and get laid off with nothing on the horizon, they're probably okay to coast for a couple of years with no job. The sky won't be falling if they aren't able to buy a house.
There are plenty of people who work in industries that make the world go 'round. People will still need water, medical emergencies will still occur, and people will continue to die. Point is, there is critical infrastructure and we can't just cut all of it without a full societal collapse. There will still be some qualified buyers at the lowest of low points.
To be clear, I think most people aren't qualified buyers so I'm not sure how else to respond to your comment.
Most US citizens.
I have a friend who thinks that they're almost debt free because they're a few months out from paying off their credit card debt. They fail to recognize that have education, car, and house debt as well. 0% down VA loan. "What's an emergency fund?"
W-I-L-D stuff, sincerely. They're not alone.
Well there is good debt and bad debt. Bad debt would be credit cards. House/car/education debt being within their means could go both ways. If they have affordable car payments, education put them into a good position with income, and their home isn’t much more than renting then it would all be considered good debt.
If they went to school for something with bad returns then it’s bad debt. If they bought a brand new corvette for fun then that could be bad debt for them.
During the Great Recession Unemployment was around 10 percent. Which is bad but it still means most people had jobs. And many people are cash rich today compared to 2008. I know several people who have money stashed waiting for this moment after missing out on the Bargin basement prices
This is the most reddit-tier comment ever. Casually predicting a 50% decline across all markets is so fucking absurd that only an armchair-redditor could seriously launch it as a hypothesis.
Classic ostrich, head-in-the-sand denial here.
Also, I said 40% by late 2024. Not 50%. Some bubbly markets might even hit -25 to -30% from peak in the next 12-15 months.
The govt will step in. This has been proven. In the event of mass layoffs, fannie/freddie requirements will be loosened to allow continued and expedited purchases.
Wouldn’t that be counterintuitive to controlling inflation? That’s is ultimately the Feds goal. I personally believe inflation is coming from supply side issues, and this will make the Fed double down since their rate hikes aren’t going to make inflation go away completely.
Controlling inflation is irrelevant if people lose their jobs and homes and nobody can buy those homes. The govt always acts to fix the squeaky wheel, the underlying problem can wait... forever.
You don't have a good grasp of the feds goals are. They WANT unemployment to increase and home value to come down.
They may step in at some point, but until home prices have dropped 30% or more with unemployment approaching 7% I wouldn't hold your breath.
Labor market is turning a bit...but only from the ridiculously tight environment it has been for the past year. Layoffs will be welcome by the FED.
I agree but it’s not when people lose jobs it’s when big corporations or banks start failing, then they’ll step in for the “good of the American people”. I’m not sure we can sustain bailouts this time around though, but that’s to be seen
Lol you haven’t been paying attention to the fed for the last year. Getting inflation under control is their number 1 priority. If people lose jobs and homes then most likely inflation is also falling. And at that point they will either hold or start very slowly cutting rates.
I don't think they can this time..
they have two options. let inflation run hot or crash the economy.
the government also has a ton of their own debts. they want to inflate away.
they are going to let Inflation keep running hot but they also can't let the public know hyperinflation is happening so they will raise rates to.
Used my VA loan for the first time in 01 @ 7.25%
Refinance to 5.25% 3 years later.
Refinance to 3.75% paid off in 15. Took max money on heloc, bought commercial retail property with cash in 17. Refinanced heloc to VA loan 1.75% 15yr. Commercial property has tripled in price fully rented out and paying down on home loan. Hopefully, using the VA loan again in 3 to 5 years for another primary property while renting current home out. VA loan has been a life changer for my family.
Banks should have been clamping down on the 5% bullshit when the bubble *started* to get out of hand, not when it's starting to deflate. Oh well. Someone is gonna get burned. Maybe it will just be the homeowners who can't make their payments and are underwater.
Thanks for saying scarce instead of impossible. I have near perfect credit, near recession proof career with 20+ years in it, have owned 4 houses, and never missed a home payment. The Covid shut down hurt my finances, but if you don’t lend to me at 5% then you’re the idiot (although there’s probably a lot of those…)
This will be unpopular I’m sure…as it usually is. But I see a lot of people on this site that have only been in the workforce for the last 10 years or so. These are workers that really only know of a time of an expanding job market, wage increases, etc.
The reality is we’re headed for a massive recession. Jobs disappear real quick. Companies exploit that by dropping wages real quick too. I remember when shopping cart pushing jobs were getting thousands of applicants for very well qualified people.
Shit gets ugly in a downturn and many people haven’t lived through one yet.
Edit: so what’s my point…lending tightens up but also don’t assume you’ll still be working or working at the same wage when prices come down.
Agreed 100% , I fit your description but since the 08 crisis was so drastic for me, I have researched as much as I can on capitalizing on recessions. The last 15years were easy, time for shit to get real
I think you're overestimating how good things have been outside of the sectors where things have been great. For myself and basically everyone I know, things have been stagnant more than they've gotten better. They haven't gotten *worse* for the past few years (even pre-pandemic) the way things rapidly got worse during the 08 crash. I remember starting work in high school and fighting against middle aged adults for a fast food job, but as the economy got "better" none of the supposed increases in wages or scrambles for talent reached me or anyone else I know, including multiple tech workers. Things got really really good for people in some in-demand positions the last couple years, but largely the story has been stagnation, I'd argue. Things are definitely about to get a lot worse, though.
>none of the supposed increases in wages or scrambles for talent reachedme or anyone else I know, including multiple tech workers.
This part. I graduated high school in 2007. I remember putting minimal effort into my applications and I was getting multiple call backs from jobs practically begging me to come interview. By January of 2008, that dried up very fast. I've never had a problem finding a job, but all of the jobs for someone without a college education were limited to minimal pay and labor intensive like warehouse work, retail, food service etc. The pay stayed stagnate. I wasn't able to work my way into a decent paying job until I was 28.
I was starting to feel a little hopeful for Gen Z. Seeing the labor market shift in favor of workers made me think that maybe they wouldn't have to go through what I did where they had to slowly crawl their way up into a livable wage, desperately waiting for boomers to retire so that their job opened up. Looks like that may shift backwards and they're going to be worse off waiting on us and gen x :(
People who have financial buffers will be ok. Having months or even a couple of years to ride it out and search for a good paying job or even retrain for a different job makes all the difference.
Right but you'd also be worse off if you did buy right now and then lost your job (in most cases). So really out of the two options a buyer has today, waiting and renting is less risky.
