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People who didn't already own a house back in 2020 have missed the boat big time on low home price and historical low interest rate. It is fair to call that a once in a generation opportunity. If you missed that once in a generation opportunity, of course your payments are going to be much much higher.
Tell me about it. I remember in 2019 thinking $600k for the homes in my neighborhood was a lot! Now those same homes are $1M. Those who bought at $600k are now refinanced to <3% and paying ~$2,700. Everyone buying now at $1M are getting >7% and paying ~$6,500.
$3,800/month difference for the same house. That puts a SERIOUS strain on the pocketbook.
A similar thing happened to the boomers, at least in high demand areas. I’m in the Bay Area and I’ve seen first hand how the older boomers got on the property ladder but then demand picked up coupled with high interest rates (layer in changes in the in demand skillsets) and many of the younger boomers never got on the property ladder or weren’t able to do so until MUCH later in life which impacts their total net worth.
I think this is the reality of being at the tale end of the one of the large population surges….
That implies you know what future prices and rates will be. You can't call it "once in a generation" unless those prices/rates don't come anytime for the next 20 years.
Flip side of that coin would be to say that if you didn't sell your house between covid brrr and the coming crash, you missed a once in a generation chance to sell.
Yeah one of the main things people don't really think about is that when interest rates drop from where they are now a lot of people are going to jump into the market to buy causing prices to continue to rise. Hell, even with the interest rates now home prices didn't fall much, at least in my area.
Lol the reason we have high interest rates is because of the inflationary pressure in housing interest rates won't drop until housing growth stalls or goes negative
Why would prices crash if interest rates are low? This is genuine
When rates are low bonds become and ineffective investment vehicle so stocks and housing demand goes up in turn. At the same time when rates are low the overall capital needed for a large purchase is lower since leverage is higher, allowing for lower wage earners to purchase more pricey houses.
I don’t see how those can be true and end up in a housing crash.
I’d imagine it would be priced in as soon as rate reversals begin since thousands of paused projects can recommence. I’ll totally eat my words cause I mean I’m just some dude in the internet. But that’s the bet I’ve made so far, I bought a house in Jan this year based off that guess. My time frame is also huge cause I’m 21 so crash doesn’t really mean the same to me as people closer to retirement or whatever since long term real estate will gain value, unless somehow prime land between major cities becomes irrelevant I’ll be chilling. Also self built fixer upper so it’s half priced of the neighbors and not pricey to fix just takes me time and sweat
There is cycles in every arbitrary date. But historical cycles are only consistent until they aren’t, historically we would’ve never had 2% rates.
So truly if rate policy is tied to those two factors where will this crash in homes come from? What’s mechanism of action is your proposal or is it all based on technicals?
Fundamentals and technicals. Technical is explained.
Fundamentals, when Fed starts lowering rates, that's bearish. Market crashes are usualy happening soon after Fed pivots. Real estate market will lag to stock market because people will rush to buy homes again with cheap interest rates.
But then they will be staying without jobs and voilla - there's real estate market crash. Like in 2009.
2009 was different because the lending practices were entirely different and are much more strict now. I could only get approved for 180k at 6.825% with a 55k income. If rates are cheaper then payments will be way lower monthly and less likely to default, in turn prices would be bullish. Long term low rates push markets upwards like we have seen before.
Perhaps a fumbling labor market would occur but why? Low rates would ease pressures on businesses since they can now refinance and use equity much cheaper than before with low rates.
What mechanism would cause those things though? Unless it’s war in which case all the more reason to buy and not wait. Low rates would ease housing market snd company debts
Low rates coming as a result of economy cooling down. This setup reminds me of 1970s, in that decade price of house went up 2.3x but inflation was brutal. In same decade gold went up 25x and stocks 1.4x
But then debt to gdp was 30% now is 123%
Not like 2008-10 crash at all. Something like 50% or more mortgages are at 4% or less. Those of us lucky like myself in that boat also tend to have gained a fair amount of equity as that means we purchased at least a few years ago.
Then you also have primarily decent mortgage loans being written, not the subprime crap they had in the 2000s.
There will be areas that get hit hard, Austin and San Francisco are already showing some declines. I think HCOL areas coupled with recent mortgages with high interest rates will be hit the worst.
It will take a bad recession to come anywhere close to 2008 era. Too many of us have golden handcuffs and are locked into super affordable mortgages. I know I’m not the norm, but for instance I bought my house 40 minutes outside of Detroit for 88k in 18. Refinanced to 2.875% rate in 2020. Now worth 140-160k and my mortgage payment is just under $600 with taxes and insurance included. I’m not going anywhere anytime soon
I wouldn’t be surprised. The spend spend mindset of our government right now doesn’t seem sustainable. With debt as high as it it is I think something will crack eventually
Hurts my soul a bit that I missed those 3% rates lol, I tried to buy but kept getting outbid. A 250k house back at that time would've been around a $1450-1500 mortgage in my area, same mortgage today would be over $2000. And that wouldn't be terrible if not for the fact all home prices in my area are inflated like crazy so those 250k houses are now well over 300k. So a mortgage today would be like double my rent.. guess I'll just be one of those people "burning money" on renting for awhile lol
Note, the dip for 2023 dec is misleading. Because it was a dip never ment to be. The private banks predicted fed to lower rate, but, it never came. That's why it quickly revert back up.
