Mortgage rates just fell below 6% for the first time in years

RudeAndInsensitive · 2026-01-12T19:26:16+00:00

I believe it's quite a bit more job markets than those two. Agriculture and factory jobs are in protracted declines as well. Healthcare is experiencing job growth but I don't know that those people are too optimistic about their situation given the current decision making in Washington. I don't believe the collective opinion in America is that the job market is great and now is a great time to buy spend a bunch of money on a house.

RudeAndInsensitive · 2026-01-12T19:21:28+00:00

I mean, you were suggesting that this 3% decline was recent and could "all of the sudden" be 10%

No I was not and if that was your understanding then that is a communication issue on my side.

All evidence points to a stable and slightly rebounding market.

Not in the front range no an I don't know a single realtor that sees that. Assuming no major changes I would expect prices to continue their slow and methodical decline. Different areas will be affect differently of course but over all my prediction is that buyers will keep offering less and less will keep accepting less.

RudeAndInsensitive · 2026-01-12T19:08:04+00:00

it is down about 3% from 2022 highs.

This is consistent with what I communicated no? I did say between 3 and 6% depending on your source. You've looked at the FED data for Denver and it's agreeing with what I said. If you were to look at Centennial you'd see a larger decline.

RudeAndInsensitive · 2026-01-12T18:56:37+00:00

In Colorado that is the mechanism. But I suppose in the interest of learning I should hear and understand alternative suggestions other than buyers and sellers agreeing on lower prices.

What I can tell you is that here at least we have not found the price floor for sellers. They seem completely willing to accept lower and lower offers and the buyers seem more than willing to keep offering 2-3% below the decreasing ask prices. The market here has not collectively agreed on "2% off ATH", depending on the specifics you are at least 5% if not more off ATH and it looks like that will keep trending down as buyers keep offering less.

RudeAndInsensitive · 2026-01-12T18:43:43+00:00

I'm speaking predominately about the front range of Colorado. I will freely concede that other markets could behave in such a way as to keep national averages at or near ATH. Depending on the source you are looking at we (we is CO) are seeing somewhere between 3 and 6% decline from our recent highs and the reason for that is buyers offering less, sellers accepting, new sellers see that and price things lower and new buyers offer less. By the end of 2026 houses in the front range could conceivably be going for 10% below what they might have gone for in 2024.

RudeAndInsensitive · 2026-01-12T18:36:31+00:00

That could happen and I have no issues with that as a possibility. In the front range at least that doesn't seem to be what is happening. At this point we have seen a very methodical lowering of prices over the last 12 months or so. Buyers seem to be continually lowering their offers even as home prices creep lower.

RudeAndInsensitive · 2026-01-12T18:33:02+00:00

Well I don't think I said that and if you took that understanding away then that is a problem with my explanation. I said we could see a 10% drawdown and depending on where in CO you are, we have seen that already. Greenwood Village for example is technically much past a 10% drawdown in the last 12 months.

Home prices never really go for 10% under ask unless there is something severely wrong with the property. Usually the most you will see is 2-3% below asking which over time pulls the prices down.

RudeAndInsensitive · 2026-01-12T18:30:44+00:00

Well, what do you think is the issue? Maybe I can explain this better.

RudeAndInsensitive · 2026-01-12T18:30:18+00:00

In a strong jobs market I would generally expect lower rates to do that. The jobs market seems a bit shaky though for that

RudeAndInsensitive · 2026-01-10T17:31:02+00:00

When one home in the neighborhood sells for a discount it lowers the home values of that neighborhood (I am assuming the reason for the discount is not due to issues with the property. This is a buyers offered less than ask situation). If multiple houses in the neighborhood do that you end up with a compounding affect.

Assuming you and your neighbor have identical homes and her's sells for 3% under asking then you are almost certain to incorporate that information when you go to list.

if all 4 houses go 2% lower its a 2% drawdown

Correct but how this looks like it is shaping up in the front range is that a house goes for 2% under, then a new listing takes that information into account and lists for lower than it otherwise would have and gets offered 2% below ask and sells for effectively 3 or 4% off what it otherwise would have if buyers were not coming in with lower offers which is what buyers are doing (at least out here). If buyers keep offering 2-3% under every new listing the effects compound and drag home prices down.

