Americans locked into lower mortgage rates have been increasingly unwilling to sell their homes.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Gotta be tough for a company to get anyone to move for a job at this point.

I did the math today. To maintain my same quality of home, given price increases and mortgage rates, I'd need about a $50K increase in annual income before taxes.

And yet the Biden RTO thread is full of people insisting there are people lining up to take federal jobs in DC and refilling vacant positions is no problem!

What does RTO mean - asking honestly.

Return to office. A lot of federal agencies are increasing in-person requirements.

Oh got it! thanks!

[Anonymous]

I'm never moving out of my starter house at a 2.2% mortgage. We just get used to making do with less space.

[Anonymous]

Yes higher mortgage rates hurt, but not as much as some articles (or posts) would have you believe. You have to do the math for your own situation.

Household A: Locked in 2.5% on a $750K mortgage (monthly pmt $2963). That means interest expenses in the first five year of mortgage are roughly $18K / year. Adding the SALT deduction of $10K, they can deduct $28K come tax time (or just take the equivalent $27.7K standard deduction).

Household B: in current market, gets 7% rate on same $750K mortgage (monthly pmt $4989). That mean deducible yearly interest expense of roughly $51.5K. With SALT, that's $61.5K deductible, an increase of $33.5K in deductible expenses for tax savings of $13.4K (assuming 40% combined fed/state marginal tax rate), or $1117 per month. That reduces the effective after tax monthly payment to $3872 when compared to household A's mortgage. That's equivalent to a 4.66% mortgage rate (after tax).

So, relative to the 2.5% mortgage, still a big jump, but not as big as the hype would have you believe.

Per above poster claiming a $50K raise would be required: to handle that difference, you'd need an extra $3872 - $2963 = $909 per month, or $10908 annual after tax increase in income, which means a gross salary increase of roughly $18K before taxes are taken out (again assuming 40% combined marginal rate). Any price increase component should be ignored: it has presumably also increased the equity in your existing home. For someone making $300K, that's a roughly 6% raise, so it shouldn't be that big of a factor (assuming folks won't go through the trouble of a job change for small raises).

TLDR: do the math for your own situation, it may be a lot milder than the Sturm und Drang online would have you believe.

[Anonymous]

Anonymous wrote:Yep we are the older people everyone likes to blame at the moment. 3000 sq ft house in a good school district, almost paid off. more house than we need or want and we would love to downsize, but the way prices are, a smaller house would be more than we paid for our original house and with a mortgage would actually cost more than we are paying at the moment. we don't want to stay put, but it doesn't make any sense to move.

No hate here. It doesn't make sense for older people to downsize unless they're paying cash for their next home. At least your home is large enough to host your grown kids and grandkids when they visit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yep we are the older people everyone likes to blame at the moment. 3000 sq ft house in a good school district, almost paid off. more house than we need or want and we would love to downsize, but the way prices are, a smaller house would be more than we paid for our original house and with a mortgage would actually cost more than we are paying at the moment. we don't want to stay put, but it doesn't make any sense to move.

+1

I will say, though, that when we bought our first house for $750K, the rate was 6%, and that was considered pretty good.

DP. It’s just weird. There’s so much unused house. One kid is out and the other is going next year. It’s just me and my son in the house but between school, friends, and sports he seems to never be home. I would love a cozier space just for me.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yep we are the older people everyone likes to blame at the moment. 3000 sq ft house in a good school district, almost paid off. more house than we need or want and we would love to downsize, but the way prices are, a smaller house would be more than we paid for our original house and with a mortgage would actually cost more than we are paying at the moment. we don't want to stay put, but it doesn't make any sense to move.

+1

I will say, though, that when we bought our first house for $750K, the rate was 6%, and that was considered pretty good.

DP. It’s just weird. There’s so much unused house. One kid is out and the other is going next year. It’s just me and my son in the house but between school, friends, and sports he seems to never be home. I would love a cozier space just for me.

pp here.. I'd be willing to rent out my large house with a large yard in a good school district, though. I can rent a tiny condo. DH and I plan on traveling a lot, so we don't have need for a large place. I would actually rather not have a large place.

[Anonymous]

I wonder if they ever lower rates (big IF) - if there will be a lot of supply (pent up supply). I mean I know there will still be tons of demand but I wonder if supply would also increase.

[Anonymous]

Anonymous wrote:Yep we are the older people everyone likes to blame at the moment. 3000 sq ft house in a good school district, almost paid off. more house than we need or want and we would love to downsize, but the way prices are, a smaller house would be more than we paid for our original house and with a mortgage would actually cost more than we are paying at the moment. we don't want to stay put, but it doesn't make any sense to move.

That’s a dumb comparison.

[Anonymous]

Anonymous wrote:Anything less than 5% at this point is worth more than gold

We were talking about moving a few years ago but Covid and the interest rates put that discussion on ice. 3%
It's far from the only factor, but it matters.

Aside: the photo from the OP's post looks like the neighborhood of my nightmares.

[Anonymous]

I’ll sit on my 2.75% 30 year for as long as possible. I’ll rent it, leave it vacant, whatever it takes. 5-6 years from now the payment will be a shrinking portion of my take home. I look forward to sticking to the banks. I still have DTI left at my current income to finance another house. I will NEVER sell.

[Anonymous]

Anonymous wrote:I wonder if they ever lower rates (big IF) - if there will be a lot of supply (pent up supply). I mean I know there will still be tons of demand but I wonder if supply would also increase.

Total guesses on my part, but it seems logical to me that rates will go down. With current rates even a .5 point drop will get people excited and motivated to move. And yes of course there will be a lot of supply hitting the market. Supply will get swallowed up quickly then things will settle down a bit once all those people who've been sitting on the sidelines do their dance. Not unlike opening a dam. I hope what follows is a normal, steady market.

[Anonymous]

Anonymous wrote:I’ll sit on my 2.75% 30 year for as long as possible. I’ll rent it, leave it vacant, whatever it takes. 5-6 years from now the payment will be a shrinking portion of my take home. I look forward to sticking to the banks. I still have DTI left at my current income to finance another house. I will NEVER sell.

This is such a strange flex. So you'd rather be a landlord rather than sell and invest the proceeds, no matter which scenario makes more financial sense?

[Anonymous]

It's not just the feds who are RTO. We worked hard to pay off our house.. not moving.

[Anonymous]

Anonymous wrote:I’ll sit on my 2.75% 30 year for as long as possible. I’ll rent it, leave it vacant, whatever it takes. 5-6 years from now the payment will be a shrinking portion of my take home. I look forward to sticking to the banks. I still have DTI left at my current income to finance another house. I will NEVER sell.

+1 Similar situation at 2.6%. Plus, house is appreciating at a 10-15% rate year over year. DH and I discuss keeping the home as a legacy property for our child. No reason to ever sell. It's a stable asset and the location of the house, plus neighborhood, is highly sought after with low inventory even at astronomical home prices.

[Anonymous]

Anonymous wrote:Yep we are the older people everyone likes to blame at the moment. 3000 sq ft house in a good school district, almost paid off. more house than we need or want and we would love to downsize, but the way prices are, a smaller house would be more than we paid for our original house and with a mortgage would actually cost more than we are paying at the moment. we don't want to stay put, but it doesn't make any sense to move.

+1