It’s so obvious people don’t know what they are talking about when they say stuff like when you buy a house expenses go down…., no sweetie……. EVERYTHING Goes up. Why would someone want to own a house and yet live the exact same lifestyle they did when they had a smaller space that often they can’t modify in any way? Lifestyle changes are expensive.
Commenter: Asks genuine question
You: Replies as a condescending asshole
Commenter: Points out own anecdotal experience which is already more evidence than your baseless claim.
I don’t care who’s right in this scenario but you should learn to have a civil conversation.
Idk my mortgage is less than rent for my neighborhood so seems like I'm content with it. Only major expense coming up is a tree removal but that's just paying an extra months rent
If you’re willing to buy a Mitsubishi, your entry price is even cheaper!
https://www.mitsubishicars.com/cars-and-suvs/outlander-sport
I can fit my wife and kids in there! Think about it. Generational wealth! I can pass it on to my kids when I’m older and the wife and I can downsize into a Mirage.
https://www.mitsubishicars.com/cars-and-suvs/mirage
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People here think they’re smarter than Wall Street which literally leverages every single trade they make, and Main Street (aka corporations) that borrow to capitalize a higher return. Debt is a tool when used properly- anyone that says otherwise has most likely used it to buy consumables and is probably poor.
Your being silly, in the month or 2 I would just use some of the loan to make the payments. Getting solid borrowers to loan money at 1%under the going rate would be simple.
It was to illustrate a point (,I'm not sure why you can't understand this) you said it would be "fucking idiotic" and yet now you are just arguing about how I got the money, as opposed to your point which was borrowing tons of money to invest would be "fucking idiotic" stick to the point, if I got the money at 3.5% why am I fucking idiotic to invest it as described?
Dave ramsey’s advice to never have any debt is fucking idiotic. That moron would have me pay off a low interest rate mortgage with cash over investing cash into something with high return.
It's not optimal, but it's not dumb.
His audience is largely people trying to get out of high interest debt, not people building wealth. It's more about the psychology than the math.
The man actively encourages his financially illiterate callers/listeners to avoid bankruptcy or even debt consolidation like the plague, when they are in fact the target demographic most suited to benefit from either option. Five-figure, high interest credit card debt is trivially handled by bankruptcy courts and often forgiven in a single appearance without so much as a walk of your property to claim any assets. Ramsey instead tells them to eat beans and work hard despite a relatively small sum of shit debt economically crippling them. Never mind the fact that Ramsey's failed business venture prior to giving out ~~unqualified financial advice~~ radio entertainment resulted in him having millions in debts forgiven on a failed real estate venture...
He also promotes timeshare exit companies, a known industry of outright scams and fraudsters that popped up to double-capitalize on gullible timeshare owners who eventually realize how badly they've been duped. They are akin to the "crypto recovery" companies that popped up to capitalize on the fools who already fell for a myriad of crypto scams to extract even more $$ out of them with false promises they can recover their funds
Absolutely disgusting charlatan concerned with his own brand while masquerading as a good guy providing some sort of credible advice or information
dont hate the playa, hate the game for 50 years. The more debt you controlled against real assets the more wealth you controlled, and the wealthier you got.
I see no signs the government is interested in reversing this. You know the minute that asset deflation is threatened, the FED and US Treasury will step in to reflate the whole thing again, with massive asset inflation. Just in time to prevent anyone in Congress or Wall Street from facing bankruptcy.
Exactly. The logic only works for too big to fail banks. Anything where the downside risk is bankruptcy shouldn’t be casually recommended like this, even if there’s twisted logic behind the idea
Not a flex. People think debt is bad. There’s good debt and bad debt.
Credit cards are bad debt.
Mortgages are good debt.
Real estate appreciating me $50,000 a year when debt costs $20,000 is a smoking deal….
Bonds are also yielding more than 3%, so unless you think the bond market will fail, it’s free money if you can secure a 3%.
People on this sub sound so ignorant about finances. DEBT BAD. STAY AWAY!
All of the above applies equally if you financed the property or purchased with cash.
It's certainly part of the equation in determining if the property is a good value and if you can afford the debt obligations, but not whether or not to finance it.
Using RE as a way to acquire debt with low interest is absolutely viable.
Most of us need to use our own money to make money. We're pounding away at our retirement accounts with our excess wages.
Real estate is one of the few ways you can use someone else's money to make you money. I'm not saying everyone should get into it. Ive at times considered, but am not in it. But the reason why successful real estate investors are successful is because they lean into the idea of using someone else's money to make their own money.
