1) You're competing in an auction for the house so if you make 75th percentile income and only willing to spend 20% of your income on a house than anybody in the 50th percentile and higher whose willing to spend say 40-50% of their income will out bid you.
2) Interest rates do make a big deal when buying a house. A 250k house @8% is a 1.8k monthly payment (21.8k/yr) while that 250k house @4% is ~1.2k and @2% is ~900.
So if you can afford spending 1k/month on a house then @2% that house is 270k, @4% that house is 210k, and @8% that house is ~140k.
2a) So you could buy a 270k house @8% and be paying ~2k/month in hopes of the interest rates to drop to 2% and then refinance to pay ~1k/month but I'm risk-adverse so I don't condone that idea unless you can stomach 2k/month.
I'm guessing without rising interest rates we wouldn't actually see the housing market cool down.
1) You're competing in an auction for the house so if you make 75th percentile income and only willing to spend 20% of your income on a house than anybody in the 50th percentile and higher whose willing to spend say 40-50% of their income will out bid you.
2) Interest rates do make a big deal when buying a house. A 250k house @8% is a 1.8k monthly payment (21.8k/yr) while that 250k house @4% is ~1.2k and @2% is ~900. So if you can afford spending 1k/month on a house then @2% that house is 270k, @4% that house is 210k, and @8% that house is ~140k.
2a) So you could buy a 270k house @8% and be paying ~2k/month in hopes of the interest rates to drop to 2% and then refinance to pay ~1k/month but I'm risk-adverse so I don't condone that idea unless you can stomach 2k/month.
I'm guessing without rising interest rates we wouldn't actually see the housing market cool down.