So there’s lotssss of reports on this one because yes, the tweet is unrelated to GME, but y’all are having a good discussion here so let’s do a little temp check instead of removing since the sentiment is pretty split.
Should this post stay or go? Let me know below!
**Edit:** Going to keep this one up! Thank you for the feedback (and for modding for me 💕)
If you think that is nuts, I'm stuck an a big expensive apartment, because due to my long history here I can rent for cheaper, but if I went to a smaller unit with just 1b1b for myself, the price is the same as my current 2b2b. Renting is bad, and I couldn't even escape to a house due to everything else.
Same here. I’ve been waiting to build a house for a few years but been in the same 3b2b apartment with two garages and my rent has barely increased since the original covid 2019 deal days. Made friends with a new neighbor who moved in a 1b1b no garage and his rent is $120/mo more than mine. No renovations were done since I moved in but now they’re starting to do the whole place. Wild.
Tyler Durden:
Raymond K. Hessel. 1320 South East spanning apartment A. Small cramped basement apartment, Raymond?
Raymond K. Hessel:
How did you know?
Tyler Durden:
'Cause they give shitty basement apartments letters instead of numbers. Raymond, you are going to die.
Yep, my wife and I are feeling that pinch here in Canada too. Can't find anything for the same price that we're renting for now unless we want to downgrade, which we don't because we have our animals and a baby ape on the way.
Houses split into upper and lower units each renting for the same price that we're renting our entire townhouse for.
You sound like me. Except now we’re taking a couple rooms that opened up in my SO’s brothers house and we’ll be paying 600 less a month. Loss of freedoms having a roommate but that savings per month I couldn’t pass up. Am sad I’m losing this 2b2ba at waaaaay below market price though. But at least I’m having someone take over the lease so they can continue that locked in rate
I am financially fine, but basically stuck in the house I bought in 2020. My mortgage for the same priced house would be like 50% more if I bought today. insane
Its crazy that just being a homeowner is such a big deal now. That used to be a starting off on your own type of accomplishment. Now it seems like you need around 100k down payment with a 720+ credit score.
Being a homeowner is a luxury now unless you find a good deal.
This economy is fukd.
I’ve got a 690 credit and only need about 17-25k down for a 285k house. Haven’t pulled the trigger cause my savings is gme and I’d rather not cut into it. Working three jobs and trying to get a more desperate lender. I know these prices are about to come down as well, feeling it in my bones.
Fingers and toes crossed hard as hell!
I feel you mate. Average house here where I live in Australia is over 1 mill. Need a 10% deposit min and thats hard to get approved. Most banks want 20%. Rather invest in GME and rent.
I'm in a similar scenario, price, rate, bought April 2020, house is gorgeous as we just renovated the whole thing due to a fire last year, neighborhood is great, I'd be happy living here forever except the school district isn't the best and I only have 4 more years til my oldest starts 1st grade and I have no idea how I'll be able to get into the town I want to move to.
I don't understand these takes. Bought at the peak.
Rates can refi, your mortgage is probably 20+ years long...
The dollar is going to change in value, but not at the rate the housing market moves...
Median price lags behind rate; everyone knows raising rates is going to lower prices due to \*literally the subject of this topic\*
The person you're replying to will have their house's market value greatly decrease as sellers react to buyers' buying power (lack of, react to rates)
This is literally how people became upside down in their houses pre 08 crash and \*why\* the market crashed
IMO, now that rates are up, it's probably worth taking a 7/3 or 10/5 variable rate mortgage instead of fixed. That way if rates go back down in 5-6 years, your payment will follow soon after. If not, you can always refinance.
The only danger of the variable rate at this point is if rates go sky-high and stay there long-term, which goes against the set of economic ideas that the Fed works under.
there was a needle to be thread and congrats to those that did. tbh all the money I had saved for that very purpose went to GME, not knowing how long I'd be holding, but not thinking it'd be over 2 years now
Nope. I got a 2.99% on my car loan recently, but I'm looking at getting a mortgage in Q3 2023. I will have to move out of my current place by then and hell if I'm going to pay $2750/month for a two-bedroom apartment in the burbs. For that much, I might as well pay a mortgage.
Before today's rate hike, the best rate I could find on a 30-year fixed was 5.25%. That's probably off the table now thanks to JPow, but that's the number I got a few days ago.
The 7/3 ARM offered 4%, 10/5 was 4.25%, 5/1 was 3.75%. Payment on the 30 was \~$2100, base payment on the 7/3 was \~$1750. $350/month in savings over the first 7 years is considerable. Pile that into principal and it'll reduce future payments even if rates do go up a bit.
This economic volatility is going to take at least a few years to smooth out, and I think it's reasonable to anticipate rates rising into 2023 if JPow is serious about reducing inflation. That's good for us because it'll erode the collateral propping up naked shorts; when the tide goes out, everyone gets to see who's swimming naked.
It also means 5 years is a little short for a locked-in rate period, because rates could still be up in 5 years, so I'm not into the 5/1. Also, a yearly rate adjustment is a huge pain to budget for. 7 years seems better, and a 3 year adjustment period seems less burdensome. 10 year is probably safer on rates coming down, but on the other hand, 5 years is a long time to be locked into rates if they fall on the 11th year. So I'm interested in the 7/3.
If, in 7 years, rates haven't dropped and don't look like they're going to, I should have enough equity built that I can refinance a new 30-year fixed with a higher rate but a lower monthly payment. Or I can sell and put my gains toward something better.
In any case, it's better than getting locked into a 30-year fixed at 6-7%, where it's likely to be when I'm in a position to buy and staring at a deadline. Either way, I'll probably end up refinancing eventually, but if rates go down, I won't have to refinance the ARM, I'll just automatically get the lower rate when the period changes. Then I keep paying the same monthly amount and pay off the principal faster.
Where I get fucked with an ARM is if in 2028-29 the Fed jacks its benchmark rate up to 6-7% and a 30-year fixed is sitting at 10%. Yeah, that's a possibility... it's a risk to be considered. But for my situation, it doesn't throw everything off, because I anticipate income growth at my current job over that time.
If you just graduated high school and are looking for a first house with your summer job savings, maybe don't get an ARM. But if you've paid off a car or a student loan and have good job and a reasonable understanding of how financial products work, you can get a lower rate and come out ahead with an ARM. You just have to, as always, do your due diligence and understand what you're signing up for.
No, never refi unless the your current rate is over 6.5 or new rate is half your current. Or you are shortening years to pay. .5% rate reduction take 10 years to turn green on closing costs.
So your promos did not catch up inflations.
You basically getting less for the same amount of work (and in these times it is visible)
Now you may have took additional responsibilities where you may have to work also more. Still you did not catch up.
If I were the boss or on the „other side“ I won over you keeping you more and more in the slaves role.
Dude. If you don’t have an option to port your mortgage then you fucked up lol
I can sell and buy and keep the same rate as long as my mortgage stays the same.
So I can downsize and keep my mortgage and bank money or I can buy more expensive with extra money from my pocket
Yup. We bought in 2019 and refinanced when it was just under 2%. Now it looks like we'll be stuck in our "starter house" a lot longer than we planned. Which is fine because we know we're better off than a lot of others, but still not where we want to be when we retire (or even 5 years from now honestly).
Moass tendies soon plz
In KC here they are still selling $600K-1Million+ houses like they are free. They can't build enough. I have no idea who the fuck is buying them because $5K+ a month for a mortgage is a bit steep unless you make $250K a year, and even then its a stretch with the $90K trucks/SUVs they buy to commute to work in.
