But are gen z parents mostly boomers or generation x? I thought x waited longer to have kids.
In the northeast , I would guess it’s mostly boomers, making that stat untrue at least around here ?
In the northeast , I would guess it’s mostly boomers, making that stat untrue at least around here ?
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anon_0k9zlfz6lz9oy
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I believe X. Average age of female birth 25 years ago I think was 26? Putting a 25 year olds mother in her early 50’s making her an X-er
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anon_0k9zlfz6lz9oy
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ARM’s arent much of a story imo. Anyone who took one out 5-10 years ago refi’d into fixed rate loan in the 3’s.
If in buying today I’m taking out an ARM tho
Some. It's not like what happened with boomers, who left urban areas en masse often times when they graduated HS.
The oldest Gen Z is what, 27 or so?
It's easy to say that now. I don't think boomers cared if their neighborhoods were walkable.
That's why LI is having a real housing crisis.
arms were the most used product in 2018-19 if memory serves correctly. those 3 and 5yr resets are in for a rude awakening
Especially if those are the same folks praying for loan forgiveness. Once people start repaying loans I suspect it will have a larger impact than expected. Less discretionary money to throw at Louis Vuitton purses and $150 Lululemon jogging pants.
What’s the interest rate difference between arm and fixed ?
And why would you take the arm ? You really feel interest rates are gonna go down ?
All the people I know that live on Long Island love it and don’t think it’s a crisis. They like open space and having backyards.
Place is too far for me. The traffic out there just scares me
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anon_0k9zlfz6lz9oy
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1) if you took out a 3 or 5 year ARM youd have to be literally in a coma to not have refi’d.
2) post gfc when you take out an ARM youre only approved if you qualify for the max recast rate.
ARM’s are a nothingburger and nothing to worry about in residential real estate at least. Commercial is a different story
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anon_0k9zlfz6lz9oy
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Historically 7 year arms are 75-100bps lower than fixed rate loans.
So I can go 30 year fixed at 6.5% or 7/1 ARM at 5.5% (I think ARM rates are high right now I gotta check).
In those 7 years there will be a refi opportunity at a lower rate on a fixed rate loan or after 7 years you just refi into a fixed rate loan at a higher rate but youve paid down principal over those 7 years net effectively rendering your monthly payment the same or even lower. Despite refi’ing perhaps at the same or even higher rate.
Heres an example from last summer a mortgage broker did for us
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anon_0k9zlfz6lz9oy
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anon_0k9zlfz6lz9oy
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@Plum Street im not taking a victory lap or anything but yes, I did get arrows slung at me left and right here. I have a lot of respect for @RUTGERS95 , super bright guy but like most wall street/bond guys, they always struggle with real estate because they view everything as a stock/bond and housing is not that.
As I tried to say, this wasnt necessarily my opinion as much as it was just the facts the data was showing.
My original call in OP assumed rates would be 5.5%-5.75% and wed see yoy appreciation drop to 0-3% from June-22 to June-23. Well rates were pretty much above 6 the entire time and prices are looking just about flat yoy.
I’ll have to make a newer video from June-23 to June-24 which will be an interesting one as I’ll have to preface calls based on rates. I think anyone pretending they know what rates will be in spring 2024 is a fool. The markets say rate cuts in September 50% shot. And then 80% shot at the rest of the meetings in 2023.
So who the hell knows. Alot more variable these next 12 months. The past 12 were imo a little easier to call. But overall has been a good thread
agree you'd have to be in a coma but never underestimate the stupidity of a populace that reads at a 7th grade level :)
I mentioned my nephew buying last year but having to bid a crazy amount over the original price and many thought it was a terrible move. Now it looks like a great move, NJ prices aren’t going lower for at least several years and I don’t think he wanted to wait 5 years to owe a house. At least he brought it before the interest rates went up. I thought the NJ prices would go down but it’s just the opposite. I thought he would have trouble affording the payments but his wife hasn’t gone back to work so he‘s able to afford the house on solely his income.
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You are vastly overestimated how many millennials can afford what you are describing. Perhaps 1% of all NJ millennials can afford to buy in a Westfield or Chatham.
I did the whole walkability thing in New Brunswick and Morristown. It was nice for a few years, but really ****ing expensive. Eventually I wanted a better deal and then after that bought where I could get some nice land in the suburbs.
Lol so true . Maybe that guy doesn’t realize that most people can’t afford to purchase in Westfield or Chatham . He’s got Rich people problems !
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anon_0k9zlfz6lz9oy
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Yeah its fvcking expensive man. The thing im not sure alot of people realize is how much gift money these millennial buyers are getting.
Its such a new trend. Ive been in the business since 2011, ive never seen as much gift money than I have the past 2 years. Parents are gifting very large downpayments so that their kids get smaller mortgages.
I do fairly well for myself id say and it really is astonishing how expensive housing is. Like I can afford a $5,300/month housing payment (PITI) but for $5300/month you think id get more. $6K a month is getting me a $750K house with 20% down. I say $6K because after utilities/internet.
