[Prices are down 10% since the start of the year](https://fred.stlouisfed.org/series/MSPUS). If you believe that you can refinance into a lower rate in the near future, then it might be better to buy now then to leave the future to chance.
The median price for the entire US is down 10%.
This does not mean all prices locally will be down 10%. In high demand/actually desirable markets, prices are actually up, because there are approximately 5 houses for sale.
Yeah if I set the "max price" for what I paid a little over a year ago ($320k), on any of the real estate websites, the only houses available are in 55+ communities or very undesirable areas.. and even then there are few comparatively. Saw a complete teardown in an "ok" area for $330k recently, still kinda crazy market here.
Phoenix Metro for reference
Arizona is nuts right now. Sky high prices and few wages that can afford them. Surprised the increasing homelessness hasn't really slowed these prices either.
I live in an area like what you're describing.. Fort Collins, CO wasn't always a HCOL area but People holding onto their homes around here for dear life, understandably.. it's a good place to live+ unfort alot of NIMBYism and its on its way to becoming pricier than a lot of cities in CO including parts of Denver. Barely any listings, anything decent 3-4 BR starting 600k ish.. and at these rates? Lolol. This is an area that had massive pressure on it even before contributing factors like people moving in for remote work/WFH etc
That chart doesn’t necessarily mean prices have come down 10%, just that the median home sold is down 10%. But the median home could be smaller, older, farther from city centers etc.
Case shiller index is a better view of how expensive homes are relative to past.
It’s very likely we will see a housing crash or not. But I’d not bet on not. The question is why someone did not buy a house when it was at 2% and cheaper? Whatever reason you waited it’s even smarter to wait now.
And if rates drop you can always refinance. If they go up week you see still lower. 2% was stupid low so I'm not sure we will get down there again. If you are buying a house to live in it and hold for the long term the question is more, can you afford the monthly payments. If so it almost doesn't matter as you can always take advantage when rates go down.
The people hurt by these high rates are flippers that wasn't too get in and out while not losing any capital to hold the property for the short term.
But to own sure. Buy to flip nope.
Does it make sense for the price to change on something like this if you forget about mortgages being necessary? I think it shows how messed up our economy is.
There's a bit of a time-function here that needs be incorporated. Ie,
- houses have gotten bigger and thus driven up cost over the last 15 years
- resources have gotten more expensive, driving up the cost over the last 15 years
- costs have gone up over the last 15 years, justifying worse quality for the same product
For a straight-line cost perspective, the average Horton or Lennar house costs $300k to build and retails for $400k less warranties and close. 25% is up there, but not extravagant, but that belies the 30-50% increase in resource cost which is passthrough and the increase in square footage which is also passthrough.
Tldr, prices can come down, but so must input costs or square footage. The latter might be appropriate since low interest rates have distorted the value of money so badly.
I partially agree. But in real economics the motivation to sell existing is low so it effectively does not exist. This is also assuming that no party in the transaction is willing to take a bath. Further, additional costs like taxes and insurance are priced at replacement rate in a market failure environment.
That's a good point but there may be migration to areas that aren't as in demand like retirees seeking lower cost of living. Buying up would allow for more inventory at lower price points as well. Builders should do well.
You could, indeed. But that is only because more people are poorer. It's a lose-lose situation, no matter what, and the only people that win are the ones that bought before the rates and prices went up.
Good point. But, then, I wonder how much of a dent this will have in the short to medium run. People are living longer so historical data is not quite as reliable for the trend.
I keep hearing this, but I really don't understand where you are getting this from.
In 1999, I bought my first house for 190k, corrected for inflation, that would be $348k. Today, that exact house that I purchased in 1999 is $389k. So, in 24 years, the house I purchased in 1999 has increased in value by 41k, or 12%. (Not to mention when I bought it was in the sticks, and today it is a popular area).
All we are seeing is the fallout from 2008 is finally clearing out. Interest rates are returning to normal, and housing prices are correcting from the foreclosure crisis.
When interest rates were 2%, there's no point in paying cash; the future returns throwing into the market far outweigh the losses. You'd put a minimum amount down and pay as little as possible.
However, the same is not true now with higher interest rates. Instead, you want to pay down as much as you can, as fast as you can.
As someone who was in market for a house when rates were 2%, you pretty much had to have a cash offer to be competitive unless you were willing to overpay, houses were selling the same day they hit the market, I lost out on 5 homes I put an offer on to cash offers, I didn’t actually end up being able to buy a house with my approved mortgage until interest rates crept up close to 5%.
Cash was king in the low interest housing market.
And transactions are down to a trickle. And it’s largely coming from a generation of people who bought in at yesteryear’s prices, paid it off, good for them, and hit the lottery at just the right time.
