bostonbubble.com

Former Arlingtonian · Guest

I'm convince we are seeing people borrowing more money to buy homes than ever in history. The bulk of the rise in prices from 2005 to today a direct result of people borrowing too much.

Here is what I found when I looked at the most recent Burlington-Ma Real Estate transactions:

2 Woodcrest - Burlington - sold for $439,000 on 9/17
New Mortgage is $439,000 - No 20% downpayment
In 2004 this property sold for $423,000 - mortgages totaled approx $400K.

4 Stewart Burlington - sold for $600,000 9/16/2013
New Mortgage is $480,000 - nice to see 20% down
In 1999 this house sold for $367,000 - it was brand new - 7.4 % 30 year Mortgage rate. (the DoCom bubble was in full swing in Mass).

8 Gibson Burlington sold for $480,000 on 9/9/13
New Mortgage $384,000 - great down payment
Sold in 2004 for$460,000 with a $368,000 Mortgage

13 Mountain Rd - Burlington sold for $385,000
New Mortgage is $371,500

5 Marret - Burlington sold for $570,000 on 9/4/13
New Mortgage is $484,4000
2002 it sold for $469,000 with a Mortgage of $270,000 (in the midst of the DotCom bust)

8 Richardson Burlington sold for $410,000
New Mortgage is $369,000
sold in 2003 for $357,000 - Mortgage was $316,000 (Interest rate was 20% lower - the buyer paid approx 20% less)

Debt is driving Real Estate.

optimus · Joined: 23 May 2008 Posts: 39

> Debt is driving Real Estate.

Do you think the current market is sustainable?

former Arlingtonian · Guest

Is the market sustainable?

As long has enough people think taking on more Debt than ever - the market is sustainable.

But, we saw a 35% increase in Mortgage costs a couple of months ago and that big a move in mortgage rates hasn't happened since the early 1990s.

I think my analysis of Waltham and Burlington demonstrate there are lots of folks relying on Debt more than increased income or large down payment.

1040ez · Guest

I am wondering what kind of mortgage interest rate are these people getting when they put less than 20% down. Also which lender(s) are they getting the risky loan from? I will be laughing my butt off if they get those loan from government loan agencies...

Former Arlingtonian · Guest

Bingo for at least one!

2 Woodcrest, sold for $439,000 and the Veterans Administration gave the Buyers a $439,000 VA Mortgage.

4 Stewart - got a Money Purchase Loan because they borrow $480,000 and Fannie Mae conventional mortgages have to be under $417K - from Fairway Independent Mortgage - they are a broker who I suspects makes the loan and then sells their paper to Fannie Mae or Freddie Mac- wee Fairway broker in link below
http://www.youtube.com/watch?v=6-SCMVeJWU4

13 Mountain - which is a $371K Mortgage - no down payment is an FHA loan - they bought the house for $385,000 - I think this is a Mass Housing loand
Here is the Link from the Credit Union who sold the Mortgage...
http://www.metrocu.org/home/home/borrowing/mortgage/masshousing_affordable_mortgage_solutions

Most Mortgages today are done through Mortgage brokers who turn around and sell the Mortgage to Fannie/Freddie/or FHA (at least that's what I have been able to figure out)

This is not going to end well.

mack200 · Guest

Most people dont have 20% to put down on a home. It appears the conclusion here is if you don't put 20% down you will end up in a bad place....come on. If you have good credit any lender will loan you 90+ percent. You all must be 1%'ers

admin · Posted: Mon Oct 21, 2013 6:11 pm GMT Post subject:

Mack200 · Guest

I agree that putting money down and not financing 95-100% is ideal and puts the homeowner in a much better position in case they need to sell, etc. I was merely making the point that the majority of home buyers do not have 20% of the purchase price to put down. If you limited lenders to only lending to 20% down buyers the housing market would tumble because there would be nobody there to buy homes.

What got us in trouble in 2008 was in part 100% lending but the much larger issue was adjustable rate mortgages that started adjusting.

admin · Posted: Mon Oct 21, 2013 6:44 pm GMT Post subject:

Former Arlingtonian · Guest

I'm not a 1%.

Check out the product that many Mortgage Brokers are selling which is 97% Mortgage Financing from Fannie Mae.
BTW- you can even have some one 'Gift' you the 3% down for the home.

We are right back to 100% financing schemes of the Old Bubble days.

I am not part of the 1% crowd, although I wish I were.

People don't seem to grasp when everyone can borrow an extra 17-20% you drive up prices by 17-20% and people pay more than they have to for housing. If Fannie Mae was more aggressive about keeping people to 20% down or even 15% down - there would be less Home Price inflation.

The numbers I pulled from Burlington and Waltham illustrate that its not 40-50% down payments driving up Home values, its a result of people taking out the biggest mortgages in the history of Massachusetts real estate.

Former Arlingtonian · Guest

Here are the details on Fannie Mae 97% Mortgage
https://www.fanniemae.com/content/eligibility_information/homepath-mortgage-matrix.pdf

Or
https://www.fanniemae.com/content/fact_sheet/mcm-product-matrix.pdf