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SVTPerformance's Chain of Restaurants
Road Side Pub
Real-Estate Bubble Popping?
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<blockquote data-quote="tistan" data-source="post: 16798131" data-attributes="member: 26495"><p>If interest rates get up to 7-8%, the housing market is going to see more than a 25% correction. In the 70-80s, when interest rates were high, the average home was $60-70k. Now the average home is around $400k. At 3% interest, you could buy a $700k house on a $2900 payment, which is the same payment at a $400k house at 8%. That is a lot more than a 25% correction. Then you have to consider how much home the banks will qualify people to buy. Allowable debt to income on the high end is around 40%. At 80k median income, that allows about $2700 in house payment if their are no other debts. Now the average car payment is $700 a month. One car payment knocks the house payment down to $2k a month. I think $275k is where the average home price is going to drop in order for people just to be able to afford to buy.</p></blockquote><p></p>
[QUOTE="tistan, post: 16798131, member: 26495"] If interest rates get up to 7-8%, the housing market is going to see more than a 25% correction. In the 70-80s, when interest rates were high, the average home was $60-70k. Now the average home is around $400k. At 3% interest, you could buy a $700k house on a $2900 payment, which is the same payment at a $400k house at 8%. That is a lot more than a 25% correction. Then you have to consider how much home the banks will qualify people to buy. Allowable debt to income on the high end is around 40%. At 80k median income, that allows about $2700 in house payment if their are no other debts. Now the average car payment is $700 a month. One car payment knocks the house payment down to $2k a month. I think $275k is where the average home price is going to drop in order for people just to be able to afford to buy. [/QUOTE]
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SVTPerformance's Chain of Restaurants
Road Side Pub
Real-Estate Bubble Popping?
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