Do you think home prices and interest rates will come down?

[gretchenindisguise]

I was just playing with mortgage calculators based on current prices and interest rates and I don't understand how anyone is buying right now.

Do you think they'll come down?

[sarahsays]

I'm not sure if they will come down but I bought right now (well last fall) because the rental market in my area is crazy and it is cheaper for me to pay a mortgage, even with the current prices and rates, than it was to rent.

[gummybear]

It HAS to right?
I am thinking about training to be a mortgage broker so I can be ready to pounce when interest rates go down and everyone refinances.

[Gato]

My college BFF is in the affordable housing credit space and he says the things that are making housing prices rise are not going away. A shortage of materials, a shortage of labor, local building restrictions—I know there are more but I’ve forgotten. Anyway it’s a massive cluster of badness.

I don’t know about interest rates. I do know they were unnaturally low for the past ten years, so I wouldn’t count on those ever coming back.

[loira]

I think interest rates will eventually come down in Canada, but no to the house prices. There's a lot of talk right now about a Canadian housing bubble but I don't think it's going to pop anytime soon.

[goldengirlz]

I was just reading some articles about this. The tl;dr is that interest rates will probably remain where they are for now, but because inventory is still low, home prices aren’t declining as much as you’d expect (although they have declined.) You can also blame the Baby Boomers who are selling their houses in more expensive metros and retiring to cheaper locations, with cash.

Prices have definitely come down in my market, but we were talking to a realtor at an open house just yesterday and he mentioned that the stock market recovery has meant people have more cash to spend. (Of course, I take anything realtors tell us with a grain of salt.) For better or worse, I think this IS the housing market dip.

[goldengirlz]

Jul 10, 2023 15:40:29 GMT -5 gummybear said:

It HAS to right?
I am thinking about training to be a mortgage broker so I can be ready to pounce when interest rates go down and everyone refinances.

I mean, they don’t HAVE to come down. We were spoiled with historically low interest rates because we came out of a historic recession, but that was a blip in history if you look at the rates our parents and grandparents paid. Now we have persistently high inflation and the Fed won’t lower rates until that stabilizes.

[starburst604]

Jul 10, 2023 15:50:10 GMT -5 goldengirlz said:

Jul 10, 2023 15:40:29 GMT -5 gummybear said:

It HAS to right?
I am thinking about training to be a mortgage broker so I can be ready to pounce when interest rates go down and everyone refinances.

I mean, they don’t HAVE to come down. We were spoiled with historically low interest rates because we came out of a historic recession, but that was a blip in history if you look at the rates our parents and grandparents paid. Now we have persistently high inflation and the Fed won’t lower rates until that stabilizes.

This is what I keep reminding myself since we just sold and bought last month. Yes, these rates seem incredibly high in comparison to the last handful of years, but those weren't really normal. If they even come down a point in the next handful of years we'll probably refinance and could probably go from a 30 to a 20 with a similar payment to what we have now. 

[TR]

Jul 10, 2023 15:40:29 GMT -5 gummybear said:

It HAS to right?
I am thinking about training to be a mortgage broker so I can be ready to pounce when interest rates go down and everyone refinances.

Become a mobile notary instead lol probably faster and less work, but fairly good $$$

[Jalapeñomel]

I was just looking at this yesterday, because we have PMI but will hit the 80% this year.

I’m still unsure how it works, as I’ve gotten conflicting info, but if I have to refinance to get rid of the PMI, it will be cheaper for me to keep the PMI and my 1.9% interest rate.

Also, I was talking to my parents who are considering downsizing and my SIL was like, this market will make VA loans so much more attractive, and I’m like, huh? (They believe they’ll be able to buy any house they want with a VA loan when they return to the states)

[ohgillian]

No, I’m guessing probably not.

[dirtyred]

Jul 10, 2023 15:57:14 GMT -5 starburst604 said:

Jul 10, 2023 15:50:10 GMT -5 goldengirlz said:

I mean, they don’t HAVE to come down. We were spoiled with historically low interest rates because we came out of a historic recession, but that was a blip in history if you look at the rates our parents and grandparents paid. Now we have persistently high inflation and the Fed won’t lower rates until that stabilizes.

