Funny story.... My brother was performing at a casino here in Albuquerque, along with Steven Michael Quezada (agent Gomez from Breaking Bad). After the show, they went out to the parking lot and there was a dead body. Everyone looked at Bryan Cranston and made Heisenberg jokes... Nobody ever found out who the deceased was or how he died. Was a strange coincidence.
Increase in mortgage rates will slow it down, and we are headed there.
Goodbye marketRumblings the Fed might send a message and start with a 50bps increase.
The difference in payments between a rate in The 2’s and a rate in the 5’s can be pretty massive. Will be interesting to see what happens to home prices. I suspect we will start leveling off and plateauing in the near term.The rising mortgage rates seem to be slowing home sales just a bit in many markets
Son graduates and has a job. I ran numbers and he will be much better off renting with these prices.The difference in payments between a rate in The 2’s and a rate in the 5’s can be pretty massive. Will be interesting to see what happens to home prices. I suspect we will start leveling off and plateauing in the near term.
That doesn’t surprise me. What a tough market for first time buyers, especially.Son graduates and has a job. I ran numbers and he will be much better off renting with these prices.
Son graduates and has a job. I ran numbers and he will be much better off renting with these prices.
Will there be appreciation is the question. If rates go up, there are too many people bidding to what their max payment is and if that continues then prices will soften from that. Also, if he would decide to move in a 2-5 years when most people change jobs from their first, he would need to have 6-7% appreciation just to handle the sales commission.For now yes, but what about in five years after appreciation etc? Depending on where he lives there will be appreciation. House payment won't go up but rent will.
Will there be appreciation is the question. If rates go up, there are too many people bidding to what their max payment is and if that continues then prices will soften from that. Also, if he would decide to move in a 2-5 years when most people change jobs from their first, he would need to have 6-7% appreciation just to handle the sales commission.
I told him to take the rent difference and what a payment, insurance, and other stuff and invest it in some conservative mutual funds. I think he will be in better shape than buying at this point doing that.
One issue could be people who have routinely bought a house, lived there for 5 years and sold it when they got a new job. Had 5% annual appreciation so they covered the realtor commission and the interest rate went down 0.5% each refi or purchase so it didn’t matter. If this thing even flatlines, they may be unable to move since the commission will eat any pay down and then the rate tripling will make the next place unaffordable.Yep. No guarantee that current home prices won't decline. Inflation can be a tricky deal. I would love to be selling a house right now/not so much buying. Seems to me we might have a 20-25% correction in home prices in some areas.
Yep. No guarantee that current home prices won't decline. Inflation can be a tricky deal. I would love to be selling a house right now/not so much buying. Seems to me we might have a 20-25% correction in home prices in some areas.
Which itself is trouble if people get underwater just because the market shifted.
A lot more safeguards in place against this than 20 years ago, but could still happen.
Definitely not a great time for this interest rate shift for many, right after a dramatic increase in prices the last year or two. Not only were people paying way more per month for the same houses just because of the price increases, now add a significant increase from the interest.
It's tough because other than the short financial crisis a dozen or so years back, most people have only experienced a strong or steady overall economy for the last 30+ years. A lot of people didn't experience the crazy decade+ from 1973-1988.Which itself is trouble if people get underwater just because the market shifted.
A lot more safeguards in place against this than 20 years ago, but could still happen.
Definitely not a great time for this interest rate shift for many, right after a dramatic increase in prices the last year or two. Not only were people paying way more per month for the same houses just because of the price increases, now add a significant increase from the interest.
The longer you prop something up, the worse the downside is.It's tough because other than the short financial crisis a dozen or so years back, most people have only experienced a strong or steady overall economy for the last 30+ years. A lot of people didn't experience the crazy decade+ from 1973-1988.
Hopefully the Fed can manage the current times, but history tends to find ways to repeat itself.