7 ms·

Most of the people I speak to who locked in <3.5% are not planning on selling in the next 10 years or more. Then to consider the scenario of renting throughout

Most of the people I speak to who locked in <3.5% are not planning on selling in the next 10 years or more. Then to consider the scenario of renting throughout this period; how much cash is being torched compared to a mortgage payment? How will they save for a down payment during a period of inflation like this? Current renters will have lower potential to save on a monthly basis, only to get 30-40% off on their first home with a >7% interest rate. If you sum the lost savings from rent plus the additional interest payment, it is uncertain whether that is the best strategy. That is also assuming real estate prices in certain regions wont hold stronger value, which they probably will. Some areas in the South East, Midwest, and Front Range will likely not see such a drop in value with respect to interest rates and mortgage payments. The demand is just too high. Not to mention that rent is collected by people who are now in a better position to purchase newly discounted real estate without loans, further fueling price demand by competing against each other and shortening supply.

diogenescynic 4y ago
>Current renters will have lower potential to save on a monthly basis It's cheaper to rent than to buy in many markets and if you own you have to factor in maintenance, property taxes, and insurance. It's definitely not as black and white as you're making it out to be.
- Beldin 4y ago
  > if you own you have to factor in maintenance, property taxes, and insurance. Around here, if you rent, your landlord factors those things into the rental price. Admittedly not necessarily the insurance; that typically is just a requirement of the lease.
  - diogenescynic 4y ago
    The price to rent ratio compares the price to rent vs own. It’s definitely cheaper to rent than to own in many places. You can also get rent control in many cities so comparing renting to owning is going to vary with the specific situation.
    - Beldin 4y ago
      I'm sorry, I must be missing some subtelty here. If renting is indeed cheaper than owning, landlords would be subsidising renters. That can't be correct...
bushbaba 4y ago
Demand was high. It’s dropped by 50% since the peak with inventory up by over 2x from the low
- BuckRogers 4y ago
  Not only that, new listings are down YoY while inventory continues to grow. That's a bad combination if you want prices to continue to go up. There's so many predictions but my take is simple, the only thing for sure is that prices are not going up anytime soon again. I'm still renting as I moved around a lot for jobs. I've saved hundreds of thousands of dollars, and intend to strike in 2023. I'm still looking for deals in the meanwhile, but most of these sellers are bitter that the market from even at ~5% in the summer is gone. And by and large the buyers disappeared in March in my region. At a certain point, prices do have to match the cost of borrowing money. That's the trap of cheap loans. Those that got ~3% loans are stuck in whatever home they chose without a loss. They can't sell because most used that cheap money to pay ahead on decades of gains. Finding a sucker at 7%+ is going to be impossible, because short-term minded people simply don't have the money or means. And there's only so many generous and wealthy fathers to go around. Even those dads or investors don't want to take a risk in a market that hasn't bottomed out yet. Once again, as always, cash is king.
  - seanmcdirmid 4y ago
    Many home owners can wait if their plans are flexible. But taking it at face value, selling when prices are high is often a net-zero since you have to buy back into the same hot market (likewise, selling in a cold market can make sense if you want to upgrade into the same cold market). Selling in a hot market is only a net win for investment properties or second/third homes, and those people often can wait out cold markets (but sometimes they are leveraged like crazy and can't!).
greenie_beans 4y ago
i rent, and i'd pay over $1-$1.5k/month more on a mortgage if i wanted to live in the neighborhood where i rent. i'm doing an okay job saving for a down payment while waiting for everybody with low interest rates who need to sell because life happens.
SevenNation 4y ago
