3 ms·

I feel a bit doom-and-gloomy, mainly because I'd like to move into a bigger house as my family grew over the past few years. The problem being, I bought my cur

I feel a bit doom-and-gloomy, mainly because I'd like to move into a bigger house as my family grew over the past few years. The problem being, I bought my current townhouse almost a decade ago and refinanced during the pandemic to an incredibly low rate. Since I would need a new mortgage to buy a new house and rates are significantly higher now, I feel like I'd end up paying twice as much per month for a marginally better house. I'd always heard that housing prices have an inverse relationship with interest rates, so if rates go up, actual housing prices should go down. In reality (so far), prices seem to be much stickier, and people just aren't listing many houses at all. So essentially I'm whining that I'm paying a shockingly low amount of interest, almost borrowing money for free, and if I take out another loan I'll actually have to pay a (historically) normal amount of interest. But it would still really hurt to make that jump, and it does feel like weird/unhealthy stuff is going on in the housing market.

nonameiguess 3y ago
This is mildly amusing because I feel like I'm a great economy for effectively the same reason. I bought a downtown townhouse seven years ago at roughly half the price this neighborhood is currently going for and I'm paying 1.9% interest, on track to have the house paid off completely in another seven years despite housing expense being well under 10% of my income. I'm also expecting a kid but purchased bigger than I needed on purpose in anticipation of that. I'm sure a lot of this has to do with who you know as well. Someone further down asked if it "feels" like unemployment is really 3.7%, which seems like a silly question in a lot of ways. How something feels to you is not representative of an entire country. Personally, it "feels" like 0% unemployment to me because nobody I keep in regular contact with is unemployed, my family is mostly in skilled trades and business is booming, and my younger nieces/nephews who recently graduated college all found jobs pretty much instantly, higher paying than I'd have expected, with random ass humanities degrees and no special skills. My own company is still growing and hiring, though our parent company had layoffs. I don't know any of those people, though. But if your entire peer group is senior engineers expecting $500k salaries who worked for web companies that overhired during Covid and live in places where a family-sized house goes for at least $2 million, it probably feels more dire. Probably similar for media companies given the streaming wars are ending and they have to operate like real businesses now and actually make money. All the creatives I know have been struggling their entire lives, though, so that is nothing new.
- wil421 3y ago
  Why pay your house off early? I stopped a while back and save the money instead. My wife and I both “pay” the full mortgage each but we save the other half for investments at the moment. We could pay off 80% of our house this year but I feel like it should just invest all the cash. Any thoughts beside being free from a mortgage? I would love to live rent free but I’d make more investing it.
  - ghaff 3y ago
    There's definitely psychology involved but it's mostly about the numbers. I paid off my ~5% mortgage quite a few years ago when I had some spare cash. In retrospect, I would have been better putting it into an index fund, but who knows adjusting for risk? Today, if I had a 1-2% mortgage, I'd be putting the money in my brokerage money market account. If I were buying today, I'd probably pay cash if I could.
- ghaff 3y ago
  You have a (smallish) subset of people in tech, many living in an area of the country which has tended to be more expensive--often much more expensive--than just about any metro other than NYC for decades, which came to regard totally compensation that was totally out of line with what engineers traditionally earned as normal. And presumably the flood of people who went into computer science and programming because that's obviously where the money was will tend to bring the market into equilibrium.
- toomuchtodo 3y ago
  I would not suggest paying off a mortgage at that interest rate. Keep enough cash on hand to ensure you can service the debt, but that rate is a gift, a unicorn likely never to be seen again. Ride it to maturity.

nonameiguess 3y ago

This is mildly amusing because I feel like I'm a great economy for effectively the same reason. I bought a downtown townhouse seven years ago at roughly half the price this neighborhood is currently going for and I'm paying 1.9% interest, on track to have the house paid off completely in another seven years despite housing expense being well under 10% of my income. I'm also expecting a kid but purchased bigger than I needed on purpose in anticipation of that. I'm sure a lot of this has to do with who you know as well. Someone further down asked if it "feels" like unemployment is really 3.7%, which seems like a silly question in a lot of ways. How something feels to you is not representative of an entire country. Personally, it "feels" like 0% unemployment to me because nobody I keep in regular contact with is unemployed, my family is mostly in skilled trades and business is booming, and my younger nieces/nephews who recently graduated college all found jobs pretty much instantly, higher paying than I'd have expected, with random ass humanities degrees and no special skills. My own company is still growing and hiring, though our parent company had layoffs. I don't know any of those people, though. But if your entire peer group is senior engineers expecting $500k salaries who worked for web companies that overhired during Covid and live in places where a family-sized house goes for at least $2 million, it probably feels more dire. Probably similar for media companies given the streaming wars are ending and they have to operate like real businesses now and actually make money. All the creatives I know have been struggling their entire lives, though, so that is nothing new.

wil421 3y ago
Why pay your house off early? I stopped a while back and save the money instead. My wife and I both “pay” the full mortgage each but we save the other half for investments at the moment. We could pay off 80% of our house this year but I feel like it should just invest all the cash. Any thoughts beside being free from a mortgage? I would love to live rent free but I’d make more investing it.
- ghaff 3y ago
  There's definitely psychology involved but it's mostly about the numbers. I paid off my ~5% mortgage quite a few years ago when I had some spare cash. In retrospect, I would have been better putting it into an index fund, but who knows adjusting for risk? Today, if I had a 1-2% mortgage, I'd be putting the money in my brokerage money market account. If I were buying today, I'd probably pay cash if I could.
ghaff 3y ago
You have a (smallish) subset of people in tech, many living in an area of the country which has tended to be more expensive--often much more expensive--than just about any metro other than NYC for decades, which came to regard totally compensation that was totally out of line with what engineers traditionally earned as normal. And presumably the flood of people who went into computer science and programming because that's obviously where the money was will tend to bring the market into equilibrium.
toomuchtodo 3y ago
I would not suggest paying off a mortgage at that interest rate. Keep enough cash on hand to ensure you can service the debt, but that rate is a gift, a unicorn likely never to be seen again. Ride it to maturity.