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Mortgage Market Reopens to Risky Borrowers

wsj.com

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Re: Mortgage Market Reopens to Risky Borrowers

#81

Post by opportune »

jedberg wrote: post #57
opportune wrote: post #22

Is anybody else making the supposedly foolish decision to time the housing market? I am financially ready to purchase my first home, currently living in the bay area, but I think right now just looks like a bad time. - A lot of housing price growth is seemingly "priced in" since rents for condos/apartments significantly lower than total monthly ownerships costs (mortgage+hoa+insurance+taxes+etc.), even with 20% down.…

In the Bay Area prices have already started to level off. Sites like Zillow are predicting a 10% downturn in the next year in the highest priced areas. If you want to buy in the Bay Area, I'd wait a year and see what happens. I don't think the price increased will outpace your savings by very much if you hold out and continue to add to your down payment fund. But I'm just a guy on the internet, so don't blame me if I…

Yeah I've seen that too, and that's at least one point in my reasoning as well. I am not really sure what factors Zillow is specifically using to predict that, though.

I'm looking to buy a 2br condo somewhere between San Mateo and Santa Clara (inclusive) which should probably be hit the hardest, however even 10% seems not enough - not from an affordability standpoint, but from a value standpoint, I think even with some appreciation it would be better to keep renting. And there must be a limit to how much 1-2 br condo in the area can appreciate, since I assume it will probably always be pegged to at most somewhere around what a local software engineer salary with ~3-10 years of experience could pay for a mortgage. And they are already right around that level.

Re: Mortgage Market Reopens to Risky Borrowers

#82

Post by ryanSrich »

acdanger wrote: post #69
jedberg wrote: post #57

Earlier quoted context omitted.

In the Bay Area prices have already started to level off. Sites like Zillow are predicting a 10% downturn in the next year in the highest priced areas. If you want to buy in the Bay Area, I'd wait a year and see what happens. I don't think the price increased will outpace your savings by very much if you hold out and continue to add to your down payment fund. But I'm just a guy on the internet, so don't blame me if I…

Interesting, have a link to the Zillow prediction?

This is what I could find, but doesn't corroborate the prediction mentioned above https://www.zillow.com/san-francisco-ca/home-values/

Re: Mortgage Market Reopens to Risky Borrowers

#83

Post by chiefalchemist »

rayiner wrote: post #6
apo wrote: post #2

> Some $2.5 billion worth of subprime loans, those with FICO credit scores below 690, ended up in mortgage bonds in the first quarter of 2019. That is more than double a year earlier and the highest level since the end of 2007, according to Inside Mortgage Finance. There was $1.9 billion worth of subprime mortgage bonds in the second quarter. Statements like this are hard to evaluate without knowing the denominator:…

The problem is that most journalists are innumerate. As Matt Yglesias notes, "many reporters and editors don't really understand what they're doing. Reputable colleges hand out degrees to people who have almost no understanding of quantitative methods." [1] These journalists see the numbers as garnishes on a narrative point. They're not trying to put the numbers in some sort of mathematical context to draw sound conc…

A start would be that the rest of us stop considering these type journalists. Call them reporters. Call them writers. But journalism is a verb. And if you're not going to act appropriately then you're not worthy of being labeled with the title.

Words matter. They shape worlds. Ironic, huh.

Re: Mortgage Market Reopens to Risky Borrowers

#84

Post by jedberg »

acdanger wrote: post #69
jedberg wrote: post #57

Earlier quoted context omitted.

In the Bay Area prices have already started to level off. Sites like Zillow are predicting a 10% downturn in the next year in the highest priced areas. If you want to buy in the Bay Area, I'd wait a year and see what happens. I don't think the price increased will outpace your savings by very much if you hold out and continue to add to your down payment fund. But I'm just a guy on the internet, so don't blame me if I…

Interesting, have a link to the Zillow prediction?

