Why are higher interest rates seen as a terrible thing for the American economy...

Why are higher interest rates seen as a terrible thing for the American economy? I'm looking at magazines/newspapers from the 1980's, and it seems like interest rates were fairly high back then. And that was during an economic boom. What's the issue with raising interest rates in order to reduce inflation? It seems like an easy decision to make.

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houses were also 50-100kkk user. 10% on 50k isnt all that much money.

Because most dipshit home owners borrowed like $500k or more

As long as you have a sensible fixed-rate mortgage and not some sort of adjustable-rate scam loan, how is that an issue at all?

I guarantee houses would get cheaper if interest rates today were 10%. Cheap debt increases demand and helps fuel higher home prices.

sure, but not 50k cheap. if you're expecting million dollar houses to go for 1-200k you're going to be incredibly disappointed

checked

Fuck man I'm forever priced out of buying my 50 acre lot with a 4000 sqft ranch aren't I???

when investors that priced in endless 10% annual price appreciation suddenly see their rental fall in value by 25%, they tend to panic a bit. mom and pop investors are buying way more houses than institutional investors right now, and they tend to make poorer decisions.
not an issue for me, mind you, but people will overreact if housing prices start moving the other way for a while. we're at the point where plenty of average people can't afford houses at current rates, reducing demand, and if investors can't make money off price appreciation in the short to mid-term, they will probably invest in something else for now.

checked and agreed. but i think things will fall back in line with long-term inflation trends within a few years. if we see a recession and rising unemployment, that could amplify things a bit as well.

I live in flyover retard land, boxes are 300k here. Seeing them at 100 would be amazing because I'd just pay cash. Or move somewhere less retarded, maybe.

the value of the house alone isnt the only method of income. if the property is still cash flow positive then thats all that really matters for most people.
even in flyover land I dont see 100k happening again. I could see low 200s possibly but not below. that would be a worse crash than 2008 and I dont think we're even close to those conditions.

I didn't explicitly say this, but basically, I'm saying no matter who you are, it still hurts to be underwater on your house or investment. That would leave a lot of people walking away from stupid purchases they stretched to afford if anything comes up like a layoff, needing to move for work, or similar.

Agreed, same shit here, poor-quality listings like this really stunk up my market for the past two years. Sadly it works often enough to incentivize people to try it. I can afford "the new normal" just fine but we can't sustain this long before the poors decide they'd be better off getting violent instead.

I'm well aware, I didn't mean to imply that making capital gains on the house appreciating is the only means of income. I agree with you.
I am saying, shit happens when prices stagnate or pull back, causing market rents to also stagnate or pull back because people could just buy a house instead. This turns that deal that was projected to cash flow well in a few years, but that barely cash flows today, into a dumb investment.
We have a lot of supply coming onto the market (new builds), rising rates, fewer and fewer people that can afford current prices, more people moving now that the pandemic is over(TM), and a lot of new investors going into deals that only make sense if the mania continues. There are reasons to be bearish.
It's all speculation on my part obviously, anything can happen, but we shouldn't pretend it's just impossible to see a reversal in the market now that the Fed has stopped hoovering up mortgage backed securities and bonds. People who stretched to the limit planning for endless stable rent growth and price appreciation will not be having a good time if things come back to planet earth.

>We have a lot of supply coming onto the market (new builds)
anecdotal but around here in texas there is nothing available inventory. practically everything is sold months out.

yes, it is extremely local in all cases. I believe you. I am zooming way out and looking at new builds under construction as an aggregate. some markets, such as those that experienced lots of organic increases in demand, will clearly respond differently as you said. I wonder if that will continue after they see their first property tax bill in Texas though.
here, as soon as the helicopter money stopped, there's suddenly more (but still less than typical) inventory to the point where it almost seems normal.

Houses were 2-3 years of a person's salary. Not 20x.

If we get interest rates of >10% and housing returns to prices of 2-3x a person's salary, what do you think that will do to the people who just bought their 500sqf apartment for 700k?

leverage.
Some forget it works both ways.

The problem is the debt.(pic related)
> Public sector debt ~200 trillion
> Private sector debt: Estimated 1000+ trillion
> Higher rates means rising interests
> Interests will kill the economy

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I've been pondering this for a while now and I just can't make heads or tails of it. Since interest rates dictate real estate prices and you theoretically can't time the market (as a small fish), does it even matter when you take out a mortgage? For example, it shouldn't matter if you take out a mortgage with 10% interest if home prices are 200k, or a 2% mortgage on a home that costs 1 million. It's all in equilibrium, so what gives?

10% on 100k is 160k in interest alone after 30 years.
One of the reasons Boomers think they can get away with charging so much for their cheap houses is that they paid 280k for them and should get 280k back with appreciation and inflation.

>One of the reasons Boomers think they can get away with charging so much for their cheap houses is that they paid 280k for them and should get 280k back with appreciation and inflation.
uhh yes thats how most poeple think actually. not just boomers. this statement just tells me you know absolutely shitall about the real estate market
just imagine
>I buy a house
>I expect it to be worth much less than I bought it for
how does that make sense

>House prices go up forever
>Wages stagnant the entire time
>House price go UP!
>Sell house to chinks, poos, and (((banks)))
>Repeat
>Town/City becomes New Delhi or the Congo in 5 years
>Boomers: "Fuck you I got mine, pull yourself up by your bootstraps"

>Seeing them at 100 would be amazing because I'd just pay cash
Yes you and everyone else. Which is why they wont