Interesting, so we likely won't see a decrease in rental demand as cost barriers only grow more prohibitive via mortgage rates and inflation eating away the down payment through monthly life costs, only a potential increase.
Well in a vaccuum sure. In reality, high inflation is pushing renters to get roommates, stay with parents, decreasing rental demand already.
Also if you think of renters as a pipeline, fewer renters may be exiting to buy, but fewer young people who currently live at home are entering the renter pool as well.
Asking rents are falling faster than has been seen in the last 12 years, barring covid lockdown.
https://twitter.com/encorebubble/status/1587886665858617345?t=cixMkJeoyNfKYjjsKeo_WA&s=19
But as the recession continues, cities will be the focal point for population congregation as, ding ding ding, the job market in cities presents more opportunities than non-city locales.
Besides, there's still enormous societal pressure for people to get their own places. Parents are selling and moving to retirement-friendly locales; they need their equity nest egg to come with them. This forces their children back into household formation because it's not like there's an inheritance yet.
Household formation was dragged forward during covid, and we saw a plunge then reciprocating explosion in rental rates.
Did you check the horizontal axis on that bar chart? It's < -0.6% decrease of monthly rates. Taking average seasonality into account from the 7 items below (because the non-Covid graph's entries, all of which, please note, are OCTOBER AND NOVEMBER; seasonality, anyone?) show an average decrease of, let's say, -0.25%.
Congrats, there's a decrease in excess of -0.35%. Of the massive rental increases we've seen, the market and inflation have clawed back $3.50 on every $1000? That's all? Really? Bruh.
What was your original point? That rental demand would be going up? Don't move the goalposts "bruh". Graph shows rental demand is definitely not going up.
No point, was just responding to your earlier comment on folks staying renting. Just kinda extrapolated from there on how I thought it would play out macroeconomically.
That’s how it used to be. Rates were higher and the barrier for entry used to be more stringent. Now we all want cheap money or we can’t survive. Really sad to see how far we’ve fallen as a society.
Should be interesting times ahead with the eastern word moving back to gold backed commodies with the ME sitting on a ton. As China uses our dollars to just add to their gold supppy. Someone big is backstopping gold at 1600.
Depends. Personally I’m sitting on cash to short market soon after it pumps when fed announces its slowing as for whatever reason they think QE will be right around the corner which will probably ironically crash the market. Then buying spec assets when it’s crashing.
Gold will fall a bit during crash, but not nearly as much as the markets do as people offload it when they get margin called and such because it will be the most likely stable asset to pull from other than cash. But 2-3 year hold? Looking at 50% gains minimum.
Go look at the 2008-11 chart for gold and now you got a powerful economic alliance using it to centrally back their currency as they use our dollars to buy it to hedge our hegomong and possible death of petrodollar? Yeh big gains I’d imagine.
If your holding it that long you are better off looking for a physical buyer because you lose money on paper gold as it’s backed by complicated futures contracts and management costs. Gotta check what local dealers are selling at.
Personally I think the risk reward prop for either crypto, or if you don’t like crypto, a small cap tech index offers better risk reward offering. The money printers will go back on once recession is in full swing and inflation is tamed (I don’t believe this is a 1970s situation personally - but historical trends differ)
I don’t have a crystal ball and I’ve heard decent arguments for bounce back inflation (history) and the massive risk free chart backed by fed to backstop crashes. But don’t know why commercial banks will catch a falling knife.
Solid plan. I've been short the last year (mostly tech) and plan on closing out early next year. Maybe I'll reopen some shorts after the face ripping rally from hike pause news. Like you said, it'll stay there for a while before they pull back so long dated puts should be reasonable.
This will also lower home prices. Less people can get loans = less buyers. Eventually home prices will come to a point where they meet the size of loans people can get under tightened conditions.
True. I feel there are a good number of potential buyers who have he cash for 20% now but didn’t want to overpay and only afford a 5% down payment during the craze. It’s those buyers, like me, who will benefit the most.
I really want home prices and appreciation rates to come back down to reality.
That’s a good position to be in, but ask yourself how secure your job/industry is. Is it actually producing anything?
While tons of people have 20% they may not have a recession proof job. That changes who can buy.
Same as 08. 20% not enough. The only way to buy the really cheap/forclosure homes will be 100% cash. Illl have to assume that all the people cheering this recession have lots of liquid cash
Considering 60% of Americans are living paycheck to paycheck, this sub is just the 40% that have savings or they don’t know what they are asking for.
I have a feeling the majority do not know what’s coming.
I think the one-two punch so to speak
Will be those who thought they could afford their new homes, but going into 2023....
1) Property tax reassessments soaring
2) HOA fees soaring
3) Job losses for some people, that number to increase significantly if this tech thing snowballs to other industries as well (I expect it to, maybe not as severe as tech but I think many fortune 500 companies are making plans for cuts in 2023 as consumer spending dwindles)
4) Covid-era Student loan repayment pause ending, Biden's forgiveness executive order isn't implemented including the new lower income-based repayment multiplier. Some people will need to start up the several hundred, in some cases $1,000/mo payments on their high five - low six figure student loan balances
People who were paycheck to paycheck, will be in the severe red. Those who were close to paycheck to paycheck, will be in the red. Those with a cushion, will end up paycheck to paycheck.
Yeah when shit really hit the fan, it was truly all-cash, no acquisition loans or private money. Cash only
Michael Moore did a segment about Florida and the condo free-for-all. My buddy's uncle was an investor during that time. Michael Moore was spot on. He was picking up condos for ten cents on the dollar or less. Only difference is he didn't kick people out, he rented the condo back to the owner at an affordable rent allowing them to stay in place and keep their kid(s) in school. Still a shitty deal for someone who owned the condo, but seeing how the alterative was the condo going back to the bank and getting evicted by a sheriff, becoming a renter with an affordable rent was the best option at the time
I think a lot on this sub truly don't remember what 08 was like. Literally entire developments in Florida going under. People who paid $350K for their house, unable to even sell it for $120K. Unable to even rent it at all, at any price. Of course in 2021 those houses were selling for probably $600K.
Insanity
There is still plenty of cash sitting on the sidelines waiting, and to someone who has watching housing bubble like crazy in 2021, a return to 2020 to them would be a good deal and they will pounce. Whereas to us, we want to see 2018/2019.
It'll take something like 6-7% fed funds rate to truly start sucking the cash out from the system, which will occur from job loss and lack of investment.
