Feds raise US interest rates again

[UA_Iron]

with my parents in the Az area, I'll probably be over ther now and then. I'll hit you up, you better not flake.

you, me and tiger

 

[Delinquent]

I really do wish this bubble would deflate some so that we could afford to get into another house to get rid of our current problems but that doesn't seem likely in the near future

 

[Deterass]

A neighbor of mine was bitching, she just put her $80,000 house on the market for $106,000 thinking that for shure she'd get a buyer. no way, not now. especially in my small town. It is about 2500 sq. ft. though

Whiskey

Damn , 80,000 for a 2,500 sq. ft. home. Thats awful cheap. Where do you live?

 

[bluepeter]

Damn , 80,000 for a 2,500 sq. ft. home. Thats awful cheap. Where do you live?

No shit. 2500 square feet in my neighbourhood will run you close to $500000.

 

[Deterass]

No shit. 2500 square feet in my neighbourhood will run you close to $500000.

Around 200,000 in my area.....

 

[MattTheSkywalker]

alright bro's...the fed has little corrolation with mortgage interest rates. Mortgage interest rates are based on the secondary mortgage market, where investors trade mortgage backed securities. the stock market effects interest rates more than the fed does.

it's pretty funny that most people panic

Most people panic = market corrections.

Secondary market is equally capable of panicking, although there are insurance products to ease their pain.

 

[Spartacus]

Sure they don't.

But when more people put their houses on the market looking to "cash out" and fewer people can afford them due to higher rates....well, you see where this is going.

yup

 

[jnevin]

No shit. 2500 square feet in my neighbourhood will run you close to $500000.

Which is $80K U.S.

 

[George Spellwin]

The extended lower rates have enabled the lending industry to get more creative. 15 year ago, interest only mortgages were virtually non-existent.

Now all kinds of people have them.

Same with adjustables...much more common these days.

This "creative financing" makes it possible for people to buy "more house" than they otherwise would have and prolongs / raises the bubble.

When the inevitable correction happens, cash buyers will do well. So Cal will get hit very hard.

What do you think will happen in New York City?

 

[MattTheSkywalker]

What do you think will happen in New York City?

I expect NYC to see a small correction, at most 15%, because some of the prices are insane. A friend of mine around Chelsea just sold his place for $2.8M. It's 2300 s/f - a nice place, but almost $3M? You gotta be kidding me!

Many NYC places are expensive enough that their owners own multiple residences....for example another in Miami or Ft Lauderdale, etc., especially as their NYC residences have appreciated in value. These are the buyers who are likely to go interest only to take on a second place, or use a lot of their equity in their primary residence, etc.

But NYC is usually the primary residence (the high paying jobs are in NY), so these people will not be selling their NY residences. They will be selling their secondary places at a loss and flooding the market, if rates continue to rise. I am steering clear of South FL property.

NYC property owners are also sophisticated enough to know that higher interest rates mean that other investment vehicles will generate better returns, so some might sell investment properties they own (in NYC) thereby adding to the supply a little bit...hence the aforementioned correction.

If you own in NYC, you have little to worry about unless you really stretched, went interest only / ARM.

Post correction prices will level off 10% lower than they are today - my best guess.