30 year mortgage rates hit 5%

[Rich Toscano]

sdr I hope you’re still alive and well? 😀

https://fred.stlouisfed.org/series/MORTGAGE30US

[Pbranding]

I think I know what sdr and deadzone will say but I’m curious about your thoughts Rich. Do you think we are in a bubble and do you see it deflating soon? Thanks

[Rich Toscano]

I am going to put up an update today(ish) but my thoughts on whether it’s a bubble are in this article: https://pcasd.com/whats-going-on-with-housing/

[Anonymous]

MBS market dropping like a rock again today, we may see closer to 5.5% 30 year by the end of the day.

[an]

The rate of increase is pretty amazing. Hopefully, we’ll see 7% mortgage and 5% CD soon. Would love to see a massive crash in the next 6 months. Especially in the home construction industry and material cost goes back to where it was in 2010.

[scaredyclassic]

I doubt there will be a crash but I fantasize about buying a condo in downtown SD for 339,000 cash.

[sdrealtor]

Why thank you Rich! I’m out running around buying wine for the warm spring and summer nights as well as picking up tickets for a couple of shows I want to go catch. Lots of exciting things going on out there and definitely seeing the beginnings of fairly significant changes in the velocity of the market. It’ll take a few months before anything shows up in the data but I think we can pretty safely say that the completely insane sellers market is over. More to follow after I get done with the truly important things in my life But I would be remiss if I didn’t point out that 4.75% is the widely available and operators are standing by

[sdrealtor]

Ok got a little time before weekly SoCal economist call I follow every week. Two weeks ago I noticed the start of it on my NCC monitor but I always want to see a follow on for a few weeks because we have had plenty of false flags. IN the 3 submarkets I follow 2 are still roaring along but in one (NCC SFR) we are starting to bring on homes faster than they sell for the first time in about 2 years.

There’s plenty in escrow with much lower rates locked that will close in next 30 to 45 days. Then that takes another 30 to 60 days to get reported. We wont see any change in reported data until perhaps July.

There are two things coming at us also with opposite forces. Things always slow down mid April as its tax season. I think what Im seeing is more than that but its not out of the question that things pick up in a couple weeks. Which brings us to May. There is no stronger market here than May. Its the annual impact of relo buyers showing up in throngs to secure a new home to move into over the Summer while schools are out. Will this be muted by the higher rates? I think it has to be but how much is a complete unknown and if its enough to have any impact equally unkown. Unless we keep getting more and more inventory it will all go quickly.

Bottom line we are in a wait and see point as to what happens? Surely we have a slower market coming at us in the future. But if and how much that impacts pricing is a complete unknown right now. As always, I love my front row seat. I’ll be watching and reporting back.

I will also add that the mortgage market typically moves up quickly in big overshoot movements then settles back slowly. I think we needed to have higher rates but to have any real impact they need to stay high and for a longer time than guys like DZ think. I think the big jumps are past and while they could creep up a little more I dont expect rates to be much higher the rest of the year. Not saying its impossible but I just dont see 6% anytime soon. The movements we’ve had are enough to slow things down we just need them to stay here for a couple years.

Lastly nothing indicates large price declines anytime soon. There is ZERO chance we go back to prepandemic pricing and the betting window remains open

[Anonymous]

The Fed giveth, the Fed taketh away

[Rich Toscano]

sdr — Good color, thank you — I especially like the point about May… I will be very interested to see how May looks.

I’m going to quibble with your forecasts though — not the forecasts themselves, but your confidence levels.

“There is ZERO chance we go back to prepandemic pricing and the betting window remains open”. — Really… zero? First of all that’s not a bet I can take unless you’re willing to offer infinite odds. But more to the point… of course it’s not ZERO chance. Prices in any market can go back to what they were a few years prior — this has happened multiple times in SD housing and it could happen again. I’m not saying it’s probable, but to say it’s IMPOSSIBLE is wildly overconfident.

And also, re your interest rate prediction. Your last rate prediction that I remember, not too long ago, was that mortgage rates wouldn’t reach 5% in your lifetime. That probably wasn’t even a year ago — and here we are at 5% already. (Hence my little joke in the OP). Given that you are a young, virile stud with decades left to go — this was a very bad prediction! But now you are making more rate predictions! I will admit that this latest one was pretty circumspect… but still, would it not make more sense to just consider that you don’t have an edge on predicting where rates will go? (I will admit here that this is the route I’ve chosen to take, but ONLY after making many terrible rate predictions in my past).

BTW I’m busting your chops you here because you have claimed to have the best predictive track record on piggington. That may actually be true, for all I know! But either way — if you are going to brag about that… I’m going to give you a hard time when you whiff one, ha ha. Heavy is the head that wears the crown! >:-)

[flyer]

With all of the crises in the world, something has to give eventually, and the winds of change do seem to be in the air.

Barring WW3, whatever happens, we’re all good, but it is going to be very interesting to see how it all plays out.

