How Will 8% Effect The Villages

[Normal]

3 days ago Jamie Dimon stated 8% rates are in our near future. Most cannot argue this because national debt is climbing well past GDP. How will this affect life here in the Villages?

Jamie Dimon—Head Of U.S.’ Largest Bank—Warns Of 8% Interest Rates Along With Recession (https://www.forbes.com/sites/dereksaul/2024/04/08/jamie-dimon-head-of-us-largest-bank-warns-of-8-interest-rates-along-with-recession/?sh=4ee368405718)

[Stu from NYC]

People who need a mortgage to purchase home will be affected. Those who pay cash not so much.

[Dusty_Star]

3 days ago Jamie Diamond stated 8% rates are in our near future. Most cannot argue this because national debt is climbing well past GDP. How will this affect life here in the Villages?

Jamie Dimon—Head Of U.S.’ Largest Bank—Warns Of 8% Interest Rates Along With Recession (https://www.forbes.com/sites/dereksaul/2024/04/08/jamie-dimon-head-of-us-largest-bank-warns-of-8-interest-rates-along-with-recession/?sh=4ee368405718)

Jamie Dimon - meh. Jamie Dimon's interest rate calls haven't panned out too well in the past.
https://news.futunn.com/en/post/40574708/expert-questions-jpmorgan-ceo-jamie-dimon-s-new-predictions-for

[Shipping up to Boston]

Jamie Dimon - meh. Jamie Dimon's interest rate calls haven't panned out too well in the past.
https://news.futunn.com/en/post/40574708/expert-questions-jpmorgan-ceo-jamie-dimon-s-new-predictions-for

Agree...click bait

[Normal]

Jamie Dimon - meh. Jamie Dimon's interest rate calls haven't panned out too well in the past.
https://news.futunn.com/en/post/40574708/expert-questions-jpmorgan-ceo-jamie-dimon-s-new-predictions-for

Thank you autocorrect lol. Dimon knows what he is doing and sometimes yes, sometimes no. But most agree national debt is climbing well past sustainable levels. Something will give.

[coralway]

Deficits don't matter ............ Dick Cheney

[Randall55]

High interest rates mean new retirees may not be able to sell their homes in order to move to the Villages. For those who sell with a sizable profit, investing instead of buying a home is a good option. I am starting to see more year-round renters.No large down payment and maintenance-free living is the attraction.

[Craig Vernon]

Watching the developer compete with pre-owned is fascinating. The entire pre-owned market is overpriced and not selling due to lack of adjustment in pricing related to interest rates. The developer is slashing prices on areas not selling and marketing Eastport against the two years of isolation that area will have related to the whole villages. Would you rather have a 2000 sq ft home for 400k with a fifty thousand plus bond or 450k-1 million for connected updated home with much less bond and a lower tax rate. Fun.fun.fun to watch.

[Craig Vernon]

High interest rates mean new retirees may not be able to sell their homes in order to move to the Villages. For those who sell with a sizable profit, investing instead of buying a home is a good option. I am starting to see more year-round renters.No large down payment and maintenance-free living is the attraction.

:bigbow:Your point is also 100% correct. Smart buyers are not willing to pay all the costs related for their purchase but can still live the dream with less stress. This means the value of the villages is questionable in the current economic environment.

[Stu from NYC]

Deficits don't matter ............ Dick Cheney

Very true, deficits do not matter until they do

[dewilson58]

People who need a mortgage to purchase home will be affected. Those who pay cash not so much.

:MOJE_whot::MOJE_whot:

[Two Bills]

How Will 8% Effect The Villages?

For the cash rich, very nicely thank you.

[dewilson58]

Jamie Dimon - meh. Jamie Dimon's interest rate calls haven't panned out too well in the past.
https://news.futunn.com/en/post/40574708/expert-questions-jpmorgan-ceo-jamie-dimon-s-new-predictions-for

Jam needs to stop predicting and watch his own shop.............down 6% (& falling) today.

[Shipping up to Boston]

Hit 8% late last year so you have a pretty recent sample of what it did or didn’t do here

[vintageogauge]

Over the years I had plenty of mortgages well over 8%, one was 14%, you go with the flow and re-finance later. The economy survived then and it will survive now.

[Topspinmo]

3 days ago Jamie Dimon stated 8% rates are in our near future. Most cannot argue this because national debt is climbing well past GDP. How will this affect life here in the Villages?

Jamie Dimon—Head Of U.S.’ Largest Bank—Warns Of 8% Interest Rates Along With Recession (https://www.forbes.com/sites/dereksaul/2024/04/08/jamie-dimon-head-of-us-largest-bank-warns-of-8-interest-rates-along-with-recession/?sh=4ee368405718)


8% piece cake to 25% increase in maintenance fees in certain district. Next year it will be more. :$:

[Topspinmo]

Deficits don't matter ............ Dick Cheney

Well they sure don’t matter now do they.

