Market Conditions: Will Student Debt Keep the Housing Market Depressed for Years to Come?
We’ve often chattered about the rising level of student debt and how that could stifle any kind of housing recovery.
Bloomberg Businessweek explores this very topic this week:
Roshell Schenck has a Ph.D. in pharmacy and earns $125,000 a year. Yet, because she has more than $110,000 in student loan debt, counselors have told her she can’t qualify for a mortgage. “I’d love to buy and can afford to buy,” says the 28-year-old graduate of Lake Erie College of Osteopathic Medicine in Erie, Pa. With lenders scrutinizing college loans more closely than in previous years, it’s almost impossible for borrowers such as Schenck to get approved for mortgages. “My debt is crushing my chances of purchasing a home.”
According to a recent Federal Reserve study, only 9 percent of 29- to 34-year-olds got a first-time mortgage from 2009 to 2011, compared with 17 percent 10 years earlier. “First-time home buyers are typically an important source of incremental housing demand, so their smaller presence in the market affects house prices and construction quite broadly,” Fed Chairman Ben Bernanke said at a homebuilders’ conference in Orlando on Feb. 10.
Recent college graduates carry an average debt load of more than $25,000, limiting their ability to qualify for mortgages even if they’re able to land a job in a market with an unemployment rate of 9 percent for 25- to 34-year-olds. Dubbing it a “student loan debt bomb,” the National Association of Consumer Bankruptcy Attorneys (NACBA) warned on Feb. 7 about the effects of rising student debt on recent graduates, parents who co-signed their loans, and older Americans who’ve gone back to school for job training.
Generation Y is now the first time home buying generation. But they are graduating from college into an uncertain job market.
Palacios says first-time buyers are key to a housing recovery because they allow current owners to move into larger, pricier homes. “Move-up buyers need somebody to purchase their homes to move,” he says. “You need that first leg in the recovery to materialize.”
Since the overall number of first-time home buyers has fallen, people aged 25 to 34 still accounted for 52 percent of that group last year, near the average since 2005, according to the Realtors group. Still, almost 6 million Americans in that group lived with their parents in 2011, up from 4.7 million when the recession began in 2007, according to U.S. Census Bureau data.
Has the game changed for first time homebuyers due to student loan debt?
If so, what does that mean for the housing market going forward?
Student debt is stifling home sales [Bloomberg Businessweek, Bob Willis, February 23, 2012]
Either the good Dr. Schnenck needs to consult another mortgage broker, or there’s something else on her loan app that’s keeping her from being approved. Student debt is hampering the housing market (and will, for the foreseeable future), but only because it’s limiting prospective buyers’ ability to save for a down and restricting how much they can afford to pay per month on a place. Unless there are other problems, I can’t see a loan being dinged due to big student loan debt. Perhaps things have changed dramatically since I got a mortgage in 2010, with good but not stellar credit, much more student debt than Schenck, and not much more in salary. Russ, thoughts?
Good article, Sabrina! Very interesting
I suspect the main reason she doesn’t qualify is because she has additional credit card debt or something else bringing her credit score down and/or little to no money available for a down payment. I was not aware that having student loans alone could make someone ineligible for a mortgage.
In any case, the student loan bubble is certainly harming house prices and will for the indefinite future. People are frequently graduating with undergraduate degrees with $50k or more in student loan debt. That only gets higher as they stay in school longer (which a lot are doing due to poor job prospects). Servicing that much debt, even at extremely low interest rates, is tough. You can’t work while you’re in school and earn enough to (nearly) pay your way as you go anymore as you could a few decades ago. If you look at housing prices, you can clearly see the bubble that happened there, but I think if you look at education prices, you’ll find the same thing. It just hasn’t burst yet.
Seems fine. Not everyone should be owning RE.
I have to agree – she’s not telling the whole story. Either she’s trying to buy more than she can afford, or she’s got additional debt. If she truly believes its her debt that’s holding her back and she can afford to buy, why not focus more on paying her debt down now while she has no other commitments? Plus as a new graduate isn’t she more likely to be moving around within the short term? Another reason to not buy right now.
