Jump to content

All Encompassing Mortgage and Real Estate Thread


UTPhil2006

Recommended Posts

40 minutes ago, UTPhil2006 said:

But your earlier quotes sent it the other way 

I’ve posted multiple times in the past few months that the assumptions of rates just dropping down into the 5% range is not a slam dunk because of the threat of inflation. That is still true. I also said I personally felt rates would drop, but that it’s not guaranteed. It’s all about inflation.

The reason is massive government spending deficits. Now we have two new data points suggesting a recession: CMBS and credit card soaring default rates. A recession would very likely drop mortgage rates, but it might be a short temporary timeframe or not go all the way down into the fives. Why?  

The damn scary future facing us now is potential stagflation. The recession hits, deficits get even worse, the government cuts interest rates, Trump policies are inflationary, and that causes inflation to get worse.

In this situation mortgage rates could do anything. If we have a nice normal shallow recession, with minimal rates cuts, sane Trump policies, or the government somehow manages a soft landing, and inflation rates stay low, then mortgage rates could settle into the fives. 

My WAG for 2025 lowest 30 year mortgage rates are:

<5%   10% chance

5-6% 65% chance

6%+ 25% chance

Just my opinion .

Link to comment
Share on other sites

2 hours ago, Dbeasy said:

I’ve posted multiple times in the past few months that the assumptions of rates just dropping down into the 5% range is not a slam dunk because of the threat of inflation. That is still true. I also said I personally felt rates would drop, but that it’s not guaranteed. It’s all about inflation.

The reason is massive government spending deficits. Now we have two new data points suggesting a recession: CMBS and credit card soaring default rates. A recession would very likely drop mortgage rates, but it might be a short temporary timeframe or not go all the way down into the fives. Why?  

The damn scary future facing us now is potential stagflation. The recession hits, deficits get even worse, the government cuts interest rates, Trump policies are inflationary, and that causes inflation to get worse.

In this situation mortgage rates could do anything. If we have a nice normal shallow recession, with minimal rates cuts, sane Trump policies, or the government somehow manages a soft landing, and inflation rates stay low, then mortgage rates could settle into the fives. 

My WAG for 2025 lowest 30 year mortgage rates are:

<5%   10% chance

5-6% 65% chance

6%+ 25% chance

Just my opinion .

For me and @Wulaw Horn I hope you're wrong. 

  • Hook 'Em 1
Link to comment
Share on other sites

“It also said that credit card delinquency rates had improved slightly from the previous quarter, with 8.8 percent of balances transitioning to delinquency compared with 9.1 percent the previous quarter.

But it found the number of balances going into serious delinquency has increased from 2023—7.1 percent went into serious delinquency in the third quarter, up from 5.78 percent in the same period last year.”

 

 

Link to comment
Share on other sites

Right now I view rates in a Catch 22 scenario.  For rates to really move downward some bad economic shit nearly has to happen.  

17 hours ago, Dbeasy said:

The damn scary future facing us now is potential stagflation. The recession hits, deficits get even worse, the government cuts interest rates, Trump policies are inflationary, and that causes inflation to get worse.

In this situation mortgage rates could do anything. If we have a nice normal shallow recession, with minimal rates cuts, sane Trump policies, or the government somehow manages a soft landing, and inflation rates stay low, then mortgage rates could settle into the fives. 

My WAG for 2025 lowest 30 year mortgage rates are:

<5%   10% chance

5-6% 65% chance

6%+ 25% chance

Just my opinion .

The soft landing has already occurred, and inflation is the Mortgage rate boogeyman.  When I look at the dreaded "stagflation scenario," I fail to see how the affect of the Trump policies that have been proposed that do not have an upward effect on inflation, stalling any governmental rate cuts.  And certainly not getting the 10 year headed in the right direction.  Now it the policies that have been proposed are muted, or not of the magnitude floated then my suppositions my be flawed. 

I view deficits getting worse as an absolute certainty, along with inflationary Trump policies in the worst case staglation scenario.  My biggest concern is a stock market collapse leading the way to panic, and a shift of the American consumer to austerity.  Then all the bad things like CC defaults, upside down Commercial RE market, no interest in controlling the deficit push us to a real bad place.  Hope like holy fucking hell this is not the case.  Because that means that there will be a worldwide recession, and we will all be fucked.

 

ON THE UPSIDE - Jim Cramer was talking this morning about how at some point the sellers who need to sell will have to capitulate and lower their price to induce a sale.  Which is the flip side of an interest rate decrease, from a monthly affordability perspective.  That has been the historical pattern over time.  And if you need to sell a home, price or incentivizing a lower rate buy down are about the only ways to move a house that is not selling.  it's the COMBO of sky high prices that have become sticky (too sticky IMHO) and the higher rates that are strangling the market.  A little give on either end, would go a long way in helping the industry as a whole.  

I do think that price capitulation won't happen until late Spring. Simply as when you have uncertainty in the immediate future and you are optimistic then you tend to want to wait and see what shakes out.  It's natural human instinct.  Expectations of the ability of sellers to get that higher price from the recent past, and buyers whose expectation of that lower interest rate from the recent past are bumping heads.  Eventually one side or the other will capitulate.  But the idea that prices are gonna come down due to increased supply, and interest rates are gonna come down to offset the higher prices, seem very unlikely to happen together.  The change will lead with buyer and sellers both slightly capitulating, and the we will begin to see the MMI move upwards off it's horrific lows. 