[Normal]

Deficits don't matter ............ Dick Cheney

Deficits don’t, but debt does. Don’t confuse the two. Spending problems and debt are totally different.

[Boomer]

Over the years I had plenty of mortgages well over 8%, one was 14%, you go with the flow and re-finance later. The economy survived then and it will survive now.

Our worst was a 10% in 1979 and we were thrilled to get it. Had a couple of 8’s along the way.

But! The thing is now though that house prices are an obscenity.

Remember the days of not spending more on your mortgage than 25% of gross. (And that advice might have included taxes and insurance. It was a long time ago.)

One of our next generation just bought their first house. They had to go up a notch or two in price because landlords were grabbing up everything cheaper in the college town where they live. They are two-income, no student loans, good savers and had a 20% downpayment —but still the chase for that first house has been crazy times. A quote from them, “Now, nobody can raise our rent!”

Another of our next generation just bought one in CA. Holy Digits!!!

I read an article the other day about how we Boomers need to get the hellouta the way so our houses will be for sale. Bashing Boomers seems to be the name of a rather popular game recently. (sigh)

Boomer

[Shipping up to Boston]

Our worst was a 10% in 1979 and we were thrilled to get it. Had a couple of 8’s along the way.

But! The thing is now though that house prices are an obscenity.

Remember the days of not spending more on your mortgage than 25% of gross. (And that advice might have included taxes and insurance. It was a long time ago, so not sure.)

One of our next generation just bought their first house. They had to go up a notch or two in price because landlords were grabbing up everything cheaper in the college town where they live. They are two-income, no student loans, good savers and had a 20% downpayment —but still the chase for that first house has been crazy times. A quote from them, “Now, nobody can raise our rent!”

Another of our next generation just bought one in CA. Holy Digits!!!

I read an article the other day about how we Boomers need to get the hellouta the way so our houses will be for sale. Bashing Boomers iseems to be the name of a game recently. (sigh)

Boomer

Hopefully it doesn’t end up like ‘08....lot of young people back then bailed and left the keys in the front door on their way out

[Pairadocs]

Jamie Dimon - meh. Jamie Dimon's interest rate calls haven't panned out too well in the past.
https://news.futunn.com/en/post/40574708/expert-questions-jpmorgan-ceo-jamie-dimon-s-new-predictions-for

True. At one time I followed him, his career, and predictions/comments. In the recent past years, while he is still active as CEO of Chase, to me he now often acts like many faded politicians; desperately grasping to make himself relevant, a headliner, once again make the covers of leading business publications. Movie stars and politicians seem to do that same once they are no longer THE focus of the moment. Just think these types get addicted to "fame", and subsequently will make attention getting statements... !

[Pairadocs]

Thank you autocorrect lol. Dimon knows what he is doing and sometimes yes, sometimes no. But most agree national debt is climbing well past sustainable levels. Something will give.

Yes, national debt is a separate subject that Dimon's or anyone else's remarks concerning their own personal opinions. As for national debt, for decades regardless of party in power, they have just "kicked the can" further down the street. The people speak, they change the party in power (as our form of government is set up to do), and again, no SERIOUS attempts are made to address the problem and INEVITABLE conclusion of this, and all, Ponzi schemes. Both political parties, like ALL politicians around the world, depend on the people fighting and arguing among themselves as to which party is to blame. It is 100% effective, always has been, rather Germany, Russia, Italy, etc. It proves you can "fool all of the people all of the time" because issues like this one, national debt, just keep rolling, and there are always very genuine "excuses", such as Covid, or the 911 attack, and so on. There will always be a serious situation, so (perhaps) there will always be a growing national debt ! ?

[Boomer]

Hopefully it doesn’t end up like ‘08....lot of young people back then bailed and left the keys in the front door on their way out



The big and important difference now is that buyers have to actually qualify for mortgages.

I could see that mess coming when all that was going on. I am not an economist. It was so obvious.

Money was too damned cheap and easy. Mortgage brokers were allowed to run amok with drive-by appraisals and stated assets loans. Then came the derivatives. That whole ugly mess was the result of pure unrestrained greed — all around.

Boomer

[Pairadocs]

High interest rates mean new retirees may not be able to sell their homes in order to move to the Villages. For those who sell with a sizable profit, investing instead of buying a home is a good option. I am starting to see more year-round renters.No large down payment and maintenance-free living is the attraction.

It is ! I have never in my experience heard so many home owners who have long ago paid off their mortgages, tell me they are considering NOT purchasing their retirement homes, but intend to rent indefinitely. Many advantages true, however, seems like that would also present a lot of tax issues ? ? Would take a lot "pencil pushing" to come up with an accurate answer to which is the "best" financially !

[Shipping up to Boston]

The big and important difference now is that buyers have to actually qualify for mortgages.

I could see that mess coming when all that was going on. I am not an economist. It was so obvious.

