Moody's says Home prices will fall 20% soon

[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:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:“ : “I’d say if you are a homebuyer, somebody or a young person looking to buy a home, you need a bit of a reset. We need to get back to a place where supply and demand are back together and where inflation is down low again, and mortgage rates are low again.”

Jay Powell - June 2022

"Inflation is down low again" does not mean price decreases! It means that housing prices aren't increasing 5% every 3 months like we saw over the past 2 years. In other words, bringing down the rate of increase (not prices) to a more reasonable level.

Did you miss the next speech when he said housing needed to go through a “difficult correction” so that homes could be affordable again? And where, during the same speech, he made it clear that unemployment needed to rise and wages cannot go up anymore?

If incomes aren’t going up, and interest rates are going up, how exactly do you think JPow is expecting to see houses become affordable again?

Nobody decided to "correct" home prices and pull a lever. We are at record inflation levels, causing fed to raise rates, causing mortgage rates to increase, causing home prices to drop.

Read Powell’s speech. He explicitly says house prices are detached from fundamentals and need to go through a difficult correction so that people can afford houses again. https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220921.pdf

And they might in some parts of the US. Some of the housing increases in some parts of the US were not justified, and just as with 2008, they will be impacted by the Fed’s actions more than others.

But you are on DCUM. The presumption is that most people here aren’t talking about real estate generally, they are talking about DC area real estate. So we are effectively talking past each other if you fail to understand the specific market that dominates discussion on this board. As with the money board, there seem to be a lot of posters recently who discovered DCUM and post without any comprehension that most of us actually live in DC.

Lol nothing local about interest rates.

I don’t remember Powell saying there needs to be a housing correction, EXCEPT in DCUM land, that place is right on point.

Uh. Interest rates aren’t the only factor in real estate pricing.

Where are you located? Let’s talk about that area.

Of course not, by why do you think anywhere in the DC area is so special that people will choose to pay 50% more today for the same house they could have bought 6 months ago? Not to mention the affordability component. DC’s “wealth” is highly tied to income vs assets (as in wealthy NYC, SF, etc). “Wealthy” people in the DMV are mostly workaday white collar professionals like lawyers, consultants etc who very much depend on their yearly income which is not going up and which limits their budgets. No big law lawyer is going to decide to much less be able to afford paying $3 million at 7% for the same house they could have gotten at 3.5% in March.

For upper tier, people are buying below their means. A % more or less isn’t a huge deal.

For middle tier, there is infinite number of buyers.

You don’t seem very familiar with DC.

So where are you?

I don’t agree with what you wrote, but assuming it’s true, how is DC different than anywhere else? Why will people in the DMV not care that interest rates doubled in six months and continue buying at historically high and already unaffordable prices?

People will care. But not as much as other areas. Market will soften. Prices will flatten / lower a bit. But nothing like 2008. Which wasn’t that bad here.

Where are you? Florida?

You still aren’t giving any reasons why. Why would interest rates affect the DMV less than other areas?

And 2008 was bad here, you’re delusional.

Okay but it really wasn’t. The suburbs struggled, possibly that’s what you mean? but DC? Nope

Ha, DC prices didn’t recover to their 2006 peak until December 2020. Fourteen years, baby. https://fred.stlouisfed.org/series/WDXRSA

Incorrect. https://fred.stlouisfed.org/series/DCSTHPI

It “only” took 6 years for prices to recover in DC. That is not “immune.”

[Anonymous]

Anonymous wrote:For all those saying the DC area is immune from real estate downturns, the Zillow forecast shows the DC area losing more value than most of the South. That makes sense when you look at population trends.

https://apple.news/A6kmfo70XQTeYzHp0P6NGrg

https://www.axios.com/2022/05/30/us-population-growth-arizona-texas-florida

Did you look at the scale? The DC area is say -2% and “the south” is +5%? What’s the margin of error for these Zestimates? +/-10%?

[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:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:“ : “I’d say if you are a homebuyer, somebody or a young person looking to buy a home, you need a bit of a reset. We need to get back to a place where supply and demand are back together and where inflation is down low again, and mortgage rates are low again.”