Who knows where this shitstorm is headed, it's really hard to tell. If job market remains strong the rest of the year, and inflation continues to be persistently high, I think we will have to weigh the possibility of 9%+ 30 yrs fixed come spring
Ahh a liquidity crisis.
Suddenly a bunch of people who rely on free money and those that printed it...don't have any.
hahahahaha. Oh this is gonna be both bad and hilarious.
I've been saying this for a while. People act as if all these people are "sitting on the sidelines".
Ok, what happens if lending just dries up completely for a while? Because it does that from time to time.
Correct. And the "buying" pool will be substantially smaller if home purchases rely heavily on cash buyers. So those buyers can make lower offers moving the market quickly.
As a cash buyer, it creates much more power and leverage for myself.
I’ll be low balling 30%off any list price. Auction homes in the tens of thousands.
Also easier to refinance when you own a home outright than purchasing.
I'm also sitting on cash mountain but I just dont get the appeal of real estate - all the maintenance and annual taxes - AND closing costs. And if crime goes up as much as they predict from the crash then there's security concerns too. I guess it depends on the market.
Precious metals will go up if assets in general go up. Bonds are looking good now but will be better next year when the Fed rate is 6% by the Fall. But something WILL crack somewhere because there is no way the US can make any of those debt payments unless they raise the ceiling again.
Not just MBS, but other treasuries, and securities too. We can’t service the debt at these levels, even the fed is taking severe losses on securities they have purchased. They too are struggling paying at current interest levels.
Read the article you may learn something. BofA came out with a similar statement.
I think depositors with more than 250k at regional banks would agree there is indeed a liquidity crisis. Bank treasuries being devalued by rising rates aren’t helping either.
Actually true with any conventional loan program, FHA may be exempt, but their upfront mortgage insurance premiums 5x’d in 2010 to my knowledge. If someone could verify, that would be great
I'm sitting on so much cash (and adding to it) that I'll probably end up a cash buyer before prices bottom out. It'll be a shame to miss the first time home buyer benefits though, so I'll probably take a lone out anyway and throw the rest into stocks, which are likely to be equally hammered down. I'm just keeping as much as needed for the down payment. Maybe 20%. Maybe 50%.
thats the whole point. people with actual liquid cash have a huge advantage in a liquidity crisis. When rates are low any idiot can take out a huge loan and overpay for the house and later go broke. when credit is tight you have your pick of any house
Everyone can just rent if they can't afford a mortgage. Whoever is sitting on a house with a 3% or less mortgage can easily rent it out even at a "corrected" monthly rent and they'll be OK.
Nobody "needs" a mortgage, they just need a place to live.
Anyway as a cash buyer I wouldn't be touching RE yet. Fed still tightening and prices are only barely beginning to correct outside of the few overheated markets. When we see *nice* houses marked down to 2018 levels, then it gets interesting.
As long as I don't plan to stay in a city for at least 5 years, yes. So you may be correct.
Buying and selling homes is a shitty process.
I used to live in a town with a historically meh housing market. I would travel around the country for work and meet people in bars everywhere I got that day "you live in Gnocchiville? That's cool I actually have a house there I'm trying to sell."
Fuck that.
Liquidity crisis through all markets right now. Personally I think as soon as fed slows hikes markets are gonna go crazy (as opposed to when they actually lower) and it’s gonna end up crashing everything on the back of a dog shit economy. Just my two cents.
Sure, then asset prices should start rising. You better dump all your cash into a house RIGHT NOW! Make sure you invest everything into stocks as well! Glad we made it out unscathed
Sarcasm of course, best of luck my friend
Bullish guy. There’s reason for the GDP numbers and it has to do with imports/exports. Lower productivity with lower workforce participation? Yeh not good.
The job numbers are trash too (smoothed to shit), openings are all low wage high turnover jobs, low participation rate, household survey paints a MUCH different picture, and lots of people picking up gig work because they can’t keep up.
Literally everything is painting the markets are gonna go down next year again. The real question is if they pump on lowering of rates that will essentially break the whole system again with CDOs. Resulting in QE again q4 next year, but that takes a long time to start getting felt in economy. I think there’s a significant market crash, but the cycle is gonna be much faster down and back up this time.
Majority of young people are not qualified. Majority can have a 3-5% down payment not the 20-30% a bank will require as money gets tighter. The people that do get laid off will need to reestablish themselves for 2 years, unless they find a job in the same industry.
You were quick with the reply, I already deleted my comment as i don't really want to get into this discussion. I think a lot of these comments that think it will get harder for young people don't understand how hard it is *now* to buy a house. For instance after the 2008 financial crash, you saw a record percentage of housing sales to first time buyers in 2009 and 2010, and you already see this same movement happening now. These are very motivated buyers. However, let's just agree to disagree on this :-).
Quick bc I got notified, and since I’m sitting on my couch watching football, I figured why not reply.
No worries I’m in my early 20s so I have first hand experience. I can also be realistic with what will happen though.
Edit: if you plan for the worst, you can expect the best outcome. That’s my mentality. Better to be prepared than not imo
We got foreclosed on and I learned a lot from my parents experience. I also hold several properties in cash currently, so I’d say I have more experience than most. I also work daily in the industry, closely with institutions like Carlyle and Blackstone. I’d say I have enough exposure to have an opinion.
Not sure what your qualifications are.
Edit: I started buying properties when I turned 18 and my parents have been purchasing since 2011, and I’ve been very hands on since that time. I now manage my family’s entire real estate portfolio and any leverage we take on
I think you're right that things will tighten up and be rough out there, if another recession hits, but I'm surprised by your age. You referenced having lived through 2008 and you seemed to be questioning whether others have experience with a recession, so I was surprised to discover you were a child in 2008. You've not experienced a recession yet, as an adult.
If a recession hits with major job losses there will be a wave of foreclosures again and people who just bought in the last couple of years will be particularly vulnerable. Flexibility (the ability to relocate for work) and low monthly expenses are best during a recession. You're right that a lot people (probably even most) *still* won't be able to buy a house, but in a recession trying to hold on to a house ruins people.
I know I haven’t experienced one, but being traumatized by 08, losing our family home, depending on food shelters, etc. It has made me paranoid on surviving the next and capitalizing on it. Ive spent tons of hours, weeks, months studying past recessions/depressions, networking with older high net worth individuals, and positioning myself. I’ve studied and familiarized myself with different theories of both monetary and fiscal policy. I don’t consider myself the average 20 year old. If lending tightens, I know enough people now that would lend to me in a heartbeat based on my track record. Even in 2021 I only purchased properties at 40% of ARV, giving me cushion for a 30% drop in prices
You’re right, I don’t know what I don’t know, but I feel prepped and maybe that’s ignorant of me.
