The Mortgage Business Is So Bad... How Bad Is It?

[Joe Flacco]

I think 8% is around the upper end of the new normal range for a while. Good chance that we get a range of around 6%-8% for the next five years or so.

 

[alebrewer]

It's hard to imagine than 8% rates will be the new normal from here on out.

Agreed. I believe the historic lows has created an environment where regulators understand the macro-economic impact of any additional mortgage rate hikes. Lots of pent up demand should rates drop back a point or so.

 

[chad hampton]

If rates stay at 8%, it’s only a matter of time before the bottom falls out of home prices. economy is a mess. unless you work in government, you are fearful of losing your job. Pretty much everyone I know is 175k and up - and the ones that have lost their jobs over the last year Have not found comparable replacement positions.

There is a significant difference between affording the median home at 3% and affording it at 8% Without wages significantly increasing.

 

[Dublin ohio]

There is a significant difference between affording the median home at 3% and affording it at 8% Without wages significantly increasing.

Median U.S. home price $416K. With 20% down P & I at 3% $1404 at 8% $2443. 74% increase

 

[djd09]

its going to be a long winter...

 

[Joe Flacco]

I'm not saying it is going to be the same today, but this is the last time rates were increasing, and this is as far as the data for home sales and rates goes back.

It is easy to think that higher rates = higher payments = prices will go down, but that is too basic. The economy is very complex.

The 1970 recession saw the biggest percentage decline in median sale price prior to the 2007 financial crisis. That was about a 11% decline YoY in median sale price. It is possible we see something like that at some point during this long term period of increasing rates.

In the 1974 recession, median sale price increased so even if there is a recession, it is not a given that home prices will decline.

Rates actually bottomed in the 50's but the data I have for both only goes back to 1963. So during this 18 year period when rates were increasing, the median sale price increased 390%. That is about a 8% per year increase in median sale price with rates in an increasing trend.

 

[Joe Flacco]

This is the 40 year period when rates were declining. The median sale price increased from $69,000 to $360,000. That is about a 4.2% increase in median sale price with rates in a declining trend.

 

[ucbruin]

Those forumites who have been saying/predicting (and you know whoyouare)....
"WINTER IS COMING"....
Will one day be correct....
Winter eventually comes....
Hahaha....

 

[Joe Flacco]

It's not the fed playing games with the rates. This stuff about "fed kept rates artificially low" is nonsense.

 

[Joe Flacco]

Those forumites who have been saying/predicting (and you know whoyouare)....
"WINTER IS COMING"....
Will one day be correct....
Winter eventually comes....
Hahaha....

It is winter for real estate. Everything real estate related except for builders is in a recession.