Email Preview: |
Your name saw this post on The ActiveRain Real Estate Network and thought it might be of interest to you. Please see the link below to review the post.
Is there “ Normalcy Bias” with Mortgage Interest Rates?
If you look up the term “normalcy bias,” you find yourself swimming in psychological theoretician talk, most of which deals with people’s response to disastrous situations. The theory behind it is that when faced with the unknown, there is a tendency among even rational human beings to misconstrue new (and even dangerous) circumstances as being more normal and safe—than is often the case. How this relates to the current real estate market is not as farfetched as you might think. Ask anyone who wanted to or bought a house in the early 1980s, and my guess is you will probably get an earful. Due to inflation since, the asking price for homes would be pretty inviting today…that is until you check into what the mortgage interest rates were at that time. A home valued at $250,000 today would have had an asking price in 1983 dollars of just over $94,000—a real bargain. But, the 30-year mortgage interest rate in October 1983 was a colossal 18.39%! In today’s dollars, the monthly payment on a $250,000 mortgage would be a daunting $4,295.00! That’s not including taxes and insurance. No one is predicting 18% mortgage interest rates are right around the corner—or even any time in the ... more
__________________________________________________ Are you on The Rain? Grow Your Network!
|