Inflation is a mother

[Oblivian]

FHA and PMI loans were low single digit percentages of the mortgage market until the last 30 years or so.
They started gaining popularity during the 1980s real estate boom and really took off in the mid to late 90s.
Up until then, the vast majority of mortgages were 20% down.

30+ years is quite a long time. People act as though less than 20% down is something that started occurring in the 2000s. I just randomly looked through about 15 of our files from 1996. I'd say only about a third of them had 20% down. We even had a couple 100% VA loans in there.

 

[Satsui Ryu]

I agree with you 100%. People's spending habits don't match their income. I see so many people in big houses, 2 big shiny brand new trucks, couple of 4-wheelers in the garage, boat tucked away around the side. I don't understand, there is no way so many people make enough money to be paying for all these luxuries straight up. You may have a bunch of shiny things but I bet you have a bunch of shiny debt as well.

I'd much rather be in my small house with my old car, and have no debt and a bunch of retirement savings, but I guess that doesn't make you look wealthy to the people walking down the sidewalk.

Not to say the financial system isn't rigged or to blame, but individuals have to share some of the blame as well.

I live on the Bay Area and I can't help but think most people here cannot afford to live here, even those who are doing well. You have people with $300K household incomes with a $1.2 mil home, the Benz SUV and BMW 5 series, two kids who may be in private schools, etc. People here make California incomes, but spend like they have Wyoming costs of living. I think people here are so competitive they just have to keep up with the Jones's or just have a sense of entitlement that they must have the best of everything. I know my wife gets caught up in that mentality sometimes.

 

[90 50]

That is insane to me, batshit insane. I bought my first house in 1998, 1750 sq. feet, $105,000 in a suburb of Dallas. That same house now is around $200,000 but still less than half of what you are looking to pay and almost a third larger.

Mines 1850, suburb north of Houston on lake Houston in 2006 for 118,000.

My dads apartment in San Diego is more than my mortgage but his house in Ensenada is bigger and cheaper than mine!

 

[Uber_Noober]

Tell your grandfather he's a cool cat, I'm a grandfather too nd I want to buy his Chevelle.

 

[Grassshoppa]

Don't you live in San Diego too?

The funny thing is property tax in Chicago/Cook County and a lot of the outer ring burbs is way higher than the average property tax bill in SD county. There are some people paying $15,000 a year in property taxes out in far burbs of Chicago. As expensive as houses are here, you make up for it a bit in property tax over what it could be.

Don't disagree with your points though. The gf and I are going to be buying a house soon and expect to pay between $500-600k for a 1200 sq foot single family home.

Yup. We live in San Diego. Over the last five years, the price we could sell our home for has gone up $200,000. One of our rentals, 1 bed 1 bath 500 sq ft, five years ago rented for $900. Now it rents for $1375. I think one day you'll see a 500 sq ft "condo" rent for $2000/month in San Diego. Unbelievable. Hope you guys are able to buy soon.

 

[ralphc1]

30+ years is quite a long time. People act as though less than 20% down is something that started occurring in the 2000s. I just randomly looked through about 15 of our files from 1996. I'd say only about a third of them had 20% down. We even had a couple 100% VA loans in there.

In the 90s, the value of homes was increasing so fast that some banks would loan 110% of the selling price to get the loan. They assumed that the values would keep climbing and got caught when prices collapsed.

 

[TardStrong]

ok but what was the price of the $800,000 house in 1990? Only $150,000.
I’ll take the 18% rate any day, god I wish.

$150,000 in 1980 is comparable to $486,000 today acorrding to cpi inflation calculator. Housing prices have risen faster than inflation.

$150,000 home at 18% in 1980 payment is $7,100 (inflation included) todays money. The good part though was you could refinance after intrerest declined

$486,000 mortage today at 5% is $2,609

$800,000 mortgage at 5% is $4295 a month

 

[AGGAMEMNON66]

That’s what I was thinking. My mom laughed at my 4% cause her and my dad’s first house was like fucking 20. Can’t even imagine

What’s the difference in their 20% Vs the current 4% tho.. also, how much was the home they purchased at the time Vs what you’d pay now?


Context matters.

 

[AGGAMEMNON66]

Just got our property tax bill. It went up $300/year. Made me think about inflation. Everything keeps going up. Property tax, home owner's insurance, car insurance, HOA dues, water, electricity, etc. I feel for people that don't get a cost of living raise every year to keep up with inflation. Otherwise, you end up making less money every year.

I also feel for people trying to buy a home now. What are mortgage rates at these days? 5%? That's crazy. We locked in a long time ago at 3.5%.

Inflation has been outpacing peoples' salaries for quite a while now. When will a large portion of the population reach the tipping point and no longer be able to afford life?

I live in Illinois.. don’t get me started on fucking property tax. I’m so close to leaving this shitty fucking state.

