A bit of perspective on rising mortgage rates...

[DCPatriot]

Have been in real estate sales for over 40 years and have seen what's coming! :

If your purchase price is $500K...which is all too 'average' for a typical home in the Washington, D.C. region here's the difference in monthly payment compared to just 3 months ago.

Cash Down Payment = $100K

$400K MONTHLY Principle & Interest (P&I) at 2.500% is $1,580.48 

$400K MONTHLY P&I at 6.375% is $2,495.48

That's an increase monthly of $915.  and an annual increase of $10,980.

That's a Range Rover payment!   Or...it's the combined car payments of husband and wife.

+++++++++++++++++++++++++++++++++++++

What happens next with the slowdown...

The Builders will have the upper hand and start offering "closing cost assistance" which will ultimately be used as pre-paid interest aka "POINTS" to BUY DOWN the interest rate.

In the above example, 4 points is $16K. So, you ditch the Tray Ceiling in the Owner's Suite or the Viking Stove in the Kitchen and use it to get that rate down.

Poor Sellers who have to compete with Builders in the neighborhoods are bleep-out-of-luck, and this crap will go on for YEARS!

Lots of Short Sales in the next year as the loss in market price eats into your equity that you borrowed on...so now you have TWO mortgages and are under water.

+++++++++++++++++++++++++++++++++

You're going to see lenders cut back on offering "equity lines of credit", or the guidelines will change to 70% vs. the current 80%.

[libertybele]

Have been in real estate sales for over 40 years and have seen what's coming! :

If your purchase price is $500K...which is all too 'average' for a typical home in the Washington, D.C. region here's the difference in monthly payment compared to just 3 months ago.

Cash Down Payment = $100K

$400K MONTHLY Principle & Interest (P&I) at 2.500% is $1,580.48 

$400K MONTHLY P&I at 6.375% is $2,495.48

That's an increase monthly of $915.  and an annual increase of $10,980.

That's a Range Rover payment!   Or...it's the combined car payments of husband and wife.

+++++++++++++++++++++++++++++++++++++

What happens next with the slowdown...

The Builders will have the upper hand and start offering "closing cost assistance" which will ultimately be used as pre-paid interest aka "POINTS" to BUY DOWN the interest rate.

In the above example, 4 points is $16K. So, you ditch the Tray Ceiling in the Owner's Suite or the Viking Stove in the Kitchen and use it to get that rate down.

Poor Sellers who have to compete with Builders in the neighborhoods are bleep-out-of-luck, and this crap will go on for YEARS!

Lots of Short Sales in the next year as the loss in market price eats into your equity that you borrowed on...so now you have TWO mortgages and are under water.

+++++++++++++++++++++++++++++++++

You're going to see lenders cut back on offering "equity lines of credit", or the guidelines will change to 70% vs. the current 80%.

It is unfortunate that people will find themselves underwater on their mortgages.  I feel for those that just bought a home at the top of the market around here. With so many people moving into the area the price of homes absolutely skyrocketed.  Usually in this area we are the last ones to experience an uptick in property values and the last ones to recover when they start to settle into a more normal price range.  The housing market is cyclical.

[DCPatriot]

It is unfortunate that people will find themselves underwater on their mortgages.  I feel for those that just bought a home at the top of the market around here. With so many people moving into the area the price of homes absolutely skyrocketed.  Usually in this area we are the last ones to experience an uptick in property values and the last ones to recover when they start to settle into a more normal price range.  The housing market is cyclical.

@libertybele

I see these 'custom' builders constructing several homes in a new 'cul-de-sac', with one home framed and closed-in.

The sign says "XYZ HOMES...From $1.2M

No hip roofs, no dormer roofs, no double door entry, no 3 car garage, not even a freaking Palladium window!!   

[GtHawk]

@libertybele

I see these 'custom' builders constructing several homes in a new 'cul-de-sac', with one home framed and closed-in.

The sign says "XYZ HOMES...From $1.2M

No hip roofs, no dormer roofs, no double door entry, no 3 car garage, not even a freaking Palladium window!!   

My daughter and her husband just looked at a home in Westminster, CA zip 92683. The house was built in 1958 3bd 2 bath, 7200sqft lot, pool with paver patio and the house has been completely upgraded, asking price $899K before the inevitable bidding war 

[libertybele]

My daughter and her husband just looked at a home in Westminster, CA zip 92683. The house was built in 1958 3bd 2 bath, 7200sqft lot, pool with paver patio and the house has been completely upgraded, asking price $899K before the inevitable bidding war 

It is craziness!  Within 4 years the assessed value of our home has risen over $220,000.  We down-sized and I am so glad we made the move when we did.

[Kamaji]

My daughter and her husband just looked at a home in Westminster, CA zip 92683. The house was built in 1958 3bd 2 bath, 7200sqft lot, pool with paver patio and the house has been completely upgraded, asking price $899K before the inevitable bidding war 

Depending on the particular town, that would be a bargain in many areas of L.I., particularly with a lot that size.