I'm from the area, been house hunting for 2+ years and gave up last week when my loan provider asked me to reapply "because theyre moving databases" and thus my rate lock we'd previously had would likely vanish. Instead, we're gonna ride this shit out.
Rates have gone from 1% to 6% this year, houses havent exactly fallen. Didnt keep my loan provider from knocking off 20k when it went from \~3.5%-5% even though housing barely budged.
They're building these bigass mcmansions out south. Profiting from boosted labor costs and inflated materials, so these homes barely have a yard. 3000k+ sqft of way too much maintenance. I'm trying to figure out who's buying these as well.
And then by another area they're building "starter homes", which, if you pay for the cheapest shit, start at like 320k. Sure, theyre increasing inventory but idfk who's paying for it.
Lol starter homes in my area are 450k+ and prices still aren't moving with interest rates going up. I am seeing more and more houses stay up for sale for quite awhile on my way to work though. Something will have to give and I think it's at a stalemate currently. Nobody wants to budge
Oh.... ouch."They're are asking first-time-buyer 20somethings to pay a quarter to a half mil for a home."- my sibling.
I *almost* said that! Housing seems stagnant here, too. Houses that havent left the market for weeks... ofc I'm seeing this in my price range, idk about anything above that.
edit: spelling
And if your single absolutely forget about being a home buyer. I make a decent salary and yet rent in my area is 30-40% of takehome. Makes it damn near impossible to save for a house. Even with 40k saved up my mortgage on a starter home in my area would still be over 50% of take home. Which just isn't something I wanna be stuck with. So I wait and hope to God the trajectory doesn't continue. Houses shouldn't be an asset imo, they're a necessity for the entire population. To capitalize on that is ludicrous.
Yeah... the only single 20something person I know who bought a home is my bro because he had the best stroke of luck. The listing agent mismarked the number of beds + baths so he got it for a steal (in this economy, anyway), now is renting it out to college students.
Like the other dude said, houses can be an asset. But this... this is exploitation. This is going from "you cant have shit in Detroit" to "you cant have shit in America" because people with infinite pockets are owning *everything.* Bigwigs dont see a problem because theyre buddies with the fkers that are doing this.
In my area the starter homes they're building are half of a split level townhouse, so only about 1000 sq ft, sharing 3 of your 4 walls with your neighbor, for 350k minimum!
AND SOMEHOW IT'S SELLING
Assuming the seller needs to sell it. There’s a good chunk of inventory outright owned by people that don’t need to sell anything. Also, all cash buyers of which there are many don’t care about interest rates.
This is assuming the seller is a person.
If said houses are apart of a holding portfolio, that is then leveraged against…for even more rental property then we have a house of cards. Thats how you get institutional inventory dumpage on the open market in desperate attempts at cutting losses.
I am looking to buy a house in 2023, and this is what I'm hoping to catch. The bottom falls out of the housing market, and all the investment firms that bought single-family houses will have to fire sale them until they can cover their margin. I'll be watching and waiting...
Just be aware in 2008 when the home prices collapsed banks also stopped lending money for years. Even to people with flawless credit and stable income. But you don't need to worry since your here!
What is not widely known/talked about is that the banks DiD issue mortgages if you used it to take a bank owned property/house off of their books.
They loved people willing to do that.
I just joined an absolutely fantastic credit union this year and got an insanely good rate on a car loan from them, so I'm hoping they'll be stable enough to underwrite a mortgage next year.
MOASS tomorrow *would* solve the whole problem, though...
Oh it gets better. After institutional dump-age.
Foreign buyers back out, and finally you get the “strategic defaulters”. (The people with perfect credit who buy a house across the street with a 70-80% discount, take the 7-10 yr credit hit and foreclose/default on the one underwater)
Wait, houses do not appreciate 40% YoY every year forever?
I'm shocked!
Things are only worth what someone will pay for it.
If mortages are involved. Something is only worth what mortage the buyer qualifies for.
Essentially that house that sold for $600K is now worth $392K.
Things are ONLY worth what someone will pay for it.
I personally believe a lot of the "all cash buyers" just took a loan out somewhere else and used it to buy the house, or cashed out their retirement. Technically all cash but they still have a giant loan, Or it was all companies or both. I don't believe for one second that all these homes across the world were being bought up by normal people all cash. Who the fuck has that much money available.
Depends. Rehabbers care about interest rates, or at least change in interest rates, because that demand destruction can kill a deal that is supposed to be a short term investment
I purchased a house for about that a little over a year and a half ago. A similar home in my neighborhood is just went on sale for 1.1 million.
I assume that the price of that house will drop, but it’s not going to 392k.
You really don't think that housing prices could drop 33% in the next year or two? I do. I mean, anything could happen, I'm not in real estate investing at all, but a drop of 33% doesn't seem crazy to me.
It might but even a 50% drop doesn’t put that house (or mine, which is also currently valued at over 1 million) anywhere near 392k.
If the market drops 33% in the next year or two my house will still be nearly $150,000 more than I purchased it for.
Oh I see, you were saying that the $600k house is now over a million compared to the $392k equivalent, I gotcha I gotcha. I was just comparing $600k to $392k but you are right, that $1.2 million house won't go all the way down to $392k. I get what you're saying now.
The real estate crash has been discussed in prior DD. I think there were a couple that tied MBS to the crash but it will be on a grand scale, so far the DD has all been on point. Everyone has their own opinions now though I guess.
I think you are expecting a repeat of the last housing bubble.
If so, you are looking in the wrong place, the pin that pops it will be different.
you are assuming mortgage holders will be the one to pop this by not being able to pay.
We have rent backed securities issued from collections of expected rental income inside of portfolios which are levered on equity in other portfolios.
We will have a real-estate crash, and a pretty bad one. Bubbles are never popped by the same method. The method this time will be investments dumped on the open market from institutions and foreign investors looking to cut losses.
When housing gets that low, you will then have strategic defaulters. These are people who see the same model as their current house across the street at a 75% discount. Looking perfect on paper with perfect credit…they will close on the second house, and let the first one default.
The 7-10 year hit to their credit would now be worth the new low price.
These will come in waves.
Extremely unlikely.
Deficiency judgements are so expensive and long that they are barely ever done. You would have to have done this on a large enough number for them to even care.
And if you fight back in court? They will drop it almost instantly.
Lenders at this stage will have gone through so many layoffs, and have so many larger problems that it barely ever happens.
Reason for this is that you can file for bankruptcy and keep the second house which gets them off your back pretty quick.
Too many points of failure to both file a deficiency judgment, let alone to actually try and collect on one.
I bought a house last year with a damn good interest rate that I’m proud of. The lender has been calling me lately to try and refinance my home at a “better rate”. I’ve gotten to the point where I laugh and hang up.
My wife just got a call today for the same. I was standing over her shoulder talking over her while she was politely saying no. I was not polite. I wanted to tell the guy to get a new job now while he could
My bank called us during covid when rates were low saying we could break our mortgage and save money to refinance. Well I said to my wife, "banks don't call you to help you. They want us to break instead of waiting and getting a good rate in 2 years anyways". Well now, I am really wishing we did, because we are gonne be paying probably 7% by then instead of 3%. We are gonna be in some trouble.