It will have an affect on the market, but limited to certain sectors. Student loan debt affects the purchase capacity of “post-college through early-30s” buyer demographic who weren’t heavily subsidized by parents/family during college/graduate school years and/or don’t have parent/family-provided down payment cash. That demographic profile typically still sought “starter homes” in those specific neighborhoods most desired by “upper-middle income white-collar young professionals”, and was once able and willing to shoulder more debt yet to do so, Increasing student debt coupled w/more normalized mortgage requirements are reducing their buying capacity. What we’ll really see is a sharper divide between post-grads with no debt (and likely family wealth still available to still subsidize lifestyle) versus those post-grads w/6-figure student loans and no gifted down-payment reserves. So the Green Zone market for $400,000+ 2/2 condos for young recently-married (or co-habiting) couples will likely not revive soon. .
Boo hoo. Dr. Shenck, who is presumably single, could easily retire all her student loans AND save a downpayment on a home in 2-3 years if she lived frugally….inexpensive apartment, cheap paid-off car, not racking up CC debt, etc. But that wouldn’t be fashionable.
I think student loan debt is just one of many factors that are impacting the way Americans allocate their money. In general we are having to reprioritize our spending based upon rising commodity costs and increased costs for health care, retirement, and education. The emerging markets are consuming more resources and it is inevitable that as their standard of living rises ours will fall. In addition, as healthcare technology advances people will choose to spend more on healthcare. And then there is the failure of social security and the out of control rises in the cost of education.
I wonder if there’s still some gender discrimintation here in Roshell’s case. I recall when mortgage underwriting heavily discounted earnings of young unmarried working women (and wives), assuming that their earnings were inherently less reliable during childbearing years. I recall this principal being applied to us at each mortgage application, even though we have equal salaries and equal histories of stable continuous employment.
On second thought, Schenck probably couldn’t retire her debt AND amass a DP in 3 years, but she certainly could pay off the loans.
“inevitable that as their standard of living rises ours will fall”
Yes.. right up until the point where it’s that no longer deprived youth who grows up to connect brain waves to electronic limbs or cures cancer.
Increased competition for resources – different story.
They’re just talking about her school debt. Maybe she also has a car loan (likely.) Maybe she has $30,000 in credit card debt from being a student all those years.
So suddenly she now has $170,000 in debt and wants to take on even more. It’s not that unusual now for the banks to say “no” if you have that much debt. I know someone with a $120,000 income who was trying to buy a $425,000 property and had a $60,000 downpayment. But he also had student loans and a $600 a month car payment and some credit card debt.
The bank made him get rid of his car payment before they would give him the loan. (his parents paid off the remaining car loans for him.)
“Boo hoo. Dr. Shenck, who is presumably single, could easily retire all her student loans AND save a downpayment on a home in 2-3 years if she lived frugally….inexpensive apartment, cheap paid-off car, not racking up CC debt, etc.”
In 2 or 3 years?
Try 5 or 6 years. $2,000 a month on the student loans still takes you over 4 years just to pay that off. And then where does the downpayment come from? And yes- you have other expenses (like car payment, insurance etc.) Even if she does $3,000 a month that is STILL over 3 years.
Y’alls reading comprehension ain’t too good. Annoy specifically asked for only Russ’s opinion.
Yes- we need an expert. Where’s Russ? 🙂
“Boo hoo. Dr. Shenck, who is presumably single, could easily retire all her student loans AND save a downpayment on a home in 2-3 years if she lived frugally”
+1 on that she is 28 years old if she cant pay down the student loan and save for a DP then she shouldn’t even be allowed anymore debt.
“And yes- you have other expenses (like car payment, insurance etc.) Even if she does $3,000 a month that is STILL over 3 years.”
so in three years its like 3033 per month and rent 1k per month she makes 125k per year!
she states “I’d love to buy and can afford to buy,” this is 100% the “how much per month view” and sad a person with this income right out of school doesnt have a plan for debt.
remember debt is not a bad thing, but 70% people cant handle debt correctly
plus if she does the three year pay down plan in 1.5 years her debt load will be small enough where she could finally get approved for more debt.
it a simple balancing act that i guess her 111k of schooling never taught her.
