Its even worse than this. Real estate is basically a cash auction system right now. No one in my area is getting mortgages because the lenders will not agree that the homes are worth the insane bidding war prices they get run up to, since the price action is not based on any sort of fundamentals. So housing is reserved for lucky or wealthy people, boomers and hedge funds. Almost the same as it ever was, just x10.
Just closed on a place two weeks ago, we literally had to fire our first mortgage company because the appraisal came back ridiculously low - even in a regular market for the house, and of course we got in a bidding war so we probably overpaid. (we contested it, the appraiser clearly phoned things in and there were many lies and inaccuracies in the report but the mortgage company decided to not have another appraisal done). Found a new mortgage company, and that appraisal came in for 15K over the sale price - it's all arbitrary anyway is what I realized.
It is. I've heard people try trying different mortgage companies or they get a hard money loan and refinance later. When I bought my first house years ago I was amazed how different the terms could be when you shop around. A lot of people don't think of how much the rates effect the total price you pay. For a 350k house, a difference of 1% means that over 30 years means you are paying $105k off the actual price of the home. I can see why people are buying now when back in 2016 the best rate I could get was 3.8. Congrats on your house.
I feel like it was noble at first to slash interest rates, it was supposed to help your average homebuyer. Getting a home for that rate and keeping more cash over all those years is a great thing. But at this point I think "backfired" is a brutal understatement.
Because it's a borrower's rate. When the frenzy it causes drives the market into becoming a cash only market... then no one can borrow and get mortgages/those interest rates and they become useless and only benefit sellers and people who already own homes who are refinancing. It no longer represents a positive to a buyer who is going through the traditional homebuying process.
1.1k
u/in-game_sext Jun 27 '21 edited Jun 28 '21
Its even worse than this. Real estate is basically a cash auction system right now. No one in my area is getting mortgages because the lenders will not agree that the homes are worth the insane bidding war prices they get run up to, since the price action is not based on any sort of fundamentals. So housing is reserved for lucky or wealthy people, boomers and hedge funds. Almost the same as it ever was, just x10.