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Hrekires t1_iwvgyrg wrote

This is literally the expected results of efforts to combat inflation, isn't it?

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maggotshero t1_iwwd9l0 wrote

Yeah, inflation has also decreased over the past month or so. I think in october in only went up like .4 percent, which was lower than experts were predicting.

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Contren t1_iwx0xqq wrote

And some of the down the pipe numbers like wholesale prices are turning negative. I'd expect inflation to cool rapidly in early next year, it's just going to be a question of whether we overshoot and dive headfirst into a recession.

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Flaky_Bee_2599 t1_iwypo75 wrote

Yeah but it did that before in June. All the news articles had economists talking about how inflation was over and that it had peaked.

Guess what happened next month.

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jason_steakums t1_iwvdzfn wrote

Sucks that high mortgage interest is what it takes to get home prices to stop going through the roof. Although I am a fan of my savings account actually earning interest for once in my adult life.

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tipbruley t1_iww84r3 wrote

Lol my bank savings account is still at like .05% so I have no faith banks will adjust

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CrystalMenthol t1_iwwdn27 wrote

You can shop around for a better rate. A quick look at Investopedia shows Citi, Capital One, and a few others with interest rates above 3%.

Of course, you have to judge if you actually have enough money in the bank where the difference between 0.05% and 3.00% is worth the hassle of moving the account over. But there are definitely options much better than the rock-bottom interest rates we've been stuck with the past decade and a half.

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tipbruley t1_iwwe40q wrote

All banks with 3% are online only banks. But yeah, I’m switching my savings over to one now since 3% is legit.

I just don’t see the majority of the population taking the effort to do so.

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zzleeper t1_iwx3t21 wrote

Go to Marcus they pay like 3%. Or just buy 6mo tbills they are risk free and pay + 4.5%. or buy ibonds at 9%.

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RawOystersOnIce t1_iwxz8a1 wrote

Transfer your money to a High Yield Savings Account. My interest rate is 3%.

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CrystalMenthol t1_iwvzwvu wrote

It actually started to feel like free money was the natural state of the world for a decade or so there. Younger people (less than 35 or so), probably really don't have perspective on how national economies "normally" function without extreme measures like Quantitative Easing happening in the background. Stonks don't always go up.

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jason_steakums t1_iwwb2rd wrote

tbh I'm glad we seem to be easing into a more normal economy the way that we are, it could have been a real abrupt shitshow between post-covid and Brexit economic weirdness and Ukraine and all this other stuff hitting at the same time

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Rikey_Doodle t1_iwwb606 wrote

>Stonks don't always go up.

You're telling me all that stuff about infinite growth was all just lies? I refuse to believe it.

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thunder_struck85 t1_iwwdwa1 wrote

Why do people continue to call it free money? There's nothing free about it. You still borrowing an enormous sum that has to be paid back in full. No different than borrowing a mediocre sum at a higher rate.

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CrystalMenthol t1_iwwe7m0 wrote

They call it free because you borrowed it for almost free. It's like if I rented you a car for no money, you'd have no problem saying "I got this rental car for free!" You still have to give back the car / pay back the loan, but you got to use that car/money during the rental/loan period.

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thunder_struck85 t1_iwwk7mj wrote

But you still didn't borrow it for almost free. It's a stupid saying. Borrowing $1mil at 1% is still not free. That's still a lot of money in interest if you're buying an item that has no real return.... like a house you don't plan to flip but live in long term.

Nothing free about it.

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Ag0r t1_iwx96a9 wrote

If the loan's interest rate is lower than inflation, it is literally free. Many many Americans have mortgage rates lower than 3% which means the value of the debt is shrinking more then the debtor is charging for it.

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aladdyn2 t1_iwz1ym2 wrote

Yeah I'm 46 and got my first mortgage at 6.5% 15 years ago which was good at the time and my parents maybe 25-30 years before that started at 13% interest. Of course back then they could actually make and save money more easily so they weren't just borrowing 100% of the cost.