[sdrealtor]

[quote=Rich Toscano]sdr — Good color, thank you — I especially like the point about May… I will be very interested to see how May looks.

I’m going to quibble with your forecasts though — not the forecasts themselves, but your confidence levels.

“There is ZERO chance we go back to prepandemic pricing and the betting window remains open”. — Really… zero? First of all that’s not a bet I can take unless you’re willing to offer infinite odds. But more to the point… of course it’s not ZERO chance. Prices in any market can go back to what they were a few years prior — this has happened multiple times in SD housing and it could happen again. I’m not saying it’s probable, but to say it’s IMPOSSIBLE is wildly overconfident.

And also, re your interest rate prediction. Your last rate prediction that I remember, not too long ago, was that mortgage rates wouldn’t reach 5% in your lifetime. That probably wasn’t even a year ago — and here we are at 5% already. (Hence my little joke in the OP). Given that you are a young, virile stud with decades left to go — this was a very bad prediction! But now you are making more rate predictions! I will admit that this latest one was pretty circumspect… but still, would it not make more sense to just consider that you don’t have an edge on predicting where rates will go? (I will admit here that this is the route I’ve chosen to take, but ONLY after making many terrible rate predictions in my past).

BTW I’m busting your chops you here because you have claimed to have the best predictive track record on piggington. That may actually be true, for all I know! But either way — if you are going to brag about that… I’m going to give you a hard time when you whiff one, ha ha. Heavy is the head that wears the crown! >:-)[/quote]

Honestly I don’t ever remember predicting anything about rates ever before. It’s just not something I really ever gave a thought to before. I might have said I don’t expect them to get that high again in passing but do not recall making what I would consider a firm prediction. Also rates aren’t really my wheelhouse. I don’t expect to see them hit 6% but if they did it’s not like I’d fall off my horse. On the other hand I stand by my zero chance of pre pandemic pricing around me. Not to say it couldn’t happen somewhere in SD or that someone won’t find a one off sale but the general pricing level just isn’t going back where I live. No problem with the busting of the chops either. I take none of this personally. I have spent decades positioning myself to keep doing what I love in the manner I love no matter what the future brings baring a zombie attack for which I have no response but to run 🙂

And the bet is easy. Even money we do not see pricing levels here back at prepandemic levels which DZ said that would at least return to. The bet was for him but anyone is welcome to take it

[flyer]

With all of my wife’s projects in the entertainment industry, when not Zooming business meetings, we’re in the Los Angeles area once in awhile, and we’re hearing real estate may be cooling off a bit up there as well. Our daughter and her husband live in Malibu, and they are also seeing a slight decline in demand, so, things do seem to be changing in various SoCal and other areas.

[sdrealtor]

[quote=flyer]With all of my wife’s projects in the entertainment industry, when not Zooming business meetings, we’re in the Los Angeles area once in awhile, and we’re hearing real estate may be cooling off a bit up there as well. Our daughter and her husband live in Malibu, and they are also seeing a slight decline in demand, so, things do seem to be changing in various SoCal and other areas.[/quote]

It’s literally been only the last week and in a small way. If you are hearing things I’d suggest an exorcism or at least a good shrink

[scaredyclassic]

[quote=Rich Toscano]sdr — Good color, thank you — I especially like the point about May… I will be very interested to see how May looks.

I’m going to quibble with your forecasts though — not the forecasts themselves, but your confidence levels.

“There is ZERO chance we go back to prepandemic pricing and the betting window remains open”. — Really… zero? First of all that’s not a bet I can take unless you’re willing to offer infinite odds. But more to the point… of course it’s not ZERO chance. Prices in any market can go back to what they were a few years prior — this has happened multiple times in SD housing and it could happen again. I’m not saying it’s probable, but to say it’s IMPOSSIBLE is wildly overconfident.

And also, re your interest rate prediction. Your last rate prediction that I remember, not too long ago, was that mortgage rates wouldn’t reach 5% in your lifetime. That probably wasn’t even a year ago — and here we are at 5% already. (Hence my little joke in the OP). Given that you are a young, virile stud with decades left to go — this was a very bad prediction! But now you are making more rate predictions! I will admit that this latest one was pretty circumspect… but still, would it not make more sense to just consider that you don’t have an edge on predicting where rates will go? (I will admit here that this is the route I’ve chosen to take, but ONLY after making many terrible rate predictions in my past).

BTW I’m busting your chops you here because you have claimed to have the best predictive track record on piggington. That may actually be true, for all I know! But either way — if you are going to brag about that… I’m going to give you a hard time when you whiff one, ha ha. Heavy is the head that wears the crown! >:-)[/quote]

Funny you should mention certainty. I’ve been studying Wittgenstein’s unpublished notes called ON CERTAINTY. It’s actually a pretty fun read, for philosophy. We probably all need to read this to intelligently define our terms.

The book is free online, a pdf. It’s in the form of short numbered fortune cookie like aphorisms.

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