Money was too damned cheap and easy. Mortgage brokers were allowed to run amok with drive-by appraisals and stated assets loans. Then came the derivatives. That whole ugly mess was the result of pure unrestrained greed — all around.

Boomer

Agree

[Blueblaze]

Most of my life, mortgages have been over 8%. My first as over 18%. And for 100 years prior to the housing market crash, you could get 4.25% in any passbook savings account -- and that was 3% over the inflation rate. I'm finally making 5% again in the money market, with inflation running about the same. It ought to be more like 7-8% in this inflation. I can't imagine why anyone thinks a 3% mortgage is normal. For crying out loud, my grandfather's $5000 mortgage on his 2-bedroom 1910 Craftsman was 5%, 85 years ago!

Abnormal has been a disaster. How about we try NORMAL again?

[rjm1cc]

The higher the interest rate the more home prices will be depressed as their is only so much a buyer can spend each month.
But then the builder may buy down the rate and increase the price of the home. Since the home is new and does not need a new roof or painting the new homes could be a better deal than a resale so resale prices maybe depressed.
At any rate as the interest rate goes up costs will go up.

[kkingston57]

3 days ago Jamie Dimon stated 8% rates are in our near future. Most cannot argue this because national debt is climbing well past GDP. How will this affect life here in the Villages?

Jamie Dimon—Head Of U.S.’ Largest Bank—Warns Of 8% Interest Rates Along With Recession (https://www.forbes.com/sites/dereksaul/2024/04/08/jamie-dimon-head-of-us-largest-bank-warns-of-8-interest-rates-along-with-recession/?sh=4ee368405718)

To answer your ? probably zero. Most people in TV do not have mortgages. Conservative investors will get 5-6% on super safe investments. etc

[tophcfa]

Dimon is prediction 8% UST rates, which would translate to about 9.5 - 10% mortgage rates. Very high by averages since around 2008, but not very high relative to long term averages before then (when individuals, the country, and most of the developed world were not addicted to unsustainable levels of debt). I read an interesting analogy correlating inflation to weight. It's very easy to get addicted to the lifestyle that both fuels inflation and makes one overweight, but very difficult to have the long term discipline to keep both under control. Just like an unpleasant diet that helps one loose weight, the necessary steps to bring down inflation are also difficult to cope with. And just like a diet, when the weight comes off, one can't go back to the same old lifestyle or it will just come roaring back. High interest rates aren't necessarily a bad thing, they are just the result of many years of undisciplined fiscal and monetary choices. When inflation finally does come under control, the knee jerk reaction to again lower rates to historically low levels is a very bad idea.

[Randall55]

It is ! I have never in my experience heard so many home owners who have long ago paid off their mortgages, tell me they are considering NOT purchasing their retirement homes, but intend to rent indefinitely. Many advantages true, however, seems like that would also present a lot of tax issues ? ? Would take a lot "pencil pushing" to come up with an accurate answer to which is the "best" financially !When you purchase a home you have tax issues in the form of property taxes and bond. No one is going to escape taxes. Renting is not for everyone but it does have many advantages when interest rates are high. Our social security checks pay for all of our expenses. We have not had to spend a dime of our savings and it is earning great interest. Not likely home prices are going to surge anytime soon. If they do, we will simply buy a small home. We sold our larger home with a pool for a sizeable profit and downsizing has not been an issue for us. We are loving the maintenance-free life.

[dewilson58]

When you purchase a home you have tax issues in the form of property taxes and bond. No one is going to escape taxes. Renting is not for everyone but it does have many advantages when interest rates are high.

Renting is extremely more expense than my debt free home.

Included in your rent number are all the taxes, interest & a ROI for the owner.

I'm not paying for a ROI..............I'm earning the ROI.

[Randall55]

Renting is extremely more expense than my debt free home.

Included in your rent number are all the taxes, interest & a ROI for the owner.

I'm not paying for a ROI..............I'm earning the ROI.We sold our home for double the amount we paid. We KNOW that was nothing but a stroke of luck. At this time, we are not willing to spend our money in real estate because we believe home prices will continue to fall. Everyone chooses what they believe is best for them. We are enjoying a maintenance free life and travelling. We will have no regrets no matter which way home prices go.

[dewilson58]

We sold our home for double the amount we paid. We KNOW that was nothing but a stroke of luck. At this time, we are not willing to spend our money in real estate because we believe home prices will continue to fall. Everyone chooses what they believe is best for them. We are enjoying a maintenance free life and travelling. We will have no regrets no matter which way home prices go.

:coolsmiley:

My point was............we have all of that & more.
More than doubled, maint. free, travelling, & not paying someone's ROI.

:wave:

[Randall55]

:coolsmiley:

My point was............we have all of that & more.
More than doubled, maint. free, travelling, & not paying someone's ROI.

:wave: Our last home was not maintenance free. Required lots of work.Taxes were high. Now I understand where you are coming from. Not concerned with what the landlord does with our rent. We feel we are doing what is in our best interest and that is all that matters.