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VonStinkelberg t1_iwx6bt7 wrote

That's exactly what monetary policy is meant to do. What sucks is since 2008 we've had low interest rates and any attempt to raise rates has been met with equity markets shitting their pants, thus the most prudent decision was to do nothing about it... If we had higher rates perhaps private interests like BlackRock wouldn't own such a large swaths of the housing market, or Carvana and the like wouldn't have driven secondary car prices through the roof. Leading us to the seventh ring of inflation, which will be followed by consolidation when weaker competitors bow out due to increased operating costs, only to concentrate more of the world's wealth. In short, the people entrusted with protecting our financial system have allowed it to be plundered. Hopefully we have sense enough to let speculators wither into non-existence instead of bailing them out with kids' lunch money. Source: A decade on Wall St.

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SolomonGrumpy t1_iwyyujy wrote

That's only part of the problem. QE (the govt adding billions to the market over the past few years) is also a major contributor to inflation.

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VonStinkelberg t1_ix1lzkq wrote

You're very much correct. Open market activities are another lever, which only incentivizes poor behavior from a concentrated banking sector. Glass-Stegall would remedy many of the issues we have come up against and will into the future. Banks shouldn't gamble with depositors money, yet those bets are effectively insured under current law; they can securitize the next dog shit product or take over-draft fees from broke people, there's no need to risk the entire fucking economy for bonus season.

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IndIka123 t1_iwzebb0 wrote

We can hope that this will spark cheaper development and government housing

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Pig_Benis-1234 t1_iwvb91g wrote

In the last downturn people had their homes listed for YEARS without even one showing.

Let that sink in all you risk free drywall addicts.

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Ashurb4nip4l t1_iwvd66i wrote

Drywall addicts?

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bromthecrow t1_iww9r1v wrote

It refers to house flippers. Rather than actually repair a wall, some of them will just nail a new layer of drywall down over every exposed section of wall and sell it as newly done walls

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dobryden22 t1_iwvdib0 wrote

I'm equally curious about this. Gana take a guess, it has to do with modern homes using more drywall than older ones with like wood paneling. I assume that gets carried into remodeling.

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PineCreekCathedral t1_iwvgy3q wrote

The risk-free part before it makes me think he's talking about house flippers and how they drive up the market.

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-VizualEyez t1_iww5chi wrote

When I read weird comments like this drywall nonsense I always enjoy looking at their profile. Never disappoints.

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Velkyn01 t1_iwxm94j wrote

The guy posts a ton in r/ "Real Estate Bubble", of course he hates flippers lol

0

Amelia_Blake_ t1_iwvcagw wrote

I was a potential buyer, but luckily I was just trying to upgrade, so I still have a comfortable home. I’m not scared, I’m just not willing to pay 7% interest on a 30 year loan 🤷🏼‍♀️

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deathxbyxtaxes t1_iwvdwas wrote

Glad you’re comfortable, I wouldn’t expect it to go down significantly anytime soon.

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Freexscsa t1_iwve84v wrote

very likely at least the next 10-20 years before it ever goes down its sad how many people are ignorant of historic interest rates.

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deathxbyxtaxes t1_iwvepnx wrote

Seriously, these rates are great compared to the 80’s, although sale prices were an order of magnitude lower to be fair. Once people get over the shock of such a rapid rate rise I think the market will stabilize some. I wouldn’t expect to see record sale numbers, but people will still buy.

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MurlockHolmes t1_iwvt27l wrote

I would take 80s interest rates for 80s prices, as it stands we're on our way to making it so home loans are unfeasible and only the people that can buy in cash will be able to afford houses

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deathxbyxtaxes t1_iwvy9ve wrote

I find that a lot more likely than everyone cheering on a market crash.

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Celcius_87 t1_iwwnhff wrote

Some of the people wanting a market crash ARE cash buyers

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deathxbyxtaxes t1_iwxbe6y wrote

Sure, but most of them are not in my experience. Almost everyone I’ve seen cheering for a market crash is in position where they can’t afford to buy otherwise. I get it, but it ignores all the nuance of the effect of the larger economy.

