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I really hate the title of that article. Of COURSE rate and price drops would improve affordability. What they are trying to says is that forecasted rate and

I really hate the title of that article. Of COURSE rate and price drops would improve affordability. What they are trying to says is that forecasted rate and price drops won't help. And I tend to wonder if they are correct in terms of price drops, at least in some markets. We seem to be gradually falling off the peak of the market in Miami/Ft. Lauderdale. Between people being pessamistic about the economy, RTO to jobs in the northeast, and foreign nationals leaving the country, demand is decreasing and so prices are dropping. They seem to be slowly heading for historical averages after peaks in 2022, and houses that don't drop their price from 2022-24 peaks are not selling. It feels very much like 2008 right now, and I'm really hoping we see some improvement in the next few years.

jrockway 1y ago
Doesn't Florida have an insurability problem that's becoming a crisis? At the end of the day, I'm guessing that most people price housing as mortgage + insurance. If insurance costs go up, the price of the underlying property has to go down in order to meet a monthly payment target. So some of that is probably already going on.
- toomuchtodo 1y ago
  Yes. Florida has the highest insurance costs in the US. Many are going without insurance if they don’t have a mortgage that will force placement of insurance. > Florida currently has the most expensive insurance premiums in the nation. According to data by Insurify, a national insurance data collection group, Florida's projected cost of property insurance averages about $11,000 a year. > ValuePenguin’s study shows Florida’s property insurance has increased 72% in the last five years, with the number of homeowners who can’t get coverage through private insurers going up 400%. The US is currently spending ~$1T/year on climate costs. https://www.cfpublic.org/housing-homelessness/2025-01-10/central-florida-homeowners-join-rising-trend-opting-out-of-property-insurance https://www.cfpublic.org/housing-homelessness/2025-01-10/cen... https://www.newsweek.com/map-reveals-scale-florida-property-insurance-crisis-1920042 https://www.newsweek.com/map-reveals-scale-florida-property-... https://www.bloomberg.com/news/articles/2025-06-17/us-spending-on-climate-damage-nears-1-trillion-per-year https://www.bloomberg.com/news/articles/2025-06-17/us-spendi... | https://archive.today/EBmaI https://archive.today/EBmaI https://www.theguardian.com/environment/2023/oct/09/climate-crisis-cost-extreme-weather-damage-study https://www.theguardian.com/environment/2023/oct/09/climate-...
- VWWHFSfQ 1y ago
  > most people price housing as mortgage + insurance I would go as far as to say it's actually mortgage + insurance + taxes in most states. Very likely to be paying anywhere from $5,000 to $10,000 in county + school taxes per year which by itself is enough to make the home suddenly unaffordable even if you bought it 10 years ago at a great price and rate.
  - ipython 1y ago
    + HOA fee (condo HOA fees can easily add up to several hundred $$ per month)
  - SoftTalker 1y ago
    Yep my taxes and insurance escrow payments are a larger part of my total monthly payment than the loan is.
- mosdl 1y ago
  You also need to include property taxes.
littlexsparkee 1y ago
That's what the substantially is there for - yes, it would technically help but few can afford payments on a $1.2m SF home even if money were free
- nyeah 1y ago
  Who is buying a home in SF? Can we come down to Earth?
  - littlexsparkee 1y ago
    It's just an example - most people live in major metros where the jobs are and those are the places the rate drops just wouldn't help much. What you said kind of makes my point of how jacked up the market is due to homeowners having done their best to slow production as much as possible, and our emphasis on housing as investment. It didn't have to turn out this bad.
    - nyeah 1y ago
      If it's meant to be an example, then it's wildly cherry-picked. Very few of the nation's homeowners live in NYC or SF. Even fewer home buyers are serious about those markets. The exceptions are often in co-ops where down payment %s are much larger. It is not accurate, it's not even rational, to use those markets as reference points for a national discussion.
      - littlexsparkee 1y ago
        Of course it is. If jobs are in major metros but it's impossible to buy there and hard to rent even as a tech worker - what does that mean for the city (and all the people that are locked out of opportunity)? A study from Hsieh and Moretti estimated that looser zoning rules in elite cities could increase GDP growth by a third. Everyone's looking to AI for productivity gains but this is major money on the floor that, while getting more discussion at present, is not part of a national policy, to everyone's detriment.
deleted 1y ago
[deleted]
quickthrowman 1y ago
Rate drops will make affordability worse, you do understand that less interest just means more principal, right? If a mortgage payment is $1800 of interest and $700 of principal at 7%, a buyer is in the same position if rates go down to 3% and the payment is $1400 in interest and $1100 of principal (numbers are made up, I don’t have time to calculate the exact values). In the 2nd case, the home price would be higher and the lower rate would mean reduced financing costs, with the same TCO in the end. Bonds work the same way, as the yield goes up above what the bond was issued at, the face value of the bond decreases, only the housing market has limited supply so prices didn’t go down when rates went up. If yields go down, the face value of the bond goes up, just like with houses. The only thing that will lower housing values is more supply.
- nyeah 1y ago
  For a fixed loan term and fixed price, less interest means lower payments. (But of course if you assume that prices will do whatever you want them to, then you can prove anything you want.) Bonds do not work like houses. Typically bonds pay out a fixed coupon rate and then 100 at the end of the term (fingers crossed).
  - neutronicus 1y ago
    Fixed loan term and fixed principal, yes. Grandparent is alleging that in a lower-rate environment sellers will raise prices until buyers' monthly payments are about the same as they are in this high-rate environment.
    - nyeah 1y ago
      Agreed, sure, alleging.
    - VWWHFSfQ 1y ago
      > alleging that in a lower-rate environment sellers will raise prices Didn't we see exactly this scenario play out in 2001-2005 and again during Covid? > Heading into 2020, affordability was increasing—even in the face of rising home prices—as buyers benefitted from historically low interest rates and steady income growth. > The national HOAM index fell from 101.94 in February 2021 to 98.22 in March 2021, indicating homes were no longer affordable for the median-income household. Rates dropped which caused a demand-side surge (because more people could afford the mortgage) which quickly turned into a market dynamic that caused home prices to increase beyond median affordability. https://www.atlantafed.org/economy-matters/community-and-economic-development/2021/06/03/low-interest-rates-inventories-affect-housing-affordability https://www.atlantafed.org/economy-matters/community-and-eco...

jrockway 1y ago

Doesn't Florida have an insurability problem that's becoming a crisis? At the end of the day, I'm guessing that most people price housing as mortgage + insurance. If insurance costs go up, the price of the underlying property has to go down in order to meet a monthly payment target. So some of that is probably already going on.

toomuchtodo 1y ago
Yes. Florida has the highest insurance costs in the US. Many are going without insurance if they don’t have a mortgage that will force placement of insurance. > Florida currently has the most expensive insurance premiums in the nation. According to data by Insurify, a national insurance data collection group, Florida's projected cost of property insurance averages about $11,000 a year. > ValuePenguin’s study shows Florida’s property insurance has increased 72% in the last five years, with the number of homeowners who can’t get coverage through private insurers going up 400%. The US is currently spending ~$1T/year on climate costs. https://www.cfpublic.org/housing-homelessness/2025-01-10/central-florida-homeowners-join-rising-trend-opting-out-of-property-insurance https://www.cfpublic.org/housing-homelessness/2025-01-10/cen... https://www.newsweek.com/map-reveals-scale-florida-property-insurance-crisis-1920042 https://www.newsweek.com/map-reveals-scale-florida-property-... https://www.bloomberg.com/news/articles/2025-06-17/us-spending-on-climate-damage-nears-1-trillion-per-year https://www.bloomberg.com/news/articles/2025-06-17/us-spendi... | https://archive.today/EBmaI https://archive.today/EBmaI https://www.theguardian.com/environment/2023/oct/09/climate-crisis-cost-extreme-weather-damage-study https://www.theguardian.com/environment/2023/oct/09/climate-...
VWWHFSfQ 1y ago
> most people price housing as mortgage + insurance I would go as far as to say it's actually mortgage + insurance + taxes in most states. Very likely to be paying anywhere from $5,000 to $10,000 in county + school taxes per year which by itself is enough to make the home suddenly unaffordable even if you bought it 10 years ago at a great price and rate.
- ipython 1y ago
  + HOA fee (condo HOA fees can easily add up to several hundred $$ per month)
- SoftTalker 1y ago
  Yep my taxes and insurance escrow payments are a larger part of my total monthly payment than the loan is.
mosdl 1y ago
You also need to include property taxes.

