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How low can we go? 30 yr fixed at 3.75% with no fees...

irvinehomeowner

Well-known member
Your double speak is just disguising your skewed perception.

The Tsunami I am referring to was predicted may times in IHB that O-Arm reset would reset to a higher interest rate that would force more foreclosures... just like people are predicting double digit interest rates.

What really happened is rates did not skyrocket and instead being lower than some of the fully indexed rates resulting in LOWER payments so people were not forced out. That' 28% you keep bandying about (without context) is still far away from the over 50% drops predicted by the naysayers... just like how you predicted a drop in 2018 right?

And stop holding Larry's pants... he doesn't need you to constantly pander to him. Always makes me wonder if you and him are related.
 

Liar Loan

Well-known member
You continually attack Larry, but since he's not here to defend himself, I correct the record when I see you making false proclamations, as you are in this thread.

BTW, you just displayed your ignorance of O-Arms because it wasn't that rates would be increasing that people predicted. It was that recasting from a neg-am payment to fully amortizing payment would lead to a tsunami of foreclosures. Most people were making less than a full interest-only payment, so they were negatively amortizing. Once a certain threshold of negative amortization was hit, the loans would recast to the fully amortizing P&I payment, which would lead to a gigantic increase in payment amount. By lowering rates, the Fed caused the negative amortization to slow way down and in many cases, reverse. In essence, they flattened the curve and bought time for borrowers, many of whom decided to squat in their homes until they were foreclosed on or were granted a short sale.

You are conflating the recasting of these pick-a-payment loans with predictions of higher interest rates, which are two completely distinct and separate risks. And anyway, the people saying double digit mortgage rates won't happen are the same one that said 7% interest rates wouldn't be happening only a few months ago, so their record isn't very good.

Irvine did drop by 28% and I wasn't one of the ones that predicted 50% and neither was Larry, right?
 

irvinehomeowner

Well-known member
I believe Larry hinted at 40%+. He later admitted that it was much lower than he expected... he wrote a post about it. You could look it up but I know you are bad at finding historical facts.

And what false proclamation about Larry have I said? You're so quick to stand by your buddy that you imagine people are attacking him just like he thought I was attacking him and had to apologize about that assumption (also a factual incident you can look up).

BTW, you just displayed your ignorance of O-Arms because it wasn't that rates would be increasing that people predicted. It was that recasting from a neg-am payment to fully amortizing payment would lead to a tsunami of foreclosures. Most people were making less than a full interest-only payment, so they were negatively amortizing. Once a certain threshold of negative amortization was hit, the loans would recast to the fully amortizing P&I payment, which would lead to a gigantic increase in payment amount. By lowering rates, the Fed caused the negative amortization to slow way down and in many cases, reverse. In essence, they flattened the curve and bought time for borrowers, many of whom decided to squat in their homes until they were foreclosed on or were granted a short sale.

As for the O-ARM... I know how they work... I actually had one on one of my homes. By lowering the rates, the recast wasn't a shock to the borrowers because in many cases... the fully indexed rate was the same or lower than the prevailing O-Arm rate (not the teaser rate). And you just confirmed what I said, by the Fed doing that... they prevented the Tsunami... so you just agreed with me. You are double speaking yourself into supporting what I initially said... thanks.

Are 7% rates the lowest right now? You always like to point out the extremes to try to make yourself look better than what is actually happening and yes there are rates 7 and up... but there are also lower rates.

Do you believe there will be a time when the absolute lowest rate you can get is 10%? I doubt you will answer that definitively. You're still sticking to your assertion that prices dropped outside of the normal ebbs/flows in Irvine after 2018.
 
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sgip

Well-known member
A 40 yr loan is a possible work around, but there has to be investor demand for the product - IE security and yield. If a 30 yr loan allows for 5% down, a 40yr might go to 85% max for example. Yield of course means rate, so a 40 yr loan may have a .25 to .50 bump in rate.

On a $1m loan with a .50 rate spread between a 30yr and a 40yr loan the difference in payment is around $150-$170 per month. Not an earth shattering difference.
 
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Liar Loan

Well-known member
A 40 yr loan is a possible work around, but there has to be investor demand for the product - IE security and yield. If a 30 yr loan allows for 5% down, a 40yr might go to 85% max for example. Yield of course means rate, so a 40 yr loan may have a .25 to .50 bump in rate.

On a $1m loan with a .50 rate spread between a 30yr and a 40yr loan the difference in payment is around $150-$170 per month. Not an earth shattering difference.
Yeah, 40-year loans really don't make sense. The extra 10 years don't lower the payment by enough to make a meaningful difference to most borrowers. I view it as a sign of overheated housing markets when the "40 year" gets mentioned at the peak of every RE cycle as a way to increase affordability.
 

