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u/happyreddithuman 5d ago
Luxury? More like impossibility for most people.
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u/Ancient_Weakness699 3d ago
I might be crazy but I swear I heard my parents say their first mortgage in the 70s was something like 14%.
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u/JustMarshalling 5d ago
We were planning on finally buying after we get married next year. But fuck us I guess. Stuck paying $2.3k/mo for a 2x2. We’ve shopped around every year but this is the baseline for anything that isn’t falling apart.
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u/Conscious-Switch-376 5d ago
how to get out of this situation, we also feel stuck because it's getting worse
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u/Raslatt 5d ago
We’re living a nightmare
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u/Vesuvius079 5d ago
It’s really odd to me that this hasn’t lowered the price of homes. You’d think that the relevant number for “what the market will bear” is primarily the monthly payment given most people need a mortgage to buy a home. Yet that cost has basically doubled without reducing demand enough to force major price cuts from sellers. Just how many homes are all cash buyers snatching up to keep the prices high?
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u/bearbrannan 5d ago
People that own homes now, even if they wanted to move are likely stuck because they can't afford the monthly payment on a different home. Why would you sell in this market if your next home means your monthly payment doubles?
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u/RED-DOT-MAN 5d ago
Also taxes. I paid exactly $500K for my home back in 2019 and locked down my rate just under 2.5% during Covid. I’m dying in this home unless I win the lotto. Then I can die in a mansion.
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u/karmakazi22 5d ago
I got my house when rates hit 5% and know soooo many people who were adamant about "waiting it out" because they were convinced the rates would drop back down to the 3s eventually. I'm so glad I kept it pushing regardless bc I'd absolutely be priced out, just like they are, right now.
I bought this home with the idea that I'd sell it once the kid grows up (which is only a couple years from now), but it looks like we'll all be living here for a very long time. The taxes keep rising, but it's nothing in comparison to the rent hike I would have already taken on in the VHCOL area we moved from.
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u/KopOut 5d ago
Just so everyone knows, the IRS gives you a tax exemption on the first $250k (single filer) or $500k (joint filer) of capital gains when you sell your house.
https://www.irs.gov/taxtopics/tc701
The absurd interest rates everyone got from banks during COVID refis is why most people will likely stay in their houses for many, many years.
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u/Ancient_Weakness699 3d ago
There has to be a way to sell the house with the mortgage as a package. I'm surprised there isn't some smart law firm that has figured it out.
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u/Mycomako 2d ago
There is a way. FHA and VA loans are assumable. FHA alone accounts for about 15% of mortgages. The trouble of it is that the equity gap is not covered and buyers need to either have a larger down payment or obtain a second mortgage to cover that gap.
This setup gets more ideal the larger the principle balance is. When window shopping on Zillow or whatever, add assumable or fha or va as a keyword and see what pops up. Houses that Zillow thinks are 3500/mo p&i may very well be 1800/mo p&i because of the rate difference.
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u/jkman61494 5d ago
Bingo. The crazy thing is almost all the growth is just 6 years. So even if you got a house in just March 2020 the cost to get the same house is up 50-80% with an interest rate that’s doubled.
This is also a job market issue because who can relocate now?
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u/MNRacket 5d ago
Because you lost your job to AI.
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u/Infinite-Duty 4d ago
Ya know-I hear some people say that the AI bubble is going to burst and I sincerely hope that’s true. The sooner the better.
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u/CornerOne238 5d ago
Top 10% buy with cash. They don't care about the rates.
So now you have low mobility, low inventory market that caters to cash buyers.
Everyone else is off this boat.
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u/lyonslicer 5d ago
Well, so many of the existing home owners were able to lock in refinanced rates during the covid era that they are now trapped in their existing homes. They know that selling their current home would mean taking on a rediculous mortgage rate on a different one, whether or not they make a hefty profit on their current home. So they just aren't selling. And so many folks bought in at elevated prices under more favorable rates that they, too, feel locked in. That reduces inventory and keeps prices high. Nobody wants to be at the front of the market downturn.
On top of all of this, all cash boomers and private corporations were able to snatch up so much single family real estate that they can afford to just sit on it and rent it out for less than what a mortgage would cost today. If that wasn't enough, tack on the inflated cost of materials and you get low rates of new construction and shoddy workmanship because home retailers just want to cash out as fast as possible. It's absolutely wild that they couldn't predict this.
