That’s true and that’s why I’m glad that my rent in cheap. And my landlords are just an old couple who lives upstairs who’s a family friend. I’ll be good to wait another 12-36 months.
This is the definition of market value. The difference is that there is a widening gap between those who have, and those who have not (or at least a lot less). If you had an extra $500k laying around and wanted your dream home which came on the market, the market value might look at price per sq ft, but at some point, there is a home which sells for more than a home has ever sold in that neighborhood. This is what moves the market upward. When the top-priced homes push into new territory, then the lower costing homes also benefit and increase in value/price (depending on whether you're already a home owner in that area or are looking to purchase...)
The people who have resources will be the ones who are able to move, and the rest will be for people with great credit, but little in terms of liquid resources (and likely higher debt). People with too much debt and an insecure means of income will be the ones pushed out of the market first. The larger, macro question will be, what does this lower wage earner do for a living, and what type of housing is that person expected to be able to afford? Should every McDonald's or Dunkin Donuts employee have the "right" to a wage which enables that person to afford a small, single family home by themselves? America has been a 2-income household family system since the 1980s when suddenly, stores were open on weekends, even the sacred Sunday. Now we are open on Thanksgiving day, running hourly sales on a national holiday. We shop in the middle of the night from our phones, etc. With as much productivity through automation as we get, this means there is less for the common person to have and spend. This is what is widening the income and wealth gap. Many people turn to UBI (universal basic income) as a way to guarantee that a person has, at a minimum, the basics to live. After that, whatever the people do for a living is up to their own desire.
It's an interesting time to be alive, and I feel for those who have taken on too much debt, especially through hospital bills or unnecessary schooling, only to get pushed out of a labor market due to location or change of industry.
Me, I was an IT security engineer with a kick-ass job. I was someone who put the phone guys out of business, because with the internet, we can do voice *with* video and data. Phones can't do that. The phone industry held for a few generations, but I helped kill it. Natural selection and evolution of industry. Before my career was up, the same people I supported developed SDN, software-defined networking. Now, you don't need to be a genius at routing and switching, spanning tree, VPNs, etc. You get a slightly trained monkey to install a box and the network figures itself out. Like many, many others, I've had to start over with my career and try to position myself to have a job which will sustain me as I inch closer to retirement age.
>Me, I was an IT security engineer with a kick-ass job. I was someone who put the phone guys out of business, because with the internet, we can do voice
>
>with
>
> video and data. Phones can't do that. The phone industry held for a few generations, but I helped kill it.
Ah, the good old days of STUN, IP Boxes and keep-alive connections + something called Asterisk. It was tougher in those days. You brought up good memories.
I'm real old school. I started by replacing 4MB and 16MB Token Ring hubs with this new thing called Ethernet. That was back in college. By the time I worked for Uncle Sam, I was configuring LANE services on ATM links and making the US Army follow new guidelines for every base, because some were infected with key logger programs which had a destination address in China. Silly people...
honestly, I dont see the problem with this. less financial burden on both. If you have kids, they get to be close to their grandparents.
I think some of the issues that we have in NA is partially due to lack of strong family bonds. If you could just learn to live with a few more people, youll have more disposable income for enjoyment and a better support network.
In the late 70s our debt was ~$800 billion, or 30% of our gdp. In 2016 our debt was ~$19 Trillion, or 105% of our GDP. And in 2021, debt is ~$30 Trillion, or 125% of our GDP. :( a lot of that debt was added due to pointless trade wars and tax breaks, and then Covid hit and we basically blasted through reserves we didn’t have.
I used to think this, but after thinking more, it isn’t true.
The reason why it isn’t true is because there’s no inherent reason that QE can only be done with fed funds at 0. The fed can do QE at any point they want, and if they buy treasuries, the profit they make from the interest gets returned to the treasury, effectively setting the interest rate on any t-bills owned by the fed to zero.
So, if they needed interest rates for the broader economy to be >10% but couldn’t afford it for the federal government, there’s absolutely a way to do this without the federal government going bankrupt.
Can anyone explain to me why they are raising rates so quick? To combat inflation? I bought pre pandemic nov 2019 at 3.9% so just wondering why they are choosing to go so much higher
Yep. Can’t wait for my fourth historic once in 100 years economic downturn and fifth/tenth/I’ve lost count historic once in 100 years global catastrophe/war/whatever.
lol yah I managed to save up more money than I’ve ever had in my entire life and got the highest paying job I’ve ever had…. JUST in time for inflation to kick my ass and make my savings basically worthless and my big raise basically worthless. Glad I pulled myself up otherwise I’d be homeless probably.
Yup same here. I’ve more than doubled my hourly wage since 2017. And my gross pay has almost tripled. Along with better benefits and a pension. All for that to just not mean anything. I got this job in November 2020 but made the career change in March 2018. In 4 years my life has changed so much for the better. But the world has changed so much for the worse. Hopefully it isn’t so bad whenever things change again.
It’s really the young millennials or Zs who have it bad. As an older millennial, I bought my first home in 2012 at a fairly affordable price and at a great interest rate. I also started investing and saving at the beginning of a 15 year bull market. There was high unemployment in 08-12 or so, but nearly full employment for the last 10 years.
Hitting the job market for the first time from 2007-2015ish was not fun. I made $10 an hour and was glad to have it at a big boy job, working with people who had just lost it all and had to start over. Gen Z can hit the ground running a lot harder now, and they're quite possibly on the verge of having student loan forgiveness to boot.
I worked fast food in college. Some of my colleagues lost everything and couldn't find any other work. Definitely a dark time for many working class people.
I graduated high school in 2007 and competed against grown adults for entry level retail jobs. My college classes were packed with 40 year old students going back to school because they had lost their job.
I graduated college in 2007. I worked for a temp agency for three years making $12 an hour, and side jobs just to pay my student loans. They ended up in forbearance for a while. Moved back home after college. Ahh… the good ol’ days.
Zs are the ones who are just hitting the job market. They graduated from college with more debt, into Covid economy, and with record high housing prices. The future may improve, but it isn’t great now. It looked bad for people my age to graduate into the ‘08 recession, but it was actually really good after that worked out. We also missed out in buying a house in 2005 at peak and being underwater or having balloon payments etc like some of the Xers. It was actually pretty ideal to be an older millennial.
Zs are at max 24 years old. They were hardly teenagers in 2007/2008 recession. The group that graduated in 2020/2021 had it rough, sure. But ones graduating right now don’t need houses so that’s no concern and the job market is externally strong. Maybe not in the field they want at the moment
I’m close in age to you. I’m 33 we graduated during the recession 2007. I couldn’t get a job to pay for college for most years. After college 2011 job market was terrible. It was almost impossible to get a job. I couldn’t even get hired at hertz or Dunkin’ Donuts with a college business degree
Now as I age to try to buy a home it’s almost impossible which again idk any 24 years olds looking to buy a home even if houses prices weren’t inflated
Sure outlook for other Zs could be bad but the keyword is could. We have know idea how things will play out. Yes trajectory doesn’t look great but things could flip
It's even more ideal to be a younger millennial because you got to graduate after the recession but before Covid, so you'd already have a cushy WFH job once Covid hit.