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64557175 t1_iwvwskf wrote

Well luckily that means I'll have my first home right before I'm too old to be of much use in the workforce... 🥲

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Yourponydied t1_iwwxhe8 wrote

I bought my house in 2015 at 3.5% Ignorant to all of it, the bank told me is an OK rate. When I googled it, I found an article from the 08 recession "the days of 3.5 percent interest gone forever"

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Tuned_Out t1_iww6rq2 wrote

I'm in a similar position. We're very lucky we can save another year or two. The best (but hardest for most) way to combat a high interest rate is with a higher initial down payment.

General advice if anyone here is in a position to take it:

Now is not the time to be grabbing zero or low down payment loans. Be warned, the interest will enslave you and the PMI is something most first time buyers don't consider until they're deep into the process.

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proteannomore t1_iwwppal wrote

I'm willing to eat the interest rate but not without at least 20% down. Rates will fall eventually and I can refinance.

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54794592520183 t1_iwxqho9 wrote

I will be early next year. I would prefer lower, but 7% on what is the question. If the housing prices go down, I won’t mind the 7%. Logic being, good chance housing prices go back up at some point.

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8BitSk8r t1_iwvgtjw wrote

I need to buy, rent is astronomical where I live (and I don't buy into the "well the apartment buildings take the risk" bullshit the rich try and peddle).

Unfortunately buying is impossible to. A tiny, one story house in the rust belt of PA shouldn't be $250k+ with 7% freaking interest. I shouldn't have to pay $1600 a month for such a house that's literally big enough for one person.

It's disgusting.

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[deleted] t1_iwvxgl2 wrote

I pay more than that for a one bedroom apartment in the suburbs 😭. A house is a pipe dream.

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SweetCosmicPope t1_iwwax6r wrote

That's the thing, right? Rents have gone up just as much, if not more, than mortgages.

When we bought our house in 2017 we had rented two previous places over about 5 years. The first one started out at about $1300 a month for a luxury apartment in a nice neighborhood. After the first lease was up it jumped to $1900. We couldn't afford that at the time, so we moved way out in the boonies and rented an attached townhome for about $1400 a month. When we bought our house, it had just gone up to also $1900. Our mortgage is $2200 (including escrow), so at the time it was a slight bump up, but we could afford it.

It's been 5 years now, and I'm not sure what the townhouse is going for, but the other day I happened to be in the neighborhood of my old apartment and looked up how much it's going for just for laughs: $4400 a month for a 900 sq ft 2 bedroom apartment.

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thunder_struck85 t1_iwweey6 wrote

Could be worse. You could be in Vancouver and that same house would be $1,000,000 and you would have a job making 30% less .... so at least you got that going for you.

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Fun-Translator1494 t1_iwxstac wrote

“Getting your finger nails pulled out while someone sticks a needle in your eye isn’t cool, but at least someone isn’t also shoving a hot fire poker up your anus, so relax bro you have it good”

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ScrewAttackThis t1_iwwlwrx wrote

Home prices are about $500k around me. It fucking sucks. I'm just saving money while I have a $1100/mo rent.

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smogeblot t1_iwzgh16 wrote

>A tiny, one story house in the rust belt of PA shouldn't be $250k+ with 7% freaking interest.

Are you sure you're not looking in Bucks County or something? I can find dozens of medium sized houses all over the rust belt around $100k.

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54794592520183 t1_iwxqpmc wrote

My rent for a three bedroom apartment is less then that, and I am in what used to be a trendy neighborhood….

Northern Chicago burbs are around 250-300 for a 3-4 bedroom house. It’s a bit cheaper across the border In Wisconsin.

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ZombiePartyBoyLives t1_iwvon94 wrote

I'm in a RE-related field, and the rate freak-out on top of the regular seasonal slowdown has been...not good. A friend of mine who is an appraiser with 30 years of experience just got let go after like 6 years with a company. Last night, I went to go pick up dinner from a bar and grill, and an agent I used to see out in the field all the time was tending bar. Yeah, it's rough right now...

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cyrixlord t1_iwwj69o wrote

well, homeowner type buyers. corporate property hoarders are still going gangbusters. I get calls/mails at least twice a week wanting me to just walk away from my home (i'm not even selling) for pennies on the dollar so they can flip it and rent it out. companies buy multiple homes in one neighborhood.

proper homeowners can't keep up with the counteroffers.

