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It’s no surprise that, throughout the last 30 years or so…Real estate prices have continued to climb as interest rates have continued to decline…and now, we’re at the cheapest rates we’ve EVER seen, while housing is ALSO the most expensive it’s even been. The concern, however, is how sustainable IS this – what’s going to happen when interest rates rise back up – and is there the worry of more inventory flooding the markets once mortgages in forbearance are able to be foreclosed?

It’s difficult to say FOR SURE since there are SO many different factors at play like the local economy for each market, how much inventory there is, and its desirability…but, we’ll talk about AVERAGES here, overall…and this is what was found:

Despite what you would think, one study concluded that – historically – rising interest rates actually made NO DIFFERENCE, OVERALL, to the price of housing – in fact, since the 1980’s, housing continued to rise even though mortgages rates went UP.

View post on imgur.com

Another resource confirmed, this as well….analysis from Core Logic, Freddie Mac, and the Bureau of Labor Statistics found that housing prices did INDEED go up, even though interest rates ALSO went up.
https://edit.urban.org/sites/default/files/hfpcfig2_revised.png
https://www.urban.org/urban-wire/when-interest-rates-go-healthy-economy-history-says-home-prices-will-rise

The reason for this is rather simple, though: One, interest rates are generally only increased in a good economy, where people are spending money, with consistent wage growth….which, typically means people are buying homes.

And, TWO – interest rates are also increased to combat inflation, which as any real estate investor will know…inflation is generally GOOD for real estate, because that also causes home price to rise up, in tandem.

The thing is, real estate is based on so many small factors, like location, inventory, the local job market, the health of the economy…and obviously, some markets will end up doing much BETTER than others.

But then there’s also the concern of FORECLOSURES…as it is right now, home owners have the option of opting in to mortgage forbearance, which allows them to temporarily “pause” their housing payments and then extend those missed payments to the end of the loan. During this time, forecloses are temporarily put on hold – and, beginning next year, we should begin to see the outcome of how many people can resume their payments.

The GOOD news is that, month after month, it actually looks like the amount of mortgages in forbearance has been steadily going down – and the latest finding was that, last month, loans in forbearance decreased from 7.2% to now 6.8%.
http://www.mortgagenewsdaily.com/09232020_black_knight_first_look.asp

So, in this case – EVEN THOUGH there are mortgages in forbearance…it’s unlikely that ALL of those are going to completely stop paying once the forbearance period is up, it’s unlikely that EVERYONE is going to be selling at the same time, and it’s unlikely that they’re going to crash the market.

All YOU need to be made aware of is that you ONLY buy a home that you can afford to live in LONG TERM, without the intention of selling. Generally, I don’t recommend buying real estate without the intention of holding it at LEAST 10-20 years because ANYTHING can happen in the short term – but, as long as you buy something that you MAKE SURE you can afford, with a healthy emergency fund to cover you during a time of potential unemployment – then you should be okay.

For business or one-on-one real estate investing/real estate agent consulting inquiries, you can reach me at GrahamStephanBusiness@gmail.com

*Some of the links and other products that appear on this video are from companies which Graham Stephan will earn an affiliate commission or referral bonus. Graham Stephan is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available.