If you look up a random house on Zillow[0] and scroll to the bottom on the right in the "Neighborhood" section, it will tell you about how much it's gone up/down in the last year and their prediction for next year. I've looked at a lot of houses and the 10% is sort of my mental average of what I've seen around the Bay Area. That house for example has a 13% down predation, but each "Neighborhood" is different.

[0] https://www.zillow.com/homedetails/5441-Kaveny-Dr-San-Jose-C...

Re: Mortgage Market Reopens to Risky Borrowers

#85

Post by throwaway38501 »

Throwaway account for reasons that will be clear.

Few years ago, used to be have a 820+ credit score, earning £30k a year, had one barely used credit card that was always fully paid off, I would struggle to get approval for loans or overdraft, etc.

My depression and anxiety came back, got into reckless behaviour and drugs for a while, three credit cards, payday loans, random holidays on credit for no reason, down to 400s or so now. My banking app has started aggressively suggesting mortgages to me since last month, every time I open the app.

To those worried I'm turning things around, cut down on drugs quite a bit, payday loans all paid off, £2k left in credit card debt and will start earning £60k a year once I start my new job next month.

Re: Mortgage Market Reopens to Risky Borrowers

#86

Post by opportune »

swypych wrote: post #79
opportune wrote: post #22

Is anybody else making the supposedly foolish decision to time the housing market? I am financially ready to purchase my first home, currently living in the bay area, but I think right now just looks like a bad time. - A lot of housing price growth is seemingly "priced in" since rents for condos/apartments significantly lower than total monthly ownerships costs (mortgage+hoa+insurance+taxes+etc.), even with 20% down.…

I can see your perspective, I don't think you are wrong. I bought my house in 2014 and thought the very same thing. I eventually made the decision that my house is not an investment, it's a home, which will I will use for shelter, and that I do not plan to sell for 20+ years. So long as I can afford to make the mortgage payments and not be house poor, I will be reasonably happy and this should work out. Through that…

That is completely fair, and it makes a lot of sense if you have that longer term mindset.

I think that for the amount of property I could afford now, I would probably want to trade up for a larger property after about 5-15 years once I have kids. Or I might take a job in NYC around then as well. So my outlook is a bit more short term, and the flexibility of renting carries a bit of a premium.

The benefit of your approach is that you will probably weather any short term decrease in market value of your property and make up for it over time. That definitely works if you are willing to really commit to an area for a long time

Re: Mortgage Market Reopens to Risky Borrowers

#87

Post by jedberg »

ryanSrich wrote: post #82
acdanger wrote: post #69

Earlier quoted context omitted.

Interesting, have a link to the Zillow prediction?

This is what I could find, but doesn't corroborate the prediction mentioned above https://www.zillow.com/san-francisco-ca/home-values/

You have to average out all the different areas of the Bay Area. For example check out San Jose: https://www.zillow.com/san-jose-ca/home-values/

Re: Mortgage Market Reopens to Risky Borrowers

#88

Post by rayiner »

hinkley wrote: post #74
rayiner wrote: post #6

Earlier quoted context omitted.

The problem is that most journalists are innumerate. As Matt Yglesias notes, "many reporters and editors don't really understand what they're doing. Reputable colleges hand out degrees to people who have almost no understanding of quantitative methods." [1] These journalists see the numbers as garnishes on a narrative point. They're not trying to put the numbers in some sort of mathematical context to draw sound conc…

Journalists, or people, some of whom are journalists?

Journalists specifically, among college graduates generally: https://nces.ed.gov/fastfacts/display.asp?id=37.

In 2015-16, there were 1.9 million bachelors degrees awarded, of which about 1.1 million were in business, engineering, science, math, psychology, or health fields, all of which would involve significant math/statistics. A further 160,000 were in social sciences, which typically involve a significant statistics component these days. So only a minority, 35-45% graduate in fields like communications and journalism, where math would not necessarily be part of the curriculum.

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