30-year mortgage rates are near 8% with excellent credit. Interest rates have climbed for the past three months straight. The Fed is considering another interest rate increase for November and December, possibly pushing rates up to 8.5% or even 9%. The reasoning is that higher interest rates will "slow down inflation".
Home sales are at a 13-year low. Factor in the higher cost of insurance and the fact that property taxes are going up to unaffordable levels and the very high cost of labor and materials for home construction... and you have a real estate market that's going to crater.
I personally know several homeowners that had their homes listed for sale, but have removed them from the market in the past 2 months. They will wait and hold on to what they have for now. One real estate agent mentioned to a couple that they should keep their house off the market until at least middle of next year and then decide based on market conditions.
I'm suggesting that the U.S. economy is a three legged stool... and one of those legs is housing and private & commercial real estate. If it fails, the economy goes into a deep recession at best.
We need a real estate crash.
Young American families need homes and they are currently unable to afford them.
Home prices need to come down 30% or more.
We've been fed a lie that there is not enough housing. This just is not true; what we've had is a misallocation of capital where investors/Airbnb were eating up the homes keeping them off market for families that want to own. We need a return to normal home ownership.
Here’s the problem though: a real estate market crash would be a repeat of 2008. That recession would cause many of those young, new homeowners to lose their jobs, then their house now that they can’t afford the payments. Then the banks start hurting because they’re not getting their money back. Our banking system, because of its fractional reserve nature, counts on people paying back their loans so that the money can be reloaned to others. Other home buyers, other businesses, etc.
It causes a chain reaction that puts the entire economy into a recession at best. In 2009 the govt avoided a deeper recession by bailing out the banks. That of course is just putting a bandaid over the true problem.
The real problem is our fiat currency and Federal Reserve coupled with fractional reserve banking practices. Those two combined are a house of cards that is a pain to keep up, but must be kept up or everyone wakes up tomorrow with no money. Except for the preppers who stacked gold, silver, and bullets.
How do you dismantle such a system while keeping the economy running smoothly? You can’t. The smoothest way would be to create a metal-backed alternate currency and make everyone switch over to it simultaneously. Even that wouldn’t solve every problem, not immediately, and there would still be mass confusion and chaos.
While I do not want to see another 2008 (it was a rough time for me personally), we really need the whole economy to crash. Housing, stock market, all of it. Yes it will hurt but money is the only thing that ALL people "listen" to.
I used to think that the great awakening would occur when people learned about what has been done to the children. I no longer believe that. Especially with what we've seen the last month. Even Jan Halper has said this. The only thing that will wake up enough people to make a difference is their money.
I agree that our entire monetary system is a house of cards and I have no idea how we will fix that. Perhaps flushing the system is a start.
They don't give a damn about children. Many even got their kids jabbed at the Temple of Fauci
Central banking caused %99 of these problems, but your right. We can’t ease off the heroin. In 2008 Ron Paul said a hard fast crash is better than endless bailouts. He said the system is going down and the longer we can kick the worse it’ll be. He said a prolonged slow bailout bail in, could destroy civilization. At least with a hard fast crash over 6mths to 1year. People have enough in savings to local support to get through. Problem is….. stretch that out into 5 years 10 years and society may never return.
Look at what the imf had done to the 3rd world. Constant debt, loans, interests. They’ll never get out. If all the debt on this planet was paid off, the system would crash. Technically, there’s more debt than money so we can never come close to paying off the debt. It’s a Ponzi scheme. It’s over.
I agree & have been trying to explain this to my family to no avail. sad because they’re making poor financial decisions, and I just have to sit back and watch. I think we’re going back to a time when America was Great and farmers, etc had respect. more agrarian…Washington thought everyone should have their own land, a place or their own.
“The phrase refers to the independence of the peasant farmer who is freed from military oppression.5 In the biblical passage there is a juxtaposition of the simple life with that of royalty or the state.6 Thus, it would seem that Washington's use of "vine and fig tree" in its full context would be an appropriate message in the setting of the American Revolution and the founding of the United States.“
https://www.mountvernon.org/library/digitalhistory/digital-encyclopedia/article/vine-and-fig-tree/
Yeah I feel like we alm will lose stuff. For our freedom it's worth it to let the deep state system go. Real money and I don't thinknit will be long before we are all back on our feet.
I think opportunity will be vast, whole industries are folding and the work they do will need doing again. Build a company.
