Record low rates causing people to make abhorrent financial decisions

**meanstringbean** · Today, 09:01 AM

Not an earth shattering take by any means, but with record low rates from the federal reserve you hear crap financial advice like 'put as little down as possible' and 'you are better off investing the difference in the stock market'. While mathematically this plays out, it doesnt take into part the behavior of the average consumer.

Ex: You have $50,000 saved for a down payment. If you traditionally went 20% down to avoid PMI this means you can afford a $250,000 house. You hear "rates are at record lows, put as little down as possible it's free money". So that's 5-10% down. Instead of putting $25,000 and investing the remaining $25,000 the american CONSOOMER is putting that $50,000 down and buying a $500,000 house. They are getting robbed blind by mortgage lenders while walking away satisfied as if they are the ones who made off like a bandit. Thinking "lol I just locked in record low interest rates, can make the min payment on my mortgage, invest the rest, I am so smart" when in reality you just doubled your principal payment, will have much less (if any) money leftover to invest, and are now extremely house poor.

If you want to know what is partially causing the home value spike look no further. The sad part is these decisions are being made by the white collar / corporate / middle to middle upper class who consider themselves financially smart (hey they know how interest rates work!) but lack financial wisdom (biting off more than they can chew).

Now expand that to cars, home improvement projects that are backed by financing, etc. It's 'free money' but in reality just because you get approved for something doesnt mean you can afford it. Cost of everything is spiking yet wages remain flat. Cheap capital has been the cause of almost every single bubble in financial history - a day of reckoning will come from this, just make sure you are on the right side of it.

Long story short remove interest rates from the equation and look at your monthly expenses. If your housing costs (mortgage, PMI, interest, taxes, repairs) exceed 30% of your gross pay you dun goofed. And yes believe it or not quality 250k houses do exist, but you might not get to live in the rich end of town or in California paying that much - but guess what, if the above math doesnt work out then you cant afford it.

**AestheticBraahh** · Today, 09:53 AM

Hmm. Good insight brah! Reppped

**HMFIC_BROWSIN** · Today, 09:55 AM

I got some bad news..... The winning bidders for nearly every home sale in Arizona is a cash buyer right now.....

This isn't a bubble.

**lockdev** · Today, 09:57 AM

Originally Posted by HMFIC_BROWSIN

I got some bad news..... The winning bidders for nearly every home sale in Arizona is a cash buyer right now.....

This isn't a bubble.

Who are these buyers? And where the fook are they getting the 400k+ to put down on these houses?

In b4 chinamen.

**tryn2change** · Today, 10:03 AM

Originally Posted by HMFIC_BROWSIN

I got some bad news..... The winning bidders for nearly every home sale in Arizona is a cash buyer right now.....

This isn't a bubble.

Roughly about the same thing here in northern Cali. All these tech workers are throwing money and inflating local home prices to crazy levels. There is a chunk of buyers paying all cash but most seem to be taking loans out though - they still get to keep a good chunk of that Bay Area pay and I’ve heard some companies aren’t adjusting for cost of living differences due to relocation.

I just saw an ad for 1800 square ft, 3/2 go for just a tad under $700k. A year ago it would have commanded around $500k 😫

**EnforcerOTF** · Today, 10:03 AM

1 out of every 5 houses sold is sold to a bank or fund that never occupies it and is just holding stock

**solidus2k3** · Today, 10:04 AM

Originally Posted by lockdev

Who are these buyers? And where the fook are they getting the 400k+ to put down on these houses?

In b4 chinamen.

interested to hear as well. how are there so many people with piles of cash

**Fozzy13** · Today, 10:06 AM

250k houses are rare/non existent near me, even in TX. I think you can buy a small townhome outside the city for a bit over 250k but anything near 250k will need work, which will cost additional $$.

Adding to the high costs of homes is building material shortage which is raising the prices

**TexasTechPharmD** · Today, 10:06 AM

I live in North Texas area. I just put up my house for rent. I got 20 calls last week offering to buy my house for $400k to $450k lol I bought it for $350k two years ago.... lol

**Lefticle** · Today, 10:08 AM

Originally Posted by HMFIC_BROWSIN

I got some bad news..... The winning bidders for nearly every home sale in Arizona is a cash buyer right now.....

This isn't a bubble.

Same in Colorado. OP is a dumbass.

**DolphinPilot** · Today, 10:11 AM

one of the biggest reasons for this crap in my area (Oregon) is because state governments are stifling the amount of homes being built. Not building up the supply to even keep up with demand. It's pretty fcking lame.