Jay Powell - June 2022

"Inflation is down low again" does not mean price decreases! It means that housing prices aren't increasing 5% every 3 months like we saw over the past 2 years. In other words, bringing down the rate of increase (not prices) to a more reasonable level.

Did you miss the next speech when he said housing needed to go through a “difficult correction” so that homes could be affordable again? And where, during the same speech, he made it clear that unemployment needed to rise and wages cannot go up anymore?

If incomes aren’t going up, and interest rates are going up, how exactly do you think JPow is expecting to see houses become affordable again?

Nobody decided to "correct" home prices and pull a lever. We are at record inflation levels, causing fed to raise rates, causing mortgage rates to increase, causing home prices to drop.

Read Powell’s speech. He explicitly says house prices are detached from fundamentals and need to go through a difficult correction so that people can afford houses again. https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220921.pdf

And they might in some parts of the US. Some of the housing increases in some parts of the US were not justified, and just as with 2008, they will be impacted by the Fed’s actions more than others.

But you are on DCUM. The presumption is that most people here aren’t talking about real estate generally, they are talking about DC area real estate. So we are effectively talking past each other if you fail to understand the specific market that dominates discussion on this board. As with the money board, there seem to be a lot of posters recently who discovered DCUM and post without any comprehension that most of us actually live in DC.

Lol nothing local about interest rates.

I don’t remember Powell saying there needs to be a housing correction, EXCEPT in DCUM land, that place is right on point.

Uh. Interest rates aren’t the only factor in real estate pricing.

Where are you located? Let’s talk about that area.

Of course not, by why do you think anywhere in the DC area is so special that people will choose to pay 50% more today for the same house they could have bought 6 months ago? Not to mention the affordability component. DC’s “wealth” is highly tied to income vs assets (as in wealthy NYC, SF, etc). “Wealthy” people in the DMV are mostly workaday white collar professionals like lawyers, consultants etc who very much depend on their yearly income which is not going up and which limits their budgets. No big law lawyer is going to decide to much less be able to afford paying $3 million at 7% for the same house they could have gotten at 3.5% in March.

For upper tier, people are buying below their means. A % more or less isn’t a huge deal.

For middle tier, there is infinite number of buyers.

You don’t seem very familiar with DC.

So where are you?

I don’t agree with what you wrote, but assuming it’s true, how is DC different than anywhere else? Why will people in the DMV not care that interest rates doubled in six months and continue buying at historically high and already unaffordable prices?

People will care. But not as much as other areas. Market will soften. Prices will flatten / lower a bit. But nothing like 2008. Which wasn’t that bad here.

Where are you? Florida?

You still aren’t giving any reasons why. Why would interest rates affect the DMV less than other areas?

And 2008 was bad here, you’re delusional.

Okay but it really wasn’t. The suburbs struggled, possibly that’s what you mean? but DC? Nope

Ha, DC prices didn’t recover to their 2006 peak until December 2020. Fourteen years, baby. https://fred.stlouisfed.org/series/WDXRSA

Incorrect. https://fred.stlouisfed.org/series/DCSTHPI

It “only” took 6 years for prices to recover in DC. That is not “immune.”

Everyone knows that you have to hold real estate for 5-10 years to make it a worthwhile choice. So yeah, immune unless you’re an idiot.

[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:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:“ : “I’d say if you are a homebuyer, somebody or a young person looking to buy a home, you need a bit of a reset. We need to get back to a place where supply and demand are back together and where inflation is down low again, and mortgage rates are low again.”

Jay Powell - June 2022

"Inflation is down low again" does not mean price decreases! It means that housing prices aren't increasing 5% every 3 months like we saw over the past 2 years. In other words, bringing down the rate of increase (not prices) to a more reasonable level.

Did you miss the next speech when he said housing needed to go through a “difficult correction” so that homes could be affordable again? And where, during the same speech, he made it clear that unemployment needed to rise and wages cannot go up anymore?

If incomes aren’t going up, and interest rates are going up, how exactly do you think JPow is expecting to see houses become affordable again?

Nobody decided to "correct" home prices and pull a lever. We are at record inflation levels, causing fed to raise rates, causing mortgage rates to increase, causing home prices to drop.

