[quote=mixxalot]Fed highly likely to raise interest rates soon in June which if mortgage rates skyrocket will put a dent in real estate prices hopefully.[/quote]
I don’t think rates are not going to skyrocket. Ditto for mortgage rates. if at all, the Fed will probably string along a occasional blip of interest rates over a long period of time. Afterall, the Fed doesn’t want the markets to crash, and they seem to be hell bent on propping up the markets
After Fed raised rates, mortgage rates didn’t skyrocket. Today’s rate is lower than it was right before Fed raised the rates. And certainly, weren’t not seeing a steep drop of buyers interested. How mortgage rates relate to Fed rates? People seem convinced they move in lock-step. I’m not so sure what the correlation is.
My take on housing is more if it has to do with what goes on in people’s mind. If there’s fear on the street because of widespread uncertainty, then that probably will put a dent in people’s appetite. If rates are trickling up but people feel comfortable with their job/career/paycheck situation, and banks still qualify them, I don’t think that will put a dent in people’s appetite for buying. People were saying that large Qualcomm layoff was going to put a dent in housing. t didn’t make a difference, did it?
You got the strongest buyers right now holding on to the houses, purchased at the lowest prices, and maybe purchased with the cheapest loan products in history. In a game of poker, this would be almost equivalent to someone holding onto a royal flush. Almost.
Mortgage rates are not going to affect people who already bought and making their payments on their house. Their cost is fixed. And even if there is a slight depreciation on their house, they aren’t going to sell to “take a loss” only to buy another house, now with a new loan with higher interest.. because their payments on that smaller house with higher interest probably ends being the same as their previous loan on the older house that is underwater.
Me? I’m not selling anything anytime soon. Unless I get more than 100% appreciation, then I might consider it. Getting close on one. So maybe in that case. So multiply people like me with others that bought and were stacking them when rates were low, prices were low, and now rents are high…There is very little motivation to sell in the near future. That’s the problem with inventory.
