All things being equal, you’d expect price to rise with low rates (and that seems to be happening now), but prices are affected by supply among other things, and I’d guess the supply (expansion) of credit as well. With so many distorting factors, it doesn’t follow that declining interest rates over the last forty years, hasn’t had some affect on prices, or that somehow the reverse is made true, and therefore we should all buy now. With no savings, no equity, still over-priced homes, and a dependence on low cost mortgage debt is it any wonder we’re still scratching our heads over conventional wisdom?
The other baffling notion is that price is no longer relevant, since the net income (aka affordability) is what counts. So why the fixation with price at all, since it no longer sits to the right of the ‘equal’ sign? After all, your job’s salary isn’t advertised as a lump sum. On the other hand, if memory serves me correctly a home is a manufactured product, has a shelf life, and the parts that go into its making depreciate. I think it is a mistake to ignore this. If this is all about wealth building, you’d be better off investing in a good education in the long term, than an inflatable home.
