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I'm afraid the housing market might remain severely distorted for a long time, even after the rates continue to shoot up. As someone who bought a "starter home

I'm afraid the housing market might remain severely distorted for a long time, even after the rates continue to shoot up. As someone who bought a "starter home" years before the pandemic at rock bottom rates in the SFBAY, these new rates have made me reconsider my next steps. I originally planned to sell and upgrade at some point in the future, however, this is making less and less sense as rates continue to shoot up. It makes no sense to trade a mortgage well below inflation for a much higher one at an even more inflated price per square foot, with a higher tax bill to boot. My rate is locked down for the remainder of the loan, and I'm still well above water even as the market cools. I know I'm not the only one in this position, and it's definitely contributing to the lack of inventory, keeping prices higher than they should be. We need to build more housing!

izzydata 4y ago
I am also in this situation and it basically makes no sense to move. So I'm stuck here until something changes. I think 30 year mortgage rates need to be below 4% before anything makes sense for me.
- darth_avocado 4y ago
  Which is going to fuel an even bigger housing crisis.
  - lotsoweiners 4y ago
    Who knows. One thing is for certain though is that inventory is remaining low because people like myself can’t sell our homes due to interest rates.
    - lotsofpulp 4y ago
      You can sell it, you just do not yet have sufficient incentive to sell for a low enough price. If you have a job loss and cannot keep up with mortgage payments, then you would have to sell it, and the house would sell at some price (in most areas).
- lotsofpulp 4y ago
  > think 30 year mortgage rates need to be below 4% before anything makes sense for me. Or prices need to decrease, which can happen by increasing supply, as ProfessorLayton wrote.
  - treis 4y ago
    Increasing supply runs into the same headwinds with increased rates. Probably worse because builders pay even higher rates for short term money.
    - jahewson 4y ago
      Yes!
    - lotsofpulp 4y ago
      Maybe in the short term, but eventually, their vendors will need to lower prices. Specifically, the landowners. This would be expedited if we had a land value tax that made it more expensive for land owners to just sit on unproductive land. Of course, due to prop 13, California has the exact opposite situation where landowners are rewarded for sitting on unproductive land.
  - roflyear 4y ago
    Someone has to pay to build the houses.
    - deleted 4y ago
      [deleted]
somethoughts 4y ago
It's interesting because it'd actually be very much in the banks self-interest if you did take your mortgage and transfer it to a better home that is now the same price as your original loan amount. Presumably a home in the same area that is valued now at a time of high interest rates the same as your current house was during the time of low interest rates will be a nicer home. Having the higher valued home as collateral is a benefit to the bank.

izzydata 4y ago

I am also in this situation and it basically makes no sense to move. So I'm stuck here until something changes. I think 30 year mortgage rates need to be below 4% before anything makes sense for me.

darth_avocado 4y ago
Which is going to fuel an even bigger housing crisis.
- lotsoweiners 4y ago
  Who knows. One thing is for certain though is that inventory is remaining low because people like myself can’t sell our homes due to interest rates.
  - lotsofpulp 4y ago
    You can sell it, you just do not yet have sufficient incentive to sell for a low enough price. If you have a job loss and cannot keep up with mortgage payments, then you would have to sell it, and the house would sell at some price (in most areas).
lotsofpulp 4y ago
> think 30 year mortgage rates need to be below 4% before anything makes sense for me. Or prices need to decrease, which can happen by increasing supply, as ProfessorLayton wrote.
- treis 4y ago
  Increasing supply runs into the same headwinds with increased rates. Probably worse because builders pay even higher rates for short term money.
  - jahewson 4y ago
    Yes!
  - lotsofpulp 4y ago
    Maybe in the short term, but eventually, their vendors will need to lower prices. Specifically, the landowners. This would be expedited if we had a land value tax that made it more expensive for land owners to just sit on unproductive land. Of course, due to prop 13, California has the exact opposite situation where landowners are rewarded for sitting on unproductive land.
- roflyear 4y ago
  Someone has to pay to build the houses.
  - deleted 4y ago
    [deleted]

somethoughts 4y ago

It's interesting because it'd actually be very much in the banks self-interest if you did take your mortgage and transfer it to a better home that is now the same price as your original loan amount. Presumably a home in the same area that is valued now at a time of high interest rates the same as your current house was during the time of low interest rates will be a nicer home. Having the higher valued home as collateral is a benefit to the bank.