[Normal]

Our last home was not maintenance free. Required lots of work.Taxes were high. Now I understand where you are coming from. Not concerned with what the landlord does with our rent. We feel we are doing what is in our best interest and that is all that matters.

We own, but there are some great rental deals out there right now. The owner pays utilities, taxes etc. You just need to shop around. There is/was a large supply of rentals to choose from this past season. We had friends that had everything covered for 2 months for 2200 a month. They seem to be getting competitive with great prices and perks.

[Randall55]

We own, but there are some great rental deals out there right now. The owner pays utilities, taxes etc. You just need to shop around. There is/was a large supply of rentals to choose from this past season. They seem to be getting competitive .The exact reason why we chose to rent a home. Not expensive at all.

[Normal]

The exact reason why we chose to rent a home. Not expensive at all.

I don’t know how long I could take a CYV, but things are fairly affordable if you go that route.

[Randall55]

I don’t know how long I could take a CYV, but things are fairly affordable if you go that route.We are taking our time in buying another home. Preowned homes are sitting on the market for MONTHS. Plus, there is an abundance on the market. To us, this is a sure sign home prices will continue to fall.

The quality of construction with new homes is diminishing. Bonds are ridiculously high. Lots are smaller and homes are squeezed in tight. An abundance of patio villas makes us believe there will be many short term rentals. We are not enthusiastic with the planning of the Eastport area. Simply not our cup of tea. It seems it is going to be very crowded.

For now, renting is where we feel most comfortable.

[Shipping up to Boston]

Our last home was not maintenance free. Required lots of work.Taxes were high. Now I understand where you are coming from. Not concerned with what the landlord does with our rent. We feel we are doing what is in our best interest and that is all that matters.

Exactly. You can own outright and it still costs a couple grand to turn the key given what you described. A homeowner always has to do something. I’ve been on both sides of it. The difference down here is when an Ian or the like wipes out the rented property, you just grab your stuff and move on to the next rental. In my book that’s maintenance free living in this demo. Owning later in life isn’t as big a deal as when you’re younger. There is no one size fits all way to live. Different needs, lifestyles and considerations...for different people

[Boomer]

Exactly. You can own outright and it still costs a couple grand to turn the key given what you described. A homeowner always has to do something. I’ve been on both sides of it. The difference down here is when an Ian or the like wipes out the rented property, you just grab your stuff and move on to the next rental. In my book that’s maintenance free living in this demo. Owning later in life isn’t as big a deal as when you’re younger. There is no one size fits all way to live. Different needs, lifestyles and considerations...for different people

Exactly right.

Both sides of the Own v. Rent thing are completely valid.

I also agree with you that it is a much bigger deal for a younger person to be able to get that first house. Mine was at age 25. That was ten houses ago and now here I am, still owning and living in a hard asset. But that does not mean that smart renting is not a good choice for some.

I also acknowledge the fact that, in general, it was easier for the Boomers to get started in homeownership than it is for the millennials.

Boomer

[Kenswing]

I dream of 8% interest rates.

[eyc234]

3 days ago Jamie Dimon stated 8% rates are in our near future. Most cannot argue this because national debt is climbing well past GDP. How will this affect life here in the Villages?

Jamie Dimon—Head Of U.S.’ Largest Bank—Warns Of 8% Interest Rates Along With Recession (https://www.forbes.com/sites/dereksaul/2024/04/08/jamie-dimon-head-of-us-largest-bank-warns-of-8-interest-rates-along-with-recession/?sh=4ee368405718)

Easy solution, do not live on credit, live below your means and save, save, save!

[Laker14]

The question asked in the OP is "how will this affect life in The Villages", to which my answer is "not much". I will still get up, enjoy the nice weather, engage in my activities etc etc.

The questions addressed in most replies is "how will this affect the housing market?", and "how will this affect my own decision to buy vs. rent" and responses that essentially convey the message that "I made a different choice for my own personal reasons and circumstances and I'm smarter than you"...

The decision to rent vs. buy does not come down entirely to dollars. I crunched the numbers for nearly 20 years, and had made the decision, while I was still working and living in NY, that renting made more sense. However, after renting for a few years, I discovered that I'd rather own than rent. I won't list the advantages and disadvantages of the renting vs. owning equation. We all know them.

When I made my decision prices hadn't taken the spike up they took a few years ago, and I was given a 2.75% mortgage, and I wasn't looking at it as a vehicle to make money. Those were MY circumstances THEN. Given today's mortgager rates and housing market I might make a different decision, or not, I don't know. Doesn't matter.

For anyone on the fence about buying vs. renting, I wouldn't be in a hurry to fall off of that fence, in any circumstance. Take your time. What you may lose in having missed the "ideal" moment financially, you'll likely more than recover in a better knowledge and understanding of this place, and your place in it.