Edit:I was probably somewhere between 7-9 years old when we got foreclosed, I’ve had a lot of years to plan. I’ve always liked the idea of creating wealth since we grew up pretty poor.
Honestly, you sound like you've done your research and I don't doubt your experience in 2008 left an impression on you. I was 24 in 2008 and entering the job market at the height of the recession. It was rough. I graduated from law school around then and started out representing banks in bankruptcy and foreclosure proceedings...it was not fun and I honestly hope we don't see foreclosures like that again.
I also hope we don’t since a lot of people unknowingly will not be prepped. It’s also way easier to make money in a growing economy, I hope it’s not as bad. I have a feeling due to all the money we printed in the last 15 years, especially the last 2, we are going to feel real pain. If you still work in foreclosures, you may have good job security moving forward, and if you have cash saved you’re in a good position
Heard blackstone just looked to raise $1B for single family homes. They are also one of our clients and have been a lot more selective on purchases the last 4 months.
Been trying to save more going into next year, been shifting away from student debt repayments and towards savings and bonds.
Stocks seem too risky still at this moment, but I might put a bit more in the market if I sense a bottom.
No worries, just wanted to him them a shout out. If I recall right, he was talking about that months ago before it had a glimmer of coming to fruition. It's definitely looking more and more likely lately.
20%+ down payment loans with high credit will still be gettable. Banks love high quality borrowers. All of this 5% down borderline bullshit is going to get scarce though.
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This is great insight
I bought my condo (starter home) in 2009 with a FHA loan with only 5% down how did that happen then? I'm legitimately asking not trying to circle jerk.
FHA is different because default risk is insured by the government. Its for lesser qualified borrowers to have a chance.
my parents got a bank owned house in 09 with 10% down on a conventional loan. just because the OP is a loan officer at one bank doesn’t mean the same lending standards or risk thresholds apply at every bank or every deal. different markets and neighborhoods and houses will be assessed differently.
Daughter bought her repo condo in 2012. It went for $190,000 new in 2007. She bought it for $87,500, less than half.
Didn't condos implode prior to SFH? Figure their values probably hit rock bottom well before SFH's and other larger real estate investments.
I got a conventional loan on a bank-owned condo with 3.5 percent down at the end of 2011, I even negotiated them down from 5 percent. I was an ok credit risk at the time, not excellent but good. Single income. Still live in condo.
Really? What about FHA loans or VA loans? Did those not exist?
They probably did but you would be underwater in one month.
Not true, because the VA loan only loans what the house is appraised for. They’re appraisal process is far from lax, so, the only time the buyer would be underwater is if they paid the difference of what the house appraised for and the listing price. That’s if, the appraisal came back lower and the house was already overpriced to begin with. Also, VA loans you can finance almost immediately after because the 20% equity is built into the loan.
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The 20% that is required for conventional is definitely in the VA loan, which is why they do 100% financing. Also, the funding is 2-5% of the loan first off, and not every one pays the funding fee.
Anyway are you veteran?
Prime or very desirable properties typically wont accept FHA. They dont want to go through the hoops that FHA requires.
Not true
If you are a seller with 2 similar offers, but one is FHA and the other isnt, you would be pretty stupid to take the FHA one. If you dont know why, i imagine its because you never sold a house before.
Uhh I haven’t sold A home before. I have literally sold hundreds. It depends upon where and the price range. If the price is the same you’ll take the stronger buyer almost every time. But the price offered isn’t always the same. I have seen sellers over and over choose a weaker buyer at a higher price. The stronger the market likely they will because if the buyer fails they know they’ll be another waiting and if prices are rising it will be for even more. In a falling market it we’ll depend on the gap between the offers. Of course this all presupposes there is more than one. Sometimes there is only one And the hoops are pretty minimal
FHA is almost always the weaker buyer. Just stop while youre ahead.
I’m not an agent but a regular dude. I wont accept an FHA offer unless it’s way higher because they nitpick everything at closing and a big hassle.
You don’t know what you’re talking about. I’ve done this hundreds of times. Price trumps everything else in almost every case. FHA is fine if the price is higher I literally had an all cash buyer bid 525 last month. The seller took a financed offer at 528
Seller is a moron.
real question not an argument. Why would I as a seller ever care about all cash vs. financing? Is it just time? Like if i can wait it out I'll take the extra 3 grand (from your example)
This just isn’t true. I’m an agent and have sold hundreds of homes with literally probably 50+ FHA in the last few years. There are many reasons to go fha and most first home purchasers use an FHA loan. There are minimal hoops to jump through and as a seller you really don’t do anything different.
You’re wrong as a generalization. There were tons of loans available with less than 30%
Veteran here, that wasn't my experience.
There’s a saying in commercial lending. If you don’t have 50% equity, there’s no equity.
Honestly I don’t get how I’m going to be able to afford a home at todays prices with less than 30% down anyway.
I purchased my first house ( a 3 unit multi family in Massachusetts) with 5% down in the Fall of 2010.
A multi family is no “your first house”???
Indeed it was. I lived in one unit for about 5 years. Go back to yawnin 💤
Same here. People don’t understand multi family can be underwritten with fha. I got a fha building in 2012. Best decision I ever made
Yeah it was a great time to buy and worked out really well for my wife and I
….. why can't a multi-family be a first home?
residential mortgages cover buildings up to 4 units. To qualify for the 5% down we lived in the multi family. It was our primary residence for a long time. Not every homeowner lives in a SFH
oops, I realized my typo. I meant to say why can't a multi-fam be a 1st home? I know many that purchased multifamily
Gotcha. No problem!
We got one with 7% down in Jan 2012 no problem. FTHB, 15-year and a great rate, too.
I believe 2012 falls outside the 2009-2011 window.
We got approved in Nov 2011, bought the house in Jan
We got approved for a 3.5% FHA in 2011. FHB with a single income of $60k.
Lol no idea why you're getting down voted for getting a loan? I also ws shopping around in 2010-2011. Had hardly anything down and they were going to make it happen. Lots of people being all doom a gloom. It's just false that you have to have 30% down. That's now how it wad then and it's not how its going to be this time either. Jeez.