> Most of the people I speak to who locked in <3.5% are not planning on selling in the next 10 years or more. One way to look at this is to ask people what they plan to do. Another way is to look at what they've done. According to this article, the average length of time spent in a house is 8 years: > https://www.thezebra.com/resources/home/average-length-of-homeownership/ https://www.thezebra.com/resources/home/average-length-of-ho... So unless those people you know just moved in, they're X years into a average 8 year occupancy.
- kbelder 4y ago
  Only If you accept the wonderous concept that circumstances don't affect behavior.
- algoatecorn 4y ago
  Agreed. I was just offering an anecdote from my personal circle, many of whom view their real estate purchases as an investment to tuck away. Mostly, these are people who divested a portion or their stock portfolio in mid-2021 and didn't want to sit on cash in anticipation of the current inflation we are seeing now.
- lelanthran 4y ago
  > According to this article, the average length of time spent in a house is 8 years: > > https://www.thezebra.com/resources/home/average-length-of-homeownership/ https://www.thezebra.com/resources/home/average-length-of-ho... Okay, using your own reference, they also say that the median was 13.2 years. Anyway, from that article you cited, a stunning 76% of homeowners stayed longer than 8 years. It seems what more than 3/4 of homeowners do is simply live in the damn thing.
mupuff1234 4y ago
Not selling doesn't magically make your house keep it's market value. As long as there's someone in the vicinity selling at a lower price your house would lose value either way. And there's always someone selling.
- Test0129 4y ago
  It does however make it irrelevant. If you never plan on selling and your mortgage rate is low then you're winning on inflationary terms.
  - BuckRogers 4y ago
    I'm not sure if I'd call it irrelevant. People have to do fast home sales for many reasons, and it can come up as a necessity at any time. Life can be a twisty road that we can't foresee. I suppose I can't disagree that hoping for the best makes it irrelevant. Your second statement I wanted to agree with but you never really win with any mortgage (other than getting a home, which is important). You'll pay for any house at any rate 2-3+ times over if you just pay the minimum payments. When you go to sell it at the end, your home will not have doubled in value or more. Not for anyone born after 1980 at least. The only way to win financially is to pay off the house, or beat out usury by producing reliable market gains or other income to outpace it. Easier said than done, I would just pay off a home as fast as possible.
    - quonn 4y ago
      > but you never really win with any mortgage Maybe not at 7%. Maybe not at 3,5% either. But at 1-2% fixed for 10-20 years and you don't have to refinance, you win. So your statement is a bit broad. I think it's a good exercise to compute the total interest over the time of the credit and relate that to the cost of renting.
    - lelanthran 4y ago
      > You'll pay for any house at any rate 2-3+ times over if you just pay the minimum payments. Maybe that's the problem - making only the minimum payments? The people making only the minimum payment due would probably have screwed themselves in other ways, financially, even if interest remained the same. I bought my house in Dec-2016[0]. My outstanding principle owed to the bank right now is just a hair over 17% of what the original principle was when I was granted the loan. Whenever my circumstances improved (wage increases due to moving jobs, cash bonuses in employment, etc), the extra money each month always went into my mortgage, despite complaints from my wife that we could do with a nice holiday in some other part of the world (or that she could do with a new car[1]). That's basically 6 years. Now perhaps there are people who did not have their income improved over 6 years, but I don't think that the majority of borrowers experienced no income improvement[2]. The real problem is that borrowers have been making the minimum monthly payments, and spending the increased income elsewhere (new iShinies, new cars, new furniture, expensive holidays ... whatever). People underestimate just how much inroads they could make into their principle if they didn't have high monthly car payments, or "need" a 24-month cell plan that basically sells them the phone at twice the price because "Look, I get all these minutes and data for free each month". [0] I'm not in the US, although in the country I am in, I'm in a fairly middle-class and desirable area [1] As someone who can rebuild just about anything in an ICE car, I keep her car running just fine, even though it's a 2011 hatchback. [2] I admit, I experienced drastic income improvement (roughly 40% increase) when I switched from being an embedded developer to a backend developer. Completing an MSc didn't hurt either.
