I think the numbers makes sense to buy with current interest rates. but its going to change pretty soon, once the QE3 is done and Fed start to raise interest rates, it will be interesting to see what happens to the property values.

I am sure with in a year or two interest rates will go up to 5.5 to 6%. so assuming the current properties won’t go up or go up only a bit, you still need $600 – 750 more in monthly payments for the same house. so obviously demand will go down b/c peoples income won’t raise that much in a short period of time.

one other assumption that you are making is only people that will sell the house in the future are the ones buying right now with at-least 20% down. at any given year less than 10% of the houses are sold / bought in a given neighborhood unless its a new construction. so with in the last few years lets assume 30% of the people bought, so you don’t know about the rest of 70% of the households.

what about the people who uses their equity like an ATM ?

my assumption is at least 40 – 50% of the houses foreclosed in 2008 – 2010 are not b/c they bought house in bubble price period (2004 – 2006), but b/c of misuse of their equity in the house.

so this problem still exists regardless of how qualified the current buyers are.

so right now the property values are fairly priced, but without any change in property values it might look like bubble in a year or two when interest rates go up. may be its time to lock in the profits now.