audioluvr wrote: »
Home Depot hates me they keep giving me discounts and no interest until... specials. I always pay them off right before they start to change interest.
Kex wrote: »
I totally disagree with the viewpoint expressed that it is always better to pay off debt as fast as possible, or pay for purchases in cash whenever possible. This completely ignores the “opportunity cost” of what could otherwise be achieved with the funds that were used, instead of borrowing.
A good example is the spring of 2009. As the market crashed again following the financial collapse that began in the summer of 2007, I panicked. I freely admit it. I was young and stupid. So what did I do?
I paid off two car loans because I had the money to do so. The rates at the time were 6.25% and 4.5%. I spent $40K to pay them off. What are those cars worth today? One I sold for $3,500 several years ago. The other I kept. It is probably worth about $5K today. So from $40K to $8.5K, but I saved some interest. Not a great investment. In fact, not an investment at all. 😬
Another $40K I kept, but I could have used it to pay off part of my mortgage, which was subject to an interest rate of just under 6% at the time. Had I done so, That 40K share of the property today would be worth about three times what it was then, given the nature of the local housing market. So maybe 80K extra for 40K invested. Much better than paying off the car loans. 😊
However, instead I invested that extra 40K. What is it worth today? Over $1M. Far more than the interest on the mortgage that I would have saved. Especially since I refinanced the mortgage later at a much lower rate.
In this case, the opportunity missed would have been a very costly decision. Careful borrowing is a very useful tool for creating additional wealth.
New home supply spikes while sale prices plunge. But don't expect a crash.
It looks as if there's a perfect storm brewing in the US housing market. But looks can be deceiving.
A long-expected drop in the average selling price of new homes is finally here, according to data from the Federal Reserve, even though home prices broadly stubbornly refuse to roll over.
The decline in new home prices comes as the supply of freshly built homes hits 9.3 months of availability — a level that was last seen in 2010 and is seldom seen outside of a recession. If the supply of new homes rises any further, it will reach the highest level since the peak of the last great financial crisis.
However, Rick Sharga, the executive vice president of Market Intelligence at real estate data provider ATTOM, isn't concerned about a market crash, even as new home prices start to slide.
"The likelihood of another housing crash, as we saw in the Great Recession, is very, very slight," Sharga told Insider in a recent interview. "There's always a chance, but absent some economic catastrophe, it seems very unlikely that'll happen."
There are six reasons why Sharga, who has studied the US real estate market for over two decades, said it's "extraordinarily unlikely" that home prices will suffer from a financial crisis-style drop of 20-30% anytime soon.Housing market collapses come when there's a far greater supply of homes than demand for them. In a normal market, there's about six months of available supply, Sharga noted. After the housing bubble burst in the financial crisis of the previous decade, there was over 12 months of supply for new homes.
Although new home inventory has risen to 9.3 months, Sharga noted that there's still a relative shortage of existing homes since supply is about half of a normal period at three months. That's because many current homeowners don't want to move unless they're forced to, Sharga said, given that rapidly rising mortgage rates have made getting a new house more expensive.
Though observers could infer that the slight pullback in new home prices will continue to worsen because supply is abnormally high, Sharga said that such a decline wouldn't seriously harm the housing market because new home sales make up only about 10% of total home sales.
And while the supply of new homes is elevated, it isn't a cause for concern, in Sharga's view. The uptick in new home supply is the result of a backlog of building projects coming online — not overeagerness from homebuilders, Sharga said. In fact, he noted that homebuilders are cutting back on the number of housing starts as rising interest rates weigh on demand.
"If you look at the combination of homes completed and homes under construction, you're not really looking at an oversupply situation at the moment," Sharga said.
Sharga added: "If the builders had kept their pedal to the metal and we continued to see single-family residential housing starts increase, that would be more of a cause for concern. But really, what they're doing right now is moving through the inventory that they started on a year ago and has taken them a long time to complete because of supply-chain disruptions and lack of available labor."
Indeed, commodities and building materials had experienced their own boom and bust during the pandemic as the price of lumber, roofing materials, and appliances spiked due to supply chain disruptions. But as builders and contractors finally secure materials for new construction, and paid handsomely for them, the picture has started to look a bit different. If anything, the market is increasingly looking like it's finally going back to normal.
Additionally, while Sharga said that there's been a "significant uptick" in listings with reduced prices, he said that the number of marked-down homes isn't much higher than usual. That's because for years, very few homeowners had to lower their asking price, so even a sudden spike in the number of homes with price cuts brought the total just higher than average.
However, new home builders are more eager now than they were just six months ago to get houses under contract, presenting an opportunity to buyers and finally shifting bargaining power back towards buyers who may have experienced bidding wars and lost opportunities. And buyers who went under contract on new construction a few months back are more likely to back out as prices drop and builders offer more concessions to sweeten the deal.
Furthermore, housing market fundamentals seem to be solid, unlike 15 years ago. Loan quality is far better today because there are fewer "ticking time bombs" in the form of unqualified buyers, Sharga said. Less loan speculation has led to lower delinquency levels, the real estate veteran noted. High homeowner equity and a low unemployment rate are also signs of strength.
Finally, home prices aren't going to crash because there's still more demand than supply, Sharga said. People might not be scrambling to relocate to trendy Sun Belt cities as often as they were early in the pandemic, Sharga said, but he still believes the trend of moving has legs.
Emlyn wrote: »
I recall seeing stories from China a few years ago about city sized building developments consisting of hundreds of new high rise apartment buildings thrown up using shoddy construction standards and never occupied. Haven't seen much on that since Covid lockdowns began but there was talk at the time that the building and finance schemes there could crash the world's economy again if it wasn't managed.
ken brydson wrote: »
@aprazer402 can probably relate with me...
VR3 wrote: »
gas and a match tom!!
treitz3 wrote: »
I can tell you with complete certainty that this house is gonna crash (in value)
I have been in the housing industry for quite some time and this one I walked into today? It was the absolute worst I have seen to date. I feel like puking just looking at the photos again.
I walked in, held my breath as much as I could, snapped some photos. Walked out after about 5 minutes and had to get some fresh air. Went back in for another 3 minutes, snapped the rest of the photos and that was it. I had to rest outside breathing fresh air for the next 35 minutes just to make sure I could drive without crashing my truck.
Sorry if I end up derailing your thread here, John.....but it may give it more exposure as well.
Excuse me while I go barf.