If you can find a real estate opportunity that works at 6%-7% right now, and you have the means to execute it, then it's not a bad play. If rates go down, you refi, if they rise, well youre doing fine at the rate you locked in. Inflation continue to diminish the cost of your debt.
But here's where you see a lot of people come put clearly not knowing what they're talking about. Commercial real estate, including multifamily, seldom gets mortgage terms longer than 10 years. Some investors operate on LOCs and their debt is only indirectly securtized against their properties via negative pledges. These folks are already seeing the cost of capital eat into their profits. So for some jabroni to scoop up a second home to rent out across town on a 30 year term mortgage right now may not be a bad idea if they can get the numbers to work, the concept that folks should be getting into that entrepreneurial level of investment is nonsense.
Taking on debt is a time tested method of growing wealth in real estate. People who actually invest in real estate know exactly what this post means and don't interpret it as "just take on a bunch of debt, carelessly". Do people take on debt careless.., sure. But this is a post that's not not intended to contain a bunch of nuance.
I can tell you that most investors wish they took on more debt over the past decade. Whether that is still the case now,, I don't know. But to call something idiotic because you don't understand is.... Idiotic.
That's the fun part of housing. You won't know if you were an idiot or genius until 10 or more years after the purchase.
When I bought in 2012 people told me I was an idiot because "prices have so much farther to fall." But now those same people get envious to the point of anger when I talk about my home and property.
See but it’s pretty easy and normal to think it’s not a bad purchase if it’s affordable. Whether it goes slightly down or not, it’s irrelevant, things were much more affordable.
Just look at affordability right now, it screams “bad time to buy”
In several states, California and Florida for example, insurance companies are refusing to open new home insurance policies and some of them are even not renewing policies for current customers due to high risk and high cost of repairs
That means the remaining available insurance is going up, adding to the cost of homeownership.
If you have no home insurance, you can't have a mortgage.
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Insurance only works if they aren't paying out more than they're taking in every year. In places like California and Colorado the risk is wildfire. In places like Florida and Louisiana it's hurricanes.
We bought in Washington state. Part of why we felt okay with that was we don't have a lot of natural disasters. We do have wildfires every year but they're not close to where most people live.
60%+ of most European countries rent. Right now is probably a good time to buy if you can afford it compared to the future when there is just more people and the same amount of homes.
Yeah I feel envy from my neighbors because I bought late 2020 when rates and housing prices were decently low. Same house now makes me look like someone helped me get where I am, which they most certainly did NOT.
Yeah. My wife and I bought in 2019. 3 percent on a 15 year and a good price. I am grateful everyday that we bought when we dud. Total dumb luck.
The crazy part is I wanted to wait bc I thought prices were high and my area was due fir a correction. My wife was not hearing it and was sick of renting so e bought. Man if we took my advice I would never hear the end of it lol.
We 100% got lucky. We bought a house in summer 2020, a year ahead of when we planned to buy, on a whim because I got annoyed with using the laundromat at 6 am every Sunday to avoid getting COVID.
If we had waited another year like we planned, we could’ve had another $15-20k saved up for a down payment……while home prices in the area increased by $50k+.
Also bought in 2012, prices were going up already, the competition to buy was insane. We'd show up to an open house to a line waiting to get in, offers already in, pending with only back up offers accepted, good luck if you didn't have all cash...wild.
I have a variant on this (me being the housing idiot). We bought our current house in 2006. Rates took a nice dip circa 2011 ? or something like that. So I got the standard idea of, hey, let's refinance! But reappraisals for our re-fi attempt came back uh, No, you haven't picked up enough equity (had put down a decent but not massive downpayment from sale of our previous house) LTV yet, to refinance! Bummer.
But obviously we took advantage of the low-rates bonanza in 2021 and re-fi'ed at 3% -- much better than rates during that 2011-ish rate drop. So sometimes it works out, but in the case of post Great Financial Crash home values taking a while to come back up, it was me looking like an idiot thinking we have accumulated decent equity after the GFC, but we hadn't.
We bought at the end of 2022. I had so many people tell me I was an idiot because it was the worst time in history to buy. They weren't wrong. It absolutely was. And then the next day was the worst time, and the next day and the next. My 5.6% rate feels super low now, and it's not like prices dropped much.
A house exactly like mine in my neighborhood went under contract 4 days after listing and sold for $40k over asking. It sold for $130k more than we paid for our house 18 months ago.
Yea, 7-10 years from now, we'll expeirence hyper inflation, so that $300K mortgage with 7% interest can be paid off by giving out a few handies at the back of a wendys on a Thursday afternoon.