We replaced it. It's running in the background. This is just a demonstration of the evil it is to wake normies. I'm sure it will fall and it will be the necessary scare Q posted about. It has to die it cant be fixed. It's a giant ponzi scam. Let it die. I would welcome its demise.
It's going to collapse under its own weight. Already has, we watching a controlled demolition of the fiat.
Collapse started 2019. Covid was timed as a cover.
And to add...
We've lived the roaring 20s for the last 10 years or so. People made money out of thin air instead of hard productive work. That cannot go on.
And after the roaring 20s we had a great depression. History does not always repeat but it rhymes. There will be panic. It will be scary for some. It will not be smooth. Our entire system is corrupt and it must be destroyed to be rebuilt anew.
That is just my opinion. Gloomy though it is, I do believe that it will create happier times for our children and grandchildren.
thankful for people like you who understand how insane it is for young people right now. Prices are completely out of control and basic starter homes are out of reach for a large swathe of the population. When you try to explain it to your parents or others who grew up in the 50s-70s, they just refuse to see.
what starter homes?? they dont build them any more any new construction i see is all big high end stuff...
That is because people buying new homes want them to be in jogger proof neighborhoods for as long as possible. Old style starter homes were possible in the days of segregation, redlining, realtor discrimination.
nope they do it cuz there is not enough profit in the small home market...
Agree, tat leaves the manufactured and tiny home guys filling the gaping need. Warren buffet got into manufactured home business. There are over 50k mobile home parks in the states. Dense land use, collect only lot rents. Mote millionares than any industry out there. Many parks are very nice, cheap to live in. But it's not land ownership and it sucks. Buy dirt, own it up front.
Yep, that's why it's even worse. By "starter homes" I mean 50-year old homes that were originally built for 20k now selling for 300k-400k. And people wonder why America isn't moving forward. We have a generation forcing us to work for decades to pay for already paid off houses instead of building anything new. But if you try to discuss this with anyone, you just get told you don't understand business or are jealous.
I live in a home built in the 70's and it's exactly right. Probably sold for $40k - $50k back then, it's 10x now and still rising.
I could rent my house for $4,000/mo and I would have a literal line of people begging to sign a 5+ year lease w/ a $20k security deposit by EOD today.
That's fucking absurd.
The market is grossly over-inflated by at least* 30-40% on average. And even that price adjustment is overly aggressive, but has to be based on inflation and The Fed's money printing addiction.
Older homes, not newer homes. Smaller homes. 1, 2 bedroom homes. The less desirable the home the better the price will be.
No kidding. Easy real estate money, trump sped the economy up so we could get ahead and prepare. All on the back of the deep state.
If we are corporate employees in what world are the employees responsible for the corporate officers financial decisions. How do their loans become an employees debt?
I suspect we are not liable for any debt since trump got in office. Any seen Nything on this debt angle besides nesara?
There is a third aspect that is actually the REAL problem.
That is: the current system allows a private business (Federal Reserve System) to not only print money out of nothing (fiat) and use fractional banking (another form of fiat), but also CHARGE INTEREST ON THE MONEY CREATED.
THAT is the primary problem. If the other 2 things were done responsibly (which they never are), we could deal with them, but the charging of interest on top of it all makes it IMPOSSIBLE to ever pay it all back -- at least, not without selling every asset that exists, including humans.
During the Great Depression, we had massive economic misery, and we also had manipulation by the Federal Reserve via money printing.
BUT ... there was ONE country in the entire world that had it even worse than the USA did, and were able to emerge within just 5 years to become the most economically prosperous nation in the entire world.
Germany.
What Hitler did for Germany from 1933-1938 is still referred to (by those unafraid to tell the truth) an "economic miracle."
The blueprint is there. We just have to follow it: Dump private central banking, bring money printing under direct control of the government, no interest charged, among other policies.
https://www.bitchute.com/video/iEP3VtQ9ZTbR/
And we’re already selling humans daily.
Great description of how we got here MAG768720.
"counts on people paying back their loans so that the money can be reloaned to others"
That isn't how that works. When a mortgage is taken the banker creates new money and it is paid back with interest. They do not loan out money on deposit. This is why inflation is a constant thing, because they are constantly inflating the money supply.
There used to be rules about how much they could create(loan) based on how much was on deposit but those rules were removed around 2008 I believe. Nope, in 2020.
"As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent effective March 26, 2020. This action eliminated reserve requirements for all depository institutions."
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
I think the obvious answer to the stated dilemma is this: the cabal is making housing unaffordable so we will move to apartments in 15-minute cities. Period. End of story. None of what is happening in the real estate & financial markets is organic. It’s all part of the plan.
