Why don’t people understand that low rates work against them?

[Anonymous]

If you could buy a $1,000,000 million house at 4%, with a monthly payment of about $4,700 per month, when the rates hit 3% the price goes promptly to 1,250,000, with a monthly payment of roughly $5,300.

So your principal is higher, and your payment, all in the name of lower rates.

https://www.calculator.net/payment-calculator.html

[Anonymous]

How are you calculating that increase in price as being directly related to rates?

[Anonymous]

Unless I already own and refinance.

[Anonymous]

Yeah this just isn't true.

[Anonymous]

Huh? The price goes "promptly" to a certain number?

[Anonymous]

Price appreciation has been strong over the last year, but nowhere near 25% strong in the aggregate. You're gonna need a cite if you want to convince anyone that prices appreciate so much that monthly payments actually increase. I don't buy that for a second.

Although I do think it's fair to say that people should be less nervous to buy when interest rates are high. Refinancing is easy, after all.

[Anonymous]

Mmmm, have you been following the market?

[Anonymous]

Anonymous wrote:If you could buy a $1,000,000 million house at 4%, with a monthly payment of about $4,700 per month, when the rates hit 3% the price goes promptly to 1,250,000, with a monthly payment of roughly $5,300.

So your principal is higher, and your payment, all in the name of lower rates.

https://www.calculator.net/payment-calculator.html

If you can afford $4700 per month at 4% that means you can afford $4700 at any rate. Your $4700 affordability is linked to you job/salary/income source and not to rate. But yes, if rate does go down from 4 to 3%, given the same $4700 affordability, over time (and not instantly) priced would slowly creep up ......assuming the unemployment rate and desirably to live in an area is still the same.

[Anonymous]

Just not true. Interest rates went down way faster than the prices went up. Especially in less-hot markets.

[Anonymous]

Homes under 1 million in the Dc area were selling for even 200k over asking price. That happened in less than 6 months. Prices have been seeing crazy appreciation in the last year. People blame covid. Rates are the culprit.

[Anonymous]

Interesting microecon problem, kid

[Anonymous]

Anonymous wrote:Homes under 1 million in the Dc area were selling for even 200k over asking price. That happened in less than 6 months. Prices have been seeing crazy appreciation in the last year. People blame covid. Rates are the culprit.

Causation vs Correlation, my friend. You're ignoring the tight supply due to people not wanting to move in a pandemic combined with the sudden change in preference trending towards more space and blaming it all on the rate. It's not solely because of the rates.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Homes under 1 million in the Dc area were selling for even 200k over asking price. That happened in less than 6 months. Prices have been seeing crazy appreciation in the last year. People blame covid. Rates are the culprit.

Causation vs Correlation, my friend. You're ignoring the tight supply due to people not wanting to move in a pandemic combined with the sudden change in preference trending towards more space and blaming it all on the rate. It's not solely because of the rates.

People are waiting it out because they think the prices won’t come down. They’re betting that they can sell better later.

People haven’t stopped traveling or doing other things. Why would covid stop them only from selling homes?

[Anonymous]

Anonymous wrote:Interesting microecon problem, kid

Interest rates are a macroeconomic issue, adult!

[Anonymous]

what is even happening