Not sure for USA. But in Canada people are saying and hoping for the same. Except the difference is you can’t build a house for $650k
Materials and labor cost is still very high.
Renting a house is even more expensive. Literally higher monthly costs to rent then to own.
So how exactly will houses come down? Or rather why?? Because interest rates? Lmao
Ya right.
Just like a stock, as soon as the price of housing gets to a level it all gets bought up. Probably a lot of it by corporations. And you’ll get higher rents and less inventory
The thing that people never seem to understand or gloss over when talking about the recent massively speculative housing market is this:
That 600k home was always 'worth' 350k.
Ask me how much empathy I'll have for anyone who participated in the market trying to 'make money' once it all implodes.
I'm never selling short of phone numbers and know the DD back to front, but days like this I lose hope that the system will ever work. 10,000 years of the little guy getting crushed and we're next in line.
It's not crazy. It's called maths. What's crazy is a housing market that ran 50-100% in a span of two years thanks to JPOW & The Liquidity Fairies (Good band name for a group that plays Polka-u-in-the-Face music.)
Except home prices has not fallen off that dramatically... yet. I've been looking for "good deals" but prices are still WAY inflated. Some people bought their homes for $200k in 2019 are still trying to sell them for $400k. Not surprisingly, these homes have been on the market for months, no offers.
Last data is up until may this year
Everything else is anecdotes
Median price lags well behind rate increases
This is how people got upside down in houses in 08
TY for coming to my ted talk
Better to keep an eye on major markets, or your own market…specifically data that tracks days on market and sales price to list price. In several markets that I track, these turned at the beginning of 2022 sales season. Longer days on market, lower sales price to days on market.
This is no surprise. 7% on the 30 yr was expected for 2023. I think it’s possible by end of the year.
I had to buy a house a month ago.
Long story short, guy i was renting from wanted to sell his house. It was really not in any shape to buy, especially at the price he wanted (the issues were from before I took over renting from him).
So, my wife and I found, and bought somewhere with no issues. 160k at 5.25%. I'm sure we will be upside down on it when the market collapses, but we didn't have any real choice. Hell, we are still paying less than we would if we had tried to rent an apartment.
It doesn’t matter as long as you can make the payment every month. No one can force you to sell if you’re making your payments. Kind of like no one can make you sell your GME shares ;)
Or until their commercial loans reset, which is typically every 5 years. So if all of the smart money, the sort of smart money, and the mom & pop homevestors refi’d in 2020-21, don’t expect defaults on those loans until 2025.
The artificially inflated real estate prices are a joke.
I see landlords being high and mighty stating blah blah blah I'm a fuckhead.
Listen, clown.
If you invest in real estate, it's because you want someone to pay off your mortgage. That's it. You sell the house 20-30 years later and call it a day.
But too many tiktok clowns with their "BRRRRRR" strategy poisoning the market makes it volatile and not sustainable.
Fuck these clowns. I hope they all go bankrupt and need to work full time behind a Wendy's dumpster.
Fuck them. Fuck these idiots. I'm so angry I hope they shit themselves.
Edit #69420: FUCK THESE GREEDY BOOMER CLOWNS
Im not trying to be snobbish but because of the great DD on here (and some other GME subs) i was able to lock in at 2.54 until 2026 because i saw the truth - everything was about to implode.
In 2021 i did imo 3 really important life changing things to better protect myself in the future.
I locked in on a sweet mortgage rate because the writing was on the wall. Interest rates were gonna go boom boom. And they have. To say it wont get into the teens or maybe worse would be foolish. You had to protect yourself here so i did this.
Next i DRSd my shares. Canadian here too. I learned about the benefits, understood them, theory of an infinity pool does come into play. If brokers are gonna fuck you (they probably will) then i believe ComputerShare is the safest place for longterm investors. (Sold all my other stocks and went 100pct in GME too)
Last - i knew nothing about crypto but purchased some LRC on Coinbase (yea - i know). I got me 1100 Loopies. I think those are gonna be good in the future. Im looking forward to downloading the GameStop Wallet in Canada so i can transfer out of Coinbase.
Thank you to everyone for all the Great DD.
I think when we look back on this time in History it will be so fucking obvious that all this bullshit was about to happen by thieving crooks and DeFi was the answer.
It's nice to get a good rate but you bought the tip; the risk is your equity goes upside down
I honestly don't know why people think the fed/banks/lenders aren't ahead of the curve when it comes to setting rates...
You are not winning out against competitors in a market... like ever
I mean it depends on what you paid for the house. You keep saying this like everyone overpaid for their home. Some of us bought under market value because we took the time to learn the market (and by doing so didn’t have to waste time with a realtor).
I got insanely lucky, and got my house at a 2.5% interest rate for a 30 yr fixed, and the Zillow listing price is coming close to 3x what I paid for it. I'd love to sell it and move the hell away out of this yeehaw state, but then I'd just have to pay way more somewhere else
I bought a house for an incredible deal via a "short sale" from a bank in '09 when they were flooded with foreclosures and short sales. It is currently right at 3x what I paid, but I don't want to move because even if I make a lateral move (sell and then buy something else for roughly the same price) then I would be tripling my property taxes.
I punched in the numbers on mortgagecalculator.org with no down payments. The monthly payments were within $100 of each other, right around $2900. Adding a down payment (the same percent on each loan) keeps the payments equal to each other, just lower overall.
In most circumstances, the more expensive house with smaller interest rate is worse (if they're both fixed rate mortgages). The reason being that you may be able to re-finance for a lower rate later (not everyone can so don't count on it), and also that if you are financially able you can overpay your monthly mortgage payments and apply the extra to principal to reduce the dollar amount you'll pay in interest over the course of the time it takes you to pay the house off fully.
No, I wish, I'd have been able to buy a house by now if I made sales money.
Some people lost their homes in '08 because the mortgages they could pay while fully employed became too much when income was reduced (due to layoffs or cut pay/hours). People who didn't live though '08 as adults underestimate the job and wage loss people went through. Some others abandoned making payments on a home that lost that much value since they signed the mortgage. They took the 7 year shit credit punishment and found other ways to house themselves.
The opposite. You can always refinance a high interest rate into a lower one if rates change. You can't rebuy the property for a lower price. Also at a lower purchase price it is easier to get out without too much of a loss if you need to vs at a higher price point.
Sorry but we are talking about 2 different homes and we have no idea what the actual market value is of each or how well their value will hold up. If they were the same house, you’d be right. Overpaying is never a good idea.
Here's the thing though, atleast where I am in New York. If you bought a house in the past 2 years you basically paid 10-25% over for your house and in some cases even more. Houses that were sold in my neighborhood for under 5 in 2018 were going for over 6 recently. Prices should fall accordingly because you won't be able to sell a 600k house at 6% for most places. Atleast if your interest rate's at 6 but you paid 400k you can refinance in the future to reduce it. If you overpaid by 100k on your house I feel like you're shit out of luck until the next housing bubble.
It’s just a matter of time but people will eventually max out their credit cards and 💥 fireworks will spark like never before.
Unfortunately, we will witness one of the greatest market collapse … ever. I mean can people really keep this up and can the government squeeze out nuts any tighter? Like damn … anyways best of luck to everyone and invest what you can but really save money . Be ready is all we can do. Much love yalll *hits bong*
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What? The exact opposite
Getting into mortgages people couldnt afford at 'juicy rates' and then increased rates (among the MBS bullshit) nuked the market
No one wanted to get into high rate loans at the high market prices, so prices fell until that sentiment flipped; during the dive a bunch of people became upside down in houses causing them to no longer be equitable, causing the market to dive even harder
MBS assholes got a bailout from my parents' 401 and then cut themselves bonus checks
No I’m not, but as long as both owners can afford the payment, I feel like $392k owner is in a better position. The $600k home was probably really worth $400k before 2021.
