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2021 Housing Market Crisis

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The MBA predicts an epic increase in lending/mortgage originations for 2021. The highest number since 2005(?) and even higher in 2022 with the potential for a rate increase. The recession was happening before the pandemic began. We would have recovered by end of year but Covid19 has only made things worse. 

Yet homes in foreclosure are on the rise. Temporary housing, with the potential for 29 million renters in 12.6 million households face evictions in the U.S. (Eviction Lab - Princeton,) is kinda scary. Other estimates predict a higher estimate at 30-40 million. 

Yet residential homes in my town list and sell in the same day. If they don't sell the day they list it's because they go into a bidding war with multiple buyers that lasts only a few days. Everyone moving into my town is from New York. Those that live in the city, work in the city, find convenient commuting from here to there by car, bus or train. Realtors here are busy, and so are mortgage lenders. 

I'm dying to know how many people leave New Jersey in 2020. 

 

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1 minute ago, Parker said:

Yet residential homes in my town list and sell in the same day. If they don't sell the day they list it's because they go into a bidding war with multiple buyers that lasts only a few days. Everyone moving into my town is from New York. Those that live in the city, work in the city, find convenient commuting from here to there by car, bus or train. Realtors here are busy, and so are mortgage lenders. 

Same by me. My other hope is that NY continues its insane policies that are causing people to leave in droves for the foreseeable future. As they come to NJ for the convenient commute (as you said), they keeps alive the ability for people like me to finally escape.

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there's a guy on youtube....minority mindset. i've not watched his video on this yet, but i've watched a couple of his videos....i kinda like the guy.

 

 i wouldn't be surprised to see this happen again. we're still seeing the crap from the klinton era in housing in some areas

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Meh, I dont see the same metrics in the housing market that were around pre 2008. 

You had people foreclosing on homes they could never afford before they bought the house.

If the economy slumps foreclosures will rise, that's a given, but its not going to drive the recession like it did in 2008. 

In 2016 we went through a very lengthy financial process to open a mortgage, something that didn't really exist before 2008. 

If the housing market enters a state of "crisis", basically everything else will be too. However, it will be due to increasing unemployment and not junk bonds or people who would default on their loan by taking a 100 dollar a week pay cut. 

 

With the current economic state, foreclosures are going to happen no doubt.. and the longer this artificial shutdown goes the worse its going to be. 

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1 hour ago, Parker said:

Yet homes in foreclosure are on the rise. Temporary housing, with the potential for 29 million renters in 12.6 million households face evictions in the U.S. (Eviction Lab - Princeton,) is kinda scary. Other estimates predict a higher estimate at 30-40 million. 

Correct. It's very high, but not being reported on.

Foreclosures and evictions were put on a moratorium through the end of December, That all comes to an end, and Jan. 1st, evictions and foreclosure activity ramp up big time.

Measuring mortgage applications means nothing. There are TONS of renters moving out of the big cities into the country, to get away from the crazy. Inventory is extremely low, since so many people can't afford to move, due to their financial situation.

If you look at different economic data, in NJ, 31% of small businesses have permanently closed. Nationwide there are still 21 million collecting some type of unemployment payments, when this time last year, it was 1.5 million. And this is before all the other shutdowns and business closures..

How many of those people are still paying their rents or mortgages? How many parents had to cut back or quit their jobs to stay home and home school their kids?

Here's the jobs hiring data that came out today. Hiring is slowing way down. 440K was the prediction, came in at 307K.

bfmDD61.jpg?itok=ZIV4k6vn

...."A report issued this month from the National Low Income Housing Coalition (NLIHC) and the University of Arizona estimates that 6.7 million households could be evicted in the coming months. That amounts to 19 million people potentially losing their homes, rivaling the dislocation that foreclosures caused after the subprime housing bust.

