Author Topic: Went through the process of house hunting/buying  (Read 78363 times)

Offline Ergel

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Re: Went through the process of house hunting/buying
« Reply #60 on: June 10, 2013, 11:38:29 AM »
Meh, 3.25 or 4.75, it's all good to me lol.  It was only about 30 years ago that mortgage rates were 13%
And houses were 1/13 of the price they are now
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Offline bem684

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Re: Went through the process of house hunting/buying
« Reply #61 on: June 10, 2013, 12:00:12 PM »
And houses were 1/13 of the price they are now

I don't think I get your point.

Offline Ergel

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Re: Went through the process of house hunting/buying
« Reply #62 on: June 10, 2013, 01:25:16 PM »
I don't think I get your point.
Same way I didn't get yours
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Offline bem684

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Re: Went through the process of house hunting/buying
« Reply #63 on: June 10, 2013, 02:34:22 PM »
Same way I didn't get yours

Allow me to explain.  I was trying to say that whether mortgage rates are 3.25% or 4.75% (or even slightly higher for that matter), I'd still consider it a good rate when compared to the range of rates we have seen over the past 30+ years.

Were you trying to say that because housing prices went up, the mortgage rates should be lower?

Offline Ergel

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Re: Went through the process of house hunting/buying
« Reply #64 on: June 10, 2013, 03:09:40 PM »
Allow me to explain.  I was trying to say that whether mortgage rates are 3.25% or 4.75% (or even slightly higher for that matter), I'd still consider it a good rate when compared to the range of rates we have seen over the past 30+ years.

Were you trying to say that because housing prices went up, the mortgage rates should be lower?
Not because, but it evens out
Historic interest rates have about as much to do with current interest rates as historic housing pricing has to do with current pricing
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Offline bem684

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Re: Went through the process of house hunting/buying
« Reply #65 on: June 10, 2013, 03:19:42 PM »
Not because, but it evens out
Historic interest rates have about as much to do with current interest rates as historic housing pricing has to do with current pricing

I agree with the last thing you said, but I wasn't claiming a causative relationship.  I was only saying that the rates are better today. 
You seem to be saying that it doesn't matter because houses cost more now?  In other words the monthly payment on a 4% mortgage today would be similar to the payment on a 12% mortgage from 1985 because the house now costs 3x more, is that right?

Offline Ergel

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Re: Went through the process of house hunting/buying
« Reply #66 on: June 10, 2013, 03:30:29 PM »
I agree with the last thing you said, but I wasn't claiming a causative relationship.  I was only saying that the rates are better today. 
You seem to be saying that it doesn't matter because houses cost more now?  In other words the monthly payment on a 4% mortgage today would be similar to the payment on a 12% mortgage from 1985 because the house now costs 3x more, is that right?
Not 3x. But 10+ and yes that makes it a lot cheaper to buy a house in 1983 than now, despite the change in interest rates.
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Offline bem684

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Re: Went through the process of house hunting/buying
« Reply #67 on: June 10, 2013, 05:44:42 PM »
Not 3x. But 10+ and yes that makes it a lot cheaper to buy a house in 1983 than now, despite the change in interest rates.

My parents bought their house in 1989 for $270k and today it's worth about $500k.  Not sure what market increased 10x... didn't the housing markets implode a few years ago?

But even so, I think you're confusing what the interest rate does.  It does NOT make it more or less expensive to buy a house.  It only makes it more or less expensive to borrow the money.  (The proof to this is that if you bought a house today and you paid off your entire mortgage tomorrow, you'd pay the same amount whether your mortgage interest was 2% or 20%).  So you can't compare the interest payment of today's $500k mortgage to the interest payment of a $100k mortgage from 1985, because the loans are different sizes - even if they would buy the same exact house at their respective times.

So when you say that "it evens out" because interest rates have fallen while home prices have risen, that's misleading.  Because if you borrowed $300k in the 1980s or if you borrowed $300k now, your monthly payments would be much lower now.  The difference is that today your $300k will buy a smaller house than it would have in the 1980s, and that's due to rising home prices and inflation, not the interest rate on the mortgage.