Liar Loan

Well-known member
Do you believe there will be a time when the absolute lowest rate you can get is 10%? I doubt you will answer that definitively. You're still sticking to your assertion that prices dropped outside of the normal ebbs/flows in Irvine after 2018.

I don't know what will happen with rates, but neither does anybody else... not even the Fed seems to know. The 2018-2020 price decline in Irvine was confirmed by Irvine real estate expert USCTrojanCPA. No offense, but most posters assign him higher credibility than you. ;)
 

usctrojancpa

Well-known member
I don't know what will happen with rates, but neither does anybody else... not even the Fed seems to know. The 2018-2020 price decline in Irvine was confirmed by Irvine real estate expert USCTrojanCPA. No offense, but most posters assign him higher credibility than you. ;)

Using median price per SF, prices in Irvine declined by 6.7% from the peak in May 2018 ($496/sf) to a through in Nov 2019 ($463/sf) and on a YOY over basis the largest decline was 3.8%.
 

irvinehomeowner

Well-known member
Using median price per SF, prices in Irvine declined by 6.7% from the peak in May 2018 ($496/sf) to a through in Nov 2019 ($463/sf) and on a YOY over basis the largest decline was 3.8%.
And anything close to 5% is within the margin of seasonal ebb/flows from summer to winter... so I stand by my contention that there was no significant drop after 2018 as predicted by Liar Loan and a few others. I believe if you bought at the "high" of May 2018, you would still be in a much better place than now. In 2 or more years time? Who knows... but really... whoever was looking to buy a home in 2018 was not going to sit on the sidelines for 4+ years.

Add to that... anyone who did take Liar Loan and company's advice and waited... are not only facing higher prices today but also higher interest rates... something else LL did not predict back then.

Good job Liar Loan!
 

Liar Loan

Well-known member
Using median price per SF, prices in Irvine declined by 6.7% from the peak in May 2018 ($496/sf) to a through in Nov 2019 ($463/sf) and on a YOY over basis the largest decline was 3.8%.
The PPSF chart that you post also shows it took until Jan 2021 for prices to exceed the May 2018 peak. Anybody that waited, benefited from not only lower prices, but lower rates. But please don't take my word for it. This is you on Feb 5, 2019:
It will happen, those delusional sellers just need some time to help them sober up. There will be those stubborn ones who'll keep their home on the market forever at their inflated asking price and some will decide to rent out the home and try again later but the fact is that more homes will be coming onto the market and that'll continue to put pressure on prices, especially in the higher end of the market. Patience will be rewarded with those high end home buyers.

And here are some TI members talking about how they benefited by waiting to buy:

Here to give Eyephone some credit. I've been a long time lurker on this forum prior to joining in the discussion last July. Being bearish isn't exactly easy on this forum.

I been helping my "Irvine or bust" parents with a 1031 exchange for almost a year. We just opened escrow last week and will be saving a lot of $$$ because I was able to talk my parents into waiting. Eyephone and a few other bearish members were not the sole reason or the top reason I was able to convince them to hold off but it helped.

Back to the topic of the post. The comps for the home we are in escrow for was closing at slightly above 1 million in April,June 2018. They were closing for low 900s at the end of 2018. We used that and made gazillion low ball offers and got a desperate owner to agree to budge for just above 870k.

The market is softening and inventory is increasing. If you are in the market to buy a home, definitely leverage this to your advantage.

Wow... Kenkoko saved his parents 13% off the purchase price by convincing them to wait in 2018! That's real money!!

Here is another person that benefited:

+1.

I'm in the market to buy now and credit TI for all the research and feedback to help me wait. My realtor was pushing me to buy 1 year ago and I said prices will drop. My wife and the realtor didn't agree, but just last month, my realtor caved and said that she's glad I waited because prices have dropped (with SP/LP spreads widening and DOM increasing).

I specifically saw the change end of December/early January when homes were falling out of escrow (@ the $1.2-1.5M range). Now I'm just waiting to find the right home ($/layout) somewhere in the GP.

The people that benefited the most from the 2018-20 downturn in Irvine were the $1M+ buyers, which constitutes the majority of buyers on this board if I had to guess. Not only did they save greater than 10% on price (according to Kenkoko), but they also benefited from rates dropping by almost half while waiting to buy!
 

usctrojancpa

Well-known member
The PPSF chart that you post also shows it took until Jan 2021 for prices to exceed the May 2018 peak. Anybody that waited, benefited from not only lower prices, but lower rates. But please don't take my word for it. This is you on Feb 5, 2019:


And here are some TI members talking about how they benefited by waiting to buy:



Wow... Kenkoko saved his parents 13% off the purchase price by convincing them to wait in 2018! That's real money!!