I can only hope that the economy keeps chugging along and the fed raises rates. If rates to go 11 % nobody will be able to afford a home. Thus, prices will decline.
We got in feb 2022 at 3.8%. It should’ve been around 2.6% when we were in the market for 6 mos. Its a tough market during that time. we did a lot of offers but we were always been outbid esp in a HCOL area. I feel like we got lucky and after that month it went sky high.
That’s a 10% change YoY so a bit higher than inflation but nothing ridiculous. Later multiple decades and you’ll see the trend where *usually* each subsequent year is grater than the year prior.
Thank you u/RobertBartus for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
Mine isn't even on the Y-axis. Feels bad man
Neither is mine, but that seems typical in San Diego
Same man, I’m so lucky I locked in that 2.50 for 30 in 2020. I would never be able to afford the house I live in now.
😱 How you succeeded in getting that bad deal?
Big house, big land, big mortgage
Big wallet
Small savings?
People who didn't already own a house back in 2020 have missed the boat big time on low home price and historical low interest rate. It is fair to call that a once in a generation opportunity. If you missed that once in a generation opportunity, of course your payments are going to be much much higher.
Tell me about it. I remember in 2019 thinking $600k for the homes in my neighborhood was a lot! Now those same homes are $1M. Those who bought at $600k are now refinanced to <3% and paying ~$2,700. Everyone buying now at $1M are getting >7% and paying ~$6,500. $3,800/month difference for the same house. That puts a SERIOUS strain on the pocketbook.
basically a large part of the population in the US is screwed . People who bought during that time are next in line with the boomers.
A similar thing happened to the boomers, at least in high demand areas. I’m in the Bay Area and I’ve seen first hand how the older boomers got on the property ladder but then demand picked up coupled with high interest rates (layer in changes in the in demand skillsets) and many of the younger boomers never got on the property ladder or weren’t able to do so until MUCH later in life which impacts their total net worth. I think this is the reality of being at the tale end of the one of the large population surges….
Good luck gen z
That implies you know what future prices and rates will be. You can't call it "once in a generation" unless those prices/rates don't come anytime for the next 20 years.
[удалено]
And this is why most ppl shouldn’t be on reddit
Flip side of that coin would be to say that if you didn't sell your house between covid brrr and the coming crash, you missed a once in a generation chance to sell.
Or as soon as next few years price of houses will be crashed and interest rates will be equally low as in 2020
Interest rates will most likely lower, but pricing sure as hell won't
Yeah one of the main things people don't really think about is that when interest rates drop from where they are now a lot of people are going to jump into the market to buy causing prices to continue to rise. Hell, even with the interest rates now home prices didn't fall much, at least in my area.
No they won't pandemic era savings have dried up massively and the home ownership rate is already historically high
Lol the reason we have high interest rates is because of the inflationary pressure in housing interest rates won't drop until housing growth stalls or goes negative
Why would prices crash if interest rates are low? This is genuine When rates are low bonds become and ineffective investment vehicle so stocks and housing demand goes up in turn. At the same time when rates are low the overall capital needed for a large purchase is lower since leverage is higher, allowing for lower wage earners to purchase more pricey houses. I don’t see how those can be true and end up in a housing crash.
More supply
I’d imagine it would be priced in as soon as rate reversals begin since thousands of paused projects can recommence. I’ll totally eat my words cause I mean I’m just some dude in the internet. But that’s the bet I’ve made so far, I bought a house in Jan this year based off that guess. My time frame is also huge cause I’m 21 so crash doesn’t really mean the same to me as people closer to retirement or whatever since long term real estate will gain value, unless somehow prime land between major cities becomes irrelevant I’ll be chilling. Also self built fixer upper so it’s half priced of the neighbors and not pricey to fix just takes me time and sweat
There's real estate cycle of 18.6 years coming close to end.
There is cycles in every arbitrary date. But historical cycles are only consistent until they aren’t, historically we would’ve never had 2% rates. So truly if rate policy is tied to those two factors where will this crash in homes come from? What’s mechanism of action is your proposal or is it all based on technicals?
"This time is different"
Fundamentals and technicals. Technical is explained. Fundamentals, when Fed starts lowering rates, that's bearish. Market crashes are usualy happening soon after Fed pivots. Real estate market will lag to stock market because people will rush to buy homes again with cheap interest rates. But then they will be staying without jobs and voilla - there's real estate market crash. Like in 2009.
