How rising mortgage rates affect the housing market

Don Peebles, The Peebles Corp. chairman and CEO, joins ‘The Exchange’ to discuss the rising mortgage rates, the health of the housing market, and more.

[adamestrada]

A rise in portfolio losses this quarter is predicted by a number of indicators, including market falls, skyrocketing inflation, major Fed interest rate rises, and rising treasury yields. How can I make money in the choppy market of today? My million-dollar bond and stock assets are still something I'm considering selling.

[fabiohill]

A lot of folks have been going on about a February rally too and said stocks that would be experiencing significant growth these new year season, any idea which stocks this may be? I just sold my home in the Boca Grande area and I’m looking to remunerate a lump sum into the stock market before stocks rebound

[theandersonfamily]

We are seeing it even in Florida. I have looked at hundreds of homes in Florida. We are planning on moving later this year. Homes have been on the market for 3 to 6 months. $500, 000 homes are now between $380 to $480k.

[Katadori]

He is presenting a false choice between either buying or renting. And it flies in the face of the data, which show both purchase and rental demand going down.

There are other options, such as finding roommates, moving back in with the parents, living in a van down by the river, etc. All of these simply pull people out of the shelter market altogether. And with prices rising so much, a lot of people on the low end of the income scale are being priced out of independent shelter altogether.

Thinking about the implications, it's pretty dire for rental real estate investors. The purchases prices (+ mortgage interest, which is often not fixed for RE investors) have risen drastically, meanwhile rents have not risen nearly as much and are also declining in many locations. That caps the profit they can make at a low level. Add that 6-month bonds are going for 5% now, which is actually quite competitive with current real estate profit caps in a lot of locations, is a lot less risky, and you never have to paint a wall or replace a water heater if you're a bond investor. All of these effects are making it worse for real estate investors to stay in the market, and they own a stunning 18% of real estate now. If even a small portion of them back out, then that's going to drastically ramp up inventory and tank prices.

Also consider that half of all short-term real estate investors (eg., AirBNB hosts) bought their property within the last 2 years, very likely with variable interest loans, implying they are either underwater now or are pretty close to it at the same time AirBNB demand is dying and their mortgage payments have gone up drastically. That's a lot of investors who simply may not be able to afford to keep their assets into a rising Fed funds rate.

[bigtex]

Gosh, I don't know. Perhaps makes it harder to buy a house?

[AlexOnBass]

Why does everyone think that tiny stimulus check we got 2 years ago is changing people’s lives 😂😂😂😂😂😂

[OpenAirOutreach]

There’s always a bust when there’s a rapid unsustainable boom

[BenDover-edrm]

In NY n NJ the prices are still high and the rates ! Just will like to Thank all of you who voted for Biden n Harris !!!

[KungPowEnterFist]

@0:40 That is categorically false. The increase in mortgage interest rates over the last 12 months has not "doubled" the cost of a mortgage. It has increased mortgage payments by 31% assuming the selling price, taxes, etc., are unchanged over the same period. Prices have come down some, however. Assuming a 10% drop in price (vs 12 months ago) with today's higher mortgage interest rates (vs 12 months ago) a consumer would only pay an 18% higher mortgage payment. Assuming a 20% drop in price would result in a barely noticeable 5% higher mortgage payment. Folks, this is why the real estate market has not begun its collapse yet. 6.75% mortgage rates are not enough to bring real estate market back into balance. And, BTW, this is not a binary choice of buy vs rent. Multiple families can share a home (extremely popular in Miami), taking on roommates, efficiencies, back with parents, leave the country, etc. These options are the explanation why real estate/rental markets can crash so suddenly and so hard. It is not aliens coming from outer space abducting millions of homeowners/renters and placing them in suspended animation for several years as mainstream media would have you believe.

[MrYatesj]

Interest rates might being ticking up but home prices are declining. As long as there are jobs homes will sell and more importantly foreclosures will remain low.

[nonenone]

mortgage rates need to go to %10.00 to get prices back pre pandemic levels, which is what buyers want.

[lesliehatun]

Lumber is cheap today but prices still high. 6.75% interest rates.

[Codehulk]

Sure, Anything negative? No Not Really. Happy Meals For Everyone :)

[OpenAirOutreach]

Rents come down after home prices come down, when home prices attract more buyers

[MM-rstk]

I thought the housing correction was over

[fromdusktodawn]

That lying grinch said, “we haven’t seen [the price decreases] yet…”

[terrywilson]

👍👍👍👍. I've been quite unsure about investing in this current market and at the same time I feel it's the best time to get started on the market. i was at a seminar and the host spoke about making over $972, 000 within 3 Months with a capital of $200, 000. i need to know how to go about it.