The number of Americans struggling to pay rent has steadily risen since this summer, according to the Census Bureau's Household Pulse Survey. In the latest survey, from early November, 11.6 million people indicated they wouldn't be able to pay the rent or mortgage next month.

Meanwhile, some renters who are still paying rent are relying on "unsustainable" income to make ends meet. Among those who report trouble making rent, "More than half are borrowing from family and friends to meet their spending needs, one-third are using credit cards, and one-third are spending down savings," the NLIHC report found.

https://www.cbsnews.com/news/eviction-19-million-americans-risk-moratorium-coronavirus/

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In the current "debt forgiveness=social justice" climate (there's all kinds of talk of forgiving student loans), I can see the foreclosure/eviction moratorium extending indefinitely. 

On mortgages, banks will be given a choice - modify the terms down/extend the duration to a payment that the mortgagor can "afford", or sell the mortgage to another entity who agrees to modify the terms down.  The new "mortgages" will essentially become 30 year+ leases.

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My wife works in the mortgage business and it's not slowing on her end. Lots of refinancing due to the low rate, and a large amount of people are looking to become first time home owners.

Lots of realtors call and ask about listing my home. The conversation ends quickly after I state the listing must include a "Leftists need not apply" clause. 

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1 minute ago, ChrisJM981 said:

and a large amount of people are looking to become first time home owners.

I'd be interested to see how many can actually qualify, based on their personal situation. My neighbor sold his house in the Summer. His first 3 deals fell apart because the buyers couldn't get a final mortgage commitment.

Another thing many aren't talking about is the landlords. With like 40% of the country renting, how many landlords will get foreclosed on, because their renters aren't paying them, and they can't pay the mortgages/costs on their buildings?

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2 hours ago, JackDaWack said:

Meh, I dont see the same metrics in the housing market that were around pre 2008. 

You had people foreclosing on homes they could never afford before they bought the house.

If the economy slumps foreclosures will rise, that's a given, but its not going to drive the recession like it did in 2008. 

In 2016 we went through a very lengthy financial process to open a mortgage, something that didn't really exist before 2008. 

If the housing market enters a state of "crisis", basically everything else will be too. However, it will be due to increasing unemployment and not junk bonds or people who would default on their loan by taking a 100 dollar a week pay cut. 

 

With the current economic state, foreclosures are going to happen no doubt.. and the longer this artificial shutdown goes the worse its going to be. 

that's something i still see happening in my area. i can alsmot always tell by seeing the family that moves in. they move in, and generally might make it for up to 2 years....usually they're gone in less than a year. i'm actually looking at a house around the corner from me that this happened with.......gonna see if i can grab it as a rental property

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8 minutes ago, 1LtCAP said:

that's something i still see happening in my area. i can alsmot always tell by seeing the family that moves in. they move in, and generally might make it for up to 2 years....usually they're gone in less than a year. i'm actually looking at a house around the corner from me that this happened with.......gonna see if i can grab it as a rental property

Mortgage companies will not approve a loan if that were true. 

What does happen, is after people get their Mortgage, they pile on credit debt until they can't manage it anymore. Aka, living beyond their means. 

I have seen VERY few foreclosures take place in 2 years let alone 1. They would literally have to not pay a single payment from day one. Its takes forever to evict someone. 

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48 minutes ago, ChrisJM981 said:

Lots of realtors call and ask about listing my home. The conversation ends quickly after I state the listing must include a "Leftists need not apply" clause. 

Last I looked, political beliefs was not a "protected class." You can freely discriminate against lefties.

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1 minute ago, Handyman said:

Last I looked, political beliefs was not a "protected class." You can freely discriminate against lefties.

That is, if you can find one who isn't already in some other 'protected class'.

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3 hours ago, JackDaWack said:

You had people foreclosing on homes they could never afford before they bought the house.

 

1 hour ago, 1LtCAP said:

that's something i still see happening in my area. i can alsmot always tell by seeing the family that moves in. they move in, and generally might make it for up to 2 years....usually they're gone in less than a year.

