Freddie Mac's weekly survey tells the same story on a slower clock: the 30-year average bottomed at 5.98% on Feb 26, the same week the article dates the start of the Iran war, and was 7.03% last week (new reading at noon ET today).
In dollars: on a $400k 30-year loan, 5.98% vs 7.03% is about $276 more per month in principal and interest, roughly $3,300 a year for the same house.
The energy story also showed up in this morning's ISM manufacturing report: the headline was flat (54.5), but prices paid jumped to 77.9 from 71.1, well above the ~73 expected. Input-cost prints like that tend to keep the 10-year, and mortgage rates with it, elevated.
I’m sort of glad that my wife went to grad school and now has a still-unsettled career. We move around often enough that we have no timeline for buying and keep our down payment savings in the market. We are as likely to live somewhere where we could never afford to buy a home as we are to live in a place where houses are affordable. So I can watch these developments from afar without becoming worried.
American culture pushes you to buy early and often, though, and so I think this is going to cause a generational shift in politics and culture. You’re going to have so many 20-somethings with decent earnings who will either rent eternally or live with their parents, and that will change the way they vote and consume and live.
I expect even more young people will flock to mid-sized and larger cities where renting is an expectation and a lot of housing stock is mortgage-free or financed very cheaply anyway. We’ve been looking at our parents like they’re crazy when they’ve mentioned us moving to the burbs and buying a house for a long time, but that’s just our lifestyle, to some extent. However, the current median first-time homebuyer is already 40 years old. I think more and more people are going to become like us regardless of their career choices.
The rise in interest rates won’t be the thing that changes buying pattern. Today’s high is the highest since 2023. That’s three years ago and not generational impacting. Those rates were the norm for decades. Rates in the 2% is not normal.
The bigger issue is the rise in home prices coupled, a rise in inflation and lagging wage rate. Those three factors will impact home ownership much more than an interest rate. You want real change you need a change in your wages and in general government, at all levels, need to rethink revenue intake.
The problem is that Trump has come out and said the quiet part out loud, that he wants to make homes more affordable to young people while protecting the equity gains in existing homeowners. Those two can’t be reconciled.
Oh sure, Trump might be dumb enough to come out and say it, but that sentiment is unfortunately shared by most of the ruling class. They theoretically want to get inflation under control and make life more affordable for the average American, but they don't want to upset the paper gains asset-holders have made over the past 10 years. The problem is that those gains, especially in stonks for the top 5-10%, are driving inflation. You can't get inflation under control unless you pop the stock bubble, which none of the powers that be want to do.
Man, I could not agree more. I wish I had your skill at writing out my thoughts.
There is just simple denial to the fact that we cannot please everyone all the time. We cannot keep the wealthy as fat and happy as they are right now, without sacrificing the social ties that we have as a nation, as a world.
We should have evolved to be better with the success of capitalism in creating a middle class of people. Instead, we’ve allowed capitalism to revert into cannibalism.
Thank you for the kind words. Yes, the problem is that our economy has now developed around the rich spending their stock gains. That's why the top 10% are like 50% of spending or something. If the rich pull back, the economy goes into a recession, and we can't have that!
The problem that our leaders don't get is that inequality in many ways is worse than being in a bad spot in absolute terms. We judge our own well-being based on how we're doing relative to others. That's why the poor in America don't want to hear that the poor have it great compared to the rich in 1880. Because it's irrelevant.
Sacrificing the social ties is EXACLTY what has been happening, and it's undermining society's cultural and moral fiber.
A friend in my small town (14,000 ppl) is moving. They bought their house in Jan of 2019 for 210k and just listed at 440k.
The only updates were basic maintenance and interior painting. They actually gutted some livable space in an attempt to make an in-laws suite, that they never finished (so it’s just drywall at the moment in like 600sqft of the house).
I’m sure they will get around that amount. It’s insanity.
Too low of rates lead to the high prices and there is no way back but a price that collapses to the sustainable mortgages at 7%.if every 1% is a rise of $276 then the home price has to fall most of the way so a mortgage on a 400k home isn’t $1300 more.
Seems to an issue all around. People just keep paying higher and higher prices for things. Where is the limit at which people collectively just say no, that's too much? I've been waiting for that since 2021.
Well it’s only been four years of this, and I would be curious to know how many young people are currently buying homes, since again, the media first-time buyer age is climbing still.
The rise in interest rates will absolutely change buying patterns if prices remain where they are (spoiler: Trump has already said he’s going to do whatever it takes to protect the equity for existing homeowners). We’re talking about hundreds to thousands of dollars in differences in monthly mortgage payments in some HCOL areas. How does that not affect buying patterns?