ethbr0 4y ago
In the US at least, we really should simplify, ease, and mandate 401k loans/withdrawal options for first-time homebuying. Doesn't help if rent eats all your paycheck, but if people are able to save they should be rewarded for doing so, and allowed to use that for a first home purchase. https://www.investopedia.com/ask/answers/081815/can-i-take-my-401k-buy-house.asp https://www.investopedia.com/ask/answers/081815/can-i-take-m...
- frumper 4y ago
  I'm not sure I understand. It's quite easy to take money out of your 401k without penalty for a first time home buyer. How could it be easier than just requesting the money?
  - ethbr0 4y ago
    Loans are subject to plan administrators allowing it, and withdrawals are subject to taxes and penalties, unless one qualifies for a hardship exception which is nebulously defined and at IRS discretion for home purchases, no?
    - frumper 4y ago
      Withdrawals are subject to taxes which is fair because you haven't paid taxes on it yet. While there may be some wiggle room for 401k administrators or the IRS, generally if you don't have other resources for a down payment on a house then you won't see any penalties for the withdrawal. The 401k loan will depend on your plan, but the terms are defined by your general plan, not something that the administrator will deny because you have poor credit. That said, both of those generally sound like poor choices, but if you truly need it they are options(if your company allows loans). Saving for retirement is really meant to help you in retirement.
      - ethbr0 4y ago
        We allow people to save for college in tax advantaged plans. Why not houses? And if so, why not use a vehicle that already exists (401k/IRA) instead of creating a whole new one? The conventional wisdom that borrowing from your 401k to buy a house is always a poor move seems... overly reductive and a bit patronizing. If someone isn't able to fund their 401k and save for a down payment, who am I to tell them that using a tax advantaged vehicle is a bad way to become a homeowner? Mortgage rates, local rental prices, local home prices and inventory, living situation and likelihood of moving, tax situation, etc. all impact, and I don't know anyone's situation. Besides, who wants all the money in the world if you have to spend most of your life living in a place you hate?
mattbrewsbytes 4y ago
> locked in <3.5% are not planning on selling in the next 10 years or more Not just that but looking further out at retirement, downsizing and staying in the same area is not looking possible. The house might be worth $X on paper at that point but if you sell you are then thrust into a market where everything is much higher. Its financially more palatable to just stay put even if you don't need the space. I imagine people within a couple years of this decision are staying put right now and this will keep demand up regardless of rates.
- Mochsner 4y ago
  If you're downsizing, full cash or majority cash offers (if an option) would be the exception here.
- seanmcdirmid 4y ago
  If you are downsizing you can cash out and then buy your next (smaller) place in cash without a loan. This all assumes you aren't in California, though, where prop 13 encourages you to stay put no matter what.
  - mirashii 4y ago
    Almost, except Prop 19, which allows you to transfer your property tax valuation under Prop 13 to a new property to allow people to downsize in retirement.
    - seanmcdirmid 4y ago
      Ooh, nice, I didn't know about that one. Seems like the right direction to go in.
mywittyname 4y ago
> are not planning on selling in the next 10 years or more. Most people don't plan on selling their house when they buy it. Life usually forces you into the situation.
- fknorangesite 4y ago
  What makes you say that? People often consider places "starter" vs "forever" homes, for example.
  - frumper 4y ago
    People often plan for marriages will be forever too. Life happens.
  - antisthenes 4y ago
