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5.5% rates, 8% mortgages (I had one briefly in 2000) aren't 'new' -- they're just 'new' for folks (traders, advisors, and many in the media) who have never lived through it before. And by 'new' I also mean 'scary' b/c it's uncharted territory for them and perhaps their training/education/experiences.
For 15+ years, we have been in a Bull Stock Market, bolstered by government stimulation and zero interest rates. That looks like an artificial set of conditions that was overdue to end. If you are holding your "breath" expecting those conditions to return anytime soon, I don't see that as likely. It appears that Banks are projecting 5% interest rates for quite a few more years, so stocks will likely have a formidable alternative for many investors' cash. I am breathing just fine with 5% interest rates, and I am not interested in "guessing" if we have hit the bottom of the stock market.
We bought our two homes when interest rates were 10.5% and 8%. We refinanced the second mortgage when rates dropped to 6% and eventually paid it off at that rate. We survived.
Yes, 8.5% and 8% respectively for us, back in the 70s. We also survived. The rates for the last ten years or so were so low that everyone now seems to think that that was "normal".
Does it matter that the 8% mortgage rates have resurfaced with real estate prices at substantial multiples of where they were bought in the past cycle when rates were there and where incomes haven’t grown at same multiples?
Does it matter that the 8% mortgage rates have resurfaced with real estate prices at substantial multiples of where they were bought in the past cycle when rates were there and where incomes haven’t grown at same multiples?
I'm sure it matters a lot if you're trying to buy in a place like Marin county. In Maricopa County, where we live now, I think there are still more options on the scale.
The first house we bought back around 1960 (+/-) had a interest rate of 6%. Of course, the price of the house was a lot less than it would be today and we had a lot less income. The funny part now, is that I remember laying in bed at night worrying about how I was going to make house payments of $88.50 each month. My how times have changed.
I dunno gents...I think the folks in the market buying a home for $500-775K are making more than you might think at least that's the younger bucks I work with...so the home might cost them 2-2.5x annual salary....they have the mind set date the rate and marry the price, something like that....keep in mind most of the homes selling today for $1M+ are bought with cold hard kash...
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It wasn't that long ago we lived with 5.5% rates, or worse.
Bee might have correctly called the (short-term?) bottom! We have a clairvoyant among us.