tysker said:

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fka ftc said:

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Fightin_Aggie said:

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techno-ag said:

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What did we ever do back when the interest rates were near 18%?

Oh yeah, I remember. We saved up for 20% down, didn't buy more than we could afford, and refinanced when rates went down.

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Houses were 80k

18% interest on a balance of $64k is can still be paid down in 3 years with discipline and the wage at the time,


18% or 8% on $640k is a big deal different

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Then you cannot buy a $640k house. Plenty of $80k houses out there. Are you simply not interested in those?

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$80k houses? So a trailer park. In Normangee. The commuting costs to BCS are going to be a PITA

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$160k in Hearne gets you acceptable schools and a decent little town.

Let me know if you want to admit your real problem with Hearne.

Hearne is 20 minutes from B/CS.

Your attacking the op stance that says there's a macro economic problem with a distorted view that's its mostly a personal problem, despite repeated references disputing your unsupported argument.

You're not taking the opposite view, you introduced an entirely different argument and using it to distort the original point.

You'd need to argue the original point with some sort of statistics or other facts that would show that pricing or wages are not the main issue. So far you've only given emotion or opinions about the unwillingness of buyers to make sacrifices.

Deny it all you want. Doesn't matter to me

Agthatbuilds said:

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fka ftc said:

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Agthatbuilds said:

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Fun thing is some of those production builders are building entire neighborhoods of rentals because of people's inability to purchase new homes

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Which in 10 years will make for great starter homes to be purchased by those complaining most on this thread.

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Of course, iirc, the intention is for these to always be rentals held by private equity, sold as income producing units, not individually, but as entire packages. It's basically an apartment complex.

Back to the argument at hand- the only real solution, in my opinion, is for massive wage increase across the board (which I know my company couldn't handle in this time of inflation), or a real bubble busting recession or depression that guts the housing market. Now, option two would probably just lead to more homes being bought up by private equity firms or real estate investors flush with cash, and not necessarily leading to more affordable homes for people, since most of them would probably not be in a position to finance a home.

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You do not recall anything as you simply do not know.

That is not the intention.

The fact you think a massive wage increase could ever possibly be a solution is... either naive or simply lack of understanding of economics.

Please advice of how much "stimulus" money ever handed out is spent on housing. Or how much of taxes is spent on housing.

A massive wage increase is nothing more than UBI.

Agthatbuilds said:

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Your attacking the op stance that says there's a macro economic problem with a distorted view that's its mostly a personal problem, despite repeated references disputing your unsupported argument.

You're not taking the opposite view, you introduced an entirely different argument and using it to distort the original point.

You'd need to argue the original point with some sort of statistics or other facts that would show that pricing or wages are not the main issue. So far you've only given emotion or opinions about the unwillingness of buyers to make sacrifices.

Deny it all you want. Doesn't matter to me

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Good. Prove it.

fka ftc said:

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tysker said:

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fka ftc said:

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Fightin_Aggie said:

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techno-ag said:

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What did we ever do back when the interest rates were near 18%?

Oh yeah, I remember. We saved up for 20% down, didn't buy more than we could afford, and refinanced when rates went down.

---

Houses were 80k

18% interest on a balance of $64k is can still be paid down in 3 years with discipline and the wage at the time,


18% or 8% on $640k is a big deal different

---

Then you cannot buy a $640k house. Plenty of $80k houses out there. Are you simply not interested in those?

---

$80k houses? So a trailer park. In Normangee. The commuting costs to BCS are going to be a PITA

---

$160k in Hearne gets you acceptable schools and a decent little town.

Let me know if you want to admit your real problem with Hearne.

Hearne is 20 minutes from B/CS.

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Wait what?

Hearne has an acceptable school? Maybe if you can get to Mumford ISD … other wise you're better off in Milano or Franklin.

Pantera said:

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fka ftc said:

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tysker said:

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fka ftc said:

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Fightin_Aggie said:

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techno-ag said:

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What did we ever do back when the interest rates were near 18%?

Oh yeah, I remember. We saved up for 20% down, didn't buy more than we could afford, and refinanced when rates went down.

