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.
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.