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

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

Your real estate agent IS right (surprisingly!).

Assuming you sell your house today and net $500K (not unusual at all), you could put that in a HY savings account and get ~$2K/mo interest, without touching your principal and without any carrying costs. You've just locked in your profit.



I'm sure your argument is going to be, but we need a place to stay! You're right, you do. Now, do the math one more time in terms of hanging on to your house, vs realizing your profits today (assuming you can sell, with today's market) and renting something lower cost (no, it won't be the same kind of house that you're selling, that's stupid) for a while. If you're not willing to do that, that's fine, others will be, because they can do the math as well.

Prices are set at the margin. A few sales in a neighborhood (up or down) set the prices for the whole neighborhood. You want to sell, when nobody's selling, not when everybody's heading for the exit.

Actually, almost no one will be willing to do this, as it is quite risky for effectively no financial benefit.

Explain.

Can't explain, can you?

So you make $25k yearly on a 5% CD with 500K principal.
Simple math.
Uh Oh! Tax time arrives.
Now you have to pay a high tax rate on your $25K interest earned.
Ever heard of something called inflation?

That's why I said...math. I know it's hard, but...

You'd much rather let the value of your current home erode away (Hint: That's what high interest rates do) AND keep paying the carrying costs with ding ding...tax paid dollars. The SALT deduction is only $10K, ONLY your mortgage interest is deductible (unto $750K), not your property taxes, home owners insurance, HOA (if applicable) etc. All of those are paid with post-tax dollars.

You wanna do that? Be my guest.

There's a reason the residential RE market is at a standstill. That's what high interest rates do, they swing the pendulum in favor of savors, vs borrowers, who gain in a low interest rate environment.

You haven't even come close to doing all the math in support of your argument. And I mean all the math... and for a range of future scenarios. Take the most likely... that home prices stagnate nominally for the next five years. Start with that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

But what if there’s more inflation?

May be, may be not.

The answer to that depends on your evaluation of whether the current (or future) morons in the White House or at the Fed have the will and ability to print more dollars, devaluing them.

Yes = more inflation.
No = deflation.

Our economy is 2/3 dependent on consumer spending. Unless incomes rise (ha!) with (or higher than) inflation, consumer spending WILL go down. That's the recession and deflation part. The rest 1/3 of the economy can keep spending all they want, it won't do zilch.

The government is increasing spending and consumption faster than its subjects are tightening their belts. Directly in contrast to the FED goals. Total dysfunction from the swamp as it stokes WW3 to avoid embarrassment and ridicule as it heads for its prepared bunkers.

They won't be for too long. The bond markets have woken up after...40 years. The govt still has to be able to SELL their paper, and the only buyer of last resort is the Fed, and they...can't/won't be able to buy it and offload it at any sane interest rates. Neither will private/overseas bidders.

The US govt is *ucked as well. They have NO choice but to cut spending. If the current administration won't do it, they'll topple and a different one will. It's a cycle, we've been there before (but so long ago that people have forgotten), and we'll be there again.

There was pain that time, and there will be pain this time.

Why can't the Fed just buy and hold? They already have some trillion on their balance sheet, what's a few trillion more? I think they will have to in order to keep interest expense down.

Or another option is yield curve control similar to what they did with the huge post WW2 debt.

The problem with cutting spending is that nobody will agree to cut spending for their pet project.

It’s got to be across the board . The only viable politically

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

But what if there’s more inflation?

May be, may be not.

The answer to that depends on your evaluation of whether the current (or future) morons in the White House or at the Fed have the will and ability to print more dollars, devaluing them.

Yes = more inflation.
No = deflation.

Our economy is 2/3 dependent on consumer spending. Unless incomes rise (ha!) with (or higher than) inflation, consumer spending WILL go down. That's the recession and deflation part. The rest 1/3 of the economy can keep spending all they want, it won't do zilch.

The government is increasing spending and consumption faster than its subjects are tightening their belts. Directly in contrast to the FED goals. Total dysfunction from the swamp as it stokes WW3 to avoid embarrassment and ridicule as it heads for its prepared bunkers.

They won't be for too long. The bond markets have woken up after...40 years. The govt still has to be able to SELL their paper, and the only buyer of last resort is the Fed, and they...can't/won't be able to buy it and offload it at any sane interest rates. Neither will private/overseas bidders.

The US govt is *ucked as well. They have NO choice but to cut spending. If the current administration won't do it, they'll topple and a different one will. It's a cycle, we've been there before (but so long ago that people have forgotten), and we'll be there again.

