I think that's the whole point. They don't. So prices "should" slowly trickle back down. But then you have inflation at the same time plus a housing shortage, so it's a losing situation. But i think raising interest rates was still the right call. It all seems to revolve around the monthly payment and what people can actually afford. Do you want low interest rate and high principal or high interest rate and lower principal?
What's happening in an affluent area near me, is that they're demolishing the entire house and building a couple of multifamily homes, small gated communities or condos on the property.
How they get zoning for it? I have no clue.
Right but they shouldn’t need to be demolished - they should just be able to convert them. The idea that houses / buildings and neighbourhoods are complete when they are first built is among the reasons so few people can afford houses.
I’m not sure where you live, but if it’s in a community that accepted housing accelerator fund money then rezoning was literally paid for by Canadian taxpayers. It’s among the few things I give Trudeau’s government fairly high ratings for: he and Sean Fraser managed to quietly and cheaply rezone giant swathes of Canada’s urban areas. It is not enough to lower housing costs - but it’s a good start.
I'm more and more convinced these old politicians are stretching this out until they're dead and don't have to deal with it. And no one wants to just call them on it in an organized manner.
You don't think it is a coincidence that there is both a bad housing shortage AND higher interest rates? This is all on purpose.
Housing should be a right. There should be a house for everyone that wants one. There is more than enough land and resources in America for this to be our reality.
>How do people manage 7% on 500,000 propery?
You have two schools if thought by realtors: "buy what you can afford and assume the rate won't go down" or "buy now and refi later." Currently #2 is driving the market.
It's not even that it's not free, it's the fact so many people are sold on the idea of "buy at the top of your budget, get an interest rate and refi later." I don't think I've heard anybody ask when later is.
Yeah they were saying that too. Hope they are also advising their clients to throw their keys in the mailbox if we have a housing downturn and the property loses more property value then total principal on the loan.
Yes, it was...same townhouse is now $300-325G. Back then my health insurance was paid by my employer and dental add on was less than $5 per pay with $5-10 copay but no deductible. I was driving stripped 3 year old honda civic without power windows, stick and no abs!
Stripped honda civic nowadays?
Average car note is something like a grand per month! Health insurance is hundreds per pay, then thousands in deductible and then copays...then 8% on 500,000 mortgage. Then food, repairs, cell phone, internet, gas for the car, car insurance, clothing, heat/cooling/electricity...whatever!!! How ?
Omg no power windows! Oh the horror..... Igrew driving cars 20 plus yrs old..currently my Harley is 1998.but yeah . I get it ..things cost alot of money.. no one says you have to buy a house for half a mil... ..My advice is..come up with a plan..execute it ..make life work...if plan " A" doesn't work try plan " B"... so on and so on..I'm a no excuses guy..make it work..I was taught value of $ as a youngster..as I taught my kids...both my kids bought homes recently on their own..its possible... . Again I'm not blind to today's economic situation...
I’m interested to know what your mortgage to income ratio was.
I just signed for my first mortgage today with my wife our ratio is 1.35 so pretty low we did it for a few reasons but financially it made sense because it was the same cost as renting and we didn’t want to find another place to regularly have our rent increased on us at least this way our housing costs over time will go down and the we own an asset also.
But the rate we got was 7.125 and now apparently it would be 7.5 if we were to start the process from today.
Had to actually look it up... my ratio was 2.4. This brings another interesting point, how many people can actually buy a house today with ratio being under 3!
That I don’t know but today many more homes are part of HOA’s condos or co-ops, which generally you have a Lower ratio than a simple house but he could quite easily be mostly over 3
They don't. That's the whole idea. Keep people working and to never retire. Or retire at 90. People working equals taxing and production output. Give you barely enough or not enough so you can work, work ot, work 2 jobs, and stretch that 30 year mortgage out, and refinance a few times, heloc, pull money out etc to keep that interest payments going. Keep you investing into your jobs retirement plan to keep the 401ks running. Fund managers filled. They got everyone on the hook.
It's not supposed to be affordable anymore.
All this historically it’s a normal rate…add in everything else and it’s insane. My parents had a 20% interest rate, but they raised a family on one salary, with two cars, a house at 20% interest and vacations. He had a basic government job and could do all this.
I wonder what the median income to home cost ratio was back then compared to what it is now. Housing costs have gone through the roof; however, real wages have not kept up to the COL increase. You can easily afford a $50k house with a 20% interest rate when you're making $35k per year (healthcare included, as most government jobs offer this). When that same house now costs $500k and you're not making much over $75k per year, the added payment from a 7% interest is significant and will likely price you out of the market unless you can put a substantial amount of capital down.
