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And the fed expects the funds rate to go up to 3.4% by year end which assuming its not priced into the mortgage rate would put rates about 7.5% with a 3500 doll
by weezin 4y ago
And the fed expects the funds rate to go up to 3.4% by year end which assuming its not priced into the mortgage rate would put rates about 7.5% with a 3500 dollar payment. One thing also to note is how much prices would have to fall to get back to the 2100. For 6% and 7.5% a 500,000 dollar house would have to go to 350000 and 300000 respectively. This would basically flip new home buyers upside down.
- toomuchtodo 4y agoThe perils of buying at the end of a macro cycle. Real estate was overvalued due to zero interest rate policy, and their values must now fall (buyers buy a payment governed by wages/income and mortgage interest rates). New home buyers will be fine as long as they intend to live in their home. If you’re in the market, wait 3-6 months (or longer, based on Fed meetings raising rates) if you can as values decline. Anyone selling right now is still trying to get out at the top, which has already passed.
- imtringued 4y ago"the macro cycle" won't end. In fact, when the interest rate is zero and we are not in a liquidity trap, one would expect there to be no cycles whatsoever.
- lazide 4y agoIt typically takes several years for these type of shifts to work their way out market wise - existing sellers want to hold on hoping prices will recover, and it takes awhile for them to to HAVE to adjust prices.
- toomuchtodo 4y agoSure, the more motivated you are, the more you’re likely to cut your price. If you’re selling, you’ll have to cut your price eventually. If you can afford to or your circumstances permit, you’ll hold out as long as you can servicing the debt. Maybe the incoming recession is deeper or lasts longer than expected, making servicing that debt challenging forcing a sale faster.