Interest rates are not going back to 3%

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Interest rates are not going back to 3%

Chris SeveneyBusiness Member
Moderator
Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

I am sure many of you will disagree with me, but I am seeing a lot of posts talk about “today’s high interest rates”

I believe there are many of us who view today’s rates to be more of the norm versus the outlier.

If you look at the current data, interest rates are not going to be dropping significantly in the near future. Could interest rates get back potentially into the 4’s, yes.

But I believe the days of the federal rate being at 0% and mortgage interest rates in the 2’s and low 3’s is not something people should bank on in the near future.

It’s not only goes for acquiring property, but for those who have invested in syndications where the exit was a refinance at a low rate.

Let the fireworks begin

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Brad Jacobson
Realtor · Ogden, UT · Member since 2019 · 338 posts · 415 votes
3y

I'm going to offer a different opinion because I believe our government has become so addicted to easy monetary policy that I bet they'll happily drop the fed rate back to 0% at the first chance they get.  Fiscal responsibility is only going to continue to get worse under our current leadership and political landscape in my opinion.  

I wouldn't bank on it happening in the near-near future but I'm fairly confident that down the road we'll have another bizarre incident like Covid or a 2008-style recession and our geniuses at the Fed will happily drop rates back to zero and keep them there way too long again in a similar reckless fashion.

Personally, I just hope my portfolio is large enough at that point that I can refinance the whole thing back into the 2-3% and be set for life.  That's what I'm banking on and looking forward to!

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  • Ben Zimmerman
    Rental Property Investor · Raleigh, NC · Member since 2016 · 396 posts · 995 votes
    3y

    I think rates will increase slightly or relatively flat-ish for the next year or two, and then start to quickly drop back down.

    The reason being that the US simply can't afford high interest rates anymore.  Rates have been steadily dropping since the 1980s as can be seen in the chart quoted several times already.  I don't believe this is a coincidence since the national debt began to spike at the exact same time.

    The economy is interconnected, stocks, bonds, Tbills, interest rates etc.  When historical mortgage interest rates ranged from 5-8%, the US debt level was nowhere near what it is today.  At 31 trillion dollars worth of debt, a 1% change in the prevailing interest rates means an additional 310 billion interest payment each year.  The government is already financially screwed, but it will be REALLY screwed if rates climb multiple percentage points and stay there for very long.

    For this reason alone I'm fairly confident that the government will push to lower rates as soon as it is realistic to do so and am anticipating back to the 3-4 range in a few short years.  

    Until America gets its spending under control, it will continue to force artificially low interest rates upon us as this is the only way the country can economically survive.

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    3y

    @Nick Barlow

    thanks!  as far as I can tell, we need more units for owners to occupy and for renters to rent.

    0Reply
  • Troy P.
    Investor · Baton Rouge, LA · Member since 2019 · 184 posts · 167 votes
    3y
    Quote from @Carlos Ptriawan:
    Quote from @James Hamling:
    Quote from @Bruce Woodruff:
    Quote from @Troy P.:

    Completely untrue. I know a lot of folks that just bought or will be buying soon and 0% of them are 'wealthy'.....just normal people.

    Now you might be correct if you said that only wealthy people can buy homes in SoCal on the beach, or on Staten Island.....but in general, naw, anyone that really wants to can buy houses.

     Only the "wealthy" are able to buy home huh....... LOL....... 

    In 2022 that's 5,800,000 home sales. So am I to believe that's 5.8 million "wealthy" people? 

    In 2021 it's 6,900,000. 

    2020 6,500,000.

    Since 2019 it's more than 30 MILLION homes sold. To put that in terms, it's saying the entire population of Texas, twice the population of New England, half the entire population of the Midwest....... Or in common sense terms, a fu#k-ton of people. 

    So these 30 million+ people are all just "wealthy"? If that's what you think, and it may be true in your perception, I say this says way more about yourself and life/income level than it does the market or those 30million "wealthy" home buyers. Maybe wealthy in your opinion, NOT wealthy by definition of the word. 


     hahahaha those who bought homes today subscribed to BP I guess


    Nahh, I purchased my first home in 2007 for 114K at 6.75% just before the financial crisis, but thank you for your perspective.  If you both would have continued to read my following posts clarifying my thought instead of pouncing an a great opportunity for a clever and humorous response, you would've understood my point a little better.
    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Nick Barlow:

    If we’re already at a deficit of rentals

    But are we? A 'deficit of rentals' would mean that there are less housing units available to rent - on a national level - than there are people desiring to rent them. This does not appear to be the case....

