Surging Mortgage Rates Set Off Scramble to Buy Homes

daedalus said:
IMO price drops will trail the perception of rising future rates, just as the perception of deflation stymies consumer spending.  So short term, the perception of rising rates will fuel an increase in the willingness to pay, but long term, as rates actually do rise, prices will have to fall.

Psych101 stuff.
 
The Redfin data is backwards looking and not all that reflective of how rising rates may be impacting the market. It's often the case that buyers are rushing more to avoid being priced out than worried about mortgage affordability.

From what I'm seeing outside of Irvine are agents reducing prices, wondering why they are seeing homes on the market as long as they have been.

Within Irvine, a few of the calls I'm getting go like this:

Buyer - I just put a deposit down on a new home.

Me - Congrats. When will the house be done?

Buyer - oh, it fell out so it's supposed to be done in 61 days.

Me - Hmmmm. Builder say why?

Buyer. No, just that it's ready to go.


Interesting turn of events here. The next 2 months will tell us how the rest of the year will go IMHO.

SGIP
 
Burn That Belly said:
daedalus said:
daedalus said:
IMO price drops will trail the perception of rising future rates, just as the perception of deflation stymies consumer spending.  So short term, the perception of rising rates will fuel an increase in the willingness to pay, but long term, as rates actually do rise, prices will have to fall.

Psych101 stuff.

Historically though, rates are still low. We are still not even at 5%. People used to buy homes in the 8-13%.
And where were prices the last time mortgage rates were 8%?  Just imagine what an 8% mortgage rate environment would do to the market today!  Hint:  Prices won't be higher.
 
Burn That Belly said:

Some of my relatives were born in rural Nebraska, but have lived in CA for many years.  I remember at a family party awhile back they were talking about how houses were still selling for $20k in the small town where they grew up.  The houses may have gone up slightly since then, but I doubt the average house is breaking $100k even now.

Of course, there are no jobs besides farming, so the economic base comes from welfare.  I think the town liquor store does pretty well..
 
Sorry daedalus, I don't agree that prices will fall enough to offset rises in interest rates... esp not in areas where financing is not as widely used due to large or all cash down payments.

I've seen this sentiment since 2008 and I have yet to see a proportionate decrease/increase is prices related to interest rates. Rates have been between 4-5% for the last how many years... yet prices keep going up... so how is that math working?
 
irvinehomeowner said:
Sorry daedalus, I don't agree that prices will fall enough to offset rises in interest rates... esp not in areas where financing is not as widely used due to large or all cash down payments.

I've seen this sentiment since 2008 and I have yet to see a proportionate decrease/increase is prices related to interest rates. Rates have been between 4-5% for the last how many years... yet prices keep going up... so how is that math working?

Explain to me what happened last housing crash.
 
eyephone said:
irvinehomeowner said:
Sorry daedalus, I don't agree that prices will fall enough to offset rises in interest rates... esp not in areas where financing is not as widely used due to large or all cash down payments.

I've seen this sentiment since 2008 and I have yet to see a proportionate decrease/increase is prices related to interest rates. Rates have been between 4-5% for the last how many years... yet prices keep going up... so how is that math working?

Explain to me what happened last housing crash.

Why don't you?

Show me the math where rise/fall in interest rates were *proportionately* related to rise/fall in housing prices. The one rule I've seen in housing prices in Irvine is they usually rise much faster than than they fall.

Waiting to buy a house because thinking that prices will drop when the interest rates go up is folly... just buy what you can afford and stop worrying about the peak/valley game.
 
Liar Loan said:
Burn That Belly said:

Some of my relatives were born in rural Nebraska, but have lived in CA for many years.  I remember at a family party awhile back they were talking about how houses were still selling for $20k in the small town where they grew up.  The houses may have gone up slightly since then, but I doubt the average house is breaking $100k even now.

Of course, there are no jobs besides farming, so the economic base comes from welfare.  I think the town liquor store does pretty well..

Important points here is JOBs. Even if rates keep-on ratching upward, so long as economy continues to produce good wages and jobs abundant, interest rate will rise. When the pendulum shift to slow down purchasing goods and plenty of standing inventory then the recessions phase will taken place. Along with jobs loss.