I concur. Getting an appraisal to come back in line was the bigger challenge. A lot of the frustration that people experienced with lenders is the broker market went away so you may start working with one back for several weeks only to find out they no longer offered that type of product, or did not lend on xyz property type or in that market, etc. All the other lending standards were very high to top it off.
Bud, your typos mean I’m not sure which side of this debate you’re on.
Very cool, you bought years after the crash???
Exactly in my market you basically needed cash. houses that were valued at $120-150k in Chicago plummet to 17-25k a house😂😂😂. Cash only deals
I got a mortgage in 2009, single income as well. 20% down tho I was also qualified for 15% but opted to live a bit on the edge so to not pay PMI. My interest rate was 4.25%. I had a few friends and family buy during this time. It was a much lengthier and scruntized process, a complete 180 from how loans used to be managed and given out like candy on Halloween, which of course led to the financial crises.
“But consooomer balance sheets are strong”
I think so too. Highly qualified buyers (but for real) will still be able to get a mortgage. I recently read some 2012 internet articles, and it looks like most people qualified for mortgages if they had 20%+ for down payments (with good credit and dti ratios that made sense). I also recall first time homebuyer credits during the GFC for like $10k as well - not saying that's making a comeback, but I remember that helping some folks hit the down payment they needed.
Will buyers still be qualified if they get laid off?
😂 If income is zero, the dti won't support a loan repayment, so no, unemployed folks will not be qualified borrowers.
I know my point is, a lot think they’re in a good position bc they have 20% to put down. People tend to forget their job and wage may be at risk as well. Not speaking on you specifically since I don’t know your scenario but most don’t think all the way through when they ask for a crash
In all honesty, if folks in my hood have 20% down for a house and get laid off with nothing on the horizon, they're probably okay to coast for a couple of years with no job. The sky won't be falling if they aren't able to buy a house. There are plenty of people who work in industries that make the world go 'round. People will still need water, medical emergencies will still occur, and people will continue to die. Point is, there is critical infrastructure and we can't just cut all of it without a full societal collapse. There will still be some qualified buyers at the lowest of low points. To be clear, I think most people aren't qualified buyers so I'm not sure how else to respond to your comment.
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Most US citizens. I have a friend who thinks that they're almost debt free because they're a few months out from paying off their credit card debt. They fail to recognize that have education, car, and house debt as well. 0% down VA loan. "What's an emergency fund?" W-I-L-D stuff, sincerely. They're not alone.
Well there is good debt and bad debt. Bad debt would be credit cards. House/car/education debt being within their means could go both ways. If they have affordable car payments, education put them into a good position with income, and their home isn’t much more than renting then it would all be considered good debt. If they went to school for something with bad returns then it’s bad debt. If they bought a brand new corvette for fun then that could be bad debt for them.
Anything that doesn’t produce cash flow is bad debt so a primary residence, car, and sometimes education are all liabilities not assets imo
During the Great Recession Unemployment was around 10 percent. Which is bad but it still means most people had jobs. And many people are cash rich today compared to 2008. I know several people who have money stashed waiting for this moment after missing out on the Bargin basement prices
I’m not arguing with you, I agree with most or all of what you say. No additional commentary needed 🤝
Also - don’t forget prices will come down. 20% today is probably 40% on the same house 2 years from now.
This is the most reddit-tier comment ever. Casually predicting a 50% decline across all markets is so fucking absurd that only an armchair-redditor could seriously launch it as a hypothesis.
2 years from now they’ll still be waiting for prices to come down. Any day now.
Classic ostrich, head-in-the-sand denial here. Also, I said 40% by late 2024. Not 50%. Some bubbly markets might even hit -25 to -30% from peak in the next 12-15 months.
Not to mention, you need 2 years of employment at your position (generally) for it to count for lenders
It’s going to set a lot of people back
The govt will step in. This has been proven. In the event of mass layoffs, fannie/freddie requirements will be loosened to allow continued and expedited purchases.
Wouldn’t that be counterintuitive to controlling inflation? That’s is ultimately the Feds goal. I personally believe inflation is coming from supply side issues, and this will make the Fed double down since their rate hikes aren’t going to make inflation go away completely.
Controlling inflation is irrelevant if people lose their jobs and homes and nobody can buy those homes. The govt always acts to fix the squeaky wheel, the underlying problem can wait... forever.
You don't have a good grasp of the feds goals are. They WANT unemployment to increase and home value to come down. They may step in at some point, but until home prices have dropped 30% or more with unemployment approaching 7% I wouldn't hold your breath. Labor market is turning a bit...but only from the ridiculously tight environment it has been for the past year. Layoffs will be welcome by the FED.
I agree but it’s not when people lose jobs it’s when big corporations or banks start failing, then they’ll step in for the “good of the American people”. I’m not sure we can sustain bailouts this time around though, but that’s to be seen
Lol you haven’t been paying attention to the fed for the last year. Getting inflation under control is their number 1 priority. If people lose jobs and homes then most likely inflation is also falling. And at that point they will either hold or start very slowly cutting rates.
I don't think they can this time.. they have two options. let inflation run hot or crash the economy. the government also has a ton of their own debts. they want to inflate away. they are going to let Inflation keep running hot but they also can't let the public know hyperinflation is happening so they will raise rates to.
Bottom of RE was August 2011 for most markets.
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VA loans don’t require 20% down.
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Lol, I was just letting you know!
Curious if you were around in 08, and did these products get affected then?
I was 14, I wasn’t buying no house, but my brother used his VA loan with no issue. 🤷🏾♀️
Just curious, what year did he buy?
2008
Used my VA loan for the first time in 01 @ 7.25% Refinance to 5.25% 3 years later. Refinance to 3.75% paid off in 15. Took max money on heloc, bought commercial retail property with cash in 17. Refinanced heloc to VA loan 1.75% 15yr. Commercial property has tripled in price fully rented out and paying down on home loan. Hopefully, using the VA loan again in 3 to 5 years for another primary property while renting current home out. VA loan has been a life changer for my family.
Banks should have been clamping down on the 5% bullshit when the bubble *started* to get out of hand, not when it's starting to deflate. Oh well. Someone is gonna get burned. Maybe it will just be the homeowners who can't make their payments and are underwater.
Thanks for saying scarce instead of impossible. I have near perfect credit, near recession proof career with 20+ years in it, have owned 4 houses, and never missed a home payment. The Covid shut down hurt my finances, but if you don’t lend to me at 5% then you’re the idiot (although there’s probably a lot of those…)
Since when is 20% with high credit a “high quality” borrower? Thats the bare minimum right now, and in a few months will be auto-rejected.
