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I wont call it a crash,there are still plenty of buyers who want a house,sellers would just have to come down in prices,they are too high anyway.
Sellers will still reap a profit,but getting more realistic.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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people want a house they can afford.
Last fall, DS & GF bought a house against 15 others and some with cash. They won the bidding by 25%+, over ask. They had to sell some shares. Today, to afford the same payment, that house has got to decline by 20% (interest rate increase) And they need to sell more shares ( equity market decline).
Seller had a unicorn company.
YHMV
In my Florida market, inventory has doubled in three months and the rate of sales has halved since June 1. I do believe we have hit the wall here. Do I think values will fall 50%? No, but I do think we're going to see values pull back sharply and possibly very quickly once everyone starts to notice. So far, it seems the only ones who are aware that things have changed are those in the business and those trying to sell.
Cash buyers don't want to sell stocks that are down substantially to buy a Florida property and those getting a mortgage are finding that a $300,000 mortgage payment is about $1000 higher than it was earlier this year. Stir in the highest prices ever, rapidly increasing insurance premiums and condo fees. What you get is a perfect storm of reasons not to buy.
Interesting point about not wanting to sell stock to buy in cash. And yet I still think, no. I think other poster who said we will not see low mortgage rates again ever (though I would say at least, for a long while) has a good point. People need a place to live, inventory is low, they aren't making more land; and while house price appreciation may slow, I don't think prices will actually go -down- like they did in the Bush Recession. They went down 40 even 50 percent of total actual price in Savannah, on some upscale properties, crazy. This time is different. The rapid growth of price may taper or even flatline (and perhaps when inflation is factored in you could say flat price means that much price loss, if inflation is eight percent and price remains flat it would be eight percent price decrease). But even that is hard to see, I think it will just be less steep appreciation. Exact rates based on locality and region. One long-term factor which will affect places like FL will be sea level rise. I would not be surprised to eventually see the federal flood insurance at least for second homes on the beach eliminated. Its cost will keep growing.
Mortgage rates have gone from 3% to 6%.
I see a problem with people who bought with adjustable mortgages. If interest rates keep rising, there will be a problem.
Housing prices are going to drop. Demand is going to drop. By 50%? Absolutely not. I do feel that those who purchased a home in the last year will feel some pain if they have to sell soon for some reason. However, if they plan to keep living in it and can make the payments, they'll be fine. It will just be a 10-12 year horizon for them rather than the typical 5-7 years.
People who bought over-priced homes with adjustable mortgages at 3% are going to default as mortgage rates increase. Same thing that happened in 07.
There's very few of those. Banks were mostly securing fixed mortgages and there hasn't been an uptick in adjustable since the great recession... until now as the interest rates shoot up.
I think the SoCal market is incredibly overpriced. A correction of around 50% would bring it down to reality.
It is unbelievable that homes in bad neighborhoods are going for over $800,000.
Here is one in the West Adams neighborhood of LA for $899,000? Does it look like a neighborhood where someone with a $200,000 income wants to live? How much income is needed for an $899k home?
I can see investors buying these homes to get some monthly return when interest rates were zero percent but not when the ten year T-note yields 3.23%.
The endless money was coming from stock market profits, bitcoin profits and mortgages that used to have super low interest rates. Those days are over in 2022.
The houses in the pictures are dumps. I wouldn’t pay half that price to live in California.
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