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Zillow seeks to sell 7k homes for $2.8B after flipping halt

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Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#371

Post by ineedasername »

ajb wrote: post #324
VBprogrammer wrote: post #307

Earlier quoted context omitted.

Compound interest means that you will be paying a lot more money for the same house if you buy over 30 rather than 15 years. However, for someone disciplined, taking a 30 year mortgage and paying it off like a 15 year mortgage with significant over payments is a good strategy. It means if you need to tighten your belt you can always drop down to the normal payment for a spell without so much as having to speak to the…

The answer to this dilemma is to have an offset mortgage. Your savings offset the amount borrowed, and you only pay interest on the difference. Once you've saved enough to cover it, you pay no interest.

Though something to keep in mind is that offset mortgages are not an option in all locales. The US for example doesn't have them.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#372

Post by mattbrewsbytes »

ineedasername wrote: post #289
mattbrewsbytes wrote: post #265

Earlier quoted context omitted.

I think you highlighted an important concept. Rather than overpay, people can look further out from a city center and get cheaper housing. Sure the commute may be longer but there has been a lot of remote working over the last year or so, many companies going fully remote. Home buyers have many choices and at a certain price, its simply too much and they go elsewhere. I think zillow is trying to unload their mistake…

>look further out This is what has driven up housing prices where I live. It's having a ripple effect as those with more flexible WFH schedules decide they can now afford to buy a home outside of the city, and those outside the city realize they can get a significant upgrade in home quality for no extra cost by moving still further away. As people begin to make choices like this at a systemic level, I really think th…

What would be really nice to see is some of the nearly vacant small rural towns see a resurgence of some kind. Grant programs by the government to spark a movement to these areas would be interesting.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#373

Post by crate_barre »

ep103 wrote: post #321
the-pigeon wrote: post #296

Earlier quoted context omitted.

This would be easy to fix with legislative that makes property taxes much higher for investment home properties. I don't think I've ever heard of a politician even talking about that though.

They are generally called non-primary residency taxes, and they're definitely a thing, and definitely getting more publicity, and most definitely need to become much stronger and more widespread.

It seems like on the most pressing matters, we are always a generation behind.

Entire lifetimes wasted before our eyes. Anyways, maybe we can solve free school lunch finally, seems like that’s what we’re up to.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#374

Post by gonehome »

game_the0ry wrote: post #255

Former real estate finance professional, here. If you were hoping this was a sign of the real estate market falling and perhaps its your chance to get a bargain, think again. > The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter. Institutional investors (Blackstone, Blackrock, Colony, et al) will be being in bulk,…

This framing feels backwards to me - I thought the reason institutional investors see it as a valuable asset is because of NIMBYs constraining supply for them via local policy and obstruction. The institutional investors are a symptom of that policy, but the NIMBYs (and incentives that exist for existing owners like prop13) are the cause.

Real Estate scaling supply to meet demand is in direct conflict with old properties increasing in value forever. You can't really have both and we're stuck a valley of bad incentives that favor existing owners.

If we let people build housing to meet demand it would fix it, but existing owners are motivated to leverage enormous amounts of equity (and local political power) to stop any new building in order to keep property scarcity high. Their explanations beyond that are all just motivated reasoning rationalizations. Hopefully stuff like RHNA will force local municipalities to act.

I can empathize somewhat with someone who spent $3M on a crappy house being afraid of being under water from increased supply, but I have no empathy for someone who bought a $300k house 30yrs ago that's now worth millions acting to obstruct new construction.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#375

Post by grey-area »

VBprogrammer wrote: post #307
mediaman wrote: post #283

Earlier quoted context omitted.

A note on the mortgage: I understand your aversion to debt, but choosing a shorter duration mortgage can increase the probability of default, even if it shortens the time to the point that you are debt free, because for any given amount of cash reserves you have it shortens the runway you have if you lose your income. As long as mortgage money is cheap, the most profitable course of action is to use the 30 year mortg…

Compound interest means that you will be paying a lot more money for the same house if you buy over 30 rather than 15 years. However, for someone disciplined, taking a 30 year mortgage and paying it off like a 15 year mortgage with significant over payments is a good strategy. It means if you need to tighten your belt you can always drop down to the normal payment for a spell without so much as having to speak to the…

You’re not allowing for leverage, inflation and incredibly low interest rates.

In real terms cash is losing significant money every year while assets are gaining money. Debt makes sense as long as you have a margin of safety and can multiply the impact with leverage.

IF you believe inflation will be significant over 30 years say, and can lock in a low rate, it is better to go with a longer term.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#376

Post by ineedasername »

lordnacho wrote: post #348
BuckRogers wrote: post #272

Earlier quoted context omitted.