Read Powell’s speech. He explicitly says house prices are detached from fundamentals and need to go through a difficult correction so that people can afford houses again. https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220921.pdf

And they might in some parts of the US. Some of the housing increases in some parts of the US were not justified, and just as with 2008, they will be impacted by the Fed’s actions more than others.

But you are on DCUM. The presumption is that most people here aren’t talking about real estate generally, they are talking about DC area real estate. So we are effectively talking past each other if you fail to understand the specific market that dominates discussion on this board. As with the money board, there seem to be a lot of posters recently who discovered DCUM and post without any comprehension that most of us actually live in DC.

Lol nothing local about interest rates.

I don’t remember Powell saying there needs to be a housing correction, EXCEPT in DCUM land, that place is right on point.

Uh. Interest rates aren’t the only factor in real estate pricing.

Where are you located? Let’s talk about that area.

Of course not, by why do you think anywhere in the DC area is so special that people will choose to pay 50% more today for the same house they could have bought 6 months ago? Not to mention the affordability component. DC’s “wealth” is highly tied to income vs assets (as in wealthy NYC, SF, etc). “Wealthy” people in the DMV are mostly workaday white collar professionals like lawyers, consultants etc who very much depend on their yearly income which is not going up and which limits their budgets. No big law lawyer is going to decide to much less be able to afford paying $3 million at 7% for the same house they could have gotten at 3.5% in March.

For upper tier, people are buying below their means. A % more or less isn’t a huge deal.

For middle tier, there is infinite number of buyers.

You don’t seem very familiar with DC.

So where are you?

I don’t agree with what you wrote, but assuming it’s true, how is DC different than anywhere else? Why will people in the DMV not care that interest rates doubled in six months and continue buying at historically high and already unaffordable prices?

People will care. But not as much as other areas. Market will soften. Prices will flatten / lower a bit. But nothing like 2008. Which wasn’t that bad here.

Where are you? Florida?

You still aren’t giving any reasons why. Why would interest rates affect the DMV less than other areas?

And 2008 was bad here, you’re delusional.

Okay but it really wasn’t. The suburbs struggled, possibly that’s what you mean? but DC? Nope

Ha, DC prices didn’t recover to their 2006 peak until December 2020. Fourteen years, baby. https://fred.stlouisfed.org/series/WDXRSA

Incorrect. https://fred.stlouisfed.org/series/DCSTHPI

It “only” took 6 years for prices to recover in DC. That is not “immune.”

Everyone knows that you have to hold real estate for 5-10 years to make it a worthwhile choice. So yeah, immune unless you’re an idiot.

Also no investment is 100% foolproof, but DC real estate is a pretty safe bet.

[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:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:“ : “I’d say if you are a homebuyer, somebody or a young person looking to buy a home, you need a bit of a reset. We need to get back to a place where supply and demand are back together and where inflation is down low again, and mortgage rates are low again.”

Jay Powell - June 2022

"Inflation is down low again" does not mean price decreases! It means that housing prices aren't increasing 5% every 3 months like we saw over the past 2 years. In other words, bringing down the rate of increase (not prices) to a more reasonable level.

Did you miss the next speech when he said housing needed to go through a “difficult correction” so that homes could be affordable again? And where, during the same speech, he made it clear that unemployment needed to rise and wages cannot go up anymore?

If incomes aren’t going up, and interest rates are going up, how exactly do you think JPow is expecting to see houses become affordable again?

Nobody decided to "correct" home prices and pull a lever. We are at record inflation levels, causing fed to raise rates, causing mortgage rates to increase, causing home prices to drop.

Read Powell’s speech. He explicitly says house prices are detached from fundamentals and need to go through a difficult correction so that people can afford houses again. https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220921.pdf

And they might in some parts of the US. Some of the housing increases in some parts of the US were not justified, and just as with 2008, they will be impacted by the Fed’s actions more than others.

But you are on DCUM. The presumption is that most people here aren’t talking about real estate generally, they are talking about DC area real estate. So we are effectively talking past each other if you fail to understand the specific market that dominates discussion on this board. As with the money board, there seem to be a lot of posters recently who discovered DCUM and post without any comprehension that most of us actually live in DC.