---

Houses were 80k

18% interest on a balance of $64k is can still be paid down in 3 years with discipline and the wage at the time,


18% or 8% on $640k is a big deal different

---

Then you cannot buy a $640k house. Plenty of $80k houses out there. Are you simply not interested in those?

---

$80k houses? So a trailer park. In Normangee. The commuting costs to BCS are going to be a PITA

---

$160k in Hearne gets you acceptable schools and a decent little town.

Let me know if you want to admit your real problem with Hearne.

Hearne is 20 minutes from B/CS.

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Wait what?

Hearne has an acceptable school? Maybe if you can get to Mumford ISD … other use you're better off in Milano or Franklin.

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Go for it. Franklin has produced great students as well.

But Hearne produced my father, aunt, uncle, cousins and others all of whom graduated from Texas A&M and did well for themselves.

So tell me what the problem is.

Oh, I agree with you that massive wage increases would only lead to higher prices, thereby negating whatever purchasing power one might gain.

However, it's undeniable that the cost of housing has far outpaced the increase in wages. It's been posted here multiple times. The likely real solution is a crashing real estate market, forcing the costs of homes to reduce enough to be more affordable to more people.

I have nothing against the residents or people associated with Hearne. Great people, some of my best friends, grew up there and I can't say I'm any different coming from right across the Robertson/Milam county myself. But I will say that Hearne has a huge problem as a city with leadership, and the school system has been failing for quite a while. Why does everyone transfer to the three schools I mentioned if otherwise?

I am likely to move that direction, or towards Caldwell and if I have kids they may attend one of those two school districts. If they do I hope things change because they are both subpar, Hearne especially.

Removed for being dickish.

This is going to be a rare one for fka ftc, so give me a moment to fully develop.

I am going to admit to some error and short sightedness in the broader discussion I have lamented.

I have mentioned before I have a friend in the lobbying business, particular to the housing industry. I discussed this thread as he is older, wiser and vastly more experienced than I, but likely anyone who has posted on this thread.

He has a child in their mid 20's thinking about that first time home buying experience.

His counsel... well, that its a complex one and not easily blamed on this and that.

Below is a fantastic article he pointed me to. I advise folks to read it. Be warned, it does NOT back me up and contradicts me in several areas. But it backs me up in others.

For the younger folks, I will actually apologize. I will say sorry for not respecting or even considering the economic environments you yourselves experienced, and more importantly, when you experienced them.

Honestly, those things are the sorts that define different generations. So I will work to have a better understanding of the frustration you feel by working hard and being fiscally responsible and still frustrated by housing costs, particularly home ownership.

I would also still encourage you to seek opportunity in tough markets as it may be a path to success, however you may define that.

https://hub.jhu.edu/2023/08/29/affordable-housing-crisis/

Pantera said:

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I have nothing against the residents or people associated with Hearne. Great people, some of my best friends, grew up there and I can't say I'm any different coming from right across the Robertson/Milam county myself. But I will say that Hearne has a huge problem as a city with leadership, and the school system has been failing for quite a while. Why does everyone transfer to the three schools I mentioned if otherwise?

I am likely to move that direction, or towards Caldwell and if I have kids they may attend one of those two school districts. If they do I hope things change because they are both subpar, Hearne especially.

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Only way to change the leadership in Hearne is to move there and effect the change.

Or support school choice which helps address housing cost issues to a small extent.

Having met with investors and developers as recently as today that are looking to put a "for rent" gated community in, there is merit to the idea that money is intentionally flowing to that model. And yes, they absolutely considered it like an apartment complex or rv park that they could make cash flow and sell as a single unit.

And I live in a small, rural town where the average home price, per our CAD's most recent report, is now just north of $305k.

fka ftc said:

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Pantera said:

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I have nothing against the residents or people associated with Hearne. Great people, some of my best friends, grew up there and I can't say I'm any different coming from right across the Robertson/Milam county myself. But I will say that Hearne has a huge problem as a city with leadership, and the school system has been failing for quite a while. Why does everyone transfer to the three schools I mentioned if otherwise?

