Wouldn't you be embarrassed to overpay by $100,000? Only fools buy houses without knowing neighborho

House prices generally rise along with wages. When wages go up, people use their borrowing power to bid up home prices. Of course, this requires three simplifying assumptions. First, interest rates must be steady. Steadily dropping interest rates can increase borrower leverage in the absence of increasing wages. In fact, most of the increase in prices from 1990 to 2012 can be directly columbia river cruises attributed to falling interest rates. Homebuyers in 1990 made the same house payments as a buyer in 2012, but prices columbia river cruises in 2012 were considerably higher due to the decline in interest rates from 10.5% to 3.5%. It doesn t look likely that interest rates will fall below our recent record lows, certainly not enough to recreate the excess leverage created from 1990 to 2012.
The second simplifying assumption is that the percentage of income put toward housing remains constant. Most people in California borrow the maximum a lender will give them. During columbia river cruises the 1970s when California inflated its first housing bubble, lenders allowed DTIs upwards 60% because they expected borrowers to have 10% raises every year due to inflation. Recent regulations in the qualified mortgage rules cap total DTIs at 43% of borrower income, and the GSEs currently only allow 31% to be put toward housing payments. Unless lenders find a loophole, DTIs should be much more stable in the future.
The third simplifying assumption is that wages and interest rates are applied to conventionally amortizing mortgages. During the bubble in the early 90s, interest-only columbia river cruises loans were popular and some Option ARMs existed in the market. During the Great Housing Bubble, Option ARMs proliferated and DTIs got wildly out of control. Since both interest-only and negative amortization loans were banned by the new qualified mortgage rules, it s unlikely these products will cause prices to inflate wildly again.
That leaves us only with wage growth to push prices higher. If we assume stable interest rates (perhaps a poor assumption as rates will likely rise) and we assume stable DTIs and conventionally amortized mortgages, then prices will only rise to reflect wage growth. In the short term, prices may rise because many markets are still undervalued, but over the long term affordability limits will be more rigid, and house prices will only appreciate if people earn more money.
The U.S. Federal Reserve has put a lot of its eggs in the housing basket. After all, a healthy housing columbia river cruises sector brings benefits to the economy. Home-building provides jobs, mortgage financing offers revenue to the banking system, and households feel more financially secure if the value of their home isn't freefalling into the abyss.
Some fret the recent columbia river cruises rise in mortgage rates could scramble the Fed's goal. The 30-year fixed rate edged up to 4.15% last week. What is the impact if the 30-year fixed rate jumped from its recent low of 3.5% to 4.5%?
The impact on the national market would be small, but the impact on our local markets columbia river cruises where prices are much closer to affordability limits will be strongly impacted. A borrower who could afford payments on a $643,341 mortgage at 3.5% interest columbia river cruises rates can only afford to borrow $570,154 at 4.5%. That s about an 11% drop in buying power.
Consider the trends in home prices and incomes since housing's bottom in 2011. The average new-home price is up about 17%, while per capita income has increased just 2.8% (or about the same pace as inflation).
Assuming the average household income columbia river cruises has risen just as slowly as per capita earnings, the typical family needs to devote more of its monthly budget to housing costs even with no change in interest rates. A larger debt burden will make banks more reluctant to write a mortgage.
The constraint will fall harder on adults aged 35 or younger who make up the usual cohort of first-time buyers. They have higher unemployment rates than other adult workers. And many also carry large amounts of student-loan debt.
The over-indebted recent college graduates are priced out, they are debted out. The amount they are likely spending on rent could make a housing payment. Most markets still have costs of ownership columbia river cruises lower than comparable rentals. They can t qualify because they have too much debt in student loans, car loans, and credit cards.
The former owner of today s featured property paid $430,000 columbia river cruises in 2002. He put $43,000 down and borrowed the rest. On 2005, he took out a $598,500 Option ARM with a 1% teaser rate. When that was due to reset, he took out another Option ARM for $650,000 in mid 2007. He extracted about $250,000 with those two refinances, and he was likely making columbia river cruises payments far less than a rental due to his teaser rate.
Wouldn't you be embarrassed to overpay by $100,000? Only fools buy houses without knowing neighborhood values. Don't be a fool. Don't suffer the pain of an underwater columbia river cruises mortgage. columbia river cruises The surest way to lose your house is to overpay for it. Our reports identify overvalued and undervalued neighborhoods. Use it to broaden or narrow your search area. Savvy buyers work with us to find bargains. We've saved thousands from financial ruin. Let us save you too. If you want peace of mind while shopping for your next home, sign up for our monthly market newsletter.