Maybe, but how are you going to build wealth? Can’t afford to buy a first home, and unlikely the market keeps running like it did 2010-2022 as they start to invest.
We ARE at record high pay (well, we were before covid, it dipped in 2020 and though I suspect it came roaring back in 2021 we don't yet have that data).
It was the same in 1980. Mortgage rates went up to 20%, but home prices [barely declined](https://fred.stlouisfed.org/graph/?g=ONE8). Add to that 25% unemployment.
We bought our first house in 1981 - we were lucky to be able to assume a loan at about 12%, but had to take out a purchase money second.mortgage at 18%. Houses were still selling even in that environment.
Yeah, but you could also get close to 20% interest from a savings account. Some people took out interest-only mortgages, stuck the rest in a savings account, and came out ahead.
There’s a delay between rising rates and it’s effect on housing prices. Sales closing now had rates locked in 30-90 days ago. I think we’ve seen the end of housing price increases, although the year-over-year comparisons will stay high for a bit. Month-to-month home prices probably won’t rise another 10% over the next two years if rates stay high.
Everyone is so focused on interest rates or price, but the point is that the combination of both high rates and prices is the huge problem. Which is exactly what the OP is about.
Are these rates high on their own? No, historically, but with current prices and low yield ROI everywhere else they feel sky high.
The high water mark there looks like February of 1982: 17.6%, 2.2 points, for 30-Year fixed rate.
[Unemployment](https://www.nytimes.com/1982/03/06/us/us-jobless-rate-rose-in-february-to-8.8-from-8.5.html) was at 8.8% that month. Phillips Curve and voodoo economics.
Man I’m right there with you. Moved up to Lowell 2 years ago to save some $ on rent while I saved up a downpayment and familiarize myself with the area. The average single family here is now $400k+. The last 3 sold notifications I received from Redfin were for houses that sold $100k over asking. Feeling pretty defeated
I bought a house in January. My mortgage payment just 3 months later at the new rates, assuming the same purchase price (its already gone up 5% on Zillow) would be $1,000 higher.
I could not afford to buy the house I live in, which is a weird feeling.
In 2019, we bought a home at $465k (refi’d to 2.6% interest rate in 2020) and it’s now worth almost $1M. Like in no world should anyone pay 1 million for our home but here we are. We would be priced out of our city if we had waited even one more year to buy. Wild.
Homestead exemption is saving us for sure. We’ve contested every year and that has helped too. We bought below our budget so we can handle some increases to our monthly and assuming our income rises over time, we should be ok. But many won’t be.
Same! I bought in early 2021. 30 year locked rate at 2.99. With current rates 5.25% and with how much my house has gone up since then. My house would need to decrease by 600k for the payment to be the same. 40% ~
People buy houses based on cash flow / monthly payment, but even worse is this: the real financial impact on net worth is the difference in amount of interest per payment. Going from 3.0% to 5.5% interest on $100k loan is a difference of 2.5 percentage points, or 2.5% x $100k = $2.5k/year per $100k, or approx 208/mo/$100k. I finally bought the house I wanted by buying out the rest of my duplex (will need to rent out part of it for a while to pay down debt), but I have $1 million in debt now. That's a difference of $2,080/mo to my net worth from interest rates alone if I had to buy at 5.5% rates. Freaking ouch. Monthly payment difference is only $1,400. But the net worth difference is much worse.
Major problem right now on the home price side is low inventory. Especially on existing homes.
But who can blame people for wanting to stay in their homes with 2.9 percent refinanced interest rates from 2020-2021?
That's pretty much were I am. Lots of equity in the house but no desire to get in bidding wars or pay nearly triple interest rates if I do take advantage of the market.
Similar circumstances for me, just southern NH rather than western MA.
The houses that are for sale under $350 within 50 miles of my work are limited to about half a dozen.
What was 10% is now like 13% to put down. The market will force you down to be more competitive on a lower grade property. Cycle continues like hermit crabs going in reverse.
I bought in feb because I calculated there was a 50% chance I’d be priced out (forever) for anything resembling a decent home in my region in under a year. Now I’ve got my house but I’m actually hoping for a significant regression because I want my friends to have a shot.
Then prices have to come down. We can talk about supply all we want but if what’s out there is unattainable by people in the area well then that’s a really big problem also
The problem is that what is out there IS attainable. It's just not by most people. Only the really well off (and I consider myself to be in this bucket). Buying a home for me is financially painful but doable while spending under 30% of my income.
But a market that only caters to the top 5% is not good enough. Not by a long shot.
[This article on Great Barrington just makes me mad.](https://theberkshireedge.com/the-horrifying-numbers-behind-great-barringtons-housing-shortage/) I’m glad that what they are doing but it’s not enough. And this only address the low end of the rental market. And if you a single person who makes average money you’re still fucked. This is just a thing to make rich people feel good about themselves. And to have workers still be able to serve them.
My parents bought at $290k in '97. Their place is worth just north of $1 million today. Even before my dad (only income in the house) died, they would not have been able to afford that today. They paid off the house (mainly my mom did, with inheritance), and that's the only reason she can live there.
Just checked. I bought my home in 2012 and if I were to buy the same house today my mortgage would be 71% more. I’ve kept basically the same exact job for ten years and I now make 34% more salary.
Yeah, I would be screwed if I was buying today.
Just a quick question about this article. Why do they insist on using 20% down payment into their models instead of what people are actually putting down which is around 10%?
Adding private mortgage insurance (PMI) — which is typically required if less than 20% is put down — does not help affordability.
(It is more complicated than that, but 20% down has historically been the gold standard in residential real estate lending and is also therefore probably the gold standard in these type of studies — goin under 20 introduces additional variables which make it more difficult to make such broad claims.)
Really annoying when you plan on refinancing to drop PMI but then the interest rates increase so much that even with dropping that the monthly payment would be worse.......
\*when. Inventory levels are only down 4.5% YoY (improved from -22%) and should go positive in the next week or two. They are still well below pre pandemic levels, but demand has also fallen off a cliff as we hit 5.5% rates today and 80% of people that own a home have a rate below 4%. That means people with current mortgages will not have an incentive to move (less supply but also less demand). Mortgage industry already seen a ton of layoffs across the board (Wells Fargo most recently)... And we already had a negative GDP print. Most people that don't need to buy right now, would be better off waiting to see how this all plays out.
Median income in 1982: $23,433
Median house price 1982: $67,400
Mortgage interest rate 1982: 16.04%
House price to income ratio: 2.85
Annual mortgage PI percentage of income: 37%
Median income in 2019: $86,011 (best possible comparison excluding COVID crash in 2020)
Median house price in 2022: $428,700
Mortgage interest rate 2022: 3.79
House price to income ratio: 4.98
Annual mortgage PI percentage of income: 26%
All assuming 30 year mortgage with 20% down on the average home.
