A 30-Year Trap: The Problem With America’s Weird Mortgages

[murray t turtle]

I'm so glad we got the " .....and h*teful" part in there about these evil 30 yr notes, but what about all the climate change they are causing?

%%
LOL I dont regret paying off several of mine[30 yr, 20 yr];
if any hate that, they can always get in debt again .
But that [debt ]could actually help climate change, mortgage paper is a renewable resource; + I'm in favor of tree + paper harvest, which uses fossil fuels, or literal horse power LOL
Another fringe benefit the horse trailer takes fossil fuels, a bit.
Life is good with no 30 year debt also

 

[schizo]

You can't look at a number like this in isolation. Mortgage affordability all comes down to the payment, and payment should be a percentage of your income. So traditionally, they say no more than 30% of your income should go towards mortgage.

This means that there are 2 ratios we need to look at before you can claim that you had it bad. First, we need to find out what percentage of your income that mortgage payment was, and then we need to look at the interest rate in relation to the house price.

Right now, I keep seeing the math go something like this. Pre-2021 increases, a mortgage on a $300k house was $1500, but now, it has doubled (rough numbers as I can't remember the real ones). Clearly income hasn't doubled in a few years, so this increase is bonkers. Furthermore, the ratios of house price to income was roughly 1:4, meaning that a $200k house could be purchased by someone making $50k a year. Now, these numbers are more like 1:8, and they of course got this high because of the low interest rates.

So saying all this, you simply cannot compare your situation to what is happening now. There is no way for most young people to get into the housing market now no matter how much of their income they are willing to put into housing.

Well, if you think in terms of demand vs supply, it'll work itself out eventually. As the rates go up, demand will drop. Lower the demand will ultimately lead to a drop in housing price.

If you can't afford to buy a house now, I'd say, just sit tight and wait. The housing market will cool and the price will become more affordable.

 

[newwurldmn]

Well, if you think in terms of demand vs supply, it'll work itself out eventually. As the rates go up, demand will drop. Lower the demand will ultimately lead to a drop in housing price.

If you can't afford to buy a house now, I'd say, just sit tight and wait. The housing market will cool and the price will become more affordable.

the argument is that no one wants to sell because they will lose their preferential rate. The issue is that if they did, where would they go? The problem isn’t rates. It’s a shortage of housing.

 

[nitrene]

If you can't afford to buy a house now, I'd say, just sit tight and wait. The housing market will cool and the price will become more affordable.

Sounds reasonable given US' history, however if there is a tipping point reached and we become like NZ, Australia, Canada & UK then you are a forever renter.

Supply is certainly the real problem and here in the SF bay area the leftist NIMBYs will never okay another housing project ever.

 

[murray t turtle]

Sounds reasonable given US' history, however if there is a tipping point reached and we become like NZ, Australia, Canada & UK then you are a forever renter.

Supply is certainly the real problem and here in the SF bay area the leftist NIMBYs will never okay another housing project ever.

%%
Except for the many that bought travel trailers, raw land. And mobile homes[depreciating asset]
And a lot more bought mini homes \some prebuilt, some not prebuilt.
And some bought built in AZ, no water, so trucked in water, better than rent

 

[2rosy]

Imagine what will happen to the already hot housing market when the fed drops rates. Miami is already insane. Crazy insane. Rents and purchases

insane meaning high prices? is brickell area expensive?

 

[ElCubano]

insane meaning high prices? is brickell area expensive?

rents in some of the Brickell area apts have jump 50% in a year.

 

[monkeyc]

Back in the late 90s, I refinanced mine at 13%. What are you complaining about?

Rates were 7.5-8% in the late 1990s. I don't know how you could have paid 13%. The only time it was 13% was 1982-83.

 

[ironchef]

Rates were 7.5-8% in the late 1990s. I don't know how you could have paid 13%. The only time it was 13% was 1982-83.

15% in 1982, 9% in 2000.

 

[schizo]

Rates were 7.5-8% in the late 1990s. I don't know how you could have paid 13%. The only time it was 13% was 1982-83.

That's on average. There was a lot of fluctuation depending on your credit score, your income, and whatnot. In retrospect, I should have done more homework, but it's worth remembering that this was time when information was very limited even with the Internet. I believe people were still accessing the web via 56k modem.