I am likely to move that direction, or towards Caldwell and if I have kids they may attend one of those two school districts. If they do I hope things change because they are both subpar, Hearne especially.

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Only way to change the leadership in Hearne is to move there and effect the change.

Or support school choice which helps address housing cost issues to a small extent.

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That's the plan! Cameron Yoe, A&M and Hearne's school colors aren't too far off anyway, so it could be a smooth transition.

I also wanted to say that I agree with your views generally, so I hope there were no ill feelings on this exchange.

I harbor no ill feeling even to some of the more disrespectful sorts that appear.

I am an absolute contrarian, particularly as it relates to topics to be debated. It forces others to think, challenges others to pay attention.

Over time I have developed a healthy respect for certain posters on board and try to ignored the ones that have development disabilities and personality disorders.

Discussion is grand, personal attacks are hard to avoid, tougher skin keeps the school nurse (aka staph) from being the most overworked people in the business.

I think many on here have lost sight of the historical realities of interest rates. Here is look at that:



We bought our first house in 2007 on a custom, wonky mortgate but our average interest rate was right around the number listed here for 2007.

Where we are today with interest rates is closer to the norm than the exception.

https://www.forbes.com/sites/forbesbusinesscouncil/2022/08/01/what-to-know-about-investing-in-build-to-rent-communities/?sh=4b6fbd687f83

Quote:

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For the investor looking for the best returns on real estate, financial legacy grows over time through buying right, managing capital efficiently and investing for the long-term. BTR is creating a scenario where investors retain their ownership over properties while receiving infinite cash-on-cash returns, with lifetime cash flow.

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Quote:

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A staggering 60% of Americans can't afford to buy a home. The BTR industry provides this 60% with a desirable alternative

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https://www.forbes.com/sites/bradhunter/2021/02/22/ten-billion-reasons-why-there-is-a-built-for-rent-land-rush/?sh=761fef08d90b



Here's two articles on build to rent from a 20 sec Google search. The key is that younger families who want to buy a home increasingly cannot afford to, so, developers have developed this build to rent asset class. These units are not going to be sold, at least any time soon, because they provide infinite cash flow that can adjust with inflation and increasing rental demands. It makes a lot a sense for both the investor and the customer. It's far more valuable as a cash flow unit than selling each property individually.

I have a feeling I'm a bit more plugged into this industry than you are, fwiw.

Agreed.... the exponential growth in price is the outlier far more than interest rates.

Agthatbuilds said:

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I have a feeling I'm a bit more plugged into this industry than you are, fwiw.

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I know for a fact you are not. If you are are in production building, my evening was spent with the guy whose boss's boss's boss goes to for advice.

Happy to have a more in depth discussion on BTR. I am only interested in building their houses for a fee.

There is no long term financial model for holding single-family detached residences in a single neighborhood for the long term.

The legal liabilities down the road would be mentally.... r.

Quote:

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This isn't a simple story, but in a sentence: Affordable housing hasn't been solved in this country because the supply hasn't caught up with the demand.

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I agree with this. Now, I'm in the custom business, so I can't speak directly to building houses for an unknown buyer, but, if I were a production builder, I wouldn't be flooding my own market in an effort to bring cost down. I'd probably jump on board the build to rent train.

I'm not in production building. I'm also the boss's boss's boss, if you will

Agthatbuilds said:

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Quote:

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This isn't a simple story, but in a sentence: Affordable housing hasn't been solved in this country because the supply hasn't caught up with the demand.

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I agree with this. Now, I'm in the custom business, so I can't speak directly to building houses for an unknown buyer, but, if I were a production builder, I wouldn't be flooding my own market in an effort to bring cost down. I'd probably jump on board the build to rent train.

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Smaller builders are seeing investment buyers, heavily trended towards immigrants (legal), buying all the specs up as soon as they come out of the ground. No options, no customizations, they pool money, buy the property and rent to their friends / family. This is happening widespread in DFW, imagine Houston is the same.