Great family home located in the gated community of The Legacy columbia river cruises at Bryant Ranch! This 5 bedroom 3 bathroom home with a bedroom downstairs features cathedral ceilings upon entry into formal columbia river cruises living room and dining columbia river cruises room. Large kitchen opens up to family room and looks out to sparkling pool and spa. Award winning columbia river cruises schools, close to freeways 91, 241, 55, and walking distance to Santa Ana river trail and bike path. Property is sold as is .
Gain a competitive columbia river cruises advantage over other buyers. By locating distressed properties -- before they hit the MLS -- you can discover where tomorrow's REOs and short sales will appear. columbia river cruises Most of these properties are not listed on the MLS, but they will be soon. Research properties in advance and get a jump on your competition. Don't miss out on another deal because you couldn't act quickly. Use this tool to your advantage!
The green and blue properties have owners who are not paying their mortgages. They may be offered as short sales, or they may go through foreclosure and become REO. Either way, they will also likely be available on the MLS soon. Find your next home!
The 30-year, fixed-rate mortgage posted its largest weekly increase since April 17, 1987. The 30-year, FRM came in at 4.46%, up from 3.93% last week and 3.66% last year, Freddie Mac reported in its Primary Mortgage Market Survey.
Following Fed chief Bernanke's remarks on June 19th about the possible columbia river cruises timing of reduced bond purchases, Treasury bond yields jumped over the week and mortgage rates followed. He indicated that the Fed may moderate the pace of its buying later this year and end the purchases around the middle of 2014, said Frank Nothaft, vice president and chief economist for Freddie Mac.
It will be amusing in a few months to read economists and the NAr complain about how rising interest rates killed the momentum of the housing recovery. It will be portrayed as some unexpected exogenous shock to the system when in reality everyone knew it was coming.
Sales of newly built homes rose to their highest level in five years in May, according to numbers compiled by the U.S. Census, but those numbers are at risk of being wrong. They are based on signed contracts, not closings, for homes, many of which have not yet been built. Those contracts were signed well before a huge spike in mortgage rates, and those closings could be up to nine months away, when the homes are completed.
We ve been talking a lot with salespeople across the country to get a read on the current situation, says Stephen East, a home building analyst with ISI Group. Sales people are very worried about it. Customers are worried that they cannot yet lock in, and they are watching columbia river cruises the rates get away from them. I do think cancellations will climb.
Of the sales contracts signed in May, according to numbers columbia river cruises compiled by California-based analyst Mark Hanson, 31 percent were for completed homes, so buyers likely columbia river cruises would have locked in their mortgage rates near record lows. Those deals would close easily. And 24 percent were for homes under construction. Some buyers may have locked in a rate if the home was almost done, but some likely did not.
The biggest columbia river cruises risk is with the rest of the contracts. Of the signed contracts in May, 36 percent were for homes that were not yet started. columbia river cruises Completion and closing would be anywhere from three to nine months out. Those buyers, in most cases, could not lock in mortgage rates yet. Rates are up a full percentage point from the beginning of May and continue to rise.
The builders raised their prices in lockstep with the rise in resale prices; however, new homes are not undervalued. When borrowing costs rise, it will take a big bite out of new home sales. They will either need to adjust their pricing or be content with lower sales volumes. This effect will be particularly noticeable columbia river cruises locally where potential buyers have less room to raise their bids.
There are a ton of grand openings in Irvine columbia river cruises this weekend. It will be interesting to see if they re as crazy as what I witnessed at Lambert Ranch in 2012 and The Branches a couple months ago. I stopped by Willow Bend last Sunday afternoon and there was just one couple there. However, I couldn t get any real answers from the agent about sales/availability.
Dramatic home price gains in some of America s largest columbia river cruises cities point to a potentially new housing bubble in those areas, according to Robert Shiller, who helped create a closely watched gauge of U.S. housing prices.
There is a risk of bubbles in these cities, Shiller, a co-founder of the S P/Case-Shiller Home Price Index, told Reuters on Wednesday. House prices increases have been dramatic. It looks like the beginning of the last bubble.
There is a risk that prices could rise for another year in these areas and then fall back, hu