Anyway, thats why im so bullish on the sunbelt. Its still super affordable. Just threw $250K into another apartment deal in uptown Dallas. Great location.
The average millennial salary was 71k in 2020 nationally. It's going to be higher than that in NJ now.
Even still assuming a couple makes 71k each = 142k household income they can afford approximately 426k. That is certainly out of the realm in Chatham which I didn't mention, but I do see townhomes and condos that look pretty decent in Westfield in that range. There are also other suburbs with some walkability that are even less, they just have less cache.
And as kyk mentioned, a lot of millennials are inheriting or getting money from their parents as they retire. That is part of what is keeping prices high. Even millennials born to working class boomers, which is probably most millennials, now stand to inherit very expensive homes that the parents bought for less than 200 if not 100k in a lot of cases that they now own free and clear.
I’ve heard the same about gifts in addition to folks pulling/borrowing money from investment and retirement accounts. Tack on the loan forgiveness prayer and millennials have been spending like crazy because they feel rich thanks to Mommy/Daddy and the Gov’t. Just wait until the carrying costs, college loan repayments, taxes, etc. hit these folks it will be a huge wake up call.
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anon_0k9zlfz6lz9oy
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Zero Inventory and people’s willingness to spend whatever it takes to own a house will continue to carry this market until there is either a catastrophic event or job losses start to mount. But, what’s crazy to me is that vacation home markets are still buzzing. No matter where I look = from East Sandwich, MA to Hilton Head, SC - prices are off the charts and there are bidding wars for multimillion dollar homes. A few areas like the Poconos and Adirondacks are slightly more tame, but even those prices are 2X-3X pre-COVID so a slowdown doesn’t mean there are any deals to be had.
Yes 10k for those making under 125k is definitely "rich" while simultaneously a 400k home is too expensive...
Time for people to restart paying those student loan bills! And no forgiveness soup for you. Big wake up call to many.
The psychology underlying loan forbearance and forgiveness pushes people to spend what they view as a windfall. It’s the lottery mentality only they didn’t win. Financially irresponsible idiots. On the opposite end of the spectrum, when my wife and I paid off our loans we pretended as if we didn’t and directed that same amount (and more) to 529s for our kids. And now my kids won’t have college loans to deal with. The formula for financial success and freedom isn’t hard - just takes sacrifice and discipline.
very true
make them pay them back, stop backstopping bad behavior. We've got enough gov't programs for that, we don't need more
I think buyers are in full blown panic mode now. I am done trying to predict the future. Rates near 7 and people still pay 100k overasking.
A realtor friend of mine lost out on a house in Chatham. Asking 879k, they offered 900k and the winning bid was 1M.
The realtor didn't miss price it that badly. That's desperation.
I'm the New Brunswick specialist on here since our brokerage is located there. There were 16 active houses for sale in the entire city in April. Out of probably 8,000 housing units.
I am working with a buyer in Basking Ridge because he's a buddy of mine and I feel bad for him. It's bonkers rn.
A realtor friend of mine lost out on a house in Chatham. Asking 879k, they offered 900k and the winning bid was 1M.
The realtor didn't miss price it that badly. That's desperation.
I'm the New Brunswick specialist on here since our brokerage is located there. There were 16 active houses for sale in the entire city in April. Out of probably 8,000 housing units.
I am working with a buyer in Basking Ridge because he's a buddy of mine and I feel bad for him. It's bonkers rn.
Why would people sell/move when they would be trading in 3% mortgages for 7% ones? Most aren't. Are there a lot of cash buyers now?
Most people losing jobs find a new one within a few weeks. Not a problem for the economy.
Yes, that’s why the Fed keep raising rates. But it’ll change and then the dominoes will start to fall.
Hikes are over. Cuts coming soon since inflation is gone. The Fed can't influence the job market unless they can find 3-4 million more workers to fix the imbalance. The Fed was dumb to even try.
What I don’t understand is how a $2M house in East Sandwich, MA has 79 “saves” on the first day it’s listed on Zillow. Or, how a $3M house in Chester, NJ has 48 “saves” on the first day it’s listed. Or, $6M house in Bluffton, SC has 172 “saves”. I know “saves” don’t mean squat but I’ve never seen that much activity on multi-million dollar homes. Two houses I looked at recently went for $100K+ over asking and had a dozen offers. I have to believe 401K, 529 contributions, etc. are going down and people are pulling out money to afford these mortgages and taxes.
I think carrying costs will start weighing people down and they will contribute less to investments/retirement = there has to be a long term impact to reckless spending on homes, autos, etc. The amount of money being thrown around is mind blowing. Private school applications at schools like Delbarton set a record this year and a lot of people aren’t even applying for financial aid because they don’t want to hurt their application.
Yeah, it’s crazy. Application volumes through the roof and quality of candidates are like never before. I was just thankful my son got in where he wanted because I knew a lot of kids that got turned away. And, people more than willing to pay full boat.
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