Let’s be real, if rates are cut significantly housing will do another +20-30%

[Anonymous]

Mamma needs new windows and a kitchen remodel. Bring it.

[Anonymous]

Anonymous wrote:Haven't we been led to believe that many buyers in the highly desirable areas are "all-cash"? Thus, interest rates don't matter for that large group of buyers.

+1. There are so many buyers that aren't affected by the interest rates.

[Anonymous]

Anonymous wrote:Well, I own a home with a 2% mortgage…so I’ll wish for it.

+1

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:If rates are cut significantly - there will be an influx of supply too from people who are locked in right now. So who knows how that plays out.

This.

People who are only selling because rates finally dropped enough have to buy something, no? Which means demand is still up. Keeping prices up.

I don't see a happy way out of this situation for people looking to buy or wanting to trade up and have the golden handcuffs. It'll be a long, sluggish slog for the market to reach some sort of new equilibrium. Think in terms of years and years.

We don't know where people will move to though - it all remains to be seen. I just think it could be interesting how it plays out. Although honestly right now - I don't see rates dropping that much any time soon.

[Anonymous]

It’ll depend who is selling. People who sell once rates drop probably fall into 2 camps: 1- upgrading from their first home, need more space and 2- downsizing for retirement

I feel like it’ll cancel out. People are sooo used to their low monthlies right now, and theyre not going to be itching to more than double which i think is the problem for camp 1 now

[Anonymous]

Anonymous wrote:It’ll depend who is selling. People who sell once rates drop probably fall into 2 camps: 1- upgrading from their first home, need more space and 2- downsizing for retirement

I feel like it’ll cancel out. People are sooo used to their low monthlies right now, and theyre not going to be itching to more than double which i think is the problem for camp 1 now

A lot of people are not going to give up their low mortgage rates even if they buy another house. A high proportion of these properties with sub 3% mortgage rates can be rented out with positive cash flow. It’s also doubtful that we will see rates this low within the next few decades. If we are lucky maybe rates can go slightly under 5%, but I don’t see sub 4% rates happening again anytime soon.

[Anonymous]

Anonymous wrote:It’ll depend who is selling. People who sell once rates drop probably fall into 2 camps: 1- upgrading from their first home, need more space and 2- downsizing for retirement

I feel like it’ll cancel out. People are sooo used to their low monthlies right now, and theyre not going to be itching to more than double which i think is the problem for camp 1 now

It is painful to see how much more I'd have to pay to trade up. Gaining an extra 20% square footage, which would be deal, would double my mortgage easily.

Buy I have been playing around with the mortgage calculators and noticed that the payment difference between 15 years and 30 years (roughly 8% versus 6.5%) is minimal. Which means trading the 25 years left on my mortgage for 15 years, and eliminating 10 years worth of interest payments. Somehow that seems to mitigate some of the pains of a higher rate. Will need to investigate it more closely.

Either way, still kicking myself for being too risk averse and not pushing the top of my budget the first time around.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Haven't we been led to believe that many buyers in the highly desirable areas are "all-cash"? Thus, interest rates don't matter for that large group of buyers.

+1. There are so many buyers that aren't affected by the interest rates.

Sort of. We are all cash buyers, but not if prices go up 20-30%. So I'm rooting against a rate drop (and I don't think here will be one) because I'd rather buy a home at current prices for cash than have to take out a mortgage, even at a low rate. Sure, if borrowing is cheap, who cares, right? But if we buy with cash now and then rates go down later, we own the equity increase instead of having to pay for it, albeit at a cheap rate.

Fortunately I don't see rates going down anytime soon because we are waiting for the right house since we want to be in this one for decades.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’ll depend who is selling. People who sell once rates drop probably fall into 2 camps: 1- upgrading from their first home, need more space and 2- downsizing for retirement

I feel like it’ll cancel out. People are sooo used to their low monthlies right now, and theyre not going to be itching to more than double which i think is the problem for camp 1 now

It is painful to see how much more I'd have to pay to trade up. Gaining an extra 20% square footage, which would be deal, would double my mortgage easily.