    Frankly, I don't know any peers (millenials), that are able to afford anything more than a starter home anyway. That seems like a very outdated concept for people who are very well-off. I mean, most of us aren't even able to afford to buy a home, let alone casually upgrade to a "forever" home. In my high COL area, even starter homes are only affordable for top 20 percentile earners. Everyone else either lives with roommates or parents and rents.
    - caeril 4y ago
      > don't know any peers (millenials), that are able to afford > In my high COL area Yes, it is a problem that Millenials refuse to live anywhere other than Instagram-worthy locations. God, what would Becky think if I posted a TikTok from flyover country? And imagine shopping at Walmart, I would literally die frfr no cap. How we could ever solve this vexing self-inflicted problem, I have no idea. What a quandary. > seems like a very outdated concept Yes, much like the outdated concept that building tangible wealth in underpriced assets is worth the cost of a slightly lower number next to the heart icon. Fucking boomers, amirite?
      - hotpotamus 4y ago
MuffinFlavored 4y ago
> Most of the people I speak to who locked in <3.5% are not planning on selling in the next 10 years or more. If this keeps supply low, why does anybody have hope housing prices will fall in a meaningful way over the next 3 years? (aka, people on the sidelines waiting for a pullback)
- lotsofpulp 4y ago
  Because it won’t keep supply low (nationwide) unless we figure out how to stop people from dying, or open immigration floodgates.
015a 4y ago
Couple things to note about this: 1) Mortgages dropped below 3.5% in ~2019. The median duration of home ownership in the US is 8 years. So: asserting that "most people I speak to who have locked in <3.5% are not planning on selling in the next 10 years" is kind of like... That's normal. Statistics assert they weren't going to sell independent of rates. 2) People severely underestimate how many houses in the US have no mortgage against them. Its somewhere around 35-40%. That's oftentimes because: the typical home seller in 2021 was 56 years old. The friends you queried are (probably) an anomaly in the market. 3) The reasons cited for why home owners sell their properties is far more varied than financial. The most typical reasons are: current home is too small, want to live closer to friends or family, moving for work, the neighborhood is becoming undesirable, and... death. Even in lower interest rate environments, most of these reasons would have resulted in a higher monthly payment; that's reasonably normal. The monthly payments today are, well, much higher; but the fiction that "I'm not selling because I'll end up paying more" doesn't really have basis in the core motivations for home sales (they might in the absolute pits of a recession, but that doesn't usually last long; certainly not as long as elevated interest rates; and even if they did, plenty of people end up being forced to sell because of money; but they're not going to go buy a new home in this market). 4) Happening simultaneously with rising interest rates is: the largest transfer of wealth in the history of the united states. Boomers are dying. Its estimated that, as their deaths accelerate over the next ten years, $30T-$60T in wealth (most of it in: real estate!) will be inherited by younger generations. Those numbers are mind-boggling. Its estimated that millennials, as a generational cohort, currently hold something like $10T in total wealth. Point being; there's a lot going on right now. Its really difficult to draw single-post conclusions about any of it. https://fred.stlouisfed.org/series/MORTGAGE30US https://fred.stlouisfed.org/series/MORTGAGE30US https://www.thezebra.com/resources/home/average-length-of-homeownership/ https://www.thezebra.com/resources/home/average-length-of-ho... https://www.forbes.com/sites/brendarichardson/2019/07/26/nearly-40-of-homes-in-the-us-are-free-and-clear-of-a-mortgage/?sh=6f8f1ae147c2 https://www.forbes.com/sites/brendarichardson/2019/07/26/nea... https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers https://www.nar.realtor/research-and-statistics/research-rep... https://www.forbes.com/sites/josephcoughlin/2021/11/16/millennials-are-banking-on-the-great-wealth-transfer-4-words-why-you-shouldnt-cash-that-check-yet/?sh=7448b21d2dde https://www.forbes.com/sites/josephcoughlin/2021/11/16/mille... https://www.magnifymoney.com/news/net-worth-of-millennials/ https://www.magnifymoney.com/news/net-worth-of-millennials/

