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You are correct.
Isnt it an oxymoron to say “you can ALWAYS refinance if/when interest rates go down”? If it’s not certain that interest rates will go down, then it’s not a guarantee that you can always refinance. If we’re in a parallel universe where interest rates remained high, then there is no guarantee that they would decline in the future allowing for you to refinance.
No, an oxymoron is like “jumbo shrimp” or “army intelligence” etc… the thing is 30 years is a long time, given the choice between a higher rate and lower price, versus lower rate and higher price, the former allows more opportunity: if you pay down early there’s less to pay down, and if rates dip you can refinance at a lower rate. When buying at a high price with a low rate you can’t really do those things. It’s all relative to historical data, whether a price/rate is considered high/low. A low rate is capped off because we’re about as low as they’ve ever been, and 0% is the absolute floor. Prices, however, still have plenty of room to come down (and will need to for the avg person to be able to afford the avg home).
If entertaining a many-worlds discussion: Would the parallel universe have moratoriums on evictions and foreclosures? If yes, would they keep extending protections?
Right now we have a situation where people are not moving much. The amount of people who fell behind on their mortgages is higher than historical norms. Eviction and foreclosure moratoriums are keeping inventory tied up. The few houses getting listed are being pounced on by a competitive segment of buyers.
Once banks start taking back the homes from people not paying their mortgage we’ll likely see a lot of short sales and foreclosures. All the talk about commercial real estate space being converted to residential (urban regions). These things will happen and will flood the market with supply, allowing enough inventory for a more healthy market for normal buyers and sellers to transact again. Around this time you’ll see rates going higher. This all feels similar in some ways to years immediately running into 2008; housing prices didn’t align with earnings. Either salaries come up or housing prices will come down. Once people start moving and supply returns, the tides will change and today’s buyers will be underwater for years. That’s at least what’s keeping me on the sidelines.
Buy the house when you need and afford. You cannot control the interest rate and housing price. Your question is highly speculative.
You are 100% right although it’s not a popular view. People who buy high price with low rate often are looking for external validation. The realtors get paid on closed transactions, so their pitch is always “oh but look at the low rates!” Right now is the hardest time to wait but a lot of downside risk for those who can’t curb their FOMO.
I’m banking on supply levels returning to normal is what will push prices down, then rates rising will follow. I laid it out in more detail on another comment elsewhere in this thread.
In theory this makes sense. However you don’t know when and if the housing prices will drop, and/or interest rate fluctuations.
Low housing prices and high interest rates will give advantages to wealthy cash buyers
It is true that we can't know for certain if the interest rate will drop in the future, but assuming we lock ourselves into a 30-year mortgage term, probability is in our favor if we lock in a house under a higher interest rate environment vs. the other way around
Yeah it’s cool— and I completely agree. Something like buying/renting a primary residence should be based on usage and needs, rather than a focus on returns.
No. This is dumb. High interest rates are correlated with high prices. There is no guarantee rates go down.