I am going to call BS on this article. There is no mystery to how banks determine affordability. In fact, most folks qualify for more than they could actually afford. The typical maximum back ratio is 45% and if your credit is really good, we can probably go to 50%. The back ratio is just the (PITI + Debts)/Gross Monthly income.
So if this person makes $125k/yr then the most they could spend per month on housing and major debt is around $4600/month ($10,416 x 45% = $4687). The PITI on a $300k place should be around $2000k a month. So the only way this person would not qualify is if the student loan burden is at least $2600 a month. I have seen a ton of student loan debt and hardly anyone is paying $2600/month even with $100k in student loans. Even if you assume the loan is being paid back over 10 years at 8% interest rate, the payment on student loans would just be $1200/month.
There is some other reason they don’t qualify and in all likelihood it is the BMW 5 series payment, credit card debt, or there is a low FICO score for some missed payments on something somewhere. The most obvious reason is they are trying to buy a nicer property than they can really afford.
“There is some other reason they don’t qualify and in all likelihood it is the BMW 5 series payment, credit card debt, or there is a low FICO score for some missed payments on something somewhere. The most obvious reason is they are trying to buy a nicer property than they can really afford.”
Yup. That’s why I can’t stand these anecdotal stories. And then people go off spouting how her story applies to everyone.
Russ, don’t you wish that your advice from 2006 still applied?
““One of the excuses I often hear as to why someone is paying rent as opposed to owning their own home is “I am saving for a down payment and closing costs.” Well, that is no longer a valid excuse!”
…
In summary, if you would like to become a homeowner, do not let the lack of a down payment stop you from achieving the American dream. If you have any questions about zero down loans or other mortgage products, don’t hesitate to give me a call.”
“In summary, if you would like to become a homeowner, do not let the lack of a down payment stop you from achieving the American dream. If you have any questions about zero down loans or other mortgage products, don’t hesitate to give me a call.”
I must say, if I bought in 2006, I would be MUCH happier if it was with 0% down…
“I must say, if I bought in 2006, I would be MUCH happier if it was with 0% down…”
With your assets and in a recourse state?
“counselors have told her she can’t qualify for a mortgage” who are these counselors she speaks of?
what is is paying in taxes? Contributing to a retirement fund? Any industry fees or malpractice insurance for pharmacists?
“With your assets and in a recourse state?”
Ummm….no. But I assume most that bought with 0% down did so because they only had 0% to put down. Side note, even in a recourse state, I have only heard of banks coming after homeowners on 2nd mortgages. How common has it actually been to go after the 1st?
“The emerging markets are consuming more resources and it is inevitable that as their standard of living rises ours will fall.”
Economics fail 101.
“With your assets and in a recourse state?”
As a matter of practice, chancery courts in IL don’t enforce recourse of first lien mortgages. Courts consider it an inequitable outcome if interest in the underlying asset, the home, is already conveyed.
G, great way to take my blog posts out of context. If someone chose to save up or put more money down, then more power to them. However, that does not change that the fact that financing was available for those with lower down payments. My job is financing home purchases and there are variety of options for buyers. I simply let people know what is available and people can make their own decisions about how they want to approach their purchase.
She works in the middle of nowhere, you seriously have to drive out 2 hours from her work to even find houses that are unaffordable to her. Article is 100% pure bullshit.
“Yes.. right up until the point where it’s that no longer deprived youth who grows up to connect brain waves to electronic limbs or cures cancer.”
Ze, do you have a link to the clip you posted about this before? I’ve found the concept of the merging lines to be effective in making this point but never could find your link.
“I simply let people know what is available and people can make their own decisions about how they want to approach their purchase.”
Obvious revisionism from someone who was declaring “Well, that is no longer a valid excuse!” in regard to a lack of a down payment.
This woman is in way better shape than most people with college loans. Many have the same debt and aren’t even able to find jobs. The student loan biz is kind of like mortgages were a few years ago, everybody qualifies. For profit colleges are making a killing buy promoting loans. Much much harder to walk away from though.
