8 ms·

I wish we were back in the days of 20% down. Seems like that would ground the market properly and make people more price sensitive, but I am not an economist. T

I wish we were back in the days of 20% down. Seems like that would ground the market properly and make people more price sensitive, but I am not an economist. Turning the spigot off is harder than turning it on. My beef is that easy credit isn't just driving up the price of housing it's driving up the size of housing which is connected to the price.

toomuchtodo 11y ago
Indeed. Unfortunately, so much of the US economy rides on the housing market, you'll never see sane policies such as this enacted.
somedudethere 11y ago
Is it really "easy credit"? My coworker just got done with getting a mortgage in San Mateo and it really seemed like a long drawn out processes with significant hurdles in terms of paperwork and documentation along with a requirement to put down $300k on a $1mil house. I've been told by several people that it is significantly harder to get a mortgage today than in 2007/2008. Perhaps he was making it harder than it really is but a mortgage is the hardest consumer credit to get.
- toomuchtodo 11y ago
  It's a bit harder, but not significantly. (Source: both my parents are mortgage underwriters). Getting a mortgage is not terribly difficult. Both child support and unemployment income can be used to obtain a mortgage. It really depends who is going to buy the loan. If its Fannie or Freddie (government sponsored entities), you have to meet their criteria if they're to buy the loan from you after you've made it. If you're a lending institution who is going to hold and service the loan (local banks or credit unions) you have a lot more leeway in what your criteria is.
- SHIT_TALKER 11y ago
  You are right, it is definitely harder than it was during the mid 2000s free-for-all. People are conflating "cheaper" with "easier" in this case. Just because rates are suppressed doesn't mean anyone can get a loan.
  - arielweisberg 11y ago
    I messed up using easy when I meant cheap. But it's still easy enough to move the market. Cheap credit no one can get isn't going to have an impact. When 2.5x median income doesn't buy the median house (or even close) there may be an issue. There isn't anything magical about the 2.5x number though, but IMO there is an upper limit on what is reasonable for people to spend on housing.
- nostromo 11y ago
  Your coworker is very close to the "jumbo mortgage" limit on mortgage size. If you exceed this amount, it is much more difficult to get a mortgage, even with pristine credit. https://en.wikipedia.org/wiki/Jumbo_mortgage https://en.wikipedia.org/wiki/Jumbo_mortgage
VT_Drew 11y ago
20% down would mean even fewer millennials would be able to buy a house. I don't know anyone that has 40k sitting around in their bank accounts for a 20% down payment on 200k starter home.
- zardo 11y ago
  I can save 40k, finding a home for only 200k is a laugh though.
  - Nadya 11y ago
    Look in Maine. My mother is moving to a house that is roughly 180k on a decent chunk of land. The issue is she works from home and someone tied to a corporate office in SF might not have the luxury of moving out east.
    - douche 11y ago
      It's going to get even cheaper in the next year or so in Maine. Several major paper mills have just announced huge layoffs or have closed their doors. In Franklin County (approximately 35000 people, and about 1/16th of the state), the Verso mill laid off 300 employees, along with 100 logging contractors. Spider that out to the service, supply, and transport jobs that are going to go away as a result of this, and you are talking thousands of jobs that are going away, and there's no other industry to absorb those losses. Real-estate is already dirt-cheap up there - a home that would sell for half a million in Boston or a million in SFO can be bought for less than 150k. It's going to crater even harder. If anybody likes to ski and can work remotely, I've got a couple of houses for < $100,000 in the family that are a half-hour from Sugarloaf or Sunday River...
  - Phlarp 11y ago
    Minneapolis reporting in, 200k houses abound. But hey fuck us flyover states-- what with our high paying jobs and affordable housing
    - 11y ago
djb_hackernews 11y ago
In Boston most sellers won't consider an offer if it doesn't have at least 20% down. I can tell you that it has not grounded the market at all mostly because the offers are so much over offer and the offers are so much over appraisals that anything less than 20% means the sale is likely to be blocked by the lender due to LTV issues. My beef is 3 fold: NIMBY, weak public transport, REITs buying SFHs and small multis that historically have always been owner occupied.
- jazzyk 11y ago
  I don't think what you said ("won;t consider an offer" applies to first-time buyers. With the median home price in Boston around $467K, a young family would need ~$100K (including tx costs) in _cash_ to buy. I am a bit puzzled by where this down money would come from. Given college debt payments and stagnant wages. Also, saving money is not a practiced virtue in the US :-)
rodgerd 11y ago
New Zealand has 20% and in some cases 30% equity requirements. It has made not a whit of difference.
rarepostinlurkr 11y ago
20% down? A starter home in the bay area in a less than great neighborhood would run you about $500k 7 years ago. Drop 100k down on your home for the 20% buy in, thats a pretty big chunk of change that has already eliminated a huge swath of people. If you have just been given a job offer to come work in the bay area you are likely looking for a home to move your family. Your signing bonus isn't going to be given as a lump sum, so you are stuck renting for $4,000/month. Not to mention that previously $500k starter home is now $800k (still a bad neighborhood with crap schools too)
- bkjelden 11y ago
  Prices are just simply insane here. I don't know how anyone who hasn't been part of an IPO or an acquisition is going to be able to buy here. I'm a software engineer and my wife is a nurse. We supposedly fit the demographic that's pricing people out of the area, but more and more we feel priced out ourselves.
- flog 11y ago
  $800k sounds low. You've still got to do the retrofit, or it's going to be a TIC, or it's going to have excessive insurance costs... even then you'll be outbid by 20-30% over asking price. I've been sitting on a 20% deposit for years (at the equiv of SF property), but simply cannot afford to buy given all those costs. The only way I can see it happening is to be married, with a double income.