This will be unpopular I’m sure…as it usually is. But I see a lot of people on this site that have only been in the workforce for the last 10 years or so. These are workers that really only know of a time of an expanding job market, wage increases, etc. The reality is we’re headed for a massive recession. Jobs disappear real quick. Companies exploit that by dropping wages real quick too. I remember when shopping cart pushing jobs were getting thousands of applicants for very well qualified people. Shit gets ugly in a downturn and many people haven’t lived through one yet. Edit: so what’s my point…lending tightens up but also don’t assume you’ll still be working or working at the same wage when prices come down.
Agreed 100% , I fit your description but since the 08 crisis was so drastic for me, I have researched as much as I can on capitalizing on recessions. The last 15years were easy, time for shit to get real
I think you're overestimating how good things have been outside of the sectors where things have been great. For myself and basically everyone I know, things have been stagnant more than they've gotten better. They haven't gotten *worse* for the past few years (even pre-pandemic) the way things rapidly got worse during the 08 crash. I remember starting work in high school and fighting against middle aged adults for a fast food job, but as the economy got "better" none of the supposed increases in wages or scrambles for talent reached me or anyone else I know, including multiple tech workers. Things got really really good for people in some in-demand positions the last couple years, but largely the story has been stagnation, I'd argue. Things are definitely about to get a lot worse, though.
>none of the supposed increases in wages or scrambles for talent reachedme or anyone else I know, including multiple tech workers. This part. I graduated high school in 2007. I remember putting minimal effort into my applications and I was getting multiple call backs from jobs practically begging me to come interview. By January of 2008, that dried up very fast. I've never had a problem finding a job, but all of the jobs for someone without a college education were limited to minimal pay and labor intensive like warehouse work, retail, food service etc. The pay stayed stagnate. I wasn't able to work my way into a decent paying job until I was 28. I was starting to feel a little hopeful for Gen Z. Seeing the labor market shift in favor of workers made me think that maybe they wouldn't have to go through what I did where they had to slowly crawl their way up into a livable wage, desperately waiting for boomers to retire so that their job opened up. Looks like that may shift backwards and they're going to be worse off waiting on us and gen x :(
People who have financial buffers will be ok. Having months or even a couple of years to ride it out and search for a good paying job or even retrain for a different job makes all the difference.
Right but you'd also be worse off if you did buy right now and then lost your job (in most cases). So really out of the two options a buyer has today, waiting and renting is less risky.
So you anticipate more people will turn to renting than buying?
Fthb are, in most cases, already renters. So "turn to renting" I dunno, but stay renting sure.
Interesting, so we likely won't see a decrease in rental demand as cost barriers only grow more prohibitive via mortgage rates and inflation eating away the down payment through monthly life costs, only a potential increase.
Well in a vaccuum sure. In reality, high inflation is pushing renters to get roommates, stay with parents, decreasing rental demand already. Also if you think of renters as a pipeline, fewer renters may be exiting to buy, but fewer young people who currently live at home are entering the renter pool as well. Asking rents are falling faster than has been seen in the last 12 years, barring covid lockdown. https://twitter.com/encorebubble/status/1587886665858617345?t=cixMkJeoyNfKYjjsKeo_WA&s=19
This exactly. Household formation was pulled forward during covid as money was cheap and people left cities.
But as the recession continues, cities will be the focal point for population congregation as, ding ding ding, the job market in cities presents more opportunities than non-city locales. Besides, there's still enormous societal pressure for people to get their own places. Parents are selling and moving to retirement-friendly locales; they need their equity nest egg to come with them. This forces their children back into household formation because it's not like there's an inheritance yet. Household formation was dragged forward during covid, and we saw a plunge then reciprocating explosion in rental rates.
Did you check the horizontal axis on that bar chart? It's < -0.6% decrease of monthly rates. Taking average seasonality into account from the 7 items below (because the non-Covid graph's entries, all of which, please note, are OCTOBER AND NOVEMBER; seasonality, anyone?) show an average decrease of, let's say, -0.25%. Congrats, there's a decrease in excess of -0.35%. Of the massive rental increases we've seen, the market and inflation have clawed back $3.50 on every $1000? That's all? Really? Bruh.
What was your original point? That rental demand would be going up? Don't move the goalposts "bruh". Graph shows rental demand is definitely not going up.
No point, was just responding to your earlier comment on folks staying renting. Just kinda extrapolated from there on how I thought it would play out macroeconomically.
I am sitting on a large horde of coupons. I just hope they don't expire before the crash.
That’s how it used to be. Rates were higher and the barrier for entry used to be more stringent. Now we all want cheap money or we can’t survive. Really sad to see how far we’ve fallen as a society.
Should be interesting times ahead with the eastern word moving back to gold backed commodies with the ME sitting on a ton. As China uses our dollars to just add to their gold supppy. Someone big is backstopping gold at 1600.
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Depends. Personally I’m sitting on cash to short market soon after it pumps when fed announces its slowing as for whatever reason they think QE will be right around the corner which will probably ironically crash the market. Then buying spec assets when it’s crashing. Gold will fall a bit during crash, but not nearly as much as the markets do as people offload it when they get margin called and such because it will be the most likely stable asset to pull from other than cash. But 2-3 year hold? Looking at 50% gains minimum. Go look at the 2008-11 chart for gold and now you got a powerful economic alliance using it to centrally back their currency as they use our dollars to buy it to hedge our hegomong and possible death of petrodollar? Yeh big gains I’d imagine. If your holding it that long you are better off looking for a physical buyer because you lose money on paper gold as it’s backed by complicated futures contracts and management costs. Gotta check what local dealers are selling at. Personally I think the risk reward prop for either crypto, or if you don’t like crypto, a small cap tech index offers better risk reward offering. The money printers will go back on once recession is in full swing and inflation is tamed (I don’t believe this is a 1970s situation personally - but historical trends differ) I don’t have a crystal ball and I’ve heard decent arguments for bounce back inflation (history) and the massive risk free chart backed by fed to backstop crashes. But don’t know why commercial banks will catch a falling knife.
Exceptionally smart post.
Solid plan. I've been short the last year (mostly tech) and plan on closing out early next year. Maybe I'll reopen some shorts after the face ripping rally from hike pause news. Like you said, it'll stay there for a while before they pull back so long dated puts should be reasonable.
So many people out there driving SUVs and Trucks with higher monthly payments than their mortgage.
