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.
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.