There was pain that time, and there will be pain this time.

Why can't the Fed just buy and hold? They already have some trillion on their balance sheet, what's a few trillion more? I think they will have to in order to keep interest expense down.

Or another option is yield curve control similar to what they did with the huge post WW2 debt.

The problem with cutting spending is that nobody will agree to cut spending for their pet project.

It’s got to be across the board . The only viable politically

And I guarantee it'll never happen. Too many politicians want to be reelected. It'll take 5 seconds for someone to come out... "I can't believe they want to cut the budget for x program for old/poor/education/military etc. How dare they!"

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

Your real estate agent IS right (surprisingly!).

Assuming you sell your house today and net $500K (not unusual at all), you could put that in a HY savings account and get ~$2K/mo interest, without touching your principal and without any carrying costs. You've just locked in your profit.



I'm sure your argument is going to be, but we need a place to stay! You're right, you do. Now, do the math one more time in terms of hanging on to your house, vs realizing your profits today (assuming you can sell, with today's market) and renting something lower cost (no, it won't be the same kind of house that you're selling, that's stupid) for a while. If you're not willing to do that, that's fine, others will be, because they can do the math as well.

Prices are set at the margin. A few sales in a neighborhood (up or down) set the prices for the whole neighborhood. You want to sell, when nobody's selling, not when everybody's heading for the exit.

Actually, almost no one will be willing to do this, as it is quite risky for effectively no financial benefit.

Explain.

Can't explain, can you?

So you make $25k yearly on a 5% CD with 500K principal.
Simple math.
Uh Oh! Tax time arrives.
Now you have to pay a high tax rate on your $25K interest earned.
Ever heard of something called inflation?

That's why I said...math. I know it's hard, but...

You'd much rather let the value of your current home erode away (Hint: That's what high interest rates do) AND keep paying the carrying costs with ding ding...tax paid dollars. The SALT deduction is only $10K, ONLY your mortgage interest is deductible (unto $750K), not your property taxes, home owners insurance, HOA (if applicable) etc. All of those are paid with post-tax dollars.

You wanna do that? Be my guest.

There's a reason the residential RE market is at a standstill. That's what high interest rates do, they swing the pendulum in favor of savors, vs borrowers, who gain in a low interest rate environment.

You haven't even come close to doing all the math in support of your argument. And I mean all the math... and for a range of future scenarios. Take the most likely... that home prices stagnate nominally for the next five years. Start with that.

And there in lies the problem. If that's your base case...

No need to do any more math.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

But what if there’s more inflation?

May be, may be not.

The answer to that depends on your evaluation of whether the current (or future) morons in the White House or at the Fed have the will and ability to print more dollars, devaluing them.

Yes = more inflation.
No = deflation.

Our economy is 2/3 dependent on consumer spending. Unless incomes rise (ha!) with (or higher than) inflation, consumer spending WILL go down. That's the recession and deflation part. The rest 1/3 of the economy can keep spending all they want, it won't do zilch.

The government is increasing spending and consumption faster than its subjects are tightening their belts. Directly in contrast to the FED goals. Total dysfunction from the swamp as it stokes WW3 to avoid embarrassment and ridicule as it heads for its prepared bunkers.

They won't be for too long. The bond markets have woken up after...40 years. The govt still has to be able to SELL their paper, and the only buyer of last resort is the Fed, and they...can't/won't be able to buy it and offload it at any sane interest rates. Neither will private/overseas bidders.

The US govt is *ucked as well. They have NO choice but to cut spending. If the current administration won't do it, they'll topple and a different one will. It's a cycle, we've been there before (but so long ago that people have forgotten), and we'll be there again.

There was pain that time, and there will be pain this time.

Why can't the Fed just buy and hold? They already have some trillion on their balance sheet, what's a few trillion more? I think they will have to in order to keep interest expense down.

Or another option is yield curve control similar to what they did with the huge post WW2 debt.

The problem with cutting spending is that nobody will agree to cut spending for their pet project.

You really don't understand how (and why) the Fed works, do you?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

Your real estate agent IS right (surprisingly!).

Assuming you sell your house today and net $500K (not unusual at all), you could put that in a HY savings account and get ~$2K/mo interest, without touching your principal and without any carrying costs. You've just locked in your profit.