Lol nothing local about interest rates.

I don’t remember Powell saying there needs to be a housing correction, EXCEPT in DCUM land, that place is right on point.

Uh. Interest rates aren’t the only factor in real estate pricing.

Where are you located? Let’s talk about that area.

Of course not, by why do you think anywhere in the DC area is so special that people will choose to pay 50% more today for the same house they could have bought 6 months ago? Not to mention the affordability component. DC’s “wealth” is highly tied to income vs assets (as in wealthy NYC, SF, etc). “Wealthy” people in the DMV are mostly workaday white collar professionals like lawyers, consultants etc who very much depend on their yearly income which is not going up and which limits their budgets. No big law lawyer is going to decide to much less be able to afford paying $3 million at 7% for the same house they could have gotten at 3.5% in March.

For upper tier, people are buying below their means. A % more or less isn’t a huge deal.

For middle tier, there is infinite number of buyers.

You don’t seem very familiar with DC.

So where are you?

I don’t agree with what you wrote, but assuming it’s true, how is DC different than anywhere else? Why will people in the DMV not care that interest rates doubled in six months and continue buying at historically high and already unaffordable prices?

People will care. But not as much as other areas. Market will soften. Prices will flatten / lower a bit. But nothing like 2008. Which wasn’t that bad here.

Where are you? Florida?

You still aren’t giving any reasons why. Why would interest rates affect the DMV less than other areas?

And 2008 was bad here, you’re delusional.

Okay but it really wasn’t. The suburbs struggled, possibly that’s what you mean? but DC? Nope

Ha, DC prices didn’t recover to their 2006 peak until December 2020. Fourteen years, baby. https://fred.stlouisfed.org/series/WDXRSA

Incorrect. https://fred.stlouisfed.org/series/DCSTHPI

It “only” took 6 years for prices to recover in DC. That is not “immune.”

Who said “immune”?

5-6 years for everything. Even condos and crappy homes in crappy locations. As you drill down to look at desirable counties, the dip flattens out and gets shorter.

[Anonymous]

It has been said many times on multiple threads…these massive price drops all the Chicken Littles are crying for, the calculations of what a payment is now versus what it was at 3% for the same price and how sellers HAVE to adjust their price. That assumes sellers will willingly choose to sell their house during this time and accept that price level just because buyers want it. No. Sellers will only put their house on the market over the period if they absolutely have to. Otherwise they’ll sit and wait, renovate, etc. Sellers can’t afford to trade up, laterally move, or downsize either because of the interest rates, just like every other buyer. So they’ll wait. It’s already happening with greatly reduced inventory.

Sideliners are realizing they should have jumped on the deals sellers were giving them at 5%. Exactly when everyone else on this board was advising them to. Now I see repeated buyer comments of “if it can just get back to 5%, I’m going ahead and entering the market.” Because who knows when they’ll be down to 5% again now. Which is why experts repeatedly advise DON’T TRY TO TIME THE MARKET.

[Anonymous]

Anonymous wrote:It has been said many times on multiple threads…these massive price drops all the Chicken Littles are crying for, the calculations of what a payment is now versus what it was at 3% for the same price and how sellers HAVE to adjust their price. That assumes sellers will willingly choose to sell their house during this time and accept that price level just because buyers want it. No. Sellers will only put their house on the market over the period if they absolutely have to. Otherwise they’ll sit and wait, renovate, etc. Sellers can’t afford to trade up, laterally move, or downsize either because of the interest rates, just like every other buyer. So they’ll wait. It’s already happening with greatly reduced inventory.

Sideliners are realizing they should have jumped on the deals sellers were giving them at 5%. Exactly when everyone else on this board was advising them to. Now I see repeated buyer comments of “if it can just get back to 5%, I’m going ahead and entering the market.” Because who knows when they’ll be down to 5% again now. Which is why experts repeatedly advise DON’T TRY TO TIME THE MARKET.

Agreed. Just because a house is “overpriced” it doesn’t necessarily mean that the price will eventually come down. We shouldn’t assume that every seller is desperate.

