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NickButera

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5 hours ago, big_palooka said:

Every market is different, yes. But you'll not see the bottom completely fall out as it did a decade ago in places like Vegas and parts of Florida. When I get board, I'll look at the data on Vegas as I'm interested. Currently I'm licensed in WA, CA, UT, CO, MT, TX, VA, GA, FL so those are the markets I know well.

Regulation in the mortgage industry has stabilized the housing market. The stated or no Income and asset loans are a thing of the past. The standards for qualifying have been higher. Income, asset and down payment verification have made it harder to get approved than ever. 

Some major markets could be in a mini-bubble, but it will be nothing like 2008. That was the 2nd biggest recession to the great depression was caused by housing and speculation. 

I do not think it will be as big of a loss in real estate as it was before.  I think you will lose about 30% of gains, which is roughly a 10-15% overall drop, on average but areas like Vegas will feel it more than others.  I do believe also that the drop will not come from the same source as before.  There are a ton of variables that include baby boomer, millennials, interest rates, owner occupied rates, foreign investment, etc....  My overall belief is that this will be a nasty recession that will effect the housing market some but will kill areas like Vegas that have seen unbelievable growth for a while now.

40 minutes ago, S&B Bleeder said:

I find this discussion very interesting but where are we going with this topic?

G wants to buy Carr's house next to Gruden after we cut him.  Speculating when would be the best time to get a good deal and we can all go to his place and harass Gruden.  We will cut him some slack though if he brings the alcohol to the BBQ.

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9 hours ago, S&B Bleeder said:

I find this discussion very interesting but where are we going with this topic?

We're going to buy the stadium too.   =)

Think BIG and shoot for the stars, might get lost in space but at least it's moving forward...or is that backward depending on perspective and Newton's 3rd law?!? In space it probably doesn't matter...

Edited by G
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14 hours ago, big_palooka said:

The FED lowering rates has nothing to do with long term fixed mortgage rates. FED rate cuts only effect short team rates.

I also don't think it affects credit cards, car loans or student loans and those are at record highs along with housing in California.

Everything is connected when it hits the fan though.

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On 12/4/2019 at 2:09 PM, big_palooka said:

The last recession was directly tied to the housing market and housing crisis. Bad mortgage loans played a huge part in this. Watch The Big Short if you haven't. There were some other factors that played in here as well that would take forever to get into. Point is, it was a one off for housing.

Historically, in a recession, housing will rise or stay stable as expected for this pending recession. Why? Because with a recession, interest rates will drop. This brings in new pools of buyers and more affordability for move up buyers, etc. 

I work in mortgage and real estate. There will be some cooling off, but there won't be a big drop in housing prices this time around the way we saw 2007/2008. 

Anyone with a pulse and a FICO above 680 back then could qualify for $500k on an interest only home loan. Just curious how does someone ever pay off an interest only loan? What really puzzled me was why didn't the government allow longer term loans like they do in other parts of the world when things started unraveling seems to me it would have helped a lot of people actually afford their homes.

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12 minutes ago, billking said:

Anyone with a pulse and a FICO above 680 back then could qualify for $500k on an interest only home loan. Just curious how does someone ever pay off an interest only loan? What really puzzled me was why didn't the government allow longer term loans like they do in other parts of the world when things started unraveling seems to me it would have helped a lot of people actually afford their homes.

lol... you didn't need a 680. Subprime companies would give a stated income/asset loan to 500 FICOs. 

You don't payoff an interest only loan unless you start paying money to principal (which most won't do). It was a tool to get a cheap payment for a house you couldn't actually afford in hopes that housing kept growing and you built equity. Instead, housing dropped and people were massively underwater. 

And they used to have 40 year loans. They still pop up from time to time, but not popular among banks. 

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On 12/5/2019 at 10:02 AM, drfrey13 said:

I do not think it will be as big of a loss in real estate as it was before.  I think you will lose about 30% of gains, which is roughly a 10-15% overall drop, on average but areas like Vegas will feel it more than others.  I do believe also that the drop will not come from the same source as before.  There are a ton of variables that include baby boomer, millennials, interest rates, owner occupied rates, foreign investment, etc....  My overall belief is that this will be a nasty recession that will effect the housing market some but will kill areas like Vegas that have seen unbelievable growth for a while now.

G wants to buy Carr's house next to Gruden after we cut him.  Speculating when would be the best time to get a good deal and we can all go to his place and harass Gruden.  We will cut him some slack though if he brings the alcohol to the BBQ.

I like it.  I'll  be in Vegas some next season.  We can party at G's house.  

Moving to Vegas?  A thought.  I want to get out of California but there's too much work to just leave it behind and the weather's exceptional.

Actually I like this discussion on real estate.  My Son's friends want to make their first purchase.  I told them to wait for the decline in property values.  It happens every 10 years give or take and we're beyond that point.  The last recession was a lalapalozza.  It will extend the period beyond what we've experience in the past unless there's a major catastrophe. 

Edited by S&B Bleeder
I had more to say.
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3 hours ago, big_palooka said:

lol... you didn't need a 680. Subprime companies would give a stated income/asset loan to 500 FICOs. 