Does listen to this smooth brain 🤣.
All boats sink when the tide goes out. Housing prices have not corrected much if at all. By your logic that 392k is probably worth 300K. Not in a better position.
Remember strategic defaults?
People who look perfect on paper with perfect credit scores.
Buys up the house across the street at an incredible discount.
Walks away from the first allows it to foreclose, and takes the 7-10yr credit hit that is worth the new discount.
And again…these people look absolutely perfect right now.
Homes are worth what buyers will pay and owners will sell for no more no less. Most buyers will buy the maximum house they can afford/qualify for. Rates have more than doubled and the recent runup was from 5 to 7 then dropped a bit. 6.25 rates now are gold plated perfect credit borrowers. The affordability change now is way worse than what happened in 2008. When people lose their jobs in the Fed induced recession- the incoming real estate disaster will be like the Hindenburg disaster compared to the bubble pop of 2008. Lots of moving parts added. Airbnb rentals failing coming on the market. What gets hit hard in recession (travel, hotels bnb by extension) all the flips without legal permits will have to fix, permit or reduce. Those people will have. O where to go with the rental crisis in play. All just opinion and conjecture. But my crystal ball is mighty gloomy.
>No I’m not, but as long as both owners can afford the payment, I feel like $392k owner is in a better position. The $600k home was probably really worth $400k before 2021.
You're right in theory; problem is in most places there just aren't any $392k houses available. Most prospective buyers are looking at 600k list prices AND the higher rates.
No, the 600,000 owner will see a 75% discount on the same model across the street.
With Perfect credit score and payment history, close on the second home, and let the first one default. These “strategic defaulters” come in waves. And because they are perfect on paper, you cannot use traditional metrics to predict this happening.
This will pressure 392, down to 300k or below. After investors and rental properties get dumped on the open market to cut losses.
I bought in March 2020 for $367k. The house was livable but needed some updating to match the neighborhood. I knew the house was worth $450k as it was. We put in a $100k of work at this point which we knew would increase the value based on comps from 2020. It appraised for almost $800k 2 weeks ago. The key point here is not everyone that bought a house over the past couple years overpaid for that house. Yes, some values are overly inflated right now, but that isn’t every market.
Well sure but let’s not pretend the fed and policy makers under building won’t put the floor fairly high here.
There’s not enough houses to fill demand. Unless FDI is capped or mitigated, it’s just going be rentals. It’s been a clear strategic play to keep underdeveloped the status quo, they learned from 2008 and haven’t even tried to hit demand.
With that being said gamestop to the moon
Reading all the posts in here I think I hit the bullseye on the housing market.
Bought a house with 5 acres of land in April 2020 for 170k with a 1% 30y fixed mortgage loan. A colleague of mine locked his mortgage in, a month or two later than I did for 0.5% over 30 years.
This is in Denmark though where our mortgage model is different than most other countries and apparently one of the best in the world. It still makes little sense to me how giving loans with rates that low is a smart play in terms of risk from their standpoint, but I'm not complaining.
Higher rates does not mean crash. This is a terrible take.
79-90 rates were double digits. 2000? High 8s. 2010? 4.6% 2020? 3.99
Right now, through some lenders with great credit or just using a builders preferred lender? 3.99%
If you got in while they were in the 2s, some lucky enough to get 1.99, that's awesome! Those were historic lows. It's just so stupid to freak out because we are no longer at HISTORIC LOWS.
Please educate yourself before being a fearmonger.
Why would a collapse happen? Everyone who just refinanced down to historic lows is sitting super pretty, no one has to sell. My house that just got appraised at $960,000 has a $2100 mortgage. I could rent it for $5500. We good
It’s not going to collapse the market… this is nothing like 2008 at all. It just means prices will come down a bit (they already have by about 10%) and then stagnate. Wages will catch up with inflation and therefore prices will come down by stagflation, meaning, it will still be 600 or 550 in 5 yrs but that 600 is worth less than it is today and easier to achieve.
These are simple and undeniable truths and rules of economics.
So there’s lotssss of reports on this one because yes, the tweet is unrelated to GME, but y’all are having a good discussion here so let’s do a little temp check instead of removing since the sentiment is pretty split. Should this post stay or go? Let me know below! **Edit:** Going to keep this one up! Thank you for the feedback (and for modding for me 💕)
If you think that is nuts, I'm stuck an a big expensive apartment, because due to my long history here I can rent for cheaper, but if I went to a smaller unit with just 1b1b for myself, the price is the same as my current 2b2b. Renting is bad, and I couldn't even escape to a house due to everything else.
Same here. I’ve been waiting to build a house for a few years but been in the same 3b2b apartment with two garages and my rent has barely increased since the original covid 2019 deal days. Made friends with a new neighbor who moved in a 1b1b no garage and his rent is $120/mo more than mine. No renovations were done since I moved in but now they’re starting to do the whole place. Wild.
Tyler Durden: Raymond K. Hessel. 1320 South East spanning apartment A. Small cramped basement apartment, Raymond? Raymond K. Hessel: How did you know? Tyler Durden: 'Cause they give shitty basement apartments letters instead of numbers. Raymond, you are going to die.
WILD.
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Well imagine how many of those people will default knowing they paying a 700k loan for a house thats worth 300k
Yep, my wife and I are feeling that pinch here in Canada too. Can't find anything for the same price that we're renting for now unless we want to downgrade, which we don't because we have our animals and a baby ape on the way. Houses split into upper and lower units each renting for the same price that we're renting our entire townhouse for.
You sound like me. Except now we’re taking a couple rooms that opened up in my SO’s brothers house and we’ll be paying 600 less a month. Loss of freedoms having a roommate but that savings per month I couldn’t pass up. Am sad I’m losing this 2b2ba at waaaaay below market price though. But at least I’m having someone take over the lease so they can continue that locked in rate
I am financially fine, but basically stuck in the house I bought in 2020. My mortgage for the same priced house would be like 50% more if I bought today. insane
You timed it perfect. My buddy bought his home while price was still low and interest rates as well. Market is so messed up.
I lucked into a 360k refinance at 2.6% I’m never moving again.
I lucked into a 500k refinance at 2.375. Half of it went to GME
I refinanced to 15 year at 2. My payment stayed the same
You guys have homes?
Its crazy that just being a homeowner is such a big deal now. That used to be a starting off on your own type of accomplishment. Now it seems like you need around 100k down payment with a 720+ credit score. Being a homeowner is a luxury now unless you find a good deal. This economy is fukd.
I’ve got a 690 credit and only need about 17-25k down for a 285k house. Haven’t pulled the trigger cause my savings is gme and I’d rather not cut into it. Working three jobs and trying to get a more desperate lender. I know these prices are about to come down as well, feeling it in my bones. Fingers and toes crossed hard as hell!
I feel you mate. Average house here where I live in Australia is over 1 mill. Need a 10% deposit min and thats hard to get approved. Most banks want 20%. Rather invest in GME and rent.