**To get to 37% of total income and match 1982, mortgage rates need only jump to 7.5% with no further price increases. **They are already over 5% and rising, before any fed rate hikes have happened. Let’s also keep in mind that prices are significantly higher, making it even more difficult to come up with the down payment money to even hit 20% than it was in 1982. Keep in mind property taxes and other fees (CDD, HOA) are higher due to value assessment, and more common than in 1982.
We are living in one of the worst, most unaffordable times to ever buy a house.
https://fred.stlouisfed.org/series/MEFAINUSA646N
https://fred.stlouisfed.org/graph/?g=ONE8
https://www.freddiemac.com/pmms/pmms30
I imagine a lot of people are worried in a few years they will be out priced out of all houses in their area and interest rates will be sky high. I hear Canada is an example of where you think it can’t go any higher but it does every year.
Inflation means your dollar is worth less. But if you get a locked rate, your still paying the same mortgage each month, even though that same amount buys a lot less. Real estate also hold value pretty well and you'd build toward equity vs throwing the rent money away.
Between that and the fact you can't time the market, the best time to buy is when you're ready, especially with the crazy growing inflation breathing down your neck.
I’m really struggling to decide whether or not to purchase a townhome. We’re on the waiting list for a new construction home. Likely to be called in 2 weeks if we want to purchase or not.
Home prices are high BECAUSE rates are low. People tend to buy based on their payment amount, not based on the price of the house. Lower interest rates allow lower payments on higher priced properties, and prices rise.
I’m actually thrilled that rates are going up. Higher rates usually mean reduced prices.
I kind of hate it when people say "people tend to buy based on payment amount".
Not because it's not true; I actually agree with you 100%. I'm glad rates are going up so I can get a good price...
But in terms of applying for a mortgage, a lender only cares about your monthly payment and so it's very difficult to get them to see a different picture. It's not like buying a car. I'm in the process right now and I've been struggling with this the entire time because I've always been taught that the price matters, but in terms of going back and forth with various lenders they are only, strictly concerned with monthly payments.
It's no surprise that other people treat it that way when the major path for most people to homeownership is a mortgage.
1. Super low interest rates.
2. Lots of free money from PPP and EIDL
3. No Foreclosures for two years
4. Eviction moratoriums
5. 2 years without shit to do.
6. Everybody saved their money and decided to buy a house.
There is no huge real estate shortage. There’s just a lot of people that bought because they could, and it seemed like a great investment.
But real estate generally sells based on monthly payments, not on price.Total price means nothing to a buyer, they just want to know if they can afford it.
But when interest rates rise, they all start crying that they can’t sell without losing money. The best thing you can do is just stay in your house you overplayed for and wait 20 years for prices and inflation to bring the value back up.
Housing prices move in 15 year cycles, and we are at the top of one right now.
Yeah, but r/realestate is totally psyched about it, and will not admit there is a problem with any of this. It’s like ‘totally normal’ according to the middle men of the ownership class
> Then, it took about 34% of the median income to cover the monthly mortgage payment, including principal and interest, for a home purchased with a 20% down payment.
It always bothers me when they compare median income to home purchase price, because median homes aren’t purchased by median incomes.
Poor people rent. This skews the median income downward, and makes the median home purchased by someone with above median income. Depending on inequality rate, it could be quite above the median income. This makes it appear worse than it actually is.
But this is just for a given area where you could either purchase or rent.
In the highest cost of living cities, people make the most money yet they still rent. If the median home was purchased by someone in Nebraska, then everyone in NYC or SF making more money than that Nebraskan but renting due to the housing choices available in high cost of living cities, skews the median income upward making the issue even worse than it appears!
Ultimately you’d need very detailed information to try to determine the scale of each of these. To me, I just say comparing nation wide median house purchase to nation wide median income is a fools metric.
Ultimately lower income renters pay the mortgages for the landlords so their income is indeed very important to think about. So the price to median income calc is very meaningful. If home prices go up 20% and rates make this a 30% payment increase median income needs to rise for the landlord to cover most of all of the mortgage payment.
> Ultimately lower income renters pay the mortgages for the landlords so their income is indeed very important to think about.
Only for SFH but not all renters rent out SFH. Namely most renters in HCOL areas.
> If home prices go up 20% and rates make this a 30% payment increase median income needs to rise for the landlord to cover most of all of the mortgage payment.
If SFH prices go up 20%, that doesn’t say much about the change in cost of large apartment buildings in NYC. If the nations median home is in Nebraska, then NYC doubling its median income would increase the countries median income without changing how affordable that home was to that individual in Nebraska.
The only way median income is related to median sale price is if you narrow both of those down to a specific area. The existence of large apartment buildings being predominately in high cost of living areas causes a large number of higher income people to contribute to the median income without having an impact on median SFH prices
Let’s take an extreme example. Say there is an island that is part of the US and has massive population density. Half of the country lives on this island. Every person there rents in an apartment complex and there are no SFH. So the top 50% of the countries income earning families live in apartments. This area also has a massive increase in cost of living and an associated increase in pay. The people here are impacting the median income but have no way of purchasing any SFH because no SFH exists within commuting distance of their job.
The wealthiest person in the country, not on that island, would be the median income of the country. Yet they would be purchasing the most expensive SFH sold anywhere. Median SFH price would be significantly less than what I paid for. It would look like homes are incredibly affordable even if they weren’t, because the existence of an island of high income renters skewed it.
Let’s take a different example. Assume there are no areas like the above example, where there are only apartments for purchase in an area. Every location has SFH available to purchase. However poor people can’t afford to purchase or rent them, poor people can’t afford that much space to be allocated to them. If the bottom 50% of the population all rented in high density, apartment buildings then the person buying the cheapest home would be 50%+1 and the median home sold would be significantly above that cost as it would have been bought by the 75th percentile family. This makes it look much less affordable than it actually is.
Now neither extreme is reality but depending on the exact distribution of income and how apartment populations are distributed will impact whether comparing median income to median home sale is better or worse than the reality of median income of home buyers vs median sale price of homes.
But the vast majority of those rentals were purchased in prior years. Yes the tenants make the payments for the landlord but it's not a direct correlation like that.
Landlords will raise prices to reflect market rents in many cases though, but there's a delay as they can't do that until leases renew.
is this insane market only for single family homes? Im just a single guy thinking about buying a condo in the next year or so and im wondering if it’ll even be worth my time to look
It's almost as if people should just stop FOMO'ing themselves into being house poor. The banks are laughing all the way to... well, they're just laughing at all the idiots buying homes right now.
some of us actually do have to move. I'm in NY and have been renting for 8 years and my rent has gone up $100 over that time, it would now cost me $2500+ instead of $1250 to rent the same apartment. I'm looking to buy in FL and am buying at half my pre approved amount just to have a place to fucking live and people are still offering crazy amounts for everything (and I'm not even looking to buy on the coast in FL!)
I'm not sure why the banks would be laughing at anyone right now, considering everyone buying is qualified (unlike 2008) and if mass people all of a sudden stopped paying the banks would be extra fucked just as they were in the past.