You ignored the rest of what I said. Rates alone are not the deciding factor. People who complain only about the rates are ignoring the entire historical trend and hoping for a lottery ticket.
Home prices, budget inflationary pressure and wage rate are the culprits. We can drop rates but if home prices rise and wages lag you still won’t be able to afford a home, nevermind budget inflationary pressure.
I didn’t ignore what you said. You said interest rates aren’t the biggest issue with the housing market, I pushed back on that. I still think interest rates are a very large (and certainly more impactful than you’re given credit for) component in home sales decreasing across the country. People aren’t willing to sell their sub 2-3% mortgages if they don’t have to and would rather rent those properties out than get rid of them and lose what amounts to free money. Nothing you’ve said has disproven that notion.
Interest rates rising are absolutely keeping people from buying new homes, are locking homeowners into their properties, and are preventing new homebuyers from finding anything worth buying.
It also remains to be seen what will happen with AI and the job market, but up until now it has been very beneficial to your career to be able to move to a new city for a better opportunity. So home ownership is pretty much a huge negative for people early or mid level in their careers.
Housing has been going down considerably since 2022 adjusted for inflation, and those high rates ensure that real prices in 5 years will be considerably lower. Which is a positive for everybody but boomers.
This is obviously fake news, as the President of the Unites States* has proclaimed that prices are dropping fast and the only thing going up is your 401(k).
/s, of course.
(The “Unites” goof on the AI agreement was just too dumb and had to be thrown into this comment.)
This post is a really good topic to generate economic discourse. Coming in with a satirical and political comment causes discourse to breakdown or otherwise incentivizes shitty comments.
To rightsize this, how do you think mortgage rates increasing will affect market demand in the suburbs of Chicago, Denver metro, and Phoenix?
Something like half of mortgage holders have a rate at 4% or lower. No one is selling for a lower price. People will just stay put. Basically the housing market is completely frozen for the foreseeable future.
Why would prices drop when there is high inflation and all of us owners have low rates? “lets sell our house then buy another one at a higher rate?” lol
The part you didn't say is owners who don't have to move. You're right that gorup would never sell in this environment. The two groups that would cause negative pricing pressure are the owners who are forced to sell due to outside pressure (have to relocate, job loss etc), and home builders who can't afford to sit on unsold units for too long.
Hah all good. Was just so painful buying her out of the equity, and then refinancing off of my 3.15% rate. I was lucky to be able to afford it at the time because it helped me keep my son via the 'familial home', but getting crushed a bit by the insurance and taxes at this point. C'est la vie ;)
The developers are also reveling in this current lax permitting / enforcement environment to churn out as many units as possible, with as little investment as possible.
Ten years ago, people had 2% ARM mortgages looked like geniuses compared to my 3.5% 30y fixed. They’re starting to panic now if their rates reset this year or next. When some of them are forced to downsize, it may not help housing supply, but at least it helps relieve some pricing war that’s going on in some neighborhoods.
BlockQuantCapitalLab | 7 hours ago
Freddie Mac's weekly survey tells the same story on a slower clock: the 30-year average bottomed at 5.98% on Feb 26, the same week the article dates the start of the Iran war, and was 7.03% last week (new reading at noon ET today).
In dollars: on a $400k 30-year loan, 5.98% vs 7.03% is about $276 more per month in principal and interest, roughly $3,300 a year for the same house.
The energy story also showed up in this morning's ISM manufacturing report: the headline was flat (54.5), but prices paid jumped to 77.9 from 71.1, well above the ~73 expected. Input-cost prints like that tend to keep the 10-year, and mortgage rates with it, elevated.
Gamer_Grease | 8 hours ago
I’m sort of glad that my wife went to grad school and now has a still-unsettled career. We move around often enough that we have no timeline for buying and keep our down payment savings in the market. We are as likely to live somewhere where we could never afford to buy a home as we are to live in a place where houses are affordable. So I can watch these developments from afar without becoming worried.
American culture pushes you to buy early and often, though, and so I think this is going to cause a generational shift in politics and culture. You’re going to have so many 20-somethings with decent earnings who will either rent eternally or live with their parents, and that will change the way they vote and consume and live.
I expect even more young people will flock to mid-sized and larger cities where renting is an expectation and a lot of housing stock is mortgage-free or financed very cheaply anyway. We’ve been looking at our parents like they’re crazy when they’ve mentioned us moving to the burbs and buying a house for a long time, but that’s just our lifestyle, to some extent. However, the current median first-time homebuyer is already 40 years old. I think more and more people are going to become like us regardless of their career choices.
joepez | 8 hours ago
The rise in interest rates won’t be the thing that changes buying pattern. Today’s high is the highest since 2023. That’s three years ago and not generational impacting. Those rates were the norm for decades. Rates in the 2% is not normal.