You don't payoff an interest only loan unless you start paying money to principal (which most won't do). It was a tool to get a cheap payment for a house you couldn't actually afford in hopes that housing kept growing and you built equity. Instead, housing dropped and people were massively underwater. 

And they used to have 40 year loans. They still pop up from time to time, but not popular among banks. 

40 year loans.  I was sure they were coming in 2008.  They'll be back.

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4 hours ago, billking said:

Anyone with a pulse and a FICO above 680 back then could qualify for $500k on an interest only home loan. Just curious how does someone ever pay off an interest only loan? What really puzzled me was why didn't the government allow longer term loans like they do in other parts of the world when things started unraveling seems to me it would have helped a lot of people actually afford their homes.

The interest only part of the loan ends at a certain point.  A lot of buyers in the last cycle used a 2/28 arm which means the interest only part was for two years only and generally carried the lowest interest rates.  They also had 3 ,5, 7, and 10 year options to go along with negative amortization loans where you pay less than the interest rate and your principal increases.   One of the biggest issues was a person could afford the interest only part but not the principal + interest.  So when the interest only period ended and the equity did not grow there was now way to refinance, sell the home, or make the payment.  That was a big part of the problem in the foreclosure market and was greater because many interest only loans where issued in the subprime market where many buyers did not care as much about negatively effecting their credit so they walked away.  it was a perfect storm when combined with the greed of the banks and the government officials giving the public what they wanted instead of what they needed.  The government did very similar things with the new regulations.

The issue with loan terms is not directly a government thing.  A bank can technically allow for any term they desire as far as I know.  The issue with longer term loans is the secondary market.  Fannie Mae and Freddie Mac had to follow government restrictions on loans they want to buy.  Fannie Mae started buying 40 yr mortgages in 2005 but I have been out of the loop for so long now I do not know any of the regulations except conversations I hear my wife having about her clients.

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13 minutes ago, S&B Bleeder said:

40 year loans.  I was sure they were coming in 2008.  They'll be back.

Right before I left the industry I started seeing 50 yr loans from some lenders.  Just like how you see 72 and 84 month car loans and 20 yr student loan programs.  Get liquid and be smart.

Edited by drfrey13
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13 hours ago, drfrey13 said:

Right before I left the industry I started seeing 50 yr loans from some lenders.  Just like how you see 72 and 84 month car loans and 20 yr student loan programs.  Get liquid and be smart.

Japan used to do 100 year multigeneration mortgages. Crazy to think about

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2 hours ago, big_palooka said:

Japan used to do 100 year multigeneration mortgages. Crazy to think about

i know it is a little different but this model allows for too high of an increase in cost.  Disneyland used this model for their annual passes and it allowed them to go from charging $100 for a pass to now between $400 to $1400.  That increase is 4 times higher than inflation over that period for the lowest priced plan.  All because the perception of paying $20 a month with a down payment of $160 is easier than paying the cost up front.  If they never switched to a monthly plan the cost increase would have maybe gone up to $250 but I believe it would have stayed under $200.  People wanting to put off pain always hurts them more in the end.

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On 12/6/2019 at 3:42 PM, S&B Bleeder said:

I like it.  I'll  be in Vegas some next season.  We can party at G's house.  

Moving to Vegas?  A thought.  I want to get out of California but there's too much work to just leave it behind and the weather's exceptional.

Actually I like this discussion on real estate.  My Son's friends want to make their first purchase.  I told them to wait for the decline in property values.  It happens every 10 years give or take and we're beyond that point.  The last recession was a lalapalozza.  It will extend the period beyond what we've experience in the past unless there's a major catastrophe. 

Got to buy it first. =) Right now I stay in my ex's comped hotel rooms. 

On 12/7/2019 at 7:58 AM, drfrey13 said:

Disneyland used this model for their annual passes and it allowed them to go from charging $100 for a pass to now between $400 to $1400. 

 People wanting to put off pain always hurts them more in the end.

Agree 100% about get liquid and be smart.

I had that 100 Disney pass when I lived in SD and LA. Was great in LA as I'd go down for a few hours mid day and go through exit as a single rider. LOL

I've put off the pain many times before and the next 6 months is all about fixing years of enjoyment (debt) and working 2nd job (investing and options in recession causes cuts) Then see where we are and reassess at that time. I'm single w/no kids so it's easy for me to just put dating/extras on hold for a bit. When I was younger I doubt I'd look as far forward as I do now. If Vegas falls through Thailand for retirement is always an option.     'Stay thirsty my friends'   =)

Edited by G
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32 minutes ago, G said:

Got to buy it first. =) Right now I stay in my ex's comped hotel rooms. 

Agree 100% about get liquid and be smart.

I had that 100 Disney pass when I lived in SD and LA. Was great in LA as I'd go down for a few hours mid day and go through exit as a single rider. LOL

I've put off the pain many times before and the next 6 months is all about fixing years of enjoyment (debt) and working 2nd job (investing and options in recession causes cuts) Then see where we are and reassess at that time. I'm single w/no kids so it's easy for me to just put dating/extras on hold for a bit. When I was younger I doubt I'd look as far forward as I do now. If Vegas falls through Thailand for retirement is always an option.     'Stay thirsty my friends'   =)

3 kids makes it a little tougher for me but definitely looking for a second job right now.  Looking for recession proof work and not caring about the pay as much.

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