I do make quite a bit more now but I am not sure I would be able to buy my current house at today’s prices (I refinanced when interest rates were low).
On one hand, I don’t like when I read about ‘astronomical interest rates’ when I know the rates in the 70s, 80s and 90s were the same or higher than what we’ve had in the last 15 years. I’d prefer people understand that it’s the wages not rising along with price inflation that’s the issue.
This is exactly the issue I had. Infuriating as it is, I finally clawed my way up to a position where I could earn enough to buy a house and then COVID hit and destroyed everything… Now I’m back to having to live in someone else’s garage, paying their entire mortgage payments in rent prices for the rest of my life…
The big driver is the interest rate, not the base price increases.
Home price increases, going up about 3%, have pretty much tracked with the inflation rate. 3% on the base will add a bit to your mortgage payment, but no where close to what doubling the mortgage interest rate will do.
Just jump into a loan calculator and see what happens when you bump up the base price 3% vs. shifting the interest rate from 2019 to 2023 values.
No, supply is very high but nobody wants to pay dem interest rates. Your monthly payment is literally double what it would have been in early 2022 for the same house.
They buy with cash, and tend to hold houses indefinitely. Which is another reason sales are decreasing. Humans sell their houses for a myriad of reasons. A corporation that rents housing isn’t going to sell unless the corporation shuts down. They’re going to keep that steady rental income because humans can’t afford a mortgage to stop renting.
Corporate landlords are buying with loans. If you have the cash to buy one house outright you will instead put 10% down on 10 houses and have 10 houses to rent. See an accountant for details - including what the best amount to put down is (I picked 10% only because it makes the math easy)
When interest is high, borrowers can’t afford to get a mortgage, and corporations pay cash.
But theyre not getting mortgages, they’re getting business loans. And they’re not making down payments, they’re using existing property as collateral on the loans.
I’d say that’s something a layman wouldn’t know and someone might need to talk to an account, but our most recent ex-president is going through a pretty high profile court case about it right now…
I dunno, as an actual accountant it’s not like I deal with any of this stuff on a day to day basis. I don’t know what knowledge I’ve gained through mitosis, but I did assume everyone would know without having to explain that. So maybe you’re right? Or maybe you just don’t understand it so you think no one else can?
If you cannot get a loan, then real estate is a much less powerful investment. Cash flow is key, if you have one properties that you put each down $20k, pay $1000/month on and rent for $1200 that is $2000/month in extra cash. If you instead buy the property for 200k you get $1200 in cash per month. Of course in reality you will never have all your property rented all the time, so it is more reasonable to say with 10 properties you get $1600/month - and sometimes get a $200 bonus while with 1 you sometimes have $1200 and sometimes $0 - which is much harder on the budget.
Of course anyone thinking about this needs to see an accountant to run all the different numbers, but in general real estate generally only makes sense if you can take a loan and thus have less risk.
Yes, the interest rates are much higher, which makes mortgages cost a lot more. But they aren’t literally double. A $250k mortgage at 3% is roughly $1200/mo vs $1700/mo at 7%.
So supply is low and home prices are increasing. Not good for home buyers.
Interest rates are also high.
I had a mortgage in 2005 with 7.5% interest. The cost of homes is 2-4x as much now but I’m only making 20% more.
I had a mortgage in 1998 with 7.5%.
I do make quite a bit more now but I am not sure I would be able to buy my current house at today’s prices (I refinanced when interest rates were low).
On one hand, I don’t like when I read about ‘astronomical interest rates’ when I know the rates in the 70s, 80s and 90s were the same or higher than what we’ve had in the last 15 years. I’d prefer people understand that it’s the wages not rising along with price inflation that’s the issue.
This is exactly the issue I had. Infuriating as it is, I finally clawed my way up to a position where I could earn enough to buy a house and then COVID hit and destroyed everything… Now I’m back to having to live in someone else’s garage, paying their entire mortgage payments in rent prices for the rest of my life…
“Fun.”
I bought a place in 2019 that I could in no way afford at the current rates. The mortgage would be roughly $1000 more per month. Just not possible.
The big driver is the interest rate, not the base price increases.
Home price increases, going up about 3%, have pretty much tracked with the inflation rate. 3% on the base will add a bit to your mortgage payment, but no where close to what doubling the mortgage interest rate will do.
Just jump into a loan calculator and see what happens when you bump up the base price 3% vs. shifting the interest rate from 2019 to 2023 values.
No, supply is very high but nobody wants to pay dem interest rates. Your monthly payment is literally double what it would have been in early 2022 for the same house.
But corporate landlords don’t pay mortgages…
They buy with cash, and tend to hold houses indefinitely. Which is another reason sales are decreasing. Humans sell their houses for a myriad of reasons. A corporation that rents housing isn’t going to sell unless the corporation shuts down. They’re going to keep that steady rental income because humans can’t afford a mortgage to stop renting.
Corporate landlords are buying with loans. If you have the cash to buy one house outright you will instead put 10% down on 10 houses and have 10 houses to rent. See an accountant for details - including what the best amount to put down is (I picked 10% only because it makes the math easy)
If interest is cheap, sure.
When interest is high, borrowers can’t afford to get a mortgage, and corporations pay cash.
But theyre not getting mortgages, they’re getting business loans. And they’re not making down payments, they’re using existing property as collateral on the loans.
I’d say that’s something a layman wouldn’t know and someone might need to talk to an account, but our most recent ex-president is going through a pretty high profile court case about it right now…
I dunno, as an actual accountant it’s not like I deal with any of this stuff on a day to day basis. I don’t know what knowledge I’ve gained through mitosis, but I did assume everyone would know without having to explain that. So maybe you’re right? Or maybe you just don’t understand it so you think no one else can?
If you cannot get a loan, then real estate is a much less powerful investment. Cash flow is key, if you have one properties that you put each down $20k, pay $1000/month on and rent for $1200 that is $2000/month in extra cash. If you instead buy the property for 200k you get $1200 in cash per month. Of course in reality you will never have all your property rented all the time, so it is more reasonable to say with 10 properties you get $1600/month - and sometimes get a $200 bonus while with 1 you sometimes have $1200 and sometimes $0 - which is much harder on the budget.
Of course anyone thinking about this needs to see an accountant to run all the different numbers, but in general real estate generally only makes sense if you can take a loan and thus have less risk.
Corporate landlords don’t own a high enough % of residential real estate to have that much influence.
Yes, the interest rates are much higher, which makes mortgages cost a lot more. But they aren’t literally double. A $250k mortgage at 3% is roughly $1200/mo vs $1700/mo at 7%.
Depends on the house. Homes in my area are closer to $4-500k
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A $500,000 loan goes from $2182 to $3400 from 3% to 7%. A $1,000,000 loan goes from $4363 to $6835. Still not double.
Doubling the rate doesn’t double the total payment, only doubles the interest payment.