Rocket Mortgage to trim 8% of workforce as home-loan market shrinks • Hacker News Board

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#141

Post by llampx » Thu, Apr 28, 2022, 10:49 AM UTC

agent008t wrote: post #136

itsoktocry wrote: post #121

Earlier quoted context omitted.

> Going in debt for 30-40 years has zero appeal for me, it just seems like a terrible move. Buying a house isn't for everyone, sure. But this is a serious misunderstanding of what "going into debt" is. You're not buying a TV you'll throw out in 5 years, you're buying an asset class that has a history of appreciating in value over 100+ years that you can get incredible leverage on. In the US and Canada, at least, buyi…

>buying an asset class that has a history of appreciating in value Correction - over a time period of decreasing interest rates. Housing, on its own, is a depreciating asset. It is a consumable like a TV. It deteriorates with time. "Housing always goes up", without an understanding of why it has been going up, can be a dangerous belief and could be one of the reasons why housing at the moment is so expensive relative…

Exactly. I believe interest rates bottomed sometime in 2020-2021. Those rates are not going to be seen for another few decades. It remains to be seen what this will do to house prices. What happened to most speculative tech stocks since 2021 can also happen to other asset classes.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#142

Post by cascom » Thu, Apr 28, 2022, 10:52 AM UTC

yurishimo wrote: post #133

cascom wrote: post #107

Earlier quoted context omitted.

There have been a lot of headlines about this, and in the handful of markets I’m sure this has a price effect, but in the us market as a whole, they are $10b-$100b? of a ~25T market, it just doesn’t move the needle

It doesn’t need to be spread out to have an effect. If the investments are concentrated in cities, that raises the price of housing in the surrounding areas as there is more demand for rural properties from city residents trying to escape the higher prices. Anecdotally, I’m seeing crazy numbers for “average” houses in the small towns surrounding the DFW metroplex. Hell, the house my parents built in 2006 for $140k is…

There are 950k homes for sale in the us today (down from 1.05m a year ago)…if I sold $50b of homes tomorrow @ $430k median price = 120k that would bring inventory levels back to where they were a year ago and represent 2% increase in annual home sales (on ~5.8m), by your logic national home prices would drop…I don’t think that’s a large enough number for that to happen… maybe if I sold $0.5T?

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#143

Post by ddorian43 » Thu, Apr 28, 2022, 10:59 AM UTC

pooper wrote: post #114

lmt55 wrote: post #102

Earlier quoted context omitted.

This is fair, you didn't miss those people. But I think it was worth me highlighting them because they are, as I argued, very important. I somewhat agree with your argument. Housing costs more than other assets compared to its economic value, exactly because people have an emotional reaction to the idea of owning it - or the idea of not owning it. However I have seen middle-class people overextend themselves to 'buy…

A real estate investment newsletter suggests that for a successful real estate investment, as a rule of thumb you should be able to charge almost one percent of the cost of the house as rent because a rational investor shouldn't count on the value of the house going up. I am curious what you guys think of this statement. I think the idea is if the potential rent you get out of your investment is too much under one pe…

> A real estate investment newsletter suggests that for a successful real estate investment, as a rule of thumb you should be able to charge almost one percent of the cost of the house as rent because a rational investor shouldn't count on the value of the house going up.

Does this have all taxes(property,rent,etc) included in the cost?

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#144

Post by j4yav » Thu, Apr 28, 2022, 11:01 AM UTC

JetAlone wrote: post #90

Buying a home mortgage is signing yourself over to a lifetime of servitude and uncertainty if you lose your income stream. Buy a property out of pocket to live in and make the most of a DIY life at a fraction of the cost and an odd stress differential, or just keep renting and be agile enough to roll with the punches.

How do you avoid the servitude and uncertainty by renting instead? Aren’t you still dependent on an income stream to pay rent without being kicked out?

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#145

Post by BirdieNZ » Thu, Apr 28, 2022, 11:01 AM UTC

agent008t wrote: post #136

itsoktocry wrote: post #121

Earlier quoted context omitted.

> Going in debt for 30-40 years has zero appeal for me, it just seems like a terrible move. Buying a house isn't for everyone, sure. But this is a serious misunderstanding of what "going into debt" is. You're not buying a TV you'll throw out in 5 years, you're buying an asset class that has a history of appreciating in value over 100+ years that you can get incredible leverage on. In the US and Canada, at least, buyi…

>buying an asset class that has a history of appreciating in value Correction - over a time period of decreasing interest rates. Housing, on its own, is a depreciating asset. It is a consumable like a TV. It deteriorates with time. "Housing always goes up", without an understanding of why it has been going up, can be a dangerous belief and could be one of the reasons why housing at the moment is so expensive relative…

Most of the housing bubble is actually a land price bubble. Land is only a long-term depreciating asset in shrinking cities, because demand for the land is decreasing.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#146

Post by IMSAI8080 » Thu, Apr 28, 2022, 11:06 AM UTC

vmception wrote: post #57

alimov wrote: post #36

Earlier quoted context omitted.

maybe one more interesting detail worth noting: c) private equity firms are buying up insane amounts of real estate, being able to outbid regular home buyers and (don’t quote me on this b/c I’m not 100% sure) pay cash for the properties they buy.