“I recall when mortgage underwriting heavily discounted earnings of young unmarried working women (and wives), ”
When I bought my place, I was described as a “single woman” in the paperwork. Would a man be described as a “single man,” in the same paperwork? (I remember back in the 90s, when a family friend bought a house and she threw a fit when she was described as a “spinster” in the paperwork.)
Noone was holding a gun to the head of people during the boom forcing them to buy. You guys which criticize the players in the game remind me of the PTA mommy who blamed synthetic pot for her idiot son running his car into a tree, killing himself. Had players in the game been warning people about the bubble they would be in a different profession. You can’t blame Suzanne for “researching” this blame the pushovers husband. & the bitch wife with her overpowering nesting instinct.
Jenny I would throw a fit too–the proper nomenclature is spinstress. Crazy cat lady also suffices.
G, no revision is necessary. I said it and stand behind it. Financing was available and I was making it known. End of discussion. Adults have to figure out what works best for their individual circumstance. If you prefer to buy your properties with 50% down or all cash or whatever, that is your prerogative. Everyone is not in that position and nor does everyone agree with that approach.
“Noone was holding a gun to the head of people during the boom forcing them to buy.”
I couldn’t agree more. However, the revisionism is what gets me. This tired tripe of “I simply let people know what is available and people can make their own decisions about how they want to approach their purchase”, and “Adults have to figure out what works best for their individual circumstance”, as if sales techniques were not utilized, is laughable. Even a used car salesman is more honest. But no, the home sellers and debt sellers are just harmless information providers that never in any way attempt to influence their customers’ “well informed” decisions. It’s not like their paychecks depend on it, right? Note the similarity of Russ’s quotes to another innocent wage earner:
“The grown-ups listen to everyone they perceive as being worth listening to and then make their decisions, recognizing that sometimes their decisions take them off a cliff. I can’t make them do anything. Developers and real estate agents can’t make them do anything. But at least they pay attention to us because we know things they want to learn.”
-#2 (Crib Chatter, February 2nd, 2010 at 6:11 pm)
Forget the one specific example; in general it’s a valid article, and points to the long-term pain to society caused by soaring college costs. As someone who in six years will begin having to pay college costs for my oldest, it concerns me that nothing is being done to keep colleges from continually raising tuition and costs at a level well above inflation. It can’t continue forever. As a futures trader once said to me, “High prices are the cure for high prices.”
“as if sales techniques were not utilized, is laughable.”
The thing is, if Russ didn’t do it, someone else would. Should Russ let that business leave his office and go down the street if the same overall effect is acheived?
For me, it’s the level of degree that mortgage brokers and RE agents nudged, pursuaded or pushed buyers. It’s one thing to say “Icarus, on a 30 year loan the difference between $200 and $210 at [2003] rates is ~$50”, it’s another thing to say “I know youre budget is $200K your credit is good for $250K and prices can only go up.”
I would hope Russ would imploy some type of self-imposed ethic and not encourage someone who is a borderline risk to take on more money than they should.
Ze’s Hans Rosling video on global standards of living: http://www.youtube.com/watch?v=jbkSRLYSojo
“The thing is, if Russ didn’t do it, someone else would. Should Russ let that business leave his office and go down the street if the same overall effect is acheived?”
I have no problem with anyone doing it. Just be honest about it. He’s a debt salesman who obviously used techniques like his blog illustrated, such as an emphatic “Well, that is no longer a valid excuse!” for someone with no money down in 2006. But now we are supposed to believe that he never encouraged anyone about anything since he only provided information.
“I would hope Russ would imploy some type of self-imposed ethic and not encourage someone who is a borderline risk to take on more money than they should.”
Well, according to Russ now, he just provided loan info and the adults made their own decisions. There are no ethics involved beyond giving accurate loan info. There is no encouragement, either. I mean, what motivation for that does a commissioned salesperson have?
Thanks, giardiniera. (Also for the lunch idea.)
