Pretty gloomy article about housing

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Irvinecommuter

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But such robust foreign purchases can't overcome what ails the U.S. housing market. Activity is weak even now that banks are no longer tightening mortgage-lending standards, according to a Fed survey. Banks are searching for new lines of business since the Dodd-Frank reform law and regulations are depriving them of revenue from proprietary trading, derivative origination and investing and off-balance sheet activities. The end of the mortgage refinancing surge has added to the pressure on banks.
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http://www.bloombergview.com/articl...ith-government-programs-and-big-bank-interest

Biggest hurdle is the 20% down payment.  With RE prices so high, saving 20% is next to impossible.  For example, a $600K property requires a down payment of $120,000...that means 8-12 year worth of savings.
 
Europe, China, Japan,....everywhere else the deflation is happening. the money will keep pouring into the US, in stocks, bonds, or real estates..no worries. Only thing that keeps Irvine real estate price in check is the constant increase in supply (new home construction)

by the way, just saw a news this morning, on average for every dollar Americans save on gas, they spend more than two dollars extra. the American consumer behavior is on the path of self-destruction.
 
Irvinecommuter said:
But such robust foreign purchases can't overcome what ails the U.S. housing market. Activity is weak even now that banks are no longer tightening mortgage-lending standards, according to a Fed survey. Banks are searching for new lines of business since the Dodd-Frank reform law and regulations are depriving them of revenue from proprietary trading, derivative origination and investing and off-balance sheet activities. The end of the mortgage refinancing surge has added to the pressure on banks.
Click to expand...
http://www.bloombergview.com/articl...ith-government-programs-and-big-bank-interest

Biggest hurdle is the 20% down payment.  With RE prices so high, saving 20% is next to impossible.  For example, a $600K property requires a down payment of $120,000...that means 8-12 year worth of savings.
Click to expand...

Not necessarily. 
 
jmoney74 said:
Irvinecommuter said:
But such robust foreign purchases can't overcome what ails the U.S. housing market. Activity is weak even now that banks are no longer tightening mortgage-lending standards, according to a Fed survey. Banks are searching for new lines of business since the Dodd-Frank reform law and regulations are depriving them of revenue from proprietary trading, derivative origination and investing and off-balance sheet activities. The end of the mortgage refinancing surge has added to the pressure on banks.
Click to expand...
http://www.bloombergview.com/articl...ith-government-programs-and-big-bank-interest

Biggest hurdle is the 20% down payment.  With RE prices so high, saving 20% is next to impossible.  For example, a $600K property requires a down payment of $120,000...that means 8-12 year worth of savings.
Click to expand...

Not necessarily.
Click to expand...

Clearly it's not the universal rule but is a big hurdle, especially in this age where people have significant student debt to pay.
 
Irvinecommuter said:
jmoney74 said:
Irvinecommuter said:
But such robust foreign purchases can't overcome what ails the U.S. housing market. Activity is weak even now that banks are no longer tightening mortgage-lending standards, according to a Fed survey. Banks are searching for new lines of business since the Dodd-Frank reform law and regulations are depriving them of revenue from proprietary trading, derivative origination and investing and off-balance sheet activities. The end of the mortgage refinancing surge has added to the pressure on banks.
Click to expand...
http://www.bloombergview.com/articl...ith-government-programs-and-big-bank-interest

Biggest hurdle is the 20% down payment.  With RE prices so high, saving 20% is next to impossible.  For example, a $600K property requires a down payment of $120,000...that means 8-12 year worth of savings.
Click to expand...

Not necessarily.
Click to expand...

Clearly it's not the universal rule but is a big hurdle, especially in this age where people have significant student debt to pay.
Click to expand...

I agree that it's still a big hurdle especially in this generation where a bachelor gets you no where.  Higher education means more debt with student loans which in results takes longer for most families with dual incomes to save enough for a down payment on a home. 

 
bones said:
irvinehomeowner said:
bones said:
Yet we see young families left and right buying $800k+ homes.
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FCBs!!! (or kids of)
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Definitely some. But I think we're underestimating the earning power of the "young".
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What's the definition of young family?  early 20's? mid 20's? late 20's? early 30's? mid 30's? late 30's? 