I'm sure your argument is going to be, but we need a place to stay! You're right, you do. Now, do the math one more time in terms of hanging on to your house, vs realizing your profits today (assuming you can sell, with today's market) and renting something lower cost (no, it won't be the same kind of house that you're selling, that's stupid) for a while. If you're not willing to do that, that's fine, others will be, because they can do the math as well.

Prices are set at the margin. A few sales in a neighborhood (up or down) set the prices for the whole neighborhood. You want to sell, when nobody's selling, not when everybody's heading for the exit.

Actually, almost no one will be willing to do this, as it is quite risky for effectively no financial benefit.

Explain.

Can't explain, can you?

So you make $25k yearly on a 5% CD with 500K principal.
Simple math.
Uh Oh! Tax time arrives.
Now you have to pay a high tax rate on your $25K interest earned.
Ever heard of something called inflation?

That's why I said...math. I know it's hard, but...

You'd much rather let the value of your current home erode away (Hint: That's what high interest rates do) AND keep paying the carrying costs with ding ding...tax paid dollars. The SALT deduction is only $10K, ONLY your mortgage interest is deductible (unto $750K), not your property taxes, home owners insurance, HOA (if applicable) etc. All of those are paid with post-tax dollars.

You wanna do that? Be my guest.

There's a reason the residential RE market is at a standstill. That's what high interest rates do, they swing the pendulum in favor of savors, vs borrowers, who gain in a low interest rate environment.

You haven't even come close to doing all the math in support of your argument. And I mean all the math... and for a range of future scenarios. Take the most likely... that home prices stagnate nominally for the next five years. Start with that.

And there in lies the problem. If that's your base case...

No need to do any more math.

Show me the breakeven. Do it. For a $1M house. How much does the value have to fall to break even?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

Your real estate agent IS right (surprisingly!).

Assuming you sell your house today and net $500K (not unusual at all), you could put that in a HY savings account and get ~$2K/mo interest, without touching your principal and without any carrying costs. You've just locked in your profit.



I'm sure your argument is going to be, but we need a place to stay! You're right, you do. Now, do the math one more time in terms of hanging on to your house, vs realizing your profits today (assuming you can sell, with today's market) and renting something lower cost (no, it won't be the same kind of house that you're selling, that's stupid) for a while. If you're not willing to do that, that's fine, others will be, because they can do the math as well.

Prices are set at the margin. A few sales in a neighborhood (up or down) set the prices for the whole neighborhood. You want to sell, when nobody's selling, not when everybody's heading for the exit.

Actually, almost no one will be willing to do this, as it is quite risky for effectively no financial benefit.

Explain.

Can't explain, can you?

So you make $25k yearly on a 5% CD with 500K principal.
Simple math.
Uh Oh! Tax time arrives.
Now you have to pay a high tax rate on your $25K interest earned.
Ever heard of something called inflation?

That's why I said...math. I know it's hard, but...

You'd much rather let the value of your current home erode away (Hint: That's what high interest rates do) AND keep paying the carrying costs with ding ding...tax paid dollars. The SALT deduction is only $10K, ONLY your mortgage interest is deductible (unto $750K), not your property taxes, home owners insurance, HOA (if applicable) etc. All of those are paid with post-tax dollars.

You wanna do that? Be my guest.

There's a reason the residential RE market is at a standstill. That's what high interest rates do, they swing the pendulum in favor of savors, vs borrowers, who gain in a low interest rate environment.

You haven't even come close to doing all the math in support of your argument. And I mean all the math... and for a range of future scenarios. Take the most likely... that home prices stagnate nominally for the next five years. Start with that.

And there in lies the problem. If that's your base case...

No need to do any more math.

Show me the breakeven. Do it. For a $1M house. How much does the value have to fall to break even?

I don't even have to do the math.

Whatever your net is going to be on a $1M house (could be $1M), you could rent a very nice home for $4K/mo (after paying tax on the interest income) without touching your principal and zero carrying costs.

Wait for the market to normalize and buy again, if you want. For the foreseeable future interest rates will NOT go down (they can't), in fact they may go up even more. That makes cash even more valuable.

Again, home prices are set at the margin. You don't want to be at the end of the line to sell, you wanna be at the front.

[Anonymous]

Here's a visual as to why the market is so out of whack. I'm sure you guys have seen this (or similar), and if you're a current homeowner (especially someone who bought during the last 3 years), it should make you nervous.

Trends are trends. They always go out of whack..and then normalize.



https://www.visualcapitalist.com/buying-vs-renting-house-in-america/

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

Your real estate agent IS right (surprisingly!).

