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I sure don't understand why home prices haven't cratered yet, other than rates must still be too low. For the longest I time I thought "they will never end zirp because if they did, prices will crater and they will all be booted out of office." So that was wrong, or the market is just Wile E Coyote running in the air well past the cliff edge. I get paid a lot, but if I type local asking prices into a mortgage calculator, it's a clear "Nope!" until I look a few hundred miles away where asking prices are about half. The UK is an interesting point of comparison vs US because we don't have 30 fixed rate mortgages, but we seem to be going with "extend and pretend"ing a 25 year tracker into a 40 year tracker. A pile of 2 year fixed mortgages are supposedly set to expire this year and refi higher so that could be interesting soon. But the only thing that has cratered here so far is UK home builder stocks, which boggles my mind when US home builder stocks are at ATHs. Please explain. Also, send help, lol.

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As someone who's in the MBS space, when I did an analysis a couple months back, average coupon rate on agency MBS (weighted by notional) was 2.96. Add roughly 75 bips to get you mortgage rates and some origination since then, average mortgage rate in the country is still probably ~4%. Plus with a massive deficit in housing starts vs demand, home prices aren't going to affected until people are forced to sell (i.e. unemployment). Still a long way to go in the cycle for that to happen.

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Tough to tell where we are in cycle. The fact that so many potential sellers are unwilling to sell and lose their 3% mortgage, and then turn around a finance next home around 7%. Obviously it messes up the affordability math, and it's so hard to also factor in the fuzzy psychological impact of the shitty rate on the new financing, on top of basic math issue. Cash buyers are totally fine and are a bigger share of monthly txs these days. The rent vs buy math favors renting all else equal. Demand staying fairly strong from younger families that are having first and 2nd kiddos, especially if they can access "bank of relatives" instead of TradFi. Yada yada. Please write more soon.

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