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Average priced $525,000 home nationwide, now requires $3,387 monthly in principle and interest alone
I look at the spot price for lumber for some hint for what will happen. Spot price is the wholesale price per thousand board feet.
It is currently at $424. The last time we saw that price was in June, 2020, during the worst of the Covid crisis. It hit a high of $1,645 in May, 2021 and another high of $1,441 in Feb of 2022. Down $1,000!
It is headed down and I see no reason for it to stop.
Since 2000 square foot homes take around 20,000 board feet, the home that was built early this year can now be built for $20,000 less. Factor in decreasing demand due and all the reasons discussed and, Yeah, I see a real price decrease coming.
I look at the spot price for lumber for some hint for what will happen. Spot price is the wholesale price per thousand board feet.
It is currently at $424. The last time we saw that price was in June, 2020, during the worst of the Covid crisis. It hit a high of $1,645 in May, 2021 and another high of $1,441 in Feb of 2022. Down $1,000!
It is headed down and I see no reason for it to stop.
Hurricane Ian rebuilding has the ability to drive prices up again in the short term.
Drywall is going to see a big spike in demand for the next six months or more- homes that flooded but are otherwise intact, any drywall that was submerged needs to be replaced.
We bought our starter home for $650k. Pay about $800 per mo in taxes and insurance. Our mortgage is locked in for 2.82%. I played around with a calculator to see how much our payments would have gone up by if we had a 7% rate like now - our payments would have gone up by about $1400 per mo. It’s crazy.
Yes, we all know the stories of how boomers had to pay 10-15% interest rates, but back then prices were a lot lower even after accounting for inflation and also relative to an average income. Where my parents live, their state and locality stopped doing property assessments around 1991. I was absolutely shocked to learn that some years, my parents paid only $800 total in property tax per year. The state finally decided to do reassessments due to the absurdity of how low so many boomers were paying in taxes compared to younger people who’ve been basically subsidizing their homeownership for the last 3 decades. I really had little sympathy for my parents complaining because in the end, their taxes were going to go up by a measly $90 per mo. while I’m getting socked for almost $750 per mo in taxes.
Locals around us also now complain about getting slammed with 10% even 20% increases per month in rent payments. There are now bidding wars for people trying to get into rental units because no one can afford homes. Why do you think younger generations struggle so much? It’s a lot harder to bootstrap up when mortgages cost $3000-4000 per mo for a modest home, it is difficult to even save for a down payment when rents per mo. are rising 10-20% and rents cost $2000+ per mo., an education costs an arm and a leg, health care is astronomical, and even daycare now runs $2000-3000 per mo for a single child in many localities. The idea that America is special because you can climb the social and economic ladder is a gigantic myth.
Mortgage rates have been far too low for far too long.
We should’ve been hovering around 7% for years.
But now we just had a tremendous increase in housing prices coupled with low interest rates.
Interest rates will not go down - but housing prices will.
I think we are getting ready to see people walking away from those huge mortgages they took out on houses that will eventually be worth about 1/2 of what they paid.
And they’ll rent from either the private landlord, or more and more likely the corporations who are buying (and building) single family homes and communities.
Those same corps will buy up those foreclosed houses at 1/2 of what they current owners bought them for - and rent them.
Lather, rinse, repeat.
You will own nothing
We are staying in our current house and never plan to sell. We are sitting pretty since I refinanced and locked in at 2.5% for 20 years back when rates were ridiculously low. We didn't make the mistake of just resetting for 30 years.
I think that poster meant their insurance & property taxes were $800/month - not P&I.
But I see why you would think that ... it was weirdly worded in their post.
I needed to read it more carefully.
I didn't pick up on the fact that the thrust of fibonacci's post was about property taxes and not about housing prices.
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