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Bought first house in 90s at >8% and was happy about it. Refinanced every time rate dropped 1-2%. So the real cost of the higher rate wasn’t so bad as refi opportunities came up. Important to not overbuy. If you can afford 7-8% now, you reasonably can expect to refi in next 2-3 years. Personally, I would not wait and try to time the market and I would not use an adjustable.
You’re not going to see 2018 again for a long time
Pro
Yes I agree but only partially. There are new builds too and companies like Lennar, DRHorton, Providence, etc. can't just fold their hands and say we don't build anything as we are not gonna sell. They can't stay in business without "producing" anything as much as they want to keep their inventory low to have a high unit sales price. Unless they change business and start selling software or whatever. And that is the end of a housing market, lol.
Real estate market usually lags about 6-12 months behind, so estimate of the bottom is June 23 - Feb 24 (not an exact science but good rule of thumb).
Pro
I agree more or less. My concern is more the interest rates. I have looked at historical data. Barring 1970s, in more recent times, that is post 2000, interest rates come down to the more average of 4-5 within 1.5-2 years of a peak of 8%. That also depends on when the Fed acts.
320K for a nice one bedroom condo in midtown is sorta reasonable to me but I do think prices will go back down within a year. Foreclosures will be happening as layoffs happen and people can’t afford their mortgage payments from the pandemic
Pro
@C1: I would be inclined to agree but the general theme in media is that this time the house price escalation has occurred due to justified fundamentals and there isn't a surprime lending crisis to trigger a crash and foreclosures but theoretically what you say is true too. You still need a job to pay down 3% mortgage rate payments.
Well I don’t think we need a subprime lending crisis like in 2008 to have another housing crash. But I do think that if there’s a recession coming (not sure tho cause the US just reported positive GDP growth so it’s not a grim outlook), housing prices will for sure go back down. If the prices won’t go down then it’ll be the rates. 6-7% is not sustainable for a long time and it has to go back down after Jerome stops shitting on us
Community Builder
we might see some price corrections over the next several months, but that is solely attributable to overpricing coupled with the rapid appreciation over the last 2-3yrs, bottom line is that there is a ~3m housing unit shortage nationwide, so prices won’t be falling anytime soon, stagnancy or growth deceleration is much more likely, real estate is hyper local, so throw any guesses or predictions out of the window without further context, inventory in desirable locations will remain low since no one in their right mind is gonna sign up for a 5-7% mortgage when their current rate is 2-3%, but one can easily find a jumbo 30yr fixed mortgage at 5.25% today, and there is a lot less buyer side competition with many folks sitting on the sidelines thanks to fear-mongering, scorched earth clickbait, so i’d pounce now if you find something that meets your needs
A shortage at what price points - everything is so expensive! (ATL) hard to believe the richer folks are having hard time finding homes at their wanted price points.