By this map the, western 1/3 of the country is already taking a butt kicking.
KC wasn’t hurt too bad in 2008, but the past couple of years home values have shot way up, so it might get hurt a lot more this time. But something has to happen as housing (except for the slums that bears will find) has risen so much that a home in a reasonably decent area (read that as “not a slum”) is unaffordable. The tradeoff of risking ones life for an affordable home hasn’t caught on yet.
Im in the strongest housing market (atlanta) in US supposedly. We took a minor pricing hit when rates skyrocketed but quickly revovered. Two houses on my street went up for sale 2 weeks ago and they’re under contract.
I am not seeing this in either the Atlanta area market or the Florida west coast market. The problem is that there is still an overall shortage of units in both new construction and resale. No one is going to sell their home right now that needs a mortgage on their next home as the payments have doubled. So this leaves mainly cash buyers or people for which the interest rate doesn’t matter.
Trust me…I would love to see a downturn to acquire a couple more pieces of property !!!
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I think your analysis is correct, but I view these articles a minor type of sensationalism. The are factual, but have less meaning than people try to give them.
Every article I have seen puts cash home buyers at 25-35% of sales. Vast majority of those folks aren’t concerned about this, and many would be happy. Then there are people like us, we have 100% equity in our home but no foreseeable plans to sell. Those who have to sell could be hurt, but I don’t have a number for that. Those who want to sell could also be hurt, but many of those can wait for thing to reorient. There are also a number of folks who have mortgages in the 2.5-3.5% range that won’t want to let those get away.
This isn’t 2008-2010, when a significant number of people were underwater because values dropped overnight and they had no or negative equity due to putting little or no money down and borrowing beyond their capacity to repay.
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I agree jim and something you didn’t mention is we’re at full employment. Thats why we didnt have a housing crash after rates jumped, people can afford the much higher payment. P rices are a little depressed, yet i could sell if i wanted to. Maybe i couldve sold for 575k a year ago, today is might be 540k. I owe under 200 so not too concerned about a lost 35k.
Im not sure I agree with the “people can afford a higher payment” part of your post. Wages are most certainly not keeping up with inflation. People are racking up debt at historic levels as the US Household Debt report shows:
They seem to be able to afford it because houses are still selling, in Atlanta anyway. Nationwide mortgages fell of a cliff but have rebounded a bit. Higher rates are just the new normal.
It’s supply, demand and location. A lot of people are moving to the South and Southeast and very few to the Midwest and parts of the West. Home prices are pretty stable in my general area because there’s a shortage homes for sale and rentals.
With 20% down on a $350k home the payment is almost $600 more because of the interest rate compared to 2 years ago. Cash buyers and move up buyers with a lot of equity are buying, a young couple trying to get into their first home will probably have to wait or buy much less house.
After the Shah was deposed in 1979 many very wealthy Iranians came to the United States and brought their money with them. During the eighties real estate in most parts of our country was very depressed because mortgage interest rates were astronomically high. However, these wealthy Iranians didn’t believe in mortgages and tended to be all cash buyers, so sellers in Kings Point, Great Neck, NY were able to sell their homes for very high prices. I am not sure why so many of them moved to Kings Point, Great Neck but Kings Point has the second highest percentage of Iranians in the United States. Beverly Hills, California has the highest.
The problem with waiting is throwing money away on rent and trying to save until rates come down. It would probably be better to buy anything now and move up later or refi when rates come down.
I’ve never viewed my house as an investment. It’s shelter. In the past 10 years my house has doubled in value, but the only thing I get of the deal is a higher property tax bill. But if the market crashes and my house is only worth half of what I paid for it, it doesn’t bother me since I have never made or lost a dime on its value.
It’s both.
Only if you sell it. Kind of like being a millionaire on paper. Doesn’t mean shit until you sell it. And while we have had years of increasing values (thanks to artificially low interest rates), there is no guarantee that you will make a “profit” on your house.
If you could go back in time would you choose to rent over owning? Home equity accounts for a big chunk of the middle classes net worth.
Not this guy, theres no better wealth builder than home ownership. My only regret is 11 years ago all i could afford was 240k. If i spent 400k it would be worth 1.2m now.
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And unless you take out the equity, you are only “house rich”. Sure, it appreciated, but back in the day I remember ads (and financial “advisors”) encouraging you to “put your biggest asset to work for you” by taking out the equity. A lot of people who followed that advice ended up pretty house poor.
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No. And while my “net worth” looks great on paper, until I actually get the money by selling my shelter, then it’s just a number. I dunno…you’re one of those who plans to sell and move someplace where you don’t know anybody and the windfall from the house might get a nicer place in another state. But I’m basically pretty shy and moving away from 35 years of friends to try to develop new friendships doesn’t appeal to me. And I really would rather not sell my house and move someplace else here. So my net worth is just a number
If you can go back in time would you buy again or would you rent?
I would definitely buy again and then move up to a bigger house like I did. I realize it’s only a number on a piece of paper but a renter’s number is always zero.