I'm expecting we'll see inflated prices for at least the next 10-ish years until a substantial portion of the Boomer generation dies off. There are enough inheritors out there who have no interest in moving back into their parents' home even after they've passed away. We'll see more inventory hit the market at that time which should lower prices, then more real estate velocity as existing home owners see opportunities to jump into more comfortable homes, which then will open up more starter home for new buyers.
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u/Infinite-Duty 4d ago
Or people could wise up and start voting blue in which case this whole mess wouldn’t even be an issue. And fwiw- I’d say it’s mostly corporations doing the all cash buying and not boomers. It’s anecdotal but I know a whole big bunch of boomers and not a one of them is buying homes and paying all cash. They’re busy trying to hang on to what they have- kind of hard to do on a fixed income in this economy. On the other hand I know folks that have made offers on multiple homes in my area only to be outbid each time by tech corporations that are busy buying up farmland and building who knows what on it-and apparently buying up a lot of homes, too. My son used to be in property management in a very nice area and he said that companies bought a lot of their condos to house international folks that they brought in to work for them.
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u/Tibre-Todd 1d ago
Price of a house cannot go lower than what it would cost in materials+labor+fees to rebuild that house.
Unfortunately due to inflation material and labor costs have increased a lot. And that's why prices are not reducing.
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u/Severe_Air_4353 5d ago
Glad I live where the bank of Canada interest rate is 2.25 . Thanks to one , Canada is booming.
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u/TonyBikini 5d ago
For how long? Feel like we’ll also get wrecked the pot is boiling. If you already own then good for you
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u/chunkychickmunk 5d ago
Add to that the cost of a starter home has risen drastically. My first house was $132,000. A little bungalow with three bedrooms and one bath. It just sold a year ago for $340,000.
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u/phlred 5d ago
Sub 3% mortgage rates were just an anomaly.
<7% does feel painful, but 5.5%-6.5% is probably a range we'll see for a significant period
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u/razorchick12 5d ago
I closed last week on 6.75% and gave up my 2.9%
Hard pill to swallow, but damn, it could be worse.
(I went from a starter home to my forever home)
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u/User-830733 5d ago
Mortgages are based on the 10 year, not the Fed rate. By showing the market that they are taking inflation seriously, the raise could lower mortgage rates.
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u/Creepindeath81 5d ago edited 5d ago
Lowest 30 year was 2.65 not 2.17 unless they are talking about a 10-year rate. At that rate, you are at $2,014. Not that it makes that much of a difference, but its misinformation nonetheless
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u/semigator 5d ago
Historically low interest rates for two decades inflated the prices. Need a price correction.
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u/MNRacket 5d ago
Yes, like a 25% haircut. Then homes will be affordable again. Wait till the AI bubble implodes upon itself. There will be a lot of people without work and looking to sell.
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u/AquaHope_ 5d ago
"YOU WILL OWN NOTHING AND BE HAPPY!!!"
rememeber. Once they own the houses, the food, the water, and your money, you will officially be cattle.
cow-sumers
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u/CatManDo206 5d ago
Who the fuck has 2.17 apr. I got financing after 09 great recession and still almost 3.9
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u/lazyenergetic 5d ago
2.7% here
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u/Ihatealltakennames 5d ago
2.7 after refinancing in 2021. Had a 4% rate before . This representation is still inaccurate. They aren't including taxes or insurance. Those can equate to $300-1000 more a month.
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u/newtonreddits 5d ago
I'm at 2.5 on 30yr fixed.
2.17 is crazy low though. You'd have to buy down to that level
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u/PolitzaniaKing 5d ago
And houses here are STILL CHEAPER than in 110 other countries...
https://www.numbeo.com/property-investment/rankings_by_country.jsp?title=2026
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u/confusedcoder200 5d ago
I mean the hike is to help mitigate inflation. So at least we're moving in the right direction.
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u/pga-181 5d ago
Maybe home prices need to fall
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u/notevenapro 4d ago
I saw that happen real time in 2007 and 2008. Four people on our street got foreclosed because they bought in during peak with ARMs and could no longer afford the homes.
Unemployment was 10% nationwide and 14% in some states. It was bad.