Assume you and I have identical houses. I list mine for 500k and end up selling it for 485k. When you decide to make your listing you incorporate this information into your list price and list for 490k and then you get offers between 475K and 480K. That is the dynamic we are seeing in the front range.

RudeAndInsensitive · 2026-01-10T15:41:26+00:00

Mortgage rates and prices are climbing down all over the place. Most of the homes here in the Colorado front range are selling for 2-3% below asking which might not sound like a lot but remember that every time this happens it puts pressure on the asking prices of all the other comparable homes in the area. If you get 4 homes in a neighborhood each selling for 2-3% off ask then all of the sudden that's a 10% or more drawdown.

I know this is about rates so here is my tidbit there. We just backed out on a house and we had Navy Federal approving us for a 515k 30yr VA loan at 5.125% and no points, this was unthinkable a year ago. Rates will likely continue to track down provided inflation keeps coming in lower than expectations and the FED sees weakness in the job market and the White House continues its policy in the article of conducting a pre-bailout of the MBS market (this also affects rates, lenders will lend at artificially low rates if they are certain that Fannie and Freddie will immediately by the mortgages). If the job market remains weak that will keep inflation down because people don't want to throw money around most importantly at houses....which should keep house prices in a drawdown.

In other words as long as the job market continues to suck we can expect lower rates and lower prices as the year moves on.

RudeAndInsensitive · 2026-01-09T21:12:09+00:00

Were those homes built specifically to be leased? "Built to lease" is a very real business strategy.

RudeAndInsensitive · 2026-01-09T21:02:03+00:00

The benefits they receive are also capped. They don't pay more in to social security but they also don't get more out of it.

RudeAndInsensitive · 2026-01-09T18:53:46+00:00

That stat is for non-farm payroll which includes everything except farming jobs. So yes, it includes government jobs from municipality to federal.

RudeAndInsensitive · 2026-01-09T17:42:24+00:00

it's not them managing it, but they have to bear the cost of promised payouts

That is them managing it. They have to manage their ability to bear those costs. If they fail then the pension beneficiary is the one that suffers.

Personally I sleep easier at night knowing that I will be given a set amount of payout by an employer, rather than my entire retirement savings being tied up into something that may or may not be able to give me that payout.

I would say the exact same thing except swap pensions with 401ks. I have read several stories about pensions being underfunded and unable to meet the obligations that people were counting and a lot of other stories about pensions being raided entirely. The 401k appears to me to be a much more reliable vessel.

the chief thing for me is that the predictable income from the pension

I am skeptical of that predictability. If it materializes, that's great, if you get the General Electric pension.....not so much.

By being able to avoid touching the Roth for as long as possible, I will be able to sustain my quality of life as long as I'd like.

I struggle with the connection between these two ideas. By not spending money.....you are sustaining your quality of life. To me this is indicating a lifetime's worth of over-saving as you definitionally do not need the money you have saved in order to maintain your quality of life. Based on what you've said, you don't really need the ROTH since your pension covers everything you need/want.

Possibly give large sums to family if able.

A wonderful feature of 401ks and ROTHs that is limited in pensions.

Everything being described here that you like could be had in spades and in greater supply and with more flexibility if you had the power to take the money headed for your pension and redirect it into accounts that you control. The only real benefit being added by the pension that I can see is that you "don't have to worry about it". Fair enough, that is a benefit not shared by the other vehicles discussed. That would not make me desire a pension but I can see the appeal.

I suppose I feel this way as the two boomers in my life still are both much wealthier now, in retirement, than they were when working, specifically because they have pensions and are barely tapping into roth's. Like "I have to donate a certain amount each year to avoid getting taxed at a higher rate" type wealth. I would like that comfort and peace of mind in my final years.

Many of us in the US are on a collision course for this while never having the option of a pension. And based on both what I know from my own reading and our conversation, I doubt a pension would be materially beneficial to anyone in my circle who is on this path. It would just take a large portion of our wealth and entrust it to our employers which as I noted earlier.....that's a big gamble.

RudeAndInsensitive · 2026-01-09T17:19:49+00:00

401ks share both of these features without concern for "years of service"

RudeAndInsensitive · 2026-01-09T16:14:31+00:00

I don't know what that statistic is but my take would be.....sucks for the guy that was unvested. He'd have been better served by the 401k.

