Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Stocks

How Interest Rates Are Squeezing Home Buyers

by September 23, 2022
September 23, 2022
How Interest Rates Are Squeezing Home Buyers

I knew well ahead of the real estate crash that began in 2006 and 2007 that problems were coming, but I didn’t really understand the cause. I thought that the price of houses was going to deter buyers, but buyers didn’t care about the price of a home, they only cared about “how much a month?” And that, of course, is a function if interest rates — as rates go down, a fixed monthly payment can buy a more expensive house (and vice versa). It’s the ‘vice versa’ with which we are currently concerned.

Since January 2021, the 30-Year Fixed Mortgage Rate has gone from 2.65% to 6.29% today. Looking at this chart, one has to wonder if the term ‘criminal ineptitude’ is an appropriate appellation for the Fed. It would seem that the Fed thinks their mission is to prevent anyone form ever feeling any pain. Unfortunately, the Fed’s actions simply delay the pain, and in doing so potentially make it worse.

For most people the price of the home is irrelevant. They only care about the monthly payment they can afford. The following table assumes a monthly payment of $2015 (principal and interest) and a mortgage amount in 2021 of $500,000. Note that at the current rate of 6.29% the the fixed payment can only cover a loan of $325,900 — 34.8% smaller than in 2021.

There are some people who can afford a higher payment, but they are still going to feel the pinch as rates go higher. This table shows that the current payment is over 50% higher than at the 2021 starting rate. Surely, many of these people are going to postpone their purchase.

Conclusion: Real estate is in a bubble thanks to interest rates being kept unrealistically low for years. Rising rates will put the squeeze on home buyers, and in many cases they will have to forego their purchase. The result will be that the reduced demand will cause prices to drop. Real estate cheerleaders say that prices won’t suffer because “people have to live somewhere.” This is true, but they are already living somewhere, aren’t they?

Technical Analysis is a windsock, not a crystal ball. –Carl Swenlin

(c) Copyright 2022 DecisionPoint.com

Helpful DecisionPoint Links:

DecisionPoint Alert Chart List

DecisionPoint Golden Cross/Silver Cross Index Chart List

DecisionPoint Sector Chart List

DecisionPoint Chart Gallery

Trend Models

Price Momentum Oscillator (PMO)

On Balance Volume

Swenlin Trading Oscillators (STO-B and STO-V)

ITBM and ITVM

SCTR Ranking

Bear Market Rules

DecisionPoint is not a registered investment advisor. Investment and trading decisions are solely your responsibility. DecisionPoint newsletters, blogs or website materials should NOT be interpreted as a recommendation or solicitation to buy or sell any security or to take any specific action.

0
FacebookTwitterGoogle +Pinterest
previous post
SICK: Ad Exposes Democrat Mark Kelly’s Push For Sex Change Surgeries And Chemical Castration on American Children (VIDEO)
next post
Doctors Baffled After Oklahoma Police Officer Paralyzed From Neck Down by Mystery Illness

You may also like

Week Ahead: NIFTY Placed At Decisive Levels; Set...

May 27, 2023

Price Momentum Oscillator (PMO) Internals Still a Problem

November 2, 2024

Junk Science; Junk Analysis!

October 27, 2022

Only One Pocket of Strength Left in US...

June 7, 2024

GNG TV: Changing Tides for Risk Assets

January 13, 2023

DP Trading Room: Negative Divergences Explained

March 28, 2023

The Top 3 Reasons Why THIS is My...

August 24, 2023

2023 Stock Market Forecast: Where’s the Strength?

January 19, 2023

US Stocks May Be Trending Higher: Check Out...

April 6, 2023

Mish’s Daily: Russell 2000 — How Money is...

October 19, 2022

Week Ahead: NIFTY Placed At Decisive Levels; Set...

May 27, 2023

Price Momentum Oscillator (PMO) Internals Still a Problem

November 2, 2024

Junk Science; Junk Analysis!

October 27, 2022

Only One Pocket of Strength Left in US...

June 7, 2024

GNG TV: Changing Tides for Risk Assets

January 13, 2023

DP Trading Room: Negative Divergences Explained

March 28, 2023

The Top 3 Reasons Why THIS is My...

August 24, 2023

2023 Stock Market Forecast: Where’s the Strength?

January 19, 2023

US Stocks May Be Trending Higher: Check Out...

April 6, 2023

Mish’s Daily: Russell 2000 — How Money is...

October 19, 2022

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • New Tariffs Will Push Countries Closer to China

      July 10, 2025
    • Bentley Kyle Evans Talks Legacy, Lessons, and Life in Television

      July 10, 2025
    • Pro-Trump ‘troll’ who spread Hillary text-to-vote memes in 2016 has conviction tossed by appeals court

      July 10, 2025
    • How Loyverse Integration Unlocks Small Businesses’ Growth

      July 10, 2025
    • How I Triple My Returns With 3x Leveraged ETFs!

      July 10, 2025
    • A Fiscal Hawk’s Defense of the GOP’s Deficit-Busting Budget Bill

      July 10, 2025

    Categories

    • Business (8,443)
    • Investing (2,115)
    • Politics (15,994)
    • Stocks (3,198)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved