[quote=urbanrealtor][quote=poorgradstudent]Well, this does help explain part of the support for rising home prices.[/quote]
Sort of.
It better explains why low interest rates and innovative lending (not always a good thing– think NINJA loans) start to make sense.
Low payment and low cash down mean purchase can be almost as cheap as current rent prices.
Also, and I think more importantly, it explains that current prices are back-stopped to a certain extent.
If prices in condos drop even 10% they become cheaper than renting.
Barring a broad rent fade (and we are not currently at risk of a deflationary rent spiral) those currently high prices are effectively fixed.
There are some nuances and changes but that is the short version.[/quote]
Oh yeah, rent prices factored into our decision to buy last year. The mortgage on our 3/2 SFH is pretty comparable to what we’d have to pay to rent a simliar property. Barring a 10% correction in the next year or so, so far the decision seems to have mostly paid off.
