Earlier quoted context omitted.
curious about logic behind buying at ATH.
It is new construction. I put the deposit down in October.
The land (which is the expensive part of expensive housing) is almost certainly not new.
Mortgage Rates Hit 5.78%, Highest Level Since 2008
31–40 of 46 posts
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#32Earlier quoted context omitted.
The mortgage I got (FHA) in July of 2008 was 6.25%. The house I grew up in, had a mortgage at 9%, and was only that low because my parents won a contest at the local bank.
On the other side of the coin, you used to be able to earn 6, 7, 8%, maybe even more, just by parking money in a savings account. I'd love to find a bank today offering even just 3%.
Wait a few months and you’ll see 3% again, savings acct interest rates are usually a few bps below the federal funds rate.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#33Earlier quoted context omitted.
I think it depends on if real estate is still being devoured by investment groups. And during high inflation, it doesn't seem like they're going to stop parking their money in homes any time soon. And since they can buy with cash, interest rates don't matter to them.
How much influence do investment groups really have on the housing bubble?
Well even Blackrock only has $60 Billion in housing in a $36 Trillion housing market. So not much (although it varies by location and market prices can be affected by outliers.. so there are exceptions, sure).
Keep in mind, these investment groups need to make cash on cash return above their hurdle rate, otherwise their investors pull the plug. Their goal is to make returns, not take all the housing from poor families while they cackle to themselves in their underwater bond villain lair while petting a white cat.
Also, historically, 1% interest rate increases leads to 10% decrease in home price because of the mathematics of mortgages and the fact that most people only look at the monthly. As far as "Cash" buyers, a sizeable number aren't actually cash, there are a number of services that make it appear that way for home purchasing. My brother used one to make a "cash" offer in the Bay Area recently.
TL;DR - Unless you have a wife who is 8 months pregnant, just wait. There's no need to buy in while prices and rates are both this high.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#34My parents bought our first house in 1979 and they said the interest rate was 12%
I bought my house in 2002 and had a 6.5% interest rate. That was the lowest rates had ever been at least going back to 1970. A year later I refinanced down to 5.5% and then in 2010 down to 3% before paying it off a few years later.
So yeah 5.78% is higher than the rates of the last 15 years but historically it is still quite low.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#35What's going to give first? Interest rates? House Prices? I was on the market to buy a place. First time home owner jitters, but interest rates started to rise fast. Buying power dropped so much that I'm dropped out. At these rates, I really need the price to drop by 20%-ish. I'm sitting on cash and it feels like shit. I wonder how other people feel.
I'm glad the housing market is slowing down. I'm not in a rush to buy (not willing to do super short review dates after listing) and not willing to get into a bidding war.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#36What's going to give first? Interest rates? House Prices? I was on the market to buy a place. First time home owner jitters, but interest rates started to rise fast. Buying power dropped so much that I'm dropped out. At these rates, I really need the price to drop by 20%-ish. I'm sitting on cash and it feels like shit. I wonder how other people feel.
I'm glad the housing market is slowing down. I'm not in a rush to buy (not willing to do super short review dates after listing) and not willing to get into a bidding war.
I’m glad it’s slowing too, but I’m 40 and at this point I’ll probably never outright own a home unless I inherit one. This sucks.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#37Earlier quoted context omitted.
I'm glad the housing market is slowing down. I'm not in a rush to buy (not willing to do super short review dates after listing) and not willing to get into a bidding war.
I’m glad it’s slowing too, but I’m 40 and at this point I’ll probably never outright own a home unless I inherit one. This sucks.
[deleted]
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#38What's going to give first? Interest rates? House Prices? I was on the market to buy a place. First time home owner jitters, but interest rates started to rise fast. Buying power dropped so much that I'm dropped out. At these rates, I really need the price to drop by 20%-ish. I'm sitting on cash and it feels like shit. I wonder how other people feel.
Arguably the 1980-81 era is a bit of an outlier, but perhaps instructive due to some of the similarities. The Fed under Volcker caused mortgage rates to rise to close to 20%. This was done to quell inflation that had proven persistent during the 70s. Back in '08 I recall looking at home sales data for my state (Oregon) during that era and there were quarters where the average selling price went down almost 20%. Of co…
Timing the market is risky. Nothing guarantees that things will pan out the way you describe + your reader might be throwing money down a rental drain unless they buy.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#39We started seriously looking for houses to buy in April, and got a rate of 5.125% later that month. We were really hoping for something Of course, now the "worry" is that rising rates will sink the market value. So long as I keep my job or can still find another easily, that's not much of a concern; but the prospect of a recession, with layoffs and hiring freezes, is in the back of my mind.
Re: Mortgage Rates Hit 5.78%, Highest Level Since 2008
#40My parents bought our first house in 1979 and they said the interest rate was 12% I bought my house in 2002 and had a 6.5% interest rate. That was the lowest rates had ever been at least going back to 1970. A year later I refinanced down to 5.5% and then in 2010 down to 3% before paying it off a few years later. So yeah 5.78% is higher than the rates of the last 15 years but historically it is still quite low.
My parents' mortgage in 1966 was at 4.875%, if I recall correctly.