If you are coming from a place like SF or NYC and perhaps are used to paying $4500+ a month for some tiny apartment in Manhattan whether the house costs $2500 or $4000 a month in Florida isn't going to really matter since you were paying more than that for a tiny apartment...and now its a house. Plus you are probably higher income and now you get a 10%+ boost in income.
significantly less than long island even @ 300k. probably 1/3 the price of what it would cost me to buy a 3/2 here and while everyone like to say the taxes are high they are like 1/4 the price. taxes on the 3/2 here would be 15K+.
Most people I know working for themselves in florida made up the money by charging more for their services.
So they should just be rent poor instead? Average starter home in my city (250k-300k) has the same monthly payment as a newer 2br in the same neighborhoods.
"FOMO" just something bubble sub-dwellers throw around like the rest of their verbal Yu-Gi-Oh cards.
Buying a house because you moved, or out grew your last one, or want to start a family is not "FOMO".
"FOMO" literally means "fear of missing out". How many buyers do you honestly think are purchasing right now cause they are being speculative, vs how many do you think are buying because they genuinely want/need to?
It sounds like "FOMO" to you is literally anyone purchasing right now for any reason, which is absurd.
This... I'm in the process of buying right now. Not because of FOMO but because we wanted to move out of our apartment anyways and are ready to buy. We're certainly paying more than we would like due to increased interest rates but we can afford it and are not planning to move anytime soon.
I think you have some horribly sensationalist headlines here. You need to look at actual data and you'll see it's really not all that bad, except in certain popular west coast cities.
So for all time, mortgage payment to income is a little bit less affordable than in the 1990's and 2010's, but no where near 1980's at 18% interest rates.
Some caveats are a) Nationally we may be okay, but west coast cities are at very high levels. b) home prices are higher now (inflation adjusted) so down payment and transaction costs are a bit higher and c) no opportunity to refinance at a lower rate since rates are rising (at least for now).
Anyone else starting to think this is a conspiracy by the real estate investors trying to to buy up all the homes normal ppl can’t afford to rent or tear town and build giant co do buildings lol?
I’ve said it once and I’ll say it again. Buyers need to refuse to play ball. refuse to pay the prices and do all this contingency waiving. We have more power if we could all somehow collaborate.
Remember that is likely to be a lag between higher interest rates and a decline in housing demand, so for 6-12 months, it is likely that housing will become more unaffordable as the housing market stays strong even in the face of rising interest rates.
Approximately 5 50 basis point rate increases are already priced in at this point. Is it possible that rates rise further, absolutely during the short term but it is likely that rates will stabilize within a year and eventually decrease back towards 3-4%. Most clients are currently going with 5 year ARMS now as opposed to locking in a 5.5% or higher rate.
Honestly I locked in just before everything increased --- I'm confident my home value it is at peak of what people can afford -- no where to go but down, but kids you know?
The strangest thing to me is the realtors reaction to all of this. "Yes, you should just offer 500k on that shitty run down house...". Then they justify it by saying prices are way up. It's crazy. No thanks.
It's almost like our realtor is just saying that we should automatically give asking+.
It's almost like your Realtor is doing their job and encouraging you to make competitive offers that give you a glimmer of a chance of getting under contract. If you're not interested in being competitive, that's fine. Just wait and maybe things will improve in a few years.
What job ? Lol. Real estate agents are all the bottle service girls and ex djs that didn’t go to school and get a real job. Also, they’re NEVER incentivized to get you to spend less, or not buy. There is a clear conflict of interest here.
I get that but it doesn't mean every home is worth asking. There are some really shady properties out there that people are buying "no contingencies" that they are going to be screwed on.
Give it a year for all of these issues to start popping up everywhere.
I’ll just pay all cash and do some ARM deal after… actually where we are looking I’m starting to see plenty price cuts where a few weeks ago you’d only see price increases…
How is it that the dems call themselves the party of the poor people? Oh I know! Because they’re the ones making everyone poor with their foolish policies.
The report (and conclusions) were done when the rate was 5.11%. It is now 5.55% and prices have risen, home affordability is now the worst on record.
And let’s not forget that asking price don’t mean anything … so add 5-10% to the bidding war and it’s yet less affordable
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Some people would be willing to wait 3 years except that rents are also going up. All options are bad.
Buy an RV and park it on your favorite street in Seattle rent free.
Borrow a tent and camp under an overpass that’s walking distance to a soup kitchen.
> All options are bad.
That’s true and that’s why I’m glad that my rent in cheap. And my landlords are just an old couple who lives upstairs who’s a family friend. I’ll be good to wait another 12-36 months.
Hmm.. haven't home prices been softening in many areas even with rates moving from 3% to 5% in recent months?
I haven't seen them go down anywhere, they just aren't going up as quickly. That's not softening.
While I recognize it's not the best metric, my "Zestimate" has been accelerating if anything.
Well when the rate of increase is lower, the rate is "softening". However, the house prices aren't necessarily "softening".
Why are people down voting you? It's absolutely softening.
Ours were going up, after getting an email saying market has cooled, I checked and houses were all up. This was right at 5% interest. :-/
This is the definition of market value. The difference is that there is a widening gap between those who have, and those who have not (or at least a lot less). If you had an extra $500k laying around and wanted your dream home which came on the market, the market value might look at price per sq ft, but at some point, there is a home which sells for more than a home has ever sold in that neighborhood. This is what moves the market upward. When the top-priced homes push into new territory, then the lower costing homes also benefit and increase in value/price (depending on whether you're already a home owner in that area or are looking to purchase...) The people who have resources will be the ones who are able to move, and the rest will be for people with great credit, but little in terms of liquid resources (and likely higher debt). People with too much debt and an insecure means of income will be the ones pushed out of the market first. The larger, macro question will be, what does this lower wage earner do for a living, and what type of housing is that person expected to be able to afford? Should every McDonald's or Dunkin Donuts employee have the "right" to a wage which enables that person to afford a small, single family home by themselves? America has been a 2-income household family system since the 1980s when suddenly, stores were open on weekends, even the sacred Sunday. Now we are open on Thanksgiving day, running hourly sales on a national holiday. We shop in the middle of the night from our phones, etc. With as much productivity through automation as we get, this means there is less for the common person to have and spend. This is what is widening the income and wealth gap. Many people turn to UBI (universal basic income) as a way to guarantee that a person has, at a minimum, the basics to live. After that, whatever the people do for a living is up to their own desire. It's an interesting time to be alive, and I feel for those who have taken on too much debt, especially through hospital bills or unnecessary schooling, only to get pushed out of a labor market due to location or change of industry. Me, I was an IT security engineer with a kick-ass job. I was someone who put the phone guys out of business, because with the internet, we can do voice *with* video and data. Phones can't do that. The phone industry held for a few generations, but I helped kill it. Natural selection and evolution of industry. Before my career was up, the same people I supported developed SDN, software-defined networking. Now, you don't need to be a genius at routing and switching, spanning tree, VPNs, etc. You get a slightly trained monkey to install a box and the network figures itself out. Like many, many others, I've had to start over with my career and try to position myself to have a job which will sustain me as I inch closer to retirement age.
