That's crazy, I'm glad I, and a number of my friends, refinanced in 2020-2021 for rates in the 2.25-2.75 range. Going from 2.25 (my rate) to 5 would result in ~$300 more a month on my mortgage.
people that were using cheap mortgages to purchase additional properties with the aim of flipping it, who were also leveraged, are screwed.
the last bit of bad news is that property prices may not rise for people who buy the dip, we are entering into a global recession and the world's biggest real estate market have declined with no hope of making a comeback.
If they refinanced in 2020 then they likely bought in 2019 or earlier. If prices fell to 2019 levels it would be a crash —- and probably merit all sorts of government response including lowering interest rates. No one that entered the market before 2020 is “screwed”.
Housing prices even in the markets hit hardest by 2008 recovered in ten years. You aren’t stuck living in your current home forever.
If you bought an investment property then relax, there’s no indicator that rents are going to decrease anytime soon.
Many young people put off home ownership specifically because we watched slightly older friends lose their shirts on their houses. I remember specifically one friend who had to save up to sell their house, not only was he selling for 20% less than he bought for, but he was making $20k in out-of-pocket concessions to the buyers. Popular opinion was that houses were too risky.
Plus, there was the issue of, we all either were laid off recently, or had friends who had been laid off. It's kind of hard to think about long term planning with that hanging over you head.
So when the house of cards collapses, young people won't be the beneficiaries. They will suffer long-term because they lack the experience and context to internalize concepts like business cycles. I remember my mom telling me to use the $8000 first buyer credit from the government to buy the house across the street from her for $78,000. That house is how worth a quarter of a million. But I didn't buy it because I was worried about layoffs or further market collapse.
not to mention 1 out of 2 GEN-Z and 1 out of 4 millenials are hodling crypto, the situation is far more bleak than ever before.
So yeah, just got footing as an adult, then bye bye economy.
the can cannot be kicked any more.
They'll convert to rentals and make back any acquisition overpayment over time. Even if we hit a recession, with so many people having left the workforce and continuing to leave over time through retirement, rental demand should remain firm.
good