Next up: they’ll make energy costs and taxes so high no one will be able to afford their homes that have them.
That’s already happening.
As a home owner, what does this do to my mortgage?
If you have a fixed-rate mortgage, nothing. If you have an adjustable-rate mortgage, you're going to pay more as interest rates rise.
I guess what i am asking is if/when my house drops 30% in value, would i be able to adjust my mortgage to reflect that? Of am i stuck trying to sell at a loss?
You're stuck. If you must sell, look into a "short sale". The other alternative is simply stop paying on your mortgage and allow the lender to foreclose on your house. If you're in trouble, talk to your lender. Payments may be adjusted and such. (granted at the expense of a longer mortgage) Doing either of these will likely negatively impact your credit rating. I figure a short sale would be the least impactful though. (other than extending your mortgage length)
Since you're already stuck, you may consider holding on if you can. The market is stupid right now and inflation keeps soaring. It is possible that your salary may rise over time, allowing you to pay down your mortgage so that you are no longer "upside down" and this would allow you to sell your house as normal; albeit at a loss from what you paid for it.
Disclaimer: I am not a finance person. I take no responsibility for what I have provided. Do your homework and seek out proper financial guidance.
I appreciate your honesty as well as your disclaimer -- however, you ALSO sound like a very knowledgeable and logical person regarding this topic. And given that, let me ask your opinion on this question -- some folks on this topic have mentioned living in mid-sized homes built in the 60s/70s that sold for $50K-$60K, that are currently "worth" 10x or more than that. I am in that boat...and we just paid off our mortgage two years ago.
Given that we've lived in a disgustingly BLUE area for the past two decades in the Peoples Republic of Northern VA and HOPE to move south to SC to escape the suffocating taxation and proximity to so many nasty/brainless liberals.....what would you do? The price of our VA home continues to crazily climb, while the home prices in the SC coastal area we wish to live are starting to tumble. Our hope was to sell our home and then buy a new home down south in cash. But my gut feeling is that we probably need to wait another 6-18 months to see what transpires.
Do it you won't be sorry. I did.
Your google is as good as mine. Sorry.
I figured i was stuck. Ty.
As a homeowner there is nothing to worry about since there is no reason for anybody who bought more than a year ago to have an adjustable-rate mortgage. Nothing changes as long as you wait a few years before you sell. If you have owned the property more than 5 years you certainly have equity even after this past year's drop in values. When interest start falling more buyers will enter the market making it easy to sell once again. People who bought at the peak of the market in 2022 will need to wait about 5 years before it makes sense to sell.
It all has a place in the market.
The problem is that it is not anything close to a free market. It's a completely rigged system that benefits homeowners at the expense of young generations. Literal trillions in underwater MBS bought up by the fed to artificially prop up home prices.
Also boomers like me have not come close to replacing themselves. They will continue to move into assisted living or die. In the next decade or so I expect there will be more houses than buyers. Time will tell.
Boomers will be retiring for the next 10+ years which will free up a lot of the housing. As people age and retire they try to simplify their housing so often buy condos or rent apartments and live off the proceeds from the sale of tier homes. Historically 2-bedroom homes were not built because it limits who future buyers could be. Boomers are such a large population that 2-bedroom condos and houses are just now becoming more common and will continue to expand.
Too true I am a boomer and moved from a much larger house to a 2 bed. Have another 2 bed in a warmer climate.
Not if we keep allowing tens of millions of illegals into the country with the promise of instant citizenship or green cards.
There has to be at least 50 million illegals in this country by now.
Very good point. Probably smoking too much hopium but I really do believe if anyone can mass deport them it will be Trump. And I really hope what I think is going to happen is going to happen.
Housing's a symptom. O'Biden/Dem's the disease. Stop printing money, keep interest rates high for a while, the market will tank, and things will calm down. Including housing.
Can't do that while OBiden needs to send your newly minted dollars to various shitholes on the globe.
My home value has nearly doubled in the past 3 years. The market I am in is currently holding steady. While the equity in my home feels good, I am good with a crash. I want my children to be able to own a home of their own someday. We didn't buy our home to get rich, we bought our home to have a nice place to live and raise our family. It is easy to get pulled into the world of yearning for wealth.
Our country/world needs a hard slap in the face to wake us up and remind us what really matters and it ain't money. God, family and close friends is real wealth. It's so easy to lose track of this.
yes, but if I sell I need to have a place to live, so I either have to buy or rent. And I value the stability of owning for my family.