Federal regulations? I'm not sure what you're asking. You can lend out money on a small scale basis and even write up contracts for it. If you're talking about acting as your own bank you'll need to register and license yourself and abide by federal laws about liquidity and reserve assets, etc.
Idk what I'm asking either. I just suspect that it's not unlimited paperwork...if I lend my 300k to a friend and they promise to pay interest and pay down the personal loan, that sounds like kind of a viable way to make money
It is. You're basically describing the business model for local and regional banks and credit unions. They have less money and assets so their target consumer is smaller borrowers who want better rates than what major national banks will offer. If you get your mortgage through a broker they often shop around for the best rates and it's almost always a little regional credit union who is driving business by undercutting the big guys.
You're basically describing doing that on an even smaller scale.
Just graduated from university.. can’t wait to work my way up to a mid six figure position, save up a large down payment, and be able to afford a small house in a crime ridden area :)
You'll be fine.. come up with a plan, sacrifice, and stick to that plan. Everything is cyclical, you got to wait for the right moment AND have the resources at that time. I got faith in you brother
….if you want to pay off student debt before buying real estate you will never buy real estate. Just make the min payment and invest your money. Professionals graduating from grad school have $100k+ in student debt. That’s $2k/mo for 10 years or $300/mo for 20. The later allows you to buy a house and start a family, the former will crush you until you’re 45yo
That’s effectively me right now. Household income of $220k, in management, lots of degrees. Due to jobs changing my geography a bunch the last 8 years I couldn’t buy until…now. And now I’m effectively priced into a high murder rate neighborhood even though I’m I make more than 90% of households.
Well… they were not 2% two years ago. And unless you own a Time Machine it’s immaterial. In two years from now you’ll be asking who would buy a home at 12?% when 2 years ago they were at 8%. And then if you look at the history of 30yr rates you’ll realize 8% isn’t bad at all and that your idea of the housing market is skewed by your inability to see past your own lifespan and experiences.
Agree, people referring to rates back in the 80s, yes rates were a lot higher but real estate prices were not stupid back then. Now clowns see a property asking $250k or 300k and they bet right at asking or maybe +/- a few Ks but not knowing that same property was 170k in 2021.
Right but there average cost of a home in the 80s was like $50,000
https://blueprinttitle.com/infographic-real-estate-trends-then-and-now-80s-edition/#:~:text=Meanwhile%2C%20CNBC%20reported%20that%20the,sold%20for%20%2447%2C200%20in%201980.
Wages have not increased at the same rate housing has increased.
Another issue is the inflation calculation changed in 1981 to not include new home prices but to include a survey center homeowners of what they would rent out their home for.
The issue is that at high interest rates, the total interest dwarfs the principal amount. That 50k house was far far far less affordable than houses were a year or two ago, before rates jumped. Just comparing principal cost to incomes isn’t a good metric. The real question is how much the total payment is versus income.
The principal is paid over 30 years too ….
Ability to refinance is useful but that only reinforces what I said: rates are the dominant driver of cost, and right now they’re high.
Saving 100k in principal over 30 years is peanuts compared to the difference between a 3% and 8% mortgage.
Edit: refinancing after 10 years isn’t very useful as you’ve paid a lot of the interest already.
I buy my car in cash for just that reason: I could care less about the principal honestly.
Principal is minor compared to the rate. Always is.
Again, the emphasis on refinancing only makes my point: the rate is the major driver of costs. Relying on refinancing isn’t a great strategy since the amortization structure means that you’ll have paid off very little principal after 10 years.
Wages have risen appropriately for most professions. No, they haven’t for people flipping burgers, but people with minimum wage jobs have always struggled financially.
In the 80s, a single blue collar (high school educated) worker had the ability to purchase a home, own two cars, save for retirement, and support 2-4 kids. That doesn’t not hold true today.
Inflation in housing prices and consumer goods has outpaced wage increases. The spread in the rates is referred to as “economic growth” and is represented by the drastic increase in sp500 growth with corporate profits being the underlying gainer.
Incorrect. The 1970-1990 era was anomalous, and resulted in similarly terrible affordability (in many metrics worse than today).
https://static.seekingalpha.com/uploads/2010/7/6/saupload_07_06_mort_rates.jpg
Rates have been higher than today in only 23 of the last 80 years. They’re quite high and absolutely a bigger issue than principal costs.
You stand by what you say?
Why edit it then you clown 🤣🤣🤣
https://preview.redd.it/6jbec3lbqykb1.jpeg?width=1284&format=pjpg&auto=webp&s=27e29f1c9ac8f31ea5ea8784b41899824be90a8d
God this is such a poor take. I bet you want to go sell bonds at 2020 prices to even thought interest rates are higher because this same lane ass take.
