patrick.net

Interest rates will have to come down in order for pricing to come down. This is actually a contradiction to what most people think. But when interest rates come down, mortgage applications will go up and people will start selling their homes," Cardone told co-host Rachel Campos-Duffy.

Yeah. Talking head fucktard. He clearly said that since he followed up with "This is actually a contradiction to what most people think.". He wasn't misquoted.

Rising mortgage applications will result in more sales. But lowering prices?

...hmmmm. Unless he his thinking that an increase in homes for sale will lead to a dramatic increase in supply and thus eventually lower prices. But there is a shitload of demand pent up by Millennials who want a home, so I don't know WTF he is thinking should this be what he meant.

Psychology is subordinate to simple math.

If interest rates are high, then the cost to borrow money is high, and fewer people can afford to borrow any given amount of money. A smaller pool of buyers means lower prices.

The only way prices can move in the same direction as interest rates is if the economy is doing extremely well, and that this is the reason that the Fed is raising interest rates. In that case, more people have good jobs and lots of money, so that there can be more buyers in spite of higher interest rates

But the economy is not doing well.

A few talking heads have proposed this - that the low inventory is due to folks unwilling to swap a 3% mortgage for a 7% mortgage. So when parity is achieved, a flood of sellers appear and inventory shoots up and prices decline. Yes, and more buyers, too, due to the lower rates. Where will the balance be?

It's 2% mortgage here, Sir.

I forecast the 30 yr mortgage rate will steady around 5.5% by next June.

If we sell, I plan on allowing the buyer assume our VA mortgage (at a 3% rate and with now about $150,000 balance). Also to create an incentive to qualified buyers, I may offer to pay up to 4 discount points to reduce their mortgage by 1%. So a 6% mortgage rate is reduced to a 5% mortgage rate.

So if their second mortgage is at 5% with $150,000, then their effective rate is 4.5% (i.e., ( 6% + 3% ) / 2).

From what I've researched the 30 year mortgage rate was around 4% when housing prices peaked. Likely buyers locked in a slightly lower rate between 3.5% and 4%. So its not their effective rate is far off from this rate.

And keep in mind that income has risen since housing peaked in early 2022, so buyers have more buying power while housing prices have remained flat.

If the 30 yr mortgage rate returns below 6% then there will be an increase in home sales.
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I remember when first following Patrick after his 20/20 interview about how for most that buying a home means buying a monthly home payment (mortgage+property tax and insurance+hoa fees).

When the monthly home payment is sustainable or manageable for the desired housing of potential buyers, then we'll see an increase in home sales.

If someone wants to buy in my HOA which is 2 miles from the beach in the Florida panhandle, they will compare the monthly home payment to renting a 3 bedroom/2.5 bath/2 car garage townhome in the HOA for around $2200.

Our current monthly payment for our 3 bedroom townhome is around $1550 (includes 30 yr mortgage payment of 3% rate with purchase price of $187,000 back in summer 2016).

Right now fast food is offering around $15 per hour to start near my HOA.

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ad says

If we sell, I plan on allowing the buyer assume our VA mortgage

If you do that, you can't use a VA loan for your own house.

GNL says

ad says

If we sell, I plan on allowing the buyer assume our VA mortgage

If you do that, you can't use a VA loan for your own house.

From my research, the max for a VA mortgage is around $750,000. I would have to deduct from this $750,000 the balance of the VA mortgage that is assumed by the buyer of our townhome, which is around $150,000. So I would have available $600,000 for a VA mortgage on my next home purchase.

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