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.
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.