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Old 10-07-2018, 07:42 AM
 
7,671 posts, read 11,275,729 times
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Quote:
Originally Posted by C2BP View Post
Oh boy.......I think the party may be over and a Housing Bubble 2.0 maybe in a trouble.
LOL

You must be very young if you think a 5% mortgage interest rate is alarming for housing.

Quote:
Originally Posted by mathjak107 View Post
Housing was soaring when I bought my first property in 1987 and I was thrilled to get an 8-1/4% mortgage . The last housing boom saw 7% mortgages . Local markets dictate where prices go not mortgage rates until they get pretty high . The best appreciation historically is when mortgages are in the 6-7% range .

That means the economy is humming
I would have been thrilled, too! When I bought my first property in 1985 I paid 12% for my mortgage. When we traded up from a townhouse to a SFH in 1989, I was thrilled to get a 9% mortgage. (Actually, now that I think about it, it might even have been 9.5%.)

LOL at these youngsters wringing their hands at 5%.
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Old 10-07-2018, 07:44 AM
 
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and the thing was the real estate markets were still booming . real estate was soaring here in 1987 up until the stock market crash .

it was the market crash that hurt real estate here not interest rates .
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Old 10-07-2018, 08:51 AM
 
16,485 posts, read 17,501,756 times
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Quote:
Originally Posted by MadManofBethesda View Post
LOL

You must be very young if you think a 5% mortgage interest rate is alarming for housing.



I would have been thrilled, too! When I bought my first property in 1985 I paid 12% for my mortgage. When we traded up from a townhouse to a SFH in 1989, I was thrilled to get a 9% mortgage. (Actually, now that I think about it, it might even have been 9.5%.)

LOL at these youngsters wringing their hands at 5%.

My first mortgage loan was about 7-3/4% around 1993/94. My moms in the mid to late 80s was 12% and she had a chance to re-fi to a 10% and were ecstatic to get it. I remember back in I think 98 I was able to refi from that 7.75@30 to a 4.25@15. That move saved me 10 years of payments and about 150,000 in interest and the payment actually dropped 300 hundred bucks. I was able to accelerate my payments and pay more towards principal thus saving even more over time. Of course house prices were on a upswing, but I was happy where I was.

The thing is that mortgages are a seesaw. Rates go up prices go down payment doesn’t really change much. Quick and dirty calculation

525,000 house price 20% down 425,000 loan balance at 30 years you’re at 2400 PITI
At 5.5 that house would need drop about 20% in asking price to
410,000 house price 20% down 337,000 at 30 years you’re at 2400 PITI

Regardless it still requires 20% down. So anywhere from 80-100,000. Forget all the additional sundry costs associated to buying and moving. For me I’ll gladly pay the additional 20,000 to get a 3.5 rate. I would do 20% down to avoid PMI. That’s just throwing money away. If I’m buying at 5.5 I may never see those lower rates so I may never be able to refi. Even if I refi I’m paying to refi and it may not happen later due to whatever circumstances. Anything less than 20% throws PMI on your loan and unless you can refi you’re paying that firvthe rest of the loan lifetime.
And as time goes on the money I buyght a house with today will be worth less n the future.
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Old 10-07-2018, 08:54 AM
 
9,291 posts, read 11,138,237 times
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Quote:
Originally Posted by mathjak107 View Post
Housing was soaring when I bought my first property in 1987 and I was thrilled to get an 8-1/4% mortgage . The last housing boom saw 7% mortgages . Local markets dictate where prices go not mortgage rates until they get pretty high . The best appreciation historically is when mortgages are in the 6-7% range .

That means the economy is humming

In the 80's mortgages were in the teens!

I got an FHA loan in 1996 for 8% and was thrilled to buy the house, the interest rates were the least of my concerns. In 2001 I got a 7% loan (25% down, great credit) but by 2003 I was able to get a 4.65 fixed and refi'd.
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Old 10-07-2018, 08:55 AM
 
Location: Colorado Springs
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When mortgage rates rise, the market slows down because people who have a lower rate, e.g. 3% in lieu of newer 5% decide to not move or refinance.