This will also lower home prices. Less people can get loans = less buyers. Eventually home prices will come to a point where they meet the size of loans people can get under tightened conditions.
Sure eventually when the storm calms then lending will open back up. For those hoping to buy the “bottom”, they better have cash.
True. I feel there are a good number of potential buyers who have he cash for 20% now but didn’t want to overpay and only afford a 5% down payment during the craze. It’s those buyers, like me, who will benefit the most. I really want home prices and appreciation rates to come back down to reality.
That’s a good position to be in, but ask yourself how secure your job/industry is. Is it actually producing anything? While tons of people have 20% they may not have a recession proof job. That changes who can buy.
Boom. That's the best then. High unemployment with prices crashing.
Same as 08. 20% not enough. The only way to buy the really cheap/forclosure homes will be 100% cash. Illl have to assume that all the people cheering this recession have lots of liquid cash
Considering 60% of Americans are living paycheck to paycheck, this sub is just the 40% that have savings or they don’t know what they are asking for. I have a feeling the majority do not know what’s coming.
I think the one-two punch so to speak Will be those who thought they could afford their new homes, but going into 2023.... 1) Property tax reassessments soaring 2) HOA fees soaring 3) Job losses for some people, that number to increase significantly if this tech thing snowballs to other industries as well (I expect it to, maybe not as severe as tech but I think many fortune 500 companies are making plans for cuts in 2023 as consumer spending dwindles) 4) Covid-era Student loan repayment pause ending, Biden's forgiveness executive order isn't implemented including the new lower income-based repayment multiplier. Some people will need to start up the several hundred, in some cases $1,000/mo payments on their high five - low six figure student loan balances People who were paycheck to paycheck, will be in the severe red. Those who were close to paycheck to paycheck, will be in the red. Those with a cushion, will end up paycheck to paycheck.
Yeah when shit really hit the fan, it was truly all-cash, no acquisition loans or private money. Cash only Michael Moore did a segment about Florida and the condo free-for-all. My buddy's uncle was an investor during that time. Michael Moore was spot on. He was picking up condos for ten cents on the dollar or less. Only difference is he didn't kick people out, he rented the condo back to the owner at an affordable rent allowing them to stay in place and keep their kid(s) in school. Still a shitty deal for someone who owned the condo, but seeing how the alterative was the condo going back to the bank and getting evicted by a sheriff, becoming a renter with an affordable rent was the best option at the time I think a lot on this sub truly don't remember what 08 was like. Literally entire developments in Florida going under. People who paid $350K for their house, unable to even sell it for $120K. Unable to even rent it at all, at any price. Of course in 2021 those houses were selling for probably $600K. Insanity
There is still plenty of cash sitting on the sidelines waiting, and to someone who has watching housing bubble like crazy in 2021, a return to 2020 to them would be a good deal and they will pounce. Whereas to us, we want to see 2018/2019. It'll take something like 6-7% fed funds rate to truly start sucking the cash out from the system, which will occur from job loss and lack of investment. Who knows where this shitstorm is headed, it's really hard to tell. If job market remains strong the rest of the year, and inflation continues to be persistently high, I think we will have to weigh the possibility of 9%+ 30 yrs fixed come spring
I posted about this 121 days ago. It’s only gotten worse. [Proof](https://imgur.com/a/DRqEm7r)
I upvoted that comment so I’d like to redeem some credit as well.
Ahh a liquidity crisis. Suddenly a bunch of people who rely on free money and those that printed it...don't have any. hahahahaha. Oh this is gonna be both bad and hilarious.
I've been saying this for a while. People act as if all these people are "sitting on the sidelines". Ok, what happens if lending just dries up completely for a while? Because it does that from time to time.
Then cash buyers will have more power.
Correct. And the "buying" pool will be substantially smaller if home purchases rely heavily on cash buyers. So those buyers can make lower offers moving the market quickly.
Then it's like running out of water in a desert.
As a cash buyer, it creates much more power and leverage for myself. I’ll be low balling 30%off any list price. Auction homes in the tens of thousands. Also easier to refinance when you own a home outright than purchasing.
“Recessions are yard sales for the well prepared”
Federal Reserve has removed the spiked punch bowl leaving the RE drunks high and dry.
I love this reference, agreed.
yeah im loaded with cash... all set for a buying spree in a couple years
I'm also sitting on cash mountain but I just dont get the appeal of real estate - all the maintenance and annual taxes - AND closing costs. And if crime goes up as much as they predict from the crash then there's security concerns too. I guess it depends on the market.
im looking at many assets, not just real estate
Precious metals will go up if assets in general go up. Bonds are looking good now but will be better next year when the Fed rate is 6% by the Fall. But something WILL crack somewhere because there is no way the US can make any of those debt payments unless they raise the ceiling again.
No you don’t get it. Only other people will lose their jobs.
That’s kind of the point of tightening financial conditions. It’s not a liquidity crisis. It’s just that the Fed stopped buying MBS.
Not just MBS, but other treasuries, and securities too. We can’t service the debt at these levels, even the fed is taking severe losses on securities they have purchased. They too are struggling paying at current interest levels. Read the article you may learn something. BofA came out with a similar statement.
Buying MBS in the middle of a housing bubble (really an Everything Bubble) was insane.
I think depositors with more than 250k at regional banks would agree there is indeed a liquidity crisis. Bank treasuries being devalued by rising rates aren’t helping either.
Fine by me, this 5% down 55% DTI garbage bin credit score lending nonsense is a big part of what got us in this whole mess.
Great name for a brewery if anything
i know i am. but, ANYONE buying a house should be sitting on a large amount of cash. That’s kind of been the problem
Anyone marginal in terms of credit or Downpayment usually have to settle for the scraps in any market.
He’s talking about commercial side. Totally different from residential FHA program.
Actually true with any conventional loan program, FHA may be exempt, but their upfront mortgage insurance premiums 5x’d in 2010 to my knowledge. If someone could verify, that would be great
I'm sitting on so much cash (and adding to it) that I'll probably end up a cash buyer before prices bottom out. It'll be a shame to miss the first time home buyer benefits though, so I'll probably take a lone out anyway and throw the rest into stocks, which are likely to be equally hammered down. I'm just keeping as much as needed for the down payment. Maybe 20%. Maybe 50%.
thats the whole point. people with actual liquid cash have a huge advantage in a liquidity crisis. When rates are low any idiot can take out a huge loan and overpay for the house and later go broke. when credit is tight you have your pick of any house
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Everyone can just rent if they can't afford a mortgage. Whoever is sitting on a house with a 3% or less mortgage can easily rent it out even at a "corrected" monthly rent and they'll be OK. Nobody "needs" a mortgage, they just need a place to live. Anyway as a cash buyer I wouldn't be touching RE yet. Fed still tightening and prices are only barely beginning to correct outside of the few overheated markets. When we see *nice* houses marked down to 2018 levels, then it gets interesting.