littlexsparkee 1y ago

That's what the substantially is there for - yes, it would technically help but few can afford payments on a $1.2m SF home even if money were free

nyeah 1y ago
Who is buying a home in SF? Can we come down to Earth?
- littlexsparkee 1y ago
  It's just an example - most people live in major metros where the jobs are and those are the places the rate drops just wouldn't help much. What you said kind of makes my point of how jacked up the market is due to homeowners having done their best to slow production as much as possible, and our emphasis on housing as investment. It didn't have to turn out this bad.
  - nyeah 1y ago
    If it's meant to be an example, then it's wildly cherry-picked. Very few of the nation's homeowners live in NYC or SF. Even fewer home buyers are serious about those markets. The exceptions are often in co-ops where down payment %s are much larger. It is not accurate, it's not even rational, to use those markets as reference points for a national discussion.
    - littlexsparkee 1y ago
      Of course it is. If jobs are in major metros but it's impossible to buy there and hard to rent even as a tech worker - what does that mean for the city (and all the people that are locked out of opportunity)? A study from Hsieh and Moretti estimated that looser zoning rules in elite cities could increase GDP growth by a third. Everyone's looking to AI for productivity gains but this is major money on the floor that, while getting more discussion at present, is not part of a national policy, to everyone's detriment.

deleted 1y ago

[deleted]

quickthrowman 1y ago

Rate drops will make affordability worse, you do understand that less interest just means more principal, right? If a mortgage payment is $1800 of interest and $700 of principal at 7%, a buyer is in the same position if rates go down to 3% and the payment is $1400 in interest and $1100 of principal (numbers are made up, I don’t have time to calculate the exact values). In the 2nd case, the home price would be higher and the lower rate would mean reduced financing costs, with the same TCO in the end. Bonds work the same way, as the yield goes up above what the bond was issued at, the face value of the bond decreases, only the housing market has limited supply so prices didn’t go down when rates went up. If yields go down, the face value of the bond goes up, just like with houses. The only thing that will lower housing values is more supply.

nyeah 1y ago
For a fixed loan term and fixed price, less interest means lower payments. (But of course if you assume that prices will do whatever you want them to, then you can prove anything you want.) Bonds do not work like houses. Typically bonds pay out a fixed coupon rate and then 100 at the end of the term (fingers crossed).
- neutronicus 1y ago
  Fixed loan term and fixed principal, yes. Grandparent is alleging that in a lower-rate environment sellers will raise prices until buyers' monthly payments are about the same as they are in this high-rate environment.
  - nyeah 1y ago
    Agreed, sure, alleging.
  - VWWHFSfQ 1y ago
    > alleging that in a lower-rate environment sellers will raise prices Didn't we see exactly this scenario play out in 2001-2005 and again during Covid? > Heading into 2020, affordability was increasing—even in the face of rising home prices—as buyers benefitted from historically low interest rates and steady income growth. > The national HOAM index fell from 101.94 in February 2021 to 98.22 in March 2021, indicating homes were no longer affordable for the median-income household. Rates dropped which caused a demand-side surge (because more people could afford the mortgage) which quickly turned into a market dynamic that caused home prices to increase beyond median affordability. https://www.atlantafed.org/economy-matters/community-and-economic-development/2021/06/03/low-interest-rates-inventories-affect-housing-affordability https://www.atlantafed.org/economy-matters/community-and-eco...