Offline Ergel

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Re: Went through the process of house hunting/buying
« Reply #68 on: June 10, 2013, 05:49:02 PM »
And my parents bought there house in '81 for 60k and now its worth at least 800k.

I understand the difference between interest rates and house cost ::)
Just saying that if you bought a house in '81 for 60k with a 13% apr you are much better of than buying that house now with a 3% rate for 800k

And you equating a 300k house from 1985 to a 300k house in 2013 is MUCH more misleading
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Offline bem684

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Re: Went through the process of house hunting/buying
« Reply #69 on: June 10, 2013, 06:00:54 PM »

Just saying that if you bought a house in '81 for 60k with a 13% apr you are much better of than buying that house now with a 3% rate for 800k

I don't think anyone would argue about that. 

And you equating a 300k house from 1985 to a 300k house in 2013 is MUCH more misleading

I was never equating the houses, only the mortgages on those houses:
The difference is that today your $300k will buy a smaller house than it would have in the 1980s, and that's due to rising home prices and inflation, not the interest rate on the mortgage.
See?

LOL ok we can end this here.  But I'm curious - where did you parents buy?  Monsey is the only place I've lived in that had 10x appreciation over the past 30 years and that's because people who buy in Monsey are nuts :)

Offline Ergel

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Re: Went through the process of house hunting/buying
« Reply #70 on: June 10, 2013, 06:02:52 PM »
Queens
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Offline ckmk47

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Re: Went through the process of house hunting/buying
« Reply #71 on: June 10, 2013, 11:00:17 PM »
I got a bargain on a house on the outskirts of Boro Park in 1991.  $285K.  Now it's worth $1.2 mil at least.  (My mortgage I bought down to 5.5%. Still higher than today, but a real bargain back then.)

Offline Fan of Dan

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Re: Went through the process of house hunting/buying
« Reply #72 on: June 10, 2013, 11:12:06 PM »
I got a bargain on a house on the outskirts of Boro Park in 1991.  $285K.  Now it's worth $1.2 mil at least.  (My mortgage I bought down to 5.5%. Still higher than today, but a real bargain back then.)
Well done.

Offline bhphotoman

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Re: Went through the process of house hunting/buying
« Reply #73 on: June 11, 2013, 01:13:01 AM »
My parents paid 12k over 25 years ago selling for about 1 million currently

Offline Ergel

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Re: Went through the process of house hunting/buying
« Reply #74 on: June 11, 2013, 11:20:55 AM »
My parents paid 12k over 25 years ago selling for about 1 million currently
now that's what I call a return. Why didn't they buy two?
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Offline Fan of Dan

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Re: Went through the process of house hunting/buying
« Reply #75 on: June 11, 2013, 02:28:02 PM »
now that's what I call a return. Why didn't they buy two?
I wonder if in 20 years we will be saying that about some other areas, who knows.

Offline smee123

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Re: Went through the process of house hunting/buying
« Reply #76 on: June 11, 2013, 02:45:38 PM »
The price of homes compared to income has gone way up in the last 20 yrs. If it goes any higher nobody will be able to afford one.

Offline Dan

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Re: Went through the process of house hunting/buying
« Reply #77 on: June 11, 2013, 02:52:45 PM »
The price of homes compared to income has gone way up in the last 20 yrs. If it goes any higher nobody will be able to afford one.
Or people will move to places where it's affordable to live.
The LA paycheck to paycheck lifestyle isn't sustainable IMHO.
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

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Re: Went through the process of house hunting/buying
« Reply #78 on: June 11, 2013, 02:59:07 PM »
Or people will move to places where it's affordable to live.
Or live further out of the frum areas, as has happened in many frum communities. I would think both will happen.

Offline smee123

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Re: Went through the process of house hunting/buying
« Reply #79 on: June 11, 2013, 03:09:51 PM »
Or people will move to places where it's affordable to live.
Not everyone can, i personally wish i could  :(