I'm a 39 year renter flush with cash from 15 years of a professional job while living in austerity for the entire time. Soliciting free advice. You sound bullish so I wanted to share five risks in the short term that have been on my mind lately: 1) Evictions now allowed in 43 states after a pandemic moratorium on them. My state allowed them October 3rd. Supply. 2) A China conflict at any point. Disruption. 3) Taxes g…

I'd say number 2 is a long shot. Political risk is not terribly simple. Eg I worked for a firm that thought the Iraq war would mean oil would rocket and markets crater, didn't go down that way. Point is even if the thing you think will happen happens, the effect is not as obvious as you think. More examples are the monthly NFP figures, you might naively think job losses means economy is doing badly, thus market goes…

>forced seller

This takes a bit more patience though. They can drag on for a while as the bank & "owner" possibly reconcile or the owner fights things tooth & nail. These deals tend to fall through a bit more than traditional sales. Given patience though, you can get a good deal: Banks don't want to be in the business of actually owning houses & their carrying costs, so they generally sell at a market-clearing rate instead of waiting for the best possible offer.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#377

Post by theflork »

BuckRogers wrote: post #272
game_the0ry wrote: post #255

Former real estate finance professional, here. If you were hoping this was a sign of the real estate market falling and perhaps its your chance to get a bargain, think again. > The company is seeking roughly $2.8 billion for the houses, which are being pitched to institutional investors, according to people familiar with the matter. Institutional investors (Blackstone, Blackrock, Colony, et al) will be being in bulk,…

I'm a 39 year renter flush with cash from 15 years of a professional job while living in austerity for the entire time. Soliciting free advice. You sound bullish so I wanted to share five risks in the short term that have been on my mind lately: 1) Evictions now allowed in 43 states after a pandemic moratorium on them. My state allowed them October 3rd. Supply. 2) A China conflict at any point. Disruption. 3) Taxes g…

I'm a mid 30s renter also flush with cash, living in a high COL area.

I have found a happy (to me) medium - I invest all of it diversified across low to high risk assets (muni bonds, i bonds, tips, mREITs, dividend stocks, stablecoins, growth stocks), and at this point just the interest/dividends (NOT counting unrealized gains!) almost cover even my crazy rent (3500/month, for the house we are renting which is valued at about 1.5m). I just don't have the time or the energy for a house. Also a house doesn't MAKE anything other than provide shelter. Psychologically it doesn't make much sense to me to "invest" in a single house, tied to one area, such a large % of my networth. My friends bought houses recently, and even the "flips" turned out to be fixer/uppers. The supply is so bad right now you can really get burned.

Once the supply improves - and really this means most of the government distortions disappear, I would reconsider. By government distortions i mean specifically 0) stimulus checks 1) extra unemployment (bonus monthly $, extra time, and expanding benefits to people that would not have otherwise been covered) 2) mortgage forbearance programs 3) student loan forbearance 4) super low rates. i agree at one point these distortions were necessary when we were all hunkered down and hospitals were being overrun, but we are far from that these days.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#378

Post by mullingitover »

BuckRogers wrote: post #359
mullingitover wrote: post #309

Earlier quoted context omitted.

> 4) Rates going up to counter inflation. I want this one since I have cash and don't care if rates are 2% or 20%. You're likely making a bad bet by holding on to cash. The inflation and low rates are doing their job for the most part by driving investment and spending, and you're swimming against the current by doing exactly what you're not supposed to be doing: hoarding cash. > 5) Vaccine mandate job losses. Supply…

That's what this is about, getting rid of my cash. As I mentioned to someone else, before inflation kicks in bigtime, and timed around these risk factors. I've hoarded cash up until this point almost accidentally, I've just been too busy working to spend. I do like a cushion, but not the cushion I have now. On the mandate job losses, I think a lot remains to be seen. We have the airline issue going on right now, and…

It's really easy to get your cash into a real estate ETF, giving you exposure to that market without any of the fuss or commitment of tying everything up with one property.

> Those are the only mandates that make sense to me, and I would hope that by Jove, even our most brainwashed vaccine-loving brethren could get onboard with.

I'm afraid that on a planet with 8ish billion meat-based life forms of extremely similar cellular makeup, vaccine mandates are going to be the norm going forward. Covid won't be the last pandemic, and vaccines are the best defense we have against them. It's not brainwashing to accept vaccination as a countermeasure, it's very clear-eyed realism.

Re: Zillow seeks to sell 7k homes for $2.8B after flipping halt

#379

Post by Loughla »

barbazoo wrote: post #294
Loughla wrote: post #64

Earlier quoted context omitted.

In the US, fixed interest mortgage rates are sort of the standard. So, the decision to buy now based on interest rates is a keen driver of many buyers. Source; I've refinanced three times based on rates going down. I dropped 10 years and 200/mo. off of my mortgage for the low, low price of $750 worth of appraisals.

I didn't know there were 30 year fixed interest rate mortgages. Interesting, here in Canada it's usually 5 years as far as I can see.

Just off the shelf, in the US, you tend to have access to 10, 15, 20, and 30 year fixed rate mortgage. Variable rate mortgages used to be pretty common, but they're nearly non-existent anymore.

When we shopped to refinance, there were no adjustable rate mortgages to be found, only fixed rate.

Anyway, what we saw was that, depending on who you finance through, you can get a term anywhere from 5-50 years.

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