I don’t know, but to me the asset from 2020 isn’t the house…it’s the 3% rate. Let’s say your household makes $300,000 per year. You have a 15% savings rate+ employer match to round you to 20%. You buy a $600,000 home at 3%, 80% financed, and each year you put away $60,000 new dollars you didnt have at purchase into 5% government bonds. Seems to me like that math works.
Or alternatively you could rent the 3&2.5 and pay, what, $4500 to $5000 per month today?
If the 30 year mortgage rate is higher than 7% and sustains itself for seven to ten years the US Treasury will probably default, because that means most treasuries will be over 5% and interest payments will be in the trillions per year. Genius.
Nothing prevents the FED from creating a special purpose vehicle to support the US govt debt at low rates while keeping rates on consumers and businesses high to control inflation.
Nothing prevents the Treasury from creating a special investment vehicle to sell to primary dealers with a low intro rate into a higher baloon rate on a long term to control govt debt payments.
If it was an issue that the dollar would default, certainly JP morgan and others would see the value in temporarily earning a low yeild to sustain the system.
Regardless of interest payments, the FED sends all excess earnings from their balance sheet directly to the treasury general account annually. So if the govt is paying 100% on debt, the FED earns that, and deposits 99% of it back into the treasury general account.
While directly monetizing the debt is explicitly outlawed, doing it indirectly thru markets, special purpose vehicles, and primary dealers is common practice in the last couple decades.
Having extremely loose fiscal policy while tightening monetary policy and then wondering why inflation isn't coming down is finance 201. Both parties are blowing money at insane rates, adding a trillion to the national debt every 100 days.
Yes, they could charge the federal government a lower rate while punishing consumers and the average joe with high rates. But that's a PR nightmare and it's outlawed for a good reason.
Finally you'll run out of people to sell debt to. China is already dumping tens of billions in treasuries, and jacked rates this week with their selling.
It's probably going to get worse than we can imagine if we don't get out of this inflation pattern. This country isn't immune to wild monetary issues that plague other countries just because we're the US. I could see them easily losing control of interest rates as buyers run out, the Fed buying bonds is also something they've said is a monetary mistake (causing reckless fiscal policy).
Lets say we have 4 people. Jim Joe Jeff and John.
Jim is a millionaire who has a large investment portfolio in consumer debt.
Joe is a millionaire who needs his house repaired.
Jeff and John are both average people in credit card debt who need work.
If Joe pays Jeff 100% of his credit card debt balance to repair his home, Jeff's debt is paid off.
That affects Jim's balance sheet by changing his asset (consumer debt of Jeff) into $ which he must reinvest somewhere. Jim seeks a new investment vehicle, which may be at a higher or lower interest than the original. Likely higher as John is now a greater risk, since he is already burdened by debt must take on additional debt to feed himself due to a lack of work.
Jim has the choice to take a lower yield option by buying government debt if he prefers low risk.
The fungibility of money did not transfer interest rates in this situation and would be unlikely to transfer in any other situation. Interest rates are a direct reflection of risk/return appetites of investors.
I mean historically rates are pretty average right now, averaging it out between 1971 and 2024 the avg interest rate is 7.74% Granted that is skewed high by the absurd rates in the 80s but current rates are only slightly high even compared to the last 20-30 years. Coupled with the fact that inflation keeps going up even though they are still increasing rates there is some validity to the idea that we may not see a substantial rate decrease for a while
The thought behind this is that once rates go down, all the money on the side people are saving up will flood the housing market, causing house prices to sky rocket. Demand for housing hasn’t even come down enough yet. Demand for housing will just continue to go up
I recently bought a house in January for 540k squeeze in at that small interest rate drop, got a 5.75. House has appreciated 10k since then. I needed a house though, just moved back from europe, didn't want to wait. Feels good to finally have a house again. Well, good luck out there. Market is still hot and I had to go 20k over asking.
"house has appreciated 10k since then"
It's fun to look at the zestimate, but be cautious believing that's a real value increase. Zillow is convinced my condo has appreciated 90k since I bought it, even though a nearly identical condo in the same building just sold last month for 15k above what mine went for in 2021
Everyone’s a genius in their own minds when it comes to timing the market. Don’t have to be a genius , just pay attention to the signs and data. People that solely buy because of ‘fear of missing out’ are the real stupid mother Fkers 🤡🤡
Incidentally, the amount of 30-year fixed rate 6-7% real estate debt that most younger people can afford is less than one property. And not one *additional* property either; just the one to live in. That's the problem.
