Housing economists are urging the Federal Reserve to hold back on raising rates, worried that elevated borrowing costs—that have gone up since the central bank began its hiking cycle in March 2022—have pushed mortgage rates too high and made homes unaffordable for many Americans.
Sales of homes dropped 2 percent in September to a little under 4 million, the lowest such level for more than a decade. The decline, which was a 15 percent plunge compared to a year ago, according to the National Association of Realtors (NAR), was the latest evidence that expensive mortgages are dissuading potential buyers from purchasing homes.
It’s not just that homes are unaffordable… for current homeowners, what’s our incentive to sell?
We bought our home in October of 2021 and have a 3.25% 30 year fixed interest rate. Why on earth would I voluntarily give that up for a (checks rates) 8.333% (!?)
It would be literally stupid of me to sell now.
Yeah and I bet there’s a lot of people in your shoes. There’s gonna be a whole bunch of houses that were purchased or refinanced in 2021 that are not gonna move for years.
My son being one of them. Their family has grown significantly, but there’s no way they could buy a bigger house right now. Oh they could sell their house for a lot more that they bought it for but not be able to buy a new one for anywhere close to the interest rate they currently have. It would be a lateral move it best, and what’s the point.
We own ours outright and would love a slightly bigger house. But there’s no way we’re doing >8% interest. Not at the inflated price of houses these days.
We just bought ours in June and there is almost a 3% difference in mortgage rates between then and now.
Yeah we just decided to blow the 50k we had saved for our 5 year plan and redo half the house we are in now. We’re at ~3% with less than 10k left on 475/month payment (no escrow). Well double up and pay that off next year and most likely die in this house of old age.
We’re exploring that option. The people who first owned the house when it was built must have had twins. One of the BR is double size and all the fixtures (lighting, window, etc) are mirrored. We’re just having trouble getting someone out here to see what it would take to split it.
We had six quotes all over 5k to move about 6 outlets and a 220v thermostat. Eventually we found a guy willing to come and walk me through it (I’m handy I just don’t fuck with anything not low voltage) for 800 bucks.
Expand the house?
Housing wasn’t exactly affordable before the rate hikes
I wonder if the only way out is through inflation. Devalue the dollar until a $500,000 house at 7.5% interest is affordable to the average person. It would be painful, but it would keep people from going underwater on their loans.
This is probably a dumb idea but I’m looking forward to learning why it’s dumb.
because salaries would have to go up and we all know that won’t happen lol
Or your salary will go up 2% while the price of everything else goes up 8%.
I mean that’s happening right now lol
I don’t think you can really conclude that from the data.
You’re talking about hyper inflation basically? Did you enjoy the grocery prices just skyrocketing during covid without your salary keeping up? Imagine that on everything.
Grocery price increases have been more gouging than inflation, but generally I agree.
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Just need a nice little recession to teach those workers to not be so uppity.
