What if interest rates go to 13%?

[BKinLA]

[quote=svelte]…remember the phrase “stagflation” and WIN (“Whip Inflation Now”) buttons?[/quote]

Remember wearing your WIN button upside-down:
(NIM = “No Instant Miracles”)?

My family bought a house in 1980 by assuming the mortgage from the seller. Whatever the interest rate was on the existing mortgage, it was obviously lower than a new one at prevailing rates.

If rates do spike, I wonder if this might become commonplace again…although who wants to assume a toxic mortgage on a property that is declining in value?

[peterb]

Underdose, I think that in order to have housing actually rise in price, we will need to have wages increase so that the debt can be sustained. Or the interest rate would have to be in the 1% to 2% range. I dont know if either of these could be accomplished in todays environment. I doubt very much that wages will be rising any time soon with unemployment in CA at 7.7% and 6.1% nationally. So that leaves lowering the interest rate. A few trillion US$ in T Bills outta do it. But what kind of premium will our lenders want for such a folly?

[peterb]

Underdose, I think that in order to have housing actually rise in price, we will need to have wages increase so that the debt can be sustained. Or the interest rate would have to be in the 1% to 2% range. I dont know if either of these could be accomplished in todays environment. I doubt very much that wages will be rising any time soon with unemployment in CA at 7.7% and 6.1% nationally. So that leaves lowering the interest rate. A few trillion US$ in T Bills outta do it. But what kind of premium will our lenders want for such a folly?

[peterb]

Underdose, I think that in order to have housing actually rise in price, we will need to have wages increase so that the debt can be sustained. Or the interest rate would have to be in the 1% to 2% range. I dont know if either of these could be accomplished in todays environment. I doubt very much that wages will be rising any time soon with unemployment in CA at 7.7% and 6.1% nationally. So that leaves lowering the interest rate. A few trillion US$ in T Bills outta do it. But what kind of premium will our lenders want for such a folly?

[peterb]

Underdose, I think that in order to have housing actually rise in price, we will need to have wages increase so that the debt can be sustained. Or the interest rate would have to be in the 1% to 2% range. I dont know if either of these could be accomplished in todays environment. I doubt very much that wages will be rising any time soon with unemployment in CA at 7.7% and 6.1% nationally. So that leaves lowering the interest rate. A few trillion US$ in T Bills outta do it. But what kind of premium will our lenders want for such a folly?

[peterb]

Underdose, I think that in order to have housing actually rise in price, we will need to have wages increase so that the debt can be sustained. Or the interest rate would have to be in the 1% to 2% range. I dont know if either of these could be accomplished in todays environment. I doubt very much that wages will be rising any time soon with unemployment in CA at 7.7% and 6.1% nationally. So that leaves lowering the interest rate. A few trillion US$ in T Bills outta do it. But what kind of premium will our lenders want for such a folly?

[jpinpb]

La Jolla Renter – thanks for posting the calculation. One thing that makes a difference in the real monthly payment is the property tax. The property tax will be lower on a lower priced home. Also, a lower priced home may allow some people to put 20% down and avoid PMI, making the total monthly payment lower.

[jpinpb]

La Jolla Renter – thanks for posting the calculation. One thing that makes a difference in the real monthly payment is the property tax. The property tax will be lower on a lower priced home. Also, a lower priced home may allow some people to put 20% down and avoid PMI, making the total monthly payment lower.

[jpinpb]

La Jolla Renter – thanks for posting the calculation. One thing that makes a difference in the real monthly payment is the property tax. The property tax will be lower on a lower priced home. Also, a lower priced home may allow some people to put 20% down and avoid PMI, making the total monthly payment lower.

[jpinpb]

La Jolla Renter – thanks for posting the calculation. One thing that makes a difference in the real monthly payment is the property tax. The property tax will be lower on a lower priced home. Also, a lower priced home may allow some people to put 20% down and avoid PMI, making the total monthly payment lower.

[jpinpb]

La Jolla Renter – thanks for posting the calculation. One thing that makes a difference in the real monthly payment is the property tax. The property tax will be lower on a lower priced home. Also, a lower priced home may allow some people to put 20% down and avoid PMI, making the total monthly payment lower.

[kewp]

Underdose, I think that in order to have housing actually rise in price, we will need to have wages increase so that the debt can be sustained.

In the long run, fundamentals *always* win out.

And median income in the fundamental. High unemployment plus falling wages is indeed the swan song for the SoCal RE market.

There is no way to re-inflate the housing bubble, short of imposing price controls and actually paying people to buy homes. I can’t imagine that ever happening.

[kewp]

Underdose, I think that in order to have housing actually rise in price, we will need to have wages increase so that the debt can be sustained.

In the long run, fundamentals *always* win out.

And median income in the fundamental. High unemployment plus falling wages is indeed the swan song for the SoCal RE market.

There is no way to re-inflate the housing bubble, short of imposing price controls and actually paying people to buy homes. I can’t imagine that ever happening.

[kewp]

Underdose, I think that in order to have housing actually rise in price, we will need to have wages increase so that the debt can be sustained.

In the long run, fundamentals *always* win out.

And median income in the fundamental. High unemployment plus falling wages is indeed the swan song for the SoCal RE market.

There is no way to re-inflate the housing bubble, short of imposing price controls and actually paying people to buy homes. I can’t imagine that ever happening.

[kewp]

Underdose, I think that in order to have housing actually rise in price, we will need to have wages increase so that the debt can be sustained.

In the long run, fundamentals *always* win out.

And median income in the fundamental. High unemployment plus falling wages is indeed the swan song for the SoCal RE market.

There is no way to re-inflate the housing bubble, short of imposing price controls and actually paying people to buy homes. I can’t imagine that ever happening.

[Author]

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