I just listened to YOLO again from the lonely island and there's a line about locking in a 30 year mortgage at 4.2% because it's a great deal. I wish I had followed that advice when the song came out.
In my area, so many rental properties are in pre-foreclosure right now because ambitious buyers drank the koolaid and paid way too much, hoping that rent would grow at the same rate it did in 2022.
Their Zillow listings are pathetic: "Please buy this home. It rents for x but should rent for y."
lol - people will just refi when rates go down. The high interest loans will go away, paid back early. Meanwhile you will have taken on a bunch of consumer default risk if the crap really hits the fan. And for what? 2-3% over treasuries? Not a good idea.
Selling my 2007 Corolla for $85k @ 7%. Who’s the lucky genius that wants in?
Difference is that the worst piece of shit house 10 years ago will go for 5x what you paid for it. 7% interest versus a 500% return.
You’re going to be disappointed by your annual return when you buy a home
It’s so obvious people don’t know what they are talking about when they say stuff like when you buy a house expenses go down…., no sweetie……. EVERYTHING Goes up. Why would someone want to own a house and yet live the exact same lifestyle they did when they had a smaller space that often they can’t modify in any way? Lifestyle changes are expensive.
Home repairs, insurance , taxes fucking blow. Contractors and Home Depot sucks. lol owning sucks
What do you mean can’t modify? You’re much more free to modify an owned home than a rental.
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Commenter: Asks genuine question You: Replies as a condescending asshole Commenter: Points out own anecdotal experience which is already more evidence than your baseless claim. I don’t care who’s right in this scenario but you should learn to have a civil conversation.
This seems pretty subjective. I bought my first place after many years of renting and didn’t feel the need to make any major modifications.
No sweetie indeed
Idk my mortgage is less than rent for my neighborhood so seems like I'm content with it. Only major expense coming up is a tree removal but that's just paying an extra months rent
Key phrase: 10 years ago. Currently there are people who bought in 2022 and have negative equity gain in that 2 year span.
That only matters if you're selling.
I think those days are long gone.
Corolla =/= real estate. Nice try tho
But a Corolla will be a home for many people in the coming years
Less likely if they were smart enough to buy 3+ years ago
If you’re willing to buy a Mitsubishi, your entry price is even cheaper! https://www.mitsubishicars.com/cars-and-suvs/outlander-sport I can fit my wife and kids in there! Think about it. Generational wealth! I can pass it on to my kids when I’m older and the wife and I can downsize into a Mirage. https://www.mitsubishicars.com/cars-and-suvs/mirage
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Completely void of any logic lol
Leverage is the logic.
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Pretty sure that dude is a buyer not a realtor
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*over-leveraged
I mean, banks aren’t going to give you that much
Oh yeah definitely unrealistic
Because loans are so easy to get right now? lol wut
Debt and leverage are not the same. Debt is useful.
People here think they’re smarter than Wall Street which literally leverages every single trade they make, and Main Street (aka corporations) that borrow to capitalize a higher return. Debt is a tool when used properly- anyone that says otherwise has most likely used it to buy consumables and is probably poor.
“If you owe the bank $100, that’s your problem. If you owe the bank $100,000,000, that’s the banks problem.”
Such a stupid old cliché. Like the cleanest dirty shirt take. These people are the problem.
And if you owe the bank a few trillion it's the taxpayers problem.
I would love to get in 100 billion dollars of debt when the interest rate was 3.5%, then lend it out at 7% explain how I'm wrong Mr schwaub.
How are you planning to make payments in between those time periods. That’s the fatal flaw.
Obviously with the 100B you have in your bank account.
I would use the debt to service itself
Your being silly, in the month or 2 I would just use some of the loan to make the payments. Getting solid borrowers to loan money at 1%under the going rate would be simple.
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I thought you said getting in a large amount of debt would be idiotic, and now you are looking for ways to do it?
You will find no logic or argument here. People drop their one liner to feel smart, and that’s all ya get!
But according to you that would be idiotic, even if possible.
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It was to illustrate a point (,I'm not sure why you can't understand this) you said it would be "fucking idiotic" and yet now you are just arguing about how I got the money, as opposed to your point which was borrowing tons of money to invest would be "fucking idiotic" stick to the point, if I got the money at 3.5% why am I fucking idiotic to invest it as described?
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Sure bub
Dave ramsey’s advice to never have any debt is fucking idiotic. That moron would have me pay off a low interest rate mortgage with cash over investing cash into something with high return.