This is what I keep reminding myself since we just sold and bought last month. Yes, these rates seem incredibly high in comparison to the last handful of years, but those weren't really normal. If they even come down a point in the next handful of years we'll probably refinance and could probably go from a 30 to a 20 with a similar payment to what we have now. 

As an old, I remember mortgage interest rates in the 16-17% range in the 1980s. When I bought my first house, my interest rate was 10%. They may come down a bit at some point, but the days of 2.75% are long gone.

[plutosmoon]

No, not anytime soon in my market. Investors are buying them up, or already own them, and holding them to keep inventory low. I have a sizable downpayment and above average income for my area and have been outbid on my last 4 offers, at least one was a cash buyer. A lot of people from NYC and Boston are moving here with remote jobs and big city wages, driving up prices. There are also a lot of second home buyers who have traditionally gone to south county, but are priced out and instead coming to our aging mill city for it's gritty art vibe. Interest rates are high, but 7% isn't unheard of in my home buying time, I bought my first house in 2007 with a 6.625 interest rate. We've just been spoiled for a long time by low rates and come to expect them, mortgages can always be refinanced, so I'm not too worried there. It sucks, but I don't see things changing any time soon.

[cjcouple]

I feel like something has to give.

Between housing/rent, cars, food, gas and utilities and everything going up? I feel like people are going to start defaulting on their mortgages. I have no proof of this to back me up, just my gut telling me its not sustainable.

[mcsangel2]

I get how anyone under 40ish is probably horrified by current interest rates, but....dude, these rates are actually normal and kind of pretty good.

I think there has been/may be more of *slight* price declines, but not much.

We are never, ever going to see the ridiculously low interest rates of the last 10 years ever again in our lifetimes.

[brooke77]

I’m watching this closely because we are set to close on our house in the next 90ish days. I do not think housing prices will decrease and interest rates probably won’t decrease until 2024. Even then, it will probably be modest decreases.

[Velar Fricative]

Jul 10, 2023 15:40:29 GMT -5 gummybear said:

It HAS to right?
I am thinking about training to be a mortgage broker so I can be ready to pounce when interest rates go down and everyone refinances.

I would have thought so, but about 40% of buyers in my ZIP are cash buyers. I live in NYC so I have no idea where that cash money is coming from lol. Then the rest appear to be first-time homebuyers who obviously aren’t giving up old <3% mortgage rates (but they’re either wealthy or getting DP help from family).

I have given up predicting anything but something has to give eventually, even if interest rates stay high.

[VillainV]

Jul 10, 2023 16:03:18 GMT -5 Jalapeñomel said:

I was just looking at this yesterday, because we have PMI but will hit the 80% this year.

I’m still unsure how it works, as I’ve gotten conflicting info, but if I have to refinance to get rid of the PMI, it will be cheaper for me to keep the PMI and my 1.9% interest rate.

Also, I was talking to my parents who are considering downsizing and my SIL was like, this market will make VA loans so much more attractive, and I’m like, huh? (They believe they’ll be able to buy any house they want with a VA loan when they return to the states)

Oof. Maybe? In super-competitive hot markets, VA loans don’t compete well against conventional loans….and the rates aren’t THAT much better than conventional. If they don’t put much down, they’ll still have very large monthly mortgage payments that likely will not be covered by their housing allowance.

[lilac05]

Jul 10, 2023 16:24:08 GMT -5 mcsangel2 said:

I get how anyone under 40ish is probably horrified by current interest rates, but....dude, these rates are actually normal and kind of pretty good.

I think there has been/may be more of *slight* price declines, but not much.

We are never, ever going to see the ridiculously low interest rates of the last 10 years ever again in our lifetimes.

I keep reminding myself that we had some pretty awful things that had to happen to get to those SUPER low interest rates. I wouldn’t trade that for a chance at historically low mortgage rates again. They were one tiny bright spot in an otherwise pretty awful time.

Our first mortgage was 6.25% and I remember people being like, “OMG! These rates are SO GOOD!”

[cherry1111]

These rates aren’t new but the median home price vs median salary has to be right? There is no way 25 year old me could buy the house I bought at 25 (and am still living in). My kids are screwed if they want to live here as young adults and things keep going the way they are going. (Both renting and buying)

[sdlaura]

gretchenindisguise, I think the area we live in is a bit unique in that if house prices do come down, people will continue to come into our market from other places. But maybe rates will come down?