The bigger issue is the rise in home prices coupled, a rise in inflation and lagging wage rate. Those three factors will impact home ownership much more than an interest rate. You want real change you need a change in your wages and in general government, at all levels, need to rethink revenue intake.
Bastillerion | 8 hours ago
The problem is that Trump has come out and said the quiet part out loud, that he wants to make homes more affordable to young people while protecting the equity gains in existing homeowners. Those two can’t be reconciled.
082426grateful | 8 hours ago
So many things defy mathematics or logic that come from his mouth. Because they are things that are said to garner votes and attention.
It’s best just to completely disregard our nation’s leadership now. Self-serving as always, now weaponized.
Bastillerion | 8 hours ago
Oh sure, Trump might be dumb enough to come out and say it, but that sentiment is unfortunately shared by most of the ruling class. They theoretically want to get inflation under control and make life more affordable for the average American, but they don't want to upset the paper gains asset-holders have made over the past 10 years. The problem is that those gains, especially in stonks for the top 5-10%, are driving inflation. You can't get inflation under control unless you pop the stock bubble, which none of the powers that be want to do.
082426grateful | 7 hours ago
Man, I could not agree more. I wish I had your skill at writing out my thoughts.
There is just simple denial to the fact that we cannot please everyone all the time. We cannot keep the wealthy as fat and happy as they are right now, without sacrificing the social ties that we have as a nation, as a world.
We should have evolved to be better with the success of capitalism in creating a middle class of people. Instead, we’ve allowed capitalism to revert into cannibalism.
Bastillerion | 6 hours ago
Thank you for the kind words. Yes, the problem is that our economy has now developed around the rich spending their stock gains. That's why the top 10% are like 50% of spending or something. If the rich pull back, the economy goes into a recession, and we can't have that!
The problem that our leaders don't get is that inequality in many ways is worse than being in a bad spot in absolute terms. We judge our own well-being based on how we're doing relative to others. That's why the poor in America don't want to hear that the poor have it great compared to the rich in 1880. Because it's irrelevant.
Sacrificing the social ties is EXACLTY what has been happening, and it's undermining society's cultural and moral fiber.
Qeltar_ | 5 hours ago
Well, in this case, it's pretty obvious which of those two he is lying about.
HIASHELL247 | 8 hours ago
Ohh I heard him say he wants home prices to go up. How is that more affordable?
Bastillerion | 7 hours ago
Because he wants those higher prices coupled with a 0% fed funds rate and 2.5% mortgage rates. It's not happening, but that's the theory.
Baxter9009 | 3 hours ago
Wasn't that Greenspan's Fed era? Which blew up anyway.
Ghostforce56 | 2 hours ago
The problem is that nothing Trump says it's reliable because he's a liar.
dust4ngel | 6 minutes ago
> he wants to make homes more affordable to young people while protecting the equity gains in existing homeowners
"i want votes, no idea how to deliver on my promises idk"
RespectTheAmish | 8 hours ago
Exactly.
Historically speaking. The rates are fine.
It’s prices that are out of control.
A friend in my small town (14,000 ppl) is moving. They bought their house in Jan of 2019 for 210k and just listed at 440k.
The only updates were basic maintenance and interior painting. They actually gutted some livable space in an attempt to make an in-laws suite, that they never finished (so it’s just drywall at the moment in like 600sqft of the house).
I’m sure they will get around that amount. It’s insanity.
Oldcomisgone | an hour ago
Too low of rates lead to the high prices and there is no way back but a price that collapses to the sustainable mortgages at 7%.if every 1% is a rise of $276 then the home price has to fall most of the way so a mortgage on a 400k home isn’t $1300 more.
socialmedia-username | 5 hours ago
Seems to an issue all around. People just keep paying higher and higher prices for things. Where is the limit at which people collectively just say no, that's too much? I've been waiting for that since 2021.
Gamer_Grease | 8 hours ago
Well it’s only been four years of this, and I would be curious to know how many young people are currently buying homes, since again, the media first-time buyer age is climbing still.
OddlyFactual1512 | 8 hours ago
>the media first-time buyer agents climbing still.
?????
Gamer_Grease | 7 hours ago
*age is
popsicle_of_meat | 6 hours ago
I think they meant to say "...median first-time buyer age is climbing still."