I'm 45 so I'm out of those categories :)
 
FARMMMMMIE said:
bones said:
irvinehomeowner said:
bones said:
Yet we see young families left and right buying $800k+ homes.
Click to expand...
FCBs!!! (or kids of)
Click to expand...

Definitely some. But I think we're underestimating the earning power of the "young".
Click to expand...

What's the definition of young family?  early 20's? mid 20's? late 20's? early 30's? mid 30's? late 30's? 

I'm 45 so I'm out of those categories :)
Click to expand...

30s.
 
well 30's is understandable... I was thinking like mid-late 20's as young families and be able to afford a $800k home. 

It's possible but not as likely without help...
 
it is all about living within your means and making smart financial decisions. Mortgage for typical Americans is a forced saving plan. If there is not enough down payment, usually it means rental will be more affordable relative to buying a house. there is no shame in renting; also it gives you more mobility, easier to move and find the next higher pay 9 to 5 job. don't worry about kids making new friends, they are young and they adapt fast
 
That can't be the savings rate in irvine right?  120,000 in 8 years is 15k per year or 1,250 per month. Seems to low.
 
qwerty said:
That can't be the savings rate in irvine right?  120,000 in 8 years is 15k per year or 1,250 per month. Seems to low.
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Exactly. I was able to save that amount in my twenties just on my own.  Not out of reach but obviously it's not like you can live by the laws of YOLO.
 
Why not this route?

3-5% down for your first home (which could be a condo or small SFR) in your early 20s.

Sell in your late 20s, 5-7 years of appreciation should get you 20% for a modest move-up SFR (3 or 4br), then either stay there or combined with further savings and more appreciation, rinse-and-repeat in your mid 30s for your final home (5br+).

Should be paid off on or before age 65 and you can either downsize, have the kids move back in or cash out and cruise the world. :)
 
jmoney74 said:
qwerty said:
That can't be the savings rate in irvine right?  120,000 in 8 years is 15k per year or 1,250 per month. Seems to low.
Click to expand...

Exactly. I was able to save that amount in my twenties just on my own.  Not out of reach but obviously it's not like you can live by the laws of YOLO.
Click to expand...

Well not everyone can be a successful gigolo like you and Qwerty  :P

Now lets say a guy named Bill finishes his undergrad at the age of 21.  He decides to go to Med school and completes that at the age of 25.  He decides hes not going to specialize but just be an ER Physician or an Internist.  Spends 3-4 more years as a resident making slave driving money.  He completes everything and now is 28-29.  Kisses his late 20's good-bye and now has to compete to find a job working odd hours to pay off his student loans and save money to buy a home.  Bill is now 35 and he finally has enough saved up to get married and buy a home... Granted he does make $250k a year but it'll be a while until he can enjoy his life :)
 
FARMMMMMIE said:
jmoney74 said:
qwerty said:
That can't be the savings rate in irvine right?  120,000 in 8 years is 15k per year or 1,250 per month. Seems to low.
Click to expand...

Exactly. I was able to save that amount in my twenties just on my own.  Not out of reach but obviously it's not like you can live by the laws of YOLO.
Click to expand...

Well not everyone can be a successful gigolo like you and Qwerty  :P

Now lets say a guy named Bill finishes his undergrad at the age of 21.  He decides to go to Med school and completes that at the age of 25.  He decides hes not going to specialize but just be an ER Physician or an Internist.  Spends 3-4 more years as a resident making slave driving money.  He completes everything and now is 28-29.  Kisses his late 20's good-bye and now has to compete to find a job working odd hours to pay off his student loans and save money to buy a home.  Bill is now 35 and he finally has enough saved up to get married and buy a home... Granted he does make $250k a year but it'll be a while until he can enjoy his life :)
Click to expand...

Depends on who dr bill marries.  If he marries homie, he's all set.
 
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