[JRcorvette]

The reckless way our Government is spending and wasting money our dollar will be devalued and will no longer be the world’s currency. We spend money on so many stupid things and have not had a Budget since I can’t remember. You all better be out of debt in your personal life if you want to survive what’s going to happen!

[gorillarick]

"The big and important difference now is that buyers have to actually qualify for mortgages."

Yeah, but they're back to doing 100% and here have some cash mortgages.
Yikes again.

[gorillarick]

"You all better be out of debt"

So if our fiat currency turns worthless, what difference will it make?

[JGibson]

How Will 8% Effect The Villages?

For the cash rich, very nicely thank you.

Almost like the 80s.

[DrMack]

We own, but there are some great rental deals out there right now. The owner pays utilities, taxes etc. You just need to shop around. There is/was a large supply of rentals to choose from this past season. We had friends that had everything covered for 2 months for 2200 a month. They seem to be getting competitive with great prices and perks.

We rented our new designer home out for 3k a month and charge the renter for electricity and water. Wi-Fi is provided.

[justjim]

8% interest rates? New sales will be a bit less and house “flippers” will fold their tent and take a hike. Resales will see a significant price decrease and overall the economy will likely go into recession. However, perhaps this rather bold prediction by Jamie Dimon could be wrong.

[themartianchick]

We had two mortgages that were 8.5 % and 9.1%. That was the going rate in the early- mid 90s. We just did our best to pay them off early.

[Southwest737]

Great CD and MM rates. Works for me.

[MandoMan]

3 days ago Jamie Dimon stated 8% rates are in our near future. Most cannot argue this because national debt is climbing well past GDP. How will this affect life here in the Villages?

Jamie Dimon—Head Of U.S.’ Largest Bank—Warns Of 8% Interest Rates Along With Recession (https://www.forbes.com/sites/dereksaul/2024/04/08/jamie-dimon-head-of-us-largest-bank-warns-of-8-interest-rates-along-with-recession/?sh=4ee368405718)

Your source, Forbes, actually says “ A chilly scenario for the U.S. economy, in which interest rates climb as high as 8% as the effects of the unprecedented monetary policy taken to combat inflation take hold, is still very much on the table, according to JPMorgan Chase CEO Jamie Dimon. . . .

“Coupled with Dimon’s concerns about the potential for “stagflation,” a recession characterized by lingering high inflation, he warned interest rates could soar to “8% or even more,” a far cry from the already 22-year high rates of over 5% and going against conventional wisdom of a looming decline in rates (U.S. interest rates have not been 8% or higher since 1990).”

Note that “conventional wisdom,” which tends to be more accurate, disagrees with his position. Note that he doesn’t say that this WILL happen, but COULD happen if monetary policy LEADS TO “stagflation,” which it hasn’t yet and probably won’t. Note that the monetary policy he is talking about is set by the Federal Reserve Bank, and the White House has NO SAY over that policy. If Trump is elected, the Fed will keep on doing whatever it thinks best with the same people making the decisions.

I believe that the Fed is doing a good job and making wise decisions, even if they aren’t the decisions many of us with less expertise would prefer. Dimon is charismatic and powerful, but he has made many predictions over the years that didn’t come true, as well as many that did.

[bowlingal]

national debt has been climbing for YEARS. This is nothing new.

[La lamy]

The insanely low interest rates for many years has been frustrating to me as an investor. Couldn't rely on any guaranteed savings. Very happy to finally have the tables turning towards savers and hopefully keep people from borrowing way too much.

[crash]

Thank you autocorrect lol. Dimon knows what he is doing and sometimes yes, sometimes no. But most agree national debt is climbing well past sustainable levels. Something will give.
When you say most you must mean most who weren’t alive during the 70’s because interest then was over 12% and lo and behold we survived. Now 5% is considered high and we are headed for doom.

[Windguy]

Thank you autocorrect lol. Dimon knows what he is doing and sometimes yes, sometimes no. But most agree national debt is climbing well past sustainable levels. Something will give.

It seems to me that people have been saying that for decades.

[Normal]

It seems to me that people have been saying that for decades.

Decades ago the US decided “deficit” spending didn’t matter and we were good for all our debt incurred. But that was back when debt was less than 1 trillion dollars. At some point though there is a ceiling on how much a government can borrow for spending. Debt is now upwards of 34 trillion, but there is much more to it than that. Borrowing (deficit spending) will come at increased servicing costs that used to be next to nothing. That cost will significantly increase on a very large amount that isn’t just a trillion dollars anymore.

Yes, we will all make more money of investments, but there could be cost reverberations.

[rsmurano]

Watching the developer compete with pre-owned is fascinating. The entire pre-owned market is overpriced and not selling due to lack of adjustment in pricing related to interest rates. The developer is slashing prices on areas not selling and marketing Eastport against the two years of isolation that area will have related to the whole villages. Would you rather have a 2000 sq ft home for 400k with a fifty thousand plus bond or 450k-1 million for connected updated home with much less bond and a lower tax rate. Fun.fun.fun to watch.