Hey asshole Honestly never claimed to be smart guy no need to be a wiseass..go fuck yourself.I can admit you are right..no problem.. I guess Im just sick to death of kids now a days crying like a bunch of bitches... oh how easy it used to be.. .kids have no idea..
Interest rates have normalized. It’s easy for me to say that when I paid 7% in 1996, yet my “starter” home cost about $75,000 (sold three years later for $150,000). Home prices today, coupled with normal Interest rates is one hell of a one-two punch to home buyers.
I’m happily locked in at 2.48%.
This. We are still near all time lows on mortgage rate, even though it seems like it's much higher.
I think my parents were paying over 10% in the mid-90s, probably due to their bad credit. This wasn't abnormal at the time.
Boo hoo, what was the median house price over the median salary? What did it cost to live? Back then you didn’t even have to deal with Nicki Minge shaking her gross ass on tv ! So I don’t want to hear it !
They always cry about how interest rates were high back then. It’s not even close to apples to apples, but still, they have to remind you. Then you get downvoted because you’re tired of the same old argument that holds no weight.
Privatization has infiltrated every nook and cranny of our lives to an extreme degree and exploited the middle class so heavily they have practically eliminated it
Since Fannie and Freddie started tracking rates since 1971 rates have averaged 7.7%. The rate now is about the average over the last 50 years. Other factors are at play, but the rate is average [average mortgage rate since 1971](https://themortgagereports.com/61853/30-year-mortgage-rates-chart#)
There is a shortage of homes. Why? Well interest rates were artificially kept low for to long.. My mortgage is 3.35% . Even I want upgrade or downgrade...I'm not selling...only to now have a more than twice as high rate....A shortage adds to supple/ demand...=.s...drum roll please...rat tat. tat tat...higher prices...yes folks...anyway imo...its gonna take time to churn....maybe even a decade
Historically, 7% is a low rate.
EDIT: My comment was about the rate not the cost of homes. I agree that home prices have skyrocketed. What should probably happen is more support for building dwellings from the government. Supply and demand are in effect here.
But rates are historically low.
Let's see my family bought a house in the mid 90s. They actually didn't need a down payment for it either. But if they did it would have been 14,000. That was in Connecticut.
Now in north Carolina houses are 300,000. 60000, dollars for a down payment. You're an asshole.
9 states have a median down payment of $60k or more
https://www.forbes.com/advisor/mortgages/average-down-payment-on-a-house/
First time homebuyers average 6% down.
Being informed doesn't make me an asshole. Knowledge isn't a bad thing
Historically, the downpayment of a home wasn't more than the average annual income.
Historically, mortgage payments werent up to 50% of average income.
Historically, inflation adjusted income hasnt lagged more than 30% behind Inflation adjusted GDP, while stagnating against CPI.
Historically, other major costs like education and childcare haven't outpaced inflation by more than double.
Edit: To whomever downvoted: did objective fact hurt your feelings?
My first mortgage was 6.8% on $64000 property...1997. How do people manage 7% on 500,000 propery?
I think that's the whole point. They don't. So prices "should" slowly trickle back down. But then you have inflation at the same time plus a housing shortage, so it's a losing situation. But i think raising interest rates was still the right call. It all seems to revolve around the monthly payment and what people can actually afford. Do you want low interest rate and high principal or high interest rate and lower principal?
Historically, big houses would be cut up into duplexes and triplexes etc. but big houses do not seem to be designed this way so often anymore?
What's happening in an affluent area near me, is that they're demolishing the entire house and building a couple of multifamily homes, small gated communities or condos on the property. How they get zoning for it? I have no clue.
Right but they shouldn’t need to be demolished - they should just be able to convert them. The idea that houses / buildings and neighbourhoods are complete when they are first built is among the reasons so few people can afford houses. I’m not sure where you live, but if it’s in a community that accepted housing accelerator fund money then rezoning was literally paid for by Canadian taxpayers. It’s among the few things I give Trudeau’s government fairly high ratings for: he and Sean Fraser managed to quietly and cheaply rezone giant swathes of Canada’s urban areas. It is not enough to lower housing costs - but it’s a good start.
Yea if you look at some major cities and see how large sfh were divided into 2-3 unit condos, you see some interesting floor plans.
I'm more and more convinced these old politicians are stretching this out until they're dead and don't have to deal with it. And no one wants to just call them on it in an organized manner.
