Being a broker for many years. I’ve seen all different markets…up - down and in between.
There is a law that states interest go down/prices go up. Interest rates go up prices/go down.
The unusually LOW interest rates have pumped prices and sales UP. I just read that the Fed will raise interest rates the begging of next year.
What this means for the LSA is: refi’s will be high for the rest of this year in order to beat the interest rate increase .The Fed sees the old bugaboo INFLATION, soo interest rates go UP.
Home prices GO DOWN, because interest rates increase the monthly payment. LESS house for more money!
But won’t house prices go up anyway as inflation starts to destroy the economy? The government pumped like billions of dollars into the economy last year. Tons of quantitative easing happening. There’s like a giant storm coming. The stock market is a mess and is teetering on the edge of another crash. At least those are stories I’ve read about this year. I can’t keep up anymore. Buckle up.
Here’s how I see it. Most houses are purchased with financing, the major cost is the mortgage.
The biggest developer from China has just defaulted on millions of their mortgage loan payments. As we have a world economy, this will drive mortgage rates up. Remember bank lending is determined by affordability. The present outrageously low interest rates have given low payments to todays buyers allowing them to buy at todays high prices. Take a 3% mtg. verses a 6% mtg. Even a 6% mtg. is low, but has a much higher payment. Remember We are living on borrowed money as a nation. Time to pay the piper,.
We may find that the Refi’s will stay good , at least until the first of the year and beyond as those waiting for a lower rate will see that they are only going higher !
Ahaaa. Title Companies…Many, Many will close their doors. I’ve seen this before with the Savings & Loan fiasco.
The people that I feel sorry for are the buyers that bought during the past year or 2. They have paid WAY TOO MUCH for their purchase. I was talking to a broker of a very large real estate office recently. He was telling me of several sales they had and this is the story. His agent has a listing priced at $430,000. He gets an offer …FULL Price in a week. CASH.
But, the same day 2 other agents submit offers of $450,000 and $475,000 CASH. WOW So my question to him was----where did they get the money? He told me they cashed in their IRA’s & pension plans. They are now stuck in a house whose prices are going DOWN, rather then an investment that paid a profit.
Something similar I heard about but up in Massachusetts - acquaintance was looking to buy a home, one on market asking price $500K (lots of acreage) - they went to look and made an offer of almost $650k - my jaw dropped and I asked WHY??? - she said because that’s the way it’s going up here - you don’t bid high you don’t get the property. I was dumbfounded. Never did hear if they got that property or not. Me? I’d have just offered asking price and if outbid, put my money back in my pocket and go home and wait…
