121–130 of 178 posts
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you assume you can time the bottom of prices with the rates and that rates will come down anytime soon
You don't have to wait for bottom. Any time rates come down by say 30%, you refinance. You keep doing it so eventually you settle into 2-3% regim.
People are bringing up that past rates were higher but leaving out how much lower past prices were. Have a look at rates over time[1] vs median home price[2]. Yes rates were 16% in 1980 but the median home was $64,000. That's $230,000 in today's dollars. If you'd prefer to pick a time when rates were more comparable, how about 2001 at 7%. The median home price was $180,000. $301,000 in today's dollars. Today's median…
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OK here's the Case-Sheller index[1]. Running the examples from before: 1980: 63 (actually for 1987, earliest in the chart) 2001: 110 2022: 305 I'm no economist so I won't try to interpret these numbers, but if higher is worse then it supports my original point. [1]: https://fred.stlouisfed.org/series/CSUSHPISA
Yep, I'm not disagreeing with your original point, just pointing out that these comparisons have a few variables to consider. At least someone already went to the trouble of creating an index for it.
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No one.
I've always heard 2.5x-3x your gross annual salary. Which makes sense, but us also would price people out of the big markets.
Same example, $65k salary x 3x to get a home value would be a $200k house. That's a total annual home cost of $11,750 with 2.75% interest rates and $16,200 with 6.5% rates.
If they can afford the $16,200 today based on the 3x rule, then surely they could have afforded a $285k house (4.4x gross) last year considering the monthly cost would be identical?
People are bringing up that past rates were higher but leaving out how much lower past prices were. Have a look at rates over time[1] vs median home price[2]. Yes rates were 16% in 1980 but the median home was $64,000. That's $230,000 in today's dollars. If you'd prefer to pick a time when rates were more comparable, how about 2001 at 7%. The median home price was $180,000. $301,000 in today's dollars. Today's median…
Economists need to figure out how people are buying these expensive houses. I work in big tech and probably in 1-2% and I am still priced out of market even outside of CA. How do other people not in big tech do it? My guess is that most people buying houses are double-income families which wasn't the case in 1980s. Note to self: If you want Ameican dream, make sure you marry someone who makes as good income as you :)…
people who can buy a house all cash will be the real winners here. if and when rates go down, they can cash out refinance, and if they don't they will benefit from the downward pressure high rates create on prices. it's rich to be rich.
People are bringing up that past rates were higher but leaving out how much lower past prices were. Have a look at rates over time[1] vs median home price[2]. Yes rates were 16% in 1980 but the median home was $64,000. That's $230,000 in today's dollars. If you'd prefer to pick a time when rates were more comparable, how about 2001 at 7%. The median home price was $180,000. $301,000 in today's dollars. Today's median…
Economists need to figure out how people are buying these expensive houses. I work in big tech and probably in 1-2% and I am still priced out of market even outside of CA. How do other people not in big tech do it? My guess is that most people buying houses are double-income families which wasn't the case in 1980s. Note to self: If you want Ameican dream, make sure you marry someone who makes as good income as you :)…
People are bringing up that past rates were higher but leaving out how much lower past prices were. Have a look at rates over time[1] vs median home price[2]. Yes rates were 16% in 1980 but the median home was $64,000. That's $230,000 in today's dollars. If you'd prefer to pick a time when rates were more comparable, how about 2001 at 7%. The median home price was $180,000. $301,000 in today's dollars. Today's median…
Economists need to figure out how people are buying these expensive houses. I work in big tech and probably in 1-2% and I am still priced out of market even outside of CA. How do other people not in big tech do it? My guess is that most people buying houses are double-income families which wasn't the case in 1980s. Note to self: If you want Ameican dream, make sure you marry someone who makes as good income as you :)…
Combine this with the number of Bay Area potential buyers who are relatively insensitive to interest rates due to being able to make very large down payments, and of course the lack of new SFH construction relative to SFH demand... I don't think Bay Area SFH prices are actually going to drop much.
I'm more optimistic about affordability of denser housing. I'm unsure how many Americans are actually happy with that, though (which is part of why it's relatively affordable...).
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You cannot do a cash out refinance if you don't already have a mortgage on the property. You can do a home equity loan or line of credit but those come at higher interest rates than a refinance. But yes the real winners are almost always those who have ample resources.
did something change? normally even on a home you own outright you can get up-to 80% of the appraised value difference
That's a home equity loan, not a cash-out refinance.