[Anonymous]

Powell said that we need to balance supply & demand. There is a limited supply - more so if rates continue to increase and inventory shrinks. How to cut down on demand then? Increase cost of mortgages via interest rates. Lowering home prices would not decrease demand.

[Anonymous]

Anonymous wrote:It has been said many times on multiple threads…these massive price drops all the Chicken Littles are crying for, the calculations of what a payment is now versus what it was at 3% for the same price and how sellers HAVE to adjust their price. That assumes sellers will willingly choose to sell their house during this time and accept that price level just because buyers want it. No. Sellers will only put their house on the market over the period if they absolutely have to. Otherwise they’ll sit and wait, renovate, etc. Sellers can’t afford to trade up, laterally move, or downsize either because of the interest rates, just like every other buyer. So they’ll wait. It’s already happening with greatly reduced inventory.

Sideliners are realizing they should have jumped on the deals sellers were giving them at 5%. Exactly when everyone else on this board was advising them to. Now I see repeated buyer comments of “if it can just get back to 5%, I’m going ahead and entering the market.” Because who knows when they’ll be down to 5% again now. Which is why experts repeatedly advise DON’T TRY TO TIME THE MARKET.

DC is a transient area. A lot of people get transferred in and out and have no choice in having to sell.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It has been said many times on multiple threads…these massive price drops all the Chicken Littles are crying for, the calculations of what a payment is now versus what it was at 3% for the same price and how sellers HAVE to adjust their price. That assumes sellers will willingly choose to sell their house during this time and accept that price level just because buyers want it. No. Sellers will only put their house on the market over the period if they absolutely have to. Otherwise they’ll sit and wait, renovate, etc. Sellers can’t afford to trade up, laterally move, or downsize either because of the interest rates, just like every other buyer. So they’ll wait. It’s already happening with greatly reduced inventory.

Sideliners are realizing they should have jumped on the deals sellers were giving them at 5%. Exactly when everyone else on this board was advising them to. Now I see repeated buyer comments of “if it can just get back to 5%, I’m going ahead and entering the market.” Because who knows when they’ll be down to 5% again now. Which is why experts repeatedly advise DON’T TRY TO TIME THE MARKET.

DC is a transient area. A lot of people get transferred in and out and have no choice in having to sell.

This. Also some of us have so much equity that we might sell even though we'd make less profit than before. We have a beach house that we're deciding whether to sell or rent out. We can get less for it now than we could Spring 2022. But we'd still make a profit. Unless the seller bought Late 2020 - 2022, they're probably still going to make a profit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It has been said many times on multiple threads…these massive price drops all the Chicken Littles are crying for, the calculations of what a payment is now versus what it was at 3% for the same price and how sellers HAVE to adjust their price. That assumes sellers will willingly choose to sell their house during this time and accept that price level just because buyers want it. No. Sellers will only put their house on the market over the period if they absolutely have to. Otherwise they’ll sit and wait, renovate, etc. Sellers can’t afford to trade up, laterally move, or downsize either because of the interest rates, just like every other buyer. So they’ll wait. It’s already happening with greatly reduced inventory.

Sideliners are realizing they should have jumped on the deals sellers were giving them at 5%. Exactly when everyone else on this board was advising them to. Now I see repeated buyer comments of “if it can just get back to 5%, I’m going ahead and entering the market.” Because who knows when they’ll be down to 5% again now. Which is why experts repeatedly advise DON’T TRY TO TIME THE MARKET.

DC is a transient area. A lot of people get transferred in and out and have no choice in having to sell.

This. Also some of us have so much equity that we might sell even though we'd make less profit than before. We have a beach house that we're deciding whether to sell or rent out. We can get less for it now than we could Spring 2022. But we'd still make a profit. Unless the seller bought Late 2020 - 2022, they're probably still going to make a profit.

I think back to the 2008 "crash". My townhouse (Anne Arundel County) would've sold over 300k at the height. But I didn't need to move then. By the time I had to move for a job - it was 2011 and I got around 200k for it. That said - I also bought in 2011 so I bought for a lower price too. My point is - sellers may not sell right now. But eventually they will again.

