3 ms·

This is a looney article. In Canada, 80s rates hit over 20%. Rates today are not even remotely high, they're lower than the late 90s!

by b112 3y ago

mikestew 3y ago
If you were expecting a 1:1 comparison, you will be disappointed. But if the only counter-argument is that interest rates aren't as high (and give it time, rates didn't hit 18% in the 80s right away), we're just talking about magnitude. The underlying environment today sure has a bouquet similar to the 80s, with slight hints of recession, and a stagnant-housing-market finish.
- hedora 3y ago
  The relative change is what matters. If rates were 20% for the last few decades then house prices would be lower, but mortgage payments would be approximately the same percentage of people’s income. Property tax rates would probably also need to be higher, since they are based on property value and not mortgage payments.
adam_arthur 3y ago
Rate is only relevant in relation to price... real home prices are much higher today than they were the in the 80s. Would you buy a $100 home on a 1000% rate? Yes, most people would. Would you buy a $100,000,000 2000sqft home on a 0% rate? No, most people wouldn't
SkyPuncher 3y ago
For most people, Home is a long-term monthly expense. All that really matters is the monthly cost, most directly a combination of sale price and interest rates (with consumables like gas, water, and electric playing a smaller role. Interest rates and sale price are pretty closely tied together. As interest goes down, people can pay more for the sale price. The sellers in the market realize that and raise their asking price. After all, if you could afford a $350k house at 5% interest, you could afford that same house at $500k with 2% interest (numbers aren’t correct, just an example). That exactly what happened over the recent past. Now interest rates are rising, so people can’t afford the same amount of house they could two years ago. This is compounded by the fact that many people are sitting on low interest loans. Unless they’re forced to sell, they’re not going to.

This is a looney article. In Canada, 80s rates hit over 20%. Rates today are not even remotely high, they're lower than the late 90s!

by b112 3y ago

This is a looney article. In Canada, 80s rates hit over 20%. Rates today are not even remotely high, they're lower than the late 90s!

mikestew 3y ago

If you were expecting a 1:1 comparison, you will be disappointed. But if the only counter-argument is that interest rates aren't as high (and give it time, rates didn't hit 18% in the 80s right away), we're just talking about magnitude. The underlying environment today sure has a bouquet similar to the 80s, with slight hints of recession, and a stagnant-housing-market finish.

hedora 3y ago
The relative change is what matters. If rates were 20% for the last few decades then house prices would be lower, but mortgage payments would be approximately the same percentage of people’s income. Property tax rates would probably also need to be higher, since they are based on property value and not mortgage payments.

adam_arthur 3y ago

Rate is only relevant in relation to price... real home prices are much higher today than they were the in the 80s. Would you buy a $100 home on a 1000% rate? Yes, most people would. Would you buy a $100,000,000 2000sqft home on a 0% rate? No, most people wouldn't

SkyPuncher 3y ago

For most people, Home is a long-term monthly expense. All that really matters is the monthly cost, most directly a combination of sale price and interest rates (with consumables like gas, water, and electric playing a smaller role. Interest rates and sale price are pretty closely tied together. As interest goes down, people can pay more for the sale price. The sellers in the market realize that and raise their asking price. After all, if you could afford a $350k house at 5% interest, you could afford that same house at $500k with 2% interest (numbers aren’t correct, just an example). That exactly what happened over the recent past. Now interest rates are rising, so people can’t afford the same amount of house they could two years ago. This is compounded by the fact that many people are sitting on low interest loans. Unless they’re forced to sell, they’re not going to.