Interest Rates Aren't The Problem

[Michael Carbonare]

Back in 1992, political strategist James Carville helped Bill Clinton win the presidency with one unforgettable phrase:
“𝐈𝐭’𝐬 𝐭𝐡𝐞 𝐞𝐜𝐨𝐧𝐨𝐦𝐲, 𝐬𝐭𝐮𝐩𝐢𝐝.”
Fast forward to today’s real estate market, and I’ll offer this variation:
“𝐈𝐭’𝐬 𝐭𝐡𝐞 𝐜𝐨𝐬𝐭, 𝐬𝐭𝐮𝐩𝐢𝐝.”

Many new investors are sitting on the sidelines, waiting for interest rates to drop, or for the "perfect time" to get started. Reality check: 𝐘𝐨𝐮'𝐫𝐞 𝐚𝐥𝐥𝐨𝐰𝐢𝐧𝐠 𝐲𝐨𝐮𝐫 𝐟𝐞𝐚𝐫 𝐨𝐟 𝐰𝐡𝐚𝐭 𝐦𝐢𝐠𝐡𝐭 𝐡𝐚𝐩𝐩𝐞𝐧 𝐦𝐚𝐤𝐞 𝐧𝐨𝐭𝐡𝐢𝐧𝐠 𝐡𝐚𝐩𝐩𝐞𝐧.

Interest rates aren't the problem. Today’s rates are below the 50-year average of 7.75%.
Affordability is the problem. Prices are sky-high, and unless they drop by 30%, (needed but unlikely), this latest drop in interest rates will little matter.
If rates do fall, motivated buyers will charge the market again, and prices will shoot up again. Any savings on interest will get swallowed by higher home prices.

Everyone’s waiting on rates to drop. Will that actually make homes more affordable, or just push prices higher again?
Curious where you stand on this.

[Mike Dymski]

Housing affordability is at a record low.  The average age of a first time home buyer is at a record high of 38 years old.  The average age of all homeowners is a record 56 years old.  Money printing and inflation has increased the economic divide.  These forces are leading to more unrest, populism, and socialism.