G, whatever. There is no revisionism, so you can leave me out of whatever grudge you happen to hold against folks who work in real estate.
I find it funny you pull up my old blog posts about zero down and completely take it out of context, but also ignore some of the stuff I wrote about subprime loans, stated products, option ARMs and other posts on trying to provide some clear information and transparency to consumers.
In fact, I find it even more odd that you quote my “no excuses” line to try to make it out to be something it isn’t but then leave out the following paragraphs from the same blog post:
“As with any good thing, there are always down sides. One of the biggest with zero down programs is that you are also starting with zero equity in the property. This means that if for some reason you needed to sell the property shortly after purchasing, you may wind up owing more than the home is worth when you factor in transaction costs such as realtors, taxes, and seller associated closing costs. Essentially, you are more dependent on increasing property values.
The other downside to zero down loans is that the interest rates are almost always going to be higher than if you put at least five percent down. Because zero down loans carry more risk than when home buyers put money down, mortgage lenders price them accordingly. Depending on your situation and the type of loan product, you can expect to pay .125% to .5% or more in interest rates. However, if a slight increase in interest rate means not having to come up with tens of thousands of dollars, it may not necessarily be a bad thing.”
http://smartmortgageadvice.wordpress.com/2006/12/21/zero-down-loans/
I don’t know what your agenda is and honestly really don’t care. Just leave me out of it and continue to play data monkey at Corelogic.
G’s data posts aren’t even that interesting.
“G’s data posts aren’t even that interesting”
Seconded.
I’d say G’s data posts then calling out the IAR for perpetuating bold faced lies via their fraudulent data was quite interesting.
“JMM (February 27, 2012, 11:13 am)
“G’s data posts aren’t even that interesting”
Seconded.”
Regardless, you still need to man up and give him the apology you owe him.
love that video btw… we live in a wonderful time.
Dan #2 is right. Maybe the subject of this article isn’t the best example but the conventional wisdom is spot on. This is a person in the top 10% of incomes in the USA and already has a mortgage vis-a-vis a student loan payment. These people are going buy less real estate. If you want to localize this, this means folks in Chicago are just about done buying starter condos in the city.
student loan service on 25k is what like 200 bucks a month?
if that is holding back a purchase of a home then you probably shouldn’t be buying in the first place…
student loan service on 25k is what like 200 bucks a month?
if that is holding back a purchase of a home then you probably shouldn’t be buying in the first place…
and Gary, stick to real estate, and stay as far from economics and finance as possible!
“I find it funny you pull up my old blog posts about zero down and completely take it out of context.”
I posted your opening and concluding statements, both of which indicate your position on any additional “context.” Cognitive dissonance is a funny thing.
“One of the excuses I often hear as to why someone is paying rent as opposed to owning their own home is “I am saving for a down payment and closing costs.” Well, that is no longer a valid excuse!”
…
In summary, if you would like to become a homeowner, do not let the lack of a down payment stop you from achieving the American dream. If you have any questions about zero down loans or other mortgage products, don’t hesitate to give me a call.”
“Boo hoo. Dr. Shenck, who is presumably single, could easily retire all her student loans AND save a downpayment on a home in 2-3 years if she lived frugally….inexpensive apartment, cheap paid-off car, not racking up CC debt, etc. But that wouldn’t be fashionable.”
Today’s students do have it tougher than students from say the “boomer” generation. Back then college was not as expensive and more student aid was in the from of grants instead of loans. I am younger than the boomers but since I went to state school for undergrad and law school, I was able to pay off my student loan with the first check from the law firm and had no credit card debt. But come to think of it, I basically did not spend money while I was in school, no car, very basic food, jeans and inexpensive shirts, inexpensive beer . . .
Shortly after or maybe 5 years, whatever….
More dependent, or completely dependent….
“As with any good thing, there are always down sides. One of the biggest with zero down programs is that you are also starting with zero equity in the property. This means that if for some reason you needed to sell the property shortly after purchasing, you may wind up owing more than the home is worth when you factor in transaction costs such as realtors, taxes, and seller associated closing costs. Essentially, you are more dependent on increasing property values.