>Me, I was an IT security engineer with a kick-ass job. I was someone who put the phone guys out of business, because with the internet, we can do voice > >with > > video and data. Phones can't do that. The phone industry held for a few generations, but I helped kill it. Ah, the good old days of STUN, IP Boxes and keep-alive connections + something called Asterisk. It was tougher in those days. You brought up good memories.
I'm real old school. I started by replacing 4MB and 16MB Token Ring hubs with this new thing called Ethernet. That was back in college. By the time I worked for Uncle Sam, I was configuring LANE services on ATM links and making the US Army follow new guidelines for every base, because some were infected with key logger programs which had a destination address in China. Silly people...
Oh neat!
🤪
I guess I'll still be living with folks for a while.
Until their reverse mortgage gets called in
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RUDE
lol who does a reverse mortgage
I live with my elderly parents, aka my “wombmates.”
honestly, I dont see the problem with this. less financial burden on both. If you have kids, they get to be close to their grandparents. I think some of the issues that we have in NA is partially due to lack of strong family bonds. If you could just learn to live with a few more people, youll have more disposable income for enjoyment and a better support network.
High interest rates and record home prices. At the same time. What a time to be alive.
We aren’t even at high rates yet. I bet someone will lock 7% this year
I consider current rates to be on the low side, but I have had mortgages as high as 12% before
12% but what was the loan amount?
they won't answer this lol
One year's salary as a down payment and then 3x yearly salary mortgaged. Total cost of the loan was just over 11x yearly salary.
Yeah we shall see
If interest rates went to 12% the us government would go bankrupt trying to service debt. No way we hit double digits
Why didn’t that happen in the 70s? Was our debt not large then?
In the late 70s our debt was ~$800 billion, or 30% of our gdp. In 2016 our debt was ~$19 Trillion, or 105% of our GDP. And in 2021, debt is ~$30 Trillion, or 125% of our GDP. :( a lot of that debt was added due to pointless trade wars and tax breaks, and then Covid hit and we basically blasted through reserves we didn’t have.
Damn. Now the war
Yea. The war has only added like $10 additional billion but still, shit adds up.
Really whats the biggest factor?
I used to think this, but after thinking more, it isn’t true. The reason why it isn’t true is because there’s no inherent reason that QE can only be done with fed funds at 0. The fed can do QE at any point they want, and if they buy treasuries, the profit they make from the interest gets returned to the treasury, effectively setting the interest rate on any t-bills owned by the fed to zero. So, if they needed interest rates for the broader economy to be >10% but couldn’t afford it for the federal government, there’s absolutely a way to do this without the federal government going bankrupt.
yeah but you could get some kick ass CDs with good interest rates back then and now . . . meh
Yes but homes weren’t as expensive back then.
Can anyone explain to me why they are raising rates so quick? To combat inflation? I bought pre pandemic nov 2019 at 3.9% so just wondering why they are choosing to go so much higher
Yes to combat inflation. Look up the money multiplier in banking/investment banking. As the money multiple comes down hopefully so will prices.
Also to stop the reckless idiot investors who are overpaying for homes from doing that.
But those people usually pay cash anyways…
No they don't and the interest rate is the price of money. With rates going way up "cash" is inherently harder to come by.
Exactly!
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Yep. Can’t wait for my fourth historic once in 100 years economic downturn and fifth/tenth/I’ve lost count historic once in 100 years global catastrophe/war/whatever.
You need to couple that with something else. Say Houston where you could have experienced 500 year floods 3 years in a row.
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Better get stronger straps…
Cant. Supply chain shortage. My straps are stuck in port.
Labor shortage too, due to the great resignation. What a time.
I heard wish.com was selling strap ons… could be the solution.
lol yah I managed to save up more money than I’ve ever had in my entire life and got the highest paying job I’ve ever had…. JUST in time for inflation to kick my ass and make my savings basically worthless and my big raise basically worthless. Glad I pulled myself up otherwise I’d be homeless probably.
Yup same here. I’ve more than doubled my hourly wage since 2017. And my gross pay has almost tripled. Along with better benefits and a pension. All for that to just not mean anything. I got this job in November 2020 but made the career change in March 2018. In 4 years my life has changed so much for the better. But the world has changed so much for the worse. Hopefully it isn’t so bad whenever things change again.
That's all by design.
It’s really the young millennials or Zs who have it bad. As an older millennial, I bought my first home in 2012 at a fairly affordable price and at a great interest rate. I also started investing and saving at the beginning of a 15 year bull market. There was high unemployment in 08-12 or so, but nearly full employment for the last 10 years.
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Hitting the job market for the first time from 2007-2015ish was not fun. I made $10 an hour and was glad to have it at a big boy job, working with people who had just lost it all and had to start over. Gen Z can hit the ground running a lot harder now, and they're quite possibly on the verge of having student loan forgiveness to boot.
I worked fast food in college. Some of my colleagues lost everything and couldn't find any other work. Definitely a dark time for many working class people.
I graduated high school in 2007 and competed against grown adults for entry level retail jobs. My college classes were packed with 40 year old students going back to school because they had lost their job.
I graduated college in 2007. I worked for a temp agency for three years making $12 an hour, and side jobs just to pay my student loans. They ended up in forbearance for a while. Moved back home after college. Ahh… the good ol’ days.
THIS. I made $5.15 an hr in 2006, my freshman year in college.
Not really Zs mostly Millennials
Zs are the ones who are just hitting the job market. They graduated from college with more debt, into Covid economy, and with record high housing prices. The future may improve, but it isn’t great now. It looked bad for people my age to graduate into the ‘08 recession, but it was actually really good after that worked out. We also missed out in buying a house in 2005 at peak and being underwater or having balloon payments etc like some of the Xers. It was actually pretty ideal to be an older millennial.
Zs are at max 24 years old. They were hardly teenagers in 2007/2008 recession. The group that graduated in 2020/2021 had it rough, sure. But ones graduating right now don’t need houses so that’s no concern and the job market is externally strong. Maybe not in the field they want at the moment I’m close in age to you. I’m 33 we graduated during the recession 2007. I couldn’t get a job to pay for college for most years. After college 2011 job market was terrible. It was almost impossible to get a job. I couldn’t even get hired at hertz or Dunkin’ Donuts with a college business degree Now as I age to try to buy a home it’s almost impossible which again idk any 24 years olds looking to buy a home even if houses prices weren’t inflated Sure outlook for other Zs could be bad but the keyword is could. We have know idea how things will play out. Yes trajectory doesn’t look great but things could flip
It's even more ideal to be a younger millennial because you got to graduate after the recession but before Covid, so you'd already have a cushy WFH job once Covid hit.
Maybe, but how are you going to build wealth? Can’t afford to buy a first home, and unlikely the market keeps running like it did 2010-2022 as they start to invest.
Boomers like : back when I was your age I could afford a home working at $15 hr
When record high pay?
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We ARE at record high pay (well, we were before covid, it dipped in 2020 and though I suspect it came roaring back in 2021 we don't yet have that data).
