Not an expert, but the Fed seemed especially bad this most recent cycle. Certain parts of the economy were hurt by covid (like cruises) but when interest rates go to zero all the other parts of the economy that were doing just fine - like housing/tech - go parabolic.
i guess would just like to see higher interest rates if it means less bubbles and more government policy to steer markets & contain bubbles from emerging.
Prices are going up, better get in quick. The value can only ever go up!
Can confirm. Nothing like finally hitting the point where you think you might be able to afford a home, only to see interest rates skyrocket and price you out of a mortgage on the very same homes.
Yup that’s me too.
What is most insane is that even thought mortgage rates are 7% or whatever, there’s still no freaking inventory in my area and prices have barely gone down ETA and are still even going up in more desirable hoods
Yea, turns out that when a lot of the demand is coming from rich people/corporations, interest rates don’t really move prices much. Who cares about rates when you can buy with cash. Very frustrating.
Meh, it’s because nobody wants to part with a sub-3% mortgage.
In Canada we don’t yet have the same massive institutional buy side pressure with private equity scooping up the houses. Our prices are still pretty high though, and it’s more old fashioned supply/demand. Among OECD countries we have the fastest growing population because our current Federal government is very bullish on immigration (correctly, IMO) as an engine of economic growth. But fast population growth is outpacing housing supply growth, so Economic 101 tells us what we should expect.
That is exactly where I am. I would like nothing better than to move. I am getting ready to combine households with my girlfriend, and we flat out need a bigger house than the one I currently own. But what are we to do? I can sell my place…and then what? If I can even find something else, my interest rate will triple, and my monthly payment will at least double. The same goes for if I just sell and we find a bigger place to rent. Meanwhile my current monthly payment is < $1k.
I’m better off adding another wing to my current place or enclosing the garage than lighting that kind of cheese on fire.
Yeah, rates aren’t going to affect home prices all that much because most folks aren’t in the shitty ARM’s like they were last time around - so they’ll just hunker down or just be stuck.
But I think you’ll likely have another home buying opp and that is going to come from a deflationary period + job loss that will lead to prices across the board dropping, including rent prices, which would put pressure on people to keep up with a relatively higher mortgage payment.
well, higher interest rates also means less homes being built and supposedly this has been a big problem since 2008.
Seems like it would make sense for the govt to subsidize builders to incentivize them to make houses the same way they incentivize farmers to grow food that they would otherwise be taking a loss on. Nah gotta spend a trillion on the military budget instead
One of the worst thing about spending money on housing is everyone with a house doesn’t like it. Unfortunately that’s the majority of the voting public. Humans suck.
Also the idea we will have a functional federal government going forward is a pipe dream.
I think this is an understated risk that I worry about when buying a house right now. Your situation is not unique, I know several people making the same decisions. What happens in a year or two if rates ease back to the 4-5% range? I don’t know, but it wouldn’t surprise me to see inventory flooding the market from people like you. I worry about how tightly this inventory restriction is wound up and what the end result will be when it snaps.
I don’t think high rates putting a burden on new construction can compete with all the negative scenarios that could to lead to prices falling imo. This seems like literally the worst couple months in human history to buy a house.
I think one of the big problems is that new home building is going to slow wayyyyyy down. I work in an industry related to new home construction and we are already seeing a downturn that we are bracing for to continue for at least two years
Higher interest rates are definitely cutting supply. Housing starts down 18.4% YOY.
Prices are high, but production has cratered due to interest rates. Not that many people can buy new houses because of the aforementioned spread between their current and future interest rates. House prices are ultimately tied to construction and land prices (at least in fast-growing markets), and those haven’t come down. If interest rates drop to 4-5% again, there will be more inventory but also massively more people entering the housing market.
The only thing that can offer “relief” is a big recession or for some reason new supply being delivered more inexpensively.
This just means that the US will be a State’s Rights paradise where all citizens can enjoy the high standard of living of rural Mississippi.
Yea wouldn’t that mean we need to build cheaper housing where they are affordable with higher interest rates?