Why get out of a 3-4% loan just to get into a 7-8% loan?
But if you believe 3-4% is normal, then you’re probably waiting for rates to return to “normal.”
I think it’s a side effect of years of low interest rates… people are conditioned now to believe low is normal, and they want to hang on until we get back to that.
I was hoping rates would stay “high” for a while which I thought would soften the housing market so I could buy, but that doesn’t seem to have happened. Instead of prices dropping, inventory just dried up.
Shows how silly I am for thinking I could time the market.
[1] https://www.cnbc.com/2025/07/14/us-housing-markets-falling-p...
https://eyeonhousing.org/2020/01/a-decade-of-home-building-t...
https://www.thebignewsletter.com/p/its-the-land-stupid-how-t...
There are going to be losers in this. No avoiding it.
Humans take time to be produced.
What we have is a general shortfall of prosperity. Housing is affected by money supply in an outsized way. Prices are at least partly going up because our economy is stagnant, and wages are going down in real terms as credit continues expanding to keep the wheels from coming off.
The pressure on buyers, at least in the past couple of decades, is that the increase in the supply of housing has not been at all commensurate with the increase in population. That, combined with a great increase in the money supply, makes for tremendous upward pressure on real estate prices.
Sellers generally aren't in a rush except in times of economic crises, especially paired with a period of overleveraging running up to it; i.e. the GFC. Economic softening appears to be in the works at the moment, so buyers should get a little reprieve soon, but since there isn't the same overleveraged buyers all rushing for the exits like in 2008, a similar crash is unlikely.
> It doesn't make sense if you need both incomes to survive. It just pushes the total fertility rate down faster when prospective parents realize they cannot afford childcare nor one parent to remain at home.
In the context of this thread, there are not enough houses for demand, that is why they are expensive, but if an administration beats on the economy hard enough, causing job destruction and increased unemployment, those who cannot continue to afford to service their mortgages will be forced to sell. This would contribute to real estate price softening. Child care costs will never come down (as I assert in my other comment) because the government refuses to subsidize it and there are labor shortages, with childcare providers unable to find staff for the childcare wages on offer. Labor shortages will persist well into the future due to prime working age population compression due to structural demographics. Citations for this are in my comment you linked to, but I can provide as many as you would like.
So, while interest rates are at historical 'norms', affordability is not.
If you think it will stay at 7%, that 3% loan you already have is a treasure to keep using for a decade or two.
Instead, high rates plus economic uncertainty has reduced supply significantly because no one wants to sell.
Maybe lower rates will make prices even more unaffordable, which would make this a low period by comparison, but if you look at home price to income numbers, they’re still near record highs.
Maybe it means: if you think the line is always going up and to the right, today is the best day to buy, but that’s a weird way for me to think of a house, which I still kind of see as a consumable good rather than an investment vehicle.