Vlajos (February 27, 2012, 10:56 am)
“G’s data posts aren’t even that interesting.”
JMM (February 27, 2012, 11:13 am)
“Seconded.”
LOL. As if this ain’t a badge of honor.
Informal poll: What percentage of CC regulars are (i) frustrated because they were oh so financially savvy and conservative and put 20% down on a place during the peak years or (ii) frustrated because they’ve been sitting on the sidelines because they are oh so financially savvy and conservative, hoping to put 20% down on a place, but hardly any desirable places in their price range ever come on the market (and when they do, their oh so savvy dithering results in someone else buying the place, who of course is just a stupid knifecatcher)?
“Informal poll: What percentage of CC regulars are”
I have my guess, but I need a count of “CC regulars” to convert to percentage.
I have read this blog fairly religiously for over 4 years, though rarely post, and can say without hesitation that G’s posts have uniformly been the most insightful, comprehensive, and accurate, though often biting, of any other person on the site.
here’s what i got so far, feel free to adjust:
Regulars
DZ
Sonies
Anon(tfo)
anonny
Homedelete
Clio
Groove77
Bob
Dan
Dan#2
danny (lower case D)
Jenny
gringozecarioca
skeptic
G
Sonies
semi-regulars
Housing Bear
Architect
Russ
Chris M
Jennifer
Milkster
benjamon9
miumiu
roma
jp3chicago
Tipster
helmethofer
CH
dahliachi
JMM
Once-in-awhilers
WestLoople
boiztwn
SadatPlaza
Brad F.
ChiTownGirl
Laura Louzader
Anonemoose
Nice list, but aren’t 14 of the regulars people annoy wouldn’t recognize as existing?
..and kinda sweet with Clio having so lil time to post now that he’s back to taking night classes at CIU.
Informal poll: What percentage of CC regulars are (i) frustrated because they were oh so financially savvy and conservative and put 20% down on a place during the peak years or (ii) frustrated because they’ve been sitting on the sidelines because they are oh so financially savvy and conservative, hoping to put 20% down on a place, but hardly any desirable places in their price range ever come on the market (and when they do, their oh so savvy dithering results in someone else buying the place, who of course is just a stupid knifecatcher)?
i) No
ii) Yes
“When I bought my place, I was described as a “single woman” in the paperwork. Would a man be described as a “single man,” in the same paperwork? (I remember back in the 90s, when a family friend bought a house and she threw a fit when she was described as a “spinster” in the paperwork.)”
This would be offensive if true, but I call bullshit on the spinster part. When is there a narrative in “the paperwork”, anyway? You’re going to have to be more specific if you want to be believed.
A huge part of redlining, steering and other discriminatory housing practices was practiced through the exact same kind of techniques some here appear to be calling for Russ and other mortgage brokers to take – they want the broker to determine who should or should not apply for a loan at certain rates, whether someone should buy whether or not the rules allow it, where they should buy, whether those kind of people belong here, etc. etc. I would imagine that any wise actor in this space is very aware of what practices might be considered discriminatory, as well as what practices are too paternalistic or patronizing for a broker to ethically engage in.
At every level, there are several middlemen who act between those actually providing the capital for home loans and those who are actually borrowing it. We should expect those people to provide accurate information, to not act dishonestly and to faithfully perform the information gathering and disclosure required of them by the party making/funding/underwriting the loan. I’m not at all comfortable with those people making additional judgment calls.
A better question might be whether someone in Russ’s shoes bears any blame for helping people to get loans when they weren’t acting fraudulently, but were clearly entering into terms they would not be able to perform. However, if someone clueless wants to do something and they’re going to do it with or without you, and you can make it not as bad for them as others would make it, then maybe there are benefits to helping them do it in the best way possible.