Eastport isolated? Fenney has been more isolated. Newell and areas east are way more isolated. Try riding your golf cart to Truman golf course or to Loblolly, leave in the morning to get there in the afternoon. Of course the developer will have a sale on areas that don’t sell, like east of Newell close to 470 or Deluna next to 301. Car manufacturers do the same thing. Right now I have friends that have been in multiple lotteries with 50-75 other people vying to buy a new home in Eastport, and that is with higher bond prices. I have multiple friends move from fenney area to Newell with higher bonds but their property costs for pond or view were 1/2 or more than the cost in Fenney.
Used houses in our village are selling if they aren’t shooting for the moon in prices. I know of 3 houses selling for almost double what they paid for them 2-3 years ago and of course they are still on the market. But I have seen houses sell pretty quickly that have made $200k-$300k in 2-3 years.

[TeresaE]

3 days ago Jamie Dimon stated 8% rates are in our near future. Most cannot argue this because national debt is climbing well past GDP. How will this affect life here in the Villages?

Jamie Dimon—Head Of U.S.’ Largest Bank—Warns Of 8% Interest Rates Along With Recession (https://www.forbes.com/sites/dereksaul/2024/04/08/jamie-dimon-head-of-us-largest-bank-warns-of-8-interest-rates-along-with-recession/?sh=4ee368405718)

In my experience and observations, the secret to a secure retirement is cash flow. Paying cash for a home ties up a large sum that you can likely never access. Why? because in retirement your earnings are diminished.

So qualifying for a home equity loan is nearly impossible. In other words, one becomes equity rich and cash poor.

Whereas carrying a mortgage allows you to preserve your cash. Cash for medical bills, home repairs, and even investments. Those investments may even offset the cost of the mortgage. So a 7.5% mortgage costs you 3.5% if the moneys you invested give a return rate of say 4.0%.

One last thought. If your mortgage payment, including taxes and insurance, is less than rent for the same property, then you win again. And nobody can kick you out by not renewing the lease. There’s a lot to be said for that kind of security.

[Wondering]

3 days ago Jamie Dimon stated 8% rates are in our near future. Most cannot argue this because national debt is climbing well past GDP. How will this affect life here in the Villages?

Jamie Dimon—Head Of U.S.’ Largest Bank—Warns Of 8% Interest Rates Along With Recession (https://www.forbes.com/sites/dereksaul/2024/04/08/jamie-dimon-head-of-us-largest-bank-warns-of-8-interest-rates-along-with-recession/?sh=4ee368405718)
Most of the time Jamie Dimon is full of hot air. He was a big part of the mortgage collapse of 2008. If you are worried about the federal deficit, you should have thought about that back in 2017 with the big tax cuts for billionaires.

[Robojo]

3 days ago Jamie Dimon stated 8% rates are in our near future. Most cannot argue this because national debt is climbing well past GDP. How will this affect life here in the Villages?

Jamie Dimon—Head Of U.S.’ Largest Bank—Warns Of 8% Interest Rates Along With Recession (https://www.forbes.com/sites/dereksaul/2024/04/08/jamie-dimon-head-of-us-largest-bank-warns-of-8-interest-rates-along-with-recession/?sh=4ee368405718)

Mortgage rates have already gone over 9%. I moved here in September and I'm renting because I'm not paying that.

[Cuervo]

If history is any roadmap in a free-market society price will increase as demand increases.
If demand decreases so will prices, but I do not see that happening in the near future, unless there is some unforeseen major even.
There are no more nickel candy bars.

[opinionist]

There are only two ways that accelerating government debt ends. Russia did a direct default on their debt and had to live without credit for years. The Weimar Republic printed money until a wheelbarrow of cash was needed to by a loaf of bread. The real inflation rate is a killer for quality of life. Savings in dollar denominated assets can be rendered worthless in terms of purchasing power. Savings in tangible assets hold their value but do not earn interest. Choose wisely.

[Romad]

Our worst was a 10% in 1979 and we were thrilled to get it. Had a couple of 8’s along the way.

But! The thing is now though that house prices are an obscenity.

Remember the days of not spending more on your mortgage than 25% of gross. (And that advice might have included taxes and insurance. It was a long time ago.)

One of our next generation just bought their first house. They had to go up a notch or two in price because landlords were grabbing up everything cheaper in the college town where they live. They are two-income, no student loans, good savers and had a 20% downpayment —but still the chase for that first house has been crazy times. A quote from them, “Now, nobody can raise our rent!”

Another of our next generation just bought one in CA. Holy Digits!!!

I read an article the other day about how we Boomers need to get the hellouta the way so our houses will be for sale. Bashing Boomers seems to be the name of a rather popular game recently. (sigh)

Boomer

If there was real interest to increase the housing stock, there would be more pushes to end short term rentals. Instead, there are ridiculous articles in the WSJ about Boomers.

