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Copying a link from a mysteriously dead comment below: https://www.corelogic.com/intelligence/comparing-two-home-price-booms-fifteen-years-apart/ https://www.co
by AndrewDucker 5y ago
Copying a link from a mysteriously dead comment below:
https://www.corelogic.com/intelligence/comparing-two-home-price-booms-fifteen-years-apart/ https://www.corelogic.com/intelligence/comparing-two-home-pr...
You have to take interest rates into account. The amount you pay, monthly, for a mortgage of the same size is very different at different interest levels.
What people care about is their monthly mortgage payment - that's what makes a home affordable or not.
(Which isn't to discount that downpayments are a percentage of home cost, and that's pricing people out of being able to buy anything at all, even something they can easily make repayments on.)
- zargon 5y agoDoes this mean that when interest rates go up, home values may drop, leaving people underwater?
- AndrewDucker 5y agoAbsolutely. Although it's more likely that they'll just remain stagnant, which would be just fine.
- nwiswell 5y agoPeople being underwater happens to mean that the banks have bad loans. We have seen that movie before. Interest rates will not be allowed to increase faster than the property market can absorb. You can count on that; the political imperative could not be more clear. The next crisis will probably be some novel flavor of financial recklessness.
- KingMachiavelli 5y agoExactly and the market is confident the the government would intervene to prevent another housing market collapse which just compounds the effect further.