[dradernh]

Originally Posted by RickFLM4

I think a lot of us with 2-3% mortgages refinanced when rates were super low and have whatever is left of 15-year terms. I think that's a pretty good place to be. People that can barely afford the payment are mostly in 30-years (now 40-years??) and not sure how low those rates got. Maybe some 3's but would be surprised if there were many 30-year 2's out there. If there is, I agree they should stay put.

Here: January, 2021 - 2.625% on a 30-year mortgage. They couldn't get rid of the money fast enough.

Originally Posted by 2000cs

I always understood “house poor” to mean you had a big house and a big mortgage payment and nothing left over to enjoy life - like dining out. The house consumed all disposable income. And for a time, you could just “outgrow” the payment because wage inflation would drive your income up and the fixed rate mortgage payment would remain constant.

Ah, the 1970s!

And if you were in California, the 1980s, the 1990s, the 2000s, the 2010s, and now. Prices, you see - nothing necessarily to do with house size - all driven by outsized demand for a scarce product. The pricier parts of that state are still running at $1-$2K per square foot whether it's an apartment or a house. The less expensive areas are merely crazy expensive for what you get (compared to much of the rest of the country.

Originally Posted by Chick Webb

Oh, there are plenty of people in CA that are house poor. And with the little meltdown we're having a lot of people are going to be, even if they're not now.

I've said it before in this thread. Home prices, and prices in general, will not fall substantially as long as unemployment is so low.

Why? People with jobs spend money (even if it's money they don't have) because they believe that they'll be able to make it work somehow, even if it's not clear how. When people start losing jobs, or maybe when their best bruh or next door neighbor loses theirs, that's when they'll stop spending. And not just on houses, on lots of stuff; essentially anything discretionary.

We're starting to see the effects of this in the Bay Area, I think. Homes are sitting on the market and you're seeing asking prices come down 5-10%. If interest rates stay high (likely) then over the next 12-24 months prices will keep going down as people will be forced to sell because 1) they lost their job and can't afford it any longer, so they figure they'll cash out and use the funds to rent (at least it's not '08 and they have equity), 2) they have to move for a new job and need the cash, and/or 3) they're just tired of the overtaxed sh*thole that CA has become and figure they'll take their money and run to somewhere cheaper.

This will ripple down the economic spectrum to all of the people who provide goods/services to those now-vamoosed tech workers. Home prices and apartment rents will likely fall even further in the lower strata, since everything hurts those folks more.

It's all about the jobs and like it or not, we need 1-2 million more people unemployed in this country to get inflation down, even to 3%. It's not going to be pretty. Especially going into an election year. A lot of people are going to call Powell a lot of nasty names. Hell, Warren already has.

This has been true in CA for going-on 50 years now. Think about it - one-half of a century.

What I saw during that period is well-located properties fell little during the down periods. The exception was '80-'82, when sellers often had to offer a 2nd to the buyer to get the numbers to work. With 18% mortgage rates, it was insane for everyone, but sellers who didn't have to sell simply sat tight and waited it out.

It's worth noting that Northern California (generally, the Bay Area) and Southern California have frequently been two very different real estate markets.

Many regions in SoCal have seen home price swings significantly greater than those in NorCal. That's partly because it's been easier to build in the Southland since the 1970s; despite demand, building in NorCal since that time has been on a smaller scale, and that's placed a high floor under prices.

It was simply easier for Southland developers to get too far ahead of the market - the same then holding true for their recent buyers. Not that the average buyer is generally focused on what's going to happen in the market during the 2-5 years after they purchase - especially first-time home buyers, I think.

Having bought our first home in California with 5% down at the tippy-top of one of the state's major price updrafts, and with a 1st at 10%, a 2nd at 10.5%, and a 3rd and a 4th each at 12%, we had a just-under-$5K monthly PITI nut to cover in 1989. I developed an ulcer during that period.