Mortgage rates hit 20 year high......7%

[tvguy]

That’s a great deal. It must be rough to balance a municipal budget on that though, unless it’s a very small town.

1.5 million plus. Many California communities have budget surpluses. And the state has a record budget surplus. The bad news for local governments, property taxes don't spike upward with huge increases in property values. The Good news, the property taxes don't drop with huge decreases in property values. So they have a steady predictable cash flow.

 

[barkley]

That’s a great deal. It must be rough to balance a municipal budget on that though, unless it’s a very small town.

i lived/owned a home under it for 15 years and how they do the math for the calculations is beyond me-some kind of new math common core voodoo formula

my then home was set at my '99 purchase price of aprox $200K for tax purposes (new build) but the tax rates were SO HIGH that i was paying double what i pay NOW in my new state for a home that for tax purposes is reassessed annually and currently holds at double that california assessed value. here's where it get's better-after several foreclosures, short sales and such, the current owners of my former home purchased it 9 years ago for $93K yet despite their assessed value being about 46% of what it was when i owned it-they are still paying over what i paid back then and double what i pay for my current home.

 

[barkley]

the property taxes don't drop with huge decreases in property values

they can and they have. prop 8 passed AFTER prop 13-

In 1978, California voters passed Proposition 8, a constitutional amendment that allows a temporary reduction in assessed value when real property suffers a decline in value. A decline in value occurs when the current market value of real property is less than the current assessed (taxable) factored base year value as of the lien date, January 1.

​

i have multiple family members who purchased during the hot market of the early 2000's. when the housing bubble burst and their properties went down 50% or more in value they were quick to apply with their local assessors for a prop 8 evaluation. the demand was so overwhelming in some regions that the processing time exceeded 6 months. i had family that receive several thousands in property tax refunds (approved applications were retroactive to date of submission) and thousands per year more in yearly reductions. it was 'rinse and repeat' with applications for all the years it has taken for those homes/properties to get back to their then sale price values (in one case 15 years-just got back there but now with the softening of the market it has dropped again so he will re-file again this year),

 

[tvguy]

they can and they have. prop 8 passed AFTER prop 13-

In 1978, California voters passed Proposition 8, a constitutional amendment that allows a temporary reduction in assessed value when real property suffers a decline in value. A decline in value occurs when the current market value of real property is less than the current assessed (taxable) factored base year value as of the lien date, January 1.

​

i have multiple family members who purchased during the hot market of the early 2000's. when the housing bubble burst and their properties went down 50% or more in value they were quick to apply with their local assessors for a prop 8 evaluation. the demand was so overwhelming in some regions that the processing time exceeded 6 months. i had family that receive several thousands in property tax refunds (approved applications were retroactive to date of submission) and thousands per year more in yearly reductions. it was 'rinse and repeat' with applications for all the years it has taken for those homes/properties to get back to their then sale price values (in one case 15 years-just got back there but now with the softening of the market it has dropped again so he will re-file again this year),

Interesting. Values did decline but had not heard of anyone whose market value fell below the assessed value.

 

[barkley]

Interesting. Values did decline but had not heard of anyone whose market value fell below the assessed value.

seriously? family members assessed value right after 2007 purchase was just under 450K, when bubble burst and values plummeted his appealed reassessment under prop 8 set the assessed value at almost 200K LESS. if someone buys at the high end and the market cools it does not do well for them to be unfamiliar with prop 8 (houses here have dropped in value 10% over the last 60 days, we will see what happens with the newest fed hike).

 

[tvguy]

seriously? family members assessed value right after 2007 purchase was just under 450K, when bubble burst and values plummeted his appealed reassessment under prop 8 set the assessed value at almost 200K LESS. if someone buys at the high end and the market cools it does not do well for them to be unfamiliar with prop 8 (houses here have dropped in value 10% over the last 60 days, we will see what happens with the newest fed hike).

Well, usually assessed value is nowhere near market value, so a 50% drop in assessed value would be almost unbelievable.

 

[DCLMP]

I know it all works out in the wash, high interest means lower home values, and vice versa. Personally, I would rather high home values and low interest rates because the bank deserves nothing.

Doesn’t it all come out the same in the end? We bought our first house a condo in 1993 in Southern California. Our interest was around 6 or 7% . The condo was only 190,000 I can’t believe we bought a condo in Southern California for that price. I wish we would have held on to it. We were young and dumb though. We also had no idea interest rates would drop to nothing and prices would go to the moon.

 

[DCLMP]

I locked in 2.625% on a 30 year last September. I might never move out of my house.

I’m just hoping someday my kids can move out. I work with a lot of twenty something’s and they all live with their parents.
I don’t think that would have gone well for me or my parents if I would have had to do that.

 

[DCLMP]

That’s a very good point, but having a high value has benefits also- home equity to tap into in ann emergency. It’s why I think a lot of newly retire people are going to be in a world of hurt this winter. High rates, high inflation, 401k losses, high heating costs, and less ability to reverse mortgage or HELOC (terrible ideas but good in an emergency) due to house prices crashing.

I think a lot of people pulled money out their houses for improvements. Inspired by all the fixer upper shows and stuck at home for a couple of years. Hopefully people don’t freak out if they owe more than the house is worth. I saw that happen a lot in 2008 and they just walked. You can’t walk now rents too high.

 

[tvguy]

I’m just hoping someday my kids can move out. I work with a lot of twenty something’s and they all live with their parents.
I don’t think that would have gone well for me or my parents if I would have had to do that.

Well there are other factors beside interest rates and selling prices. How you choose to spend your money being the major one. My daughter is considered to be low income, but was able to buy a house all on her own. Some of her co-workers making the same salary wonder how she did it. She points out, she doesn't drop $100 every Friday night and $100 every Saturday night on entertainment/alcohol/restaurant food. That savings. almost is enough for her house payment.

 

[DCLMP]

Well there are other factors beside interest rates and selling prices. How you choose to spend your money being the major one. My daughter is considered to be low income, but was able to buy a house all on her own. Some of her co-workers making the same salary wonder how she did it. She points out, she doesn't drop $100 every Friday night and $100 every Saturday night on entertainment/alcohol/restaurant food. That savings. almost is enough for her house payment.

When did she buy a house?

 

[tvguy]

When did she buy a house?

July 2019.
Her brother and his wife bought their house in May 2022.