Assuming you sell your house today and net $500K (not unusual at all), you could put that in a HY savings account and get ~$2K/mo interest, without touching your principal and without any carrying costs. You've just locked in your profit.



I'm sure your argument is going to be, but we need a place to stay! You're right, you do. Now, do the math one more time in terms of hanging on to your house, vs realizing your profits today (assuming you can sell, with today's market) and renting something lower cost (no, it won't be the same kind of house that you're selling, that's stupid) for a while. If you're not willing to do that, that's fine, others will be, because they can do the math as well.

Prices are set at the margin. A few sales in a neighborhood (up or down) set the prices for the whole neighborhood. You want to sell, when nobody's selling, not when everybody's heading for the exit.

Actually, almost no one will be willing to do this, as it is quite risky for effectively no financial benefit.

Explain.

Can't explain, can you?

So you make $25k yearly on a 5% CD with 500K principal.
Simple math.
Uh Oh! Tax time arrives.
Now you have to pay a high tax rate on your $25K interest earned.
Ever heard of something called inflation?

That's why I said...math. I know it's hard, but...

You'd much rather let the value of your current home erode away (Hint: That's what high interest rates do) AND keep paying the carrying costs with ding ding...tax paid dollars. The SALT deduction is only $10K, ONLY your mortgage interest is deductible (unto $750K), not your property taxes, home owners insurance, HOA (if applicable) etc. All of those are paid with post-tax dollars.

You wanna do that? Be my guest.

There's a reason the residential RE market is at a standstill. That's what high interest rates do, they swing the pendulum in favor of savors, vs borrowers, who gain in a low interest rate environment.

You haven't even come close to doing all the math in support of your argument. And I mean all the math... and for a range of future scenarios. Take the most likely... that home prices stagnate nominally for the next five years. Start with that.

And there in lies the problem. If that's your base case...

No need to do any more math.

Show me the breakeven. Do it. For a $1M house. How much does the value have to fall to break even?

I don't even have to do the math.

Whatever your net is going to be on a $1M house (could be $1M), you could rent a very nice home for $4K/mo (after paying tax on the interest income) without touching your principal and zero carrying costs.

Wait for the market to normalize and buy again, if you want. For the foreseeable future interest rates will NOT go down (they can't), in fact they may go up even more. That makes cash even more valuable.

Again, home prices are set at the margin. You don't want to be at the end of the line to sell, you wanna be at the front.

Haha. You’re so full of it. Do the math. What sort of price decline do u need to make your gamble pay off?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

But what if there’s more inflation?

May be, may be not.

The answer to that depends on your evaluation of whether the current (or future) morons in the White House or at the Fed have the will and ability to print more dollars, devaluing them.

Yes = more inflation.
No = deflation.

Our economy is 2/3 dependent on consumer spending. Unless incomes rise (ha!) with (or higher than) inflation, consumer spending WILL go down. That's the recession and deflation part. The rest 1/3 of the economy can keep spending all they want, it won't do zilch.

The government is increasing spending and consumption faster than its subjects are tightening their belts. Directly in contrast to the FED goals. Total dysfunction from the swamp as it stokes WW3 to avoid embarrassment and ridicule as it heads for its prepared bunkers.

They won't be for too long. The bond markets have woken up after...40 years. The govt still has to be able to SELL their paper, and the only buyer of last resort is the Fed, and they...can't/won't be able to buy it and offload it at any sane interest rates. Neither will private/overseas bidders.

The US govt is *ucked as well. They have NO choice but to cut spending. If the current administration won't do it, they'll topple and a different one will. It's a cycle, we've been there before (but so long ago that people have forgotten), and we'll be there again.

There was pain that time, and there will be pain this time.

Why can't the Fed just buy and hold? They already have some trillion on their balance sheet, what's a few trillion more? I think they will have to in order to keep interest expense down.

Or another option is yield curve control similar to what they did with the huge post WW2 debt.

The problem with cutting spending is that nobody will agree to cut spending for their pet project.

You really don't understand how (and why) the Fed works, do you?

[Anonymous]

Anonymous wrote:Here's a visual as to why the market is so out of whack. I'm sure you guys have seen this (or similar), and if you're a current homeowner (especially someone who bought during the last 3 years), it should make you nervous.

Trends are trends. They always go out of whack..and then normalize.



https://www.visualcapitalist.com/buying-vs-renting-house-in-america/

Well if interest rates ever drop, then that would bring the blue line down without necessarily a nominal drop in housing. Anyone who recently purchased could refi.