[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:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:“ : “I’d say if you are a homebuyer, somebody or a young person looking to buy a home, you need a bit of a reset. We need to get back to a place where supply and demand are back together and where inflation is down low again, and mortgage rates are low again.”

Jay Powell - June 2022

"Inflation is down low again" does not mean price decreases! It means that housing prices aren't increasing 5% every 3 months like we saw over the past 2 years. In other words, bringing down the rate of increase (not prices) to a more reasonable level.

Did you miss the next speech when he said housing needed to go through a “difficult correction” so that homes could be affordable again? And where, during the same speech, he made it clear that unemployment needed to rise and wages cannot go up anymore?

If incomes aren’t going up, and interest rates are going up, how exactly do you think JPow is expecting to see houses become affordable again?

Nobody decided to "correct" home prices and pull a lever. We are at record inflation levels, causing fed to raise rates, causing mortgage rates to increase, causing home prices to drop.

Read Powell’s speech. He explicitly says house prices are detached from fundamentals and need to go through a difficult correction so that people can afford houses again. https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220921.pdf

And they might in some parts of the US. Some of the housing increases in some parts of the US were not justified, and just as with 2008, they will be impacted by the Fed’s actions more than others.

But you are on DCUM. The presumption is that most people here aren’t talking about real estate generally, they are talking about DC area real estate. So we are effectively talking past each other if you fail to understand the specific market that dominates discussion on this board. As with the money board, there seem to be a lot of posters recently who discovered DCUM and post without any comprehension that most of us actually live in DC.

Lol nothing local about interest rates.

I don’t remember Powell saying there needs to be a housing correction, EXCEPT in DCUM land, that place is right on point.

Uh. Interest rates aren’t the only factor in real estate pricing.

Where are you located? Let’s talk about that area.

Of course not, by why do you think anywhere in the DC area is so special that people will choose to pay 50% more today for the same house they could have bought 6 months ago? Not to mention the affordability component. DC’s “wealth” is highly tied to income vs assets (as in wealthy NYC, SF, etc). “Wealthy” people in the DMV are mostly workaday white collar professionals like lawyers, consultants etc who very much depend on their yearly income which is not going up and which limits their budgets. No big law lawyer is going to decide to much less be able to afford paying $3 million at 7% for the same house they could have gotten at 3.5% in March.

For upper tier, people are buying below their means. A % more or less isn’t a huge deal.

For middle tier, there is infinite number of buyers.

You don’t seem very familiar with DC.

So where are you?

I don’t agree with what you wrote, but assuming it’s true, how is DC different than anywhere else? Why will people in the DMV not care that interest rates doubled in six months and continue buying at historically high and already unaffordable prices?

People will care. But not as much as other areas. Market will soften. Prices will flatten / lower a bit. But nothing like 2008. Which wasn’t that bad here.

Where are you? Florida?

You still aren’t giving any reasons why. Why would interest rates affect the DMV less than other areas?

And 2008 was bad here, you’re delusional.

Okay but it really wasn’t. The suburbs struggled, possibly that’s what you mean? but DC? Nope

Ha, DC prices didn’t recover to their 2006 peak until December 2020. Fourteen years, baby. https://fred.stlouisfed.org/series/WDXRSA

Incorrect. https://fred.stlouisfed.org/series/DCSTHPI

Case Schiller is the gold standard, but you do realize the graph you posted shoes a big dip too, right?

[Anonymous]

Selling in a weak park is ALWAYS smart if trading up.

Your 400k home loses 20 percent you sell for $320k

Your 1.5 originally priced dream home loses 20 percent or only $1.2 million.

So you lose 80k one hint but save 300k next house

[Anonymous]

Anonymous wrote:Selling in a weak park is ALWAYS smart if trading up.

Your 400k home loses 20 percent you sell for $320k

Your 1.5 originally priced dream home loses 20 percent or only $1.2 million.

So you lose 80k one hint but save 300k next house

Ok, let's assume you owned the first house outright and you will use the entire proceeds (ignoring any transaction costs) as a downpayment for your new house.