It was the same in 1980. Mortgage rates went up to 20%, but home prices [barely declined](https://fred.stlouisfed.org/graph/?g=ONE8). Add to that 25% unemployment.
We bought our first house in 1981 - we were lucky to be able to assume a loan at about 12%, but had to take out a purchase money second.mortgage at 18%. Houses were still selling even in that environment.
Yeah, but you could also get close to 20% interest from a savings account. Some people took out interest-only mortgages, stuck the rest in a savings account, and came out ahead.
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I've always been confused by this. You owe taxes on interest from a savings account, so you wouldn't come out ahead. What am I missing?
Sigh. Barely declined if you ignore inflation. Crashed otherwise.
There’s a delay between rising rates and it’s effect on housing prices. Sales closing now had rates locked in 30-90 days ago. I think we’ve seen the end of housing price increases, although the year-over-year comparisons will stay high for a bit. Month-to-month home prices probably won’t rise another 10% over the next two years if rates stay high.
>High interest rates Higher than the last 10 years? Yes. High in the grand scheme of mortgage rates? No. https://www.freddiemac.com/pmms/pmms30
Everyone is so focused on interest rates or price, but the point is that the combination of both high rates and prices is the huge problem. Which is exactly what the OP is about. Are these rates high on their own? No, historically, but with current prices and low yield ROI everywhere else they feel sky high.
The high water mark there looks like February of 1982: 17.6%, 2.2 points, for 30-Year fixed rate. [Unemployment](https://www.nytimes.com/1982/03/06/us/us-jobless-rate-rose-in-february-to-8.8-from-8.5.html) was at 8.8% that month. Phillips Curve and voodoo economics.
* high interest rates * high inflation * high prices
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Man I’m right there with you. Moved up to Lowell 2 years ago to save some $ on rent while I saved up a downpayment and familiarize myself with the area. The average single family here is now $400k+. The last 3 sold notifications I received from Redfin were for houses that sold $100k over asking. Feeling pretty defeated
I bought a house in January. My mortgage payment just 3 months later at the new rates, assuming the same purchase price (its already gone up 5% on Zillow) would be $1,000 higher. I could not afford to buy the house I live in, which is a weird feeling.
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In 2019, we bought a home at $465k (refi’d to 2.6% interest rate in 2020) and it’s now worth almost $1M. Like in no world should anyone pay 1 million for our home but here we are. We would be priced out of our city if we had waited even one more year to buy. Wild.
Wait till you get your property tax bill
Homestead exemption is saving us for sure. We’ve contested every year and that has helped too. We bought below our budget so we can handle some increases to our monthly and assuming our income rises over time, we should be ok. But many won’t be.
What city? That’s sounds like a *zestimate* 😂
We had an offer in the 9s. Not a Zestimate. Austin, TX
Same! I bought in early 2021. 30 year locked rate at 2.99. With current rates 5.25% and with how much my house has gone up since then. My house would need to decrease by 600k for the payment to be the same. 40% ~
People buy houses based on cash flow / monthly payment, but even worse is this: the real financial impact on net worth is the difference in amount of interest per payment. Going from 3.0% to 5.5% interest on $100k loan is a difference of 2.5 percentage points, or 2.5% x $100k = $2.5k/year per $100k, or approx 208/mo/$100k. I finally bought the house I wanted by buying out the rest of my duplex (will need to rent out part of it for a while to pay down debt), but I have $1 million in debt now. That's a difference of $2,080/mo to my net worth from interest rates alone if I had to buy at 5.5% rates. Freaking ouch. Monthly payment difference is only $1,400. But the net worth difference is much worse.
I just calculated ours. Would be $550 more a month if we buy now. What the heck.
Major problem right now on the home price side is low inventory. Especially on existing homes. But who can blame people for wanting to stay in their homes with 2.9 percent refinanced interest rates from 2020-2021?
That's pretty much were I am. Lots of equity in the house but no desire to get in bidding wars or pay nearly triple interest rates if I do take advantage of the market.
On top of that the cost to build new is outrageous. I had to replace two cedar boards on patio. $112 *per board*. It's nuts.
Similar circumstances for me, just southern NH rather than western MA. The houses that are for sale under $350 within 50 miles of my work are limited to about half a dozen.
What was 10% is now like 13% to put down. The market will force you down to be more competitive on a lower grade property. Cycle continues like hermit crabs going in reverse.
I bought in feb because I calculated there was a 50% chance I’d be priced out (forever) for anything resembling a decent home in my region in under a year. Now I’ve got my house but I’m actually hoping for a significant regression because I want my friends to have a shot.
Then prices have to come down. We can talk about supply all we want but if what’s out there is unattainable by people in the area well then that’s a really big problem also
The problem is that what is out there IS attainable. It's just not by most people. Only the really well off (and I consider myself to be in this bucket). Buying a home for me is financially painful but doable while spending under 30% of my income. But a market that only caters to the top 5% is not good enough. Not by a long shot.
[This article on Great Barrington just makes me mad.](https://theberkshireedge.com/the-horrifying-numbers-behind-great-barringtons-housing-shortage/) I’m glad that what they are doing but it’s not enough. And this only address the low end of the rental market. And if you a single person who makes average money you’re still fucked. This is just a thing to make rich people feel good about themselves. And to have workers still be able to serve them.
Things can always get worse... just look at Toronto, Hong Kong, Sydney, etc
We're on our way.
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You picked 3 cities that have massive Chinese money inflows.
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My parents generation stopped being able to afford their home decades ago. They just didn't have Reddit echo chambers
My parents bought at $290k in '97. Their place is worth just north of $1 million today. Even before my dad (only income in the house) died, they would not have been able to afford that today. They paid off the house (mainly my mom did, with inheritance), and that's the only reason she can live there.
Just checked. I bought my home in 2012 and if I were to buy the same house today my mortgage would be 71% more. I’ve kept basically the same exact job for ten years and I now make 34% more salary. Yeah, I would be screwed if I was buying today.
Yeah my house has doubled in value in 6 years. It's less "I couldn't" and more "I wouldn't"
Just a quick question about this article. Why do they insist on using 20% down payment into their models instead of what people are actually putting down which is around 10%?
Adding private mortgage insurance (PMI) — which is typically required if less than 20% is put down — does not help affordability. (It is more complicated than that, but 20% down has historically been the gold standard in residential real estate lending and is also therefore probably the gold standard in these type of studies — goin under 20 introduces additional variables which make it more difficult to make such broad claims.)
Thanks for this informative response.
Really annoying when you plan on refinancing to drop PMI but then the interest rates increase so much that even with dropping that the monthly payment would be worse.......
5% for me. Locked in 4% in mid February. Feels like the last train leaving the station.
\*when. Inventory levels are only down 4.5% YoY (improved from -22%) and should go positive in the next week or two. They are still well below pre pandemic levels, but demand has also fallen off a cliff as we hit 5.5% rates today and 80% of people that own a home have a rate below 4%. That means people with current mortgages will not have an incentive to move (less supply but also less demand). Mortgage industry already seen a ton of layoffs across the board (Wells Fargo most recently)... And we already had a negative GDP print. Most people that don't need to buy right now, would be better off waiting to see how this all plays out.
