Here's Why You Can't Buy a House (It's Not Just the Market)

[Joe Flacco]

Amazing how one can come up with conclusions from a wedge.

Post in thread 'Mortgage rates close in on 8% with no relief in sight'

Oct 26, 2023

We are either there or almost there. 5%-5.5% for the 10 year.

I think the probability of rates moving lower from around here back to the moving average is good. What is uncertain is how long it stays around current levels before it starts moving back to the moving average. Based on the past it could sit around here for a year. It is also uncertain if it will be a sharp move lower or a gradual and steady move lower.

I think the probability of rates just blowing through this 5%-5.5% level to the next area level of resistance at 7% is low.

• Joe Flacco

It is amazing indeed.

 

[WestMichiganCG]

Assuming that they have a 20% downpayment (a big if), current 30-year interest rates suggest a mortgage payment of $2,050/ month.

Certainly not as bad in other states, but assuming the effective RE tax rate is 2.5% of MV, that would be an annual RE tax payment of $10,375.

Add $3,200/ year for insurance, that suggests PITI of $3,180 per month, which doesn't include maintenance costs that they don't have to worry about as renters. If I were single, I'd rent, but the LLs know that the math is in their favor, so now even RV parks or mobile home parks charge over $500/ month just for you to sit your trailer on the site.

The problem is QE and the homebuyer credits - those only pushed forward demand and created below-market mortgage rates for years. Why would anyone give up their 3% mortgage to pay a much higher interest rate on a home that costs so much more than just five years ago? Now, the gvmt is out of bullets because the deficit spending keeps inflation high. More are entering the potential homebuyer category than selling (who are often dying or going to assisted living), so the math doesn't currently work for a home price decline.

I've been a homeowner for over 25 years. My maintenance costs have almost equaled my mortgage payment over that time period. Nothing like a fixer upper to destroy your budget. If I were single, I would have ended up in an older duplex or rental.

 

[Joe Flacco]

I havn't had to spend anything major on maintenance yet, but I know it is coming.

I am thinking I might have to do the roof, windows, and siding in about five years. That is going to be super expensive. I'm thinking my HVAC should be fine for another 15 years at least.

 

[WestMichiganCG]

I havn't had to spend anything major on maintenance yet, but I know it is coming.

I am thinking I might have to do the roof, windows, and siding in about five years. That is going to be super expensive. I'm thinking my HVAC should be fine for another 15 years at least.

I just did siding, windows and a roof. It's expensive.