: How does the housing market work? What will it take for the interest rates to drop? Is there any hope in sight?
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*How does the housing market work?*
The housing market is like any market, in that it is driven by supply and demand. There is high demand for housing in nice places, so the houses are more expensive. There is low demand for housing in less nice places, so the houses are less expensive. This is why, for example, houses in Malibu, California are more expensive than houses Birmingham, Alabama.
*What will it take for the interest rates to drop*?
Interest rates for mortgages (I assume you mean for mortgages) are driven by many factors, including the overall health of the economy, an individual’s credit worthiness, the amount of the loan, and more. If you’re credit is good, your loan is relatively small, and the property is in a desirable area, you will get a better mortgage rate. Mortgage rates are also subject to supply and demand: if lots of people are taking out loans, mortgage rates will go up; when fewer people are taking out loads, mortgage rates will go down. With mortgage interest rates currently very high, fewer people will be taking out loans, and mortgage rates will go down. Mortgage interest rates are also influenced by the Federal Reserve’s short term lending rate, which is currently very high. When the Federal Reserve lowers the rate, mortgages will come down.
*Is there any hope in sight?*
(This part is mostly my opinion.)
Yes, there is hope in sight. We are in the middle of a transformation of society – more and more jobs are being done remotely, and it is easier than ever to have a job that is based in a high-pay city while living and working in a more affordable area: you may work for a company with the home office in San Francisco, but live in Clearlake (the most affordable city in California, according to some web site I just looked at). Also, many cities are re-evaluating the zoning laws that have kept the housing market artificially high, leading to higher density housing. More housing means more affordable housing.
It’s a scary time to be alive, because things are changing. But they can change for the better .
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