[quote=Russell]”Is there a point when a sustained slow trickle price decline plus a slow uptick in interest rates plus eventual inflation will be a wash compared to slightly “overpaying” up front[/quote]
People are assuming that mortgage rates will remain at low levels and then go up at a slow pace. Thats an assumption based on hope, but not necessarily on reality. The fact is, the bond market could very well be the next bubble to burst. The Federal Reserve is spending trillions in an effort to keep mortgage rates artificially low. Thats why you currently see 4.5% interest rates. But the Feds cannot continue this practice indefinately, as it will lead to hyperinflation. As it is, inflation is coming anyway, and mortgage rates will spike. The question is, how high will rates go ? And how will higher rates affect home prices in San Diego, particulary in neighborhoods which have yet to hit bottom ?
The unintended consequences of the feds actions to spend its way out of the current recession will eventually lead us right back into another recession. The only difference is that the first recession is deflationary in nature, where as the second will be inflationary in nature.