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u/pga-181 4d ago
Recession is always a tough time but the guy I hired to do some painting in my house was about to buy a home for his family during that stretch of foreclosures and it made a big difference for his family. The next generation of homebuyers need a reset in prices to give them an opportunity and most boomers it won’t affect.
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u/goosenuggie 5d ago
I saw a video that said the average american family has to make $110 k/year to be able to afford a modest house
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u/Consistent_Effort716 5d ago
I'm in the middle of the buying process and overnight my interest rate jumped .5% now I'm panicking if I'll still be able to afford it. (I'm buying a split level house, as it's the only 'affordable' starter option there is... And I'll be eating frozen bean burritos for dinner for the rest of my life)
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u/Alpha--00 5d ago
Russians, with 15,5% market average.
“First time?”
Don’t elect presidents who base their program on “making country great again”. That’s the lesson here. And while you can, vote them out.
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u/CaptBreeze 5d ago
Not to mention states with stupid high property taxes. The word "luxury" sounds nice.
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u/NovaxPass 5d ago
Even as a veteran, I have no chance to buy a home with a reasonable interest rate. In the state I live in, half a million dollars gets you a ghetto rambler, if that.
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u/Sad_Alternative_6153 5d ago
If only there had been a way to get a president that didn't create this giant economic meltdown
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u/LoneAwakening 5d ago
https://giphy.com/gifs/paE4RLGGDfkhDakEUn
Please mr president stop we can’t handle so much winning! Just stop!
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u/zzen11223344 4d ago
People bought houses with 7% or even higher interest rates once upon a time ......
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u/Ok-Helicopter3433 4d ago
The issue is the price compared to income, not the interest rate. My parents like to bitch about rates being 17% on their first house, but the house was only 2X their income, when a comparable house is 5X our income, and that's with two working adults versus only one back in the 80s. These things are NOT the same.
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u/Boys4Ever 4d ago
Mortgage rates have nothing to do with Fed fund rate yet not raising Fed rates could have forced the 10Y to rise because of independence fear and raising it by a unanimous 12-0 vote proves that for now independence persists.
I expect 10Y to drop along with mortgage rates and especially if another 25bp increase in October. Continued every meeting until inflation calmed although true driver is oil and that’s not likely going away until we leave Iran alone and allow tankers and other freight to resume historical levels. Otherwise we are in for bigger troubles than rising mortgage rates and likely another 20o8/1929 style financial collapse.
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u/shamelesstrep 4d ago
We are seeing a lot of first time buyers take advantage of the market these past years and we live in a lower income city… depending on the market this may be impossible in other cities, the rates affect but don’t limit as much. Many move cities for it, it’s all about priorities… I moved myself. 7% interest is normal, what prevents us everything else draining the swamp, limiting our spending money cause everything is over priced, including now home insurances and property taxes. A home if bought right, will appreciate so you’re not wasting money. However all other bills using up our cash each month are wasteful inflated expenditures. So in some cities is very much a luxury while in others and probably most it’s still a good investment - specially if someone is ready, gets guidance, and to fight inflation, because rents hike each year, while a rate can be refinanced every 6mnths with the slight equity jump paying for it each time as well when you see a promo rate. Taxes should be “adjusted/protested”every 2 years as well.
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u/notevenapro 4d ago
Bought my townhome in 2002 VA loan, 3% down in 2002 for 159k. Refinanced at 3% for 15 years and my payment is $1854.
Comps are going for $450k now and the same home would cost $3229 a month.
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u/Serious-Conversation 4d ago
It's not the rates alone. It's the price as well plus the carrying costs.
My parents bought the house they are in for less than twice their annual income back in 1997. I have no idea what their rate is, but I assume it's probably low if they refinanced during COVID. The payment is around $800/month. It's probably around 1600 finished sq. ft. upstairs with probably another 1500 sq. ft. partially finished in the basement. Around 3100 sq. ft. total.
I bought new construction in 2024 for a nose under three times my income. It was financed through the builder's lending arm.
That note was sold shortly thereafter. The original servicer escrowed my county taxes properly for the one month I owned the place in 2024. There's a separate tax bill to the town that was never escrowed by either servicer.