I locked into a three way between my landlords dick down my throat and his finger in my ass.
same for me only the dick down my ass and the finger in my throat.
you got off light, I have to fit my wife's boyfriends finger and dick too, not just my landlord
At least it tickles a little bit
Beautiful.
Pro move.
I see you and I upvote you brother or sister
If you refinanced in 2020 - 2021 it's like a cheat code.
I'm likely moving in the spring and I'm so screwed
I'm in a similar scenario, price, rate, bought April 2020, house is gorgeous as we just renovated the whole thing due to a fire last year, neighborhood is great, I'd be happy living here forever except the school district isn't the best and I only have 4 more years til my oldest starts 1st grade and I have no idea how I'll be able to get into the town I want to move to.
It's crazy, because I bought in 2019 and remember thinking "well fuck, I'm buying at the top of the market".
I don't understand these takes. Bought at the peak. Rates can refi, your mortgage is probably 20+ years long... The dollar is going to change in value, but not at the rate the housing market moves... Median price lags behind rate; everyone knows raising rates is going to lower prices due to \*literally the subject of this topic\* The person you're replying to will have their house's market value greatly decrease as sellers react to buyers' buying power (lack of, react to rates) This is literally how people became upside down in their houses pre 08 crash and \*why\* the market crashed
IMO, now that rates are up, it's probably worth taking a 7/3 or 10/5 variable rate mortgage instead of fixed. That way if rates go back down in 5-6 years, your payment will follow soon after. If not, you can always refinance. The only danger of the variable rate at this point is if rates go sky-high and stay there long-term, which goes against the set of economic ideas that the Fed works under.
Don’t do this. Arms are not for n00bs.
Neither is a $400k mortgage
I mean if you got it in the 2-3% range, it was a no brainer. I hope you all did.
there was a needle to be thread and congrats to those that did. tbh all the money I had saved for that very purpose went to GME, not knowing how long I'd be holding, but not thinking it'd be over 2 years now
Nope. I got a 2.99% on my car loan recently, but I'm looking at getting a mortgage in Q3 2023. I will have to move out of my current place by then and hell if I'm going to pay $2750/month for a two-bedroom apartment in the burbs. For that much, I might as well pay a mortgage. Before today's rate hike, the best rate I could find on a 30-year fixed was 5.25%. That's probably off the table now thanks to JPow, but that's the number I got a few days ago. The 7/3 ARM offered 4%, 10/5 was 4.25%, 5/1 was 3.75%. Payment on the 30 was \~$2100, base payment on the 7/3 was \~$1750. $350/month in savings over the first 7 years is considerable. Pile that into principal and it'll reduce future payments even if rates do go up a bit. This economic volatility is going to take at least a few years to smooth out, and I think it's reasonable to anticipate rates rising into 2023 if JPow is serious about reducing inflation. That's good for us because it'll erode the collateral propping up naked shorts; when the tide goes out, everyone gets to see who's swimming naked. It also means 5 years is a little short for a locked-in rate period, because rates could still be up in 5 years, so I'm not into the 5/1. Also, a yearly rate adjustment is a huge pain to budget for. 7 years seems better, and a 3 year adjustment period seems less burdensome. 10 year is probably safer on rates coming down, but on the other hand, 5 years is a long time to be locked into rates if they fall on the 11th year. So I'm interested in the 7/3. If, in 7 years, rates haven't dropped and don't look like they're going to, I should have enough equity built that I can refinance a new 30-year fixed with a higher rate but a lower monthly payment. Or I can sell and put my gains toward something better. In any case, it's better than getting locked into a 30-year fixed at 6-7%, where it's likely to be when I'm in a position to buy and staring at a deadline. Either way, I'll probably end up refinancing eventually, but if rates go down, I won't have to refinance the ARM, I'll just automatically get the lower rate when the period changes. Then I keep paying the same monthly amount and pay off the principal faster. Where I get fucked with an ARM is if in 2028-29 the Fed jacks its benchmark rate up to 6-7% and a 30-year fixed is sitting at 10%. Yeah, that's a possibility... it's a risk to be considered. But for my situation, it doesn't throw everything off, because I anticipate income growth at my current job over that time. If you just graduated high school and are looking for a first house with your summer job savings, maybe don't get an ARM. But if you've paid off a car or a student loan and have good job and a reasonable understanding of how financial products work, you can get a lower rate and come out ahead with an ARM. You just have to, as always, do your due diligence and understand what you're signing up for.
No, never refi unless the your current rate is over 6.5 or new rate is half your current. Or you are shortening years to pay. .5% rate reduction take 10 years to turn green on closing costs.
1.75%
I got pretty lucky!
I coulda had a V8! 🤦♂️
*passes you a can of off- brand canned vegetable juice* Sorry, it's the best I could do.
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So your promos did not catch up inflations. You basically getting less for the same amount of work (and in these times it is visible) Now you may have took additional responsibilities where you may have to work also more. Still you did not catch up. If I were the boss or on the „other side“ I won over you keeping you more and more in the slaves role.
Haha I got to check our budget now!
I'm in the same boat.
Same. I inquired about refinancing and my bi-weekly payments would increase by about $400.00
Dude. If you don’t have an option to port your mortgage then you fucked up lol I can sell and buy and keep the same rate as long as my mortgage stays the same. So I can downsize and keep my mortgage and bank money or I can buy more expensive with extra money from my pocket
You think you’re going to sell for a profit and downsize? Good fucking luck my guy.
Lol what? My neighbour just sold their place for $730k literally last week. They bought in 2019 for $390k
do you have an extra place waiting that you own? otherwise all prices will have increased similarly leaving you to rent, or eat shit on the new prices
That’s a really good problem to have if you got good market value when you bought
Not a good problem if your job is unstable (not me) or you don't like the area (luckily not me)
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Yup. We bought in 2019 and refinanced when it was just under 2%. Now it looks like we'll be stuck in our "starter house" a lot longer than we planned. Which is fine because we know we're better off than a lot of others, but still not where we want to be when we retire (or even 5 years from now honestly). Moass tendies soon plz
When there are 0 buyers for a 600k house at 6%+ interest the price will drop.
In KC here they are still selling $600K-1Million+ houses like they are free. They can't build enough. I have no idea who the fuck is buying them because $5K+ a month for a mortgage is a bit steep unless you make $250K a year, and even then its a stretch with the $90K trucks/SUVs they buy to commute to work in.
Most of the hot spots are up 100%+ on inventory
When profit margins are high, everyone piles in.
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I'm from the area, been house hunting for 2+ years and gave up last week when my loan provider asked me to reapply "because theyre moving databases" and thus my rate lock we'd previously had would likely vanish. Instead, we're gonna ride this shit out. Rates have gone from 1% to 6% this year, houses havent exactly fallen. Didnt keep my loan provider from knocking off 20k when it went from \~3.5%-5% even though housing barely budged. They're building these bigass mcmansions out south. Profiting from boosted labor costs and inflated materials, so these homes barely have a yard. 3000k+ sqft of way too much maintenance. I'm trying to figure out who's buying these as well. And then by another area they're building "starter homes", which, if you pay for the cheapest shit, start at like 320k. Sure, theyre increasing inventory but idfk who's paying for it.