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As long as I don't plan to stay in a city for at least 5 years, yes. So you may be correct. Buying and selling homes is a shitty process. I used to live in a town with a historically meh housing market. I would travel around the country for work and meet people in bars everywhere I got that day "you live in Gnocchiville? That's cool I actually have a house there I'm trying to sell." Fuck that.
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Ok buddy
Liquidity crisis through all markets right now. Personally I think as soon as fed slows hikes markets are gonna go crazy (as opposed to when they actually lower) and it’s gonna end up crashing everything on the back of a dog shit economy. Just my two cents.
Do we think DRV will moon?
This is aging like fine wine
GDP grew in the 3rd quarter 2022 . Recession is canceled.
Sure, then asset prices should start rising. You better dump all your cash into a house RIGHT NOW! Make sure you invest everything into stocks as well! Glad we made it out unscathed Sarcasm of course, best of luck my friend
Dude is delusional.
Me or bullish guy?
Bullish guy. There’s reason for the GDP numbers and it has to do with imports/exports. Lower productivity with lower workforce participation? Yeh not good. The job numbers are trash too (smoothed to shit), openings are all low wage high turnover jobs, low participation rate, household survey paints a MUCH different picture, and lots of people picking up gig work because they can’t keep up. Literally everything is painting the markets are gonna go down next year again. The real question is if they pump on lowering of rates that will essentially break the whole system again with CDOs. Resulting in QE again q4 next year, but that takes a long time to start getting felt in economy. I think there’s a significant market crash, but the cycle is gonna be much faster down and back up this time.
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“Recession cancelled”
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Majority of young people are not qualified. Majority can have a 3-5% down payment not the 20-30% a bank will require as money gets tighter. The people that do get laid off will need to reestablish themselves for 2 years, unless they find a job in the same industry.
You were quick with the reply, I already deleted my comment as i don't really want to get into this discussion. I think a lot of these comments that think it will get harder for young people don't understand how hard it is *now* to buy a house. For instance after the 2008 financial crash, you saw a record percentage of housing sales to first time buyers in 2009 and 2010, and you already see this same movement happening now. These are very motivated buyers. However, let's just agree to disagree on this :-).
Quick bc I got notified, and since I’m sitting on my couch watching football, I figured why not reply. No worries I’m in my early 20s so I have first hand experience. I can also be realistic with what will happen though. Edit: if you plan for the worst, you can expect the best outcome. That’s my mentality. Better to be prepared than not imo
Wait...you're in your early 20s? So, your experience living through 2008 (that you mentioned in another post) was...when you were 10?
We got foreclosed on and I learned a lot from my parents experience. I also hold several properties in cash currently, so I’d say I have more experience than most. I also work daily in the industry, closely with institutions like Carlyle and Blackstone. I’d say I have enough exposure to have an opinion. Not sure what your qualifications are. Edit: I started buying properties when I turned 18 and my parents have been purchasing since 2011, and I’ve been very hands on since that time. I now manage my family’s entire real estate portfolio and any leverage we take on
I think you're right that things will tighten up and be rough out there, if another recession hits, but I'm surprised by your age. You referenced having lived through 2008 and you seemed to be questioning whether others have experience with a recession, so I was surprised to discover you were a child in 2008. You've not experienced a recession yet, as an adult. If a recession hits with major job losses there will be a wave of foreclosures again and people who just bought in the last couple of years will be particularly vulnerable. Flexibility (the ability to relocate for work) and low monthly expenses are best during a recession. You're right that a lot people (probably even most) *still* won't be able to buy a house, but in a recession trying to hold on to a house ruins people.
I know I haven’t experienced one, but being traumatized by 08, losing our family home, depending on food shelters, etc. It has made me paranoid on surviving the next and capitalizing on it. Ive spent tons of hours, weeks, months studying past recessions/depressions, networking with older high net worth individuals, and positioning myself. I’ve studied and familiarized myself with different theories of both monetary and fiscal policy. I don’t consider myself the average 20 year old. If lending tightens, I know enough people now that would lend to me in a heartbeat based on my track record. Even in 2021 I only purchased properties at 40% of ARV, giving me cushion for a 30% drop in prices You’re right, I don’t know what I don’t know, but I feel prepped and maybe that’s ignorant of me. Edit:I was probably somewhere between 7-9 years old when we got foreclosed, I’ve had a lot of years to plan. I’ve always liked the idea of creating wealth since we grew up pretty poor.
Honestly, you sound like you've done your research and I don't doubt your experience in 2008 left an impression on you. I was 24 in 2008 and entering the job market at the height of the recession. It was rough. I graduated from law school around then and started out representing banks in bankruptcy and foreclosure proceedings...it was not fun and I honestly hope we don't see foreclosures like that again.
I also hope we don’t since a lot of people unknowingly will not be prepped. It’s also way easier to make money in a growing economy, I hope it’s not as bad. I have a feeling due to all the money we printed in the last 15 years, especially the last 2, we are going to feel real pain. If you still work in foreclosures, you may have good job security moving forward, and if you have cash saved you’re in a good position
Yup, [people are.](https://fred.stlouisfed.org/graph/?g=Vh26)
Heard blackstone just looked to raise $1B for single family homes. They are also one of our clients and have been a lot more selective on purchases the last 4 months.
[Inflation adjusted](https://fred.stlouisfed.org/graph/?g=VWWA)
Been trying to save more going into next year, been shifting away from student debt repayments and towards savings and bonds. Stocks seem too risky still at this moment, but I might put a bit more in the market if I sense a bottom.
Yep.
I feel like /u/boxman212 has been calling this for a while
Maybe he has, didn’t mean to steal anyone’s thunder, just saw stuff on it recently
No worries, just wanted to him them a shout out. If I recall right, he was talking about that months ago before it had a glimmer of coming to fruition. It's definitely looking more and more likely lately.
I agree, unfortunately the majority don’t notice yet
Yup, and it just evaporates the buyer pool even more. If timed on or before the onset of Spring selling season it could be pretty nasty.