You will own nothing and be happy!
Next up all these folks will go belly up on their houses that tanked just like in 2008. Then Blackrock will come swoop them up and own all the houses of America and rent them back to you.
Enjoy!
I noticed that in FLORIDA there is a HUGE swath of corporate owned homes being rented out. More so than in any other area I have seen. Do you notice this too or are you not paying attention to Florida, perhaps?
Part of FL's problem is the insane insurance rates. We built our house about 20 years ago and the rates have been around 2k per year... this year is was around 6k for the same policy! We upped our deductible to 10k and got our rate down to 3k. I can see how between insurance and the higher interest rates, a normal person trying to buy a house is unobtainable. And around us, a 20 year old double wide trailer on 5 acres is going for 250k and more. That would have been around 100k a few years ago.
On top of all that, because of the ridiculous home prices, the property taxes have gone sky high as well. It is really pricing a lot of normal people out of home ownership.
Most people aren't aware that homeowners' insurance rates went up for people with good and excellent credit to subsidize those with poor credit. Same thing has been done with auto insurance. If you have poor credit, you pay higher interest rates but lower insurance rates.
Comparing Northern Indiana to Central Florida, prices are virtually identical. The only thing I have noticed cost more are CAR INSURANCE and HOME INSURANCE. We have a 2100 square foot home in central FL about 45 minutes to the west of New Smyrna Beach. A lot of people in FL were telling me about how much things have increased especially real estate. In my opinion, home prices are equal to our area in Indiana - so they may be experiencing a change but for me, it's the "new normal."
My buddy's wife who works in real estate told me last year to not attempt to buy in the next couple years. She knows...
If you can afford to pay cash, when housing prices fall, that would be the way to go.
This is my plan...
I'm hoping to close on a 5,000 sq ft remote country-esque property using only silver when the market collapses! That's my dream at least.
Until then I sit on liquidity and patiently wait for market/price realization to happen. It only needs to happen once... housing, GME, AMC, silver, etc. So many rigged markets poised for implosion/explosion.
Buying a home now is not a bad strategy. Prices have fallen 20-30% since the peak. The strategy to use is buy based on a payment you can afford and use an FHA loan which only requires a 3% down payment. All FHA loans qualify for a Streamline Refinance with no appraisal or income qualifications as long as the previous 12 months of payments have been made on time. You cannot have a drastic drop in income but other than that it is a slam dunk. Just remember that an FHA loan can only be made by a HUD approved lender so many brokers can't offer FHA loans.
Licensed real estate agent here (licensed in 2 states) and both areas where I’ve practiced my business has not seen a decline in prices at all. In fact, my aunt just sold her home for over asking price, and she listed it high in the first place. I will say, there was a lull in the market about a year ago, but came back strong earlier this year. Homes were sitting on the market a little more than average, but not much, like 30 ish days. But it’s probably different in other parts of the country.
You also have to pay PMI for the life of the loan.
It's really nice being a veteran and not having to do any of that. No PMI, no down-payment - I see that as my only veteran's benefit that is worth it. Any vet that is honorably discharged can get a VA loan.
That's great and something I did not know. I know a lot of the vet medical care is criticized by many but my BIL is very happy with it. Thank you for your service BTW!!
FHA loans use MIP rather than PMI. It is a much lower rate and can be dropped in a refinance once the property has appreciated. Any loan with less than 20% down requires Mortgage Insurance so a purchase today will see an opportunity for refinancing to a lower rate in the future and when rates get lower property prices appreciate since more buyers enter the market.
MIP, you are correct. But unless you put 10% down on FHA purchase you have to pay MIP for the life of the loan no matter how much it appreciates. If you put 10% down you can be rid of MIP in 11 years. EDIT: You could always refinance but who wants to do that at 8%?
My point about refinancing is based on the fact that rates will swing significantly lower in the next few years. When rates decline prices will increase so chances are you could get a 3% decrease in rate and might even get a conventional loan at less than 80% LTV so no mortgage insurance. The younger generations most likely won't stay in the home for 11 years total based on history.
Found the realtor!
I left real estate in 2003 because of all the fraud that led up to the 2008 crash. I continued in lending and teaching for a few more years in hopes the fraud would be stopped but quit the whole thing because it just got worse. My mother was a real estate broker for 50 years.
We are getting into 70's interest rates. Oil embargo soon?