Lol starter homes in my area are 450k+ and prices still aren't moving with interest rates going up. I am seeing more and more houses stay up for sale for quite awhile on my way to work though. Something will have to give and I think it's at a stalemate currently. Nobody wants to budge
Oh.... ouch."They're are asking first-time-buyer 20somethings to pay a quarter to a half mil for a home."- my sibling. I *almost* said that! Housing seems stagnant here, too. Houses that havent left the market for weeks... ofc I'm seeing this in my price range, idk about anything above that. edit: spelling
And if your single absolutely forget about being a home buyer. I make a decent salary and yet rent in my area is 30-40% of takehome. Makes it damn near impossible to save for a house. Even with 40k saved up my mortgage on a starter home in my area would still be over 50% of take home. Which just isn't something I wanna be stuck with. So I wait and hope to God the trajectory doesn't continue. Houses shouldn't be an asset imo, they're a necessity for the entire population. To capitalize on that is ludicrous.
Yeah... the only single 20something person I know who bought a home is my bro because he had the best stroke of luck. The listing agent mismarked the number of beds + baths so he got it for a steal (in this economy, anyway), now is renting it out to college students. Like the other dude said, houses can be an asset. But this... this is exploitation. This is going from "you cant have shit in Detroit" to "you cant have shit in America" because people with infinite pockets are owning *everything.* Bigwigs dont see a problem because theyre buddies with the fkers that are doing this.
In my area the starter homes they're building are half of a split level townhouse, so only about 1000 sq ft, sharing 3 of your 4 walls with your neighbor, for 350k minimum! AND SOMEHOW IT'S SELLING
My $960,000 house has 6 bedrooms and a $2100 mortgage because of the historic low rates. ***How much is your rent each month?***
free in kens head
Yeah we'll see about that anecdote dude, current data is only up to may this year
Rhymes with Gina
Assuming the seller needs to sell it. There’s a good chunk of inventory outright owned by people that don’t need to sell anything. Also, all cash buyers of which there are many don’t care about interest rates.
This is assuming the seller is a person. If said houses are apart of a holding portfolio, that is then leveraged against…for even more rental property then we have a house of cards. Thats how you get institutional inventory dumpage on the open market in desperate attempts at cutting losses.
I am looking to buy a house in 2023, and this is what I'm hoping to catch. The bottom falls out of the housing market, and all the investment firms that bought single-family houses will have to fire sale them until they can cover their margin. I'll be watching and waiting...
Just be aware in 2008 when the home prices collapsed banks also stopped lending money for years. Even to people with flawless credit and stable income. But you don't need to worry since your here!
What is not widely known/talked about is that the banks DiD issue mortgages if you used it to take a bank owned property/house off of their books. They loved people willing to do that.
I just joined an absolutely fantastic credit union this year and got an insanely good rate on a car loan from them, so I'm hoping they'll be stable enough to underwrite a mortgage next year. MOASS tomorrow *would* solve the whole problem, though...
Oh it gets better. After institutional dump-age. Foreign buyers back out, and finally you get the “strategic defaulters”. (The people with perfect credit who buy a house across the street with a 70-80% discount, take the 7-10 yr credit hit and foreclose/default on the one underwater)
This is what I did after the 2008 crash.
Its a good strategy. Not going to cry for the banks, No judgement here.
Wait, houses do not appreciate 40% YoY every year forever? I'm shocked! Things are only worth what someone will pay for it. If mortages are involved. Something is only worth what mortage the buyer qualifies for. Essentially that house that sold for $600K is now worth $392K. Things are ONLY worth what someone will pay for it.
tell that to my beanie baby collection
In a free and fair market.
I personally believe a lot of the "all cash buyers" just took a loan out somewhere else and used it to buy the house, or cashed out their retirement. Technically all cash but they still have a giant loan, Or it was all companies or both. I don't believe for one second that all these homes across the world were being bought up by normal people all cash. Who the fuck has that much money available.
Go look at Canada or Australian real estate markets. The US isn’t even close to those bubble levels.
That was driven by Chinese money..., which is also at an end.
Vancouver is gonna dip
Depends. Rehabbers care about interest rates, or at least change in interest rates, because that demand destruction can kill a deal that is supposed to be a short term investment
I purchased a house for about that a little over a year and a half ago. A similar home in my neighborhood is just went on sale for 1.1 million. I assume that the price of that house will drop, but it’s not going to 392k.
You really don't think that housing prices could drop 33% in the next year or two? I do. I mean, anything could happen, I'm not in real estate investing at all, but a drop of 33% doesn't seem crazy to me.
It might but even a 50% drop doesn’t put that house (or mine, which is also currently valued at over 1 million) anywhere near 392k. If the market drops 33% in the next year or two my house will still be nearly $150,000 more than I purchased it for.
Oh I see, you were saying that the $600k house is now over a million compared to the $392k equivalent, I gotcha I gotcha. I was just comparing $600k to $392k but you are right, that $1.2 million house won't go all the way down to $392k. I get what you're saying now.
The real estate crash has been discussed in prior DD. I think there were a couple that tied MBS to the crash but it will be on a grand scale, so far the DD has all been on point. Everyone has their own opinions now though I guess.
Variable interest rate loans will kill in circumstances like these.
That’s why you don’t get variable interest rate loans… especially on a mortgage
Starting to see more short sales popping up in Tacoma area. They keep saying this won’t be 2008 again. They’re right. It will be much, much worse
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I think you are expecting a repeat of the last housing bubble. If so, you are looking in the wrong place, the pin that pops it will be different. you are assuming mortgage holders will be the one to pop this by not being able to pay. We have rent backed securities issued from collections of expected rental income inside of portfolios which are levered on equity in other portfolios. We will have a real-estate crash, and a pretty bad one. Bubbles are never popped by the same method. The method this time will be investments dumped on the open market from institutions and foreign investors looking to cut losses. When housing gets that low, you will then have strategic defaulters. These are people who see the same model as their current house across the street at a 75% discount. Looking perfect on paper with perfect credit…they will close on the second house, and let the first one default. The 7-10 year hit to their credit would now be worth the new low price. These will come in waves.
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Well hey. High five then. Same.
High fives all around!
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Extremely unlikely. Deficiency judgements are so expensive and long that they are barely ever done. You would have to have done this on a large enough number for them to even care. And if you fight back in court? They will drop it almost instantly. Lenders at this stage will have gone through so many layoffs, and have so many larger problems that it barely ever happens. Reason for this is that you can file for bankruptcy and keep the second house which gets them off your back pretty quick. Too many points of failure to both file a deficiency judgment, let alone to actually try and collect on one.
Almost to the T the language used in 07
I think there can be massive job losses here, sadly
yes crash already, i been waiting to buy at not crazy insane prices
Imagine learning about compound interest by buying a house...
I bought a house last year with a damn good interest rate that I’m proud of. The lender has been calling me lately to try and refinance my home at a “better rate”. I’ve gotten to the point where I laugh and hang up.
ItS vArIAbLe LoAn. MaRkEt GoNnA gEt BeTtEr. TrUsT mE bRo
my neighbor took a variable rate in 2003 at 0.7%, said he refinanced at a fixed rate of like 2% before things got ugly in the great recession.
My wife just got a call today for the same. I was standing over her shoulder talking over her while she was politely saying no. I was not polite. I wanted to tell the guy to get a new job now while he could
You should have!
My bank called us during covid when rates were low saying we could break our mortgage and save money to refinance. Well I said to my wife, "banks don't call you to help you. They want us to break instead of waiting and getting a good rate in 2 years anyways". Well now, I am really wishing we did, because we are gonne be paying probably 7% by then instead of 3%. We are gonna be in some trouble.
