re: What are the current 30 year interest rates? +760 Credit SCore

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The most likely group to default in the last crash were the investors. Which makes sense. If they were upside down on the value of a property they don't use for shelter cutting losses is the right financial choice.

The underemphasized risk this time is the larger number of second homes and investment properties (some estimates of this are over 20 million). That's where panic selling (or rational people walking away from bad debt) could result in a painful decrease in home valuations.

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While I see what you’re saying, it would take some sort of fairly severe macro event to make an investor walk away from a positive cash flowing property in the near future. In some areas, prices have softened and sales have slowed. But there is still a housing shortage in many areas. And those who can’t or won’t buy now, they have to rent. From my own perspective and experience in rentals over the years, anyone who survived the rent moratorium during the pandemic could likely hold on during a moderate recession/unemployment spike. And we have to remember that by 2030, it’s estimated that institutional ownership of single family rental properties may approach 40%. So for single family dwellings, that’s a diamond hands put.

As for second homes/condos, yes, a dramatic increase in unemployment could certainly cause those owners to walk away and focus on their primary residence, if forced to choose.

And for refinancing, only those who have bought in the last year or so, and going forward, would probably want to refinance. Anyone with a fixed rate mortgage acquired in the past few years should be happy as a clam to hold on if at all possible.

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, it would take some sort of fairly severe macro event to make an investor walk away from a positive cash flowing property in the near future.

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The bear case is there will be an increasing number of those. The recent Air B&B investors as a group are some of those potential first movers (especially people who crowded in on the basis of COVID stimulus based returns as predictors of future income).

There are a lot of people crowded into the "grow your wealth through real estate" business right now.

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As for second homes/condos, yes, a dramatic increase in unemployment could certainly cause those owners to walk away and focus on their primary residence, if forced to choose.

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Agreed

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And for refinancing, only those who have bought in the last year or so, and going forward, would probably want to refinance.

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Agreed

Although the language bandied about by the real estate industry has been very irresponsible IMO.

Because it has deliberately encouraged marginally qualified buyers to buy expensive homes with the seeming promise that they can easily refinance later.

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Anyone with a fixed rate mortgage acquired in the past few years should be happy as a clam to hold on if at all possible.

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Agreed

The number of refinances is lower than typical years but still higher than it should be IMO.

Higher because that's a terrible choice only made by people desperate for money to pay essential bills (they can't afford) or for lifestyles they can't afford.

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we have to remember that by 2030, it’s estimated that institutional ownership of single family rental properties may approach 40%

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I don't anticipate that frankly. Unless we get repeats of government intervention and policy like the 2020 shutdown. If that happens you will probably be right.

I’m hearing the current 30 year rate today is around 7%. They have went up drastically in the last 2 weeks.

I was quoted 5.8% for a 30 year last week. The bank was local to my area (Georgia) though.

Prices haven't come down enough to justify buying an investment property with the higher interest rates. If prices come back down to reality, then maybe...

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seems like most people I talk to hear that rates will come back down this summer. I don't understand why they think that since inflation isn't correcting

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They could come down. But that would likely be a bad thing because the economy was tanking instead of slowing

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still cashflows at 9 but barely.

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f that. that is yet another issue. depending how much you buy you need a certain PCF for each price point.

example. you bought at a good time with a low rate and a great RTV. you paid 62k for a SFH it now rents for over 1k a month and it cash flows 450 to 500 a month. now as rents rise your RTV gets better and better.

or you could buy something that costs 125k and you cashflow 100 a month due to current conditions. that is not only terrible cash flow but bad COC return.

Then you sit back and say that is not worth the time. You can do better elsewhere for the time being. never make a bad buy.