70's interest rates went above 20%. Mid 80's interest rates were 11%. 90's interest rates were 7.5%. Early 2000's interest rates were near 8%. Interest rates have been so insanely low after the 2008 crash that most buyers under 40 have no basis in historical rates.
Please do the math for me.
70s: median home price $26k interest rate 20%
today: mediane home price $400k interest rate 8%.
This is literal insanity that is nowhere near comparable to previous times. Just the interest payments today are the cost of homes less than 20 years ago. It's sociopathic behavior, but judging from your other comments in this thread you are a property owner trying to convince everyone to keep paying these absolutely insane prices
First, I only own my primary residence and nothing more. Second, I have not been a mortgage or real estate professional for nearly 20. I could give you enough data to write a series of books on the subject. This is not the place to do so.
Let me explain Median Home Price in a very simple way. Remember that means 1/2 sell for more and 1/2 sell for less. 2 homes sell for 250k, 2 homes sell for 500k, and 2 homes sell for 1mil. Median Home Price is 500k.
Now that sales have slowed and only 1 home sells for 250k and 2 homes sell for 1mil based solely on market conditions with zero change in comparative prices of the properties the Median Home Price is now 1mil. Prices did not go up or down but the quantity at price range changed. 1/2 sold for more and 1/2 sold for less.
Not at all what the vast majority of us have experienced. Homes in my city are easily doubled in price since 2019 across all price ranges. They have not dropped yet at all. Many other places I have visited, the exact same thing is going on.
Questions to ask:
Are the homes actually selling and are they selling for the list price. Are the homes selling in less than 30 days or does it take 6 months or more. Are there economic conditions driving sales such as expanded industry in the area. Has the area seen a lot of growth in new housing construction. Have you looked at housing 20 miles away from where you decided to look.
Again 1% of the geographic area of nation will continue to see high prices. I spent a lot of years working with people who wanted to live where everybody else wanted to live and had to pay the price or look elsewhere.
Same here and I live in Chiraq.
My mother commented to my sister and I that in the 70s they built their house for what her car cost her now and she said how did it take them 30 yrs to pay off a house but now it’s paid off in 6 yrs. And their house payment was nothing like mine is costing me and I’m in a house that was $150,000
My parents bought their first house in the early 60's for $16,000. They did that on dad's income which was $3,000 per year and had to have a 20% down payment. $3,000 per year was not an entry level salary those days. Now Walmart pays $30,000 starting pay for full time workers so things are in line based on starter homes costing $150,000. The big difference is that people no longer need 20% down payments but will have to pay mortgage insurance if they don't.
Most people I know and most houses I’ve seen don’t start anywhere close to $150,000. I’ve looked at several north of Atlanta like 1hr away and farther and 200-250,000 is about as low as it gets.
Atlanta has been a high-cost market for decades. While there are plenty of $150,000 homes there, they are not in neighborhoods you desire. That is a historic problem in Real Estate and why the saying goes that the three most important factors in Real Estate are Location, Location, Location. In larger cities to get lower priced homes you either have to go to inner-city or very distant rural.
I now live about 5 miles from the ocean on a golf course in a resort town. This is a small town as far as residents but gets insane numbers of tourist. I speak with a lot of younger people who complain they can't find anything in their price range. When they get honest about the problem, they admit they want to live in a home like their parents' house but forget their parents went through three houses to get to that point. Again, this is a small town so when I suggest they look 20 miles out they complain they should be able to get to work and the beach in a few minutes like when they lived with parents.
A major Metropolitan area like Atlanta would be expected to have starter homes in the $200,000 plus range. My first home was a 3 bedroom, 1 bath, 1100 sq ft with no basement or garage on a busy street. That starter home is where I built equity until I was making more money and was able to move into a larger home. I'm on my fourth home now and never owned more than one at a time.
My parents have been in same 4 bed 2.5 bath all my life with a partial basement and I’ve even looked into Alabama in small towns with nothing really below 250-300 and if you find it it’s gonna need lots of work which is more money. Cartersville outside of Atlanta by an hour or more is 350000 for town houses. I bought a double wide and all set up and foundation was 150. I couldn’t have built the two bed two bath I wanted at the time for that
They need to make fuel ungodly expensive so that people will be forced in to EVs.
I strongly believe that all of this is a result of these huge companies buying up nearly all of the houses in order to turn them into rental properties. The average person cannot afford to buy anymore.
I personally witnessed it in my old neighborhood, after living there for just 2 years, we were at 75% rentals according to the HOA board.
