Posted on 12/11/2023 8:26:32 PM PST by george76
When Joe Biden first assumed office in 2021, the average monthly new home payment was $1,915, but it has since ballooned to $3,322 as of the third quarter of 2023...
Following the increase in costs, housing is now less affordable than at any other time in recent history, with mortgage rates exceeding 7% and median housing prices rising to around $392,000 as of October, according to the WSJ. High inflation and a relative tightening of the supply of housing have resulted in the increasing prices, while the high mortgage rates are in response to the increasing cost of credit.
The average for a 30-year fixed-rate mortgage reached an all-time modern low on Jan. 7, 2021, reaching 2.65%, just days before Biden took office, according to the Federal Reserve Bank of St. Louis. Mortgage rates then reached a recent peak of 7.76% on Nov. 2 of this year, receding slightly to 7.03% as of Dec. 7.
The rising mortgage rates follow hikes in the federal funds rate by the Federal Reserve, which put the rate in a range of 5.25% and 5.50%, a 22-year high, to combat high inflation that peaked at 9.1% in June 2022. Many economists partially attribute the high inflation to Biden’s huge government spending, which stems from acts he has signed as president like the American Rescue Plan and the Inflation Reduction Act.
Rent payments have not experienced as sharp of an increase as they are less responsive to rising interest rates, increasing from an average of $1,784 per month in the first quarter of 2021 to $2,184 per month in the third quarter of 2023, according to the WSJ.
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High interest rates add a substantial amount to the cost of a home due to the loan’s long duration, with just a 5% rate on a 30-year mortgage for a $320,000 house equating to nearly $300,000 in additional costs over the course of the loan. At 8% interest on the same $320,000 home, homebuyers would pay an additional $525,297.
Americans have especially felt the effects of rising inflation under Biden in the shelter sector, with costs rising 17.5% since January 2021, higher than the 17.1% gain in overall costs.
I’ve been archiving such articles under a tag on my laptop ‘inflation’.
We should use that keyword here at FR for these articles (already done).
Thanks for posting.
So wtf...
My entire life, when interest rates go up, home prices go down...
And vice versa...
I’m reading stories about housing prices coming down...
I’ve read stories about housing prices going up...
Can someone provide factual proof of what is really happening out there?
People are unwilling to take a capital loss on selling their houses. My experience (over 60 years of owning houses and real estate) is that when interest rates go up quickly, prices take a while to come down.
Soon you will start to see some desperate sellers reducing prices and then the rush will be on. My guess is that prices will bottom in about 2 years.
If sellers can’t find cheaper places to live post possible sale of their current house, then they won’t sell their current house.
Mortgage payments are only one part of the cost of home ownership. Property taxes, insurance, maintenance/repairs, utilities, and HOA fees have also been escalating rapidly during the past few years.
Finding competent and reliable workers for home repair projects at any price is daunting task in many parts of the country. Home repair scams are on the rise and local prosecutors have little interest in pursuing these cases. As for individuals filing civil suits against scammers, the time and cost of going to court is unaffordable for many cash strapped homeowners.
Home ownership was part of the middle class American dream in another era. In today’s collapsing society it is rapidly becoming an unaffordable nightmare.
“Soon you will start to see some desperate sellers reducing prices and then the rush will be on. My guess is that prices will bottom in about 2 years.”
I’m reading articles about institutional investors being unable to sell or rent large blocks of houses they bought in 2020 and 2021. The investors are bleeding millions in investment cash trying to cover property taxes and maintenance. Price reductions on homes may start sooner than many think.
99% of Americans will be financially worse-off than they were pre-pandemic by mid-2024, JPMorgan says.
It’s a small price to pay for no more mean tweets from the mean/bad orange man...
12/11/2023, 12:25:37 PM · by Hojczyk · 39 replies
Business Insider ^ | Dec 7, 2023, 11:51 AM EST | Phil Rosen
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