So in the first case you will have a mortgage of 1.1mil and at a 3%rate your monthly payment will be about 4600
In the second case you will have a mortgage of 880k, but your rate will be 6% with a monthly payment of 5200

Over the first ten years of the loan you will have spent about 300k on interest in the first case while repaying 270k of the loan.
In the second case you would have spent 500k of interest while only repaying about 150k of the loan over the same period.

Still looks like a win to you?

[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:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:“ : “I’d say if you are a homebuyer, somebody or a young person looking to buy a home, you need a bit of a reset. We need to get back to a place where supply and demand are back together and where inflation is down low again, and mortgage rates are low again.”

Jay Powell - June 2022

"Inflation is down low again" does not mean price decreases! It means that housing prices aren't increasing 5% every 3 months like we saw over the past 2 years. In other words, bringing down the rate of increase (not prices) to a more reasonable level.

Did you miss the next speech when he said housing needed to go through a “difficult correction” so that homes could be affordable again? And where, during the same speech, he made it clear that unemployment needed to rise and wages cannot go up anymore?

If incomes aren’t going up, and interest rates are going up, how exactly do you think JPow is expecting to see houses become affordable again?

Nobody decided to "correct" home prices and pull a lever. We are at record inflation levels, causing fed to raise rates, causing mortgage rates to increase, causing home prices to drop.

Read Powell’s speech. He explicitly says house prices are detached from fundamentals and need to go through a difficult correction so that people can afford houses again. https://www.federalreserve.gov/mediacenter/files/FOMCpresconf20220921.pdf

And they might in some parts of the US. Some of the housing increases in some parts of the US were not justified, and just as with 2008, they will be impacted by the Fed’s actions more than others.

But you are on DCUM. The presumption is that most people here aren’t talking about real estate generally, they are talking about DC area real estate. So we are effectively talking past each other if you fail to understand the specific market that dominates discussion on this board. As with the money board, there seem to be a lot of posters recently who discovered DCUM and post without any comprehension that most of us actually live in DC.

Lol nothing local about interest rates.

I don’t remember Powell saying there needs to be a housing correction, EXCEPT in DCUM land, that place is right on point.

Uh. Interest rates aren’t the only factor in real estate pricing.

Where are you located? Let’s talk about that area.

Of course not, by why do you think anywhere in the DC area is so special that people will choose to pay 50% more today for the same house they could have bought 6 months ago? Not to mention the affordability component. DC’s “wealth” is highly tied to income vs assets (as in wealthy NYC, SF, etc). “Wealthy” people in the DMV are mostly workaday white collar professionals like lawyers, consultants etc who very much depend on their yearly income which is not going up and which limits their budgets. No big law lawyer is going to decide to much less be able to afford paying $3 million at 7% for the same house they could have gotten at 3.5% in March.

For upper tier, people are buying below their means. A % more or less isn’t a huge deal.

For middle tier, there is infinite number of buyers.

You don’t seem very familiar with DC.

So where are you?

I don’t agree with what you wrote, but assuming it’s true, how is DC different than anywhere else? Why will people in the DMV not care that interest rates doubled in six months and continue buying at historically high and already unaffordable prices?

People will care. But not as much as other areas. Market will soften. Prices will flatten / lower a bit. But nothing like 2008. Which wasn’t that bad here.

Where are you? Florida?

You still aren’t giving any reasons why. Why would interest rates affect the DMV less than other areas?

And 2008 was bad here, you’re delusional.

Okay but it really wasn’t. The suburbs struggled, possibly that’s what you mean? but DC? Nope

Ha, DC prices didn’t recover to their 2006 peak until December 2020. Fourteen years, baby. https://fred.stlouisfed.org/series/WDXRSA

Incorrect. https://fred.stlouisfed.org/series/DCSTHPI

My
It “only” took 6 years for prices to recover in DC. That is not “immune.”

Everyone knows that you have to hold real estate for 5-10 years to make it a worthwhile choice. So yeah, immune unless you’re an idiot.

No, that’s just for you to break even with normal appreciation given transaction costs. If prices go down, it’s going to take you a lot longer than 5 years just to get you back to where you started.