/biz/ - Business & Finance

The fed could make interest rates 20% and prices still won’t come down. Normies who have overpriced houses will just refuse to sell at a loss and will live in their house instead of buying a new one. Most home buyers already own a home that was refinanced at a sub 3% rate, they are not gonna sell their current place to buy an even more expensive home at 6%. Inventory is also really fucking low. All the higher rates do is freeze the market, they will have very little impact on prices. The only reason housing crashed in ‘07 was that everyone had ARMs so their own payments skyrocketed as rates increased which led to foreclosures and forced selling. These days everyone has a locked in mortgage that will never become more expensive, and there is zero incentive to sell. My current house has a 1900 PITI payment at a 2.25% 30 year fixed mortgage but it would rent out for $2800. I will never sell it due to how cheap my borrowing costs are, I will keep it and rent it out if I ever move to a bigger place. NOBODY is going to voluntarily sell if they are underwater on their current house, this alone keeps prices high. We need forced selling to actually cause a housing crash, and this will only be possible if there is massive unemployment to the point where nobody is in a position to buy or can get loans.

This is the catch 22 of trying to time a housing crash, if you are feeling secure enough in your career to commit to a mortgage, chances are everyone else is feeling good too, thus leading to higher demand and prices. If you are feeling insecure in your job and afraid of getting fired or laid off, everyone else will be afraid too and housing might actually dump. You have to wait until everyone including yourself is too afraid to buy and there is blood in the streets.