[gretchenindisguise]

Man. This is all so depressing.

If we could just go back to 5 year ago prices, we could probably buy. But 5 years ago we had a kid in preschool and H was still in postdoc, so no way we could have.

We are lucky our landlord keeps renting to us, and honestly we are likely below market value right now. But also have original 1980s bathrooms and kitchen. Townhouses are going for over $1mil, but definitely doesn't feel like we live in a million dollar home. Lol.

[leahcar]

Rates will stop rising and will likely dip slightly next year. But I think this will be the general range for quite a while.

Housing prices will vary a lot by metro. I think a dip will come with a recession, but we likely won’t go as low as pre-pandemic.

We refinanced during the pandemic so won’t be leaving anytime soon. That “move up- move down - but still have a mortgage” buyer is who won’t participate in the market just yet. They don’t want to leave their crazy low rates unless it’s a major life change.

[orangello]

I definitely don’t think housing prices are going to drop like we saw after the 2008/2009 recession. If they do at all, I think it will be minimal. I do think interest rates will drop; how much, I’m not sure. Banks don’t like all these folks paying cash for things due to high interest rates, so I’m betting they’ll drop a little to entice people to finance.

[bee20]

At least around here prices are down about 15%, the increases had been driven by tech and with tech cooling and interest rates rising prices have been falling since last summer. Even with prices down, they're still up about 50% above January 2020 prices.

We have plenty of cash buyers so while I could see another 5% decrease as we head into fall I don't think there will be a crash exactly. And my neighborhood is less desirable, the nicer neighborhoods are dropping less, since when prices fall more people consider the places they were priced out of before.

[rubytue]

Jul 10, 2023 16:49:04 GMT -5 lilac05 said:

Jul 10, 2023 16:24:08 GMT -5 mcsangel2 said:

I get how anyone under 40ish is probably horrified by current interest rates, but....dude, these rates are actually normal and kind of pretty good.

I think there has been/may be more of *slight* price declines, but not much.

We are never, ever going to see the ridiculously low interest rates of the last 10 years ever again in our lifetimes.

I keep reminding myself that we had some pretty awful things that had to happen to get to those SUPER low interest rates. I wouldn’t trade that for a chance at historically low mortgage rates again. They were one tiny bright spot in an otherwise pretty awful time.

Our first mortgage was 6.25% and I remember people being like, “OMG! These rates are SO GOOD!”

Yeah I think my first house was about that. My second was 7%. And I was aghast at that until my dad talked me down about the 12 and 15% rates in the 80s. Even 7% still qualified as historically low, looking at a looooong history. In my house buying lifespan, they’ve ranged from 2.5% to about 7.5%, so high in that range.

edit: to the OG question, I think rates my creep down, but probably not til winter. Prices though, not sure about. We don’t have the issue we had in 07-ish. Again, looking at the long-term history, real estate tends to keep going up. The great reset of 07-09, like the historical low rates, tends to make us think they will happen. But there is a reason our parents always said real estate was safe, that didn’t happen. And I don’t think it’ll happen again any time soon.

[stemmie]

When my husband bought our first house just before we got engaged, he only put 10% down. The house doubled in value the first year he owned it and we paid about 10 years in principal the first year, so we wrote the mortgage company which reviewed the comps and balance and cancelled the PMI.

[pinkdutchtulips]

In a short answer, no. At least no where close to me (SF/Bay Area). Interest rates may come down but the pent up demand will result in EXPLOSIVE price increases. 

[bugandbibs]

Nothing will change that will have a positive impact on single family buyers unless there is a catastrophic economic event. The housing shortage will continue in popular areas and interest rates are at more historical norms. We just got used to unusually low rates.

I am so glad that I refinanced during the pandemic. It was a major struggle for my ADHD brain to follow through and complete the paperwork (and gazillions steps), but we made the decision that our starter home is our forever home and it has really saved us during some rough financial times over the last year.

[al dente]

Well this thread is depressing lol. My biggest regret in life is not buying a single family home when we first moved here. It would've been top of our budget, but not house poor and we quickly would've made it up with raises.

Those houses are now started 1.3+ and haven't been coming down, and need work. Our house has gained as well obviously but not at the same rate.