These will not be held long-term. When non-cash buyers can get good rates again and assuming values remain elevated, they will sell and look for the next opportunity.

I had a group like that come to me recently to build about 20 "custom" homes but they balked at the construction cost, which I can't blame them for doing.

I haven't seen a ton of that here in c etral trxas, but, that's also not my market. I'm seeing less request for local customs bids and way more requests for major remodel/additions and ADUs.

Agthatbuilds said:

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I had a group like that come to me recently to build about 20 "custom" homes but they balked at the construction cost, which I can't blame them for doing.

I haven't seen a ton of that here in c etral trxas, but, that's also not my market. I'm seeing less request for local customs bids and way more requests for major remodel/additions and ADUs.

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Going to be a good market per my estimation, looking into that arena myself but in another area.

I may come across harsh, but there are simply too many dodo heads on here to pander to folks who are either unserious, trolling or simply have no idea WTF they are talking about.

We are not looking at the next 5 years being like the last 15-20.

techno-ag said:

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What did we ever do back when the interest rates were near 18%?

Oh yeah, I remember. We saved up for 20% down, didn't buy more than we could afford, and refinanced when rates went down.

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Yeah that 20% wasn't an entire years paycheck.

fka ftc said:

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Agthatbuilds said:

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I had a group like that come to me recently to build about 20 "custom" homes but they balked at the construction cost, which I can't blame them for doing.

I haven't seen a ton of that here in c etral trxas, but, that's also not my market. I'm seeing less request for local customs bids and way more requests for major remodel/additions and ADUs.

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Going to be a good market per my estimation, looking into that arena myself but in another area.

I may come across harsh, but there are simply too many dodo heads on here to pander to folks who are either unserious, trolling or simply have no idea WTF they are talking about.

We are not looking at the next 5 years being like the last 15-20.

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The "free" money seriously distorted the market, especially for those average income earners.

It did a few things:

1. It did change perception for younger buyers that money would always remain cheap and that probably caused some behavior changes
2. Wealthier (check that, not even wealthier, just more risk takers) buyers could more easily make investments into real estate and either remove homes from the market and turn them into rentals/str or flip homes for profits that would have been a more suitable starter home for another buyer
3. The introduction of the big equity players buying up thousands and thousands of homes removed supply that could have been purchased by first time home buyers. I myself lost a couple of bids on homes to "cash" buyers who were just corporations buying up property
4. Cheap money helped lead to more inflation which outpaced wage gains
5. Our reaction to covid was insane. The building market went crazy in every way. Factories runningbhalf shifts, taking advatnage to retool, cities attempting to shut down home construction, paying people to stay home, govt cahs infusions...When a bag of pvc elbows goes from 19 dollars to 100 dollars in 8 months, it's unsustainable.
6. The labor market is absurd. There's not enough skilled people to do the work, especially the high end stuff we do. Hell, when a no experience 1st day on the job plumber's assistant demands 21 or 22 dollars an hour were screwed.

fka ftc said:

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Agthatbuilds said:

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Quote:

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This isn't a simple story, but in a sentence: Affordable housing hasn't been solved in this country because the supply hasn't caught up with the demand.

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I agree with this. Now, I'm in the custom business, so I can't speak directly to building houses for an unknown buyer, but, if I were a production builder, I wouldn't be flooding my own market in an effort to bring cost down. I'd probably jump on board the build to rent train.

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Smaller builders are seeing investment buyers, heavily trended towards immigrants (legal), buying all the specs up as soon as they come out of the ground. No options, no customizations, they pool money, buy the property and rent to their friends / family. This is happening widespread in DFW, imagine Houston is the same.

These will not be held long-term. When non-cash buyers can get good rates again and assuming values remain elevated, they will sell and look for the next opportunity.

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So this may explain some houses around us that have sold for absolutely absurd prices, as in $500-800k more than their peers, and then we see multiple non-natives coming and going at weird times.

The house directly behind us was purchased by MEs. There are periods of weeks where they are seemingly gone and other people are there while they are gone. And then the former reappear weeks later. And it's this repeating cycle like this for the past few years.

