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U.S. mortgage interest rates jump to 7.16%, highest since 2001

reuters.com

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Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#201

Post by jollyllama »

BuckRogers wrote: post #186
jollyllama wrote: post #131

Earlier quoted context omitted.

It can go one of two ways. Inventory continues its years long downward trend as people stop selling due to the price drops. Or, the increased rates combined with price drops trigger a wave of foreclosures and the market crashes hard. I think the former is more likely.

Inventory continues to rise today while new listings go down. Prices are going down continuously in my market. The outlook for a cash buyer is good right now, especially by January. All it will take is one more economic blip and your 2nd scenario becomes true. Which I've read a recession is to be declared before the end of the year and it's a sure thing. We're already have improved conditions for home buying unless y…

Your saying is true. It all depends on if the supply holds out.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#202

Post by seanmcdirmid »

thatfrenchguy wrote: post #79
khuey wrote: post #17

Earlier quoted context omitted.

A lot of people simply won't sell in that situation which is going to further constrain supply.

And no more building because rates are high there so the next time rates go down there’s no supply…

Even worse than that: people in construction will change career paths, and apprentices won't enter the industry for the next 5-10 years leading to a dearth of experience when it comes time to build houses again.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#203

Post by quonn »

I find it strange that nobody here brings up the option of renting out your house instead of selling when you have to. If the mortgage is fully or even mostly covered by the rent, you can usually do that. In fact it would usually be sufficient if the interest is covered. The only exception would be divorce, unless both parties can agree.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#204

Post by mirashii »

seanmcdirmid wrote: post #195
mattbrewsbytes wrote: post #119

Earlier quoted context omitted.

> locked in Not just that but looking further out at retirement, downsizing and staying in the same area is not looking possible. The house might be worth $X on paper at that point but if you sell you are then thrust into a market where everything is much higher. Its financially more palatable to just stay put even if you don't need the space. I imagine people within a couple years of this decision are staying put ri…

If you are downsizing you can cash out and then buy your next (smaller) place in cash without a loan. This all assumes you aren't in California, though, where prop 13 encourages you to stay put no matter what.

Almost, except Prop 19, which allows you to transfer your property tax valuation under Prop 13 to a new property to allow people to downsize in retirement.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#205

Post by seanmcdirmid »

quonn wrote: post #203

I find it strange that nobody here brings up the option of renting out your house instead of selling when you have to. If the mortgage is fully or even mostly covered by the rent, you can usually do that. In fact it would usually be sufficient if the interest is covered. The only exception would be divorce, unless both parties can agree.

Renting out a house is a huge pain. Local laws can make you accept tenants you wouldn't otherwise, and eviction moratoriums can make a bad tenant very difficult to get rid of. Not only that, but being a landlord isn't a labor-free job, and many of us don't have time for that, while property management companies are very expensive.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#206

Post by seanmcdirmid »

mirashii wrote: post #204
seanmcdirmid wrote: post #195

Earlier quoted context omitted.

If you are downsizing you can cash out and then buy your next (smaller) place in cash without a loan. This all assumes you aren't in California, though, where prop 13 encourages you to stay put no matter what.

Almost, except Prop 19, which allows you to transfer your property tax valuation under Prop 13 to a new property to allow people to downsize in retirement.

Ooh, nice, I didn't know about that one. Seems like the right direction to go in.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#207

Post by lotsofpulp »

mindslight wrote: post #110
bushbaba wrote: post #85

Earlier quoted context omitted.

If home values decline by 50%. So do property tax revenues. You’d have stated needing to layoff a large portion of their police and education staff.

That's not at all how real estate valuations work in my experience. In times of asset inflation, they lag to cut homeowners a break. So much so that other tax authorities outright reject using municipal valuations on their filings. And municipal valuations never go down, barring someone paying for an independent appraisal and going through the abatement process. If real estate values corrected by 50%, then the people…

The government can also just increase property tax rates if property values go down. Instead of 0.75%, make it 1%, or 2%.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#208

Post by juve1996 »

kypro wrote: post #127
outside1234 wrote: post #49

Great news - affordable housing is around the corner! This will also deep-six people speculating on real estate or buying homes to AirBnB them (won't be profitable). All good news.

If house prices drop because of interest rates affordability remains constant. They only become "more affordable" if you have money to buy without a mortgage. So if you're saying they're more affordable to the rich, sure. But I assume you mean the average home buyer.

> If house prices drop because of interest rates affordability remains constant.

This isn't a law of nature. It's highly possible housing value decrease outpaces rising rates.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#209

Post by juve1996 »

avgDev wrote: post #117
SevenNation wrote: post #101

Several comments here state very confidently that either the commenter does not plan on moving for many years, or someone they know has similar plans. The problem with this line of thinking is to keep a brave face when the house is underwater, meaning that the house can not be sold without going into debt to pay it off. As "homeowners" approach that point, panic starts to take hold. Nobody wants to be trapped in a ho…

It is recommended that when you buy a house you buy it long term 5+ years. It is recommended that when you purchase index funds as investment you buy and hold long term 5+ years. The reason for this is because prices will fluctuate SHORT term, but generally are very stable long term and provide a return on investment. If we take a look at the current situation, even if someone becomes underwater on their house, they…

Houses are not a great long term investment vs other investing vehicles until interest rates were so low that it made it viable.

Re: U.S. mortgage interest rates jump to 7.16%, highest since 2001

#210

Post by Auracle »

binarymax wrote: post #67
fortuna86 wrote: post #52

Well great. If you didn't buy a house last year, you won't get another chance for 10-15 years.

Prices for homes last year were crazy high, because of the low interest rate. You should have a chance to get a house in the next year or two when prices come down a bit, and then refinance in 5 years.

At some point ARMs might actually make sense for people again as well. Once rates go up further and inflation actually starts to come down they should be a relatively safe bet.
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