[quote=Scarlett]Forgive me for a dumb question, theoretical speculation is great, but why not envision a scenarion in which the rate does go up 2-4%, but guess what, the prices don’t go down nearly as much to make the waiting for higher rate/lower price worth your while? (in which case it would be better to buy now w/ 20% down – not talking large downs). I am just asking, isn’t that a good possibility? Is that a carved in stone rule??

We’ve already seen that the overall prices didn’t fall back to fundamentals (in the areas mentioned by OP) and they are rising yet again. Just a couple % increase in interest rate may slow then down or stop them, but may not lower the price much….in these areas (and 20% down)…. I am just saying….[/quote]

The majority of buyers dont consider price, they consider monthly payment. They find a house that they like (hopefully) at a monthly payment they can swing (hopefully). If rates go up, then payments go up if principal doesnt go down. Simple as that, dumb as that.

Now that isnt a perfectly sliding scale, nothing in RE is. Seasonality, boom/bust, location location location, and a billion other factors pay into it, so it isnt an exact math formula. So you are correct. If the economy was adding jobs and humming along, sales would rise and prop prices too even if interest rates were increasing.

So basically, your suggestion is a possibilty. Not the only one, but one. As always people need to put their money on the table and let the wheel spin, even if your money is sitting on ‘Wait’.