How high will mortgage rates climb in the next 36 months?

[sgip]

Live by the ALGO, Die by the ALGO, because.....ALGO!!!

My guess is that OpenDoor will A) Fail, B) spin their inventory into rental properties, C) Get a fresh cash infusion until scenario A arrives, the music stops, and chairs are few. Remember, there's OpenDoor and about 4-5 other companies who brought bales of cash to the bonfire during 2022. There are plenty of other properties with perhaps thinner margins waiting to be discounted by those who hold them.

OD uses non-local realtors to sell their homes in some markets which is why their service blows. Not sure who OfferPad. Knock, or other firms use to re-market their homes. I do know that Lennar partnered with OpenDoor to relieve themselves of contingent buyers. It will be interesting to see who has to pay the balance when the home sells for less than asking. It would be a real surprise to me if Lennar doesn't report some "burden sharing" on their OpenDoor losses!

 

[irvinebullhousing]

Live by the ALGO, Die by the ALGO, because.....ALGO!!!

My guess is that OpenDoor will A) Fail, B) spin their inventory into rental properties, C) Get a fresh cash infusion until scenario A arrives, the music stops, and chairs are few. Remember, there's OpenDoor and about 4-5 other companies who brought bales of cash to the bonfire during 2022. There are plenty of other properties with perhaps thinner margins waiting to be discounted by those who hold them.

OD uses non-local realtors to sell their homes in some markets which is why their service blows. Not sure who OfferPad. Knock, or other firms use to re-market their homes. I do know that Lennar partnered with OpenDoor to relieve themselves of contingent buyers. It will be interesting to see who has to pay the balance when the home sells for less than asking. It would be a real surprise to me if Lennar doesn't report some "burden sharing" on their OpenDoor losses!

Good points. The other locally here and still advert on tv, SellerAdvantage.com still running their ads to buy at no inspections, no fixes from home sellers. I wonder how long they will continue.

 

[usctrojancpa]

Here's a property where the OpenDoor ALGO went haywire....
https://www.redfin.com/CA/Irvine/2-Coldharbor-92620/home/4784002

Purchased by OpenDoor on 7/15/22 (went into contract on 6/25/22) for $1,205,500.  Guess the ALGO was predicting that prices were heading higher.  OPPS!!!

 

[TestingIrvine]

Anyone hold fixed or long term adjustable rate  at or below 4% is a winner. The real asset is the notes in this environment  .

Indeed, now I can't sell my Tustin Ranch home with a 2.375% 30-year fixed mortgage so I'll be contributing to keep inventory off the market.

It makes no sense to leverage this depreciating investment.  Even if your rate were 0%, you're losing on this deal.  The leverage only multiplies your losses.

If you truly think rates are headed back to 3%, the smart thing would be to sell now, take the 250k tax exemption, and buy later at nearly the same rate.

So apparently Irvine homes are money losers but ?take the $250K tax exemption? for appreciation? How would there be appreciation? LOLLLLLLL

So using your logic and context clues you must be a single renter outside of Irvine.  That makes sense.

 

[usctrojancpa]

Anyone hold fixed or long term adjustable rate  at or below 4% is a winner. The real asset is the notes in this environment  .

Indeed, now I can't sell my Tustin Ranch home with a 2.375% 30-year fixed mortgage so I'll be contributing to keep inventory off the market.

It makes no sense to leverage this depreciating investment.  Even if your rate were 0%, you're losing on this deal.  The leverage only multiplies your losses.

If you truly think rates are headed back to 3%, the smart thing would be to sell now, take the 250k tax exemption, and buy later at nearly the same rate.

Ok, let's see....first off I already have 2 rental applications for $6,000 per month and my all-in cost for the home is around $4,500.  Secondly, my mom and stepdad who are getting older live in a 2-level home in Irvine and my mom asked me I can keep the home so that they can move into it in a few years.  And when they do move in they'll just pay all the costs for the home and take care of maintaining it. I could give a crap less what the value of the home is today, a year from now, 5 years from now, etc.  Not only do I not need the net sales proceeds from the sale of the home but my floor plan only comes up for sale once every 2 years on average so there's no reason for me to sell it.  So you see, there's more that goes into the equation then trying to time the market.