There will be some slow down and consumers adjust to the new realities of taxes, which I think is healthy for much longer expansions. In the meantime, invest wisely and pick a place that you can see yourself in for several years.
 
irvinehomeowner said:
eyephone said:
irvinehomeowner said:
Sorry daedalus, I don't agree that prices will fall enough to offset rises in interest rates... esp not in areas where financing is not as widely used due to large or all cash down payments.

I've seen this sentiment since 2008 and I have yet to see a proportionate decrease/increase is prices related to interest rates. Rates have been between 4-5% for the last how many years... yet prices keep going up... so how is that math working?

Explain to me what happened last housing crash.

Why don't you?

Show me the math where rise/fall in interest rates were *proportionately* related to rise/fall in housing prices. The one rule I've seen in housing prices in Irvine is they usually rise much faster than than they fall.

Waiting to buy a house because thinking that prices will drop when the interest rates go up is folly... just buy what you can afford and stop worrying about the peak/valley game.

Some people might say the fed help cause the housing and financial crisis.
 
eyephone said:
irvinehomeowner said:
eyephone said:
irvinehomeowner said:
Sorry daedalus, I don't agree that prices will fall enough to offset rises in interest rates... esp not in areas where financing is not as widely used due to large or all cash down payments.

I've seen this sentiment since 2008 and I have yet to see a proportionate decrease/increase is prices related to interest rates. Rates have been between 4-5% for the last how many years... yet prices keep going up... so how is that math working?

Explain to me what happened last housing crash.

Why don't you?

Show me the math where rise/fall in interest rates were *proportionately* related to rise/fall in housing prices. The one rule I've seen in housing prices in Irvine is they usually rise much faster than than they fall.

Waiting to buy a house because thinking that prices will drop when the interest rates go up is folly... just buy what you can afford and stop worrying about the peak/valley game.

Some people might say the fed help cause the housing and financial crisis.

Some say the FED was one of the many instrumental triggers that causes the housing crashed of 2008. Housing and the economy as a whole are cyclical. It has its ebb and rise which is natural process. The magnitude of the last crash was extreme severe because of ?Liar Loans? Nowadays banks has taken greater steps to stop the fools, from their own demise. Or aleast attempt to. This will slow down the hyper-mania of buying and a much healthier slow down vs. a crash. If ones looking for a great deal, which include me, I have high probability bet that it will never comes when you look for it in high desirable real estate markets.
 
Compressed-Village said:
eyephone said:
irvinehomeowner said:
eyephone said:
irvinehomeowner said:
Sorry daedalus, I don't agree that prices will fall enough to offset rises in interest rates... esp not in areas where financing is not as widely used due to large or all cash down payments.

I've seen this sentiment since 2008 and I have yet to see a proportionate decrease/increase is prices related to interest rates. Rates have been between 4-5% for the last how many years... yet prices keep going up... so how is that math working?

Explain to me what happened last housing crash.

Why don't you?

Show me the math where rise/fall in interest rates were *proportionately* related to rise/fall in housing prices. The one rule I've seen in housing prices in Irvine is they usually rise much faster than than they fall.

Waiting to buy a house because thinking that prices will drop when the interest rates go up is folly... just buy what you can afford and stop worrying about the peak/valley game.

Some people might say the fed help cause the housing and financial crisis.

Some say the FED was one of the many instrumental triggers that causes the housing crashed of 2008. Housing and the economy as a whole are cyclical. It has its ebb and rise which is natural process. The magnitude of the last crash was extreme severe because of ?Liar Loans? Nowadays banks has taken greater steps to stop the fools, from their own demise. Or aleast attempt to. This will slow down the hyper-mania of buying and a much healthier slow down vs. a crash.

What do *you* say? Stop regurgitating and start giving us your (and not obvious) opinions.

And actually, all the people who kept predicting a spectacular crash in Irvine claim they didn't think the Fed would go to the lengths they did to prevent the housing crisis.

As for the financial crisis... how is that on the Fed?