Don't disagree with your points.

YouBet said:

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I think many on here have lost sight of the historical realities of interest rates. Here is look at that:



We bought our first house in 2007 on a custom, wonky mortgate but our average interest rate was right around the number listed here for 2007.

Where we are today with interest rates is closer to the norm than the exception.

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Interest rates mean nothing with respect to affordability without consideration of incomes and prices. A $190,000 house with a 10% interest rate and equivalent tax and insurance proportions has the same monthly cost as a 325,000 house with a 3% interest rate. Given equivalent income level, the $190,000 home with the higher interest rate is far more affordable than the 325,000 with the low interest rate despite roughly equivalent payments, because the higher priced home requires a down payment 70% larger than the lower priced home. The current housing market is priced based upon a decade of sub 4% interest rates and 2 years of sub 3% interest rates, low supply and significant reductions in individual's expenses. The vast majority of homeowners today have interest rates below 4% as the average time to hold a mortgage is under 10 years. They are more than content to hold onto those low rates and large amounts of equity in the face of selling into a market where they'd have to downgrade to maintain equivalent monthly costs.

You cannot hold interest rates that low, for that long and not expect prices to adjust upward. You cannot increase interest rates as rapidly as they have been increased over the last year and a half and expect prices to adjust that quickly.

What was the interest rate on a savings account when the mortgage rates were 15-20% boomers?

Easy to save when you have a good account to put money in to save for a down payment.

Good luck doing that at 0% interest rate since 2008.

hph6203 said:

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YouBet said:

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I think many on here have lost sight of the historical realities of interest rates. Here is look at that:



We bought our first house in 2007 on a custom, wonky mortgate but our average interest rate was right around the number listed here for 2007.

Where we are today with interest rates is closer to the norm than the exception.

---

Interest rates mean nothing with respect to affordability without consideration of incomes and prices. A $190,000 house with a 10% interest rate and equivalent tax and insurance proportions has the same monthly cost as a 325,000 house with a 3% interest rate. Given equivalent income level, the $190,000 home with the higher interest rate is far more affordable than the 325,000 with the low interest rate despite roughly equivalent payments, because the higher priced home requires a down payment 70% larger than the lower priced home. The current housing market is priced based upon a decade of sub 4% interest rates and 2 years of sub 3% interest rates, low supply and significant reductions in individual's expenses. The vast majority of homeowners today have interest rates below 4% as the average time to hold a mortgage is under 10 years. They are more than content to hold onto those low rates and large amounts of equity in the face of selling into a market where they'd have to downgrade to maintain equivalent monthly costs.

You cannot hold interest rates that low, for that long and not expect prices to adjust upward. You cannot increase interest rates as rapidly as they have been increased over the last year and a half and expect prices to adjust that quickly.

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I know. I was simply sharing historical rates because I see people throwing around what rates were in a certain time period that aren't correct. It's also enlightening for the younger crowd to see how truly high rates were in the past.

TheMasterplan said:

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What was the interest rate on a savings account when the mortgage rates were 15-20% boomers?

Easy to save when you have a good account to put money in to save for a down payment.

Good luck doing that at 0% interest rate since 2008.

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Interest rate on a savings account for a down payment on a house is going to minimally impact when you can buy a house and the house you can afford.

What did impact was people willing to live at an overall lower standard - eat out less, drive older car, work extra job, etc.

I agree with you. And all those savings can be put in that interest account and build. That does matter.

You could arguably say that most the last 10-15 years should've been putting money in stocks due to how low the interest rates were.

Not saying the interest hurts, but its not moving the needle.

But there is a point on those savings account rates that it provides a psychological incentive to save money when the interest is not effectively zero.

I agree.

I'm getting lots of Redfin emails for housing price drops now.

Old May Banker said:

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Agreed.... the exponential growth in price is the outlier far more than interest rates.

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As I pointed out earlier, that exponential growth in sales price comes with a little friend - an exponential growth in the accompanying tax appraisal and the property tax bill that goes along with it. How many tax rates have gone down since 1980?