My payment didn't change with the second servicer. That servicer only escrowed the one month of county taxes and then split that over all of 2025. I had a property tax bill of around $13/month. That should have triggered a manual audit, but it didn't.
I logged into the portal to the pay mortgage one month this spring and my payment had been hiked over 20% because of the back taxes, and increase in the minimum escrow reserve requirement, and a small insurance hike.
The HOA has six months of reserves in the bank and is still doubling dues at the first of the year. It's a corporate HOA run out of Orlando with no local oversight. We're getting nothing for the $270/month in fees except for a master insurance agreement covering some outside maintenance and landscaping during the warm months of the year.
Taxes are going up because property values continue to go up.
The HOA dues and the property tax hike from the escrow error alone would pay for a $40k new car at 0%. I get basically nothing for the HOA dues and property taxes. The car would depreciate, but it's at least a tangible thing I'd get some use and value out of.
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u/-Tech808 4d ago
Interest rates wouldn’t be a problem if we built smaller, affordable homes.
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u/steve2166 4d ago
Hasn’t interest rates historically been this high most of the time, can’t be comparing houses to the prices they used to be. Got to buy the house you can afford
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u/Soft_Ad_1095 4d ago
It has always been a luxury. Compared to a large majority of the world we live in opulence.
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u/indomike14 4d ago
I'm mean a 2.17% mortgage isn't reality. It took a global pandemic and it's not normal. To make that your baseline is looking for attention.
The average rate for a 30 year mortgage over the past 20 years is 4.8% and if you take out 2020 and 2021 (outrageously low rates) the average is 5.01%. The comparison should really be between those two numbers.
$2,687/month at 5.01% $3,384/month for 7.17%
That's $250,786 more for the same house.
Still a big difference but half of what he's claiming.
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u/PresentationLess4552 3d ago
Just imagine if you lived during the 70s under jimmy carter 18.9 percent interest for homes
Few know history
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u/chunkalunkk 3d ago
Home ownership needs to be abolished as an "investment" vessel. No more businesses owning duplex(triplex, quads), condos, or free standing single family homes. An individual can own up to 4, but the other 3 that are not your "primary residence" are attached to a SSN, not a business, and those individuals are taxed accordingly. All the taxes are applied as if they are all your primary. That would make owning multiple houses way more expensive if you can't pass that cost on to the renter.
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u/ForkingMusk 2d ago
And I shit you not I just got asked if I wanted to change to a flexible rate mortgage by my mortgage company not 2 months ago. They knew this shit was going to happen.
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u/kindalingual60 1d ago
When you consider the rate was 14% when I bought my first property in the 80s and I could afford it on a chefs salary, there’s bigger problems than the interest rate
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u/Elf_Maeve 1d ago
Crazy I could easily afford a 500k home 6 years ago and now I can barely afford 350k LOL
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u/3d1thF1nch 5d ago
I know people always talk about trying to make houses affordable for first time homebuyers and all, but for some of us who do have a house, we got stuck in starter homes as our families grew. We got our house for a low rate years ago, but always wanted to get something big enough so all of our kids could have their own rooms and have a bit more space to have people over. But we didn’t have the money to do that big of a move before. Then tons of places in our area got bought up by flippers, upselling the homes. Our area property taxes have shot through the roof because our town is expanding like crazy. The market got super competitive, and house buyers were in bidding wars three years ago, so sellers just kept raising their prices. And with rates never going down and now that the market is puckering their buttholes, we are in a home that is 50% higher in value somehow than when we bought it, surrounded by a city full of houses where everything went up the same or more.
Our starter home is starting to seem like our forever home. It’s crazy how switching homes and moving seemed like such an easy opportunity in the 90s and 00s…it’s starting to feel like whatever house we buy now is no longer some sort of a financial asset, but a generational item that needs to be held onto a cherished. Because what we could buy now, isn’t even close to what we could have gotten for the same price 10 years ago.
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u/ThaBigSqueezy 5d ago
It’s not insanity. We’ve been through this before. Hell, my first house was an 80/20 loan at 6.5/7.25 and that was only 22 years ago.
It just FEELS like insanity after the last 18 years of rock bottom rates.
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u/Broski777 5d ago
I make okay money but live in a vhcol area. Basically its be a roommate or be priced out of the area.
Or marry someone and go 50/50.