toomuchtodo 11y ago

Indeed. Unfortunately, so much of the US economy rides on the housing market, you'll never see sane policies such as this enacted.

somedudethere 11y ago

Is it really "easy credit"? My coworker just got done with getting a mortgage in San Mateo and it really seemed like a long drawn out processes with significant hurdles in terms of paperwork and documentation along with a requirement to put down $300k on a $1mil house. I've been told by several people that it is significantly harder to get a mortgage today than in 2007/2008. Perhaps he was making it harder than it really is but a mortgage is the hardest consumer credit to get.

toomuchtodo 11y ago
It's a bit harder, but not significantly. (Source: both my parents are mortgage underwriters). Getting a mortgage is not terribly difficult. Both child support and unemployment income can be used to obtain a mortgage. It really depends who is going to buy the loan. If its Fannie or Freddie (government sponsored entities), you have to meet their criteria if they're to buy the loan from you after you've made it. If you're a lending institution who is going to hold and service the loan (local banks or credit unions) you have a lot more leeway in what your criteria is.
SHIT_TALKER 11y ago
You are right, it is definitely harder than it was during the mid 2000s free-for-all. People are conflating "cheaper" with "easier" in this case. Just because rates are suppressed doesn't mean anyone can get a loan.
- arielweisberg 11y ago
  I messed up using easy when I meant cheap. But it's still easy enough to move the market. Cheap credit no one can get isn't going to have an impact. When 2.5x median income doesn't buy the median house (or even close) there may be an issue. There isn't anything magical about the 2.5x number though, but IMO there is an upper limit on what is reasonable for people to spend on housing.
nostromo 11y ago
Your coworker is very close to the "jumbo mortgage" limit on mortgage size. If you exceed this amount, it is much more difficult to get a mortgage, even with pristine credit. https://en.wikipedia.org/wiki/Jumbo_mortgage https://en.wikipedia.org/wiki/Jumbo_mortgage

VT_Drew 11y ago

20% down would mean even fewer millennials would be able to buy a house. I don't know anyone that has 40k sitting around in their bank accounts for a 20% down payment on 200k starter home.

zardo 11y ago
I can save 40k, finding a home for only 200k is a laugh though.
- Nadya 11y ago
  Look in Maine. My mother is moving to a house that is roughly 180k on a decent chunk of land. The issue is she works from home and someone tied to a corporate office in SF might not have the luxury of moving out east.
  - douche 11y ago
    It's going to get even cheaper in the next year or so in Maine. Several major paper mills have just announced huge layoffs or have closed their doors. In Franklin County (approximately 35000 people, and about 1/16th of the state), the Verso mill laid off 300 employees, along with 100 logging contractors. Spider that out to the service, supply, and transport jobs that are going to go away as a result of this, and you are talking thousands of jobs that are going away, and there's no other industry to absorb those losses. Real-estate is already dirt-cheap up there - a home that would sell for half a million in Boston or a million in SFO can be bought for less than 150k. It's going to crater even harder. If anybody likes to ski and can work remotely, I've got a couple of houses for < $100,000 in the family that are a half-hour from Sugarloaf or Sunday River...
- Phlarp 11y ago
  Minneapolis reporting in, 200k houses abound. But hey fuck us flyover states-- what with our high paying jobs and affordable housing
  - 11y ago

djb_hackernews 11y ago

In Boston most sellers won't consider an offer if it doesn't have at least 20% down. I can tell you that it has not grounded the market at all mostly because the offers are so much over offer and the offers are so much over appraisals that anything less than 20% means the sale is likely to be blocked by the lender due to LTV issues. My beef is 3 fold: NIMBY, weak public transport, REITs buying SFHs and small multis that historically have always been owner occupied.

jazzyk 11y ago
I don't think what you said ("won;t consider an offer" applies to first-time buyers. With the median home price in Boston around $467K, a young family would need ~$100K (including tx costs) in _cash_ to buy. I am a bit puzzled by where this down money would come from. Given college debt payments and stagnant wages. Also, saving money is not a practiced virtue in the US :-)

rodgerd 11y ago

New Zealand has 20% and in some cases 30% equity requirements. It has made not a whit of difference.

rarepostinlurkr 11y ago

20% down? A starter home in the bay area in a less than great neighborhood would run you about $500k 7 years ago. Drop 100k down on your home for the 20% buy in, thats a pretty big chunk of change that has already eliminated a huge swath of people. If you have just been given a job offer to come work in the bay area you are likely looking for a home to move your family. Your signing bonus isn't going to be given as a lump sum, so you are stuck renting for $4,000/month. Not to mention that previously $500k starter home is now $800k (still a bad neighborhood with crap schools too)

bkjelden 11y ago
Prices are just simply insane here. I don't know how anyone who hasn't been part of an IPO or an acquisition is going to be able to buy here. I'm a software engineer and my wife is a nurse. We supposedly fit the demographic that's pricing people out of the area, but more and more we feel priced out ourselves.
flog 11y ago
$800k sounds low. You've still got to do the retrofit, or it's going to be a TIC, or it's going to have excessive insurance costs... even then you'll be outbid by 20-30% over asking price. I've been sitting on a 20% deposit for years (at the equiv of SF property), but simply cannot afford to buy given all those costs. The only way I can see it happening is to be married, with a double income.