We've been talking about the lock-in effect for over a year now, but sometimes looking at the cold, hard numbers helps make it super clear. Here are the costs to move up and to move to the exact same home you're in now. Both numbers are nuts. It's all because the Fed dropped rates to record lows, and recovering from that will be pretty ugly. Affordability is unlikely to recover any time soon. ICE Mortgage Technology Andy Walden CoreLogic Redfin #realestate #realestateinvesting #housing #mortgage #mortgagerates #economy #personalfinance #realestateinvestor #homeprices #affordablehousing
Bill Black
3mo
Unless one was to take advantage of a seller offering an Assumable loan- just put a new buyer in a $390K townhome with a 2.363% loan putting down $65K with 27 years left on loan! Saving her around $800 a month. It's the year to get creative! Now only if legislation would push fannie/freddie to offer assumables!
James Deskins
3mo
I have been planning on downsizing, personally, in the next few years. And, as this shows, I don't gain anything by doing so, at least not at the moment.
Lawrence Soza
3mo
The housing market mirrors our Congress - a limited number of spaces held by the same people for 40-50-60 years. Create a path & incentive for these homeowners to downsize. Maybe exempt them from the cap gains tax if they move to under 1000 SF (hey, if we can forgive student loans, why not?). Diddiling around with interest rates is not going to solve the problem. Was there more inventory or buyer opportunity when rates were in the 2-3 range. Nope. Will there be if we have those rates again? Nope. But we're welcoming millions of newcomers over our boarders, who, like it or not, require shelter and will probably push up demand well past what any of these "fixes" might cure.
Greg Leavitt
3mo
The ultra low rates weren't the problem, it was the ultra long amount of time they kept their grip on the jugular. Obvious they were steering us to this exact cliff. Preventable then, for years, but not so much fun for everyone now. That means everyone. And, no, there's no real end in sight to this. Time's the only answer IF they don't go manufacturing more friendly fire for us all to dodge in the meantime...which they will, so....
Paul Hindman
3mo
IMO: This dynamic was knowable. Varying outcomes should have been modelled. Were they? Did TPTB know this would happen? You know those really smart financial engineers that do nothing but model the outcomes of data and the people, politics, policy and industry that drive all data... Regardless, it is what it is until we regain balance. How long will that take? Without a recession reset, which seems to be off the table, it could take a lot longer than anyone can predict. Besides, just think about all that property tax revenue that's being raked in from the historic increasing in value...
Lynn Hooper
3mo
How many people would love to have their 1st rental property with 3% arbitrage & 30 year fixed amortization? Historically I have never seen such an opportunity. This increases properties in the rental space while adding buyers at the current market rates even if the price point is a lateral move. No one is locked into a home, unless you cant see the opportunity you possess. The segregated depreciation & high rents adds passive income,
This is a very accurate depiction of the market right now. Its very expensive to move and yet many are seeking either their first home or a home that better suits their needs. People will always need a place to live which creates a demand curve that is relatively constant. The supply side has been the reason we are experiencing the market the way that we are today.
Yep. The Fed totally screwed the housing market.
New Homes Sales @ Perry Homes Santa Rita Ranch
3moInterest rates are back on the move. The FED will need to see price come way down before any loosening happens in my opinion. Unfortunately it will take a recession to do so. We are starting a big stock market correction which will have adverse effects on employment. All the high mortgages people currently have will be unsustainable once jobs start to be lost and another 2008 just bigger is on the horizon. IMHO