 

[FrenchFri3dNinja]

5% is crazy? how about over 18% during the 1979-1980?

5% is still really low man. We are still well below where it was 1970 to 2007

So true. I bought my house about 2 years ago and I locked in a 3.75% interest rate and thats about the same interest rate I was getting on my CD account with Chase back in around 2000 or 1999. Now you will be lucky to get .50% on any 1 or 2 year CD lol.

 

[FrenchFri3dNinja]

What’s the difference in their 20% Vs the current 4% tho.. also, how much was the home they purchased at the time Vs what you’d pay now?


Context matters.

You do know that during that time they would have paid much less and have made much less as well right? 20% compare to 4% is a BIG fucking deal no matter of the context.
I would rather pay 4% interest on a 400,000 home with a 15 year fixed rate with 5% down payment than 20% on a 300,00 home with a 15 year fixed rate with 5% down payment.

 

[AGGAMEMNON66]

You do know that during that time they would have paid much less and have made much less as well right? 20% compare to 4% is a BIG fucking deal no matter of the context.
I would rather pay 4% interest on a 400,000 home with a 15 year fixed rate with 5% down payment than 20% on a 300,00 home with a 15 year fixed rate with 5% down payment.

Everything was cheaper then. You do know that, right? Cost of living and such. And still, people pay 400k now for houses that ran closer to 200k all those years ago.


Look, their rates were worse, I’m not questioning that.. I’m saying it’s not as bad as some make it seem depending on what decade you’re talking about tho..

 

[FrenchFri3dNinja]

Everything was cheaper then. You do know that, right? Cost of living and such. And still, people pay 400k now for houses that ran closer to 200k all those years ago.


Look, their rates were worse, I’m not questioning that.. I’m saying it’s not as bad as some make it seem depending on what decade you’re talking about tho..

Yeah I know everything was cheaper but you also didnt get paid as much as you do now. That 20% adds up when compared to 4% on a 15 year locked fixed rate. No matter if one is 200k and the other is 400K.

Use a calculator, on a 200k home at 20% interest fixed rate for 15 years with 5% down payment you would end up paying around 600K if you made monthly payments while the 400K hom at 4% interest fixed rate for 15 years with 5% down payment you would end up paying about 505K which is around 95K lower. Now tell me 20% back then doesnt matter......

 

[FrenchFri3dNinja]

@Korolla is it me or is Korolla going LIKE happy today, LOL. Thanks buddy

 

[Canada]

@Korolla is it me or is Korolla going LIKE happy today, LOL. Thanks buddy

Life‘s been good lately. Wanna give something back.

 

[FrenchFri3dNinja]

Life‘s been good lately. Wanna give something back.

Good for you buddy, have a nice day/weekend

 

[boingyman]

It is what it is. Another reason to practice fiscal responsibility and being smart with money

 

[Oblivian]

Yeah I know everything was cheaper but you also didnt get paid as much as you do now. That 20% adds up when compared to 4% on a 15 year locked fixed rate. No matter if one is 200k and the other is 400K.

Use a calculator, on a 200k home at 20% interest fixed rate for 15 years with 5% down payment you would end up paying around 600K if you made monthly payments while the 400K hom at 4% interest fixed rate for 15 years with 5% down payment you would end up paying about 505K which is around 95K lower. Now tell me 20% back then doesnt matter......

You are missing his point. Household prices have exceeded at a higher rate than inflation. You can't even begin to run an apples to apples comparison looking at just the mortgage rates. In 1980, you may have been paying 18% on a mortgage, but you were earning 10% in a CD. Median home price was around 3.6 times the median income, where now the median home price is near 5 times median income.

 

[FrenchFri3dNinja]

You are missing his point. Household prices have exceeded at a higher rate than inflation. You can't even begin to run an apples to apples comparison looking at just the mortgage rates. In 1980, you may have been paying 18% on a mortgage, but you were earning 10% in a CD. Median home price was around 3.6 times the median income, where now the median home price is near 5 times median income.

Could be, not sure what the prices were back then for homes. Still paying 20% interest rate is ridiculous.

 

[AGGAMEMNON66]

Yeah I know everything was cheaper but you also didnt get paid as much as you do now. That 20% adds up when compared to 4% on a 15 year locked fixed rate. No matter if one is 200k and the other is 400K.

Use a calculator, on a 200k home at 20% interest fixed rate for 15 years with 5% down payment you would end up paying around 600K if you made monthly payments while the 400K hom at 4% interest fixed rate for 15 years with 5% down payment you would end up paying about 505K which is around 95K lower. Now tell me 20% back then doesnt matter......

Dude, families used to be able to get by on one income. The 2 income household is much more a product of the last couple decades. There’s a reason for that. Money went further. That’s a fact.


Why are you arguing with me on this? Did you grow up in poverty or something?