People have gotten so used to 0% - 4% interest rates aka free money the past 10-15 years they panic with anything above 4%+ but if you look historically 6% 7% interest rates are very normal and in fact good because people bad with money don’t take on risk by buying a house. Now you have millennials and gen z trying to time buying a house trying to get a lower interest rate which isn’t even guaranteed. If rates are 10% tomorrow then 6% will look cheap. Stop thinking the free money interest rates will come back because you’re basically asking for another financial crisis to trigger those low rates.
Unfortunately Fed has plans to drop rates in 2024 and even more in 2025
So buy a house now and refinance in 2025. When rates drop the housing prices are going to go up.
Why seen houses as investment instead seen them as a place to live?
Tell this to sellers. Hush
You are not wrong. 2%—5% interest rates are normal, I wouldn’t even call that high interest rates. The post 08 zero interest rates/infinite QE/government crazy spending, plus all the MMT BS are not sustainable at all. We were only able to do that without causing inflation pre covid, simply because the mass production capacity of China, so we can keep the price stable when everyone over spends. But that time is over now.
Yeah, prices people bid just follow from affordability, so if you're buying, the chance of a future rate decrease actually makes hight rates a plus. The problem is that nobody wants to sell to you because it will mean giving up their "free" million dollar loan. It will take some time for supply to unstuck itself and prices to come down to what is affordable in any given region.
“Prices come down” I doubt
Well, folks will have to move for other reasons eventually, so if rates stay high they will need to accept lower (inflation adjusted) prices if they want buyers... but yeah, "eventually" is going to be until the sellers throw in the towel.
inflation disproportionately benefits the elite bc their assets increase in value while our wages stay the same. anything to combat that long term is for the best. unfortunately everyone is so short sighted they freak out about their home price or stonks or 401k and then there’s way too much political pressure to let the market run it’s course. the fed showed a glimpse of bravery until they ran up against some bank failures and had to course correct. we are inheriting a very flawed system. rich boomers rigged this shit to benefit themselves and it’ll be up to us to deal with the fallout at some point. but probably not until they are out of power / dead
This. Fed printed money like a drunk given access behind the bar. Now that inflation is raging they tepidly increase rates. Note when inflation was bad in the early 80, rates went up to 15%. We are nowhere near that today. Rates are not that high at the moment. One benefit of the gold standard was that it kept the government in check and prevented inflating the money supply. Inflation is a tax. It destroys wealth and promotes consumption over saving. Inflation also has been the harbinger of downfall for every major civilization. All of them devalue their currency and exacerbate the decline.
People taking on loans and other risk, and government backstopping when their risky behaviors fail…don’t you just love cronyism? It’s almost like the word risk doesn’t matter if everyone is doing it
Rates should be in their high teens right now to slow inflation, then stay in the low double digits for a decade or so before getting to around 7-8% in the mid-2030s, then remain there indefinitely. These low rates cause poor investments and create bubbles. The dot-com bubble inflated in a 5-8% interest rate environment.
Nothing wrong with high interest rates unless you are a bank or vc or pe or no earnings tech company
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