Re:Mortgage Rates Hit 5.78%, Highest Level Since 2008
by lupire on Thursday June 16, 2022 @12:25PM
(#31767912)
Housing isn't overvalued. Housing is in shortage, so it priced at the maximum of affordability. Either you pay the landlord or previous owner (low interest) or you pay a bank (high interest), but either way you pay all you can.
We have had a historic move up in rates but that is coming out of COVID with rates at levels that don't even make sense to lend at for 30 years with out the Fed.
It would seem hard to believe housing prices are not overvalued with that artificially low rate regime but it is also hard to see housing prices crash in a massive inflationary environment. I would think we have a small pull back and then a flat line as time catches up with price.
Of course, real estate price is always local so generalizing to the whole country doesn't mean so much.
Canada I think is more interesting than the US with all the adjustable rate mortgages. Obviously, that is not going to end well when those rates adjust as an adjustable rate mortgage is basically a bet on what is happening, not happening.