Economy The great housing market crash of 2022

[Blunderbuss]

My five year mortgage term ended last year when interest rates were very low. I have just under four years left with this fixed interest rate. Good God am I happy that happened last year and not this year.

 

[cottagecheesefan]

When exactly did they lift the no eviction and foreclosure rule?

October 2021. Then there were some additional rules that ended last month.

As of October 12, 2021, the eviction ban will apply only to renters who have pending COVID-19 rental assistance applications. All protections will end as of June 1, 2022.

 

[MeatheadMike]

Home prices hit another record high in June.
The number of sales are down due to the huge spike in mortgage rates, but it didn't stop the relentless increase in selling prices because of the housing shortage.

Drastic drop in housing prices this year remains unlikely, again because of supply shortage.
https://www.theepochtimes.com/drast...ket-economist-says_4616528.html?welcomeuser=1

 

[HockeyBjj]

Halfway through the year, still waiting

Is this thread gonna age as well as the "republicans crying about inflation risks?" thread?

Will be good to have to look back on some of the takes from May/June by the end of 2022, one way or the other

 

[cottagecheesefan]

Just give it a little more time as the economy continues down its path.









House prices starting to turn as foreclosures increase.

 

[HockeyBjj]

My five year mortgage term ended last year when interest rates were very low. I have just under four years left with this fixed interest rate. Good God am I happy that happened last year and not this year.

30 year fixed mortage taken out in 2020 bless

 

[cottagecheesefan]

30 year fixed mortage taken out in 2020 bless

even with the low rates, it is pretty disgusting when you look at the math and how much you actually pay after the 30 years. I think I would be sick if I had to take out a mortgage today with the current rates.

 

[ElKarlo]

Just give it a little more time as the economy continues down its path.









House prices starting to turn as foreclosures increase.

I see the biggest risk is buyers being unable to buy. Which will harm the resale market as well as the builders. I see this being the biggest factor as no one’s going to be able to afford a half $1 million house with a 6% mortgage rate. This will basically price out a huge amount of the population from being able to buy a new house or upgrade the house. Which was awesome probably make people who are at or near retirement age stuck in the house they’re currently in and unable to sell and move to a new location.

 

[HockeyBjj]

even with the low rates, it is pretty disgusting when you look at the math and how much you actually pay after the 30 years. I think I would be sick if I had to take out a mortgage today with the current rates.

Rich people making money from lending poor people money is the lifeblood of capitalism tho

 

[MeatheadMike]

Just give it a little more time as the economy continues down its path.

AZ local housing being down doesn't mean much in terms of crash if US home prices nation wide are up.

Price cuts are up, but from my experience, the homes with price cuts are mostly homes with major flaws/problems which nobody wants to buy, and which sellers initially priced the same as homes in the same area with no major problems.

NAHB index down is more a problem for buyers than sellers, and actually an indication that prices home can stay elevated.... Basically if the National association of homebuilders doesn't want to build more homes, the housing shortage will never be resolved. More info:

Solving the Housing Crisis Means Building When No One Is Buying

House prices starting to turn as foreclosures increase.

Since there was a moratorium on foreclosures last year and basically no one was being foreclosed on... a 440% increase since last year doesn't mean anything.
The pre-pandemic foreclosure numbers should be the baseline.

 

[panamaican]

I'll say it again -- there's a difference between prices coming down and a crash. Prices are going to come down because interest rates are up and that's going to push up the monthly payments. This affects how much house individuals can afford. Housing prices will adjust to reflect that.

Housing is not going to crash because there's still a supply shortage. And there's plenty of cash buyers waiting for opportunities. When talking about buyers, it's time to pay attention to institutional buyers, reits, cash investors, etc. NOT individuals looking for their first home. You won't see a crash until supply really increases or demand really falls off. Neither are in the near future. Look at the skyrocketing rent prices. It's cheaper to buy in many places...assuming they can put together the down payment and closing costs.

Also, I don't know why people are so worked up over the interest rates. When I was a kid, my parents told me the rule of thumb was 6%. We've had rock bottom rates for so long that people think 2-4% is normal when it really isn't.

Anyway, price declines but not housing crash.

 

[44nutman]

I have been a real estate appraiser for 21 years.
Every regional market is different and I am located in Florida.
Here is what I am seeing.
Supply has increased from 0- .2 month supply to about 2 month supply and some reports I am checking stable on supply.
Roughly 80% of my reports I check the increasing value box but the monthly time adjustments I use have decreased.
List to sale ratio is still at 100% or slightly over which means people are paying listing price or slightly over.
What I am no longer seeing is sales contracts stating will pay over appraised value
Or waving inspections.
The current market is still healthy and ask any old head Realtor who has been doing it since the 80’s and they will laugh their ass off at 6% interest rates. Honestly interest rates were too low which caused a forced run up. It’s much easier to appraise in this market. I am still turning down work so it’s not like 2009 -2010 when I was dipping in my savings account to make my bills and had to let 2 employees go.
I also do attorney work as well, so people will always die and get divorced so I am not so beholden to lender work.

