New Tractor Sales Are Declining

[jyoutz]

YEP, Wait until all of the people that bought a Home with an ARM are up against a wall, and also decided they could afford a new CUT payment jn addition when the Gov handed out that free money.

It is going to get Real... Real Quick for a Lot of home / small farm buyers that signed ARM's

That will also apply to those folks carrying a lot of credit card debt and making even one late payment.

ARMs have a cap on how much they can escalate. Usually only about 3-4%. Many ARMs were written starting at 2.5-3%. So yes the mortgage could adjust to 6 or 7%, or maybe $100-200 more per month for average mortgages. Enough that people will need to adjust their budgets, but not a catastrophe. My first mortgage in 1987 was at 10% and the second one four years later was at 7.75%. Mortgage rates are still cheap today compared to the 1980-90s.

 

[Citydude]

ARMs have a cap on how much they can escalate. Usually only about 3-4%. Many ARMs were written starting at 2.5-3%. So yes the mortgage could adjust to 6 or 7%, or maybe $100-200 more per month for average mortgages. Enough that people will need to adjust their budgets, but not a catastrophe.

That $100-200 a month is a lot of money to a lot of Americans.

 

[jyoutz]

That $100-200 a month is a lot of money to a lot of Americans.

Nobody should do an ARM unless the escalation potential in the contract is acceptable.

 

[airbiscuit]

Looks like ARM mortgages only make up about 10% of total mortgages, but I agree that nobody should do an ARM unless the escalation potential in the contract is acceptable.

 

[Hay Dude]

I did a 7/1 ARM years ago. Most people only focused on what it could adjust UP to. Many don’t account for the 7 years where you pay LESS than the fixed rate mortgage. Mine was at 2% for 7 years. We saved a ton of money in those 7 years. 84 payments at 200-300 less is a LOT of money

 

[5030]

You cn dance around the fact all you want. Bottom line is people don't have the spendable income for discretionary purchases. Not ag related, just personal use. Ag tractors will get turned over as they depreciate no matter what.

 

[jyoutz]

I did a 7/1 ARM years ago. Most people only focused on what it could adjust UP to. Many don’t account for the 7 years where you pay LESS than the fixed rate mortgage. Mine was at 2% for 7 years. We saved a ton of money in those 7 years. 84 payments at 200-300 less is a LOT of money

I refinanced with a 5/1 ARM last year to get a 2.75% rate. I plan on paying the mortgage off in 5 years, so I’ll never see the escalated rate.

 

[5030]

I refinanced with a 5/1 ARM last year to get a 2.75% rate. I plan on paying the mortgage off in 5 years, so I’ll never see the escalated rate.

Predicting the future in uncertain times can be an exercise in getting screwed.

 

[jyoutz]

Predicting the future in uncertain times can be an exercise in getting screwed.

I have the funds to pay off the mortgage now, but it benefits me to wait until the ARM adjusts.

 

[2manyrocks]

It's not so much the ARM that causes trouble as much as the borrower's budget. Borrowers get in trouble when they get an ARM when their budget is already stretched thin, but choose an ARM because of the relatively low initial interest rate. * They get in trouble later when it adjusts to a higher rate because they don't have the cushion in their budget to handle the cost increase. The underlying problem is not having enough budget.

The other area of trouble is taking out a second mortgage that may often involve an ARM, blowing the cash on crap, and then not having the budget to handle any increases in the future ARM interest rate.

*In theory, the ARM rate should be less than a long term fixed rate because the lender can adjust the rate higher as interest rates go up and therefore the lender doesn't have as much interest rate risk as with a long term fixed rate loan.

 

[MHarryE]

I see so many comments the $2400 I got as COVID stimulus triggering inflation. Long before that I saw prices climb due to tariffs. When a tariff is added, who pays the cost? Government? Manufacturer? No, it’s always the end user. Then billions given out to farmers like me to compensate for retaliatory tariffs and what they did to commodity prices - watch farmers on YouTube and note their equipment purchases with the compensatory money. But I didn’t get stimulus money to compensate for tariffs on washers, driers, refrigerators. And steel tariffs to protect our small remaining steel operations in America have really taken a toll on attachments, but I live in America’s iron mining center and the miners are mostly sitting pretty - as long as they can pass the random drug testing. My mining friends and neighbors - these are the good old days because of how the tariffs have boosted the price of US steel and scrap only goes so far in supplying the demand. Nothing like fresh ore for quality steel. And the trickle down effects double the cost of your attachments.

 

[buckeyefarmer]

My son was starting to look for a house recently. I advised him to wait. Good thing, prices are dropping.

 

[hiddentacocatneddih]

We just sold a house 50% over appraisal in less than 3 days after listing

 

[finn1]

We just sold a house 50% over appraisal in less than 3 days after listing

House next door sold in about a week. Same floor plan as mine, and the woman got full asking price… 75% more than we paid three years ago, and 30% more than the identical house across the street went for 14 months ago.

The housing market may be down, but not everywhere.

Realtors here in my part of Az are complaining that houses that sold in three days a year ago are on the market for two weeks before selling now…Cry me a River.

 

[5030]

Too bad the value of the money is worth about 1/3rd of what it was this time last year.

 

[2manyrocks]

Had a car battery to fail under warranty. Purchased August, 2021 for $69. Same battery today is $99. The claim that inflation is 9% doesn't seem accurate to me based on what I had to pay recently for T posts, dog food, motor oil, hydraulic fluid, filters, etc.

Even the guys at the auto parts store remarked how expensive things have gotten when I bought brake rotors about a week ago. Even the clerks at our local Walmart were talking about how much prices have risen when I was there a few days ago.

Seems like $250K was a normal average home price prior to 2020. Now it's pushing $500k in Nashville. 6% realtors fee of $30K seems pretty steep considering all they had to do was publish the listing on Friday, show on Sunday, and screen offers on Monday to see who was willing to pay the most over list price. $30K used to be a pretty good annual salary for many people....

I remember how crazy it was prior to the bottom falling out in 2008, but it seems to me that things got a lot more crazy a lot faster this time around than it did then.

 

[Hay Dude]

My son was starting to look for a house recently. I advised him to wait. Good thing, prices are dropping.

I’d rather pay higher interest rates now IF the price is low. You can always refinance when rates drop.

If you over pay, you can never get out of that hole.

 

[hornett22]

Friends of mine just listed a house in Knoxville 2 weeks ago for $300k. Sold same day for $350k.

People want out of blue states bad.

 

[Williy]

The K&S dealer in Lubbock, TX says
no sales in the month of December.
They did fine in November

willy

 

[5030]

Interesting. Talked to Dennis the other day and he said they cannot keep any stock on hand but then they sell mostly larger Kubota's in the +75 range.