Mortgage demand rises for the first time in six weeks, despite sharply higher interest rates

GON

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Mortgage demand rises for the first time in six weeks, despite sharply higher interest rates​

This is not so surprising, based on the lack of meaningful price declines in single family homes. The reported doom and gloom in single family homes is not matching the data. A few super-hot, bloated markets have seen some price reductions, but these super-hot market current prices are still well above single family home prices from one-year ago.

My take- the vast majority of Americans want it- they will buy it. The long-term financial risks are not enough for most Americans to defer any purchase, to include single family homes.

 
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Perhaps people who need mortgages panicked and tried to lock in rates before interest rates go up further after the last CPI numbers came out. I agree with your last statement GON. Only it doesn’t stop at houses. It extends to everything. Americans are addicted to debt.

So, prices will go up or remain high only until Americans CANT afford the mortgage - or the bank won’t give them one. At a certain point interest rates WILL drag home prices down. I think we are at or slightly beyond the “peak” of housing prices and the drop has already started.
 
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Yep, 5 to 10% is normal. Sorry kids, the party is over. No Tesla’s for YOU.

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GON

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Perhaps people who need mortgages panicked and tried to lock in rates before interest rates go up further after the last CPI numbers came out. I agree with your last statement GON. Only it doesn’t stop at houses. It extends to everything. Americans are addicted to debt.
People that locked in a rate six weeks ago may be happy after 3pm Eastern time today.

Rates for 30-year mortgages are currently in the six percent range. It is not unthinkable 30-year mortage rates could be at nine percent in the next six-nine months.
 
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People that locked in a rate six weeks ago may be happy after 3pm Eastern time today.

Rates for 30-year mortgages are currently in the six percent range. It is not unthinkable 30-year mortage rates could be at nine percent in the next six-nine months.


It’s all relative. I was pleased that I was able to get 12.25% on my first mortgage way back when. It sure beat 16%.
 
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Our first mortgage in 1977 - 1978 was 11 1/4%. In a couple of years that seemed like a bargain.

Housing sales have now fallen in most markets in Canada and house prices have softened and are starting to decline. Our overnight rate is now 3.25% up from 0.25% at the start of the year. The central banks are doing what they have to do to stop inflation.

For those who don't remember it, runaway inflation is terrible. Everything just kept increasing in price. You might as well buy something now because next month it would be even more. And there was seemingly no limit to salary demands.

My parents had retired quite well off, but were largely wiped out by inflation. They didn't understand what was happening. My dad bought bonds and they lived off the interest. Meanwhile the purchasing value of the bond itself was declining rapidly.
 
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Perhaps people who need mortgages panicked and tried to lock in rates before interest rates go up further after the last CPI numbers came out. I agree with your last statement GON. Only it doesn’t stop at houses. It extends to everything. Americans are addicted to debt.

So, prices will go up or remain high only until Americans CANT afford the mortgage - or the bank won’t give them one. At a certain point interest rates WILL drag home prices down. I think we are at or slightly beyond the “peak” of housing prices and the drop has already started.
Yeah, it has started to some degree, more so overheated markets, one such place Jacksonville Florida.
Insane price appreciation over the last few years of 50% in some cases. We were going to buy there just a few months back, we never signed the contracts though.
Kind of glad we didnt, as much as I LOVE the Jacksonville area between HOA/CDD fees and climbing(?) Florida property taxes it wasnt worth it to us. It still bothers me to a small degree but wow when I did the numbers, the taxes and HOA/CCD fees are NOT cheap in Florida compared to the Carolinas.

Now, since we are on all the builders email lists I see the house price "sale" offers on some properties where we even walked the lots as the homes were being built from Yulee to North ST Augustine FL. Keep in mind I made 7 trips there starting around June, almost by the week the prices were climbing as the community was getting underway. Seemed like every two weeks or so homes we were considering were up another $10,000... Well, now I am getting emails of $40,000 to $50,000 price cuts on "select" homes of which I know the lots in two communities we were really serious about. So after first going to Florida before the price increases, if we bought back then, those prices are $20,000 less in one community and 40 to 50k less after the 7th time we were there. Not only that but in the second community we liked, we can buy the same home (on a different lot) for 40k less. Again, limited selection specials but if you think about it, they arent going to create a fire sale atmosphere, so there will be a trickle of these homes as they try to clean up inventory which use to get sold as fast as you look at the things.
There is one area of northern St Augustine holding the price on the homes but wow, there are a huge amount that have not sold. DR Horton community in the World Golf Village.

We settled on the coastal area of NC/SC border. Much more tax friendly and we always went there for a week in the summers for a getaway. I dont think, no matter what happens to the market, where and what we are buying doesnt have much room, if any to fall.


Bottom line
Low interest rates = High home prices
Normal Average Interest Rates = Stable prices
High interest rates = Low home prices
All three above, monthly payment is the same.
The transition from artificially low rates of the last almost decade to normal market interest rates will cause pain as the builders and homeowner sellers are forced to lower prices to what the public can afford. Home values will go down and people will end up backwards or stagnant on their value of their homes and why its better to buy a home in a normal to high interest rate environment vs artificially low interest rate environment. You can refi the mortgage but not the home price.
 
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Housing in my area has slowed down but the prices are still about the same. It's just taking longer to sell the homes. Most people put their mortgage payment 1st on the list and will cut back spending in other areas. The new first time buyers have a rude awakening and should have bought when the interest rates were 3%. Plus, lawn mowers, snow blowers, and almost everything that you need when you buy a new home has gone up significantly in price. I guess they will have to wait a little longer for that new BMW even though a lot of them received student loan forgiveness. The sucking of the hind teat may be over for a while hahaha.
 
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Too bad my online savings accounts aren’t paying more than a percent or so.
Getting close to 2% at Alliant Credit Union (google it) Good "bank" no games, no tricks and I think maybe the largest in the USA or close to it.
Repeat, no games, no tricks, no stipulations, no fine print, no * for some others that are higher, I am not saying they are bad but you need to completely review the fine print and make sure you know what rate you will get other than the advertised rate with the *
Ive had Alliant for many years now, very happy but I will continue to scour the earth for an upfront no games, tricks or one time specials for a better rate. Both Checking and Savings so far for me, I have not been able to find a better straight forward bank for checking and savings.
 
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I bought my first home in early 1994 at 7% and felt lucky to get that as the average was 7.25%. The problem today with 7% mortgages is that in some hot housing markets like San Diego, home prices were rising more than 15% a year for the last several years. That means a nice home in a neighborhood in the suburbs and not near downtown where you have to deal with homeless people and crime is close to a million dollars and even a 2 bedroom condo is around $600 and you are likely to have a $500 per month HOA dues payment on top of your mortgage.

So what is happening today is the homeowners who bought those houses for $500-$600k a few years ago and were hoping to make a killing by doubling their money are lowering their asking prices by hundreds of thousands of dollars because the number of buyers who can make the payments at 7% are a whole lot less than those that could have made them at 3.5% less than a year ago.

The so called "experts" that get interviewed on the news (who of course are mostly real estate agents) are telling people to buy now anyway and refinance if and when the rates come down again. Yeah, maybe good advice when houses were $300k but there are going to be a lot of people struggling at today's prices, especially with over 8% inflation gobbling up the rest of their paychecks.

I hope everybody remembers who caused this when they go to the polls in November and 2024.
 
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