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Why do you think housing is a safe haven? Interest rates will continue to rise, thus making a monthly mortgage payment more expensive. People can flat out not

Why do you think housing is a safe haven? Interest rates will continue to rise, thus making a monthly mortgage payment more expensive. People can flat out not afford to purchase homes at these levels if interest rates rise. It's simple math.

tablespoon 4y ago
> Why do you think housing is a safe haven? Interest rates will continue to rise, thus making a monthly mortgage payment more expensive. People can flat out not afford to purchase homes at these levels if interest rates rise. It's simple math. But if you get your mortgage now, you don't have to worry about those future increases. IIRC, most American mortgages are fixed rate.
- ejb999 4y ago
  yes, but you still risk paying too much, and then if you have to sell for any reason, risk taking a huge loss. Lots and lots of people lost a ton of money in real estate during the 2008 downturn by overpaying and then being forced to sell.
- chasebank 4y ago
  The price of a home doesn't really matter. You're effectively buying yourself a monthly payment. $1M 30 yr loan @ 3% vs 7% is $4,200/mo vs $6,600/mo.
- deleted 4y ago
  [deleted]
- JTbane 4y ago
  If interest rates do go up a lot, there is a good chance housing will crash, at least proportionally.
mancerayder 4y ago
All of the points above were sayings, slogans being repeated that we see today are incorrect. Interesting username, btw!
- chasebank 4y ago
  Markets don't move that quickly, especially housing. It took over 2-4 years the last two times the market tanked. "Interesting username, btw!" Ha! Thanks. You should see the @mentions I get on IG. Turns out a lot of people are often mad at the bank... Edit: Ah, wow I can't read. I need a cup of coffee :)
throwmamatrain 4y ago
American fixed rate mortgages are locked in for the life of the loan. If you get an ARM (adjustable rate mortgage) this is not the case. A fixed rate mortgage is a hedge against rising rents and rising interest rates. New landlords buy in at higher rates/higher prices and rents will increase as a lagging factor. Yes, everything that goes wrong with the house is now your responsibility. Yes, you will pay property taxes. Landlords are not in the business of renting at a loss in cities just yet. Occupancy rates are still high.
roflyear 4y ago
Most loans are fixed rate...
twoxproblematic 4y ago
surfaceofthesun 4y ago
There are a few items that make home ownership in the US financially advantageous: * As others have mentioned, most US Mortgages are fixed-rate. (https://www.tandfonline.com/doi/full/10.1080/15214842.2020.1757357 https://www.tandfonline.com/doi/full/10.1080/15214842.2020.1...) * You also have homestead exemptions and associated limits on property tax increases (https://en.wikipedia.org/wiki/Homestead_exemption https://en.wikipedia.org/wiki/Homestead_exemption) * The mortgage interest deduction * The ability to refinance with a lower rate interest rate in the future For anyone that is not currently a home-owner, I'm afraid you're correct.
everforward 4y ago
The fed can't realistically let house prices fall too far. If they do, a lot of loans would only be partially secured. That would have far-reaching implications, and could potentially leave a lot of people homeless and the banks holding a bag of bad loans. It would also wipe out a lot of people's savings. I think interest rates will stabilize in the near future. I don't think they can continue to go up without demolishing the economy.

tablespoon 4y ago

> Why do you think housing is a safe haven? Interest rates will continue to rise, thus making a monthly mortgage payment more expensive. People can flat out not afford to purchase homes at these levels if interest rates rise. It's simple math. But if you get your mortgage now, you don't have to worry about those future increases. IIRC, most American mortgages are fixed rate.

ejb999 4y ago
yes, but you still risk paying too much, and then if you have to sell for any reason, risk taking a huge loss. Lots and lots of people lost a ton of money in real estate during the 2008 downturn by overpaying and then being forced to sell.
chasebank 4y ago
The price of a home doesn't really matter. You're effectively buying yourself a monthly payment. $1M 30 yr loan @ 3% vs 7% is $4,200/mo vs $6,600/mo.
deleted 4y ago
[deleted]
JTbane 4y ago
If interest rates do go up a lot, there is a good chance housing will crash, at least proportionally.

mancerayder 4y ago

All of the points above were sayings, slogans being repeated that we see today are incorrect. Interesting username, btw!

chasebank 4y ago
Markets don't move that quickly, especially housing. It took over 2-4 years the last two times the market tanked. "Interesting username, btw!" Ha! Thanks. You should see the @mentions I get on IG. Turns out a lot of people are often mad at the bank... Edit: Ah, wow I can't read. I need a cup of coffee :)

throwmamatrain 4y ago

American fixed rate mortgages are locked in for the life of the loan. If you get an ARM (adjustable rate mortgage) this is not the case. A fixed rate mortgage is a hedge against rising rents and rising interest rates. New landlords buy in at higher rates/higher prices and rents will increase as a lagging factor. Yes, everything that goes wrong with the house is now your responsibility. Yes, you will pay property taxes. Landlords are not in the business of renting at a loss in cities just yet. Occupancy rates are still high.

roflyear 4y ago

Most loans are fixed rate...

twoxproblematic 4y ago

surfaceofthesun 4y ago

There are a few items that make home ownership in the US financially advantageous: * As others have mentioned, most US Mortgages are fixed-rate. (https://www.tandfonline.com/doi/full/10.1080/15214842.2020.1757357 https://www.tandfonline.com/doi/full/10.1080/15214842.2020.1...) * You also have homestead exemptions and associated limits on property tax increases (https://en.wikipedia.org/wiki/Homestead_exemption https://en.wikipedia.org/wiki/Homestead_exemption) * The mortgage interest deduction * The ability to refinance with a lower rate interest rate in the future For anyone that is not currently a home-owner, I'm afraid you're correct.

everforward 4y ago

The fed can't realistically let house prices fall too far. If they do, a lot of loans would only be partially secured. That would have far-reaching implications, and could potentially leave a lot of people homeless and the banks holding a bag of bad loans. It would also wipe out a lot of people's savings. I think interest rates will stabilize in the near future. I don't think they can continue to go up without demolishing the economy.