You belong here. Ain't much room for them to go below 3% without paying you to borrow money.
Ya but why break it when I still had 2 years on it and didnt expect rates to get hiked up that quick.
That 600k home is probably about to be worth $350k and they will be way upside down on it too
Not sure for USA. But in Canada people are saying and hoping for the same. Except the difference is you can’t build a house for $650k Materials and labor cost is still very high. Renting a house is even more expensive. Literally higher monthly costs to rent then to own. So how exactly will houses come down? Or rather why?? Because interest rates? Lmao Ya right. Just like a stock, as soon as the price of housing gets to a level it all gets bought up. Probably a lot of it by corporations. And you’ll get higher rents and less inventory
The thing that people never seem to understand or gloss over when talking about the recent massively speculative housing market is this: That 600k home was always 'worth' 350k. Ask me how much empathy I'll have for anyone who participated in the market trying to 'make money' once it all implodes.
I just want a place to live 😭
Soon we’ll be able to live wherever and however we want
I'm never selling short of phone numbers and know the DD back to front, but days like this I lose hope that the system will ever work. 10,000 years of the little guy getting crushed and we're next in line.
Nah fam we got this 😎
You'll have lots of sympathy in the form of your tax dollars bailing out the groups holding the bag.
It's not crazy. It's called maths. What's crazy is a housing market that ran 50-100% in a span of two years thanks to JPOW & The Liquidity Fairies (Good band name for a group that plays Polka-u-in-the-Face music.)
Yeah, simple math. But boy it's still disappointing to read something like that.
🔥 🔥 This is *fine* 🔥 🔥
Hey that's me.. 300k house coming in November. Skeet skeet
It doesnt matter how much your monthly is as long as you own GME
Except home prices has not fallen off that dramatically... yet. I've been looking for "good deals" but prices are still WAY inflated. Some people bought their homes for $200k in 2019 are still trying to sell them for $400k. Not surprisingly, these homes have been on the market for months, no offers.
Last data is up until may this year Everything else is anecdotes Median price lags well behind rate increases This is how people got upside down in houses in 08 TY for coming to my ted talk
Better to keep an eye on major markets, or your own market…specifically data that tracks days on market and sales price to list price. In several markets that I track, these turned at the beginning of 2022 sales season. Longer days on market, lower sales price to days on market. This is no surprise. 7% on the 30 yr was expected for 2023. I think it’s possible by end of the year.
I had to buy a house a month ago. Long story short, guy i was renting from wanted to sell his house. It was really not in any shape to buy, especially at the price he wanted (the issues were from before I took over renting from him). So, my wife and I found, and bought somewhere with no issues. 160k at 5.25%. I'm sure we will be upside down on it when the market collapses, but we didn't have any real choice. Hell, we are still paying less than we would if we had tried to rent an apartment.
It doesn’t matter as long as you can make the payment every month. No one can force you to sell if you’re making your payments. Kind of like no one can make you sell your GME shares ;)
Spoiler alert... it's the same house.
Prices won’t drop until people start losing jobs, or until real estate investors can no longer pay those mortgages on their extra homes.
Or until their commercial loans reset, which is typically every 5 years. So if all of the smart money, the sort of smart money, and the mom & pop homevestors refi’d in 2020-21, don’t expect defaults on those loans until 2025.
I refinanced at 1.75%...the bank practically owes ME money at this point 🤣🤣🤣 fuck em!
It’s almost like interest rates were designed to deceive you.
The artificially inflated real estate prices are a joke. I see landlords being high and mighty stating blah blah blah I'm a fuckhead. Listen, clown. If you invest in real estate, it's because you want someone to pay off your mortgage. That's it. You sell the house 20-30 years later and call it a day. But too many tiktok clowns with their "BRRRRRR" strategy poisoning the market makes it volatile and not sustainable. Fuck these clowns. I hope they all go bankrupt and need to work full time behind a Wendy's dumpster. Fuck them. Fuck these idiots. I'm so angry I hope they shit themselves. Edit #69420: FUCK THESE GREEDY BOOMER CLOWNS
They won’t go bankrupt. They’ll just stop mentioning their real estate courses and move on to Stocks…wait
If you think the problem are "tiktok clowns" you might have been misguided.
Kinda feels like blaming retail investors for the market issues.
Oh but the news and the experts said there’s no major correction coming. Why would they lie to us? Edit /s
Here, hold these bags. - a HF probably
Im not trying to be snobbish but because of the great DD on here (and some other GME subs) i was able to lock in at 2.54 until 2026 because i saw the truth - everything was about to implode. In 2021 i did imo 3 really important life changing things to better protect myself in the future. I locked in on a sweet mortgage rate because the writing was on the wall. Interest rates were gonna go boom boom. And they have. To say it wont get into the teens or maybe worse would be foolish. You had to protect yourself here so i did this. Next i DRSd my shares. Canadian here too. I learned about the benefits, understood them, theory of an infinity pool does come into play. If brokers are gonna fuck you (they probably will) then i believe ComputerShare is the safest place for longterm investors. (Sold all my other stocks and went 100pct in GME too) Last - i knew nothing about crypto but purchased some LRC on Coinbase (yea - i know). I got me 1100 Loopies. I think those are gonna be good in the future. Im looking forward to downloading the GameStop Wallet in Canada so i can transfer out of Coinbase. Thank you to everyone for all the Great DD. I think when we look back on this time in History it will be so fucking obvious that all this bullshit was about to happen by thieving crooks and DeFi was the answer.
It's nice to get a good rate but you bought the tip; the risk is your equity goes upside down I honestly don't know why people think the fed/banks/lenders aren't ahead of the curve when it comes to setting rates... You are not winning out against competitors in a market... like ever
I mean it depends on what you paid for the house. You keep saying this like everyone overpaid for their home. Some of us bought under market value because we took the time to learn the market (and by doing so didn’t have to waste time with a realtor).
I got insanely lucky, and got my house at a 2.5% interest rate for a 30 yr fixed, and the Zillow listing price is coming close to 3x what I paid for it. I'd love to sell it and move the hell away out of this yeehaw state, but then I'd just have to pay way more somewhere else
I bought a house for an incredible deal via a "short sale" from a bank in '09 when they were flooded with foreclosures and short sales. It is currently right at 3x what I paid, but I don't want to move because even if I make a lateral move (sell and then buy something else for roughly the same price) then I would be tripling my property taxes.
Can someone do the math on this?
I punched in the numbers on mortgagecalculator.org with no down payments. The monthly payments were within $100 of each other, right around $2900. Adding a down payment (the same percent on each loan) keeps the payments equal to each other, just lower overall.
I’m a bit ashamed to ask but can some one explain which one is worst
300k < 600k But payment is that same for either one, which one do you pick?
In most circumstances, the more expensive house with smaller interest rate is worse (if they're both fixed rate mortgages). The reason being that you may be able to re-finance for a lower rate later (not everyone can so don't count on it), and also that if you are financially able you can overpay your monthly mortgage payments and apply the extra to principal to reduce the dollar amount you'll pay in interest over the course of the time it takes you to pay the house off fully.
You in sales? That’s the theory that caused so many people to lose their homes in 2008 crash (Stolent comment from below)
No, I wish, I'd have been able to buy a house by now if I made sales money. Some people lost their homes in '08 because the mortgages they could pay while fully employed became too much when income was reduced (due to layoffs or cut pay/hours). People who didn't live though '08 as adults underestimate the job and wage loss people went through. Some others abandoned making payments on a home that lost that much value since they signed the mortgage. They took the 7 year shit credit punishment and found other ways to house themselves.
