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

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

#161

Post by refurb »

nikanj wrote: post #130
refurb wrote: post #81

Earlier quoted context omitted.

Barrie, Ontario is in the middle of nowhere and houses cost $1M. Same with Kelowna, BC and Halifax, NS has doubled in price. That's not population growth, that's speculation. The Toronto suburbs are already falling in price and Canada is only ~1 month into 4-5 rate hikes this year. And unlike the US: 1) most mortgages need to be renewed in a much higher interest rate environment and 2) a lot of Canada has recourse lo…

"Greater Kelowna is the fastest-growing urban area in the country, Statistics Canada reported Friday. The Central Okanagan's population rose 14% between 2016 and 2021, from 194,892 to 222,162, according to information gathered during last year's census." In fact, all three of your examples are on the list of fastest growing locations - Halifax at 8th and Barrie at 13th https://canadamag.ca/fastest-growing-cities-in-c…

"Fastest growing urban area in Canada" is like the "fastest sprinter at the senior center". Sure it's fast relative to other cities, but not in an absolute sense.

Kelowna grew 14% over 5 years? So 2.7% a year? Or 5,500 people per year?

Kelowna is a tiny town in the middle of BC. Jobs are scarce. Vast swaths of undeveloped land surround the town. Wages are pretty typical, yet a modest house is $1,000,000. Does that make any sense?

Your list has Kamloops. Have you been to Kamloops? It's an old saw mill town. Again, lots of room to build. Houses are $800,000 to $1,000,000.

You can buy a small house, within San Francisco city limits for $1.5M. This is where wages are 2x that of Canada. Mortgages are 30-year fixed and there is no room to build any more houses and it's surrounded by water on 3 sides.

So why would Kelowna cost just 33% less than San Francisco? I could see arguing downtown Toronto and Vancouver are "pricey" but not ridiculous, but Kelowna?

And your list has Edmonton! One of the fastest growing cities! But wait, it's actually one of the cheapest too. What's going on?

Like I said, bloodbath.

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

#162

Post by throwaway0a5e »

lmt55 wrote: post #91
hans1729 wrote: post #19

Earlier quoted context omitted.

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…

I think you have missed a source of demand, and I think it's important. As housing became more and more expensive to young professionals, some people in this group have worked harder and harder to buy property, even to the point where it no longer seems rational. For example, parents taking a lot of wealth out of their retirement savings or their own homes to assist children in buying. Professionals are working more…

The real irony is that these people putting a floor on the market are mostly the same demographics screeching about how housing shouldn't be an investment.

Yet another case of how society would be better off if people practiced what they preached.

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

#163

Post by notacoward »

bspear wrote: post #38

Wow big week of lay-offs between this and Robinhood

These are nothing. In 1993 IBM cut 60K jobs and Sears cut 50K. In 2008-2009 Citigroup cut 50K and GM cut 47K. Imagine the effect those layoffs had on cities where they were concentrated. If you want to talk percentages, small to medium companies lose 50-100% all the time. Even in tech we've had bigger job contractions. I was working through the early 90s when companies like Prime and Data General went under, DEC was forced into a merge with Compaq, etc. Then, of course, the dot-com boom and subsequent bust. 8% of 26K is a big deal to the people and areas directly affected, of course, but in the larger scheme of things it's business as usual.

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

#164

Post by hibbelig »

tzs wrote: post #148
hans1729 wrote: post #19

Earlier quoted context omitted.

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 enoug…

Not familiar with this topic. What does $H mean? Annual gross salary?

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

#165

Post by francisofascii »

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…

Isn't that because Canada has much lower property taxes than the US? So you have the same effect that you see in California, where low taxes drive up prices.

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

#166

Post by nly »

lmt55 wrote: post #109
pjc50 wrote: post #105

Earlier quoted context omitted.

> Going in debt for 30-40 years has zero appeal for me Going into debt at the lowest interest rate you'll ever be offered to buy a leveraged asset that's likely to increase in price and reduce the overhead you pay on your largest expense, housing, and hedge against the risk of rent increases and security against the whims of landlords? > Germany Oh, Germany. Somehow Germany has escaped the constantly increasing house…

I own a house in London. Its total value increase since I bought it 5 years ago is much less than my salary.

Then I guess your salary is amazing, because many house prices across London have doubled in 5 years.

If you somehow bought a house at a reasonable earnings multiple, say 4x earnings, then your house has appreciated essentially what you earned over the last 5 years. This is just math.

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

#167

Post by PinguTS »

egeozcan wrote: post #89
PinguTS wrote: post #86

Earlier quoted context omitted.

What is your reference of Europe? In Germany, 15 years, 20 years, and up to 30 years is common. I took 20 years. A close friend of mine working at a bank has an internal benefit, that the 10 year fixed rate applies for her as a fixed rate for however it takes to pay-off.

I'm also in Germany, which bank is that? I didn't find any fixed-rate offer for a 450K flat.

I was in negotiations with HVB and Commerzbank. I choose Commerzbank, which had a slightly higher interest rate but way much better communication with me. I was communicating with the guy in charge of the wealth management, this may also helped a lot. ;)

Loans lower 400k are easier to issue, I learned in the process. Because >400k has much more requirements for the bank on collateral required by the regulation authorities.

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

#168

Post by agent008t »

BirdieNZ wrote: post #145
agent008t wrote: post #136

Earlier quoted context omitted.

>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.

Simply put, house price is a function of rents for similar houses and the multiple of annual rent that houses sell for. The multiple is primarily a function of interest rates, and a significant proportion of house price increases in recent decades has been the increase in multiple. It is also a function of expected future house price growth - the higher the expectation, the higher the multiple, which is where psychology and FOMO comes into play.

The interesting thing about these ingredients that decide the multiple, is that they can turn sharply. If interest rates go up, and multiple starts to contract, at some point the belief that house prices always go up will be shaken, and instead of pricing in future house price growth, people will start pricing in future contraction.

Level of rents is a function of the state of local economy (broad salary levels, more or less) and house supply. Can probably broadly be approximated as GDP growth - so fairly low.

So at interest rates at very low levels and arguable on the way up, and growth expectations seemingly very positive, and economic growth looking shaky, it looks as if house prices may have more downside than upside.

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

#169

Post by geoduck14 »

tzs wrote: post #148
hans1729 wrote: post #19

Earlier quoted context omitted.

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 enoug…

I'd like to provide some context around the approved amount. Countrywide (and other originators) get their rates from Fannie Mae and Freddie Mac. These two have guidelines set to approve X monthly payment based on your income (for instance, you can spend 28% of your income on your primary house).

These guidelines are set for BROAD populations - specifically very poor and "normal" people have the same guidelines. For poor people, a high threshold is important to "get them in a house" - they might genuenly need to spend 30% of their income on rent or mortgage. For "normal" people, that same percent is "way too much money" for "way too much house".

The result is that normal people get approved for a big fat mortgage. But we don't want a big fat house, we try and buy a normal house, but we really want it so we pay "just a little more than it is actually worth" and drive the price up "just a little".

Of note, FNMA and FDMC adjust their guidelines for high COL areas and some other guidelines. And also, their guidelines have moved over time. Also, it is a generally accepted "fact" that home ownership is good, and poor people should be encouraged to buy a house.

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