And why can't rents continue to increase? Last I heard they were having bidding wars for rental properties as well.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

Your real estate agent IS right (surprisingly!).

Assuming you sell your house today and net $500K (not unusual at all), you could put that in a HY savings account and get ~$2K/mo interest, without touching your principal and without any carrying costs. You've just locked in your profit.



I'm sure your argument is going to be, but we need a place to stay! You're right, you do. Now, do the math one more time in terms of hanging on to your house, vs realizing your profits today (assuming you can sell, with today's market) and renting something lower cost (no, it won't be the same kind of house that you're selling, that's stupid) for a while. If you're not willing to do that, that's fine, others will be, because they can do the math as well.

Prices are set at the margin. A few sales in a neighborhood (up or down) set the prices for the whole neighborhood. You want to sell, when nobody's selling, not when everybody's heading for the exit.

Actually, almost no one will be willing to do this, as it is quite risky for effectively no financial benefit.

Explain.

Can't explain, can you?

So you make $25k yearly on a 5% CD with 500K principal.
Simple math.
Uh Oh! Tax time arrives.
Now you have to pay a high tax rate on your $25K interest earned.
Ever heard of something called inflation?

That's why I said...math. I know it's hard, but...

You'd much rather let the value of your current home erode away (Hint: That's what high interest rates do) AND keep paying the carrying costs with ding ding...tax paid dollars. The SALT deduction is only $10K, ONLY your mortgage interest is deductible (unto $750K), not your property taxes, home owners insurance, HOA (if applicable) etc. All of those are paid with post-tax dollars.

You wanna do that? Be my guest.

There's a reason the residential RE market is at a standstill. That's what high interest rates do, they swing the pendulum in favor of savors, vs borrowers, who gain in a low interest rate environment.

You haven't even come close to doing all the math in support of your argument. And I mean all the math... and for a range of future scenarios. Take the most likely... that home prices stagnate nominally for the next five years. Start with that.

And there in lies the problem. If that's your base case...

No need to do any more math.

Show me the breakeven. Do it. For a $1M house. How much does the value have to fall to break even?

I don't even have to do the math.

Whatever your net is going to be on a $1M house (could be $1M), you could rent a very nice home for $4K/mo (after paying tax on the interest income) without touching your principal and zero carrying costs.

Wait for the market to normalize and buy again, if you want. For the foreseeable future interest rates will NOT go down (they can't), in fact they may go up even more. That makes cash even more valuable.

Again, home prices are set at the margin. You don't want to be at the end of the line to sell, you wanna be at the front.

Haha. You’re so full of it. Do the math. What sort of price decline do u need to make your gamble pay off?

Full of...what? Common sense? Sure.

I don't need to forecast a price decline, I can't. What I can see is the value of cash at present, as we speak. And home prices and cash are inversely related. If you can get a higher rate of return by holding cash (which has zero carrying costs) vs housing, which has pretty much the highest carrying cost and the most illiquid market, I'll always prefer cash.

People have forgotten what holding cash looks like (through no fault of their own, the Fed's actions in the last decade and a half made it a non-viable option).

[Anonymous]

Oh, and lemme add.

The ONLY thing and I mean the single biggest ONLY thing going/went for housing is leverage. Where else can you get 1:20 leverage for a normal person? Nowhere.

But leverage works both ways. When it's going up, it's fantastic. When it's going down, your "investment"/money down is wiped out in a heartbeat and you're underwater.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

Your real estate agent IS right (surprisingly!).

Assuming you sell your house today and net $500K (not unusual at all), you could put that in a HY savings account and get ~$2K/mo interest, without touching your principal and without any carrying costs. You've just locked in your profit.



I'm sure your argument is going to be, but we need a place to stay! You're right, you do. Now, do the math one more time in terms of hanging on to your house, vs realizing your profits today (assuming you can sell, with today's market) and renting something lower cost (no, it won't be the same kind of house that you're selling, that's stupid) for a while. If you're not willing to do that, that's fine, others will be, because they can do the math as well.

Prices are set at the margin. A few sales in a neighborhood (up or down) set the prices for the whole neighborhood. You want to sell, when nobody's selling, not when everybody's heading for the exit.

Actually, almost no one will be willing to do this, as it is quite risky for effectively no financial benefit.

Explain.

Can't explain, can you?

So you make $25k yearly on a 5% CD with 500K principal.
Simple math.
Uh Oh! Tax time arrives.
Now you have to pay a high tax rate on your $25K interest earned.
Ever heard of something called inflation?