Also, people who might be inclined to sell have the highest recent neighborhood sales price in their head for their own property and they are sure that their house is worth at least that much.

Furthermore, fewer buyers can qualify and they await a price drop.

But I don't think that causes a crash. To get a crash, we would need massive unemployment.
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Old 10-07-2018, 09:02 AM
 
64,532 posts, read 66,100,109 times
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Quote:
Originally Posted by City Guy997S View Post
In the 80's mortgages were in the teens!

I got an FHA loan in 1996 for 8% and was thrilled to buy the house, the interest rates were the least of my concerns. In 2001 I got a 7% loan (25% down, great credit) but by 2003 I was able to get a 4.65 fixed and refi'd.
in the early 80's yes . when i got mine in 1987 they were 7-7/8 to 8-1/4 .
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Old 10-07-2018, 09:04 AM
 
64,532 posts, read 66,100,109 times
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Quote:
Originally Posted by Vision67 View Post
When mortgage rates rise, the market slows down because people who have a lower rate, e.g. 3% in lieu of newer 5% decide to not move or refinance.

Also, people who might be inclined to sell have the highest recent neighborhood sales price in their head for their own property and they are sure that their house is worth at least that much.

Furthermore, fewer buyers can qualify and they await a price drop.

But I don't think that causes a crash. To get a crash, we would need massive unemployment.
what happens more often then not is people BUY LESS home when rates rise , they still buy a home . so the lower end becomes very pricey usually . but all the way down the line people just move down a notch . they never seem not to buy until rates go over 9% .

rising rates typically have been good for housing as those on the fence buy before they can afford even less house .

the homes at the top are still bought by the wealthy regardless. so all in all much ado about nothing and history shows us that in most areas.
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Old 10-07-2018, 09:04 AM
 
16,485 posts, read 17,501,756 times
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Quote:
Originally Posted by Vision67 View Post
When mortgage rates rise, the market slows down because people who have a lower rate, e.g. 3% in lieu of newer 5% decide to not move or refinance.

Also, people who might be inclined to sell have the highest recent neighborhood sales price in their head for their own property and they are sure that their house is worth at least that much.

Furthermore, fewer buyers can qualify and they await a price drop.

But I don't think that causes a crash. To get a crash, we would need massive unemployment.
Yes. It requires a massive slowdown in the economy and a lot of job loss due to the slowdown. Right now weíre at what....3.5 unemployment rate? If you canít get a job today itís because you donít want a job.
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Old 10-07-2018, 09:10 AM
 
64,532 posts, read 66,100,109 times
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yes , it is all about local markets not rates . you may end up with a slow down as supply tightens on more affordable homes . we are seeing that now in ny . sales are off , prices are going up and ther are lots of buyers .

my son put his house up for sale a few months ago . within hours people were at his door . it was sold in two days as offers went above listing .

people actually wrote him heart breaking letters with the offers as to why they need the house .

it was crazy to see that kind of demand . but quality wise the market is tight . my son also ended up buying another house the day the listing hit .

Last edited by mathjak107; 10-07-2018 at 10:34 AM..
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Old 10-07-2018, 10:18 AM
 
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Nationally, the inventory is near a balanced market at this point.

https://fred.stlouisfed.org/series/MSACSR

Seasonality may also be skewing the inventory higher with monthly sales rate after the summer peak. Usually, existing home sales will peak in April and September since they use settlements as the indicator for sales, as opposed to contracts for new home sales statistical reporting. We'll know more next spring. You can check your regional realtors association website for data specific to your location.

Days on market may not be a good indicator nowadays since people often advertise their homes for months before it hits the MLS. That practice started to be used around 2006 when the market slowed down.

30-year mortgage interest rate is still below 5 percent. It might hit 5.5 percent if the Fed hits its target of 3 more interest rates hikes by the end of next year and a 30-year Treasury yield of around 4.00 to 4.40 percent.
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