    Just over a year ago, there were over 15 million units sitting vacant that no one wanted to rent. (CRE.ORG)
    0Reply
  • Brian Ellis
    Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    3y
    Quote from @Bruce Woodruff:
    Quote from @Brian Ellis:
    I think this is a great time for investors coming up....should be more inventory, lower prices and less competition. So what interest rates are back to normal....I don't really see a downside here....

    But we dont have more inventory, we dont have lower prices, and there is definitely not less competition.

    I guess my point is that a newbie is going to have a really hard time getting into the game, and the mom and pop landlords (like me) will have a hard time getting deals that actually make sense, and the guys with all the money will continue to purchase in cash essentially pushing out every other competitor.  It will stay that way until we see more inventory, and we havent seen it in YEARS.

    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Brian Ellis:

    Funny, I see all 3 of these in my area (AZ) and I hear this is common across the country. Maybe move to another state or city and try your luck there.


    1Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    3y
    Quote from @Troy P.:
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @Bruce Woodruff:
    Quote from @Troy P.:

    Completely untrue. I know a lot of folks that just bought or will be buying soon and 0% of them are 'wealthy'.....just normal people.

    Now you might be correct if you said that only wealthy people can buy homes in SoCal on the beach, or on Staten Island.....but in general, naw, anyone that really wants to can buy houses.


    Yes, I should have phrased that better.  Anyone who wants a decent investment in a decent area and not wanting to dodge bullets every night is now facing a tough time making that "dream" happen due to a combination of prices, rates, and inflation going wild.

     Lol. 

    OR another way of saying it is Business as usual. 

    The idea that an Investment Real Estate business should be simple, so simple that a person in minutes or hours can at most basic level just buy any old property, easily and readily make considerable profits, LOL, that's just infantile. 

    Being a Landlord is a BUSINESS. Being a real estate broker of any kind is a BUSINESS. Why is this basic fact overlooked so much today? This is not a slot-machine, it requires more skill and care than just sitting down, throwing a few $$$$'s into it and sitting back watching everything make $$$$. It simply does NOT work that way. 

    So difficult to find good deals, yup. Complexity in how to do it all, yup. The sun rises in the east and set's int he west, yup. Any other obvious facts? 

    There is nothing new in this facet of REI being a BUSINESS and requiring intelligent care and actions as ANY business requires. The only "change" is people thinking something differently, thinking it's supposed to be easy, simple, "cheap".

    Name the business, any business, and online there will be tons of books preaching of how simple all those can be started also, so it's not the books fault. It's the fault of this "poof" generation that has become "e-z-junkies". They've never had to try at anything, get awarded for just showing up


    Your imagination certainly went wild from such a simple post... I was mostly referring to the fact that a large number of people who could have been able to afford a home as a primary residence last year now cannot due to the combination of rising rates, rising prices, and rising inflation.  I'm not sure how you discerned entitlement or lazy work ethic from my posts, but that was definitely not the intent.  I agree with some of your points, just not sure how it was related.

     Your personalizing, and than projecting. 

    What basis do you have for your assumption that "a large number of people who could have been able to afford a home as a primary residence last year now cannot"?


     Well, median household income decreased, spending decreased, mortgage applications decreased, and over that same time period home prices increased, rates increased, and inflation increased, but you're going to pretend like it's business as usual and homes are just as affordable as they were last year?  I'm not saying last year was normal, and I'm not saying that everyone has a right to purchase a home.  It's a simple analysis of the market in my area, which oddly enough has prices plummeting back to more (at the risk of being attacked) affordable levels.


     Ok, and see, here where things are going to get interesting because now your just out right lying, by commission, which means purposefully, knowingly, for the purpose of manipulating, and that just plain pizz's me off. 

    No, median household income is NOT going down, it's actually going UP. Any opinion argument your going to make here, pointless, because there is no such thing about an "opinion" on such, there is ONLY data and facts, that is it. If your "opinion" is that the sun rises in the north and sets in the south, no, there is no "difference of opinion", it's just wrong, that's it that's all. 

    Spending decreased? Really? So riddle me how your saying, in same breath, inflation AND spending DECREASED? How's that work? 

    There can not be inflation with INCREASE in spending, because that's inflation, things cost MORE. So, if spending DECREASED, that would be DEFLATION, which no, not happening. Actually, one of the biggest inflations in a long time, which spending has gone UP. Your own BS is directly conflicting itself. 

