Here’s another wrinkle. Are we talking about a home price equal to the median value of the homes in a metro area, or a home price equal to the median sales price in that year? I bought a home well below the median value of the homes in my area, but because it was 2009, there were tons of foreclosures, and new construction had essentially dried up, I likely paid over the median sales price for sales that year. That chart just says “typical home.” For all we know, they could define that as whatever a 1500 sq ft 3 bd 1 ba home goes for in that metro area if that’s the most common home on the market.
I still stand by my belief. Just looking at some of the outliers on there (Pittsburgh, Indianapolis, Ok City) and a metro I know a little about (DC), I don’t trust that infographic. I don’t believe anyone making around $35k a year could afford a “typical” home (whatever that means) in any of those metro areas in the past 10 years. The only way it was possible is if the craziness of 2020 skewed their “typical home” value just enough to throw things off a bunch just for that one year. Not to mention if banks were giving out $180,000 mortgage loans to people making $17/hr, we’ll have another 2008 on our hands if we have a deep recession accompanied by the sort of unemployment you get during a recession.
I think the only use median home sales prices for homes and it would cover an entire metro area.
I’m not sure how you define ‘value’ of the homes otherwise.
I think it depends on what you think “afford” means and what “typical” means.
You cited your experience buying a hoem with a $1100 payment and $2800/mo take home. Thats 40% of after tax. you said it as a “shock”. OK yeah its a lot more than the cheap rent you had before. But not “unaffordable” IMHO. Your income was much more than the mortgage… and left 1700 to live off otherwise. Doable iMO.
But the mortgage payment on a median price home in OKC was ‘affordable’ per the standard definition. $900 mortgage should be ‘affordable’ in OKC generally. Rent is around that on average for OKC.
That does assume a 20% downpayment probably which is a bigger hurdle. Yes most people making lower incomes don’t pile up 20% downpayments. thats a bigger reason that buying homes is somtimes out of reach. But don’t they still have FHA loans with lower down payments ?
It was definitely doable as I am still in the house. But had I been making $7,000 less a year, I think it could have put me in serious credit card debt when my HVAC went out. Part of being able to afford a home is being able to afford repairs when they happen. A lot of first time homebuyers think it’s a seamless transition to go from $1,000 in monthly rent to a house with a $1,000/mo mortgage. Sure, the mortgage is the same drain on your budget as paying rent was, but there is a lot more expensive parts of homeownership that isn’t factored into that mortgage payment.
Wow! The ad and member supported Business Insider has grown a pair. They’re requiring membership (I presume paid). My hat’s off to them, if they can make a go of it. In the meantime, I’ll pass on their paid opinions.
Since I robbed the cradle on my second wife, and have one child who scrapes by as a millennial, I feel not too unqualified to comment … like that ever made a difference.
After graduating from high school in 2007
I’m not going to take the time to delineate each step in his process. It stands to reason that any idiot can find someone, even amongst the greatest generation, that did not achieve the American dream in their lifetime, and provide a myriad of reasons for why they failed.
The big difference between the greatest generation and millennials (the least generation?) is the sense of responsibility. The laggards of the greatest generation were looked upon as crybabies, weak links, people who needed help. The laggards of the millennial generation are looked upon as standards and leaders, not who need help, but who demand and are “owed” help for a myriad of self-inflicted reasons.
We learned plenty and tightened the lending standards. We’re not going to see foreclosures caused by NINJA loans. Also, IIRC, the government made a bunch of money from the last crisis.
Also in my experience the interest rate for the high-cost area limit ($970,800 → $1,089,300) is always higher than for the standard limit ($647,200 → $715,000).
So is it safe to think we won’t see the 50% declines again that I saw on my block b/c the bankers didn’t care NINJA borrowers didn’t b/c the Feds /tax payers were left holding the bag.
One of my uncles was a broker and he made out like a bandit, with low rates and NINJA loans
Maybe if mortgage rates go up a few percent more. Otherwise it’ll depends on supply and demand, which is not the same everywhere. Nationwide there’s supposedly a shortage of housing. I highly doubt it’ll get to 50% anywhere outside of the biggest beneficiaries of the COVID wave (like Boise, ID), especially since incomes and rents create a certain level of price support.
We did see that kind of run up in PHX is why I’m worried. Too bad I didn’t cash in like this realtor was pushing for, with a lease back of your home, to time the market. Esp. with all the iBuyers here that flooded the market with easy money
Under the new rules, high-credit buyers with scores ranging from 680 to above 780 will see a spike in their mortgage costs – with applicants who place 15% to 20% down payment experiencing the biggest increase in fees.
“This was a blatant and significant cut of fees for their highest-risk borrowers and a clear increase in much better credit quality buyers – which just clarified to the world that this move was a pretty significant cross-subsidy pricing change,” added Stevens, who is also the former CEO of the Mortgage Bankers Association.
Come on, xerty, this is wrong. The fees have changed, but they’re still more expensive for people other than you. The fees still exist for all buyers, and the fee is still correlated with both the credit score and the LTV ratio exactly as anyone would expect. The adjustments were made to a bunch of loan products in different ways. They also introduced three new credit score tiers – 740-759, 760-779, and 780+ – so while in the past a credit score above 740 made no difference for the mortgage terms, now it needs to be > 780 for the best terms. In fact, the cost is now lower than before for a score >= 780 and LTV <= 80%.
Thanks to this I finally learned exactly why the loan rate goes down at certain LTV ratios. I knew it was a fact, just didn’t know the reason. Now I have the matrix!
“Pays” is not the right word: “the state provides a portion of the down payment in exchange for a share in the property. The loan, in addition to a portion of the appreciated value of the home, will be repaid when the property is resold, according to the legislation.”
Effectively the state is investing in real estate. I don’t agree with it, but it’s better than just giving money away, which is what I thought they were doing when I read what you wrote.
Whaddaya wanna bet that when the time comes for some of these properties to be sold, there will blinding outrage that the homeowner is unfairly being denied wealth accumulation when expected to fork over $200k (on their $1M home sale) to the state? Or better yet, they’ll leverage up the home, then be expected to pay $100k out of pocket when they owe the state $200k from the sale of their $1M home with a $900k mortgage(s). I’ll also bet that, be it already there or added in the future, upon death the homeowner’s heirs will receive the home with a stepped-up basis and the equity claim cleared - greedy banks may keep their liens intact, but it’s so heartless for the state to do the same.
Repaying the state is the condition that got the program approved. There’s still a long ways to go before anything is actually repaid. Something that was obvious and accepted now will be spun as terribly unfair in the future.
I doubt it, unless they all decide as a group to sell at the same time and raise a stink. A single homeowner’s experience doesn’t make the news. Besides, the outrage should be if they expect not to pay the state back. The state owns 20% of their house, it’s in the contract.
I’ve thought about the inheritance too, but the step-up in basis has nothing to do with the state’s ownership of the property. I don’t know why anyone would expect for any claims to be cleared. I suppose if the house is kept in the family in perpetuity, then the state is invested in the property in perpetuity. But if and when it’s sold, the state gets back whatever 20% is worth at the time.
