What Happnes when we see 9 or 10 percent mortgage rates

[jprad]

Quote from lasner:

How did real estate prices not plummet

Several reasons.

Going in, there wasn't a real estate bubble to drive prices well beyond reality.

You also didn't have legions of people who couldn't afford their mortgage back then. Not only did you have to prove you could pay back what you borrowed, you had to put down a serious chunk of change upfront.

Low turnover. Few people were eager to flip into a new house with an interest rate that was 2-3 times their current mortgage.

 

[jficquette]

Quote from lasner:

You haven't seen anything yet in Real Estate....just wait until the fed has to raise interest rates and mortgage rates go up accordingly. That's really when it's all over with.

Thats why people buying now are screwed. They are buying inflated prices with all time low interest rates.

Sooner or later, and it doesn't matter when, 3 years, 5 years, 10 years rates will be up to 8-10% and housing will be much lower.

You buy when rates are high and prices low. You sell when rates are low and prices high.

 

[377OHMS]

9% was a good mortgage back in the Carter days.

 

[jprad]

Quote from 377OHMS:

9% was a good mortgage back in the Carter days.

It was still a good rate late in Reagan's second term...

 

[ammo]

the houses are only worth what the bank will lend, and right now they are not willing to finance any more real estate risk, still waiting for the other shoe to drop,saving their cash so they will still be in business, banks used to be in the business of saving

 

[lasner]

Quote from jficquette:

Thats why people buying now are screwed. They are buying inflated prices with all time low interest rates.

Sooner or later, and it doesn't matter when, 3 years, 5 years, 10 years rates will be up to 8-10% and housing will be much lower.

You buy when rates are high and prices low. You sell when rates are low and prices high.

that's exactly right....it's so funny realtors tell me to buy now because interest rates are low....it's the worse time to buy

 

[lasner]

Quote from jprad:

Several reasons.

Going in, there wasn't a real estate bubble to drive prices well beyond reality.

You also didn't have legions of people who couldn't afford their mortgage back then. Not only did you have to prove you could pay back what you borrowed, you had to put down a serious chunk of change upfront.

Low turnover. Few people were eager to flip into a new house with an interest rate that was 2-3 times their current mortgage.

I was too young back then but I'm assuming nobody bought back then...and nobody sold unless they had to. I can't imagine anyone buying a house a normal price at a 20% mortgage rate

 

[jprad]

Quote from lasner:

I was too young back then but I'm assuming nobody bought back then...and nobody sold unless they had to. I can't imagine anyone buying a house a normal price at a 20% mortgage rate

The FRM segment of the market certainly took a big hit, but ARMs were pretty popular back then.

It was just as bad for the new car market. Leasing became a big time alternative to purchasing.

 

[jprad]

Quote from jficquette:

Thats why people buying now are screwed. They are buying inflated prices with all time low interest rates.

Sooner or later, and it doesn't matter when, 3 years, 5 years, 10 years rates will be up to 8-10% and housing will be much lower.

You buy when rates are high and prices low. You sell when rates are low and prices high.

Fed policy and it's impact on the dollar over the next 5 to 10 years will most likely render conventional wisdom moot.

 

[jprad]

Quote from number22:

He is old and confused, It depend on where you lived, real estate plummeted more than 60% in my area in late 80s.

I said EARLY 80's you farkin' twit...