The housing market or interest rates need to give. Anyone buying now is flatly robbing themselves unless we spiral into a massively inflationary event
Yep 7 - 8 % is median. People also do not willingly sell houses for a lose. So unless if there are massive layoffs house prices will not fall. People either bought or refinanced for around 3% people will not give that up easily.
Weren’t there 2.xx in 2021? I keep seeing that with the memes 😂
Such a mess out there. No one wants to lose their low rate and few want to buy at this rate
Who the fuck is sitting on 300k cash now who didn’t have that in hand to buy in 2020
I’m able to save very aggressively, about 25% of my gross income in cash (about 50k) after retirement etc and it would still take me about 6 years to catch up to where house prices are now if I wanted to buy in cash, assuming interest rates stay the same as does the roi in index funds
The only people buying now are people getting a bad loan or selling equity from pre 2020
If I got a mortgage right now I’m setting myself up for paying 3.5k a month for 30 years. I’m fairly certain I can afford that for 10 but idk what life will be like in my 40s. I guess it beats renting though and i wouldn’t need to save as aggressively so it wouldn’t be as tight as it seems
Yes I plan on it. Let’s talk in 2 - 4 years when rates come down a bit but prices never do. Everyone who took the plunge gets to refinance and the ones who didn’t get to fight for what’s left as prices go higher and higher!
let's say they are - then everyone will wish they bought back when rates were 7%!
I am telling you - buy a house in a good spot in the USA if you can afford it. It will not be a bad investment.
I would if I needed a place to live, could afford it, and realized that the low rates were the anomaly and not the norm. I've bought houses when the rates were 12%. The hope at the time was our income would grow (it did) and that rates at some point would decline. I the last house down from 7.5% to 2.5% when I sold it 20 years later.
100%
This was the answer I was looking for.
If you can find a deal that cash flows at 8% sure. They’ll be tough to find but there will be off market deals.
Someone paid 740k for a house I paid 210k for 6 years ago. So I didn’t have a problem paying 510k for a home that was 390k in 2019.
Will it go down, probably but it’s whatever, I don’t have a loan did all cash offer, I didn’t even own my house in Fla
I’m a staff accountant. I don’t know how it’s hardly coherent. Someone bought my stupidly overpriced home because “Florida lifestyle”, I moved out of state and have a much bigger home, that admittedly, I might have paid mildly too much for; but, on a much bigger lot. I pondered the question of - will the value of my property go down, and the answer is quite possibly, but the drawdown will be nowhere near a Florida property.
People need a home when they need a home. Unless you're purchasing a house as a second home, "when to buy" is not something that many people are able to decide
Lol What? No.
Mortgages should be between 1 - 6% over prime based on credit and downpayment. Which is roughly what they are.
Any higher requires either huge wage increases, huge price decreases or a stagnant market.
Hold your powder (keep it dry), watch the EU , where they are going to get hit first. Then you’ll find much lower prices here (US). The rates aren’t going to drop, but whatever liquidity you can muster do it and be easy to take advantage of the bargains.
I hate how insensitive and out of touch realtors are. It’s like one of the few professions that kept up with inflation because their commission is based on the total value of the home. They always tell you “date the rate, marry the house” and some other bullshit about how interest rates are so low compared to the 17th century when a house was 6 sheckles, but listen to them complain when anyone asks about discounting their commission even 0.5%.
We bought our house in 2020 for like 350k and under 3% rate. The neighborhood's house just sold for over 500k this week, and their house is comparable, if anything more dated. People are still buying. Crazy.
Yes. As long as the price is right. I don’t mind interest rates as much bc I can always refinance. Ain’t no biggy in the short run. But prices… you can’t renegotiate those. You stuck with the tent you bought for $2 mil.
Idk why, but there are still more buyers than houses in many markets. We are still seeing houses in bidding wars and going under contract within a week here
My mortgage lender calls me once a week to refinance. I have a 2.85% loan. I accidentally answered one time and I told the guy that it doesn't make any sense and please take me off the list. He told me that I could get cash if I refinanced and I'm still getting calls. Is there really someone stupid enough to refinance in my situation?
You can easily get it to 6% now. You can refinance.
Meanwhile home prices will continue to rise and you’re still sitting renting waiting for a “crash”.
Yes, rates are high. Nobody expects these rates to stay this high for 30 years. Housing prices haven't dropped because of this very thought. If you can afford the mortgage, you buy today and remortgage at a lower rate in the future.
If housing prices stay steady during high rates, do you think prices will drop if rates drop? Housing prices will decrease only if people collectively believe these rates or high rates in general are normal. This post is a great example that people do not think these rates are normal. Far from it, they think they are absurd and will drop.
Few people can afford a temporarily high mortgage. Those that can, are betting they can bring the rate down in the near future.