There is a neighborhood close to me that is a “build to rent” neighborhood. The company bought the entire plot, built the neighborhood, and it’s 100% rentals.
You can trace these big companies all the way back to our usual villains. It’s strategic.
Own nothing and he happy right?
I bought my first house in the mid 80's and had to take a 15-year FHA loan to get a rate below 10% which we got 9.5%. 15-year Conventional rate was 10.5%- and 30-year rates were above 11%. Sold the house after 7 years because when rates came down, we had considerable equity and were able to buy a larger house.
Look at the blue states only. See what the established wealthy are doing regarding local housing, allocating taxes and keeping 'their' wealth to prosper themselves and their kids?
Everyone else can complain all they want, but the truth is - the left is robbing you....legally.....County by County! The Democrats who preach equity, inclusion and anti racism are distracting you, out maneuvering you and gathering wealth (housing, land, resources) for themselves. Locally. It is a simple strategy. Unopposed. Unchallenged.
One can now SEE it via the Blue States. (the grift expanding) County by County the wealthy gain and preserve their wealth. Exclude the poor (both black and white).
The divide is happening right under your noses because you refuse to get involved, Locally, and see the grift happening in your own back yard.
While you concentrate on War, Debt, the UN, NATO and WEF, (and feel helpless) the Democrats and Rinos plot to plunder this nation's wealth county by county. And, they are succeeding. The exact thing happened in the 80s. It has happened over and over and over.
I agree with other Anons, Conservatives need a swift slap in the face. WAKE UP!
You ARE free Men - Act like it. Use your God given intellect and Protect your way of Life and protect those who cannot protect themselves. That is you duty - AS GOOD MEN. Honorable Men.
Yesterday The Fed maintained its target rate range, meaning no increase.
I’m no optimist when it comes to our current situation but two things to consider. 1) We already had a recession but the current “administration” refused to view it as such; and 2) The Fed will probably start to decrease the target range which should, in time, bring some relief to the housing market.
Supply and demand are such an important part of the conversation. Supply is restricted and underlying demand remains strong. The high interest rates have cooled the market but for how long?
I have long believed that we were in for a housing crash but more recently, I’ve leaned more towards a belief that the housing market has the potential to stay propped up while other markets suffer (e.g. commercial real estate or auto). No one in their right mind is going to sacrifice their low interest rates. Houses locked into the historically low interest rates will, for the most part, stay off market. That is, if we are able to avoid a deep recession due to other industries/markets seeing a collapse. Banks are another watch item having already seen some failures.
Also, don’t forget that the war machine has been spooled up and we’re headed into an election year.
I’ve seen many people say this but without the qualifying point about avoiding a dee recession.
Far too many people are overlooking the reality that the economy is interconnected.
No one is selling? Ok.
So then real estate agents don’t get their commissions.
Money being tight, the don’t buy that car or they don’t go out to that restaurant etc.
Now restaurants owner and car business notice their sales numbers decline. This goes on for awhile… after all, no one in their right mind is selling when they’ve locked in a low rate.
The situation just keeps getting worse so restaurant/car business decides they have to layoff some staff now since the economy has slowed.
Those that got laid off. They’re not making money. They start spending less too. It repeats.
Now suddenly there’s a bunch of other people in a similar position. Job market is getting tighter now- unemployment is up.
The ones that bought overpriced and with high rates are already trying to sell to stop their financial bleeding. But no one’s buying. Rates are too high and you lost a few because their job situation changed and they can’t afford a house like that anymore.
So it sits. No biggy. Mr Fixed rate is doing fine. Right?
Well. Mr. Fixed might have a credit card or car payment. And this time his luck runs out. He’s the one that’s out of a job. Banks still need to be paid. Where’s the money coke from?
“Yeah but it’s be stupid to sell”
Mr Fixed is looking at the equity and thinking “it’s grown a lot. I’d make a pretty penny on it.”
The circumstances force his hand. EXCEPT. Now he’s trying to sell at the same time the others who are drowning on their higher rate repayments are DESPERATE to get out.
The desperate sellers have started to drive price down. Mr Fixed seeing this starts to get a little worried. He wants to get out sooner rather than later before these high rate desperates drop prices further. So he accepts a lower price than he was anticipating.
Rinse and repeat with each of them getting more and more desperate to get out
If things worsen, you’re spot on. That’s why I think that housing gets hit “last.” There are other markets facing the music as we speak. We shall see. With all of the investors buying up housing, I can’t help but think they’re on the sidelines to buy when that squeeze is felt.
