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0 pointsbrightstep4y ago0 comments

As someone who just sold their home and is currently renting while waiting for a correction, I definitely want this to be true. Why are you confident those factors, absent a rate intervention, will produce a correction?

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adam_arthur4y ago

If inflation persists rising mortgage rates will push affordability to record lows. We're already close

If inflation abates quickly, then current prices can maintain and become the new normal.

The rate shock will price out pretty much every primary buyer. Investors will stop buying and even sell if they fear it's a peak.

On top of this, huge amount of backlogged supply is about to come into market in a big way in southern cities. The majority of the building is concentrated there. I would be very worried about Phoenix for example

xnx4y ago

Why wouldn't housing prices drop if the mortgage rate increased and keep affordability about the same?

adam_arthur4y ago

Sure, it could. But it's better to buy a lower priced item at a higher rate.

Just look how that worked out for homebuyers in the 80s paying 10%, who were able to refi at 2% later down the line.

j / k navigate · click thread line to collapse

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adam_arthur4y ago

If inflation persists rising mortgage rates will push affordability to record lows. We're already close

If inflation abates quickly, then current prices can maintain and become the new normal.

The rate shock will price out pretty much every primary buyer. Investors will stop buying and even sell if they fear it's a peak.

xnx4y ago

Why wouldn't housing prices drop if the mortgage rate increased and keep affordability about the same?

adam_arthur4y ago

Sure, it could. But it's better to buy a lower priced item at a higher rate.

Just look how that worked out for homebuyers in the 80s paying 10%, who were able to refi at 2% later down the line.

j / k navigate · click thread line to collapse