    So far everything you say is just BS. This started with your "decree" that only wealthy are capable of buying homes. Than, next "decree" that those who bought homes before now couldn't possibly afford those homes they bought, just because. Now, that median incomes are dropping, spending dropping yet somehow inflation going, with incomes and spending dropping (you obviously never completed ECON 101). 

    Just stop BS'ing your way through, please. Just be honest. 

    0Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    3y
    Quote from @Brian Ellis:
    Quote from @Bruce Woodruff:
    Quote from @Brian Ellis:
    I think this is a great time for investors coming up....should be more inventory, lower prices and less competition. So what interest rates are back to normal....I don't really see a downside here....

    But we dont have more inventory, we dont have lower prices, and there is definitely not less competition.

    I guess my point is that a newbie is going to have a really hard time getting into the game, and the mom and pop landlords (like me) will have a hard time getting deals that actually make sense, and the guys with all the money will continue to purchase in cash essentially pushing out every other competitor.  It will stay that way until we see more inventory, and we havent seen it in YEARS.


     I hear ya, I do, but it's all just excuses. It is. 

    Your not finding deals. That's a you statement. Why you decide it's the markets fault that you are not finding deals, I don't get it, your ignoring your own words. You. You didn't say the markets not finding you deals. But, that IS what your following it up with, it's the markets fault. 

    No, it's your fault. You need to work on your business. 

    If a hot dog stand opens in a parking lot and slays it the first 3 months, lines for hours. And than, over 3 weeks it putters down to where all of a sudden only 4 people per day come. Does the hot dog stand just sit there and say it's the parking lot's fault, and just sit and wait? No, the hot dog stand owner asks "what changed?" and then get's to work sorting out what changed and how HE can change, pivot, adjust, evolve, MOVE to get busy again. 

    I am so exhausted of the pity party on BP. No, NOT the markets fault. GET TO WORK, or get replaced. That's reality, if you don't get busy working you will get replaced by those who will. 

    I find no less than half a dozen "deals" a month, that's a very dry month. On average, per week, that's a very real #, half a dozen per week. And I am a very small volume operation, very. It's not rocket science, it's just work. 

    Stop making excuses, make solutions. 

    1Reply
  • Troy P.
    Investor · Baton Rouge, LA · Member since 2019 · 184 posts · 167 votes
    3y
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @Bruce Woodruff:
    Quote from @Troy P.:

    Completely untrue. I know a lot of folks that just bought or will be buying soon and 0% of them are 'wealthy'.....just normal people.

    Now you might be correct if you said that only wealthy people can buy homes in SoCal on the beach, or on Staten Island.....but in general, naw, anyone that really wants to can buy houses.


    Yes, I should have phrased that better.  Anyone who wants a decent investment in a decent area and not wanting to dodge bullets every night is now facing a tough time making that "dream" happen due to a combination of prices, rates, and inflation going wild.

     Lol. 

    OR another way of saying it is Business as usual. 

    The idea that an Investment Real Estate business should be simple, so simple that a person in minutes or hours can at most basic level just buy any old property, easily and readily make considerable profits, LOL, that's just infantile. 

    Being a Landlord is a BUSINESS. Being a real estate broker of any kind is a BUSINESS. Why is this basic fact overlooked so much today? This is not a slot-machine, it requires more skill and care than just sitting down, throwing a few $$$$'s into it and sitting back watching everything make $$$$. It simply does NOT work that way. 

    So difficult to find good deals, yup. Complexity in how to do it all, yup. The sun rises in the east and set's int he west, yup. Any other obvious facts? 

    There is nothing new in this facet of REI being a BUSINESS and requiring intelligent care and actions as ANY business requires. The only "change" is people thinking something differently, thinking it's supposed to be easy, simple, "cheap".

    Name the business, any business, and online there will be tons of books preaching of how simple all those can be started also, so it's not the books fault. It's the fault of this "poof" generation that has become "e-z-junkies". They've never had to try at anything, get awarded for just showing up


    Your imagination certainly went wild from such a simple post... I was mostly referring to the fact that a large number of people who could have been able to afford a home as a primary residence last year now cannot due to the combination of rising rates, rising prices, and rising inflation.  I'm not sure how you discerned entitlement or lazy work ethic from my posts, but that was definitely not the intent.  I agree with some of your points, just not sure how it was related.

     Your personalizing, and than projecting. 

    What basis do you have for your assumption that "a large number of people who could have been able to afford a home as a primary residence last year now cannot"?


