Calzone
Gear Whore #1
- Local time
- 11:20 AM
- Joined
- Nov 11, 2008
- Messages
- 16,885
- Location
- The Gateway To The Hudson Highlands
Here are some numbers:
87% of mortgages are under 6%.
This translates to 13% of mortgages are over 6%.
Current mortgage interest rates are around 6.2%.
22% of mortgages are under 3%.
The long term average mortgage rate over decades is actually 7.49%. Hard to believe but the numbers and the simple math does not lie.
So expect the 13% with mortgage rates over 6% to do some Re-Fi when rates become more favorable and beneficial.
87 minus 22 is 65, so perhaps 65 percent of homeowners might have an opportunity to sell and buy back into the market over a spread depending on their present locked in rate, but it seems likely that the 22% that have mortgages under 3% near or at record historical lows will continue not to sell, and effectively 22% of the available housing is kinda/basically off the market.
Let’s not forget the deep pockets that bought the 2007-2008 dip at fire sale prices that are now rental properties that exacerbate the housing shortage. These homes too likely will remain off the market. Remember not only are these properties “cash-cows” but are also a hard asset that have great potential for further appreciation as a limited commodity in a time of scarcity.
These deep-pocket homes likely have no mortgage and were bought with cash. The point here is they contribute to the housing shortage in a big way, yet they do not skew the numbers I’m reporting. At this point in history owning a home or real estate is a kinda vital asset.
I see the supply-demand imbalance pretty much continuing, and home prices getting bid up in an inflationary manner.
Two other facts: Housing costs were responsible for over 70% of inflation last year according to a report; and home prices last year went up 5.2%.
Affordable housing is a serious problem and over the long term is not going away.
Luckily “Maggie” and I are in the 22% with a mortgage rate near the record low under 3%. We caught a “falling knife” as they say, otherwise we would not be so secure in retirement.
I do think that the Hudson Valley will continue to be a hot market. Global warming, increasing storm intensities, and rising sea levels will promote the Hudson Valley as a safer place.
POST SCRIPT: pretty evident that housing prices will continue to get further inflated as interest rates fall and when the buying heats up. I don’t think Barbra Corcoran is wrong that at around 6% interest rates that there will follow an inflation in home prices due to demand. The numbers I guy into support her thesis.
The numbers I’m reporting flow in line with Barbra’s 6% as the tipping point.
Basically her premise was that it might pay to buy earlier, because the supply/demand imbalance might outweigh the cost of a mortgage even at a lower interest rate.
Simple math. If interest rates at 7% slowed down the housing market, and yet housing still appreciated 5.2%, is it sensible to say at 6% that home prices will at least go up 1%, and perhaps housing prices might get offset by that 1% to have a 6,2% increase?
Pretty much simple economics of understanding supply and demand and realizing where inflation will likely happen.
Post-Post-Script: I actually saw Barbra on Lexington Avenue and 96th Street. She is a tiny short woman. I did not invade her privacy BTW.
Cal
87% of mortgages are under 6%.
This translates to 13% of mortgages are over 6%.
Current mortgage interest rates are around 6.2%.
22% of mortgages are under 3%.
The long term average mortgage rate over decades is actually 7.49%. Hard to believe but the numbers and the simple math does not lie.
So expect the 13% with mortgage rates over 6% to do some Re-Fi when rates become more favorable and beneficial.
87 minus 22 is 65, so perhaps 65 percent of homeowners might have an opportunity to sell and buy back into the market over a spread depending on their present locked in rate, but it seems likely that the 22% that have mortgages under 3% near or at record historical lows will continue not to sell, and effectively 22% of the available housing is kinda/basically off the market.
Let’s not forget the deep pockets that bought the 2007-2008 dip at fire sale prices that are now rental properties that exacerbate the housing shortage. These homes too likely will remain off the market. Remember not only are these properties “cash-cows” but are also a hard asset that have great potential for further appreciation as a limited commodity in a time of scarcity.
These deep-pocket homes likely have no mortgage and were bought with cash. The point here is they contribute to the housing shortage in a big way, yet they do not skew the numbers I’m reporting. At this point in history owning a home or real estate is a kinda vital asset.
I see the supply-demand imbalance pretty much continuing, and home prices getting bid up in an inflationary manner.
Two other facts: Housing costs were responsible for over 70% of inflation last year according to a report; and home prices last year went up 5.2%.
Affordable housing is a serious problem and over the long term is not going away.
Luckily “Maggie” and I are in the 22% with a mortgage rate near the record low under 3%. We caught a “falling knife” as they say, otherwise we would not be so secure in retirement.
I do think that the Hudson Valley will continue to be a hot market. Global warming, increasing storm intensities, and rising sea levels will promote the Hudson Valley as a safer place.
POST SCRIPT: pretty evident that housing prices will continue to get further inflated as interest rates fall and when the buying heats up. I don’t think Barbra Corcoran is wrong that at around 6% interest rates that there will follow an inflation in home prices due to demand. The numbers I guy into support her thesis.
The numbers I’m reporting flow in line with Barbra’s 6% as the tipping point.
Basically her premise was that it might pay to buy earlier, because the supply/demand imbalance might outweigh the cost of a mortgage even at a lower interest rate.
Simple math. If interest rates at 7% slowed down the housing market, and yet housing still appreciated 5.2%, is it sensible to say at 6% that home prices will at least go up 1%, and perhaps housing prices might get offset by that 1% to have a 6,2% increase?
Pretty much simple economics of understanding supply and demand and realizing where inflation will likely happen.
Post-Post-Script: I actually saw Barbra on Lexington Avenue and 96th Street. She is a tiny short woman. I did not invade her privacy BTW.
Cal
Last edited:
