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Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

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Re: Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

#81

Post by cscurmudgeon »

paxys wrote: post #17
causality0 wrote: post #2

I'm constantly reminded to be thankful to be a homeowner in America. Most other countries don't even have fixed-rate mortgages and many of my international friends are facing massive unexpected jumps in their monthly housing costs.

In most countries buying a house doesn’t involve taking out loans that take 30 years to pay off in the first place.

On second thought, this comment is a mix of peak anti-Americanism combined with a lack of financial knowledge.

If you have ever taken a mortgage in the US, you know there are a lot of time horizons available.

Re: Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

#82

Post by mikem170 »

prepend wrote: post #50
boringg wrote: post #33

Earlier quoted context omitted.

Nah history has taught us mortgages can go way higher. Your part of the online crowd constantly trying to say the next French revolution is coming (been hearing that refrain since the 00s). Also when you buy a house - if you didnt factor in mortgage rates changing thats 95% on you. 6 % isnt even that high. Mortgage is too high offload and move elsewhere. People need to take some responsibility for their purchases.

It’s high when home prices have grown substantially since the last time mortgages were 7%. Also, it’s not really a “haha, you suck at planning” so much as a new generation is hit with much higher home prices when they are entering buying time of their life. Mortgages have been 4% for the last 20 years or so, so an entire generation has had 4% mainly due to government subsidization. And now the government can’t or won…

Also people in most other countries economically comparable to the U.S. have variable rate or 5 year fixed rate mortgages. The U.S. government backstops most 30 year fixed rate mortgages. The banks don't wouldn't offer 30 rates so low, given the interest rate risk.

Re: Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

#83

Post by mikem170 »

immibis wrote: post #5
causality0 wrote: post #2

I'm constantly reminded to be thankful to be a homeowner in America. Most other countries don't even have fixed-rate mortgages and many of my international friends are facing massive unexpected jumps in their monthly housing costs.

This lack of risk is exactly why prices are rationally so high. At least in other countries, they're ir rationally high because people forgot about the risk of interest rate increases.

I agree that low fixed rate long term mortgages contribute to higher housing prices.

And the reason 30 year fixed rate loans are common in the U.S. is because the government (taxpayers) backstop most of the loans. Bank wouldn't be stupid enough to underwrite a 30 year loan at historically low interest rates of 3%.

Re: Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

#84

Post by bradlys »

CalRobert wrote: post #30
NotYourLawyer wrote: post #24

Earlier quoted context omitted.

What does the process look like in Europe?

Usually an overpriced 30 year ARM (with a fixed period at beginning) and a restriction that you pay it off before retirement (so no 30 year mortgage if you're 45 for instance). Also a much tougher application process where people without "permanent" jobs are screwed. Of course, many, many people are on temporary contracts (because firing perm employees is hard). Possibly a stiff deposit req (I'd need a 20% deposit) a…

Some of these aren’t that far off from the American process. It being an ARM, not being able to get a house if you’re going to retire, and the impermanent job type are a bit weird though. Usually for Americans, you need to show some years of steady income to qualify. It doesn’t entirely matter what your job is - as much as you can show with your tax returns that you’re making steady money (for years) that can afford the home. The having kids thing is weird and I don’t get why that would be against you.

I’m guessing there are much stronger tenant rights in Ireland where they have a harder time evicting the person and making it impossible for them to find housing later. (Credit score, legal records, etc.)

The 4x income and 20% deposit is very common here too. Going past 4x would require unusual circumstances. People doing lower deposits and/or higher ratio incomes are not common especially in the major cities. You might qualify for a special loan from the VA or through FHA but it has penalties like having to pay PMI and being locked to only homes of a certain price.

Re: Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

#85

Post by treprinum »

NotYourLawyer wrote: post #21
treprinum wrote: post #9

This is one of a few areas where having an MBA is actually useful. Interest rate risk and how things behave when interest rates are going up are good to know.

You can also learn that by reading a book or two.

Yeah, but will you? Or do you need some sort of a structured enforced learning for knowledge to stick?

Re: Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

#86

Post by boppo1 »

codampa01314 wrote: post #27

Another step closer to revolt. There's only so much pressure the general public will be able to handle. History has taught us when there is a massive unbalance in "haves" and "have nots" things don't play out in ways where we just "sit down and discuss what's going on."

You've seen the stuff that says the vast majority (~80%) of the US can't meet basic army fitness standards, right? You think these people are capable of revolt?

Re: Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

#87

Post by Gibbon1 »

cameldrv wrote: post #65
StriverGuy wrote: post #52

One thing I see being discussed is how high rates will reduce competition for homes (therefore lower prices). This isn't necessarily true for 2 reasons: 1) High rates mean higher finance rates for development/redevelopment projects, forcing new inventory to be priced higher to be viable 2) Owners with locked in rates (most homeowners) have little incentive to trade up, and more likely to trade down (increased competi…

Owners with locked-in rates have little incentive to trade to anything else. You can't take the mortgage with you, so selling and then even buying a smaller house is going to lead to a higher payment in most cases. What you will see is a lot more rental houses. When a lot of people move, they will just keep the old house and rent it out, because a huge portion of the value in the house is the mortgage itself.

> You can't take the mortgage with you

One wonders perhaps, why is that exactly? Why can't you trade one bit of collateral for another similar bit of collateral?

You owe $300k backed by a $700k house and you want to swap that for a $500k house, why should the note holder be able to call in the loan when you do that?

Re: Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

#88

Post by oldgradstudent »

FirmwareBurner wrote: post #47
paxys wrote: post #17

Earlier quoted context omitted.

In most countries buying a house doesn’t involve taking out loans that take 30 years to pay off in the first place.

What are you talking about? It's exactly the same in Europe. Unless they get help from their parents, most middle class people need 30 years to pay off their homes here too. It's the same shit everywhere in the west. Real estate is priced at the maximum amount the market would bear.

> It's the same shit everywhere in the west. Real estate is priced at the maximum amount the market would bear.

And the market would bear to pay the amount banks will allow buyers to borrow (to first approximation).

So if banks allow 30 year mortgages, the market would bear up to 50% or so more than if banks allow 20 year mortgages.

Re: Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

#89

Post by dave333 »

I paid 11% fixed on my first house in 1976 and rates went much higher into a peak around 1980 and I thought my rate was a steal. If rates go down you can always refinance but if rates go up a fixed rate is a huge advantage. Most of the time an adjustable rate will be cheaper but in hard times when rates rise or prices decline you will be SOL. However in a housing depression judges may refuse to allow the lender to foreclose on you if you are in good standing - making regular payments maybe of interest only.

Re: Homebuyers must ‘learn to live’ with near-7% mortgage rates says RE/MAX chairman

#90

Post by bhawks »

sofixa wrote: post #76
bhawks wrote: post #46

Earlier quoted context omitted.

Reducing prices requires increasing supply - but what is going to incentivize folks sitting on a 30year mortgage at 3% to sell? The Fed's low rate policy during pandemic and then the rapid rate rise has broken the housing market. There is no reason to sell and no reason to buy. That's why you see a severe transaction drop but roughly no change in prices. It'll be this way for awhile.

> Reducing prices requires increasing supply Or reducing demand, as GP said, from companies withdrawing from the market.

2/3rds of single family housing is owner occupied. Half of the remaining are owned by 'mom and pop' landlords.

So being very generous, maybe 10% of the supply is really counting on price appreciation versus income.

If demand withdrawals, supply will as well.

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