Anyway, everything I have seen from Russ is that he is an honest, ethical and smart guy. Just because underwriting was absurdly lax during the boom times, doesn’t mean that the middlemen bear more blame for the bad transactions entered into than those who actually entered into them,
JJJ – the spinster part is true. I’ve seen it a number of times. The seller’s attorney prepares the warranty deed and chooses the language. so if the seller’s attorney is some old timer attorney who has been practicing for 30 years, and the deed his secretary pulls up is in some wordpefect 1.0 format, sure, the word spinster will be in there.
here’s what i got so far, feel free to adjust:
not even a mention as a newbie…..I guess I’ll have to argue with Bob and HD a little more
I can look at the paperwork for my place when I get home, but it definitely said, “single woman” in the section that describes the property and transaction in detail. It was in the final paperwork I received from my attorney.
“doesn’t mean that the middlemen bear more blame for the bad transactions entered into than those who actually entered into them”
I don’t think anyone has said that they do. It’s their dishonesty in now claiming zero responsibility for sales techniques they employed, such as blog entries/sales pitches like “if you would like to become a homeowner, do not let the lack of a down payment stop you from achieving the American dream”, that I find ridiculous.
@ Icarus
So where’s the wiki already? 🙂
“here’s what i got so far, feel free to adjust:
Regulars
DZ
Sonies
Anon(tfo)…
@chichow, just waiting for the $$$ so that I can afford to quit my day job 😀
http://www.mysteries-of-life.com/2012/02/different-stages-of-seller-in-todays.html
come on, it’s gotta beat G and Russ arguing
My wife and I put about 35% down on our place in the early 2000s and are very happy. The home has appreciated quite a bit in price, thanks in part to renovations we’ve done. Not frustrated at all.
“just waiting for the $$$ so that I can afford to quit my day job”
I hope you’ve got the list (which is a good start) open in a separate window and are checking posters against it (Gary L, David, Vlajos, B2nB, chuk(dc), Andy, JJJ and all the other J?? who I can’t keep straight, chichow; prob LPN and Joe too though I don’t have a firm handle on who they are).
Once you’ve got the CCer profiles up, then the big $$$ will come rolling in (good blogging lately though).
Also, giardiniera.
There’s more than one David, but I’m too lazy to care about having a unique name on this site.
“Informal poll: What percentage of CC regulars are (i) frustrated because they were oh so financially savvy and conservative and put 20% down on a place during the peak years or (ii) frustrated because they’ve been sitting on the sidelines because they are oh so financially savvy and conservative, hoping to put 20% down on a place, but hardly any desirable places in their price range ever come on the market (and when they do, their oh so savvy dithering results in someone else buying the place, who of course is just a stupid knifecatcher)?”
i) No
ii) Yes
I think the current market is silly – it is segmented between the distressed sales, and then all the other listings that aren’t selling unless it’s in a prime location with great finishes and amenities. It’s very difficult to find anything that can fit into a reasonable price range that doesn’t require a lawyer/doctor type of income in a good area. I think the main problem is the 2/2 is not really more than a rental type of housing anymore, as no one wants to live in it for more than 4-5 years.
“Once you’ve got the CCer profiles up, then the big $$$ will come rolling in ”
how do you figure?
Is there a backstory behind the DZ alias?
“Is there a backstory behind the DZ alias?”
Isn’t there a fabulous backstory behind all of the aliases? Supposedly many are already millionaires….
“It’s very difficult to find anything that can fit into a reasonable price range that doesn’t require a lawyer/doctor type of income in a good area. ”
And it will take a decade or more, with the absence of inflation including wage inflation, to return back to some sort of normalcy Everyone was getting into housing that was at a reasonable ratio with lawyers or doctor type incomes during the bubble, the problem was that not everyone had those incomes.
Lets also not forget the remaining option-ARM recasts (through September) and the few years it will take for them to move through the foreclosure pipeline. Let’s also not forget about that shadow inventory and foreclosure pipeline. It’s nowhere near pre-bubble levels and barely off it’s peak.
I’m firmly in the “rent 4evr until I win the lotto and buy something full of DELICIOUS PERIOD WALLPAPER” camp.
Which, in realistic terms, means I cannot afford a SFH, have no interest in owning a condo, and can abuse the CRLTO to my whimsical might to hold power over every landlord. Why buy in this town unless it’s exceptional? You’re still boned if you walk away from your own property. In this town, you can essentially walk away from any lease without penalty.
