|
Well it's bad news for a few reasons
A lot of appreciation with existing homes is due to
what's called "affordablility factor" I've once heard
every +1% the interest rate goes up $2milllion more people can't afford
the home.
Do keep in mind just 10-15+ years ago we did have 20% interest rates
we had 15-18% for many many years a long time ago
so even 9% wouldn't be that high.
You could always put down more money to offset the higher interest rates, you really should only buy what you can afford anyways.
I would be more concerned about all the 2-3 year ARMS
that are about to come due
here is the scary thing here for example
back years ago
if you had a 12% mortgage and it went up 3%
that's 25% increase in your payment, it hurts sure
you most likely take on as much home as you can, many do this.
Ok but how about these days where people have 5% mortgages
going up to 9%, that's an 80% increase in payments
do you think most people are going to default and foreclose?
you better believe they will
The loans that the mortgage business have been writing for the last 3-4 years are incredibly insane, it's like putting
6 check box upsells on a paysite, people don't know what they are doing, and later on they find out and here come the chargebacks (foreclosures)
in big herds.
Interest rates going up is not great news, but do keep in mind people still have 6% loans on homes you could assume
There are people that have $300k homes they own free and clear, and they could sell it to you on a 4% contract for deed (land contract)
it's still twice as much as they would get from a CD at the bank.
1 simple thing happening in real estate doesn't really matter
there are too many other ways to make money in real estate
you simply just adjust and play the game a different way, it's not a big deal.
Mortgage people will tell you that the refi boom went away a long time ago
|