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Comment by ramesh31 | Hacker News Reader

Bring it on. I can't wait to buy a house in the next 6 months. People with money who want desperately out of the renting game don't care at all about 8% interest rates. But the investors and second home buyers sure do. This has been the biggest thing keeping me out of the market since 2020; the time pressure, not the prices. I just refuse to make a massive financial decision on the spot based on a 15 minute open house tour with zero contigencies and huge earnest payments.

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This is why nothing is going to "collapse." There are so many people in your position just wanting to buy the second prices start to fall a little. That will prevent any type of serious collapse and it will be more of a minor correction at best.

Will they be able to buy though if they lose their job? Rate cuts usually come with a spike in unemployment, so...

That said I still don't think there will be a collapse unless there is like, worse unemployment than 2008. But - prices could still easily drop 10-15% if this is a more mild recession.

When fed lowers rates there will be another massive boom, so prepare for it!

Rate cuts are usually done in response to unemployment spiking. It could take things awhile to recover once they start cutting as that likely means the economy has entered a recession.

That being said - it could be the best time to buy, but not for those that lose their job.

> But the investors and second home buyers sure do.

I'm curious about this, because from what I've heard, a lot of investors are incredibly happy with the higher interest rates as they're paying cash for a lot of homes, which has been squeezing real homeowners out of the market since they are able to shortcut by making offers on houses without requiring financing.

The higher the risk-free rate goes, the less attractive housing is as an investment. Treasuries don’t require maintenance and upkeep.

No investors are paying cash for homes. The entire real estate game is about maximizing leverage with the massive home loans you can get.

They absolutely are.

I have multiple friends who received cash offers from investment companies when selling their homes. It's fairly common and well known.

"We buy houses" companies are everywhere. It's their entire strategy.

"cash offer" here means they already have the loans lined up.

They may have lines of credit, but they aren't taking out a mortgage--especially in the same market/rates that are available to homeowners. REITs and other investors will often pay cash, especially when it's a residential unit they look to either rent or flip.

Institutional investors would need to justify to their LPs why whatever they will end up earning beats buying and holding Treasuries instead. The higher rates Treasuries have the tougher it is to make that justification.

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