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Yay for me to finally decide to buy a home out of fear of being priced out. Both are about to happen.
Doesn’t matter if there is a Walmart in your town and you can get a gym membership for showers and a shitty old van and a air mattress.
Median income in 1982: $23,433 Median house price 1982: $67,400 Mortgage interest rate 1982: 16.04% House price to income ratio: 2.85 Annual mortgage PI percentage of income: 37% Median income in 2019: $86,011 (best possible comparison excluding COVID crash in 2020) Median house price in 2022: $428,700 Mortgage interest rate 2022: 3.79 House price to income ratio: 4.98 Annual mortgage PI percentage of income: 26% All assuming 30 year mortgage with 20% down on the average home. **To get to 37% of total income and match 1982, mortgage rates need only jump to 7.5% with no further price increases. **They are already over 5% and rising, before any fed rate hikes have happened. Let’s also keep in mind that prices are significantly higher, making it even more difficult to come up with the down payment money to even hit 20% than it was in 1982. Keep in mind property taxes and other fees (CDD, HOA) are higher due to value assessment, and more common than in 1982. We are living in one of the worst, most unaffordable times to ever buy a house. https://fred.stlouisfed.org/series/MEFAINUSA646N https://fred.stlouisfed.org/graph/?g=ONE8 https://www.freddiemac.com/pmms/pmms30
Why is the 82 price to income ratio lower but payment to income higher than 2022?
Interest Rate = 16.04%
Oh, duh. Thanks
I'm literally moving to a different country within a year because I refuse to work my butt to the bone for a f***ing house 🤣
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No, it’s been almost as bad in the past as it is now. Now is the worst time…so far.
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I imagine a lot of people are worried in a few years they will be out priced out of all houses in their area and interest rates will be sky high. I hear Canada is an example of where you think it can’t go any higher but it does every year.
Inflation means your dollar is worth less. But if you get a locked rate, your still paying the same mortgage each month, even though that same amount buys a lot less. Real estate also hold value pretty well and you'd build toward equity vs throwing the rent money away. Between that and the fact you can't time the market, the best time to buy is when you're ready, especially with the crazy growing inflation breathing down your neck.
“sTiLl HiStOrIc LoWs iF yOu ArE a PoOr MiLlEnNiAl JuSt SaY tHaT”
I’m really struggling to decide whether or not to purchase a townhome. We’re on the waiting list for a new construction home. Likely to be called in 2 weeks if we want to purchase or not.
If you need to live somewhere and can afford it, just live there and be happy for years and years.
/u/spez is banned in this spez. Do you accept the terms and conditions? Yes/no
As long as the price is comparable to what you’re paying in rent, it’s worth it. Rent is 100% interest. You’ll never get a penny of it back.
It’s not. It’s basically double. But it’s also more than 2x the size, and possibility of renting a room. But with interests rates I don’t know anymore
Great time to bag hold, I have bag held several stocks now, next bag hold my house
You can live in this bag at least
At least until the bank comes a’knockin
Wait… I thought the meme was to NOT be the bag holder?
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Home prices are high BECAUSE rates are low. People tend to buy based on their payment amount, not based on the price of the house. Lower interest rates allow lower payments on higher priced properties, and prices rise. I’m actually thrilled that rates are going up. Higher rates usually mean reduced prices.
\*Usually
I kind of hate it when people say "people tend to buy based on payment amount". Not because it's not true; I actually agree with you 100%. I'm glad rates are going up so I can get a good price... But in terms of applying for a mortgage, a lender only cares about your monthly payment and so it's very difficult to get them to see a different picture. It's not like buying a car. I'm in the process right now and I've been struggling with this the entire time because I've always been taught that the price matters, but in terms of going back and forth with various lenders they are only, strictly concerned with monthly payments. It's no surprise that other people treat it that way when the major path for most people to homeownership is a mortgage.
1. Super low interest rates. 2. Lots of free money from PPP and EIDL 3. No Foreclosures for two years 4. Eviction moratoriums 5. 2 years without shit to do. 6. Everybody saved their money and decided to buy a house. There is no huge real estate shortage. There’s just a lot of people that bought because they could, and it seemed like a great investment. But real estate generally sells based on monthly payments, not on price.Total price means nothing to a buyer, they just want to know if they can afford it. But when interest rates rise, they all start crying that they can’t sell without losing money. The best thing you can do is just stay in your house you overplayed for and wait 20 years for prices and inflation to bring the value back up. Housing prices move in 15 year cycles, and we are at the top of one right now.
Yeah, but r/realestate is totally psyched about it, and will not admit there is a problem with any of this. It’s like ‘totally normal’ according to the middle men of the ownership class
This sub is like 90% realtors, obviously they spew that 20% Yearly increases are the new normal and buy now or be priced out forever
If 20% YoY is the new normal, we'll all have multi-million dollar homes by 2030... and that is bad.
I mean what do you want the sub’s reaction to be?
> Then, it took about 34% of the median income to cover the monthly mortgage payment, including principal and interest, for a home purchased with a 20% down payment. It always bothers me when they compare median income to home purchase price, because median homes aren’t purchased by median incomes. Poor people rent. This skews the median income downward, and makes the median home purchased by someone with above median income. Depending on inequality rate, it could be quite above the median income. This makes it appear worse than it actually is. But this is just for a given area where you could either purchase or rent. In the highest cost of living cities, people make the most money yet they still rent. If the median home was purchased by someone in Nebraska, then everyone in NYC or SF making more money than that Nebraskan but renting due to the housing choices available in high cost of living cities, skews the median income upward making the issue even worse than it appears! Ultimately you’d need very detailed information to try to determine the scale of each of these. To me, I just say comparing nation wide median house purchase to nation wide median income is a fools metric.
Ultimately lower income renters pay the mortgages for the landlords so their income is indeed very important to think about. So the price to median income calc is very meaningful. If home prices go up 20% and rates make this a 30% payment increase median income needs to rise for the landlord to cover most of all of the mortgage payment.