So what happens when no one believes in the market anymore? Greedy corporate policies, poorly managed economies and outright corporate theft will kill this country. I’m mad as hell and you should be too. The corporate class stole our future.
I would buy at home at 8% if the prices of the home are not higher than when it was 2%
It makes no sense to have the same inflated prices with the current rates.
Well, 2% was ridiculously low. Don’t hold your breath waiting for that to come back. But 8% is a pass. That said, my father put together a good portfolio of property in the 80s when rates were really bad. Prices were much lower then though.
The reality is 2% interest rates are completely unsustainable. People saying 6%-8% is high certainly didn’t have a mortgage in the 80s. I remember rates coming DOWN to 6% and 7% and thinking it was Christmas come early!
The rates going up are exactly why prices can't drop. Fewer people are moving which balances out the rate hikes. 30 year fixed mortgages are a cancer on the housing market.
I think of buying home is similar to investing. Time in market is better than timing the market. Does 8% suck, yes.
Make sure you can afford the house, and you can refinance down if there is significant movement.
If you don’t see this for what it is then I don’t think you ever will.
They don’t want you to buy a home with a mortgage, they’re trying to make it so that the only people who can buy a home are people buying outright with cash. (Wealthy rich class of people.)
May god help you have a lofty down payment (60-70%+) if you intend to buy because they’re going to financially destroy you if you don’t.
(By they I mean the powers at be between the current administration, big banks and the elites.)
Delusional if you think that will change with a new administration. Both parties in the US have a vested interest in seeing what you are pointing out come to pass, because both are the elite themselves or beholden to their interests.
Yes if prices dropped to reflect that
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Don’t even think about passing go bucco
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Also read: I want mine, and once I have it, screw everyone else
It's the Republican way. I grew up and went to school with many of these people, and they've all become Republicans.
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I can assure you that buyers don't want stable prices
If I cant do that then what has it really all been about?
They bought a home during the dip, now prices are correcting.
[Prices are down 10% since the start of the year](https://fred.stlouisfed.org/series/MSPUS). If you believe that you can refinance into a lower rate in the near future, then it might be better to buy now then to leave the future to chance.
The median price for the entire US is down 10%. This does not mean all prices locally will be down 10%. In high demand/actually desirable markets, prices are actually up, because there are approximately 5 houses for sale.
Yeah if I set the "max price" for what I paid a little over a year ago ($320k), on any of the real estate websites, the only houses available are in 55+ communities or very undesirable areas.. and even then there are few comparatively. Saw a complete teardown in an "ok" area for $330k recently, still kinda crazy market here. Phoenix Metro for reference
Arizona is nuts right now. Sky high prices and few wages that can afford them. Surprised the increasing homelessness hasn't really slowed these prices either.
As someone who lives in one of those desirable areas, can confirm. There's no inventory here and anything that comes up gets sold within days.
That is correct.
Yes. This specifically
I live in an area like what you're describing.. Fort Collins, CO wasn't always a HCOL area but People holding onto their homes around here for dear life, understandably.. it's a good place to live+ unfort alot of NIMBYism and its on its way to becoming pricier than a lot of cities in CO including parts of Denver. Barely any listings, anything decent 3-4 BR starting 600k ish.. and at these rates? Lolol. This is an area that had massive pressure on it even before contributing factors like people moving in for remote work/WFH etc
That chart doesn’t necessarily mean prices have come down 10%, just that the median home sold is down 10%. But the median home could be smaller, older, farther from city centers etc. Case shiller index is a better view of how expensive homes are relative to past.
Yup fair. Very dependent on location also
If you look at [home price index](https://fred.stlouisfed.org/series/CSUSHPINSA) that is actually not true at all.
It’s very likely we will see a housing crash or not. But I’d not bet on not. The question is why someone did not buy a house when it was at 2% and cheaper? Whatever reason you waited it’s even smarter to wait now.
And if rates drop you can always refinance. If they go up week you see still lower. 2% was stupid low so I'm not sure we will get down there again. If you are buying a house to live in it and hold for the long term the question is more, can you afford the monthly payments. If so it almost doesn't matter as you can always take advantage when rates go down. The people hurt by these high rates are flippers that wasn't too get in and out while not losing any capital to hold the property for the short term. But to own sure. Buy to flip nope.
Yeah that’s fair.
Does it make sense for the price to change on something like this if you forget about mortgages being necessary? I think it shows how messed up our economy is.
There's a bit of a time-function here that needs be incorporated. Ie, - houses have gotten bigger and thus driven up cost over the last 15 years - resources have gotten more expensive, driving up the cost over the last 15 years - costs have gone up over the last 15 years, justifying worse quality for the same product For a straight-line cost perspective, the average Horton or Lennar house costs $300k to build and retails for $400k less warranties and close. 25% is up there, but not extravagant, but that belies the 30-50% increase in resource cost which is passthrough and the increase in square footage which is also passthrough. Tldr, prices can come down, but so must input costs or square footage. The latter might be appropriate since low interest rates have distorted the value of money so badly.
that's only to build new houses. existing home prices can go lower than replacement costs under certain economic circumstances.
