The problem for mortgages is that the headline rate (30 year fixed) was historically low for almost the entire period 2009-2020, as the economy slowly struggled out of the Great Recession and then the rates went absurdly low during the Covid recession. That meant that a lot of people locked in mortgage rates that are impossibly low (including me) and going back to more "normal" rates- the current rates are a little lower than what was available in the period 1993-2008- feels high to people. And so many people locked in those low rates (either purchase or re-fi), can't get those low rates on a new house, and so feel locked into their current home, which is serving as an anchor on the entire real estate market.
Whether that is true depends on what kind of place you want to buy and the amount of the loan. In Boston's north shore, the only available apartments are triple-deckers where you can hear your neighbors, for $2500/month, while houses are something like $800k; I consider renting to be a poor value here. In Cambridge, MA rent is higher, an average of $3500/month and you can choose between a commercial apartment and triple-deckers. An actual house is something like $2 million, although if you are okay buying an apartment or the top floors of a triple-decker, maybe you could get one for $1 million. I'm not interested in buying somewhere where I can hear my neighbors talking, so triple-deckers are out. Here rent is a little better deal (except that living in Cambridge is a bad deal). In the far Chicago suburbs (admittedly not "most metros"), on the other hand, rent for a decent apartment is close to the price of a monthly mortgage payment. And if you can pay most of the purchase price (or the price is cheaper), buying looks better, because you have less interest.
This is more complex than "houses cost less then".
Given a fiat currency and fractional reserve banking, the dollar floats in value like a leaf on the wind.
Houses cost less, people made proportionally less (inflation is a consideration here), and interest rates still bite you in the butt over the long haul, regardless of your monetary baseline.
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I feel the mortgage rates are a bit too high now. Anyone else?
The problem for mortgages is that the headline rate (30 year fixed) was historically low for almost the entire period 2009-2020, as the economy slowly struggled out of the Great Recession and then the rates went absurdly low during the Covid recession. That meant that a lot of people locked in mortgage rates that are impossibly low (including me) and going back to more "normal" rates- the current rates are a little lower than what was available in the period 1993-2008- feels high to people. And so many people locked in those low rates (either purchase or re-fi), can't get those low rates on a new house, and so feel locked into their current home, which is serving as an anchor on the entire real estate market.
But you can see this pattern here in FRED: https://fred.stlouisfed.org/series/MORTGAGE30US
In comparison to what? Buyers usually want this to be lower. Historically quite low still.
It doesn't matter if the rate is "historically low". The average monthly cost of housing is at the most unaffordable it's ever been.
I'm saying renting is way cheaper than buying in most metros
Whether that is true depends on what kind of place you want to buy and the amount of the loan. In Boston's north shore, the only available apartments are triple-deckers where you can hear your neighbors, for $2500/month, while houses are something like $800k; I consider renting to be a poor value here. In Cambridge, MA rent is higher, an average of $3500/month and you can choose between a commercial apartment and triple-deckers. An actual house is something like $2 million, although if you are okay buying an apartment or the top floors of a triple-decker, maybe you could get one for $1 million. I'm not interested in buying somewhere where I can hear my neighbors talking, so triple-deckers are out. Here rent is a little better deal (except that living in Cambridge is a bad deal). In the far Chicago suburbs (admittedly not "most metros"), on the other hand, rent for a decent apartment is close to the price of a monthly mortgage payment. And if you can pay most of the purchase price (or the price is cheaper), buying looks better, because you have less interest.
My parents bought their house when rates were about 12-14%... "High" is relative.
Lazy, regurgitated take. House prices then were also 1/10 of what they are today.
This is more complex than "houses cost less then".
Given a fiat currency and fractional reserve banking, the dollar floats in value like a leaf on the wind.
Houses cost less, people made proportionally less (inflation is a consideration here), and interest rates still bite you in the butt over the long haul, regardless of your monetary baseline.
Houses were cheap even with inflation though