“if you don’t need financing” ??? There are not too many young people I know who have $600K lying around to purchase a home with cash! (Seattle area starter homes if you can find one). I really feel for the millenials who have not yet been able to purchase. It has been a moving target. By the time they save enough for a downpayment, the downpayment has grown substantially. Housing prices are not coming down as fast as necessary to offset the rising interest rates.
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Be careful what you wish for!
But the point about mortgages is that you can always refinance once rates come down. You won’t be paying the same rate for 30 years (and prices will rebound as rates come down, which is even better). Many of us have benefited from that over the last couple of decades. Now our kids will hopefully be able to do the same.
I’m more worried about whether employment will hold up. It’s really bad to graduate into a downturn and not be able to find a job or have your offer withdrawn.
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I agree with the entirety of your statement but was responding to a comment that wasn’t limited to “young people”. For a certain demographic this is and will be a more opportunistic time to purchase real estate then the artificially inflated markets of recent years.
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Agree, but it is not a 100% bulletproof strategy. Not always easy to do so if the property value drops and equity shrinks or financial circumstances change.
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Just want to point out that the refi option embedded in fixed rate mortgages isn’t cost-free. Whoever holds your mortgage (a bank or an investor) demands compensation, typically in the form of higher mortgage rate (than it would be otherwise), for giving you that option.
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They will. There’s always a lag between rate increases and price adjustments.
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Yes but at a given monthly payment, I’d much rather be buying with higher interest rates and lower house prices than vice versa. In fact reaching to buy (opting for a monthly payment which is a higher than normal percentage of income) is clearly a much better idea in a high inflation environment (where your earnings will increase quickly) than a low inflation one.
Agree, and this is how we got into homeownership back in the nineties, but right now there is a major difference IMO. RE is way overpriced, and the rates are very high. Not a good time to tie oneself up. Plus, no idea what would happen in the world in the next few months. So if o were looking to buy, I would rather sit tight.
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Well, the buyers with tons of money wanting to buy condos in new buildings appears to be lower than the developer projected in a place in nyc. This turned out to be good for S so he and fiancée can rent a nice brand new unit that is normally for owners only. They’re happy and enjoying the place for now.
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One place where we aren’t likely to see inflation is in short-term rentals:
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I’ve been avoided AirBnB and Vrbo. I only book hotels now. For example one luxury place I used to rent in Hawaii has gone up double to what I paid in 2020.
I’m the opposite, almost never use hotels anymore. Just booked all Airbnbs for a Spain trip. Beautiful apartments averaging $125/night.
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Some hotels you can cancel very close to the dates, not so with VRBO, not the one we usually go to. The one I’m thinking off is $1k a night, I’m not sure I want to lose 2 weeks with $1k a night. In fact, my husband doesn’t want to do anymore beach vacation, he said we’re living close to the beach and we don’t even go often.
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@DrGoogle123 - the only beach vacation we do is to Bermuda to visit H’s family and we have a place to stay there. We live 2.5 miles from the beach and walk there most days.
We use Airbnb mostly for family ski trips where we have a lot of people going. I make sure to find places that have good cancellation policies. We do have a ski trip to Mammoth coming up the week before Christmas that I had to pay in full and can’t cancel. So hopefully we will have some more snow in the Sierra Mountains to ski.
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I won’t reserve those. I use filters to show only those with free cancellation. I still get a good variety of options.
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We found AirBnB’s to be much more expensive recently contrary to the article. Unless trying to gather for a larger group, we usally start by researching AirBnB’s, but more often than not chose a hotel due to price. If we’re only staying one or 2 days, the cleaning fee alone adds far too much to the cost.
Like DrGoogle123, we also prefer more flexibility. Many AirBnB’s only give partial refunds, and some give no refunds after a 48 hour booking. I rarely if ever saw such short term cancellations in the distant past.
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I did search on free cancellation on Airbnb and I didn’t find it cheap, I used similar location to the one in Maine. But I’m not deleting the app. But the reason I started FB is to get an account on Airbnb and now I don’t even use both.
We just did a VRBO rental for a family group. It was $1k/night, plus cleaning. It was a BIG house with lots of bathrooms, which was great, but it was a pain IMO. It was convenient to host an afternoon group (after a funeral) but it also meant we had to put up with our not-so-well-behaved relatives.
I’d rather have had a hotel. To myself.
For the topic, I didn’t think it was cheaper or more expensive than a hotel, just bigger. For some reason, there were 10,000 plates and maybe 7 coffee cups.
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My husband left for Mammoth today. It’s the earliest he has ever gone up. He goes with a friend and they like to go in December once the gondola opens but in recent years it’s always will there be enough snow. They stay at the Village since they split it.
Our last trip we booked a few apartments but went through Bookings. We got the space of an apartment but not all the added fees of an ABnB.
We have a vacation house rental in the extended family that is with a management company. They list on their own website, VRBO and ABNB.
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Since Election Day we have had two major inflation data points, CPI last week and PPI today, showing inflation dropping significantly. I said in June that the Fed should stop around 2.5%, and then in September that the Fed should stop at 3.5-4%. The Fed should stop. The next rate hike will do more harm than good. Tapering has a long way to go, so there is additional deflationary pressure over the next couple of years outside of the Fed Funds Rate.
The rest of the world central banks also need to catch up to us. The U.S. dollar is out of wack with other major currencies. There is still upwards price pressure on labor, but even that is easing, and the Fed should not be picking winners in the labor market. Let the market set the price. The Fed just needs to chill for a bit and see how things shake out.
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