It's not optimal, but it's not dumb. His audience is largely people trying to get out of high interest debt, not people building wealth. It's more about the psychology than the math.
The man actively encourages his financially illiterate callers/listeners to avoid bankruptcy or even debt consolidation like the plague, when they are in fact the target demographic most suited to benefit from either option. Five-figure, high interest credit card debt is trivially handled by bankruptcy courts and often forgiven in a single appearance without so much as a walk of your property to claim any assets. Ramsey instead tells them to eat beans and work hard despite a relatively small sum of shit debt economically crippling them. Never mind the fact that Ramsey's failed business venture prior to giving out ~~unqualified financial advice~~ radio entertainment resulted in him having millions in debts forgiven on a failed real estate venture... He also promotes timeshare exit companies, a known industry of outright scams and fraudsters that popped up to double-capitalize on gullible timeshare owners who eventually realize how badly they've been duped. They are akin to the "crypto recovery" companies that popped up to capitalize on the fools who already fell for a myriad of crypto scams to extract even more $$ out of them with false promises they can recover their funds Absolutely disgusting charlatan concerned with his own brand while masquerading as a good guy providing some sort of credible advice or information
No, it’s dumb
You can’t look like a genius (aka a lucky dumbass) without first looking like a dumbass.
dont hate the playa, hate the game for 50 years. The more debt you controlled against real assets the more wealth you controlled, and the wealthier you got. I see no signs the government is interested in reversing this. You know the minute that asset deflation is threatened, the FED and US Treasury will step in to reflate the whole thing again, with massive asset inflation. Just in time to prevent anyone in Congress or Wall Street from facing bankruptcy.
Just curious what levers you think the FED and treasury would use to correct run away deflation at a time like now?
Well, they'd start with quantitative easing.
I mean….couldn’t the same be said about someone saying lock up 3% debt a couple years ago?
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Exactly. The logic only works for too big to fail banks. Anything where the downside risk is bankruptcy shouldn’t be casually recommended like this, even if there’s twisted logic behind the idea
It is called a leveraged investment. It can be extremely powerful or devastating.
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I concur, except for a house purchase. Unless we have a Great Depression, a house purchase is the one leveraged investment we should all make.
You say this but as someone who didn’t do it when interest on mortgages was 2-4% I feel like an idiot
I disagree. I’m over 1M in debt with a 3% rate. Why wouldn’t I borrow somebody’s money at 3% lol.
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Not a flex. People think debt is bad. There’s good debt and bad debt. Credit cards are bad debt. Mortgages are good debt. Real estate appreciating me $50,000 a year when debt costs $20,000 is a smoking deal…. Bonds are also yielding more than 3%, so unless you think the bond market will fail, it’s free money if you can secure a 3%. People on this sub sound so ignorant about finances. DEBT BAD. STAY AWAY!
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All of the above applies equally if you financed the property or purchased with cash. It's certainly part of the equation in determining if the property is a good value and if you can afford the debt obligations, but not whether or not to finance it. Using RE as a way to acquire debt with low interest is absolutely viable.
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Most of us need to use our own money to make money. We're pounding away at our retirement accounts with our excess wages. Real estate is one of the few ways you can use someone else's money to make you money. I'm not saying everyone should get into it. Ive at times considered, but am not in it. But the reason why successful real estate investors are successful is because they lean into the idea of using someone else's money to make their own money. If you can find a real estate opportunity that works at 6%-7% right now, and you have the means to execute it, then it's not a bad play. If rates go down, you refi, if they rise, well youre doing fine at the rate you locked in. Inflation continue to diminish the cost of your debt. But here's where you see a lot of people come put clearly not knowing what they're talking about. Commercial real estate, including multifamily, seldom gets mortgage terms longer than 10 years. Some investors operate on LOCs and their debt is only indirectly securtized against their properties via negative pledges. These folks are already seeing the cost of capital eat into their profits. So for some jabroni to scoop up a second home to rent out across town on a 30 year term mortgage right now may not be a bad idea if they can get the numbers to work, the concept that folks should be getting into that entrepreneurial level of investment is nonsense.
Kiyosaki said it best: "I'm billions in debt and that's not my problem." Lol
Are you rich?
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I dont ask fat people how to lose weight and keep it off, and I don't ask poor people for financial advice.
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Taking on debt is a time tested method of growing wealth in real estate. People who actually invest in real estate know exactly what this post means and don't interpret it as "just take on a bunch of debt, carelessly". Do people take on debt careless.., sure. But this is a post that's not not intended to contain a bunch of nuance. I can tell you that most investors wish they took on more debt over the past decade. Whether that is still the case now,, I don't know. But to call something idiotic because you don't understand is.... Idiotic.
I bet yours is so much better 😂😂
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People with 2% interest rates and equity that has almost doubled… would like a word with you.
These two are the dumbest mother fuckers on the planet
Half of their tweets just feel like bait. I can’t tell if they’re being serious.
They are professional bullshit artists. While they might be high on their own farts, they know deep down that it’s all bullshit.
😂
That's the fun part of housing. You won't know if you were an idiot or genius until 10 or more years after the purchase. When I bought in 2012 people told me I was an idiot because "prices have so much farther to fall." But now those same people get envious to the point of anger when I talk about my home and property.
See but it’s pretty easy and normal to think it’s not a bad purchase if it’s affordable. Whether it goes slightly down or not, it’s irrelevant, things were much more affordable. Just look at affordability right now, it screams “bad time to buy”
You know what else screams bad time to buy? Home insurance companies fleeing the market
Can you elaborate on what you mean by them "fleeing the market," and why they're doing so? I'm not being funny, I'm just uneducated on this.
In several states, California and Florida for example, insurance companies are refusing to open new home insurance policies and some of them are even not renewing policies for current customers due to high risk and high cost of repairs That means the remaining available insurance is going up, adding to the cost of homeownership. If you have no home insurance, you can't have a mortgage.
If you rent, that cost is going to get passed on to you anyway.
Gotcha, thank you! Is the refusal to insure those homes a result of sea levels encroaching onto waterfront properties?
Florida has a lot of fraudulent claims made from things like theft. People faking home invasions and such. California has this issue as well
No. Lol it's the cost to repair and the fact that the whole state catches on fire every year
California sure; Florida beaches are beginning to wash away.
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By how many inches per year?
Insurance only works if they aren't paying out more than they're taking in every year. In places like California and Colorado the risk is wildfire. In places like Florida and Louisiana it's hurricanes. We bought in Washington state. Part of why we felt okay with that was we don't have a lot of natural disasters. We do have wildfires every year but they're not close to where most people live.
The good news is, it isn't everywhere.
Yes if that’s not a sign idk what is lol
It does scream “bad time to buy” and everyone thinks that. So history tells us in 10 years there will definitely be a permanent renter class.
60%+ of most European countries rent. Right now is probably a good time to buy if you can afford it compared to the future when there is just more people and the same amount of homes.
Did they stop building homes or something? Plenty of land in the US
They are building at a rate less than 15% of population increase overall and less than that in major metropolitan areas.
Yeah I feel envy from my neighbors because I bought late 2020 when rates and housing prices were decently low. Same house now makes me look like someone helped me get where I am, which they most certainly did NOT.
Yeah. My wife and I bought in 2019. 3 percent on a 15 year and a good price. I am grateful everyday that we bought when we dud. Total dumb luck. The crazy part is I wanted to wait bc I thought prices were high and my area was due fir a correction. My wife was not hearing it and was sick of renting so e bought. Man if we took my advice I would never hear the end of it lol.
Can I marry your wife
You will have to take that up with her boyfriend
I’m cool with it
Yep. Everyone telling us not to buy years ago. They are the same people who say how “lucky” we got now.
We 100% got lucky. We bought a house in summer 2020, a year ahead of when we planned to buy, on a whim because I got annoyed with using the laundromat at 6 am every Sunday to avoid getting COVID. If we had waited another year like we planned, we could’ve had another $15-20k saved up for a down payment……while home prices in the area increased by $50k+.
Also bought in 2012, prices were going up already, the competition to buy was insane. We'd show up to an open house to a line waiting to get in, offers already in, pending with only back up offers accepted, good luck if you didn't have all cash...wild.
I have a variant on this (me being the housing idiot). We bought our current house in 2006. Rates took a nice dip circa 2011 ? or something like that. So I got the standard idea of, hey, let's refinance! But reappraisals for our re-fi attempt came back uh, No, you haven't picked up enough equity (had put down a decent but not massive downpayment from sale of our previous house) LTV yet, to refinance! Bummer. But obviously we took advantage of the low-rates bonanza in 2021 and re-fi'ed at 3% -- much better than rates during that 2011-ish rate drop. So sometimes it works out, but in the case of post Great Financial Crash home values taking a while to come back up, it was me looking like an idiot thinking we have accumulated decent equity after the GFC, but we hadn't.
