August 21, 2011

Rates that couldn’t possibly get any lower once more get lower

Mortgage rates hit lowest level since Eisenhower’s administration

Lani Rosales | August 19, 2011 

Low, low, low

According to the National Association of Realtors, the 3.5% decline in existing home sales is due in large part to contract cancellations from declined mortgage applications or because of appraised values coming in below the negotiated price, halting the contract.

The bright spot, however, in housing is that despite cancellations and difficult lending, mortgage rates have hit their lowest level in over 50 years.

Freddie Mac’s primary mortgage market survey this week shows 30-year fixed rate mortgages averaging 4.15%, 15-year fixed rate mortgages average 3.36%, 5/1-year adjustable rate mortgages average 3.08% and one-year adjustable rate mortgages average 2.86%.

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The economy isn’t just circling the drain, it’s stuck in the strainer.  But don’t fret.  It’s the perfect time to sign a 30 year contract to borrow 3 or 4 times your annual salary just so you can paint your walls any color you want (not available in some HOAs).

Home sales numbers are dropping because of cancellations.  Homes are appraising lower than expected and loans are much more difficult to qualify for.  That means it’s a perfect time to buy!  You can get more house for less money, and you’ll have fewer people to compete against because everyone’s credit is shot.

Except yours.  Your credit is Special.

This is an open thread.  Let us know about the Special Houses you visited today.

Comments (11) -- Posted by: madhaus @ 5:09 am

11 Responses to “Rates that couldn’t possibly get any lower once more get lower”

  1. Real Estater Says:

    This is exactly why logic #3 on Patrick.net is wrong. When they first posted this, interest rate was over 6%. Now it’s 2% lower. If you had bought the house, your mortgage rate would have dropped significantly over a period when Bay Area rent rose significantly. In the real world scenario (as opposed to theory), waiting to buy would’ve been the wrong move.

  2. Sam_Adu Says:

    The best ‘burbed-esque house I visited yesterday was, of course, in Campbell…or should I say a soon-to-be annexed part of Campbell.

    http://www.redfin.com/CA/Campbell/1125-Shamrock-Dr-95008/home/734403

    I’m always captivated by homes with huge walls surrounding them (i.e. 183 Dillon, Campbell). It must be how they remind me of my very short stay in a Ghanaian prison during some unrest we had in the late 90s. I wasn’t mistreated in there but all the guys on my street were definitely fearful and we were surrounded by these humongous walls in prison.

    Anyways, we visited 1125 Shamrock yesterday. There is a zero lot line in the rear of the house with a giant rear hotel wall (easily seen in pics) abutting the property.

    The real estate agent recommended that we paint a mural (or graffiti?) on the hotel wall to pretty it up. I liked to imagine myself throwing a tennis ball against that wall all day long for my lab and waking up all the hotel guests. Who the hell would be getting a hotel room in that part of Campbell though?

    Redfin picture #3 of the place has a ‘cat on a dresser’, which is almost as good as ‘dudes on a couch’. It was funny visiting the place because that dang cat was sitting in the exact same spot when we were there.

    Right next to that cat (and cropped out of the picture) is a bookshelf full of scientology dvds+books. Black cat+Scientology material+foreboding wall=Mr. and Mrs. Adu high-tailing it out of there. Too much bad ju-ju at that house for us…not to mention that the house is smaller than the Adu’s current apartment.

  3. Real Estater Says:

    Looks like Bob’s Austin dream is slipping away.

  4. Real Estater Says:

    Reader comment about Austin:

    1: We were sort of surprised at how expensive a lot of the central neighborhoods were. This was 2 years ago and we were seeing 400k-600k houses in some of the cuter, older neighborhoods. That took me aback because property taxes are like 3%, which means you’d have this 12k-15k tax bill due every year.
    ..
    The general impression I got was that most of the areas I’d want to live in are expensive and definitely very pricey for Austin standards.
    ..
    I didn’t care for most of the suburbs we saw. Sort of bland and generic.

    2: I had no luck finding a job there. Granted I was doing it from California but still- the response rate was abysmal. Most were paying 50% or more less than what I make.
    ..
    3: The summers…. They get HOT. Or at least that’s what people from there told me. I am from NC originally so I can deal with hot summers. But they were talking about 100+ degree temps for weeks on end.
    ..
    I’m starting to have slight second thoughts about Austin.

  5. The Gilroy Alex Says:

    Sam for a while there I thought you Excretor’s sock puppet, but damn, you’re too smart & funny. Granted, I still don’t believe you’re from the African hellhole of (fill in the blank) but keep up the good work.

    The best thing to do if considering buying right now is sit on your hands and wait.

    Unless you find a place that’s Heaven for wall-ball.

  6. Petsmart groomer Says:

    > most of the areas I’d want to live in are expensive

    Shocking! :)

  7. nomadic Says:

    Who the hell would be getting a hotel room in that part of Campbell though?

    Probably someone who would throw beer bottles over the wall to get you to stop making noise.

  8. madhaus Says:

    Sam, that entry is turning into a guest post. Nicely done.

  9. SEA Says:

    “This is exactly why logic #3 on Patrick.net is wrong. When they first posted this, interest rate was over 6%. Now it’s 2% lower.”

    Let’s review #3 (Exercepts for #1):

    “House prices rose as interest rates fell, and house prices will fall if interest rates rise without a strong increase in jobs, because a fixed monthly payment covers a smaller mortgage at a higher interest rate.”

    Please note the basic claim: IF interest rates rise without a strong increase in jobs, then prices go down.

    Let me adjust it a bit:

    When interest rates significantly increase, without a strong increase in income, then prices will go down.

    Increasing interest rates is one way that the Fed keeps inflation low. The other way is to quit tossing bundles of money out of helicopters.

  10. SEA Says:

    Looks like the northern part of the RBA is getting a boost:

    “Google is renovating a two-story building in a Bothell office park to accommodate up to 840 workers, the latest sign the weak economic recovery hasn’t slowed the race for tech talent.”

    Although I’m not sure that Bothell was ever part of the RBA.

  11. Sam_Adu Says:

    Thanks Madhaus and GA.

    GA: I think you give me too much credit. Who’s to say I’m not Real Estater’s cohort trying to get my properties on Burbed for the exposure…and yes, my stories from Ghana are true!


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