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my first property was at 8-1/4% and the real estate market was booming here .
I think people have gotten somewhat spoiled with the ultra low interest rates. When my wife and I bought our first home at the end of 2005, we had a 30 year fixed at 5.75%. Older folks who knew me were amazed at that rate at the time. Those boomers were getting rates around 15-20% on their first homes.
14.5% 3 year arm on our first house in NH in 1986. Buyers were out there but picking and choosing and making low offers which many sellers took. Best properties always demanded a premium.
One difference between then and now is that real estate taxes have more than tripled.
Spoiled with low rates is an understatement. More like addicted.
Sure. Once upon a time, we had honest money. People could save. Savers were rewarded. The Fed made some effort to do their job. But today? There are no free markets. We no longer have real money. Interest rates should rise. As for a real estate bust? More like a return to normal.
What exactly are you talking about here? It was always difficult to save. My money today, though less than I'd like to have is still real. What do you think the Fed's job is that they are not working at?
I think it is harder to save now for a lot of people but it's not because of low interest rates. It's because wage growth has been stagnant since the recession. Prices(COL) have been rising faster than wages. Interest rates and inflation have an inverse relationship, so raising rates might help that dilemma, provided the economy strengthens enough to handle it, which it slowly is doing. Raising rates isn't going to crash the market, it's going to get us out of this predicament the middle class currently is stuck in
This past recession is the first recession (or, even counting slumps) that housing did not lead the way out. TARP ad nauseum is not the same as housing leading the way out. This time, the banks got the concessions, as did those that walked away from their debt, not the would-be homebuyers, for whom they made it extremely difficult to buy. Did the Fed and our government leaders avert a crisis that could have been worse? Possibly, but they did it in conjunction with the Dodd Frank Bill, the single most harmful bill to the housing industry (IMHO). Improvements could have easily been made without all of the legislation.
If you can read between the lines, these agency heads realize they've taken it too far. Fannie Mae cannot loosen their guidelines fast enough, to the point of FHA now being a viable option for only those with a bankruptcy or foreclosure. Wait for it......if you put your ear up to the proverbial wall, you can hear the HUD-rats trying to decide what their next move will be to get back their share of the pie. I'm betting on a revamp or reset of their mortgage insurance. The only thing stopping them, if they lower it too much, their entire servicing portfolio will churn and loose money. But at some point (probably when values start to rise), HUD will have to return to the competitive market.
The winners since 2008? Everyone that took out an ARM to get in and qualify - they got the home when values were down. Subsequently, they've refinaced with 0 to lender-paid costs at fixed rates lower than when they were looking to buy. (Don't get me wrong, fixed rate buyers won, too. But they didn't have qualification challenges). For the past 8 years, the talking heads have been telling us rates have to go up this year. Still waiting.
Last time rates went up around here - to around 5% -5.5% fixed - the market slowed dramatically, many builders went belly up, stalled subdivisions and foreclosures galore. That was less than 5 years ago. How easily people forget. They suspended traditional banking rules so that banks wouldn't go under and now they are clamoring for relaxed underwriting - again. Commercial is a time-bomb. Rinse, repeat.
Last time rates went up around here - to around 5% -5.5% fixed - the market slowed dramatically, many builders went belly up, stalled subdivisions and foreclosures galore. That was less than 5 years ago. How easily people forget. They suspended traditional banking rules so that banks wouldn't go under and now they are clamoring for relaxed underwriting - again. Commercial is a time-bomb. Rinse, repeat.
Really, from 2002 to 2006 rates were above 6, and I sold more homes then I ever did. 5 years ago the economy collapased. Thats what happend to the housing market.
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