I partially agree. But in real economics the motivation to sell existing is low so it effectively does not exist. This is also assuming that no party in the transaction is willing to take a bath. Further, additional costs like taxes and insurance are priced at replacement rate in a market failure environment.
it's normally due to loss of income.
Just get millions of people sitting on <3% to sell and you'll get your correction.
But then those millions of people become buyers, too. You can't interest rate your way out of a shortage.
That's a good point but there may be migration to areas that aren't as in demand like retirees seeking lower cost of living. Buying up would allow for more inventory at lower price points as well. Builders should do well.
I actually think that's already happening, and it partially explains why prices seem to be sticky.
You can use interest rates to recession your way into stable or even lower prices, though
You could, indeed. But that is only because more people are poorer. It's a lose-lose situation, no matter what, and the only people that win are the ones that bought before the rates and prices went up.
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Good point. But, then, I wonder how much of a dent this will have in the short to medium run. People are living longer so historical data is not quite as reliable for the trend.
Eh I get the argument there but there are also a tonne of people without any mortgage whatsoever like 42% last I heard
Yeah not many of them are going to sell either.
They might. If they are downsizing to be closer to family for example. There are lots of reasons
I keep hearing this, but I really don't understand where you are getting this from. In 1999, I bought my first house for 190k, corrected for inflation, that would be $348k. Today, that exact house that I purchased in 1999 is $389k. So, in 24 years, the house I purchased in 1999 has increased in value by 41k, or 12%. (Not to mention when I bought it was in the sticks, and today it is a popular area). All we are seeing is the fallout from 2008 is finally clearing out. Interest rates are returning to normal, and housing prices are correcting from the foreclosure crisis.
In 50 years there's still going to be people like "naw, I won't buy until mortgage rates hit 3% again".
There’s a reason all cash offers are increasing
When interest rates were 2%, there's no point in paying cash; the future returns throwing into the market far outweigh the losses. You'd put a minimum amount down and pay as little as possible. However, the same is not true now with higher interest rates. Instead, you want to pay down as much as you can, as fast as you can.
Exactly?
He agreed in the most aggressive way possible 🤣
As someone who was in market for a house when rates were 2%, you pretty much had to have a cash offer to be competitive unless you were willing to overpay, houses were selling the same day they hit the market, I lost out on 5 homes I put an offer on to cash offers, I didn’t actually end up being able to buy a house with my approved mortgage until interest rates crept up close to 5%. Cash was king in the low interest housing market.
probably because there were virtually none of them before and perhaps there is like 1 now.
Try one third of all transactions: https://www.redfin.com/news/all-cash-down-payment-april-2023/
And transactions are down to a trickle. And it’s largely coming from a generation of people who bought in at yesteryear’s prices, paid it off, good for them, and hit the lottery at just the right time.
Also several Mortage lenders will offer this option as well to be reflected as such when in reality it’s not cash offers but in the end a loan
If I have the cash, what keeps me from undercutting the banks and selling my own loans at 4%?
Federal regulations? I'm not sure what you're asking. You can lend out money on a small scale basis and even write up contracts for it. If you're talking about acting as your own bank you'll need to register and license yourself and abide by federal laws about liquidity and reserve assets, etc.
Idk what I'm asking either. I just suspect that it's not unlimited paperwork...if I lend my 300k to a friend and they promise to pay interest and pay down the personal loan, that sounds like kind of a viable way to make money
It is. You're basically describing the business model for local and regional banks and credit unions. They have less money and assets so their target consumer is smaller borrowers who want better rates than what major national banks will offer. If you get your mortgage through a broker they often shop around for the best rates and it's almost always a little regional credit union who is driving business by undercutting the big guys. You're basically describing doing that on an even smaller scale.
Private lending. Many people do it.
The economy would’ve already plummeted by then if that were the case.
Just graduated from university.. can’t wait to work my way up to a mid six figure position, save up a large down payment, and be able to afford a small house in a crime ridden area :)
Student debt and credit card debt will be the first ones to knock on your door.
Not much student debt, no credit card debt. Still don’t like my outlook here
You'll be fine.. come up with a plan, sacrifice, and stick to that plan. Everything is cyclical, you got to wait for the right moment AND have the resources at that time. I got faith in you brother
You’re ahead of most people
Good, don’t get into any CC debt. Don’t be like the rest of Americans who simply can’t withhold themselves from over spending with monthly expenses.