Houseing market crash
Wall street crash
Let's go, lets pull the bandaid off
This is only the beginning. Remember that the baby boomer generation owns like ~75% of the housing market and that generation is starting to die off. Starting this year there will be 3-4 million boomer deaths per year and that is going to create constant downward pressure on the housing market for the next 20 years.
You are the only person I’ve seen mention this (other than me)
I think you are 100% right.
don’t forget, boomers wanting to cash out their chips for retirement as well.
And yes. Boomer parents with property portfolio, kids inherit, “I don’t need all 5 of these houses. Sell 2-3 and go on a holiday/buy a nice car/shopping spree/whatever”
Going to be interesting to see what happens on that front.
Also, interest rates don't matter much to boomers who are downsizing since they have often built up enough equity to pay cash for a smaller home. I live in a spot where in the first half of 2022 you could list at any stupid price and get an all-cash offer in 1 day. The majority of the homes were never viewed other than on the internet.
Bidenomics. Designed to collapse the financial system. Working as intended so far.
Our fiat money system is near an end.
correct and overall it's a net positive, but one does have to wonder if the people who have saved cash for their whole life are simply going to be left out to dry.
Yes and no. Technically people that have saved cash over the last 20 years have lost of 50% of that value, likely 70%. It's hard to calculate because of the unevenness of supply and demand, improved technologies along with inflation. They should have diversified some of their savings with gold and silver as a hedge.
Savers always get raped because redistribution of wealth will say that they are too rich and need to share it with everyone else (not you or me, of course, we don't count.)
The value of their money is rapidly dropping to zero. Honestly thinknits there now.
Yep, sounds like late 2007... but I think what's coming will be 100 times worse than 2008.
The 2008 crash was a result of the heavy use of Libor Adjustable mortgages that ballooned from 2% to near 10% over a few years' time. Nobody was able to refinance since they didn't qualify for the size loan they took initially, and the loans had a 5% prepayment penalty. The original loans were no down payment loans and refinance loans required equity plus the 5% prepayment penalty.
Reme.ber 1979 interest rates were 29%. We were adjusting to the new petro dollar after coming off gold. Otcwill recover aftet these fake assed fed notes become extinct.
I’m torn on the issue at the moment and looking for sound advice. I have probably 2-5 years left until I retire, my wife another couple after that. Our kids are in college and we’ve a large home we are thinking of selling; we would net about $250K and homes are still selling quickly in my area. We’re thinking of downsizing and moving closer to work. We currently have a 3% mortgage and owe about $250K. The likely path would be to spend $300K or less and retire mortgage-free or build a home with same strategy.
Do we sell now or wait? We will wait until after the holidays in any event.
In Real Estate the time between now and after the Holidays are 2 different worlds. Things that are selling quickly now could come to a screeching halt in Jan/Feb. Most buyers avoid transactions at the Holiday season because of the turmoil it causes so those who are looking are very serious. Jan/Feb people are feeling out the market again and, in my experience, buyers are most often at an advantage to sellers then. If you live up north people also hate to move during winter weather so often wait until March to start looking for a purchase.
I'm waiting to buy until after the reset. When people want metal.
Pushing the WEF plan. we will own nothing and be happy Klaus the louse Schwab. Time they crawl back up Rothchild's two point contact where they belong.
It put me out of business.
when gas, food and other daily expenses go up we get worried but when housing prices fall it's bad? :/
If someone has a house wouldn't the best thing to do be sell now while they can still get a good price? (assuming they wanted to sell)
If somebody bought in 2020, they could make money but if they bought in 2022, they would lose money. The strategy works if you can rent until interest rates come down considerably.
I have been looking at homes for sale in my area for a while since finding out the estimated value of my home increase more than $250K since I built it 10 years ago. I though I could grab that quarter of a million and live mortgage free.
The "comps" nearby (which cost that $250K more than my build price) are worn and dated in need of much remodeling to bring them to the standards I have in my home. Anyone getting into the housing market these days is a fool.
It depends. Most people have to buy a new house in addition to selling and generally try to upsize. If the price drops drastically, the home owner eats a higher loss than if he/she stuck with the current home. Interest rates are also much much higher than they used to be.
For instance:
Let's say you have a 100k house with the mortgage paid off and let's say the market is going to drop by 30%. If you keep that house you are down 30k on paper but are only paying property taxes and insurance.
Let's say you sell it and buy a 400k house. You are left with a loan of 300k at 8% and the 30% drop loses you 120k!! instead of 30k. The resell value of your house is now 280k, less than your mortgage!
