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The only thing that matters is the financial position (assets and income) of the purchaser in an actual transaction that closes - or, in aggregate, all those who close in a given period of time such as a month or quarter.
Examining the financial picture of people who do not close on a house in that time period is irrelevant.
You are looking at the situation on a technical and realistic point of view. Homeowners wanting to cash in on what and where they do not have do not.
Personally - tiny town USA, /i saw the realtor hammer the sign in the ground ad stopped. Already sold over asking and not a starter home.
We will fluff out existing home and take it from there.
"More than 90% of homeowners with a mortgage have rates at 6% or lower, according to ICE Mortgage Technology, which recently acquired mortgage data provider Black Knight. That is keeping homeowners from selling and being faced with borrowing at today’s rates averaging over 7%."
Huge numbers of homeowners bought when mortgage rates were low to nearly nil. They cannot or will not sell in this market because won't find a rate anywhere near. Even with excellent credit and decent down payment they're still looking at interest rate on new loan > 7% for standard 30 year fixed rate mortgage.
On other side of things you have homeowners that do not have debt but need (or want) to sell at certain price. They won't budge on that number unless circumstances force them to do so. Those that do sell often are part of those doing all cash purchases for next property.
"More than 90% of homeowners with a mortgage have rates at 6% or lower, according to ICE Mortgage Technology, which recently acquired mortgage data provider Black Knight. That is keeping homeowners from selling and being faced with borrowing at today’s rates averaging over 7%."
Huge numbers of homeowners bought when mortgage rates were low to nearly nil. They cannot or will not sell in this market because won't find a rate anywhere near. Even with excellent credit and decent down payment they're still looking at interest rate on new loan > 7% for standard 30 year fixed rate mortgage.
On other side of things you have homeowners that do not have debt but need (or want) to sell at certain price. They won't budge on that number unless circumstances force them to do so. Those that do sell often are part of those doing all cash purchases for next property.
I was reading elsewhere on the Yahoo (news) app today that a significant percentage of people with mortgages have a 4% rate or lower as well, and this article shows that nearly 25% of borrowers have a 3% rate or lower (I'm in that group): https://thehill.com/business/4053795...m-to-stay-put/
Folks like me aren't selling unless we absolutely have to. We're saving a significant sum every month to secure a hefty down payment for when we do move back to the mainland, most likely in a few years. But by then we'll sell out of necessity as we're not going to have two mortgages.
I was reading elsewhere on the Yahoo (news) app today that a significant percentage of people with mortgages have a 4% rate or lower as well, and this article shows that nearly 25% of borrowers have a 3% rate or lower (I'm in that group): https://thehill.com/business/4053795...m-to-stay-put/
Folks like me aren't selling unless we absolutely have to. We're saving a significant sum every month to secure a hefty down payment for when we do move back to the mainland, most likely in a few years. But by then we'll sell out of necessity as we're not going to have two mortgages.
I would have to double my mortgage payment, or maybe worse, to make a lateral move to the place I want to go. If I don't sell, that's another affordable unit off the market.
The real question is how many of those who 'locked in' the historically low mortgage rates can afford to keep paying, should one person in the household lose their job. People tend to treat RE as an investment, even though it is the only place they own. Thus, there's an incentive to buy more of a house than one needs. It's all fine, until it isn't.
Stubbornly high prices, despite high interest rates simply show that the whole thing is decoupled from reality. For stock market we've always known that to be true to some extent, but that is a much more mobile vehicle. Electrons really.
What happened after covid is big firms snatching a lot of properties and thus keeping the prices artificially high. Something along the lines of big IT firms here in Silicon Valley that were snatching up 'talent', in case they grew some time in future. Those people never had real jobs, but were kept off the market and inaccessible to others. Then we had those big layoffs, where 'talent' suddenly realized they shouldn't have been hired in the first place.
Not a perfect analogy, but in principle it is the same.
Regarding RE, I always remember someone on CD forum a while back who said something like: "Where the heck did they all live in 2018/2019, if there's such a surge of demand all of a sudden?"
The real question is how many of those who 'locked in' the historically low mortgage rates can afford to keep paying, should one person in the household lose their job. People tend to treat RE as an investment, even though it is the only place they own. Thus, there's an incentive to buy more of a house than one needs. It's all fine, until it isn't.
Stubbornly high prices, despite high interest rates simply show that the whole thing is decoupled from reality. For stock market we've always known that to be true to some extent, but that is a much more mobile vehicle. Electrons really.
What happened after covid is big firms snatching a lot of properties and thus keeping the prices artificially high. Something along the lines of big IT firms here in Silicon Valley that were snatching up 'talent', in case they grew some time in future. Those people never had real jobs, but were kept off the market and inaccessible to others. Then we had those big layoffs, where 'talent' suddenly realized they shouldn't have been hired in the first place.
Not a perfect analogy, but in principle it is the same.
Regarding RE, I always remember someone on CD forum a while back who said something like: "Where the heck did they all live in 2018/2019, if there's such a surge of demand all of a sudden?"
Earlier this month I paid off just under $40k left of my mortgage that was 1.875%. I'm the sole bread winner as my wife stays home to raise our young family. I figure with all the crazy in the world I'd rather be completely debt free and not have to worry about making another payment. The benefit is that my emergency fund went from 6 months to 12 months since my monthly nut was dramatically cut.
Huge numbers of homeowners bought when mortgage rates were low to nearly nil. They cannot or will not sell in this market because won't find a rate anywhere near.
I don't know anyone who bothers to have a mortgage anymore. Even my kid put in an all cash offer a week ago.
The real question is how many of those who 'locked in' the historically low mortgage rates can afford to keep paying, should one person in the household lose their job.
An even better question is how man would continue to pay the mortgage if one or both people saw their paychecks double or even triple. Would they just pay it off altogether just to get rid of the monthly hassle?
I don't know anyone who bothers to have a mortgage anymore. Even my kid put in an all cash offer a week ago.
How much was your kid's offer? Putting down all cash out here will likely mean at least $500k (for a decent two bedroom condo), which goes up to $1 million + for folks looking into most single family homes here. Most simply can't afford to pay in cash out here, and I'd wager most places.
Federal government in various ways has caused this current housing affordability mess and there aren't many easy ways out.
Years of low to nil interest rates drove housing prices up. However housing prices are not declining as rapidly compared to increased interest rates. Again much of this has to do with actions taken by federal government in response to 2008 credit/fiscal/economic collapse.
Those with low interest rates are in no hurry to sell. Furthermore they won't unless can sell for price that will cover any remaining debt and or meets (perhaps exceeds) what they paid for property.
On surface current labor market and economy look good. Unemployment is low and wages have risen. But many first time home buyers simply do not have 10%-20% for down payment at todays prices. Even with standard 20% down many first time buyers will find themselves in tight situation making housing payments each month due to larger amount of debt needed to finance a home at today's prices.
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