[quote=ocrenter]let’s take someone who previously had $500k of saving in CDs.
BofA High Yield CD is at 1.2%, or $6000 interest per year.
$166k buys you a 1000 sqft condo in RB or San Marcos and so on… rent is $1300/month, minus $600 for property tax and HOA and property management fee, $700/month.
split the $500k into three, and you can buy 3 of these things in cash generating $700/month, that’s $25200/year, or a 5% return on your money.
$6000 a year vs $25200 a year, seems like pretty easy math to me.[/quote]
Bingo, ocrenter! And this is why high rates are going to hurt the housing market even more than most people expect. Rates have been artificially inflated for so long, that fixed-income investors (and others with large cash positions) are forced to get into different markets, and the housing market is one of the greatest beneficiaries of the low rates, IMHO.
