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10-21-2013, 12:32 PM
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97 posts, read 194,998 times
Reputation: 63
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10-21-2013, 12:59 PM
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Location: Riverside Ca
22,147 posts, read 30,462,196 times
Reputation: 35380
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The only way houses are affordable is to
Lower house prices and lower interest rates. And pigs will fly and hell will freeze over. And if they did that anyone who bought or has a house with a high mortgage is gonna go under.
This is the way it works
Lower interest rate to allow the borrower to borrow more equals high house sale price. Banks want high house prices. It looks good for them and they clear their books with little to no loss. Win win for them and they have steady revenue from the loan owner for 15-30 years. And if he defaults and the house is worth more he gets the boot, if its worth less they will try to " work with him" getting any payment they can, and when the market comes back they will let that guy fail and go and. Kick him out and get another loan owner in there.
OR
lower house prices and raise interest. But that's in the consumers favor.
I would prefer lower house price and higher interest. It allows you less down payment, less property tax, and you can always pay more towards principal thus making the interest rate less significant over the life of the loan. It allows you to refi if a lower rate comes along, build equity ( not really a big deal since it's locked in the house and you either sell or borrow to unlock it) and if you pay extra towards principal you can pay loan off sooner and have no payment.
Housing has reached a plateau. If rates go up prices will come down or the house will sit on market. Its a balancing act between rates and house prices. When rates jumped up from 3.5 to 4.3-4.5 the market was still going and everyone was ecstatic but the market was going from past or existing loan originations/closing or refi's. The shock was felt few months later where all of the sudden everything dried up. People also don't do much buying at this time. I don't expect the market to pick up till beginning of the year. I still watch the market but I'm not foaming at the mouth to buy.
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10-21-2013, 01:04 PM
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3,589 posts, read 6,581,147 times
Reputation: 1457
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Funny how people complain about rates "jumping" to 4.5%.
Rates have been in the 15% range in the 80s even the late 90s and early 2000 rates hovered around 6-7% and home still sold well.
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10-21-2013, 01:30 PM
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3,778 posts, read 5,433,929 times
Reputation: 2317
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Quote:
Originally Posted by aneftp
Funny how people complain about rates "jumping" to 4.5%.
Rates have been in the 15% range in the 80s even the late 90s and early 2000 rates hovered around 6-7% and home still sold well.
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Well, realtors was screaming about "best time to buy, rates are going up"  I talked to few people who closed this past Summer and they all told me they expected rates to go up to 15% by Fall  |
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10-21-2013, 01:36 PM
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Location: El Dorado Hills, CA
3,724 posts, read 9,592,768 times
Reputation: 3915
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Rates are still near a historical low. Yes, they will go back up. When? That's a great question. Really, it's common sense if you look at the rate trends over the last few decades.
If you need a mortgage, lower rates allow you to buy more house...or allow you to pay less for a lower priced house than you can afford.
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10-21-2013, 01:54 PM
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4,567 posts, read 10,107,361 times
Reputation: 6706
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Quote:
Originally Posted by NinaN
If you need a mortgage, lower rates allow you to buy more house
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Really depends on the market. One could say, the low interest rates caused house prices to go sky high.
Interest rates will eventually go up....
A buyer who could previously afford a $506K house with a $2,000 monthly budget at an interest rate of 2.5% will be able to afford only $316K if and when the average 30 Year fixed hits 6.5%: a 40% drop in affordability based on just a 4% increase in interest rates!
Now what will happen when that person who bought the house at $506k tries to sell it when the interest rates go back up and the house is valued at $316k? More waves of defaults! Have you forgotten the 1980's? |
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10-21-2013, 01:57 PM
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Location: Riverside Ca
22,147 posts, read 30,462,196 times
Reputation: 35380
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Quote:
Originally Posted by EngGirl
Well, realtors was screaming about "best time to buy, rates are going up" I talked to few people who closed this past Summer and they all told me they expected rates to go up to 15% by Fall |
To a realtor there is NO bad time to buy. It's always a great time to buy. |
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10-21-2013, 02:02 PM
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4,567 posts, read 10,107,361 times
Reputation: 6706
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Quote:
Originally Posted by Electrician4you
To a realtor there is NO bad time to buy. It's always a great time to buy.
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Sure. Its always a great time to make a commission. No purchase, no commission. |
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10-21-2013, 02:46 PM
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3,778 posts, read 5,433,929 times
Reputation: 2317
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Exactly my point. It's always a great time to buy... |
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10-21-2013, 05:36 PM
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Location: Berkeley Neighborhood, Denver, CO USA
17,228 posts, read 27,431,772 times
Reputation: 31781
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Omg!
Quote:
Originally Posted by Schnooks
wonder what next month's report will look like!
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1. Site for -- shall I be polite and say -- crazy people.
2. The data are very noisy.
3. Calm down and read - http://www.calculatedriskblog.com/20...ome-sales.html |
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