     Well, median household income decreased, spending decreased, mortgage applications decreased, and over that same time period home prices increased, rates increased, and inflation increased, but you're going to pretend like it's business as usual and homes are just as affordable as they were last year?  I'm not saying last year was normal, and I'm not saying that everyone has a right to purchase a home.  It's a simple analysis of the market in my area, which oddly enough has prices plummeting back to more (at the risk of being attacked) affordable levels.


     Ok, and see, here where things are going to get interesting because now your just out right lying, by commission, which means purposefully, knowingly, for the purpose of manipulating, and that just plain pizz's me off. 

    No, median household income is NOT going down, it's actually going UP. Any opinion argument your going to make here, pointless, because there is no such thing about an "opinion" on such, there is ONLY data and facts, that is it. If your "opinion" is that the sun rises in the north and sets in the south, no, there is no "difference of opinion", it's just wrong, that's it that's all. 

    Spending decreased? Really? So riddle me how your saying, in same breath, inflation AND spending DECREASED? How's that work? 

    There can not be inflation with INCREASE in spending, because that's inflation, things cost MORE. So, if spending DECREASED, that would be DEFLATION, which no, not happening. Actually, one of the biggest inflations in a long time, which spending has gone UP. Your own BS is directly conflicting itself. 

    So far everything you say is just BS. This started with your "decree" that only wealthy are capable of buying homes. Than, next "decree" that those who bought homes before now couldn't possibly afford those homes they bought, just because. Now, that median incomes are dropping, spending dropping yet somehow inflation going, with incomes and spending dropping (you obviously never completed ECON 101). 

    Just stop BS'ing your way through, please. Just be honest. 

    I didn't say inflation decreased.  I said it increased while spending decreased last year.  It would be wise to fully understand what you're reading before getting on your soapbox.

    I was looking at (and posted) the same FRED chart, but for last year, which showed income down and inflation up.  That was my only point.  No need to throw accusations.  No need to constantly prove how intelligent you are are and no one else "gets it".  Sure, you find half a dozen "deals" every month.  Great!  Virtual pat on the back!  Maybe we all need the same investment strategy that you have since yours is obviously the only one working right now while everyone else is busy crying on BP.  Imagine a world where everyone is as successful as Mr. Hamling and there would be no need to talk through different opinions and learn from others.  You are correct, I did not complete Econ 101.  Is that a requirement for investors or just people who are allowed to speak to you and learn from you?

    Seriously though, how do you find time to come on here and be so condescending if you're out there kiling it with one hand tied behind your back??

    0Reply
  • Nicole Heasley Beitenman
    Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
    3y
    Quote from @Chris Seveney:

    I am sure many of you will disagree with me, but I am seeing a lot of posts talk about “today’s high interest rates”

    I believe there are many of us who view today’s rates to be more of the norm versus the outlier.

    Realistically, what we're dealing with is "today's higher but still below historical average interest rates." Today's rates may still be an outlier. 

    0Reply
  • Gene Cook
    Residential Real Estate Broker · Penn Valley, CA · Member since 2014 · 14 posts · 2 votes
    3y

    Am I wrong or are you mixing "adjusted" income with raw home values? Pretty sure that in the last 30 years income compared to home prices has not diminished by a factor of almost 16 to 1.

    0Reply
  • Troy P.
    Investor · Baton Rouge, LA · Member since 2019 · 184 posts · 167 votes
    3y
    Quote from @Gene Cook:

    Am I wrong or are you mixing "adjusted" income with raw home values? Pretty sure that in the last 30 years income compared to home prices has not diminished by a factor of almost 16 to 1.


    Yes, that is probably what happened.  Good catch.
    0Reply
  • Brian Ellis
    Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    3y
    Quote from @James Hamling:
    Quote from @Brian Ellis:
    Quote from @Bruce Woodruff:
    Quote from @Brian Ellis:
    I think this is a great time for investors coming up....should be more inventory, lower prices and less competition. So what interest rates are back to normal....I don't really see a downside here....

    But we dont have more inventory, we dont have lower prices, and there is definitely not less competition.

    I guess my point is that a newbie is going to have a really hard time getting into the game, and the mom and pop landlords (like me) will have a hard time getting deals that actually make sense, and the guys with all the money will continue to purchase in cash essentially pushing out every other competitor.  It will stay that way until we see more inventory, and we havent seen it in YEARS.


     I hear ya, I do, but it's all just excuses. It is. 