Indirectly, I've seen a bunch that were technical underwater right after purchase. I track many houses sold in my neighborhood, and over the last few years, many have bought with 3.5% down FHA loans. They're technically underwater the day they move in, and don't build any equity the first several years, due to front loaded interest.

So, it doesn't take much for these people to walk away and "jingle mail" their keys back, if they hit a speed bump with their finances, since they never had any real skin in the game.

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8 minutes ago, Sniper said:

 

Indirectly, I've seen a bunch that were technical underwater right after purchase. I track many houses sold in my neighborhood, and over the last few years, many have bought with 3.5% down FHA loans. They're technically underwater the day they move in, and don't build any equity the first several years, due to front loaded interest.

So, it doesn't take much for these people to walk away and "jingle mail" their keys back, if they hit a speed bump with their finances, since they never had any real skin in the game.

Doesn't matter how much you put down, your monthly payments cant exceed a percentage of the amount of available cash you earn that doesn't go towards paying off any other debts. Like I said, this ain't 2007 anymore. 

I'm not sure how you know so many people who paid 3.5% for a down payment, but it just increases their monthly payments with mortgage insurance. Yeah the same house costs astronomically more money, but they still have to earn an equal percentage as if they put down 20%. It doesn't change the liability or threshold for making your payments since its factored in. 

I think people severely underestimate the costs of running a home and keeping up with those costs. Very few people can afford to have someone come fix every little issue that pops up. I would have been out of my house the year I moved in if I wasn't capable. However, being skillful and resourceful has saved me probably 50 grand in my home in the few years I've owned it. That includes pulling proper permits when required. 

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2 hours ago, JackDaWack said:

Mortgage companies will not approve a loan if that were true. 

What does happen, is after people get their Mortgage, they pile on credit debt until they can't manage it anymore. Aka, living beyond their means. 

I have seen VERY few foreclosures take place in 2 years let alone 1. They would literally have to not pay a single payment from day one. Its takes forever to evict someone. 

i've seen 4 just on my street. at least a half dozen others in the aves up from my street. i've seen at last another half dozen on warwick rd in stratford, and lawnside....even up by tavistock i've seen 2. a friend of mine is making himself a pretty decent living right now flipping those foreclosures.....

also,  if they're buying the house then loading cc debt....they most likely bought more house than they can afford, which brings us back to what i'd said in the first place.

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4 hours ago, JackDaWack said:

Doesn't matter how much you put down, your monthly payments cant exceed a percentage of the amount of available cash you earn that doesn't go towards paying off any other debts.

It's simple, they qualify for that higher payment and have the income to pay it. Remember, people buy "payments", not "houses".

4 hours ago, JackDaWack said:

I'm not sure how you know so many people who paid 3.5% for a down payment, but it just increases their monthly payments with mortgage insurance.

The mortgages and purchase price are public record. And yes, these new mortgages carry PMI for the life of the loan, not just until they reach 80% equity, so these buyers are idiots.

4 hours ago, JackDaWack said:

Yeah the same house costs astronomically more money, but they still have to earn an equal percentage as if they put down 20%.

They have to be able to afford the mortgage payment. If they put down 20%, the payment is less, and requires lower income. If they put down 3.5%, they have to show the higher income level to afford the payment.

But my main point, unless they get huge appreciation, they can't sell for years, as they have little equity, and the costs to sell exceed any equity they might have built up the first few years.

4 hours ago, JackDaWack said:

I think people severely underestimate the costs of running a home and keeping up with those costs. Very few people can afford to have someone come fix every little issue that pops up.

I didn't even tough on that. Most people also do new renovations, carpet, paint, etc. when they buy a house. So add that into the cost equation, and they're severely underwater for a long time.

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1 hour ago, Displaced Texan said:

I hope the market holds out until October 2021...when my house goes on the market. 