Buy I have been playing around with the mortgage calculators and noticed that the payment difference between 15 years and 30 years (roughly 8% versus 6.5%) is minimal. Which means trading the 25 years left on my mortgage for 15 years, and eliminating 10 years worth of interest payments. Somehow that seems to mitigate some of the pains of a higher rate. Will need to investigate it more closely.[b]

Either way, still kicking myself for being too risk averse and not pushing the top of my budget the first time around.

if you decide to stay in the current home, pay 1 extra mortgage payment a year, every year. That will cut 7 years off of a 30 year mortgage. That extra payment goes directly to principle and significantly cuts down the total interest you would be paying to the bank. This is what we have done and we are about 2.5 years away from being rid of the mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’ll depend who is selling. People who sell once rates drop probably fall into 2 camps: 1- upgrading from their first home, need more space and 2- downsizing for retirement

I feel like it’ll cancel out. People are sooo used to their low monthlies right now, and theyre not going to be itching to more than double which i think is the problem for camp 1 now

It is painful to see how much more I'd have to pay to trade up. Gaining an extra 20% square footage, which would be deal, would double my mortgage easily.

Buy I have been playing around with the mortgage calculators and noticed that the payment difference between 15 years and 30 years (roughly 8% versus 6.5%) is minimal. Which means trading the 25 years left on my mortgage for 15 years, and eliminating 10 years worth of interest payments. Somehow that seems to mitigate some of the pains of a higher rate. Will need to investigate it more closely.

Either way, still kicking myself for being too risk averse and not pushing the top of my budget the first time around.

This is why you shouldn’t listen to the majority of posters financial opinions on here. I can’t count the number of times I saw people advise posters with $250k HHIs that buying a $900,000 home with a 3% mortgage was irresponsible and that they should buy a townhouse or condo instead. Posters that listened to this advise are going to be trapped in these condos or townhomes for a long time, and now a mortgage payment on a $900k home with 20% down is almost $3k-$4k more than what it used to be.

[Anonymous]

mortgage rates are too high and not equitable for most, they should be under 5%, the fed will need to cut them regardless of inflation

[Anonymous]

Even if prices rose, this would be a short term impact.

Plus it's really unclear how this would play out - both more buyers, but also more sellers. I feel unclear that this definitively leads to housing price increase. If anything, possibly a temporary price increase that then stabilizes or drops if available homes exceed number of buyers.

Already, there is very selective impact in the DMV area. Some areas are only increasing (burbs), while some parts of DC are dropping (Hill East, U St), and yes, crime may impact this, but also people settling into hybrid work and wanting more SFHs with yards vs. rowhouses.

There are so many variables, I don't think anyone can say with certainty how this plays out.

[Anonymous]

No, it won’t. Housing in my area has gone from $1.8 pre covid to $2.6.

[Anonymous]

Anonymous wrote:mortgage rates are too high and not equitable for most, they should be under 5%, the fed will need to cut them regardless of inflation

You again? Just stop with this nonsense.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It’ll depend who is selling. People who sell once rates drop probably fall into 2 camps: 1- upgrading from their first home, need more space and 2- downsizing for retirement

I feel like it’ll cancel out. People are sooo used to their low monthlies right now, and theyre not going to be itching to more than double which i think is the problem for camp 1 now

A lot of people are not going to give up their low mortgage rates even if they buy another house. A high proportion of these properties with sub 3% mortgage rates can be rented out with positive cash flow. It’s also doubtful that we will see rates this low within the next few decades. If we are lucky maybe rates can go slightly under 5%, but I don’t see sub 4% rates happening again anytime soon.

We view our home in McLean Hamlet with a 2% now as part of our retirement plan for cash flow. Our mortgage is less than $3K per month. With taxes and insurance it is $4.6K per month. Could rent it for $6K.

The schools are excellent and when our youngest graduates from high school, we will move to a low cost area and pay cash. But not planning to sell the house in McLean! It would be stupid to sell it and lose the passive income.