    Your not finding deals. That's a you statement. Why you decide it's the markets fault that you are not finding deals, I don't get it, your ignoring your own words. You. You didn't say the markets not finding you deals. But, that IS what your following it up with, it's the markets fault. 

    No, it's your fault. You need to work on your business. 

    If a hot dog stand opens in a parking lot and slays it the first 3 months, lines for hours. And than, over 3 weeks it putters down to where all of a sudden only 4 people per day come. Does the hot dog stand just sit there and say it's the parking lot's fault, and just sit and wait? No, the hot dog stand owner asks "what changed?" and then get's to work sorting out what changed and how HE can change, pivot, adjust, evolve, MOVE to get busy again. 

    I am so exhausted of the pity party on BP. No, NOT the markets fault. GET TO WORK, or get replaced. That's reality, if you don't get busy working you will get replaced by those who will. 

    I find no less than half a dozen "deals" a month, that's a very dry month. On average, per week, that's a very real #, half a dozen per week. And I am a very small volume operation, very. It's not rocket science, it's just work. 

    Stop making excuses, make solutions. 

    Why are you so upset?

    I’m not complaining, I’m just speaking facts. Me and you are in two completely different markets. I value your opinion, just as much as the next guy. But right now, it has never been tougher to invest in MA. It is what it is.

    I will continue to work towards my goals regardless. I’ve achieved quite a bit in the few short years I’ve invested, so I think my opinion carry’s some weight. 
    0Reply
  • Brian Ellis
    Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes
    3y
    Quote from @Bruce Woodruff:
    Quote from @Brian Ellis:

    Funny, I see all 3 of these in my area (AZ) and I hear this is common across the country. Maybe move to another state or city and try your luck there.


    You have a point here. I will admit, I haven’t done much research in any markets other than my own. 
    0Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    3y
    Quote from @Brian Ellis:

    I would really suggest this, there are areas where you can really get some deals and good future appreciation...


    1Reply
  • James Hamling
    Real Estate Broker · Minneapolis, MN · Member since 2011 · 5k+ posts · 6k+ votes
    3y
    Quote from @Troy P.:
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @Bruce Woodruff:
    Quote from @Troy P.:

    I didn't say inflation decreased.  I said it increased while spending decreased last year.  

    Lol. I know this is what you said, and it's an OXYMORON: 

    There has NOT been a decrease in spending, that's just not true, your lying. Just like your lie that only wealthy people are buying homes, or your lie that most who bought the last year or two no longer can afford those homes they bought, or or or..... 

    I don't know what your deal is, other than someone at your monthly Young Communists of America meeting mentioned come onto BP and troll "those capitalist pigs", and here we are? 
    I have more than made my points, you've replied making it crystal clear all was with intent, and thus you have earned my block, your dead-to-me. 
    0Reply
  • Troy P.
    Investor · Baton Rouge, LA · Member since 2019 · 184 posts · 167 votes
    3y
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @James Hamling:
    Quote from @Troy P.:
    Quote from @Bruce Woodruff:
    Quote from @Troy P.:

    I didn't say inflation decreased.  I said it increased while spending decreased last year.  

    Lol. I know this is what you said, and it's an OXYMORON: 

    There has NOT been a decrease in spending, that's just not true, your lying. Just like your lie that only wealthy people are buying homes, or your lie that most who bought the last year or two no longer can afford those homes they bought, or or or..... 

    I don't know what your deal is, other than someone at your monthly Young Communists of America meeting mentioned come onto BP and troll "those capitalist pigs", and here we are? 
    I have more than made my points, you've replied making it crystal clear all was with intent, and thus you have earned my block, your dead-to-me. 

    Mr. Hamling, I believe part of the issue is a misunderstanding.  I did not say people who bought homes can no longer afford them.  I said a lot of people who could have afforded one, now cannot.  I am not a communist but you got one thing right, I'm young and willing to listen and learn.  I understand you stereotype my generation and would rather point fingers and degrade people instead of helping them learn from your vast wisdom and experience, and that is disappointing.  Thank you for providing your input, for what it's worth.  Good day, sir.
    0Reply
  • Troy P.
    Investor · Baton Rouge, LA · Member since 2019 · 184 posts · 167 votes
    3y
    Quote from @Bruce Woodruff:
    Quote from @Brian Ellis:

    I would really suggest this, there are areas where you can really get some deals and good future appreciation...



    I really need to do this as well, but the thought of not being able to put eyes on my own property is a little terrifying.  I need to brush up on the methods for making this a success.
    0Reply
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