““When I bought my place, I was described as a “single woman” in the paperwork. Would a man be described as a “single man,” in the same paperwork? (I remember back in the 90s, when a family friend bought a house and she threw a fit when she was described as a “spinster” in the paperwork.)””
Ok, maybe I deserve the negative thumbings, but I did not realize you were saying it was in something related to a deed, which is not a document applicable to the underwriting standards that would be applied to a borrower, which seemed to be the implication when someone was talking about it being harder for a single woman to get a loan. Some old codger filling out a deed and using old dickish erms doesn’t surprise me, I guess. Some people change slowly, if at all.
For underwriting, they do ask if you’re single or married and want to know who is going to be on the loan and see their tax returns and all that, so it doesn’t really surprise or offend me that in the underwriting paperwork they say that you’re a single woman, if that’s accurate.
Anyway, it used to be culturally acceptable to differentiate with respect to lifestyles which were non-standard. In polite company, it’s not anymore with respect to many attributes, but it’s still rampant. I’m surprised that surprises anyone.
“Isn’t there a fabulous backstory behind all of the aliases?”
..and tomorrow,I will share with you all, my adventures, back in my days as Diego de la Vega!
“Is there a backstory behind the DZ alias?”
Made my money by crowdsourcing my work to the internet, with vague promises of “big $$$” that, sadly, never seems to materialize.
“For underwriting, they do ask if you’re single or married and want to know who is going to be on the loan and see their tax returns and all that, so it doesn’t really surprise or offend me that in the underwriting paperwork they say that you’re a single woman, if that’s accurate.”
Just a year ago, one of my friends was encouraged by a mortgage broker to apply for a loan BEFORE she got pregnant because they would not count her salary (maternity leave was considered a “disability”) so they could not factor in her income in the qualifying. Basically- they didn’t consider her salary to be “permanent”.
It was bizarre. But then the WSJ also did an article about this same topic not long afterwards- so apparently it’s not that unusual.
I find it a bit humorous all this suspicion of flagging loan applicants or potentially flagging them based on a life circumstance like maternity leave. It sounds ridiculous on the face–think about it most mortgages are 15 or 30 years, this is NOT like employment where an employer wants to get 3-4 years out of you after training you 6mo-1yr.
What stays the same during that 15-30yr time period? I definitely don’t want to own stock on any bank that thinks they’re going to improve mortgage loan performance by looking at things such as maternity leave. I would doubt it would happen but there are a lot of banks and a lot of idiots work in banks. If I was the bank CEO and someone instituted that practice I’d make them prove it’s worth or else it’d be their job. I’d bet there is no predictive ability whatsoever on loan defaults whether one is pregnant or not.
I know someone with a $120,000 income who was trying to buy a $425,000 property and had a $60,000 downpayment. But he also had student loans and a $600 a month car payment and some credit card debt.
Does $425K strike anyone else as being a stretch for someone making $120K? When I bought my current place (8 years ago), my income was slightly more than that, I had no loans, no car payment and no cc debt. I had about $80k for downpayment and closing costs. The place I bought was $385K and that was the very, very top of my price range.
Regarding “spinster”, my dad is a real estate appraiser and I worked for him back in high school. I spent a lot of time in courthouses researching deeds, and “spinster” was still the legal term used for a single woman back in the mid-to-late-80s.
Re: Anonny’s poll, not a regular, but as noted above, I bought during the bubble with 20% down. I love my place, and if I had to sell today, I would, obviously, get less than what I paid for it, but more than what I currently owe on my mortgage. (My losses would be more than offset by the gains I made on the place I bought in ’98 and sold in ’04.)
“Does $425K strike anyone else as being a stretch for someone making $120K? When I bought my current place (8 years ago), my income was slightly more than that, I had no loans, no car payment and no cc debt. I had about $80k for downpayment and closing costs.”
That’s why the bank made him pay off the car loans. It was simply too big of a stretch.
But don’t forget- interest rates are much lower than 8 years ago as well.