[quote=patientrenter][quote=fishsticks]….Any predictions how the SD housing market would respond to, say, 8% interest rates?[/quote]
That’s easy:
1. Houses would become a lot cheaper for savers (a very small group)
2. Houses would become slightly more expensive for borrowers (the majority of buyers)
C’mon, now gimme a hard question.
Oh, and before mortgage interest rates got close to 8%, the voters in San Diego would let their Congressman know that they didn’t want interest rates to be high, and, hey presto! they would be lowered again. It’s good to control the Federal Reserve.[/quote]
If you go back and look at the data from the late-70s and early-80s when inflation was really raging… housing prices went way up… despite the fact that interest rates went way up as well. Rents were going up at the same time.
Don’t get me wrong, I think it’s important to have sub-6% mortgage rates for the next 12-18 months as we clear out most of the foreclosure detritus, but I don’t think higher rates are going to have much impact on prices 2+ years out. May keep them from going up, but I think prices will be largely stabilized by then. And while some may say that buying now in anticipation of higher rates later is a “buying panic,” it’ll sure clear out a lot of inventory. Rightly or wrongly, anyone with a long-term view is more “payment sensitive” than “principal-balance sensitive.”
