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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.

117

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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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.

−6

dobryden22 t1_iwvdib0 wrote

Replying to Ashurb4nip4l (#568,488)

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.

16

jayfeather31 t1_iwvdyja wrote

One wonders if this will be the first domino towards a major economic downturn.

3

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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deathxbyxtaxes t1_iwvepnx wrote

Replying to Freexscsa (#568,591)

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.

22

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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Hrekires t1_iwvgyrg wrote

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

284

cedarapple t1_iwvo7bg wrote

Replying to TheJanks (#568,468)

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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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.

−10

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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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.

8

Bocephuss t1_iwvsqhd wrote

Replying to WirelessBCupSupport (#569,524)

>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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MurlockHolmes t1_iwvt27l wrote

Replying to deathxbyxtaxes (#568,637)

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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TheJanks t1_iwvvbqz wrote

Replying to TheGoodKindOfPurple (#569,557)

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.

2

cedarapple t1_iwvzian wrote

Replying to TheJanks (#570,086)

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.

2

CrystalMenthol t1_iwvzwvu wrote

Replying to jason_steakums (#568,562)

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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Tuned_Out t1_iww6rq2 wrote

Replying to Amelia_Blake_ (#568,412)

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.

14

phriot t1_iww80qw wrote

Replying to WirelessBCupSupport (#569,524)

>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

Replying to WirelessBCupSupport (#569,524)

>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

bromthecrow t1_iww9r1v wrote

Replying to Ashurb4nip4l (#568,488)

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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zzyul t1_iwwabwa wrote

Replying to TheJanks (#570,086)

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

SweetCosmicPope t1_iwwax6r wrote

Replying to [deleted] (#570,295)

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.

15

jason_steakums t1_iwwb2rd wrote

Replying to CrystalMenthol (#570,524)

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

5

maggotshero t1_iwwd9l0 wrote

Replying to Hrekires (#568,868)

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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CrystalMenthol t1_iwwdn27 wrote

Replying to tipbruley (#571,172)

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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thunder_struck85 t1_iwwdwa1 wrote

Replying to CrystalMenthol (#570,524)

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.

5

tipbruley t1_iwwe40q wrote

Replying to CrystalMenthol (#571,586)

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.

13

CrystalMenthol t1_iwwe7m0 wrote

Replying to thunder_struck85 (#571,604)

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.

15

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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thunder_struck85 t1_iwwk7mj wrote

Replying to CrystalMenthol (#571,616)

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.

3

TheJanks t1_iwwlcpu wrote

Replying to zzyul (#571,343)

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.

1

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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ScrewAttackThis t1_iwwmt8y wrote

Replying to cedarapple (#570,495)

>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.

2

Savet t1_iwwnc3k wrote

Replying to Bocephuss (#569,895)

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.

5

Yourponydied t1_iwwxhe8 wrote

Replying to Freexscsa (#568,591)

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"

0

Contren t1_iwx0xqq wrote

Replying to maggotshero (#571,562)

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.

24

VonStinkelberg t1_iwx6bt7 wrote

Replying to jason_steakums (#568,562)

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.

16

Ag0r t1_iwx96a9 wrote

Replying to thunder_struck85 (#572,081)

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.

24

deathxbyxtaxes t1_iwxbe6y wrote

Replying to Celcius_87 (#572,335)

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.

0

topgun966 t1_iwxf1il wrote

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

3

54794592520183 t1_iwxqho9 wrote

Replying to Amelia_Blake_ (#568,412)

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.

2

54794592520183 t1_iwxqpmc wrote

Replying to 8BitSk8r (#568,848)

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.

−2

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.

5

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!

5

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.

2

aladdyn2 t1_iwz1ym2 wrote

Replying to CrystalMenthol (#570,524)

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.

2

smogeblot t1_iwzgh16 wrote

Replying to 8BitSk8r (#568,848)

>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.

0

VonStinkelberg t1_ix1lzkq wrote

Replying to SolomonGrumpy (#577,740)

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.

2

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.

2