These 2024 interest rates are killing us … or are they 🤔

High mortgage rates have frozen us all ... but it might be our new normal

Author

Damien Peters
July 31, 2024

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I know I talk about real estate too much … but I can’t help it.

Having bought three houses since December of last year, and seeing how much I’m paying in mortgages and how hard it is to find profitable homes to buy … I feel the pain of these “high”-interest rates.

Even if you aren’t looking to buy a home, maybe your refinancing, taking a HELOC to ball on all that built-up equity, or anything involving borrowing money, you feel it.

I hear a lot of people saying, “this can’t stay this way” or “don’t worry, rates will drop” or “The Fed is killing us”.

Well, I have a slightly different take as a cold-blooded economist that I shared on LinkedIn the other day.

What do you think?

That affordable house in 2018 now needs $190K a year in income to get a loan

Hot Take: These interest rates aren't high; they're normal. It was those 2017 rates that made absolutely no sense. 

I bought my first house in 2007 at the ripe age of 23. I think I had a 6.125% rate 0% down payment loan with no extra PMI payment, and was very happy. 

Fast forward to 2024 and people are literally pleading with the Fed because we are at 7%. The sheer outrage at the audacity of the Fed is felt every time I hear someone talk about buying a home.

I, as an economist (I got one degree in it a long a__ time ago) see a strong job market, real inflation, and rates that are still way lower than the 10%-12% loans that were common for decades.

My unsolicited $0.02: These rates aren't bad. And if you make smart financial decision knowing that these are normal, you win if they stay the same, and you win big if they drop.

And remember, they can still go higher ...

- Damien “Being Pragmatic About Buying Homes and Rates” Peters

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P.S. Do not take this as saying it’s a good time to buy. It’s an annoying, expensive and hard time to buy. I do think we can collectively get a little more realistic about it changing anytime soon.

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