Posted on 09/14/2018 8:12:30 AM PDT by Tell It Right
American homeowners have amassed a record $6 trillion in equity in their properties, a figure boosted by surging home prices and a trend of owners staying put longer. But rising interest rates and caution resulting from the housing troubles of a decade ago are limiting how much of that equity is getting tapped.
(Excerpt) Read more at marketwatch.com ...
Getting "tapped" by the banks. My equity is still there.
Is less borrowing = less banksters = good for America in the big picture?
I refinanced a couple of years ago to a 2.5% fixed rate. I’ll probably never pay extra on principal since I can I average 12% returns in investments.
The reason is because they have really good mortgage rates. If they tap into their homes their interest rates go up.
From 1995 to 2004 people could refinance and take money out of their homes and their mortgage payment would still go down. Thats because interest rates had gone from around 10% in 1989 to around 4% in 2004. So, many people could buy larger homes, refinance or add on. And do it while having a smaller monthly mortgage bill. That made them feel more flush. Of course it meant they actually owed more money over all. But as long as they had a job and did not rack up credit card debts, they were still better off. Of course 20% of the people either lost their job or did rack up the credit card debts. SO the great recession killed them.
Now, if people move to a new home or refinance because their home value went up, they will not see the drop in mortgage costs because the interest rates are going back up. Everyone who has a thirty year loan from the past 6 years is going to stay put unless they have to move. This will be a long term trend which will see fewer homes for sale. And more runs to Home Depot instead. Expect the handy man business to do very well in the coming years.
Get
Out
Of
Debt
The reason is because they have really good mortgage rates. If they tap into their homes their interest rates go up.
A "debt" of about 300 bucks giving you the time and breathing room to amass a much larger amount to walk in and buy something bigger and better later.
In N Nevada, the rise in hoyuse prices is dwarfing your 12% in investments.
Pay down your mortgage.
IF you decide to move, you will have more ‘walk away $$$$$, since the first $250,000 (single) in capital gains is tax exempt & the first $500,000 (married) in capital gains is exempt. Paying down your mortgage $200 a month & having more walk away money that is TAX EXEMPT is smarter than earning 12% & then paying taxes on that interest.
Do the math for your own situation & then you might all pay down your mortgages faster.
Same in TX. House prices are skyrocketing. Most here are selling out to downsize as they can’t afford to stay in their homes due to horrendous property taxes even when they’ve paid off their mortgages.
Thanks for the info on property values.
The 12% is my average ROI, not just since 2009. My gains since Nov. 2016 are 25% annually. Plus I’m able to move my investments around a little more in equities. For instance, I just recently moved into European and Latin American funds because they’re at 52-week lows. While I’m out of domestic equity funds because they’re so darned high. If they drop I’ll put money back into them. I can’t casually move money around like that if it’s all in one real estate asset. Plus, I don’t like having too much of my portfolio into one asset class (i.e. real estate) and certainly not in one asset (one house).
Risking becoming homeless in order to take your “dream vacation” or send Junior to some Ivy League Socialist indoctrination camp was always a STOOOOOPID move.
And they are building 800-1 million plus all around me.
Agreed. I picked a college in 11th grade after picking my career and asking people already in the career (computer programmers) what their career was like and what kind of training I needed to be like them. Then I worked full time the whole time I was in college, finished with small debt, and had a degree that actually mattered and got me ahead.
Then when I had kids my wife and I budgeted for their college, told them we ain’t paying for it unless they have a career plan, paid off all our debts except our mortgage, and spent year after year putting money either in our Roth IRA’s, our Roth 401K’s (if we met the max of our Roth IRA’s) and/or a savings account if one to three kids had an upcoming semester we needed to pay for. Three kids in college simultaneously at one point, and our only debt was the mortgage that we never added to (by “financing” other debt into). Not rocket science. Just common sense money management and doing what’s best for our kids.
Awesome!
See my response to ridesthemiles about the same thing with housing prices going up in Nevada. I’ve basically made more than 12% annually the past couple of years. 12% is my average including the bad years. Plus, I like moving my money around various asset classes as they go up and down instead of leaving it all in one asset class and hoping that one asset class keeps going up for years.
Are you getting all these Illinois transplants like we are?
Are you getting all these Illinois transplants like we are?
Not in Alabama. Got lots of illegal aliens in much of Alabama and lots of tech startups moving into Birmingham area. I wouldn’t say the tech industry in Birmingham has caught up with Austin yet. But don’t be surprised if 8 or 10 years from now...
I hope the old pad in NE Columbia will sell OK.
It’s not quite ready for sale.
Being rid of it would suit me very much. I don’t get a lot of joy dealing with the grass and bits of mail that still show up after a year.
It’s not far from Fort Jackson in some nice (to me) burbs.
I’ll bet property taxes are a very big part of this.
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