 

[cincymma79]

even with the low rates, it is pretty disgusting when you look at the math and how much you actually pay after the 30 years. I think I would be sick if I had to take out a mortgage today with the current rates.

This will blow your mind but if you pay extra that total goes down. Or do a 15 year

 

[cincymma79]

I'll say it again -- there's a difference between prices coming down and a crash. Prices are going to come down because interest rates are up and that's going to push up the monthly payments. This affects how much house individuals can afford. Housing prices will adjust to reflect that.

Housing is not going to crash because there's still a supply shortage. And there's plenty of cash buyers waiting for opportunities. When talking about buyers, it's time to pay attention to institutional buyers, reits, cash investors, etc. NOT individuals looking for their first home. You won't see a crash until supply really increases or demand really falls off. Neither are in the near future. Look at the skyrocketing rent prices. It's cheaper to buy in many places...assuming they can put together the down payment and closing costs.

Also, I don't know why people are so worked up over the interest rates. When I was a kid, my parents told me the rule of thumb was 6%. We've had rock bottom rates for so long that people think 2-4% is normal when it really isn't.

Anyway, price declines but not housing crash.

All it takes is for a few people to bail out and it starts all over again. I don’t think it’ll be as bad as 08 but I think you’ll see as much as 20% decline. People will bail when they owe more than it’s worth and that’ll happen more as the ball gets rolling.

 

[44nutman]

This will blow your mind but if you pay extra that total goes down. Or do a 15 year

Funny nobody seems to understand this. Any car loan or house loan I have had, if I had the money I would pay at least 1.5 the payment(now a days I do 2 or 3 times the payment) and apply the extra to the principal. You end up saving a shit ton on the interest at the end of your loan. Banks hate me.
I have one credit card for tthe reward points. I own my own business and monthly health insurance is a big nut every month for my family. I put all my bills on that credit card and pay off every months. Last year got 6 free hotel rooms. Use those points for family vacation every year.

 

[cottagecheesefan]

This will blow your mind but if you pay extra that total goes down. Or do a 15 year

Obviously. I sold most of my stocks so I could pay much more of a down payment (I paid about 70% of the house). Was lucky, since it was about a year ago before the stock market started to tank. I am just saying, most people don't realize how much they pay in interest and that is even with the low interest rates. But even without knowing the stock market would tank, I figured paying off the house ASAP would be just as cost effective as the money I would have made in the market (if it had continued to go up). In hindsight, it was even better of a move now that the stock market has taken a big dip.

 

[MeatheadMike]

I have been a real estate appraiser for 21 years.
Every regional market is different and I am located in Florida.
Here is what I am seeing.
Supply has increased from 0- .2 month supply to about 2 month supply and some reports I am checking stable on supply.
Roughly 80% of my reports I check the increasing value box but the monthly time adjustments I use have decreased.
List to sale ratio is still at 100% or slightly over which means people are paying listing price or slightly over.
What I am no longer seeing is sales contracts stating will pay over appraised value
Or waving inspections.
The current market is still healthy and ask any old head Realtor who has been doing it since the 80’s and they will laugh their ass off at 6% interest rates. Honestly interest rates were too low which caused a forced run up. It’s much easier to appraise in this market. I am still turning down work so it’s not like 2009 -2010 when I was dipping in my savings account to make my bills and had to let 2 employees go.
I also do attorney work as well, so people will always die and get divorced so I am not so beholden to lender work.

Mortgage rates at 6% are not historically high, but in terms of affordability for the middle class... this situation with these rates is worse than the higher rates of the 80s because of the housing shortage. In the 80s there was a large supply of homes which gave buyers options and kept prices down. Also, back then the average house costed about $85K and the average salary was $25K (3:1 ratio). where now the average home costs $420K and the average salary is $53K (8:1 ratio).

Not saying any of this means there's going to be some kind of crash, just that home ownership seems to be moving away from the middle class.

 

[MeatheadMike]

Obviously. I sold most of my stocks so I could pay much more of a down payment (I paid about 70% of the house). Was lucky, since it was about a year ago before the stock market started to tank. I am just saying, most people don't realize how much they pay in interest and that is even with the low interest rates. But even without knowing the stock market would tank, I figured paying off the house ASAP would be just as cost effective as the money I would have made in the market (if it had continued to go up). In hindsight, it was even better of a move now that the stock market has taken a big dip.

It depends. On average the S&P 500 returns around 10.5% a year, so if you have a low mortgage rate of around 4%... you'd be better off leaving the extra money invested.
But you'd have to consider other factors, like if you'll be able to make the higher monthly payments, and of course accepting the risk that the market may go down some years etc.

 

[cottagecheesefan]

 

[cincymma79]

Obviously. I sold most of my stocks so I could pay much more of a down payment (I paid about 70% of the house). Was lucky, since it was about a year ago before the stock market started to tank. I am just saying, most people don't realize how much they pay in interest and that is even with the low interest rates. But even without knowing the stock market would tank, I figured paying off the house ASAP would be just as cost effective as the money I would have made in the market (if it had continued to go up). In hindsight, it was even better of a move now that the stock market has taken a big dip.

I know mbas that don’t get how interest works. Ducking amazing