[Vermilion Villager]

Hopefully it doesn’t end up like ‘08....lot of young people back then bailed and left the keys in the front door on their way out
Different in '08. Then people had mortages but couldn't afford the payments when the interest rate on their adjustable rate mortages kicked in. Now you either have a mortage or you don't. If you do it's probably low rate....if its a low rate you're not going anywhere unless you can pay cash.

[jimjamuser]

Thank you autocorrect lol. Dimon knows what he is doing and sometimes yes, sometimes no. But most agree national debt is climbing well past sustainable levels. Something will give.
People tend to get overly "twerped out" about national debt (usually to blame some Washington organization or another) US nation debt is basically owed to the citizens of the US. It is like some people think that the world is going to leave relying primarily on the US Dollar and move to the Chinese currency--------NOT in our lifetimes.

[jimjamuser]

High interest rates mean new retirees may not be able to sell their homes in order to move to the Villages. For those who sell with a sizable profit, investing instead of buying a home is a good option. I am starting to see more year-round renters.No large down payment and maintenance-free living is the attraction.
And at the end of 5 years, you own NO home and can be comforted by swimming in rent receipts. The whole thing has ALWAYS been a trade-off.

[jimjamuser]

:bigbow:Your point is also 100% correct. Smart buyers are not willing to pay all the costs related for their purchase but can still live the dream with less stress. This means the value of the villages is questionable in the current economic environment.
It is difficult to evaluate the pride and stability of home ownership. Some home owners might consider RENTERS to be like vagabonds.

[jimjamuser]

Deficits don’t, but debt does. Don’t confuse the two. Spending problems and debt are totally different.
I worry more about population growth worldwide and in the US more than interest rates. And population growth (of both kinds) affects government spending.

[jimjamuser]

Our worst was a 10% in 1979 and we were thrilled to get it. Had a couple of 8’s along the way.

But! The thing is now though that house prices are an obscenity.

Remember the days of not spending more on your mortgage than 25% of gross. (And that advice might have included taxes and insurance. It was a long time ago.)

One of our next generation just bought their first house. They had to go up a notch or two in price because landlords were grabbing up everything cheaper in the college town where they live. They are two-income, no student loans, good savers and had a 20% downpayment —but still the chase for that first house has been crazy times. A quote from them, “Now, nobody can raise our rent!”

Another of our next generation just bought one in CA. Holy Digits!!!

I read an article the other day about how we Boomers need to get the hellouta the way so our houses will be for sale. Bashing Boomers seems to be the name of a rather popular game recently. (sigh)

Boomer
The problem with housing has ALWAYS been, "I have mine now I will support legislation that keeps you-all riff-raff out of my neighborhood". "And no dome homes because they look too modern." And don't even think like Europeans and build FINE HOMES on a factory line. I suppose it all boils down to social inertia and lack of imagination.

[jimjamuser]

The big and important difference now is that buyers have to actually qualify for mortgages.

I could see that mess coming when all that was going on. I am not an economist. It was so obvious.

Money was too damned cheap and easy. Mortgage brokers were allowed to run amok with drive-by appraisals and stated assets loans. Then came the derivatives. That whole ugly mess was the result of pure unrestrained greed — all around.

Boomer
I remember derivatives and the "GENIUS" that gave his blessing. Something always seemed wrong about the concept.

[jimjamuser]

Most of my life, mortgages have been over 8%. My first as over 18%. And for 100 years prior to the housing market crash, you could get 4.25% in any passbook savings account -- and that was 3% over the inflation rate. I'm finally making 5% again in the money market, with inflation running about the same. It ought to be more like 7-8% in this inflation. I can't imagine why anyone thinks a 3% mortgage is normal. For crying out loud, my grandfather's $5000 mortgage on his 2-bedroom 1910 Craftsman was 5%, 85 years ago!

Abnormal has been a disaster. How about we try NORMAL again?
I had a College Professor say to my class that, "Interest rates have ALWAYS been 3% above inflation."

[jimjamuser]

When you purchase a home you have tax issues in the form of property taxes and bond. No one is going to escape taxes. Renting is not for everyone but it does have many advantages when interest rates are high. Our social security checks pay for all of our expenses. We have not had to spend a dime of our savings and it is earning great interest. Not likely home prices are going to surge anytime soon. If they do, we will simply buy a small home. We sold our larger home with a pool for a sizeable profit and downsizing has not been an issue for us. We are loving the maintenance-free life.
There are more things to consider in the rent or own scenario than just the financial angle. I like to cut my own grass, many people do not. If I rented and I wanted to plant a large tree or do ANY LANDSCAPING, I could NOT. In order to paint a driveway, I have to OWN that driveway. What if I want a medium large dog and my rental agreement says, "NO DOGS". Many people like to spend LARGE amounts of time playing golf, so they pay for a lawn service to give them the time.......I do NOT.