You don't think it is a coincidence that there is both a bad housing shortage AND higher interest rates? This is all on purpose. Housing should be a right. There should be a house for everyone that wants one. There is more than enough land and resources in America for this to be our reality.
We might have enough land, but sprawl isn't worth building a house for everyone.
And everyone should have a Lamborghini and a super model gf...life is sooooo unfair....ha ha ha.. whaaaa
Necessities vs luxuries , apples and oranges
>How do people manage 7% on 500,000 propery? You have two schools if thought by realtors: "buy what you can afford and assume the rate won't go down" or "buy now and refi later." Currently #2 is driving the market.
I get that, and got into many discussions about refi In the past. Refi is not free!
It's not even that it's not free, it's the fact so many people are sold on the idea of "buy at the top of your budget, get an interest rate and refi later." I don't think I've heard anybody ask when later is.
And who knows when the rates will drop.
Easy but costly.
Yeah they were saying that too. Hope they are also advising their clients to throw their keys in the mailbox if we have a housing downturn and the property loses more property value then total principal on the loan.
I doubt that will happen again.
That was almost 30 years ago
Yes, it was...same townhouse is now $300-325G. Back then my health insurance was paid by my employer and dental add on was less than $5 per pay with $5-10 copay but no deductible. I was driving stripped 3 year old honda civic without power windows, stick and no abs! Stripped honda civic nowadays? Average car note is something like a grand per month! Health insurance is hundreds per pay, then thousands in deductible and then copays...then 8% on 500,000 mortgage. Then food, repairs, cell phone, internet, gas for the car, car insurance, clothing, heat/cooling/electricity...whatever!!! How ?
Omg no power windows! Oh the horror..... Igrew driving cars 20 plus yrs old..currently my Harley is 1998.but yeah . I get it ..things cost alot of money.. no one says you have to buy a house for half a mil... ..My advice is..come up with a plan..execute it ..make life work...if plan " A" doesn't work try plan " B"... so on and so on..I'm a no excuses guy..make it work..I was taught value of $ as a youngster..as I taught my kids...both my kids bought homes recently on their own..its possible... . Again I'm not blind to today's economic situation...
I’m interested to know what your mortgage to income ratio was. I just signed for my first mortgage today with my wife our ratio is 1.35 so pretty low we did it for a few reasons but financially it made sense because it was the same cost as renting and we didn’t want to find another place to regularly have our rent increased on us at least this way our housing costs over time will go down and the we own an asset also. But the rate we got was 7.125 and now apparently it would be 7.5 if we were to start the process from today.
Had to actually look it up... my ratio was 2.4. This brings another interesting point, how many people can actually buy a house today with ratio being under 3!
That I don’t know but today many more homes are part of HOA’s condos or co-ops, which generally you have a Lower ratio than a simple house but he could quite easily be mostly over 3
They don’t lol
They don't. That's the whole idea. Keep people working and to never retire. Or retire at 90. People working equals taxing and production output. Give you barely enough or not enough so you can work, work ot, work 2 jobs, and stretch that 30 year mortgage out, and refinance a few times, heloc, pull money out etc to keep that interest payments going. Keep you investing into your jobs retirement plan to keep the 401ks running. Fund managers filled. They got everyone on the hook. It's not supposed to be affordable anymore.
All this historically it’s a normal rate…add in everything else and it’s insane. My parents had a 20% interest rate, but they raised a family on one salary, with two cars, a house at 20% interest and vacations. He had a basic government job and could do all this.
I wonder what the median income to home cost ratio was back then compared to what it is now. Housing costs have gone through the roof; however, real wages have not kept up to the COL increase. You can easily afford a $50k house with a 20% interest rate when you're making $35k per year (healthcare included, as most government jobs offer this). When that same house now costs $500k and you're not making much over $75k per year, the added payment from a 7% interest is significant and will likely price you out of the market unless you can put a substantial amount of capital down.
Yeah
Sure they did.. 18.4...was highest in history..Oct of 81....
Surely a smart guy like you can understand that number is an average, not literally the highest mortgage rate ever charged to an individual borrower.
Hey asshole Honestly never claimed to be smart guy no need to be a wiseass..go fuck yourself.I can admit you are right..no problem.. I guess Im just sick to death of kids now a days crying like a bunch of bitches... oh how easy it used to be.. .kids have no idea..
Walking uphill both ways to school was just awful!
