Originally Posted By mrichmondj The Fed is still after the inflation boogeyman. Anyone care to speculate when the tipping point will come that causes the real estate market to crumble? Home inventories have managed to quietly creep up to a 10-year high during the past year of rate hikes.
Originally Posted By Jim in Merced CA Well, with Global Warming inevitable, my home will still appreciate -- as ocean front property. [rim shot -- ba-dum-dum!]
Originally Posted By tiggertoo ^^^ In Merced? More like a part of Sacramento Bay. Of course, my home is a mere 6 ft. above sea level less than a mile from San Francisco Bay. I am currently in the market for large pontoons. <<Anyone care to speculate when the tipping point will come that causes the real estate market to crumble?>> It will take a year or so for late payments and foreclosures to show up on the macroeconomic scale. So if the housing market were to crumble, it would happen then.
Originally Posted By StillThePassHolder Regardless of why the rate hikes are happening, if anyone out there is on an interest only loan or a three to five year ARM, refinance NOW. Get yourself a 30 year fixed before it's too late. The piper is going to start calling, soon.
Originally Posted By SuperDry I can't *quite* tell what the tone of #1 is. I know that some people are overly focused on the fed's effect on one particular part of the economy that they may be focused on, but their role is much broader than that, as it should be. If what the fed does ends the unsustainable run-up of real estate that we've seen in certain parts of the country, especially that part of it which is being driven by the insane financing packages that some are using, then so be it. Not that the fed should try to do this on purpose, but if what they are doing for other reasons happens to have that effect, then so be it. I remember right around 2000 when the tech boom was coming to an end and the dot bomb was getting started, some people were absolutely livid at Alan Greenspan and his policy of continuting to increase interest rates to prevent an overheated economy. Their view seemed to be that the market owed them a 25% annual return, and were angry at anything and anyone that might get in the way. Now that we're in more sober times, I think most people realized that what was happening to the stock market in the late 90's was not sustainable regardless of what the fed did. Similarly, I remember around 1990 when interest rates and inflaction had gotten under control for a few years, compared to the mid-teens that we had in the early 80's. There were some seniors that were mad at this because they could no longer get a CD at the bank that paid 15%. The notion that the only thing that really matters is how much the going CD rate compares to inflation (and that's not even taking into account income tax).
Originally Posted By Fe Maiden ^^^Ah, the real return of a CD. I've spent many a seminar explaining how getting 15% on your CD wasn't that great of a deal.
Originally Posted By hopemax My parents are in the process of selling their home in WA. They bought it in 1984, and their interest rate was 17%. They laugh and say, "good times." They are really hoping that they will find a buyer soon, and hold out for the market to drop and buy in Florida.
Originally Posted By mele I think the bubble is deflating a little and is about to burst. At least, that's what was said on the news. There are so many new homes on the eastside. On my street, homes are being built that are about, hm, maybe 3500 sq. feet. They are crammed onto tiny lots and are priced in the high $800,000. And we live by power lines and don't have sidewalks. I'm pretty sure that they would try to fit 2 homes on our current property. We've got people driving by, taking photos of the property. It seems crazy to me.
Originally Posted By TomSawyer New home sales are already down - probably because they are putting in those overbuilt McMansions like you're talking about Mele. But existing home sales are apparently still very good.
Originally Posted By bboisvert In another thread, I've mentioned about home prices in SW WA going up and up thanks to the exodus of Oregonians escaping the crappy Portland Public Schools. Seems to be leveling out for now, but homes in my area have nearly doubled their value in the last 7 years.
Originally Posted By mrichmondj I expect interest rates will start squeezing the budget of a lot of families real soon. With the savings rate negative, interest on all of those credit cards, variable rate mortgages, and home equity lines of credit is bound to start eating into the pocketbook. I'm about ready to get out of the housing market for a few years due to a move I have to make for work, but it seems like a good time to be recouping the equity and sitting it on the sidelines for a while.
Originally Posted By Dabob2 How weird. I started reading this and thinking "hm... haven't seen mrichmondj or TomSawyer around here in a while. Nice to see them back..." Then I started thinking "Hm... these posts sound more like they should have been written about the situation a couple of years ago..." THEN I noticed the dates. Very interesting to see what was being said then.