[jimjamuser]

We sold our home for double the amount we paid. We KNOW that was nothing but a stroke of luck. At this time, we are not willing to spend our money in real estate because we believe home prices will continue to fall. Everyone chooses what they believe is best for them. We are enjoying a maintenance free life and travelling. We will have no regrets no matter which way home prices go.
A perfect example - traveling is educational and exciting, but it is usually expensive. Each person picks slightly different priorities.

[jimjamuser]

The reckless way our Government is spending and wasting money our dollar will be devalued and will no longer be the world’s currency. We spend money on so many stupid things and have not had a Budget since I can’t remember. You all better be out of debt in your personal life if you want to survive what’s going to happen!
We will be long DEAD and the DOLLAR will STILL be the world's currency.

[jimjamuser]

Your source, Forbes, actually says “ A chilly scenario for the U.S. economy, in which interest rates climb as high as 8% as the effects of the unprecedented monetary policy taken to combat inflation take hold, is still very much on the table, according to JPMorgan Chase CEO Jamie Dimon. . . .

“Coupled with Dimon’s concerns about the potential for “stagflation,” a recession characterized by lingering high inflation, he warned interest rates could soar to “8% or even more,” a far cry from the already 22-year high rates of over 5% and going against conventional wisdom of a looming decline in rates (U.S. interest rates have not been 8% or higher since 1990).”

Note that “conventional wisdom,” which tends to be more accurate, disagrees with his position. Note that he doesn’t say that this WILL happen, but COULD happen if monetary policy LEADS TO “stagflation,” which it hasn’t yet and probably won’t. Note that the monetary policy he is talking about is set by the Federal Reserve Bank, and the White House has NO SAY over that policy. If Trump is elected, the Fed will keep on doing whatever it thinks best with the same people making the decisions.

I believe that the Fed is doing a good job and making wise decisions, even if they aren’t the decisions many of us with less expertise would prefer. Dimon is charismatic and powerful, but he has made many predictions over the years that didn’t come true, as well as many that did.
A very good post.

[Randall55]

If history is any roadmap in a free-market society price will increase as demand increases.
If demand decreases so will prices, but I do not see that happening in the near future, unless there is some unforeseen major even.
There are no more nickel candy bars.In the Villages, home prices are decreasing and MANY are sitting on the market for months. Too many look at what the Developer is doing and construe his good fortune means good fortune for all. Not true! The minute you close on your new home, you are now living in a preowned. At this time, preowned homes are not seeing large profits. Most are lucky to break even. The one exception seems to be larger homes with pools. These types of homes are seeing huge profits. Cookie cutter homes, patio villas, and courtyard villas are not. Buyers for these types of homes are choosing to buy new because new homes are cheaper. Why pay someone more for the same model?

[margaretmattson]

In the Villages, home prices are decreasing and MANY are sitting on the market for months. Too many look at what the Developer is doing and construe his good fortune means good fortune for all. Not true! The minute you close on your new home, you are now living in a preowned. At this time, preowned homes are not seeing large profits. Most are lucky to break even. The one exception seems to be larger homes with pools. These types of homes are seeing huge profits. Cookie cutter homes, patio villas, and courtyard villas are not. Buyers for these types of homes are choosing to buy new because new homes are cheaper. Why pay someone more for the same model?Even the prices of new homes are dropping. Hundreds of Lake Denham and Dabney home prices were reduced. Some as much as $50,000. Moultrie Creek is in high demand but not certain this will remain the case. Many Villagers are buying those homes creating a false market. When they try to sell, will it be difficult? Things have changed quite considerably since the post Covid craze.

[Mleeja]

The interest rate is having a big effect on the real estate market. I have a home I am involved with selling. If we could have gotten it on the market last July or August it would probably be sold. Now, it is just languishing on the market with the price going down.

[jimjamuser]

Most of the time Jamie Dimon is full of hot air. He was a big part of the mortgage collapse of 2008. If you are worried about the federal deficit, you should have thought about that back in 2017 with the big tax cuts for billionaires.
All true !

[jimjamuser]

If history is any roadmap in a free-market society price will increase as demand increases.
If demand decreases so will prices, but I do not see that happening in the near future, unless there is some unforeseen major even.
There are no more nickel candy bars.
I would think that demand for houses would be INCREASING because of the increasing population of the US (both Legal and ILLEGAL). This demand would mean increased prices. That problem could be overcome IF ZONING laws were liberalized to allow small houses, domed houses, and houses built on assembly lines as is done in Europe.

[Jayhawk]

Why pay someone more for the same model?

Crown molding, no carpet, enclosed lanai, upgraded countertops and cabinets, landscaping, painted driveway, epoxy garage floor, close-by retail, established neighborhood, no construction traffic, location, location, location, just to name a few reasons.

Some prefer new. For those who don't care, these things may be part of the consideration.