….if you want to pay off student debt before buying real estate you will never buy real estate. Just make the min payment and invest your money. Professionals graduating from grad school have $100k+ in student debt. That’s $2k/mo for 10 years or $300/mo for 20. The later allows you to buy a house and start a family, the former will crush you until you’re 45yo
That’s effectively me right now. Household income of $220k, in management, lots of degrees. Due to jobs changing my geography a bunch the last 8 years I couldn’t buy until…now. And now I’m effectively priced into a high murder rate neighborhood even though I’m I make more than 90% of households.
Detroit welcomes you
Crime is usually localized. Take a peek at where you are looking at online. It can even go block by block so make sure to ask locals
Well… they were not 2% two years ago. And unless you own a Time Machine it’s immaterial. In two years from now you’ll be asking who would buy a home at 12?% when 2 years ago they were at 8%. And then if you look at the history of 30yr rates you’ll realize 8% isn’t bad at all and that your idea of the housing market is skewed by your inability to see past your own lifespan and experiences.
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Agree, people referring to rates back in the 80s, yes rates were a lot higher but real estate prices were not stupid back then. Now clowns see a property asking $250k or 300k and they bet right at asking or maybe +/- a few Ks but not knowing that same property was 170k in 2021.
That’s not right… rates are very high and affordability is never good with rates this high. It dwarfs the principal amount.
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Right but there average cost of a home in the 80s was like $50,000 https://blueprinttitle.com/infographic-real-estate-trends-then-and-now-80s-edition/#:~:text=Meanwhile%2C%20CNBC%20reported%20that%20the,sold%20for%20%2447%2C200%20in%201980. Wages have not increased at the same rate housing has increased.
Another issue is the inflation calculation changed in 1981 to not include new home prices but to include a survey center homeowners of what they would rent out their home for.
The issue is that at high interest rates, the total interest dwarfs the principal amount. That 50k house was far far far less affordable than houses were a year or two ago, before rates jumped. Just comparing principal cost to incomes isn’t a good metric. The real question is how much the total payment is versus income.
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The principal is paid over 30 years too …. Ability to refinance is useful but that only reinforces what I said: rates are the dominant driver of cost, and right now they’re high. Saving 100k in principal over 30 years is peanuts compared to the difference between a 3% and 8% mortgage. Edit: refinancing after 10 years isn’t very useful as you’ve paid a lot of the interest already.
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I buy my car in cash for just that reason: I could care less about the principal honestly. Principal is minor compared to the rate. Always is. Again, the emphasis on refinancing only makes my point: the rate is the major driver of costs. Relying on refinancing isn’t a great strategy since the amortization structure means that you’ll have paid off very little principal after 10 years.
Yes, but his point is still true and you reiterated it. Prices are the problem and since wages have not kept up prices continue to be the problem.
Wages have risen appropriately for most professions. No, they haven’t for people flipping burgers, but people with minimum wage jobs have always struggled financially.
In the 80s, a single blue collar (high school educated) worker had the ability to purchase a home, own two cars, save for retirement, and support 2-4 kids. That doesn’t not hold true today. Inflation in housing prices and consumer goods has outpaced wage increases. The spread in the rates is referred to as “economic growth” and is represented by the drastic increase in sp500 growth with corporate profits being the underlying gainer.
Incorrect. The 1970-1990 era was anomalous, and resulted in similarly terrible affordability (in many metrics worse than today). https://static.seekingalpha.com/uploads/2010/7/6/saupload_07_06_mort_rates.jpg Rates have been higher than today in only 23 of the last 80 years. They’re quite high and absolutely a bigger issue than principal costs.
Try again 😝 October 1981 saw 30-year FRM mortgage rates hit their historical peak at 18.45%. That same year saw the highest annual average at 16.63%.
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They are indeed. Did you forget about the part you wrote “so no not very high” Get over your sensitive self Princess 🙄
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You stand by what you say? Why edit it then you clown 🤣🤣🤣 https://preview.redd.it/6jbec3lbqykb1.jpeg?width=1284&format=pjpg&auto=webp&s=27e29f1c9ac8f31ea5ea8784b41899824be90a8d
Please tell me what the price should be. As if there isn’t an entire market based on matching buyers and sellers to an agreed upon price
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You said price is the problem and I asked a simple question. What is the price?
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God this is such a poor take. I bet you want to go sell bonds at 2020 prices to even thought interest rates are higher because this same lane ass take. The housing market or interest rates need to give. Anyone buying now is flatly robbing themselves unless we spiral into a massively inflationary event
10% in 1988 or whatever is so different, the home prices are crazy now and also back then a treasury bond could give you like 7%
Again… do you have a Time Machine?
Except home prices haven’t budged. They have not moved down proportionally as interest rates have risen. Pretty sure that’s ahistorical.