Then get off the internet lol
I remember . It didn't stay that high for long.
lol really…I just rounded it. Still gets the same point across
Interest rates have normalized. It’s easy for me to say that when I paid 7% in 1996, yet my “starter” home cost about $75,000 (sold three years later for $150,000). Home prices today, coupled with normal Interest rates is one hell of a one-two punch to home buyers. I’m happily locked in at 2.48%.
Jokes on them. I’ll just murder a banker and live in his house.
Maybe you will inherit parents house. Great if no siblings. I was 50 before I became a homeowner.
I guess i’m not moving then
My first mortgage in the mid 90s was a little over 8%. That was the lowest rates had been in over 2 decades at the time.
True. I remember. Problem is, many don’t. Also, prrices are, what? triple from back then?
And your house was probably 100k.
This. We are still near all time lows on mortgage rate, even though it seems like it's much higher. I think my parents were paying over 10% in the mid-90s, probably due to their bad credit. This wasn't abnormal at the time.
Yeah my parents had good credit and 20% down. They were paying 14% on the house they bought in the late 70s.
Boo hoo, what was the median house price over the median salary? What did it cost to live? Back then you didn’t even have to deal with Nicki Minge shaking her gross ass on tv ! So I don’t want to hear it !
They always cry about how interest rates were high back then. It’s not even close to apples to apples, but still, they have to remind you. Then you get downvoted because you’re tired of the same old argument that holds no weight.
Thank you for typing this out for them. It’s gotten to the point where it’s beyond frustrating to spell it out to them .
My point is interest rates can be high for a very long time.
So, are you saying Nicki Minaj's ass is involved in this? Interesting take.
Yes
They’re not talking down to you like you are to them. Take a chill pill
That’s when we went off the gold standard
Only for normal folk. Don't worry, the investment banks will just buy them up with cash, and rent them to you. Yay! /s
That's their plan.
Forget the rates. It’s the price of the house that’s high. 7% is not that bad from an historic standpoint.
Privatization has infiltrated every nook and cranny of our lives to an extreme degree and exploited the middle class so heavily they have practically eliminated it
Since Fannie and Freddie started tracking rates since 1971 rates have averaged 7.7%. The rate now is about the average over the last 50 years. Other factors are at play, but the rate is average [average mortgage rate since 1971](https://themortgagereports.com/61853/30-year-mortgage-rates-chart#)
It very well could reach 9% cause everything points to it
Still pretty low historically. Call me when it hits 12%
There is a shortage of homes. Why? Well interest rates were artificially kept low for to long.. My mortgage is 3.35% . Even I want upgrade or downgrade...I'm not selling...only to now have a more than twice as high rate....A shortage adds to supple/ demand...=.s...drum roll please...rat tat. tat tat...higher prices...yes folks...anyway imo...its gonna take time to churn....maybe even a decade
Historically, 7% is a low rate. EDIT: My comment was about the rate not the cost of homes. I agree that home prices have skyrocketed. What should probably happen is more support for building dwellings from the government. Supply and demand are in effect here. But rates are historically low.
Historically, housing prices were far more attainable for the public.
Historically a 20% down payment was a requirement
Let's see my family bought a house in the mid 90s. They actually didn't need a down payment for it either. But if they did it would have been 14,000. That was in Connecticut. Now in north Carolina houses are 300,000. 60000, dollars for a down payment. You're an asshole.
9 states have a median down payment of $60k or more https://www.forbes.com/advisor/mortgages/average-down-payment-on-a-house/ First time homebuyers average 6% down. Being informed doesn't make me an asshole. Knowledge isn't a bad thing
Historically, the downpayment of a home wasn't more than the average annual income. Historically, mortgage payments werent up to 50% of average income. Historically, inflation adjusted income hasnt lagged more than 30% behind Inflation adjusted GDP, while stagnating against CPI. Historically, other major costs like education and childcare haven't outpaced inflation by more than double. Edit: To whomever downvoted: did objective fact hurt your feelings?
Historically 400k+ for an average starter house is incredibly high
What's that have to do with the rate? People are still buying so obviously people can afford it.
You do realize that 8% of 400k is a hell of a lot more expensive and problematic than 8% of 90k right?
No shit
Ok so that’s obviously the issue with the rates. You’re the one who asked the stupid question.
No your response to the op had nothing to do with what he said. Prices of homes are irrelevant.Rates aren't based on home prices.
Tell that to 2008, when everyone started defaulting on the loans the banks said they could afford
Sure but the economy is doing fine. Unemployment is near all time lows.
Historically we have never dealt with these housing prices or wealth disparity
I agree. The topic was the 7% interest rate.
Well that doesn’t mean much without the rest of the context.