Which they only did because they ran out of stuff to invest in (while still attracting so much other capital to invest at all), and the valuations of everything else was already stretched. not suggesting these firms were trying to do anyone favors by allowing people to afford homes the rest of the time, its more so that the math temporarily made sense with that much liquidity in the market so they jumped into real es…

Too much cash chasing too few decent investment opportunities is exactly the problem. The more cautious end of institutional investors have nowhere to go. Blue chip shares are at incredibly high valuations and bonds are returning next to nothing. Interest rates needs to be at about 3 - 4% to make government bonds broadly attractive, which will then make residential property uninteresting to this kind of investor without putting too much strain on the regular home buyer.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#147

Post by maxerickson » Thu, Apr 28, 2022, 11:06 AM UTC

matsemann wrote: post #112

runeks wrote: post #59

Earlier quoted context omitted.

> My question is: why would you fix for 30yr when you know you're paying multiple points to offset market uncertainty? To fix your monthly payment for the next 30 years. Furthermore, with a fixed rate mortgage you can benefit from interest rate volatility since you can always buy back the debt at par. In practice this means you can: 1. Take out a fixed rate loan for $n at x% 2. If the rate doubles (to 2x%) you can re…

Danish loans are a bit special, though, as in most people don't pay them down, but just use them as a way of having a fixed rent. At least that's my experience, all my danish family own their houses, but have almost done no real payments on the loans. Whenever they've paid down a bit, that is just refinanced to a new loan so they get cash, aggressively promoted by the banks. Or the equity is just based on a hope that…

I wonder if the way I use "homeowner" differently than the phrase "own their home" is particular to me. I wouldn't say someone with a mostly unpaid mortgage "owns their home" even though they are a homeowner.

It is "their house" and things like that also, but I hesitate to directly say that they own it.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#148

Post by tzs » Thu, Apr 28, 2022, 11:09 AM UTC

hans1729 wrote: post #19

cammikebrown wrote: post #2

Seems like the bubble burst is going to be more sudden than we thought. 30 year mortgages are suddenly at nearly 5.5-6%, listings are sitting on the market for longer, and multiple cities are cracking down on Airbnb.

I mean, it's not really a burst, we're just hearing the hissing noise of the obvious leak. The true demand from people with the intend to actually live in the estates has been constantly decreasing since around 2000; the real salarys dropped since then, so did the buying power. The only reasons people found buyers at x3-x10 (!) prices were a) that there is a class of people wealthy enough to still afford the purchase…

> that people were given loans they should either never have gotten (2008) or that they shouldn't have asked for

I bought my house in early 2007 and mortgages were indeed crazy back then. My analysis said that at the mortgage rates for a 30 year fixed mortgage back then (a tad over 6%) said that my ideal home financially would be around $H or less, that I could go up to 1.25 $H without house payments being high enough to crimp my currently lifestyle, and maybe I could push it to 1.5 $H if the house and location were really great.

When I went to get a mortgage from the now infamous Countrywide Financial they looked at the same data I had and pre approved my for a loan of around 3 $H.

That was an absolutely ridiculous amount. I had the analysis to prove that, so just laughed and went back to looking at homes in the under 1.5 $H range [1].

A lot of people who didn't know how to do their own analysis thought that the mortgage companies would only approve them up to what they could reasonably afford, and so getting a pre approval for much higher made them think they could actually afford way more expensive houses than they actually could.

[1] In case anyone is curious, I found a house that was almost perfect as far as size, layout, and location for 0.9 $H and almost bought it, but then found that its water source was a well owned and shared by a group of 4 houses. I could not get satisfactory information on how maintenance and repair of the well was handled. I ended up with a place a little bigger, in a better location, but without quite as nice a layout for 1.16 $H.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#149

Post by mensetmanusman » Thu, Apr 28, 2022, 11:15 AM UTC

cammikebrown wrote: post #2

Seems like the bubble burst is going to be more sudden than we thought. 30 year mortgages are suddenly at nearly 5.5-6%, listings are sitting on the market for longer, and multiple cities are cracking down on Airbnb.

This is also what the pushback against asset price inflation looks like.

Re: Rocket Mortgage to trim 8% of workforce as home-loan market shrinks

#150

Post by maxerickson » Thu, Apr 28, 2022, 11:23 AM UTC

refurb wrote: post #30

This is actually a good thing. House cycles exist and it's better to have smaller, more frequent ones than massive ones like 2008. Canada never had a 2008 housing crash. Housing has been on a tear since the early 2000's and the average sale price of a home (nationally) is 2x that of the US despite lower salaries, higher taxes and a lack of 30-year fixed rates. That is a bubble. My opinion is the US market is hot , bu…

The US is less concentrated than Canada, which is probably part of it (more than half of Canadians live in a handful of large metros).

Reasonable houses in my small US town are available for ~$100,000 (there's also listings north of $400,000, it isn't just a lack of economic activity).

Probably have to look at the US on a regional basis to do a meaningful analysis.