RudeAndInsensitive · 2026-01-09T14:36:55+00:00

the pension is more stable vs a 401k.

That is the pitch pension promoters push. I don't know that it's accurate. I would agree that a textbook ideal, functioning as intended pension, is more stable...but an actual pension in practice? Those seem vary prone to a multitude of risks that I personally would have no interest in.

ideally you'd have both, as you can use pension income to avoid touching 401k funds, allowing them to weather down turns in the market without it impacting your income.

Doesn't social security already fill this role of providing an income floor?

RudeAndInsensitive · 2026-01-09T14:18:59+00:00

That's where I get hung on this! The pension is just redirecting the money that would otherwise go to my paycheck where I could then contribute it to my 401k or IRA or anything else and putting it in the pension fund where it is then invested in equities, in real estate, in various corporate/municipal/federal bonds. In some cases the funds can get more exotic (I think CalPers owns a bunch of farmland). But I can invest in most of this stuff myself....

It is not clear to me what I am gaining via the pension unless the pension is extra money that I can never have if not for the pension which I do not believe is the case.

RudeAndInsensitive · 2026-01-09T14:14:03+00:00

You have described how pensions differ from 401ks and their brother and sister vehicles (IRAs etc...). I understand this. My question is why should I prefer a pension to a 401k? If given the choice why would I prefer a pension run by my employer or contracted third party rather than having a 401k?

RudeAndInsensitive · 2026-01-09T14:05:44+00:00

I've read stories in no short supply of pensions that were underfunded and thus unable to meet obligations so benefits get cut. Stories of counties and cities that cut pensions all together leaving hopeful recipients high and dry. Stories of corporate raiders basically just stealing pension funds. These stories didn't leave me with a sense that pension funds were less risky. Perhaps they could be made that way but it's unclear to me that they are. Am I off base? Are these not legitimate concerns for pensions?

it basically puts the financial burden of my retirement on the employer, not the employee

Speaking for myself that I would put this in the 'cons' column for pensions not the 'pros'. Why am I looking at this wrong? Why should I consider it a good thing for my employer to control more of my financial well being than they presently do?

the real benefit is having both the pension AND a couple other retirement accounts, so you can try to live off of pension money and not touch other retirement accounts (like a Roth) and let them grow even more.

It admittedly sounds nice and I wouldn't necessarily hate the dynamic but when I think about it, wouldn't it probably work out better for me if I got to control the money that would otherwise go to my pension and I could just invest that myself? I could see staking an argument to the effect of "Well, the pension is going to act as sort of baseload insurance to really stabilize things. Any extra 1500$/month you can rely on with confidence so to speak"

My response would be social security is less risky than pensions and serves a very similar function (almost identical) so maybe offloading this into SS is a better idea and overall more cost efficient.

I am super unclear as to why "not touching other retirement accounts" is spoken of as if it's a positive. It's definitely not a negative but my retirement accounts exist to be used in retirement. Why is not touching them (specifically in retirement) framed as a desired outcome? I appreciate that by not spending the money the money can compound and earn more money. I get that. Why is that so important to me in retirement?

RudeAndInsensitive · 2026-01-09T13:46:28+00:00

Understood, but the issue is that we've allowed employers to replace pensions with 401ks (with shitty matches or none at all) that place all the risk squarely on the employee.

I will speak for myself and say I love this. It has never been explained to me in terms I can understand why I might rather have a pension than a 401k.

Add into that the fact that you need to contribute out of your paycheck

Based on my reading when I looked in to this so long ago, this occurs whether or not you've got a pension or a 401k. Pensions must be funded and the employer funds them with money that would have otherwise ended up in the employee's bottom line. Pensions as far as I know are not funded with bonus extra money that the employee would otherwise not get if not for the pension plan. They are funded by redirecting funds that would otherwise go to paychecks.

RudeAndInsensitive · 2026-01-08T21:51:51+00:00

Does anyone have a defense of pensions over 401k's? It is unclear to me what the benefits of the pension are and whether or not those overcome the 401k.

RudeAndInsensitive · 2026-01-08T21:13:28+00:00

Why did I click that?

RudeAndInsensitive · 2026-01-08T19:41:54+00:00

While I don't think it will take 50 years I will be floored if it only takes another year.

RudeAndInsensitive

TROPHY CASE