 

[sgip]

10 yr T: - only because it's easy to track......

Friday Close: 3.70
Monday Open: 3.78
Monday 12:30: 3.88
Monday Close - 3.92 YOW!

Two price changes for the worse already.  It's like that saying about how "Objects in the Rear View Mirror may be closer than they appear" - that object being a 7 percent average 30 fixed loan.....

 

[Liar Loan]

Anyone hold fixed or long term adjustable rate  at or below 4% is a winner. The real asset is the notes in this environment  .

Indeed, now I can't sell my Tustin Ranch home with a 2.375% 30-year fixed mortgage so I'll be contributing to keep inventory off the market.

It makes no sense to leverage this depreciating investment.  Even if your rate were 0%, you're losing on this deal.  The leverage only multiplies your losses.

If you truly think rates are headed back to 3%, the smart thing would be to sell now, take the 250k tax exemption, and buy later at nearly the same rate.

So apparently Irvine homes are money losers but ?take the $250K tax exemption? for appreciation? How would there be appreciation? LOLLLLLLL

So using your logic and context clues you must be a single renter outside of Irvine.  That makes sense.

Is Tustin Ranch in Irvine?

 

[Liar Loan]

Anyone hold fixed or long term adjustable rate  at or below 4% is a winner. The real asset is the notes in this environment  .

Indeed, now I can't sell my Tustin Ranch home with a 2.375% 30-year fixed mortgage so I'll be contributing to keep inventory off the market.

It makes no sense to leverage this depreciating investment.  Even if your rate were 0%, you're losing on this deal.  The leverage only multiplies your losses.

If you truly think rates are headed back to 3%, the smart thing would be to sell now, take the 250k tax exemption, and buy later at nearly the same rate.

Ok, let's see....first off I already have 2 rental applications for $6,000 per month and my all-in cost for the home is around $4,500.  Secondly, my mom and stepdad who are getting older live in a 2-level home in Irvine and my mom asked me I can keep the home so that they can move into it in a few years.  And when they do move in they'll just pay all the costs for the home and take care of maintaining it. I could give a crap less what the value of the home is today, a year from now, 5 years from now, etc.  Not only do I not need the net sales proceeds from the sale of the home but my floor plan only comes up for sale once every 2 years on average so there's no reason for me to sell it.  So you see, there's more that goes into the equation then trying to time the market.

If you want to keep it for personal reasons, then it makes all the sense in the world, but your prior comment implied that the historically low rate is what was keeping it off the market.

 

[OCtoSV]

F**k - look at Bankrate today for a 20% down jumbo - way over 7%. Need 30% down to get into the 6s.

Powell plainly articulated a housing correction, and he's following through.

 

[usctrojancpa]

Anyone hold fixed or long term adjustable rate  at or below 4% is a winner. The real asset is the notes in this environment  .

Indeed, now I can't sell my Tustin Ranch home with a 2.375% 30-year fixed mortgage so I'll be contributing to keep inventory off the market.

It makes no sense to leverage this depreciating investment.  Even if your rate were 0%, you're losing on this deal.  The leverage only multiplies your losses.

If you truly think rates are headed back to 3%, the smart thing would be to sell now, take the 250k tax exemption, and buy later at nearly the same rate.

Ok, let's see....first off I already have 2 rental applications for $6,000 per month and my all-in cost for the home is around $4,500.  Secondly, my mom and stepdad who are getting older live in a 2-level home in Irvine and my mom asked me I can keep the home so that they can move into it in a few years.  And when they do move in they'll just pay all the costs for the home and take care of maintaining it. I could give a crap less what the value of the home is today, a year from now, 5 years from now, etc.  Not only do I not need the net sales proceeds from the sale of the home but my floor plan only comes up for sale once every 2 years on average so there's no reason for me to sell it.  So you see, there's more that goes into the equation then trying to time the market.

If you want to keep it for personal reasons, then it makes all the sense in the world, but your prior comment implied that the historically low rate is what was keeping it off the market.

