[quote=urbanrealtor]
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]
Well as long as mortgage rates stay constant. The monthly payment for 200K at 4.0% is less than the monthly payment for 180K at 5.0%. Granted it’s close and once you factor in the additional property tax it’s probably a wash. The point is that the market is really being backstopped by the low interest rates. Interest rates may remain low for awhile so maybe’s there’s nothing to worry about but 5’s or 6’s on mortgage rates would have a huge negative impact on housing prices.