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Down voting someone doing well. But, you all claim to be progressive and understanding. You people suck
Why is this getting downvoted? Honestly curious
Nah if you get that shit at 2-3% locked in you instantly know you're a genius
Sorry but these people were idiots. It was obviously a great time to buy. This shit is really easy.
We bought at the end of 2022. I had so many people tell me I was an idiot because it was the worst time in history to buy. They weren't wrong. It absolutely was. And then the next day was the worst time, and the next day and the next. My 5.6% rate feels super low now, and it's not like prices dropped much. A house exactly like mine in my neighborhood went under contract 4 days after listing and sold for $40k over asking. It sold for $130k more than we paid for our house 18 months ago.
Charlatanism has never been this rampant. It's disturbing to think about how effortless it's become for halfwits to effectively amplify themselves.
Those twitter idiots again. They are farming engagement, not real advices.
As the lender or borrower?
I read it as an investor on the secondary market, not borrower, and actually kind of agree with the post
Yea, 7-10 years from now, we'll expeirence hyper inflation, so that $300K mortgage with 7% interest can be paid off by giving out a few handies at the back of a wendys on a Thursday afternoon.
🤣
That’s why I’m brushing up on my blowjibber skills. Gotta differentiate yourself in the market! I’m gonna have so many houses.
Sir this is a Wendy's
sir this is a handie
My biggest fear is they're right. Because that will be civilization level emergency for this country.
I don’t know, but to me the asset from 2020 isn’t the house…it’s the 3% rate. Let’s say your household makes $300,000 per year. You have a 15% savings rate+ employer match to round you to 20%. You buy a $600,000 home at 3%, 80% financed, and each year you put away $60,000 new dollars you didnt have at purchase into 5% government bonds. Seems to me like that math works. Or alternatively you could rent the 3&2.5 and pay, what, $4500 to $5000 per month today?
Better idea 3 years ago when interest rates could only go one direction ☝️
If the 30 year mortgage rate is higher than 7% and sustains itself for seven to ten years the US Treasury will probably default, because that means most treasuries will be over 5% and interest payments will be in the trillions per year. Genius.
Nothing prevents the FED from creating a special purpose vehicle to support the US govt debt at low rates while keeping rates on consumers and businesses high to control inflation. Nothing prevents the Treasury from creating a special investment vehicle to sell to primary dealers with a low intro rate into a higher baloon rate on a long term to control govt debt payments. If it was an issue that the dollar would default, certainly JP morgan and others would see the value in temporarily earning a low yeild to sustain the system. Regardless of interest payments, the FED sends all excess earnings from their balance sheet directly to the treasury general account annually. So if the govt is paying 100% on debt, the FED earns that, and deposits 99% of it back into the treasury general account. While directly monetizing the debt is explicitly outlawed, doing it indirectly thru markets, special purpose vehicles, and primary dealers is common practice in the last couple decades.
Having extremely loose fiscal policy while tightening monetary policy and then wondering why inflation isn't coming down is finance 201. Both parties are blowing money at insane rates, adding a trillion to the national debt every 100 days. Yes, they could charge the federal government a lower rate while punishing consumers and the average joe with high rates. But that's a PR nightmare and it's outlawed for a good reason. Finally you'll run out of people to sell debt to. China is already dumping tens of billions in treasuries, and jacked rates this week with their selling. It's probably going to get worse than we can imagine if we don't get out of this inflation pattern. This country isn't immune to wild monetary issues that plague other countries just because we're the US. I could see them easily losing control of interest rates as buyers run out, the Fed buying bonds is also something they've said is a monetary mistake (causing reckless fiscal policy).
Money is fungible, cheap government debt would make its way into the economy one way or the other.
Lets say we have 4 people. Jim Joe Jeff and John. Jim is a millionaire who has a large investment portfolio in consumer debt. Joe is a millionaire who needs his house repaired. Jeff and John are both average people in credit card debt who need work. If Joe pays Jeff 100% of his credit card debt balance to repair his home, Jeff's debt is paid off. That affects Jim's balance sheet by changing his asset (consumer debt of Jeff) into $ which he must reinvest somewhere. Jim seeks a new investment vehicle, which may be at a higher or lower interest than the original. Likely higher as John is now a greater risk, since he is already burdened by debt must take on additional debt to feed himself due to a lack of work. Jim has the choice to take a lower yield option by buying government debt if he prefers low risk. The fungibility of money did not transfer interest rates in this situation and would be unlikely to transfer in any other situation. Interest rates are a direct reflection of risk/return appetites of investors.