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JustJeff88 t1_iwwmpmo wrote

I'm fairly certain that 'ridiculously high prices' and 'years of stagnant wages' has a lot to do with this.

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Ashurb4nip4l t1_iwvd2eh wrote

I hate the term "great reset"

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Prcrstntr t1_ix8l1zq wrote

Great new game plus

Everything is harder, more expensive, and this generation didn't have anything to transfer over from the last save.

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wutitd0boo t1_iwvpxsz wrote

I need to buy in March/April of 2023. Mortgage rates on a yo-yo, make me prepare for the worst.

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DumberMonkey t1_iwvuutp wrote

Get one of you can afford it and refinance when/if rates drop

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DaveOfTheDead3 t1_iwyc308 wrote

Or...now hear me out....cooperate investment firms falsely inflated the housing market to the point it's UNAFFORDABLE for most people making it impossible for potential buyers.

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shichiaikan t1_iwydbuo wrote

Fed: We're going to punish normal people because of inflation.

Everyone: It's not inflation, it's greedy cor...

Fed: INFLATION, IT'S INFLATION, GET THAT GUY OUT OF HERE. ALSO WE'RE RAISING RATES AGAIN.

Banks: So... we're going to lower rates on our own, because we're kind of fucked too...

Fed: INFLATION, UHHH..... WE'LL UHH... ADJUST... UHH... RATES... AND... RECOMMEND... UMM... LOOK, HUNTER BIDEN'S LAPTOP!

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topgun966 t1_iwxf1il wrote

I mean rates are a factor. But the insanely inflated home prices are another.

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BoilerMaker11 t1_iwyxjf9 wrote

I’d happily deal with a higher interest rate that could be refinanced to a lower interest rate some time down the line, but home prices need to drop. Mediocre houses selling for a half million when they should actually be around $350k is probably scaring people off more that a 6.5% interest rate.

That rate honestly isn’t even bad. People just got used to artificially low rates after the 2008 crash, but that’s what it was prior to the housing market collapsing. But paying that “high” rate on top of an overvalued mortgage because investors and house hunters who all have endless cash want to turn everything into a rental property so they can pay whatever price for whatever house? And regular joes have to compete with that? That probably scared people off more than anything.

I’m not paying a half million for a 1500 sq ft ranch that’s in the suburbs. Regardless of interest rate.

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valkyrieone t1_ix6be2f wrote

When you have rates causing people to pay the same mortgage on a 360k loan versus someone with a great rate on a 600+ loan, yeah, I wouldn’t blame them either.

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TheJanks t1_iwvcxsq wrote

I'm so tired of my daughter paying rent, I'm tempted to cosign a loan just to stop seeing money thrown away.

6.5%. ouch.

At least doing the math she can claim all the interest over $13,000 on her taxes and get a refund. $13,000 is a lot - but it's still lower than the amount of rent thrown away. Years down the road when the interest payments will be lower than a deduction, maybe the interest rate will be lower for a refinance.

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cedarapple t1_iwvo7bg wrote

The standard deduction in 2022 for single filers is $12,950 and $25,900 for joint filers. Getting a house for the interest rate deduction is one of the dumbest reasons to buy.

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Amerisu t1_iwvsuwt wrote

True, but at least you're getting some equity from your payments.

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TheJanks t1_iwvv4a8 wrote

More like trying to buy the house so we’re not throwing away rent. The tax deduction is trying to be a silver lining

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cedarapple t1_iwvzian wrote

You are not "throwing away rent", you are renting a place to live in. When you buy a property you are making a mortgage payment in order to have a place to live in. In the first ~10 years of a mortgage nearly all of the payment consists of interest (sort of like paying rent to a bank for the use of its money) with a small portion of the payment going to principal (equity).

When deciding whether or not to buy you should determine if renting is less or more expensive than buying a roughly equivalent house with a mortgage payment (taking into account higher maintenance and insurance costs for owners). Also consider the increased flexibility that renting offers for relocating if necessary.

