My feeling is that rates will not go up dramatically next year as it would kill the “recovery” and would also put more downward pressure on home values, which it seems the gov. will do almost anything to prevent.

Probably not dramatically next year, but they should start to creep up. Yes, it will put downward pressure on home prices (price and value are different things – value is what you get compared to what you pay).

We are still prepared to keep renting but I am concerned that any further drop in prices could be offset by a rise in intrest rates.

If you are going to sell, this is a problem. If you are going to buy, it means that any down payment you do will go further. Yes, the interest rates and house prices move in opposite directions.

My feeling is that rates will not go up dramatically next year as it would kill the “recovery” and would also put more downward pressure on home values, which it seems the gov. will do almost anything to prevent.

Probably not dramatically next year, but they should start to creep up. Yes, it will put downward pressure on home prices (price and value are different things – value is what you get compared to what you pay).

We are still prepared to keep renting but I am concerned that any further drop in prices could be offset by a rise in intrest rates.

If you are going to sell, this is a problem. If you are going to buy, it means that any down payment you do will go further. Yes, the interest rates and house prices move in opposite directions.

rnen
You are looking in my backyard. The challenge is there is lots of demand around here but very little coming on the market. The homeowners around here are a pretty stable lot. If you are looking high end there could be some relief as there has been quite a bit of overbuilding in the way of 4,000 sq ft McMansions. If you are looking for something modest I just have a hard time seeing things get markedly better. I know tons of buyers out there looking for entry level homes. An REO recently came on the market around $500K in Rancho Ponderosa and it was bombarded with buyers/interest. The house was a pit and needed major remodelling. There is a huge demand for homes like this piling up but very little coming on the market. I wish it was otherwise but I dont see that coming. While I think we will see more inventory hit the market, the competition for anything decent and well priced will be substantial.

Even if rates jumped 1% or more, I dont think that would make a difference in the market for homes under 700K.

rnen
You are looking in my backyard. The challenge is there is lots of demand around here but very little coming on the market. The homeowners around here are a pretty stable lot. If you are looking high end there could be some relief as there has been quite a bit of overbuilding in the way of 4,000 sq ft McMansions. If you are looking for something modest I just have a hard time seeing things get markedly better. I know tons of buyers out there looking for entry level homes. An REO recently came on the market around $500K in Rancho Ponderosa and it was bombarded with buyers/interest. The house was a pit and needed major remodelling. There is a huge demand for homes like this piling up but very little coming on the market. I wish it was otherwise but I dont see that coming. While I think we will see more inventory hit the market, the competition for anything decent and well priced will be substantial.

Even if rates jumped 1% or more, I dont think that would make a difference in the market for homes under 700K.

rnen
You are looking in my backyard. The challenge is there is lots of demand around here but very little coming on the market. The homeowners around here are a pretty stable lot. If you are looking high end there could be some relief as there has been quite a bit of overbuilding in the way of 4,000 sq ft McMansions. If you are looking for something modest I just have a hard time seeing things get markedly better. I know tons of buyers out there looking for entry level homes. An REO recently came on the market around $500K in Rancho Ponderosa and it was bombarded with buyers/interest. The house was a pit and needed major remodelling. There is a huge demand for homes like this piling up but very little coming on the market. I wish it was otherwise but I dont see that coming. While I think we will see more inventory hit the market, the competition for anything decent and well priced will be substantial.

Even if rates jumped 1% or more, I dont think that would make a difference in the market for homes under 700K.

[quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]

This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”

[quote=ucodegen]Yes, the interest rates and house prices move in opposite directions.[/quote]

This is actually not borne out by the facts. If you go back and look at the late-70s and early-80s, when rates increased dramatically, housing prices increased at a very high rate as well. If rates are moving up, it’s probably because of inflation. And if inflation rears its ugly head, there’s a good chance that it will show up in rents, and thus housing prices. Of course, the “next time could be different.”