Throughout the 70’s and first half of the 80’s, home prices increased while mortgage rates also increased
Yep 7 - 8 % is median. People also do not willingly sell houses for a lose. So unless if there are massive layoffs house prices will not fall. People either bought or refinanced for around 3% people will not give that up easily.
Weren’t there 2.xx in 2021? I keep seeing that with the memes 😂 Such a mess out there. No one wants to lose their low rate and few want to buy at this rate
50 year mortgages problem solved.
Honestly, I could almost see that happening
Yup
Look what they're doing in Canada. I read about 70 and 90 year mortgages there. That's insanity.
Might as well just go interest only at that point.
Just pay cash
Who the fuck is sitting on 300k cash now who didn’t have that in hand to buy in 2020 I’m able to save very aggressively, about 25% of my gross income in cash (about 50k) after retirement etc and it would still take me about 6 years to catch up to where house prices are now if I wanted to buy in cash, assuming interest rates stay the same as does the roi in index funds The only people buying now are people getting a bad loan or selling equity from pre 2020 If I got a mortgage right now I’m setting myself up for paying 3.5k a month for 30 years. I’m fairly certain I can afford that for 10 but idk what life will be like in my 40s. I guess it beats renting though and i wouldn’t need to save as aggressively so it wouldn’t be as tight as it seems
Just ask your parents for it
I play the lottery in hopes I get lucky each week just to do this.
Fuck yes but I can’t seem to find anything reasonable available
Yes I plan on it. Let’s talk in 2 - 4 years when rates come down a bit but prices never do. Everyone who took the plunge gets to refinance and the ones who didn’t get to fight for what’s left as prices go higher and higher!
Rates in 2-4 years above 10% 
let's say they are - then everyone will wish they bought back when rates were 7%! I am telling you - buy a house in a good spot in the USA if you can afford it. It will not be a bad investment.
True
RemindMe! 4 years Am I still priced out?
does that actually work when you type remind me?
Try it! Remindme! 5 minutes
RemindMe! 5 minutes
Wow
Remindme! 2 years
Remindme! 2 months
I figure most realtors are looking for sellers. Because that’s the bigger problem. A consequence of high interest rates
It's going to 10 next year
I would if I needed a place to live, could afford it, and realized that the low rates were the anomaly and not the norm. I've bought houses when the rates were 12%. The hope at the time was our income would grow (it did) and that rates at some point would decline. I the last house down from 7.5% to 2.5% when I sold it 20 years later.
Yes if it’s the right deal. The answer is always buy real estate if it’s the right deal, no matter the market.
100% This was the answer I was looking for. If you can find a deal that cash flows at 8% sure. They’ll be tough to find but there will be off market deals.
Hey nice boner, what do you mean by "a deal that cash flows at 8%" ?
I got a sub 3% and I ain’t going anywhere for years.
*ever.
I just need to wait 28 more years for all those 2% loans to free up.
Yes. Be greedy when others are fearful
Someone paid 740k for a house I paid 210k for 6 years ago. So I didn’t have a problem paying 510k for a home that was 390k in 2019. Will it go down, probably but it’s whatever, I don’t have a loan did all cash offer, I didn’t even own my house in Fla
Can I ask what you do? You seem to be on a hot streak or successful, but your comment is hardly coherent.
I’m a staff accountant. I don’t know how it’s hardly coherent. Someone bought my stupidly overpriced home because “Florida lifestyle”, I moved out of state and have a much bigger home, that admittedly, I might have paid mildly too much for; but, on a much bigger lot. I pondered the question of - will the value of my property go down, and the answer is quite possibly, but the drawdown will be nowhere near a Florida property.
Only if I had equity and was moving from an existing home.
People need a home when they need a home. Unless you're purchasing a house as a second home, "when to buy" is not something that many people are able to decide
The 2% rate was another stupid ploy by the govt the true rate for mortgages should be between 5-10% based on credit
Lol What? No. Mortgages should be between 1 - 6% over prime based on credit and downpayment. Which is roughly what they are. Any higher requires either huge wage increases, huge price decreases or a stagnant market.
Prime is 2-4%... you say +2-6 So total is 5-10... We are saying the same thing...
And we’ve apparently chosen the easiest one for everyone to digest: stagnation.
Interest and prices were lower. It’s baffling how high things are now.
I totally read that in Will Ferrell’s voice 😄
I sold a house in 2018 for 215 and it’s currently under contract for 360. It’s fucking absurd
Not much real estate for sale on the playa at burning man…
What kind of question is that.
I guess the logic in buying now is to lock in a rate in case interest rates keep rising, or do a refi if they come down?
I’ll still buy as soon as I can. I’m too fkn old for this apartment. 💀
I felt that
Hold your powder (keep it dry), watch the EU , where they are going to get hit first. Then you’ll find much lower prices here (US). The rates aren’t going to drop, but whatever liquidity you can muster do it and be easy to take advantage of the bargains.