Here is another person that benefited:



The people that benefited the most from the 2018-20 downturn in Irvine were the $1M+ buyers, which constitutes the majority of buyers on this board if I had to guess. Not only did they save greater than 10% on price (according to Kenkoko), but they also benefited from rates dropping by almost half while waiting to buy!

The market definitely softened up due to rates coming from the low-to-mid 3% to 5% which resulted in increased inventory and reduced sales volume but it was a very mild decline in prices as in April 2018 the price per SF was $481/sf and in August it was $483/sf so I'd say on average the price decline was around 4-5%. Price declines are happening very slowly now in Irvine because we have less than half of the inventory that we had in late 2018. I've been going back and forth with a stubborn cash owning seller in Northwood for a buyer for over a month. When we initially made our offer they countered back $20k over the list price....I was like WTF because your list price is above market price. haha
 

irvinehomeowner

Well-known member
LL's examples are garbage.

You never gave an actual time frame for when to buy and has actually said in several posts that it could takes years for the prices to drop.

Other posters kept thinking it would be quickly because "prices follow inventory" but that never materialized into large universal discounts. Why do you think eyephone stopped harping on the slowdown he predicted?

Give it a break... you were wrong. I know that's hard for you to admit which is why even though you told people to wait you went and bought yourself a home. Show us again where you were telling people not to wait and buy?

It's ironic you can find posts now but when I ask you to find posts where I specifically say something you claim I did you disappear. It must have taken you days to find those bad examples which is why it took you so long to respond. Hilarious.

And that doesn't change the reality that prices today are still higher than in 2018, as are rates. So to everyone who heeded LL's ill advice to wait... he will be sending you a check to cover the difference. :)

Also, do some math, if prices were "too high" in 2018, what would prices have to drop to today to make it "time to buy" considering interest rates and inflation?
 

usctrojancpa

Well-known member
10-year bond rates are below 3.50% now. The more the Fed hikes rates the low the 10-year bond rate goes because it'll cause more economic slowing and lower future inflation.
 

sgip

Well-known member
This rate move is a head fake. The job and income news will mean higher rates still. Once meaningful rent and gas/diesel price reduction data tempers inflation news (Feb?) We should expect a Fed pause, but not pivot. Rate reductions won't come until late 23 as electioneering begins and what recession has begun will need to be stomped out.


10 is off the table, but low 4's are as well IMHO


PS. Better lock in your jumbo rates soon. Once the new limits hit, Agency rates will apply.
 

OCtoSV

Active member
This rate move is a head fake. The job and income news will mean higher rates still. Once meaningful rent and gas/diesel price reduction data tempers inflation news (Feb?) We should expect a Fed pause, but not pivot. Rate reductions won't come until late 23 as electioneering begins and what recession has begun will need to be stomped out.


10 is off the table, but low 4's are as well IMHO


PS. Better lock in your jumbo rates soon. Once the new limits hit, Agency rates will apply.
I suggest everyone go watch Larry Summers' latest interview with Bloomberg as he has been more correct than anyone and had teh courage to tell a Dem POTUS he was blowing up inflation. The Fed won't stop until we have positive real rates, and they don't look at CPI but PCE which is STILL RISING.

And that low 5's jumbo comes with fees and very strict underwriting that will eiminate many borrowers that lack high W2 income.

Accessible loans will get to 9% if not 10.
 

CalBears96

Well-known member
I suggest everyone go watch Larry Summers' latest interview with Bloomberg as he has been more correct than anyone and had teh courage to tell a Dem POTUS he was blowing up inflation. The Fed won't stop until we have positive real rates, and they don't look at CPI but PCE which is STILL RISING.

And that low 5's jumbo comes with fees and very strict underwriting that will eiminate many borrowers that lack high W2 income.

Accessible loans will get to 9% if not 10.
The rates Martin quoted are WITHOUT fees. Stop making stuff up. Strict underwriting, certainly.

And NO, we're NOT getting 10%. Just admit you were wrong about it. Even 9% is now a bit far fetched.

PCE is still rising, but it was less than expected in October, which is why the 50/25/25 increase is the most likely one.
 

CalBears96

Well-known member
This rate move is a head fake. The job and income news will mean higher rates still. Once meaningful rent and gas/diesel price reduction data tempers inflation news (Feb?) We should expect a Fed pause, but not pivot. Rate reductions won't come until late 23 as electioneering begins and what recession has begun will need to be stomped out.


10 is off the table, but low 4's are as well IMHO


PS. Better lock in your jumbo rates soon. Once the new limits hit, Agency rates will apply.
I agree. The expected movement from the Fed is 50/25/25 and then pause. How long the pause? Some say until late 23, but I think it's more likely early 24.
 
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