Yes, the fixed low rate and the low property tax (including the $1k Mello Roos that is expiring June 2024) makes the home more cash flow positive.  With such a low rate more than 1/2 of monthly payment goes towards reducing the loan balance.  Plus I certain that you know this, in a higher inflation environment where your fixed interest rate is below the inflation rate the nominal value of the loan is lower than the face value as inflation eats away at the loan balance. If my interest rate was higher, I wouldn't have as high positive cash flow and less of the payment would be going towards reducing the loan balance.  Also, I have a fully renovated single level Tustin Ranch home on a larger lot where the same floor plan only comes to market about every 2 years so timing the market would be very tough. So yes, it's part a financial decision to keep the home along with a non-financial decision.  I also have a 1.75% fixed student loan rate with about $30k left to pay off.  Am I going to pay them off anytime soon?  Hell no!

 

[The Motor Court Company]

With stock in bear market, rate in 7 handles, I will be surprised if real estate price doesn?t correct 20% within a couple of years.

 

[nosuchreality]

I?m looking at our townhome in the IE.  When crunching the numbers on a 97% loan, PMI etc, PITA is closing in on rental parity really quick.

 

[CalBears96]

With stock in bear market, rate in 7 handles, I will be surprised if real estate price doesn?t correct 20% within a couple of years.

I really hope for 20% correction within a year.

 

[OCtoSV]

Jumbo rates are in the 4s.

How about today?

 

[ThirtySomethingWEquity]

With stock in bear market, rate in 7 handles, I will be surprised if real estate price doesn?t correct 20% within a couple of years.

I really hope for 20% correction within a year.

I think places in my neighborhood are down about 15% from the very very peak.  It's hard to say because the super upgraded stuff fetched absurd prices and I mainly see investors trying to sell barebones stuff, but even stilll, maybe 10% is a conservative estimate.

 

[usctrojancpa]

Jumbo rates are in the 4s.

How about today?

Don't know but probably in the mid 5% is my guess.

 

[OCtoSV]

Jumbo rates are in the 4s.

How about today?

Don't know but probably in the mid 5% is my guess.

big move in 1 month. Is it deterring any of your clients?

 

[Ready2Downsize]

In 1980, one of the banks came out and lowered mortgages bigly because no one was buying houses. (I think it was home bank to 11%, but don't quote me on that). We knew what we would buy if rates came down so we hightailed it to the builder. They were 13% by the time we locked in. It was a temporary blip down. We ended up selling the townhome a year later for a profit and bought a big house in 1981 (peak interest rates..... builder bought down the rate 6% rather than reduce the price).

I look at todays move by the BOE as similar to what happened in 1981 and I don't think Powell is going to sit idly by without talking the rates back up. Looking at the chart, maybe we can get another 40-50 basis points down.

If you're really super serious about buying and prices are down, this is probably your chance at a lower rate.

People who bought our house in Legacy have had their place on the market for over 4 months at rock bottom prices and it is pending again today (3rd time). I'll bet it sticks this time.

You could wait for lower prices, but imo rates will be higher. JMHO.

 

[CalBears96]

You can refinance to lower rate a few years down the road, but you can't change purchase price, so it makes more sense to wait for lower prices, even at higher rates.

 

[sgip]

Be careful of BankRate and other rate aggregation websites as their data is often confusing and unclear. When inputting a "Jumbo" loan, it may be a lenders "Jumbo Conforming" - 7 handle pricing - and not a "Non-Conforming/Non-Agency Jumbo" - 5 handle pricing. There are the outliers in the low 5's, upper 4's - a product of not updating their pricing for BankRate. As Abraham Lincoln was fond of saying "Don't believe everything you see or hear on the Internet.".

Conforming loan terms are rising as the Fed deleverages their Agency MBS portfolios, and they have a pretty big boat to unload. That's why it's difficult to say when an opportunity to refinance may present itself. It's not the Fed Funds Rate or the 10yr T yield, but that plenty of MBS's exist for sale, but few buyers willing to take the deals available now.

Yes, there are plenty of buyers I've spoken with who have pushed back from the table saying "eh, I'll wait to see what prices do".

SGIP