diogenescynic 4y ago

>Current renters will have lower potential to save on a monthly basis It's cheaper to rent than to buy in many markets and if you own you have to factor in maintenance, property taxes, and insurance. It's definitely not as black and white as you're making it out to be.

Beldin 4y ago
> if you own you have to factor in maintenance, property taxes, and insurance. Around here, if you rent, your landlord factors those things into the rental price. Admittedly not necessarily the insurance; that typically is just a requirement of the lease.
- diogenescynic 4y ago
  The price to rent ratio compares the price to rent vs own. It’s definitely cheaper to rent than to own in many places. You can also get rent control in many cities so comparing renting to owning is going to vary with the specific situation.
  - Beldin 4y ago
    I'm sorry, I must be missing some subtelty here. If renting is indeed cheaper than owning, landlords would be subsidising renters. That can't be correct...

bushbaba 4y ago

Demand was high. It’s dropped by 50% since the peak with inventory up by over 2x from the low

BuckRogers 4y ago
Not only that, new listings are down YoY while inventory continues to grow. That's a bad combination if you want prices to continue to go up. There's so many predictions but my take is simple, the only thing for sure is that prices are not going up anytime soon again. I'm still renting as I moved around a lot for jobs. I've saved hundreds of thousands of dollars, and intend to strike in 2023. I'm still looking for deals in the meanwhile, but most of these sellers are bitter that the market from even at ~5% in the summer is gone. And by and large the buyers disappeared in March in my region. At a certain point, prices do have to match the cost of borrowing money. That's the trap of cheap loans. Those that got ~3% loans are stuck in whatever home they chose without a loss. They can't sell because most used that cheap money to pay ahead on decades of gains. Finding a sucker at 7%+ is going to be impossible, because short-term minded people simply don't have the money or means. And there's only so many generous and wealthy fathers to go around. Even those dads or investors don't want to take a risk in a market that hasn't bottomed out yet. Once again, as always, cash is king.
- seanmcdirmid 4y ago
  Many home owners can wait if their plans are flexible. But taking it at face value, selling when prices are high is often a net-zero since you have to buy back into the same hot market (likewise, selling in a cold market can make sense if you want to upgrade into the same cold market). Selling in a hot market is only a net win for investment properties or second/third homes, and those people often can wait out cold markets (but sometimes they are leveraged like crazy and can't!).

greenie_beans 4y ago

i rent, and i'd pay over $1-$1.5k/month more on a mortgage if i wanted to live in the neighborhood where i rent. i'm doing an okay job saving for a down payment while waiting for everybody with low interest rates who need to sell because life happens.

SevenNation 4y ago

> Most of the people I speak to who locked in <3.5% are not planning on selling in the next 10 years or more. One way to look at this is to ask people what they plan to do. Another way is to look at what they've done. According to this article, the average length of time spent in a house is 8 years: > https://www.thezebra.com/resources/home/average-length-of-homeownership/ https://www.thezebra.com/resources/home/average-length-of-ho... So unless those people you know just moved in, they're X years into a average 8 year occupancy.

kbelder 4y ago
Only If you accept the wonderous concept that circumstances don't affect behavior.
algoatecorn 4y ago
Agreed. I was just offering an anecdote from my personal circle, many of whom view their real estate purchases as an investment to tuck away. Mostly, these are people who divested a portion or their stock portfolio in mid-2021 and didn't want to sit on cash in anticipation of the current inflation we are seeing now.
lelanthran 4y ago
> According to this article, the average length of time spent in a house is 8 years: > > https://www.thezebra.com/resources/home/average-length-of-homeownership/ https://www.thezebra.com/resources/home/average-length-of-ho... Okay, using your own reference, they also say that the median was 13.2 years. Anyway, from that article you cited, a stunning 76% of homeowners stayed longer than 8 years. It seems what more than 3/4 of homeowners do is simply live in the damn thing.

mupuff1234 4y ago

Not selling doesn't magically make your house keep it's market value. As long as there's someone in the vicinity selling at a lower price your house would lose value either way. And there's always someone selling.

Test0129 4y ago
It does however make it irrelevant. If you never plan on selling and your mortgage rate is low then you're winning on inflationary terms.
- BuckRogers 4y ago
  I'm not sure if I'd call it irrelevant. People have to do fast home sales for many reasons, and it can come up as a necessity at any time. Life can be a twisty road that we can't foresee. I suppose I can't disagree that hoping for the best makes it irrelevant. Your second statement I wanted to agree with but you never really win with any mortgage (other than getting a home, which is important). You'll pay for any house at any rate 2-3+ times over if you just pay the minimum payments. When you go to sell it at the end, your home will not have doubled in value or more. Not for anyone born after 1980 at least. The only way to win financially is to pay off the house, or beat out usury by producing reliable market gains or other income to outpace it. Easier said than done, I would just pay off a home as fast as possible.
  - quonn 4y ago
    > but you never really win with any mortgage Maybe not at 7%. Maybe not at 3,5% either. But at 1-2% fixed for 10-20 years and you don't have to refinance, you win. So your statement is a bit broad. I think it's a good exercise to compute the total interest over the time of the credit and relate that to the cost of renting.
  - lelanthran 4y ago
    > You'll pay for any house at any rate 2-3+ times over if you just pay the minimum payments. Maybe that's the problem - making only the minimum payments? The people making only the minimum payment due would probably have screwed themselves in other ways, financially, even if interest remained the same. I bought my house in Dec-2016[0]. My outstanding principle owed to the bank right now is just a hair over 17% of what the original principle was when I was granted the loan. Whenever my circumstances improved (wage increases due to moving jobs, cash bonuses in employment, etc), the extra money each month always went into my mortgage, despite complaints from my wife that we could do with a nice holiday in some other part of the world (or that she could do with a new car[1]). That's basically 6 years. Now perhaps there are people who did not have their income improved over 6 years, but I don't think that the majority of borrowers experienced no income improvement[2]. The real problem is that borrowers have been making the minimum monthly payments, and spending the increased income elsewhere (new iShinies, new cars, new furniture, expensive holidays ... whatever). People underestimate just how much inroads they could make into their principle if they didn't have high monthly car payments, or "need" a 24-month cell plan that basically sells them the phone at twice the price because "Look, I get all these minutes and data for free each month". [0] I'm not in the US, although in the country I am in, I'm in a fairly middle-class and desirable area [1] As someone who can rebuild just about anything in an ICE car, I keep her car running just fine, even though it's a 2011 hatchback. [2] I admit, I experienced drastic income improvement (roughly 40% increase) when I switched from being an embedded developer to a backend developer. Completing an MSc didn't hurt either.