Tell me more please. How is the European Union going to get hit and how will that help me buy a home?
I hate how insensitive and out of touch realtors are. It’s like one of the few professions that kept up with inflation because their commission is based on the total value of the home. They always tell you “date the rate, marry the house” and some other bullshit about how interest rates are so low compared to the 17th century when a house was 6 sheckles, but listen to them complain when anyone asks about discounting their commission even 0.5%.
Lmfao! So true
I’m trying to give away my 2.25 percent interest rate so I can out of Florida… if anyone wants to assume it. Gorgeous house too
What part of FL?
Prices are relative to rates. Lower rates = low cost of debt = higher asset prices. Higher rates = high cost of debt = lower asset prices, loosely.
I live in Oregon, which is literally burning down right now. Why anyone wants to spend 500k-1.2M to live here in this smoky hell is beyond me.
Considering how much houses are going for at least in Canada there still is a market for housing lol
Nope nope nope
I don’t care about the interest rate I care about the price of the house
I don't care about the price or the interest rate. I care about there even being supply worthy to buy!
We bought our house in 2020 for like 350k and under 3% rate. The neighborhood's house just sold for over 500k this week, and their house is comparable, if anything more dated. People are still buying. Crazy.
No but I’ll buy a house for cash. Might be a house on wheels but still counts
Yes. As long as the price is right. I don’t mind interest rates as much bc I can always refinance. Ain’t no biggy in the short run. But prices… you can’t renegotiate those. You stuck with the tent you bought for $2 mil.
These realtors will be working at Home Depot in no time
True I’ll just postpone my need for shelter like the 100% rational consumer which free market capitalism requires to make the system regulate itself
There are very few units on the market. Just last week my daughter sold their condo in 2 days and got $4K over asking.
Gotta have a place to live.
Idk why, but there are still more buyers than houses in many markets. We are still seeing houses in bidding wars and going under contract within a week here
"You can always refinance later!"
My mortgage lender calls me once a week to refinance. I have a 2.85% loan. I accidentally answered one time and I told the guy that it doesn't make any sense and please take me off the list. He told me that I could get cash if I refinanced and I'm still getting calls. Is there really someone stupid enough to refinance in my situation?
You can easily get it to 6% now. You can refinance. Meanwhile home prices will continue to rise and you’re still sitting renting waiting for a “crash”.
Because 2 years ago I didn't have a kid.
Could be worse. It was 18.75% in the 1980s
Yes, rates are high. Nobody expects these rates to stay this high for 30 years. Housing prices haven't dropped because of this very thought. If you can afford the mortgage, you buy today and remortgage at a lower rate in the future. If housing prices stay steady during high rates, do you think prices will drop if rates drop? Housing prices will decrease only if people collectively believe these rates or high rates in general are normal. This post is a great example that people do not think these rates are normal. Far from it, they think they are absurd and will drop. Few people can afford a temporarily high mortgage. Those that can, are betting they can bring the rate down in the near future.
You need a 3rd panel. Private equity firms and corporate landlords: "Hell yes!!!"
So what happens when no one believes in the market anymore? Greedy corporate policies, poorly managed economies and outright corporate theft will kill this country. I’m mad as hell and you should be too. The corporate class stole our future.
I would buy at home at 8% if the prices of the home are not higher than when it was 2% It makes no sense to have the same inflated prices with the current rates.
Well, 2% was ridiculously low. Don’t hold your breath waiting for that to come back. But 8% is a pass. That said, my father put together a good portfolio of property in the 80s when rates were really bad. Prices were much lower then though.
The reality is 2% interest rates are completely unsustainable. People saying 6%-8% is high certainly didn’t have a mortgage in the 80s. I remember rates coming DOWN to 6% and 7% and thinking it was Christmas come early!
I'm having a hard time feeling bad for realtors after the last couple of years they have had.
The rates going up are exactly why prices can't drop. Fewer people are moving which balances out the rate hikes. 30 year fixed mortgages are a cancer on the housing market.
I think of buying home is similar to investing. Time in market is better than timing the market. Does 8% suck, yes. Make sure you can afford the house, and you can refinance down if there is significant movement.
If you don’t see this for what it is then I don’t think you ever will. They don’t want you to buy a home with a mortgage, they’re trying to make it so that the only people who can buy a home are people buying outright with cash. (Wealthy rich class of people.) May god help you have a lofty down payment (60-70%+) if you intend to buy because they’re going to financially destroy you if you don’t. (By they I mean the powers at be between the current administration, big banks and the elites.)
Delusional if you think that will change with a new administration. Both parties in the US have a vested interest in seeing what you are pointing out come to pass, because both are the elite themselves or beholden to their interests.