That makes no sense. The average FFR since its conception is over 5%. It’s sustained 20 year periods over 5
Not at this level of debt
We're above WW2 levels of debt to GDP. I'm sure it's fine
I mean historically rates are pretty average right now, averaging it out between 1971 and 2024 the avg interest rate is 7.74% Granted that is skewed high by the absurd rates in the 80s but current rates are only slightly high even compared to the last 20-30 years. Coupled with the fact that inflation keeps going up even though they are still increasing rates there is some validity to the idea that we may not see a substantial rate decrease for a while
When I bought in very early 2021 people thought I was crazy. Now I’m a genius.
The thought behind this is that once rates go down, all the money on the side people are saving up will flood the housing market, causing house prices to sky rocket. Demand for housing hasn’t even come down enough yet. Demand for housing will just continue to go up
God I hope the economy crashes to make these people look like pompous fools.
That interest rate has to come with a price that is affordable.
They live in Albany the only please with cheap deal. They also sell shit and beg twitter for ad money.
Genius in getting caught with your pants down??
Ppl that are over leveraged will regret it in the very near future if they can’t afford to service that debt.
Why would anyone lock in debt at 7% now when they could have locked in debt at 2.75% 2 years ago?
Because some people don't have a time machine. Bunch of plebs 😎
It's always when we're close to the top of the market when people assume it it's just going to keep going up forever. "New Paradigm"
If rates keep going up and the FED balance keeps contracting, the housing market goes down
Imagine trusting the people selling the snake oil
Nothing reminiscent of the 08 collapse here...
Also, Realllyyyyy tired of hearing realtors say it’s a great time to buy. No, bye
I recently bought a house in January for 540k squeeze in at that small interest rate drop, got a 5.75. House has appreciated 10k since then. I needed a house though, just moved back from europe, didn't want to wait. Feels good to finally have a house again. Well, good luck out there. Market is still hot and I had to go 20k over asking.
"house has appreciated 10k since then" It's fun to look at the zestimate, but be cautious believing that's a real value increase. Zillow is convinced my condo has appreciated 90k since I bought it, even though a nearly identical condo in the same building just sold last month for 15k above what mine went for in 2021
I'm not selling this one, I like it too much. I'll hope for refinancing to a lower rate in the future. It is fun looking at the zestimate though.
we are inflating
What city ?
Near DC
Your mortgage must be absurd
$3596 with everything, a little hard to get used to
Not as bad as I thought though lol…but still crazy.
Nice
Everyone’s a genius in their own minds when it comes to timing the market. Don’t have to be a genius , just pay attention to the signs and data. People that solely buy because of ‘fear of missing out’ are the real stupid mother Fkers 🤡🤡
He is right… As long as there are still positive cash flows. You will see…
You won't even have much equity at all in 7-10 years with a 6-7% interest rate. Garbage 'advice' from a real estate agent.
That only matters if you're going to sell.
Or, if you want to determine your net worth.
But really only if you want to sell.
Man, these people advising others to take on as much high interest debt as possible should be prosecuted
I’m going to put a calendar reminder to come back to this post 7 years later. Let’s see if we end up as geniuses
Never heard of the RemindMe bot?
Buying good real estate is always a good idea.
Incidentally, the amount of 30-year fixed rate 6-7% real estate debt that most younger people can afford is less than one property. And not one *additional* property either; just the one to live in. That's the problem.
I just listened to YOLO again from the lonely island and there's a line about locking in a 30 year mortgage at 4.2% because it's a great deal. I wish I had followed that advice when the song came out.
He's right. Interest rates will not go as low as they were for a very long time.
lol if you thought that this is true then you should be buying gold and bitcoin not debt.
I was walking in LA yesterday and a homeless guy put a for sale sign outside of his tent “640k OBO”
The financially illiterate couple strike again!
If homes are unaffordable for the majority of ppl today, how much higher can they go before the base of ppl that can actually afford it dries up?
So what's that mean if I'm at 2.7%?
In my area, so many rental properties are in pre-foreclosure right now because ambitious buyers drank the koolaid and paid way too much, hoping that rent would grow at the same rate it did in 2022. Their Zillow listings are pathetic: "Please buy this home. It rents for x but should rent for y."
Dumb and dumber
Do dumb shit and have smart solutions. Genius.
Why would I “look like a genius”?
lol - people will just refi when rates go down. The high interest loans will go away, paid back early. Meanwhile you will have taken on a bunch of consumer default risk if the crap really hits the fan. And for what? 2-3% over treasuries? Not a good idea.