If ones looking for a great deal, which include me, I have high probability bet that it will never comes when you look for it in high desirable real estate markets.

This is one of your Captain Obvious posts. We all know it's hard to find deals in high demand areas... but they can be found. Just trying to time it with interest rates isn't the best strategy.
 
irvinehomeowner said:
eyephone said:
irvinehomeowner said:
Sorry daedalus, I don't agree that prices will fall enough to offset rises in interest rates... esp not in areas where financing is not as widely used due to large or all cash down payments.

I've seen this sentiment since 2008 and I have yet to see a proportionate decrease/increase is prices related to interest rates. Rates have been between 4-5% for the last how many years... yet prices keep going up... so how is that math working?

Explain to me what happened last housing crash.
Show me the math where rise/fall in interest rates were *proportionately* related to rise/fall in housing prices. The one rule I've seen in housing prices in Irvine is they usually rise much faster than than they fall.

Waiting to buy a house because thinking that prices will drop when the interest rates go up is folly... just buy what you can afford and stop worrying about the peak/valley game.

As much as it pains me, I'm going to have to agree with IHO here.  Not because Irvine is special, but because historically mortgage rates and home prices have ZERO correlation.

From 1980-1985 home prices were flat, yet mortgage rates went as high as 19%.

From 1991-1996 home prices dropped 20% in a gradual decline, yet mortgage rates were also declining from 10% down to 7%.

From 2003-2008 we had the largest housing bubble in history with 20%+ price increases per year, yet rates stayed mostly flat at 6% that entire time.
 
Liar Loan said:
historically mortgage rates and home prices have ZERO correlation.

You can look at a comparison graph and say there could be *some* points of correlation... but then again, a broken clock is right twice a day.

And I have no issues agreeing with Liar Loan... big lots rule!! :)
 
irvinehomeowner said:
Compressed-Village said:
eyephone said:
irvinehomeowner said:
eyephone said:
irvinehomeowner said:
Sorry daedalus, I don't agree that prices will fall enough to offset rises in interest rates... esp not in areas where financing is not as widely used due to large or all cash down payments.

I've seen this sentiment since 2008 and I have yet to see a proportionate decrease/increase is prices related to interest rates. Rates have been between 4-5% for the last how many years... yet prices keep going up... so how is that math working?

Explain to me what happened last housing crash.

Why don't you?

Show me the math where rise/fall in interest rates were *proportionately* related to rise/fall in housing prices. The one rule I've seen in housing prices in Irvine is they usually rise much faster than than they fall.

Waiting to buy a house because thinking that prices will drop when the interest rates go up is folly... just buy what you can afford and stop worrying about the peak/valley game.

Some people might say the fed help cause the housing and financial crisis.

Some say the FED was one of the many instrumental triggers that causes the housing crashed of 2008. Housing and the economy as a whole are cyclical. It has its ebb and rise which is natural process. The magnitude of the last crash was extreme severe because of ?Liar Loans? Nowadays banks has taken greater steps to stop the fools, from their own demise. Or aleast attempt to. This will slow down the hyper-mania of buying and a much healthier slow down vs. a crash.

What do *you* say? Stop regurgitating and start giving us your (and not obvious) opinions.

And actually, all the people who kept predicting a spectacular crash in Irvine claim they didn't think the Fed would go to the lengths they did to prevent the housing crisis.

As for the financial crisis... how is that on the Fed?

If ones looking for a great deal, which include me, I have high probability bet that it will never comes when you look for it in high desirable real estate markets.

This is one of your Captain Obvious posts. We all know it's hard to find deals in high demand areas... but they can be found. Just trying to time it with interest rates isn't the best strategy.

You are right, timing it with with interest rate alone will not be a legitimate argument. Buying a home is an emotional commitment and process. So if rates goes up further and if I can afford it, so what, go on and buy it. I need a roof over my head until I hit The coffins.
 
irvinehomeowner said:
And I have no issues agreeing with Liar Loan... big lots rule!! :)

I agree but it helps to add drama to these real estate posts if we feign disagreement. ;)
 
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