Not only did you lose more than the value of your original house but you're stuck with an 8% mortgage until they lower it someday.
Yeah, i can see it being a problem if you plan to buy a house right away too. If i was going to sell now i'd get a an RV, and get the rest in Gold hidden somewhere really good, just to lock it all in, then wait for a year or 2 and trade the gold and get a new house. But i'm not selling, and trying to time the market never works out (for me, at least).
They are busy building apartments like crazy. No affordable housing, just sky high rentals.
The problem is that the Fed is now backed into a corner.
If they cut rates, we risk $300 loaves of bread by the end of the week and the dollar dies.
Or they can keep raising rates to prevent hyperinflation while the BRICS nations steadily destroy the dollar.
Yeah, the fuse is lit from both ends. It's gonna go bang and frankly needs to as painful as I think it will be.
I would agree. It would certainly make everyone feel like they were "pushed to the brink" as Q alluded to.
But from a selfish perspective, I've worked very hard for a long time to build up my retirement and my money. Scary to think that could all disappear.
The bad guys have trillions of fiat, it's about to collapse. Would this be a way for them to preserve some of their illicit spoils?
The Federal Reserve System is an abomination and must be destroyed.
No arugment there.
HOWEVER ...
Interest rates are largely driven now by the US federal government's massive debt. $33+ trillion and now with no cap (i.e. no more debates about spending too much).
That massive debt was mostly taken on with much lower interest rates.
It now has to be refinanced with higher and higher interest rates.
In about a year, the INTEREST ALONE that the federal gov't will pay will be more than the ENTIRE BUDGET was about 20 years ago.
And the rate of increase in interest expense is accelerating.
This will push interest rates higher, NO MATTER WHAT THE FEDERAL RESERVE DOES.
There are criminals running the Federal Reserve System, but even worse criminals running Congress.
Let's hope we put the onus on the agent of the debt. The incorporated government. They took the loans. Im paying the loans I took.
After Dems in 1984 President Carter house interest rate 13.21 to 13.84. (%) In 1985 11.96 to 12.42. In 1986 9.75 to 10.42. My interest rate on my house 11% 1986. So, 8% is a good interest, just wait, THEY ARE NOT DONE DESTROYING THE MIDDLE CLASS! Note Carter and the cabal took interest rates to super high, Republican President brought them down. My biggest hurdle in my 70 years of life was dealing with our government that would include both parties Dem’s and Rep’s.
The PBD Podcast has talked a lot about this. Part of the issue is the sheer number of people who currently hold low interest rate mortgages. The percentage of people that have a rate < 3% is quite high. They are staying put and that has an affect on supply.
That said, I was in the areas that are considered "wealthy" in Silicon Valley over the last couple of weeks - Woodside, Atherton, Menlo Park. The sheer amount of home construction is amazing. It is Versailles 1788 around here. No wonder no one can get anyone else to come out to do minor repair jobs unless you pay at least $500-$1000. They are all down in SV. One guy told me the going rate for labor for pavers is $25 per square foot. That is not including materials. It is insane.
Slowing downn the buyer market slows down the default swap market though.
Debbie's got the buyers.
I keep hearing them advertise on the radio, they'll pay closing costs and asking price. I can't help but think they're buyers are corporations.
Don't sell your property... rent it.
Just make sure you rent in a location that will let you actually evict. The squatter thing is a nightmare.
That is why I'm going to buy a patch of dirt with nothing on it out in the middle of butt fuck nowhere I'm going to put a septic tank in the ground and I'm going to live off-grid. I mean you can get land out there for maybe $100,000 and it'll be close enough to a town that you'll be able to do your shopping and get your goods and services, and you can set it up so that you can work remotely if you want. That's a lot more approachable than some giant $600,000 two bedroom monstrosity with its ugly brutalist architecture and everything being made out of fucking corrugated tin and Styrofoam.
Good question. I think inflation is the reason in This case. The way i ook at it, if a dollar is worth only 10 cents then you need 10 times as many to make the value of a dollar. A 350k house would perhaps only be 35k of a dollar was actually a dollar. I do think real estate agents push prices up too. Plus sellers whonwant to get as much as they can.
Houses gain value with time. Houses are priced primarily on dollars per square foot and then some for features and location. Inflation caused construction prices to go from $125 per square foot to over $200 per square foot. The more it costs for new construction the higher the value of existing homes. Location becomes a big factor as well. Once an area is completely built out prices rise since no new construction can occur in that desirable area.