Gvillegator | 8 hours ago
The rise in interest rates will absolutely change buying patterns if prices remain where they are (spoiler: Trump has already said he’s going to do whatever it takes to protect the equity for existing homeowners). We’re talking about hundreds to thousands of dollars in differences in monthly mortgage payments in some HCOL areas. How does that not affect buying patterns?
joepez | 6 hours ago
You ignored the rest of what I said. Rates alone are not the deciding factor. People who complain only about the rates are ignoring the entire historical trend and hoping for a lottery ticket.
Home prices, budget inflationary pressure and wage rate are the culprits. We can drop rates but if home prices rise and wages lag you still won’t be able to afford a home, nevermind budget inflationary pressure.
The 2% rates were a massive anomaly.
Gvillegator | 6 hours ago
I didn’t ignore what you said. You said interest rates aren’t the biggest issue with the housing market, I pushed back on that. I still think interest rates are a very large (and certainly more impactful than you’re given credit for) component in home sales decreasing across the country. People aren’t willing to sell their sub 2-3% mortgages if they don’t have to and would rather rent those properties out than get rid of them and lose what amounts to free money. Nothing you’ve said has disproven that notion.
Interest rates rising are absolutely keeping people from buying new homes, are locking homeowners into their properties, and are preventing new homebuyers from finding anything worth buying.
Infinite_Dress_3312 | 8 hours ago
>Those rates were the norm for decades.
now please tell the audience what the price of homes were relative to earnings during those years, compared to present day
dopechez- | an hour ago
It also remains to be seen what will happen with AI and the job market, but up until now it has been very beneficial to your career to be able to move to a new city for a better opportunity. So home ownership is pretty much a huge negative for people early or mid level in their careers.
Frequently_lucky | 5 hours ago
Housing has been going down considerably since 2022 adjusted for inflation, and those high rates ensure that real prices in 5 years will be considerably lower. Which is a positive for everybody but boomers.
deraser | 7 hours ago
This is obviously fake news, as the President of the Unites States* has proclaimed that prices are dropping fast and the only thing going up is your 401(k).
/s, of course.
(The “Unites” goof on the AI agreement was just too dumb and had to be thrown into this comment.)
Twister50v8 | 6 hours ago
This post is a really good topic to generate economic discourse. Coming in with a satirical and political comment causes discourse to breakdown or otherwise incentivizes shitty comments.
To rightsize this, how do you think mortgage rates increasing will affect market demand in the suburbs of Chicago, Denver metro, and Phoenix?
Fallout007 | 6 hours ago
Could be the time that housing prices actually drop. High interest rates, unemployment doesn’t help. If stock/AI bubble pops going to be ugly.
QuesoMeHungry | 3 hours ago
Something like half of mortgage holders have a rate at 4% or lower. No one is selling for a lower price. People will just stay put. Basically the housing market is completely frozen for the foreseeable future.
TrisolaranPrinceps- | 6 hours ago
Why would prices drop when there is high inflation and all of us owners have low rates? “lets sell our house then buy another one at a higher rate?” lol
holymacaronibatman | 5 hours ago
The part you didn't say is owners who don't have to move. You're right that gorup would never sell in this environment. The two groups that would cause negative pricing pressure are the owners who are forced to sell due to outside pressure (have to relocate, job loss etc), and home builders who can't afford to sit on unsold units for too long.
CannyGardener | 3 hours ago
This. Divorce is a bitch on so many levels.
TrisolaranPrinceps- | 3 hours ago
Sorry brah
CannyGardener | 3 hours ago
Hah all good. Was just so painful buying her out of the equity, and then refinancing off of my 3.15% rate. I was lucky to be able to afford it at the time because it helped me keep my son via the 'familial home', but getting crushed a bit by the insurance and taxes at this point. C'est la vie ;)
TrisolaranPrinceps- | 3 hours ago
I have just seen houses in my hood selling for what they did 4 years ago at the peak, so sideways consolidation really
crowcawer | 5 hours ago
The developers are also reveling in this current lax permitting / enforcement environment to churn out as many units as possible, with as little investment as possible.
_ii_ | 7 hours ago
Ten years ago, people had 2% ARM mortgages looked like geniuses compared to my 3.5% 30y fixed. They’re starting to panic now if their rates reset this year or next. When some of them are forced to downsize, it may not help housing supply, but at least it helps relieve some pricing war that’s going on in some neighborhoods.
Single_External9499 | 7 hours ago
Less than 5% of mortgages issued in 2016 were adjustable rate.
normal_man_of_mars | 7 hours ago
Everyone with an ARM mortgage 10 years ago refinanced to a fixed rate mortgage in 2021. If they didn’t they really missed the boat!