I am hoping my dark thoughts will be eclipsed on the deficit and inflationary front.  If that is the case then you can toss everything I wrote above in the trash!

 

Link to comment
Share on other sites

22 minutes ago, horn4life said:

Right now I view rates in a Catch 22 scenario.  For rates to really move downward some bad economic shit nearly has to happen.  

The soft landing has already occurred, and inflation is the Mortgage rate boogeyman.  When I look at the dreaded "stagflation scenario," I fail to see how the affect of the Trump policies that have been proposed that do not have an upward effect on inflation, stalling any governmental rate cuts.  And certainly not getting the 10 year headed in the right direction.  Now it the policies that have been proposed are muted, or not of the magnitude floated then my suppositions my be flawed. 

I view deficits getting worse as an absolute certainty, along with inflationary Trump policies in the worst case staglation scenario.  My biggest concern is a stock market collapse leading the way to panic, and a shift of the American consumer to austerity.  Then all the bad things like CC defaults, upside down Commercial RE market, no interest in controlling the deficit push us to a real bad place.  Hope like holy fucking hell this is not the case.  Because that means that there will be a worldwide recession, and we will all be fucked.

 

ON THE UPSIDE - Jim Cramer was talking this morning about how at some point the sellers who need to sell will have to capitulate and lower their price to induce a sale.  Which is the flip side of an interest rate decrease, from a monthly affordability perspective.  That has been the historical pattern over time.  And if you need to sell a home, price or incentivizing a lower rate buy down are about the only ways to move a house that is not selling.  it's the COMBO of sky high prices that have become sticky (too sticky IMHO) and the higher rates that are strangling the market.  A little give on either end, would go a long way in helping the industry as a whole.  

I do think that price capitulation won't happen until late Spring. Simply as when you have uncertainty in the immediate future and you are optimistic then you tend to want to wait and see what shakes out.  It's natural human instinct.  Expectations of the ability of sellers to get that higher price from the recent past, and buyers whose expectation of that lower interest rate from the recent past are bumping heads.  Eventually one side or the other will capitulate.  But the idea that prices are gonna come down due to increased supply, and interest rates are gonna come down to offset the higher prices, seem very unlikely to happen together.  The change will lead with buyer and sellers both slightly capitulating, and the we will begin to see the MMI move upwards off it's horrific lows. 

I am hoping my dark thoughts will be eclipsed on the deficit and inflationary front.  If that is the case then you can toss everything I wrote above in the trash!

 

I’m right there with you. But I do believe that somehow a scenario will emerge that gets the whole system back on a sustainable track and away from the really bad scenarios. I just can’t envision it right now. Maybe really sluggish economies combined with some significant government spending cuts, but not so bad that we are plunged into deep recessions. In that scenario Phil will be happy. 

  • Hook 'Em 2
Link to comment
Share on other sites

1 hour ago, horn4life said:

ON THE UPSIDE - Jim Cramer was talking this morning about how at some point the sellers who need to sell will have to capitulate and lower their price to induce a sale.  Which is the flip side of an interest rate decrease, from a monthly affordability perspective.  That has been the historical pattern over time.  And if you need to sell a home, price or incentivizing a lower rate buy down are about the only ways to move a house that is not selling.  it's the COMBO of sky high prices that have become sticky (too sticky IMHO) and the higher rates that are strangling the market.  A little give on either end, would go a long way in helping the industry as a whole.  

I do think that price capitulation won't happen until late Spring. Simply as when you have uncertainty in the immediate future and you are optimistic then you tend to want to wait and see what shakes out.  It's natural human instinct.  Expectations of the ability of sellers to get that higher price from the recent past, and buyers whose expectation of that lower interest rate from the recent past are bumping heads.  Eventually one side or the other will capitulate. 

Anyone else seeing 60-90 DoM before the listing is removed, then later relisted at a similar or higher price?  Sellers have a 5-month window to act (when cyclical buying activity peaks through summer break) and if they don't get the price they *need*, it's often easier to park the property or rent it out if it's being floated on a 2.89% 30-year mortgage.
 

Better price indicators have been noted from homebuilders recently, where, in some markets, it's more cost effective to build than to buy an established SFH.

Link to comment
Share on other sites

8 minutes ago, Gravy Train said:

Anyone else seeing 60-90 DoM before the listing is removed, then later relisted at a similar or higher price?  Sellers have a 5-month window to act (when cyclical buying activity peaks through summer break) and if they don't get the price they *need*, it's often easier to park the property or rent it out if it's being floated on a 2.89% 30-year mortgage.
 

Better price indicators have been noted from homebuilders recently, where, in some markets, it's more cost effective to build than to buy an established SFH.

When you have a 2.89% mortgage and do not have to get the equity out of the home, you can do WTF you want.  What I would be very, very curious about is if those houses that come on and off actually sell for that higher price?  Or are these the sort of listings that I sort of view as "non-listings" as the price they list as has no chance of closing.  Now different story if they are getting that higher number!  But are they?

You are actually sort of describing the scenario of my daughter and her husband.  Did really well on a transfer via shell on both their house and a rate buy down that they are 2.75% I think, and had enough cash for the down that they didn't need a double close.  So they can do whatever they want.  But if they HAD to sell?  Then if the house does not sell and they need the equity?  Only choice is reduce price.  If no need for equity simply rent the thing forever.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.



×
×
  • Create New...