You might consider selling now, when things are still holding together and prices are up. Then go "park" somewhere for a year.

We knew we were going to downsize when the rugrats got out, and the market was still in the downdraft from the last meltdown. We decided to put the house on the market at the price we wanted. Ended up selling it and went and rented for two years, to determine where we wanted to re-buy. Ended up being a great decision, and easily saved $80K+. I wish we did that a year earlier, would have saved another 10%.

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11 hours ago, Sniper said:

And yes, these new mortgages carry PMI for the life of the loan, not just until they reach 80% equity, so these buyers are idiots.

You sure about that?  I thought it was a law that PMI had to stop at ~80% LTV or at the halfway point of the amortization term.

Yup, here it is:

 

Quote

The Homeowners Protection Act of 1998 (the Act) was signed into law on July 29, 1998, and became effective on July 29, 1999. The Act was amended on December 27, 2000 to provide technical corrections and clarification. The Act, also known as the “PMI Cancellation Act,” addresses homeowners’ difficulties in canceling private mortgage insurance (PMI)1 coverage. It establishes provisions for canceling and terminating PMI, establishes disclosure and notification requirements, and requires the return of unearned premiums

...

The servicer must take action to cancel PMI when the cancellation date occurs, which is when the principal balance of the loan reaches (based on actual payments) or is first scheduled to reach 80 percent of the “original value,

...


If PMI coverage on a residential mortgage transaction was not canceled at the borrower’s request or by the automatic termination provision, the servicer must terminate PMI coverage by the first day of the month immediately following the date that is the midpoint of the loan’s amortization period if, on that date, the borrower is current on the payments required by the terms of the mortgage (12 U.S.C. § 4902(c)). (If the borrower is not current on that date, PMI should be terminated when the borrower does become current.)

 

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On 12/3/2020 at 6:48 AM, DirtyDigz said:

You sure about that?  I thought it was a law that PMI had to stop at ~80% LTV or at the halfway point of the amortization term.

Yes, I'm sure. I was referencing 3.5% FHA loans. Private lenders will sometimes remove it after 78% LTV:

....."The annual MIP, on the other hand, is a recurring expense that has to be paid for the life of the loan in some cases.

Once upon a time, the annual mortgage insurance premium could be canceled when the borrower reached a loan-to-value (LTV) ratio of 78%. But that rule was changed in 2013, as mentioned above. Going forward, in 2014 and beyond, most FHA borrowers who put down less than 10% will have to pay the annual MIP for the life of the loan. It bears repeating: A down payment below 10% is what triggers this “lifetime” premium requirement (see table).

http://www.fhahandbook.com/blog/do-fha-loans-require-pmi/

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Should be interesting to see where this goes when the money spigot gets turned off:

US Housing Enters 2021 In A Massive Bubble

So between the plunge in supply, the surge in demand, and the ongoing stimulus booster shots, the effect on prices is quite clear: as the chart below shows, the median prices of new and existing single-family homes is at or near all time highs...

median%20home%20price.jpg?itok=1lL1ATGT

... while the annualized Q/Q home price appreciation is the highest since the financial crisis.

HPA%20annualized.jpg?itok=JWgINXi3

In short: between the Fed's record low rates, Congress' fiscal stimulus checks, record debt-fueled demand, and historically low supply the housing market is now even hotter than it was during the peak of the 2006/7 housing bubble.

gs%20housing%20activity%20tracker_0.jpg?

gs%20housing%20supply%20all%20time%20low

 

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10 minutes ago, Cheflife15 said:

As someone whos trying to buy a home right now ill tell you it's close to impossible to pay fair price on anyhing. It's a sellers market for sure. I feel like im going to get stuck holding the bag regardless. 

Unless I was selling a house in a hot market, I wouldn't be buying one. At least you could offset the purchase price with the sale. 

But its similar to buying stocks on the high swing. Price are projected to stay high at least for the next year. 

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