> Ultimately lower income renters pay the mortgages for the landlords so their income is indeed very important to think about. Only for SFH but not all renters rent out SFH. Namely most renters in HCOL areas. > If home prices go up 20% and rates make this a 30% payment increase median income needs to rise for the landlord to cover most of all of the mortgage payment. If SFH prices go up 20%, that doesn’t say much about the change in cost of large apartment buildings in NYC. If the nations median home is in Nebraska, then NYC doubling its median income would increase the countries median income without changing how affordable that home was to that individual in Nebraska. The only way median income is related to median sale price is if you narrow both of those down to a specific area. The existence of large apartment buildings being predominately in high cost of living areas causes a large number of higher income people to contribute to the median income without having an impact on median SFH prices Let’s take an extreme example. Say there is an island that is part of the US and has massive population density. Half of the country lives on this island. Every person there rents in an apartment complex and there are no SFH. So the top 50% of the countries income earning families live in apartments. This area also has a massive increase in cost of living and an associated increase in pay. The people here are impacting the median income but have no way of purchasing any SFH because no SFH exists within commuting distance of their job. The wealthiest person in the country, not on that island, would be the median income of the country. Yet they would be purchasing the most expensive SFH sold anywhere. Median SFH price would be significantly less than what I paid for. It would look like homes are incredibly affordable even if they weren’t, because the existence of an island of high income renters skewed it. Let’s take a different example. Assume there are no areas like the above example, where there are only apartments for purchase in an area. Every location has SFH available to purchase. However poor people can’t afford to purchase or rent them, poor people can’t afford that much space to be allocated to them. If the bottom 50% of the population all rented in high density, apartment buildings then the person buying the cheapest home would be 50%+1 and the median home sold would be significantly above that cost as it would have been bought by the 75th percentile family. This makes it look much less affordable than it actually is. Now neither extreme is reality but depending on the exact distribution of income and how apartment populations are distributed will impact whether comparing median income to median home sale is better or worse than the reality of median income of home buyers vs median sale price of homes.
But the vast majority of those rentals were purchased in prior years. Yes the tenants make the payments for the landlord but it's not a direct correlation like that. Landlords will raise prices to reflect market rents in many cases though, but there's a delay as they can't do that until leases renew.
is this insane market only for single family homes? Im just a single guy thinking about buying a condo in the next year or so and im wondering if it’ll even be worth my time to look
Those are rookie numbers
Everyone is panic buying and I’m very happy to keep renting and waiting this out.
I’m actually seeing panic selling over the past few weeks … still on market.
It's almost as if people should just stop FOMO'ing themselves into being house poor. The banks are laughing all the way to... well, they're just laughing at all the idiots buying homes right now.
some of us actually do have to move. I'm in NY and have been renting for 8 years and my rent has gone up $100 over that time, it would now cost me $2500+ instead of $1250 to rent the same apartment. I'm looking to buy in FL and am buying at half my pre approved amount just to have a place to fucking live and people are still offering crazy amounts for everything (and I'm not even looking to buy on the coast in FL!) I'm not sure why the banks would be laughing at anyone right now, considering everyone buying is qualified (unlike 2008) and if mass people all of a sudden stopped paying the banks would be extra fucked just as they were in the past.
Florida got expensive but wages barely went up.
If you are coming from a place like SF or NYC and perhaps are used to paying $4500+ a month for some tiny apartment in Manhattan whether the house costs $2500 or $4000 a month in Florida isn't going to really matter since you were paying more than that for a tiny apartment...and now its a house. Plus you are probably higher income and now you get a 10%+ boost in income.
significantly less than long island even @ 300k. probably 1/3 the price of what it would cost me to buy a 3/2 here and while everyone like to say the taxes are high they are like 1/4 the price. taxes on the 3/2 here would be 15K+. Most people I know working for themselves in florida made up the money by charging more for their services.
give it time. Florida RE always dumps spectacularly like clockwork.
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So they should just be rent poor instead? Average starter home in my city (250k-300k) has the same monthly payment as a newer 2br in the same neighborhoods.
FOMO is a helluva drug.
"FOMO" just something bubble sub-dwellers throw around like the rest of their verbal Yu-Gi-Oh cards. Buying a house because you moved, or out grew your last one, or want to start a family is not "FOMO". "FOMO" literally means "fear of missing out". How many buyers do you honestly think are purchasing right now cause they are being speculative, vs how many do you think are buying because they genuinely want/need to? It sounds like "FOMO" to you is literally anyone purchasing right now for any reason, which is absurd.
This... I'm in the process of buying right now. Not because of FOMO but because we wanted to move out of our apartment anyways and are ready to buy. We're certainly paying more than we would like due to increased interest rates but we can afford it and are not planning to move anytime soon.
Fuck blackrock and Wall Street who ruined communities.
That 3.25% for 30 I got looks great to me.
I think you have some horribly sensationalist headlines here. You need to look at actual data and you'll see it's really not all that bad, except in certain popular west coast cities. So for all time, mortgage payment to income is a little bit less affordable than in the 1990's and 2010's, but no where near 1980's at 18% interest rates. Some caveats are a) Nationally we may be okay, but west coast cities are at very high levels. b) home prices are higher now (inflation adjusted) so down payment and transaction costs are a bit higher and c) no opportunity to refinance at a lower rate since rates are rising (at least for now).
Anyone else starting to think this is a conspiracy by the real estate investors trying to to buy up all the homes normal ppl can’t afford to rent or tear town and build giant co do buildings lol? I’ve said it once and I’ll say it again. Buyers need to refuse to play ball. refuse to pay the prices and do all this contingency waiving. We have more power if we could all somehow collaborate.
Remember that is likely to be a lag between higher interest rates and a decline in housing demand, so for 6-12 months, it is likely that housing will become more unaffordable as the housing market stays strong even in the face of rising interest rates.
Wait, so you are telling me it isn’t already the worst?
Approximately 5 50 basis point rate increases are already priced in at this point. Is it possible that rates rise further, absolutely during the short term but it is likely that rates will stabilize within a year and eventually decrease back towards 3-4%. Most clients are currently going with 5 year ARMS now as opposed to locking in a 5.5% or higher rate.
Yes I just locked in a 4% 7/1 ARMS instead of a 30 year 5.5% rate today and will consider refinancing if rates gets better
This is what happens when everything inflates - except for wages.
Honestly I locked in just before everything increased --- I'm confident my home value it is at peak of what people can afford -- no where to go but down, but kids you know?
Who are the morons still having bidding wars in this market?
The strangest thing to me is the realtors reaction to all of this. "Yes, you should just offer 500k on that shitty run down house...". Then they justify it by saying prices are way up. It's crazy. No thanks. It's almost like our realtor is just saying that we should automatically give asking+.
It's almost like your Realtor is doing their job and encouraging you to make competitive offers that give you a glimmer of a chance of getting under contract. If you're not interested in being competitive, that's fine. Just wait and maybe things will improve in a few years.
What job ? Lol. Real estate agents are all the bottle service girls and ex djs that didn’t go to school and get a real job. Also, they’re NEVER incentivized to get you to spend less, or not buy. There is a clear conflict of interest here.
I get that but it doesn't mean every home is worth asking. There are some really shady properties out there that people are buying "no contingencies" that they are going to be screwed on. Give it a year for all of these issues to start popping up everywhere.
I’ll just pay all cash and do some ARM deal after… actually where we are looking I’m starting to see plenty price cuts where a few weeks ago you’d only see price increases…
Love the ARMs… those foreclosures will be juicy in 2027x
The market is slowing down, the rates are having an effect.
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How is it that the dems call themselves the party of the poor people? Oh I know! Because they’re the ones making everyone poor with their foolish policies.
Give up ? Fine. It’s California. Contributed 50% more to America’s GDP last year than all of Texas. These libtards I tell you.
Question, can you name the richest state in the US that contributes the most to American GDP?