21–30 of 297 posts
This will pressure prices down presumably which is a good thing for cash buyers but basically no one else.
Why only cash buyers? Even if I am borrowing money to pay for something, I would rather pay less than more.
If rates go from a low of 2% up to, say, 9%, then in order to keep the mortgage payment the same, the price of a $400,000 house would have to drop to around $230,000. This assumes a 30-year fixed rate mortgage, and the details will vary depending on money down, etc. but the basic fact remains that house prices will need to fall by a lot, down to levels of 5 years ago or more, before the current interest rate hiking c…
A lot of people simply won't sell in that situation which is going to further constrain supply.
And a lot of people end up having to sell.
If rates go from a low of 2% up to, say, 9%, then in order to keep the mortgage payment the same, the price of a $400,000 house would have to drop to around $230,000. This assumes a 30-year fixed rate mortgage, and the details will vary depending on money down, etc. but the basic fact remains that house prices will need to fall by a lot, down to levels of 5 years ago or more, before the current interest rate hiking c…
This will pressure prices down presumably which is a good thing for cash buyers but basically no one else.
I think a fair amount of people - particularly those in HCOL cities - could afford monthly payments that are on the high side, but saving for a 20% deposit has been more difficult because of how high prices have been (ie, stuck in a rent cycle of only saving a bit because of how high rent is and so on).
If rates go from a low of 2% up to, say, 9%, then in order to keep the mortgage payment the same, the price of a $400,000 house would have to drop to around $230,000. This assumes a 30-year fixed rate mortgage, and the details will vary depending on money down, etc. but the basic fact remains that house prices will need to fall by a lot, down to levels of 5 years ago or more, before the current interest rate hiking c…
A lot of people simply won't sell in that situation which is going to further constrain supply.
Even if they stay in their home, people over-levered on their fake housing equity through HELOCs are in trouble.
If rates go from a low of 2% up to, say, 9%, then in order to keep the mortgage payment the same, the price of a $400,000 house would have to drop to around $230,000. This assumes a 30-year fixed rate mortgage, and the details will vary depending on money down, etc. but the basic fact remains that house prices will need to fall by a lot, down to levels of 5 years ago or more, before the current interest rate hiking c…
A lot of people simply won't sell in that situation which is going to further constrain supply.
Earlier quoted context omitted.
A lot of people simply won't sell in that situation which is going to further constrain supply.
I hear this every cycle, but people forget even if the person who bought high won't, their neighbor who bought low (maybe a long time ago) will. And a lot of people end up having to sell.
As someone who was too young to climb aboard the price bubble of the last 5 years: here's hoping.
Earlier quoted context omitted.
Why only cash buyers? Even if I am borrowing money to pay for something, I would rather pay less than more.
This is correct, you will pay more to service the loan but only until you can refinance it. If you pay more in a low interest rate regime you have no way to improve your situation, and no way to sell if you need to.
- refi at a lower rate in the future
- sell the house without having to take a huge loss compared to low-% bagholders
This will pressure prices down presumably which is a good thing for cash buyers but basically no one else.
Why only cash buyers? Even if I am borrowing money to pay for something, I would rather pay less than more.