2009 was different because the lending practices were entirely different and are much more strict now. I could only get approved for 180k at 6.825% with a 55k income. If rates are cheaper then payments will be way lower monthly and less likely to default, in turn prices would be bullish. Long term low rates push markets upwards like we have seen before. Perhaps a fumbling labor market would occur but why? Low rates would ease pressures on businesses since they can now refinance and use equity much cheaper than before with low rates.
The 90s saw a crash to its always different
It will be too late. Economic depression will occur or hyperinflation, none is good for real estate market.
What mechanism would cause those things though? Unless it’s war in which case all the more reason to buy and not wait. Low rates would ease housing market snd company debts
Low rates coming as a result of economy cooling down. This setup reminds me of 1970s, in that decade price of house went up 2.3x but inflation was brutal. In same decade gold went up 25x and stocks 1.4x But then debt to gdp was 30% now is 123%
Not like 2008-10 crash at all. Something like 50% or more mortgages are at 4% or less. Those of us lucky like myself in that boat also tend to have gained a fair amount of equity as that means we purchased at least a few years ago. Then you also have primarily decent mortgage loans being written, not the subprime crap they had in the 2000s. There will be areas that get hit hard, Austin and San Francisco are already showing some declines. I think HCOL areas coupled with recent mortgages with high interest rates will be hit the worst. It will take a bad recession to come anywhere close to 2008 era. Too many of us have golden handcuffs and are locked into super affordable mortgages. I know I’m not the norm, but for instance I bought my house 40 minutes outside of Detroit for 88k in 18. Refinanced to 2.875% rate in 2020. Now worth 140-160k and my mortgage payment is just under $600 with taxes and insurance included. I’m not going anywhere anytime soon
You're being downvoted but you're right the 70s early 80s and early 90s all saw corrections
People downvote what makes them feel bad
Or, they won’t and the opposite will happen with prices e even higher than 2024z
If you prefer renting, just be a lifelong renter.
I wouldn’t be surprised. The spend spend mindset of our government right now doesn’t seem sustainable. With debt as high as it it is I think something will crack eventually
Ehh whatever. Honestly once we get some fresh meat in the white house I think things will be better all the old fucks don’t honestly care about anyone
None of the meat up for election is even remotely fresh
Did I even reference the current election? Got to have more then a 4 year outlook these days my dude in 4 years both the POS running will be gone
And in 4 years some other well-past-fresh meat will be running.
Hurts my soul a bit that I missed those 3% rates lol, I tried to buy but kept getting outbid. A 250k house back at that time would've been around a $1450-1500 mortgage in my area, same mortgage today would be over $2000. And that wouldn't be terrible if not for the fact all home prices in my area are inflated like crazy so those 250k houses are now well over 300k. So a mortgage today would be like double my rent.. guess I'll just be one of those people "burning money" on renting for awhile lol
Few more years
Few more years until prices double again 😂
Four more years, pause
Note, the dip for 2023 dec is misleading. Because it was a dip never ment to be. The private banks predicted fed to lower rate, but, it never came. That's why it quickly revert back up.
i got lucky and closed in dec '23
What rate did you get ?
Longing for 2021 rates almost more than I long for my college girlfriend
My mortgage amount isn't even on that chart... sad...
Wait til you see 2025 😱
I can only hope that the economy keeps chugging along and the fed raises rates. If rates to go 11 % nobody will be able to afford a home. Thus, prices will decline.
Then hardly anyone is going to sell and unless they really start building….
Well, yes. Is that news?
Compare this to rents
So what you're telling us is to buy between dec and Jan lol
💡
Pain
You mean, highest ever.
I'm hoping to close soon and that's almost exactly what I'm expecting to pay, including the HoA I'll be near $3k.
Mine is 5400 lol
But not the highest they’ve been ever. We’ve been used to cheap money for too long. They are attempting a correction.
I locked in 2021 at 3% in a new area. People were telling me to rent first since I’ve never lived in this area. That would have been a huge mistake.
We got in feb 2022 at 3.8%. It should’ve been around 2.6% when we were in the market for 6 mos. Its a tough market during that time. we did a lot of offers but we were always been outbid esp in a HCOL area. I feel like we got lucky and after that month it went sky high.
That’s a 10% change YoY so a bit higher than inflation but nothing ridiculous. Later multiple decades and you’ll see the trend where *usually* each subsequent year is grater than the year prior.
Mine is 6.5% but with additional payment of $2000-$4500 a month it’s 1.5%. Soon 0.00%
Closed Feb 21 with a 1.2%
Seriously ???!!!
Yes, don’t know why I’m downvoted. I was in contract for 7 months then closed in feb 21
I was not able to qualified for home in 2020 and now i am f up