<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>rrrrrrrrrrrryan</author><text>This logic doesn&amp;#x27;t hold in all housing markets.&lt;p&gt;In California, people generally buy the absolute most house they can possibly afford. Houses are extremely expensive and people don&amp;#x27;t want to live in shacks, so they stretch their budget as far as they can. Home prices in these markets are extremely sensitive to changes in interest rates, as you&amp;#x27;ve described.&lt;p&gt;However in other markets, interest rates can wiggle up and down without having as dramatic an effect on prices, because livable homes aren&amp;#x27;t as expensive and people have more slack in their budgets.&lt;p&gt;In markets with lots of cash buyers, home prices may also be somewhat isolated from interest rate swings.</text><parent_chain><item><author>meterplech</author><text>100% true.&lt;p&gt;And a good reminder of how much exposure housing prices have to interest rates. To frame the same math another way:&lt;p&gt;If you bought a house for, say, $580k with a $500k mortgage... You paid $80k down payment + $20k closing costs and your monthly would be ~$2,073&amp;#x2F;month.&lt;p&gt;If interest rates go up to 6%, and the person buying your house also wants to pay the same ~2,073&amp;#x2F;month, they would only be able to afford a $344,649 mortgage. Assume the same $80k down payment and $20k closing costs... and they should be willing to pay $444,649 for your house ($135,351 less than you paid!).&lt;p&gt;Obviously with inflation the person may be willing to spend more than you spent! But there&amp;#x27;s a lot of risk for homeowners who need&amp;#x2F;want to sell if&amp;#x2F;when interest rates go up. That&amp;#x27;s why the 30 year fixed is such a fantastic bet if you are willing + able to hold and lock that fixed price... but housing is a pretty lousy investment if you need to sell.</text></item><item><author>PragmaticPulp</author><text>They cite the numbers in &amp;quot;real terms&amp;quot;, which would mean inflation adjusted:&lt;p&gt;&amp;gt; The average price of American homes, in real terms, is now the highest it&amp;#x27;s ever been&lt;p&gt;Of course, you really need to be looking at mortgage rates to understand housing affordability: &lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;www.freddiemac.com&amp;#x2F;pmms&amp;#x2F;pmms30.html&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;www.freddiemac.com&amp;#x2F;pmms&amp;#x2F;pmms30.html&lt;/a&gt;&lt;p&gt;July 2021 average 30-year mortgage rate: 2.87% (with 0.7 points)&lt;p&gt;2008 12-month average 30-year mortgage rate: 6.03% (with 0.6 points)&lt;p&gt;To put that in perspective, a $500,000 mortgage (excluding down payment) would require a $2,073 monthly payment today, but a $3,007 monthly payment at 2008&amp;#x27;s 6% mortgage rates.&lt;p&gt;In other words: Houses are still way cheaper, in actual out-of-pocket terms for average people, than they were in 2008. Today&amp;#x27;s interest rates are way too low.&lt;p&gt;EDIT: Updated with 2008 numbers, thanks to comment below</text></item></parent_chain></comment><story><title>Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble</title><url>https://www.npr.org/sections/money/2021/08/17/1028083046/home-prices-are-now-higher-than-the-peak-of-the-2000s-housing-bubble-what-gives</url></story>
<instructions>Your goal is to analyze the following comment and estimate how highly it will be upvoted by the Hacker News community.</instructions><comment><author>api</author><text>I&amp;#x27;ve wondered if we are in a regime today where interest rates simply can&amp;#x27;t go up. I can&amp;#x27;t imagine a scenario where they can go up more than a point or two without blood in the streets... possibly literally.</text><parent_chain><item><author>meterplech</author><text>100% true.&lt;p&gt;And a good reminder of how much exposure housing prices have to interest rates. To frame the same math another way:&lt;p&gt;If you bought a house for, say, $580k with a $500k mortgage... You paid $80k down payment + $20k closing costs and your monthly would be ~$2,073&amp;#x2F;month.&lt;p&gt;If interest rates go up to 6%, and the person buying your house also wants to pay the same ~2,073&amp;#x2F;month, they would only be able to afford a $344,649 mortgage. Assume the same $80k down payment and $20k closing costs... and they should be willing to pay $444,649 for your house ($135,351 less than you paid!).&lt;p&gt;Obviously with inflation the person may be willing to spend more than you spent! But there&amp;#x27;s a lot of risk for homeowners who need&amp;#x2F;want to sell if&amp;#x2F;when interest rates go up. That&amp;#x27;s why the 30 year fixed is such a fantastic bet if you are willing + able to hold and lock that fixed price... but housing is a pretty lousy investment if you need to sell.</text></item><item><author>PragmaticPulp</author><text>They cite the numbers in &amp;quot;real terms&amp;quot;, which would mean inflation adjusted:&lt;p&gt;&amp;gt; The average price of American homes, in real terms, is now the highest it&amp;#x27;s ever been&lt;p&gt;Of course, you really need to be looking at mortgage rates to understand housing affordability: &lt;a href=&quot;http:&amp;#x2F;&amp;#x2F;www.freddiemac.com&amp;#x2F;pmms&amp;#x2F;pmms30.html&quot; rel=&quot;nofollow&quot;&gt;http:&amp;#x2F;&amp;#x2F;www.freddiemac.com&amp;#x2F;pmms&amp;#x2F;pmms30.html&lt;/a&gt;&lt;p&gt;July 2021 average 30-year mortgage rate: 2.87% (with 0.7 points)&lt;p&gt;2008 12-month average 30-year mortgage rate: 6.03% (with 0.6 points)&lt;p&gt;To put that in perspective, a $500,000 mortgage (excluding down payment) would require a $2,073 monthly payment today, but a $3,007 monthly payment at 2008&amp;#x27;s 6% mortgage rates.&lt;p&gt;In other words: Houses are still way cheaper, in actual out-of-pocket terms for average people, than they were in 2008. Today&amp;#x27;s interest rates are way too low.&lt;p&gt;EDIT: Updated with 2008 numbers, thanks to comment below</text></item></parent_chain></comment><story><title>Home Prices Are Now Higher Than the Peak of the 2000s Housing Bubble</title><url>https://www.npr.org/sections/money/2021/08/17/1028083046/home-prices-are-now-higher-than-the-peak-of-the-2000s-housing-bubble-what-gives</url></story>