ethbr0 4y ago

In the US at least, we really should simplify, ease, and mandate 401k loans/withdrawal options for first-time homebuying. Doesn't help if rent eats all your paycheck, but if people are able to save they should be rewarded for doing so, and allowed to use that for a first home purchase. https://www.investopedia.com/ask/answers/081815/can-i-take-my-401k-buy-house.asp https://www.investopedia.com/ask/answers/081815/can-i-take-m...

frumper 4y ago
I'm not sure I understand. It's quite easy to take money out of your 401k without penalty for a first time home buyer. How could it be easier than just requesting the money?
- ethbr0 4y ago
  Loans are subject to plan administrators allowing it, and withdrawals are subject to taxes and penalties, unless one qualifies for a hardship exception which is nebulously defined and at IRS discretion for home purchases, no?
  - frumper 4y ago
    Withdrawals are subject to taxes which is fair because you haven't paid taxes on it yet. While there may be some wiggle room for 401k administrators or the IRS, generally if you don't have other resources for a down payment on a house then you won't see any penalties for the withdrawal. The 401k loan will depend on your plan, but the terms are defined by your general plan, not something that the administrator will deny because you have poor credit. That said, both of those generally sound like poor choices, but if you truly need it they are options(if your company allows loans). Saving for retirement is really meant to help you in retirement.
    - ethbr0 4y ago
      We allow people to save for college in tax advantaged plans. Why not houses? And if so, why not use a vehicle that already exists (401k/IRA) instead of creating a whole new one? The conventional wisdom that borrowing from your 401k to buy a house is always a poor move seems... overly reductive and a bit patronizing. If someone isn't able to fund their 401k and save for a down payment, who am I to tell them that using a tax advantaged vehicle is a bad way to become a homeowner? Mortgage rates, local rental prices, local home prices and inventory, living situation and likelihood of moving, tax situation, etc. all impact, and I don't know anyone's situation. Besides, who wants all the money in the world if you have to spend most of your life living in a place you hate?

mattbrewsbytes 4y ago

> locked in <3.5% are not planning on selling in the next 10 years or more Not just that but looking further out at retirement, downsizing and staying in the same area is not looking possible. The house might be worth $X on paper at that point but if you sell you are then thrust into a market where everything is much higher. Its financially more palatable to just stay put even if you don't need the space. I imagine people within a couple years of this decision are staying put right now and this will keep demand up regardless of rates.

Mochsner 4y ago
If you're downsizing, full cash or majority cash offers (if an option) would be the exception here.
seanmcdirmid 4y ago
If you are downsizing you can cash out and then buy your next (smaller) place in cash without a loan. This all assumes you aren't in California, though, where prop 13 encourages you to stay put no matter what.
- mirashii 4y ago
  Almost, except Prop 19, which allows you to transfer your property tax valuation under Prop 13 to a new property to allow people to downsize in retirement.
  - seanmcdirmid 4y ago
    Ooh, nice, I didn't know about that one. Seems like the right direction to go in.

mywittyname 4y ago

> are not planning on selling in the next 10 years or more. Most people don't plan on selling their house when they buy it. Life usually forces you into the situation.

