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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

#91

Post by nojvek »

kstrauser wrote: post #10

“Real estate CEOs must `learn to live’ with lower sales, say resistant buyers”. The amount I can pay each month hasn’t changed drastically. If interest payments to my credit union go up, then the principal payments I can make to a seller have go down. The price I can pay is less than it was a couple of years ago. That means your commissions will be dropping, too, Mr. Liniger. You’ll just have to live with it.

The truth is interest rates have quadrupled in last 2 years but home prices have only dropped 10-20%. That’s not much.

There is very little supply at the moment, the population is still growing and the people with money are still buying houses they can afford.

FWIW under Biden, the wealth gap increased the most, he added the most debt, the house prices have the biggest hike.

For all things Democrats preach, it’s the exact opposite. Most people are worse off.

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

#92

Post by appplication »

nojvek wrote: post #91
kstrauser wrote: post #10

“Real estate CEOs must `learn to live’ with lower sales, say resistant buyers”. The amount I can pay each month hasn’t changed drastically. If interest payments to my credit union go up, then the principal payments I can make to a seller have go down. The price I can pay is less than it was a couple of years ago. That means your commissions will be dropping, too, Mr. Liniger. You’ll just have to live with it.

The truth is interest rates have quadrupled in last 2 years but home prices have only dropped 10-20%. That’s not much. There is very little supply at the moment, the population is still growing and the people with money are still buying houses they can afford. FWIW under Biden, the wealth gap increased the most, he added the most debt, the house prices have the biggest hike. For all things Democrats preach, it’s the…

Political spin isn’t needed here. The debt and wealth gap are both increasing exponentially regardless of who is in office. When Trump was in office you could have flipped the parties and made the same statement.

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

#93

Post by nojvek »

appplication wrote: post #92
nojvek wrote: post #91

Earlier quoted context omitted.

The truth is interest rates have quadrupled in last 2 years but home prices have only dropped 10-20%. That’s not much. There is very little supply at the moment, the population is still growing and the people with money are still buying houses they can afford. FWIW under Biden, the wealth gap increased the most, he added the most debt, the house prices have the biggest hike. For all things Democrats preach, it’s the…

Political spin isn’t needed here. The debt and wealth gap are both increasing exponentially regardless of who is in office. When Trump was in office you could have flipped the parties and made the same statement.

I guess my deeper point is, someone could make a law - you can only max own 2 homes, after 3rd home and thereafter, taxes go through the roof for capital gain.

Having homes as a speculative investment is a great way to have an entire generation having low home ownership.

And I agree, both sides are equally worse.

With colleges, homes, healthcare, daycares, food becoming so expensive, the effects will be huge but we’ll feel it decades later

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

#94

Post by CalRobert »

bradlys wrote: post #84
CalRobert wrote: post #30

Earlier quoted context omitted.

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…

Interesting, thanks. I came of age in the mid-noughties (and then moved to Ireland) so my perspective on US is skewed.

Reposession in Ireland takes years. And the existence of strong protections against firing means banks only (usually) lend to people with permanent jobs, even if you have years of income on temp contracts.

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

#95

Post by candiodari »

nojvek wrote: post #93
appplication wrote: post #92

Earlier quoted context omitted.

Political spin isn’t needed here. The debt and wealth gap are both increasing exponentially regardless of who is in office. When Trump was in office you could have flipped the parties and made the same statement.

I guess my deeper point is, someone could make a law - you can only max own 2 homes, after 3rd home and thereafter, taxes go through the roof for capital gain. Having homes as a speculative investment is a great way to have an entire generation having low home ownership. And I agree, both sides are equally worse. With colleges, homes, healthcare, daycares, food becoming so expensive, the effects will be huge but we’l…

... and then the rental market collapsed.

I mean what do you want to do with companies that work by owning (or ...) 200 homes and renting them out? There's a LOT of these, responsible for a big part of the rental market.

Economic systems are systems of dividing up stuff. Capitalism and communism, and everything in between change who gets which housing. They cannot solve housing shortages.

They (obviously) do not change the quantity of housing without the government at least allowing large housing developments.

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

#96

Post by pedrosorio »

Gibbon1 wrote: post #87
cameldrv wrote: post #65

Earlier quoted context omitted.

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?

Doesn’t the bank have the right to refuse to grant a mortgage in the first place, depending on the asset? It’s not like you tell them you’re buying a house worth x and they give you a mortgage for 0.8x, right?

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

#97

Post by pedrosorio »

jldugger wrote: post #62
treprinum wrote: post #11

Earlier quoted context omitted.

US has Freddie Mac and Fannie Mae that essentially buy all OK mortgages from the banks so long-term liabilities don't ruin banks and FED can create more reserves when needed.

> Freddie Mac and Fannie Mae that essentially buy all OK mortgages from the banks so long-term liabilities don't ruin banks FDMC/FNMA mostly buy up conforming loans and repackage them. In theory the bundling and government sponsored entity's (GSE) own equity would protect buyers of these repackaged bonds. In practice they did not and the government had to step in. However, none of this protects against interest rates…

> if I own a 3 percent bond but the GSEs are selling 7 percent bonds

“The SVB conundrum”

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

#98

Post by pedrosorio »

treprinum wrote: post #85
NotYourLawyer wrote: post #21

Earlier quoted context omitted.

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?

If you’re curious (many HN readers are) and have basic math literacy (ditto) once you come across the concept, grokking interest rate risk takes about an hour at most.

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

#99

Post by rsynnott »

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…

> Possibly a stiff deposit req (I'd need a 20% deposit)

Note that, for Ireland, this is because you're a second-time buyer. It's 10% for first time buyers.

Today, mortgage rates in the US start at about 6% for a variable rate, or 7% for a 30 year fix. If you have By the way, you can get a mortgage that goes into retirement, though the bank will certainly want to see evidence of a pension... You can also get a mortgage if you're self-employed; you'll want about three years accounts and for either of these cases you'll probably need a broker.

So, really, it's swings and roundabouts to an extent; Irish mortgages are a lot cheaper than US ones. To some extent this is structural weirdness; the banks have more deposits than they know what to do with, and under ECB stress testing rules they have limited things they can feasibly _do_ with those deposits, so their cost of funds is relatively low.

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

#100

Post by ghaff »

Gibbon1 wrote: post #87
cameldrv wrote: post #65

Earlier quoted context omitted.

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?

Because you no longer own the asset that is the collateral for the loan.
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