That's why I said...math. I know it's hard, but...

You'd much rather let the value of your current home erode away (Hint: That's what high interest rates do) AND keep paying the carrying costs with ding ding...tax paid dollars. The SALT deduction is only $10K, ONLY your mortgage interest is deductible (unto $750K), not your property taxes, home owners insurance, HOA (if applicable) etc. All of those are paid with post-tax dollars.

You wanna do that? Be my guest.

There's a reason the residential RE market is at a standstill. That's what high interest rates do, they swing the pendulum in favor of savors, vs borrowers, who gain in a low interest rate environment.

You haven't even come close to doing all the math in support of your argument. And I mean all the math... and for a range of future scenarios. Take the most likely... that home prices stagnate nominally for the next five years. Start with that.

And there in lies the problem. If that's your base case...

No need to do any more math.

Show me the breakeven. Do it. For a $1M house. How much does the value have to fall to break even?

I don't even have to do the math.

Whatever your net is going to be on a $1M house (could be $1M), you could rent a very nice home for $4K/mo (after paying tax on the interest income) without touching your principal and zero carrying costs.

Wait for the market to normalize and buy again, if you want. For the foreseeable future interest rates will NOT go down (they can't), in fact they may go up even more. That makes cash even more valuable.

Again, home prices are set at the margin. You don't want to be at the end of the line to sell, you wanna be at the front.

1m in cash yields around 2900/mo after tax. You'd still have to pay 1100/mo out of pocket to rent, which would probably be similar to carrying costs on the house. Hardly the deal of the century.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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 this is us too. Real estate agent keeps pushing to sell house and take the cash but buying something now is more expensive. Renting a smaller place for more then our carrying costs to wait out the market also seems to not be a good move.

Your real estate agent IS right (surprisingly!).

Assuming you sell your house today and net $500K (not unusual at all), you could put that in a HY savings account and get ~$2K/mo interest, without touching your principal and without any carrying costs. You've just locked in your profit.



I'm sure your argument is going to be, but we need a place to stay! You're right, you do. Now, do the math one more time in terms of hanging on to your house, vs realizing your profits today (assuming you can sell, with today's market) and renting something lower cost (no, it won't be the same kind of house that you're selling, that's stupid) for a while. If you're not willing to do that, that's fine, others will be, because they can do the math as well.

Prices are set at the margin. A few sales in a neighborhood (up or down) set the prices for the whole neighborhood. You want to sell, when nobody's selling, not when everybody's heading for the exit.

Actually, almost no one will be willing to do this, as it is quite risky for effectively no financial benefit.

Explain.

Can't explain, can you?

So you make $25k yearly on a 5% CD with 500K principal.
Simple math.
Uh Oh! Tax time arrives.
Now you have to pay a high tax rate on your $25K interest earned.
Ever heard of something called inflation?

That's why I said...math. I know it's hard, but...

You'd much rather let the value of your current home erode away (Hint: That's what high interest rates do) AND keep paying the carrying costs with ding ding...tax paid dollars. The SALT deduction is only $10K, ONLY your mortgage interest is deductible (unto $750K), not your property taxes, home owners insurance, HOA (if applicable) etc. All of those are paid with post-tax dollars.

You wanna do that? Be my guest.

There's a reason the residential RE market is at a standstill. That's what high interest rates do, they swing the pendulum in favor of savors, vs borrowers, who gain in a low interest rate environment.

You haven't even come close to doing all the math in support of your argument. And I mean all the math... and for a range of future scenarios. Take the most likely... that home prices stagnate nominally for the next five years. Start with that.

And there in lies the problem. If that's your base case...

No need to do any more math.

Show me the breakeven. Do it. For a $1M house. How much does the value have to fall to break even?

I don't even have to do the math.

Whatever your net is going to be on a $1M house (could be $1M), you could rent a very nice home for $4K/mo (after paying tax on the interest income) without touching your principal and zero carrying costs.

Wait for the market to normalize and buy again, if you want. For the foreseeable future interest rates will NOT go down (they can't), in fact they may go up even more. That makes cash even more valuable.

Again, home prices are set at the margin. You don't want to be at the end of the line to sell, you wanna be at the front.

1m in cash yields around 2900/mo after tax. You'd still have to pay 1100/mo out of pocket to rent, which would probably be similar to carrying costs on the house. Hardly the deal of the century.

I…I….I give up. You guys have your heads so far down in the sand…