fknorangesite 4y ago
What makes you say that? People often consider places "starter" vs "forever" homes, for example.
- frumper 4y ago
  People often plan for marriages will be forever too. Life happens.
- antisthenes 4y ago
  Frankly, I don't know any peers (millenials), that are able to afford anything more than a starter home anyway. That seems like a very outdated concept for people who are very well-off. I mean, most of us aren't even able to afford to buy a home, let alone casually upgrade to a "forever" home. In my high COL area, even starter homes are only affordable for top 20 percentile earners. Everyone else either lives with roommates or parents and rents.
  - caeril 4y ago
    > don't know any peers (millenials), that are able to afford > In my high COL area Yes, it is a problem that Millenials refuse to live anywhere other than Instagram-worthy locations. God, what would Becky think if I posted a TikTok from flyover country? And imagine shopping at Walmart, I would literally die frfr no cap. How we could ever solve this vexing self-inflicted problem, I have no idea. What a quandary. > seems like a very outdated concept Yes, much like the outdated concept that building tangible wealth in underpriced assets is worth the cost of a slightly lower number next to the heart icon. Fucking boomers, amirite?
    - hotpotamus 4y ago

MuffinFlavored 4y ago

> Most of the people I speak to who locked in <3.5% are not planning on selling in the next 10 years or more. If this keeps supply low, why does anybody have hope housing prices will fall in a meaningful way over the next 3 years? (aka, people on the sidelines waiting for a pullback)

lotsofpulp 4y ago
Because it won’t keep supply low (nationwide) unless we figure out how to stop people from dying, or open immigration floodgates.

015a 4y ago

Couple things to note about this: 1) Mortgages dropped below 3.5% in ~2019. The median duration of home ownership in the US is 8 years. So: asserting that "most people I speak to who have locked in <3.5% are not planning on selling in the next 10 years" is kind of like... That's normal. Statistics assert they weren't going to sell independent of rates. 2) People severely underestimate how many houses in the US have no mortgage against them. Its somewhere around 35-40%. That's oftentimes because: the typical home seller in 2021 was 56 years old. The friends you queried are (probably) an anomaly in the market. 3) The reasons cited for why home owners sell their properties is far more varied than financial. The most typical reasons are: current home is too small, want to live closer to friends or family, moving for work, the neighborhood is becoming undesirable, and... death. Even in lower interest rate environments, most of these reasons would have resulted in a higher monthly payment; that's reasonably normal. The monthly payments today are, well, much higher; but the fiction that "I'm not selling because I'll end up paying more" doesn't really have basis in the core motivations for home sales (they might in the absolute pits of a recession, but that doesn't usually last long; certainly not as long as elevated interest rates; and even if they did, plenty of people end up being forced to sell because of money; but they're not going to go buy a new home in this market). 4) Happening simultaneously with rising interest rates is: the largest transfer of wealth in the history of the united states. Boomers are dying. Its estimated that, as their deaths accelerate over the next ten years, $30T-$60T in wealth (most of it in: real estate!) will be inherited by younger generations. Those numbers are mind-boggling. Its estimated that millennials, as a generational cohort, currently hold something like $10T in total wealth. Point being; there's a lot going on right now. Its really difficult to draw single-post conclusions about any of it. https://fred.stlouisfed.org/series/MORTGAGE30US https://fred.stlouisfed.org/series/MORTGAGE30US https://www.thezebra.com/resources/home/average-length-of-homeownership/ https://www.thezebra.com/resources/home/average-length-of-ho... https://www.forbes.com/sites/brendarichardson/2019/07/26/nearly-40-of-homes-in-the-us-are-free-and-clear-of-a-mortgage/?sh=6f8f1ae147c2 https://www.forbes.com/sites/brendarichardson/2019/07/26/nea... https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers https://www.nar.realtor/research-and-statistics/research-rep... https://www.forbes.com/sites/josephcoughlin/2021/11/16/millennials-are-banking-on-the-great-wealth-transfer-4-words-why-you-shouldnt-cash-that-check-yet/?sh=7448b21d2dde https://www.forbes.com/sites/josephcoughlin/2021/11/16/mille... https://www.magnifymoney.com/news/net-worth-of-millennials/ https://www.magnifymoney.com/news/net-worth-of-millennials/