[quote=FormerOwner]What happens if mortgage interest rates go up from the current record lows of 4% for a 30 year mortgage to a more typical 7-8%? How much would people be willing/able to pay for houses then?
Also, while the US as a whole has low housing costs, that is not true for San Diego. In addition, transportation costs in the US (and especially San Diego) are much higher than almost anywhere else in the world. Just think about the cost of buying a car, paying the taxes/reg fees, insurance, maintenance, and all the gas. In much of the world, people walk to work or take public transit, which is much more cost effective.
SD House prices may go sideways for a long time, but I think there IS a lot of downside risk.[/quote]
Folks keep saying interest rates are going to rise to 7-8%…I don’t see that happening in the near future. It might steadily creep up, but not going to “jump”…Nope……
As we have seen, contrary to otherwise, Government will do just about anything to ensure we get out of this mess…Even if it means slight at hand work to keep rates artificially low…And it seems like they can pull a lot of rabbits out of the hat…
We might see interest rates rise 7-8% after say a decade or so… Personally, if it were me, I wouldn’t want to be holding my breath that long if I could find a place that pencils out near the cost of rent…Which should be possible now.
Rates are a historic low again…
And of course, if FLU keeps refinancing, rates will keep dropping. That’s a given..
I don’t think it makes sense to compare SD housing to other parts of the U.S. in as much it doesn’t make sense to compare Bay Area housing to SD…Each market has its own rules…. Judging by how things are, with folks still making purchases, and with stricter lender standards, I’d say that there are people who can afford to buy an arguably expensive house in Sandigo tells me the local economy is not doing THAT bad…In fact, it doesn’t seem like it’s doing bad at all.
And furthermore, I’m pretty near a “luxury apartment home” complex…And frankly, I’m seeing more and more moving trucks bringing people into SD…
Back in Feb/Mar, when I was renting out my condo, interest from folks that were “relocating”, private sector tech and biotech….So, I don’t think economy is doing bad here at all.
I would say what’s going on in SD now is a “flushing out process”. Folks that still have employment or still meeting ends meet probably are so because they happen to be lucky in in the line of work/profession/business where it’s pretty still in demand…While others who have “dropped out” because of lack of opportunity have already dropped out/relocated out of SD (maybe folks in construction/newcomers to RE???)…And still it appears there are employment opportunities that are unfilled by local people (which suggests why we see folks relocating here)…