**mayweathermusic** · Today, 10:11 AM

Originally Posted by lockdev

Who are these buyers? And where the fook are they getting the 400k+ to put down on these houses?

In b4 chinamen.

A lot of it is foreign investors. Yes China but from all over really. WSJ ran a story on this today.

**meanstringbean** · Today, 10:12 AM

Originally Posted by HMFIC_BROWSIN

I got some bad news..... The winning bidders for nearly every home sale in Arizona is a cash buyer right now.....

This isn't a bubble.

There are ways to get access to cash without having it on hand, and plenty of buyers right now are still using lenders. Though AZ no doubt has a bunch of ex-californians

**Avalanche3319** · Today, 10:13 AM

Originally Posted by Lefticle

Same in Colorado. OP is a dumbass.

3rded for Montana. Cali phags flocking here like flys to ****.

**Fozzy13** · Today, 10:16 AM

Originally Posted by lockdev

Who are these buyers? And where the fook are they getting the 400k+ to put down on these houses?

In b4 chinamen.

Originally Posted by EnforcerOTF

1 out of every 5 houses sold is sold to a bank or fund that never occupies it and is just holding stock

Its the chinamen and other investment groups.

Originally Posted by TexasTechPharmD

I live in North Texas area. I just put up my house for rent. I got 20 calls last week offering to buy my house for $400k to $450k lol I bought it for $350k two years ago.... lol

I am under contract in central texas area and the house has increased 100k since i signed 5 months ago. The house isnt even completed yet...i woudlnt be surprised if the value has increased nearly 250k-300k+ in 2 years.

**meanstringbean** · Today, 10:18 AM

Originally Posted by Fozzy13

250k houses are rare/non existent near me, even in TX. I think you can buy a small townhome outside the city for a bit over 250k but anything near 250k will need work, which will cost additional $$.

Adding to the high costs of homes is building material shortage which is raising the prices

simply not true

https://www.zillow.com/homedetails/1...80582378_zpid/

https://www.zillow.com/homedetails/2...28087377_zpid/

https://www.zillow.com/homedetails/2...80555062_zpid/

In b4 'lol those are chit houses' 'that's a chit location'. Those are nice houses next to a major metro. The 'you cant buy a house right now!' is pure myth, just coming from choosy beggars.

Maybe you cant in Austin, SF, Portland, Denver. Maybe you cant get that modern town home in the heart of a popular area of a city. But you cant afford that

**_zman** · Today, 10:19 AM

Originally Posted by HMFIC_BROWSIN

I got some bad news..... The winning bidders for nearly every home sale in Arizona is a cash buyer right now.....

This isn't a bubble.

1/5 homes are bought by pensions and hedge funds. They're buying entire subdivisions. Bubble is inflating.

**Fozzy13** · Today, 10:21 AM

Originally Posted by meanstringbean

simply not true

https://www.zillow.com/homedetails/1...80582378_zpid/

https://www.zillow.com/homedetails/2...28087377_zpid/

https://www.zillow.com/homedetails/2...80555062_zpid/

In b4 'lol those are chit houses' 'that's a chit location'. Those are nice houses next to a major metro. The 'you cant buy a house right now!' is pure myth, just coming from choosy beggars.

Maybe you cant in Austin, SF, Portland, Denver. Maybe you cant get that modern town home in the heart of a popular area of a city. But you cant afford that

Well i said near me...IDK about the Houston area tbh.

**donblaximus** · Today, 10:21 AM

Originally Posted by solidus2k3

interested to hear as well. how are there so many people with piles of cash

Its the same rules in life 80/20. You just need to be on the right side of change. There are people get very wealthy right now.
And its not just bay area. I have a property in Austin that is physically a old small bungalow and for the first time the lot value breached over $1M. This is in TEXAS.....for LOT VALUE.

**meanstringbean** · Today, 10:21 AM

Originally Posted by Lefticle

Same in Colorado. OP is a dumbass.

So record low rates have no impact on increase in housing demand?

So what cash buyers do matters when it comes to your own personal finance situation and what you can afford?

****ing moron

**HMFIC_BROWSIN** · Today, 10:25 AM

Originally Posted by lockdev

Who are these buyers? And where the fook are they getting the 400k+ to put down on these houses?

In b4 chinamen.

Dunno.

Friend sold a $600k house cash, and had 18 offers in 2 days.....

Cash buyer said they'd beat any rival bidder by $5k and still buy pure cash.

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