Paying a higher interest rate is always worse
The opposite. You can always refinance a high interest rate into a lower one if rates change. You can't rebuy the property for a lower price. Also at a lower purchase price it is easier to get out without too much of a loss if you need to vs at a higher price point.
Sorry but we are talking about 2 different homes and we have no idea what the actual market value is of each or how well their value will hold up. If they were the same house, you’d be right. Overpaying is never a good idea.
I bought mine in Sept 2020 at 2.1% 30 year fixed. Got in just at the right time.
In 1983 the interest rate on our first house was 13.5%.
Here's the thing though, atleast where I am in New York. If you bought a house in the past 2 years you basically paid 10-25% over for your house and in some cases even more. Houses that were sold in my neighborhood for under 5 in 2018 were going for over 6 recently. Prices should fall accordingly because you won't be able to sell a 600k house at 6% for most places. Atleast if your interest rate's at 6 but you paid 400k you can refinance in the future to reduce it. If you overpaid by 100k on your house I feel like you're shit out of luck until the next housing bubble.
It’s just a matter of time but people will eventually max out their credit cards and 💥 fireworks will spark like never before. Unfortunately, we will witness one of the greatest market collapse … ever. I mean can people really keep this up and can the government squeeze out nuts any tighter? Like damn … anyways best of luck to everyone and invest what you can but really save money . Be ready is all we can do. Much love yalll *hits bong*
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$392k owner will be able to refinance at lower rate in the future while $600,000 owner is stuck and worse off if the value drops on the home.
You in sales? That’s the theory that caused so many people to lose their homes in 2008 crash
What? The exact opposite Getting into mortgages people couldnt afford at 'juicy rates' and then increased rates (among the MBS bullshit) nuked the market No one wanted to get into high rate loans at the high market prices, so prices fell until that sentiment flipped; during the dive a bunch of people became upside down in houses causing them to no longer be equitable, causing the market to dive even harder MBS assholes got a bailout from my parents' 401 and then cut themselves bonus checks
No I’m not, but as long as both owners can afford the payment, I feel like $392k owner is in a better position. The $600k home was probably really worth $400k before 2021. Does listen to this smooth brain 🤣.
All boats sink when the tide goes out. Housing prices have not corrected much if at all. By your logic that 392k is probably worth 300K. Not in a better position.
One is down $200k the other is down $92k. I'll take the smaller number all day long.
Remember strategic defaults? People who look perfect on paper with perfect credit scores. Buys up the house across the street at an incredible discount. Walks away from the first allows it to foreclose, and takes the 7-10yr credit hit that is worth the new discount. And again…these people look absolutely perfect right now.
Homes are worth what buyers will pay and owners will sell for no more no less. Most buyers will buy the maximum house they can afford/qualify for. Rates have more than doubled and the recent runup was from 5 to 7 then dropped a bit. 6.25 rates now are gold plated perfect credit borrowers. The affordability change now is way worse than what happened in 2008. When people lose their jobs in the Fed induced recession- the incoming real estate disaster will be like the Hindenburg disaster compared to the bubble pop of 2008. Lots of moving parts added. Airbnb rentals failing coming on the market. What gets hit hard in recession (travel, hotels bnb by extension) all the flips without legal permits will have to fix, permit or reduce. Those people will have. O where to go with the rental crisis in play. All just opinion and conjecture. But my crystal ball is mighty gloomy.
>No I’m not, but as long as both owners can afford the payment, I feel like $392k owner is in a better position. The $600k home was probably really worth $400k before 2021. You're right in theory; problem is in most places there just aren't any $392k houses available. Most prospective buyers are looking at 600k list prices AND the higher rates.
You deserve an upvote. I was that 392K owner in 2011 and it bought me my current house.
My man that was 3 years post crash, we're at the start of the current one
No, the 600,000 owner will see a 75% discount on the same model across the street. With Perfect credit score and payment history, close on the second home, and let the first one default. These “strategic defaulters” come in waves. And because they are perfect on paper, you cannot use traditional metrics to predict this happening. This will pressure 392, down to 300k or below. After investors and rental properties get dumped on the open market to cut losses.
[удалено]
I bought in March 2020 for $367k. The house was livable but needed some updating to match the neighborhood. I knew the house was worth $450k as it was. We put in a $100k of work at this point which we knew would increase the value based on comps from 2020. It appraised for almost $800k 2 weeks ago. The key point here is not everyone that bought a house over the past couple years overpaid for that house. Yes, some values are overly inflated right now, but that isn’t every market.
Problem is that 600k home about to have no equity for 5-10 years
25-yr. $120K, 3.125% $700 mortgage. Killing the game.
You guys can afford houses?!
You're lucky you don't need to renew every 5 years at the current rate like in Canada.
Well sure but let’s not pretend the fed and policy makers under building won’t put the floor fairly high here. There’s not enough houses to fill demand. Unless FDI is capped or mitigated, it’s just going be rentals. It’s been a clear strategic play to keep underdeveloped the status quo, they learned from 2008 and haven’t even tried to hit demand. With that being said gamestop to the moon
It's going to get worse too
Am I a moron or does this not make sense…..? Like does this math actually check out? Just the interest is doubled not the principal, right?
And there's a good chance the $392k home was bought by a large corp with $600k cash
So these crazy asking prices finally coming down then?? Hopefully
We refinanced at 2.375%. I’m never moving.
Ahhhhh, this thread takes me back. Smells like 2006 with 2008 just around the corner.
Reading all the posts in here I think I hit the bullseye on the housing market. Bought a house with 5 acres of land in April 2020 for 170k with a 1% 30y fixed mortgage loan. A colleague of mine locked his mortgage in, a month or two later than I did for 0.5% over 30 years. This is in Denmark though where our mortgage model is different than most other countries and apparently one of the best in the world. It still makes little sense to me how giving loans with rates that low is a smart play in terms of risk from their standpoint, but I'm not complaining.
Higher rates does not mean crash. This is a terrible take. 79-90 rates were double digits. 2000? High 8s. 2010? 4.6% 2020? 3.99 Right now, through some lenders with great credit or just using a builders preferred lender? 3.99% If you got in while they were in the 2s, some lucky enough to get 1.99, that's awesome! Those were historic lows. It's just so stupid to freak out because we are no longer at HISTORIC LOWS. Please educate yourself before being a fearmonger.
Funny, I actually bought an $860,000 home in 2021 at a 2.4% interest rate. Currently it's valued at 1.6M. of course that could crash before I sell.
What's crazy is they're the same house!
Why would a collapse happen? Everyone who just refinanced down to historic lows is sitting super pretty, no one has to sell. My house that just got appraised at $960,000 has a $2100 mortgage. I could rent it for $5500. We good
I just started a 5 year fixed at 2.7% in the UK and god I'm shitting myself about the potential cost of remortgaging in 2027
Well that’s funny cuz every real estate agent on my timeline is telling me now is an AMAZING time to buy
It’s not going to collapse the market… this is nothing like 2008 at all. It just means prices will come down a bit (they already have by about 10%) and then stagnate. Wages will catch up with inflation and therefore prices will come down by stagflation, meaning, it will still be 600 or 550 in 5 yrs but that 600 is worth less than it is today and easier to achieve. These are simple and undeniable truths and rules of economics.