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Home prices haven't fallen much yet, despite the massive surge in interest rates, so if they can cash-out now why not? Sell now, rent for a while, watch the ma

Home prices haven't fallen much yet, despite the massive surge in interest rates, so if they can cash-out now why not? Sell now, rent for a while, watch the market crash, jump back in when prices and/or rates fall?

instagib 3y ago
Take the cash from sale and do a modest home increase or even a decrease. Less to finance.
fasthands9 3y ago
Also about 40-percent of homes in America have no mortgage on them. If you own one of these homes (and never took out a second mortgage) selling it and moving to a house of similar value is not really effected by interest rates. This is way more the case for older people, but still possible.
- madaxe_again 3y ago
  You tend to achieve less value if interest rates are high, as the buyer will typically need a mortgage, and the pool of prospective buyers decreases as borrowing costs rise, and supply and demand does the rest.
  - peter422 3y ago
    But in that example a person is selling one house to buy another (presumably a cheaper/smaller one). Market conditions will even out.
  - riku_iki 3y ago
    > to achieve less value if interest rates are high it could be more value compared to the future when interest rates may be even higher
syndicatedjelly 3y ago
> Sell now, rent for a while, watch the market crash, jump back in when prices and/or rates fall? A 1031 exchange is a good reason to not do that. https://www.investopedia.com/financial-edge/0110/10-things-to-know-about-1031-exchanges.aspx https://www.investopedia.com/financial-edge/0110/10-things-t...
- theGnuMe 3y ago
  Only if your appreciation is more than 250/500k
  - frumper 3y ago
    1031 is for investment properties, not primary residences. That also makes 1031 not an option if your alternative is to sell, rent then jump back in later. That seems to imply it's your primary you'd be selling.
- hipadev23 3y ago
  $500k in tax-free profit for a married couple goes a very long way without needing to pull a 1031.
onion2k 3y ago
House prices are unlikely to crash ever because there's hundreds of billions in private capital waiting to buy up any cheap housing stock as long term rental properties. As soon as there's any dip the demand goes up which pushes prices back up.
- brigade 3y ago
  That's all financed and even more sensitive to the rate increases than buyers who want to live there
- refurb 3y ago
  Nahh… The largest residential real estate funds are in the tens of billions. The value of US residential real estate is $47,000 billion. $100B in private investment is a drop in the bucket. And investors aren’t stupid. They want high returns and if they think real estate is going down, they’ll drop it like a hot potato. What amazes me is the 2008 real estate crash is only 15 years ago. After the crash real estate was radioactive, nobody was interested in buying. Then a decade later it’s all forgotten and people think “real estate will never go down”. Apparently it takes about a decade for people to forget everything they learned in 2008.
  - psunavy03 3y ago
    Real estate went down in 2008 after a bubble created by crappy mortgages. This is not happening again; we have a supply crunch.
    - refurb 3y ago
      Famous last words.
missedthecue 3y ago
Or more likely, rates eventually find their way back down and home prices sky rocket with all the freshly available buying power creating endless bidding wars.
- zeusk 3y ago
  Yeah, because fed is stupid about inflation. That'll just mean higher rates for longer.
  - username332211 3y ago
    I mean, isn't it? Try as I might, I've yet to find any explanation about what theory of money they operate on. I've began to suspect the issue isn't a poor ability to research on my part.
- thinkerswell 3y ago
  The US is in for hyperinflation then
  - jrs235 3y ago
    Fannie Mae and Freddie Mac restrict the maximum amount of the conforming loans which could help limit prices going to the moon. However, popular pressure will be applied for them to increase the limits (or "they're hurting 'poor' people who don't own a home".

instagib 3y ago

Take the cash from sale and do a modest home increase or even a decrease. Less to finance.

fasthands9 3y ago

Also about 40-percent of homes in America have no mortgage on them. If you own one of these homes (and never took out a second mortgage) selling it and moving to a house of similar value is not really effected by interest rates. This is way more the case for older people, but still possible.

madaxe_again 3y ago
You tend to achieve less value if interest rates are high, as the buyer will typically need a mortgage, and the pool of prospective buyers decreases as borrowing costs rise, and supply and demand does the rest.
- peter422 3y ago
  But in that example a person is selling one house to buy another (presumably a cheaper/smaller one). Market conditions will even out.
- riku_iki 3y ago
  > to achieve less value if interest rates are high it could be more value compared to the future when interest rates may be even higher

syndicatedjelly 3y ago

> Sell now, rent for a while, watch the market crash, jump back in when prices and/or rates fall? A 1031 exchange is a good reason to not do that. https://www.investopedia.com/financial-edge/0110/10-things-to-know-about-1031-exchanges.aspx https://www.investopedia.com/financial-edge/0110/10-things-t...

theGnuMe 3y ago
Only if your appreciation is more than 250/500k
- frumper 3y ago
  1031 is for investment properties, not primary residences. That also makes 1031 not an option if your alternative is to sell, rent then jump back in later. That seems to imply it's your primary you'd be selling.
hipadev23 3y ago
$500k in tax-free profit for a married couple goes a very long way without needing to pull a 1031.

onion2k 3y ago

House prices are unlikely to crash ever because there's hundreds of billions in private capital waiting to buy up any cheap housing stock as long term rental properties. As soon as there's any dip the demand goes up which pushes prices back up.

brigade 3y ago
That's all financed and even more sensitive to the rate increases than buyers who want to live there
refurb 3y ago
Nahh… The largest residential real estate funds are in the tens of billions. The value of US residential real estate is $47,000 billion. $100B in private investment is a drop in the bucket. And investors aren’t stupid. They want high returns and if they think real estate is going down, they’ll drop it like a hot potato. What amazes me is the 2008 real estate crash is only 15 years ago. After the crash real estate was radioactive, nobody was interested in buying. Then a decade later it’s all forgotten and people think “real estate will never go down”. Apparently it takes about a decade for people to forget everything they learned in 2008.
- psunavy03 3y ago
  Real estate went down in 2008 after a bubble created by crappy mortgages. This is not happening again; we have a supply crunch.
  - refurb 3y ago
    Famous last words.

missedthecue 3y ago

Or more likely, rates eventually find their way back down and home prices sky rocket with all the freshly available buying power creating endless bidding wars.

zeusk 3y ago
Yeah, because fed is stupid about inflation. That'll just mean higher rates for longer.
- username332211 3y ago
  I mean, isn't it? Try as I might, I've yet to find any explanation about what theory of money they operate on. I've began to suspect the issue isn't a poor ability to research on my part.
thinkerswell 3y ago
The US is in for hyperinflation then
- jrs235 3y ago
  Fannie Mae and Freddie Mac restrict the maximum amount of the conforming loans which could help limit prices going to the moon. However, popular pressure will be applied for them to increase the limits (or "they're hurting 'poor' people who don't own a home".