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ScrewAttackThis t1_iwwmt8y wrote

>Also consider the increased flexibility that renting offers for relocating if necessary.

That's been a big one for me. I haven't lived in a single city for more than a few years the past decade. Buying just never made sense. Now home prices are so high it doesn't make sense. Somehow they went up like 50% in 2 years. How that's supposed to be sustainable is beyond me.

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zzyul t1_iwwabwa wrote

And if someone recently bought a house for $600K and has to move in 2 years and it’s only valued at $500K, they threw away $100K buying at the top of the market. Buying is not always the best option.

0

TheJanks t1_iwwlcpu wrote

Oh I know.

After plugging in the numbers and taking into account the market right now, I think waiting at least half a year may be smart then revisit.

The neighborhood with new construction was throwing out incentives and looking at 90% drop in home sales, this is not going to get better quickly.

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TheGoodKindOfPurple t1_iwvomqa wrote

If you put down 20% you avoid paying PMI and the mortgage is at least a predictable expense. I hope you can find the right deal.

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ba_cam t1_iwvq5d6 wrote

On a modest house in my area, at 400k, who the hell has $80,000 just laying around?

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TheGoodKindOfPurple t1_iwvwl8x wrote

Oh hell, you must live in one of those places that people actually want to live in. Come to the Midwest, we have corn!

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TheJanks t1_iwvvbqz wrote

And that can be a fight. My current mortgage they said they knew all home values went up so I had to buy some kind of appraisal to prove to them that I still paid off 20% of the current house price. They didn’t care anymore if it’s 20% of what you paid more of what it’s worth. You gotta work to get that shit removed.

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WirelessBCupSupport t1_iwvo7c7 wrote

Mortgage rates aren't that high. My first home was 7.25% back in the 90's. Granted, the home prices were 1/3 what it is now. But in two or three years, if rates drop, you refi and put the points into the refi. Done.

Its a vicious cycle: you want to get your first home cheap, but then in 7-12yrs, when its time to get a bigger home, you want your current to have appreciated that you actually have 20%or more, to put down on the next one. No one wants to be underwater, which I'm guess, is now happening to many that outbid and overbid.

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Bocephuss t1_iwvsqhd wrote

>No one wants to be underwater, which I'm guess, is now happening to many that outbid and overbid.

Maybe I am missing something but even if you overbid on a house last year, you did so at a sub 3% interest rate.

So even if your home isn't worth as much as you paid, your monthly payments are most likely still lower than what they would be if you bought the same house today at 7%

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Savet t1_iwwnc3k wrote

You aren't missing anything. Everybody that rushed to buy at super low rates was essentially just buying the rate down with the inflated purchase price. Now we have a bunch of people that have never seen real interest rates freaking out.

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boysan98 t1_iwvqf8q wrote

Yeah but the cost of living has gone up relative to housing as well. So yes 7.25 is insanely high.

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phriot t1_iww80qw wrote

>Granted, the home prices were 1/3 what it is now.

This is the problem. Rates are high, but prices are still high. Maybe they'll come down enough to make payments affordable at these rates, but that's yet to be seen nationally.

We bought a house last year. To get the same payment today, the loan would have to be for $130,000 less. We probably could have saved another $25,000 in that time (difference in rent vs our total housing payment, plus repairs we've done to the house this year). There are no houses in our area for $105,000 less than what we paid that are anywhere near the same quality. Homes in that price range are either 2br condos, or are literal complete gut jobs. And that budget wouldn't leave anything left over for major rehab, so we either couldn't buy today, would be forced into a living situation we didn't want, or we'd have to find a way to pay a mortgage and rent while we did enough repairs to live in the gut job.

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CheesypoofExtreme t1_iww8p2j wrote

>Its a vicious cycle: you want to get your first home cheap, but then in 7-12yrs, when its time to get a bigger home, you want your current to have appreciated that you actually have 20%or more, to put down on the next one.

I actually do not care if my house is worth 20% or not before upgrading. Any sensible person should understand that it's simply not feasible. What I do care about is being able to save for that larger home, which is impossible when starter homes are as expensive as they are.

3