4 ms·

Part of these probably have poor credit score and can't get mortgage.

toomuchtodo 4y ago
> Part of these probably have poor credit score and can't get mortgage. FHA loans require you to fog a mirror to qualify [1] [2]. More importantly, Fed interest rate hikes have not yet hammered real estate prices sufficiently for mortgage payments to reach what wages can support [3] [4] [5]. [1] https://www.nerdwallet.com/article/mortgages/fha-loan-requirements https://www.nerdwallet.com/article/mortgages/fha-loan-requir... [2] https://www.hud.gov/program_offices/housing/sfh/lender/origination/mortgage_limits https://www.hud.gov/program_offices/housing/sfh/lender/origi... [3] https://www.youtube.com/watch?v=DsuwbJaVGqI https://www.youtube.com/watch?v=DsuwbJaVGqI [4] https://www.youtube.com/watch?v=FPJ0KYI1SKE https://www.youtube.com/watch?v=FPJ0KYI1SKE [5] https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA (ignore the clickbait youtube titles, the charts shown are sufficient)
- alexpotato 4y ago
  Are people with ~2.5% mortgages in any hurry to sell though? If people are deciding not to sell b/c of the above, yes, higher interest rates might bring down the prices of house that people "have" to sell but that's not going to improve the supply situation.
  - toomuchtodo 4y ago
    They aren't, which means liquidity will be a challenge, but there are always sellers who have no choice and must sell (death, divorce, job move, etc). New home builders also contribute to new comps, depending on the market and land availability. Supply is going to be a mess due to the cost of money, land, labor, and materials. Don't expect a crash. It's going to be a slow stagnation burn.
ctvo 4y ago
The average credit score in the US was 711[1] in 2020. It is highly unlikely the distribution is different for these 3 million house holds vs. the population that it's even worth discussing as a contributing factor unless you have some other information we're missing (I'd wager people making 150K as a holdhouse probably have better credit rating than the general population if anything). 1 - https://www.valuepenguin.com/average-credit-score https://www.valuepenguin.com/average-credit-score
- Idiot_in_Vain 4y ago
  [flagged]
willis936 4y ago
Part but not all. Having a 700+ credit score is pretty easy to accomplish with this level of income, but mortgages require a down payment. The target level of capital has been rising. At the same time rent rates have been rising. So if you make a combined $150k, $120k post tax, $90k take home after benefit bills, $60k after rent. That's plenty to live off of, but it is a lengthening horizon before you can afford a down payment, even with belt tightening exercises.
kube-system 4y ago
Or they live in trendy urban neighborhoods where a 20% down payment is $200k, and that locks you into a monthly payment that is no less than renting, and is in a school district that they don't want to be in long term.
- Idiot_in_Vain 4y ago
  [flagged]

> Part of these probably have poor credit score and can't get mortgage. FHA loans require you to fog a mirror to qualify [1] [2]. More importantly, Fed interest rate hikes have not yet hammered real estate prices sufficiently for mortgage payments to reach what wages can support [3] [4] [5]. [1] https://www.nerdwallet.com/article/mortgages/fha-loan-requirements https://www.nerdwallet.com/article/mortgages/fha-loan-requir... [2] https://www.hud.gov/program_offices/housing/sfh/lender/origination/mortgage_limits https://www.hud.gov/program_offices/housing/sfh/lender/origi... [3] https://www.youtube.com/watch?v=DsuwbJaVGqI https://www.youtube.com/watch?v=DsuwbJaVGqI [4] https://www.youtube.com/watch?v=FPJ0KYI1SKE https://www.youtube.com/watch?v=FPJ0KYI1SKE [5] https://fred.stlouisfed.org/series/CSUSHPINSA https://fred.stlouisfed.org/series/CSUSHPINSA (ignore the clickbait youtube titles, the charts shown are sufficient)

alexpotato 4y ago
Are people with ~2.5% mortgages in any hurry to sell though? If people are deciding not to sell b/c of the above, yes, higher interest rates might bring down the prices of house that people "have" to sell but that's not going to improve the supply situation.
- toomuchtodo 4y ago
  They aren't, which means liquidity will be a challenge, but there are always sellers who have no choice and must sell (death, divorce, job move, etc). New home builders also contribute to new comps, depending on the market and land availability. Supply is going to be a mess due to the cost of money, land, labor, and materials. Don't expect a crash. It's going to be a slow stagnation burn.

ctvo 4y ago

The average credit score in the US was 711[1] in 2020. It is highly unlikely the distribution is different for these 3 million house holds vs. the population that it's even worth discussing as a contributing factor unless you have some other information we're missing (I'd wager people making 150K as a holdhouse probably have better credit rating than the general population if anything). 1 - https://www.valuepenguin.com/average-credit-score https://www.valuepenguin.com/average-credit-score

Idiot_in_Vain 4y ago
[flagged]

willis936 4y ago

Part but not all. Having a 700+ credit score is pretty easy to accomplish with this level of income, but mortgages require a down payment. The target level of capital has been rising. At the same time rent rates have been rising. So if you make a combined $150k, $120k post tax, $90k take home after benefit bills, $60k after rent. That's plenty to live off of, but it is a lengthening horizon before you can afford a down payment, even with belt tightening exercises.

kube-system 4y ago

Or they live in trendy urban neighborhoods where a 20% down payment is $200k, and that locks you into a monthly payment that is no less than renting, and is in a school district that they don't want to be in long term.

Idiot_in_Vain 4y ago
[flagged]