Confused with the current market

[an]

[quote=smshorttimer]
So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?[/quote]
A $600k house w/ 20% down @ 5.5% will cost you $501,139.39 in interest and $262881 in taxes over 30 years.
If rates goes up to 7.5% and price drop to $500k to keep at the same monthly payment, you’re looking at $606,868.89 in interest and $219067.62 in taxes over 30 years.
You can calculate how much more in interest you have to pay after tax deduction but before tax deduction, you’re paying $105k more in interest and $43k less in taxes over 30 years.

[sdduuuude]

[quote=smshorttimer][quote=SD Realtor]

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.[/quote]

So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?[/quote]

Also requires a smaller down payment, and opens up an opportunity to refinance if rates drop.

Furthermore, if you buy now at low rate+high price instead of later with low price+high rate, you have taken a direct equity hit in after-tax dollars.

[sdduuuude]

[quote=smshorttimer][quote=SD Realtor]

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.[/quote]

So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?[/quote]

Also requires a smaller down payment, and opens up an opportunity to refinance if rates drop.

Furthermore, if you buy now at low rate+high price instead of later with low price+high rate, you have taken a direct equity hit in after-tax dollars.

[sdduuuude]

[quote=smshorttimer][quote=SD Realtor]

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.[/quote]

So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?[/quote]

Also requires a smaller down payment, and opens up an opportunity to refinance if rates drop.

Furthermore, if you buy now at low rate+high price instead of later with low price+high rate, you have taken a direct equity hit in after-tax dollars.

[sdduuuude]

[quote=smshorttimer][quote=SD Realtor]

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.[/quote]

So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?[/quote]

Also requires a smaller down payment, and opens up an opportunity to refinance if rates drop.

Furthermore, if you buy now at low rate+high price instead of later with low price+high rate, you have taken a direct equity hit in after-tax dollars.

[sdduuuude]

[quote=smshorttimer][quote=SD Realtor]

Hopefully that will change. I think the best chance you will see for that to happen is a rapid rise in interest rates.[/quote]

So your total payment might be the same, but you’ll pay a little less on property taxes and get some more deductible interest?[/quote]

Also requires a smaller down payment, and opens up an opportunity to refinance if rates drop.

Furthermore, if you buy now at low rate+high price instead of later with low price+high rate, you have taken a direct equity hit in after-tax dollars.

[SD Realtor]

Make no mistake about it, those who will benefit most from the rising rate environment will be the ones who have piles of cash. I didnt run your numbers AN but I do agree with your premise, the only comment I may throw in is that the 120k used to put down for the 600k home is now used for buying the 500k home so the buyer is coming in with a bit more cash to lower the balance a bit, but you may have already accounted for that.

The higher rates will help drag pricing down but pricing will FOLLOW the rates and that rubber band is a few months at least and not instantly. I am thinking over a longer term rates will be in double digits but that will be a ways out I believe.

Your illustration is very useful though. The moral of the story is if you are waiting to pounce when prices dump due to high rates, make sure you have a nice pile.

[SD Realtor]

Make no mistake about it, those who will benefit most from the rising rate environment will be the ones who have piles of cash. I didnt run your numbers AN but I do agree with your premise, the only comment I may throw in is that the 120k used to put down for the 600k home is now used for buying the 500k home so the buyer is coming in with a bit more cash to lower the balance a bit, but you may have already accounted for that.

The higher rates will help drag pricing down but pricing will FOLLOW the rates and that rubber band is a few months at least and not instantly. I am thinking over a longer term rates will be in double digits but that will be a ways out I believe.

Your illustration is very useful though. The moral of the story is if you are waiting to pounce when prices dump due to high rates, make sure you have a nice pile.

[SD Realtor]

Make no mistake about it, those who will benefit most from the rising rate environment will be the ones who have piles of cash. I didnt run your numbers AN but I do agree with your premise, the only comment I may throw in is that the 120k used to put down for the 600k home is now used for buying the 500k home so the buyer is coming in with a bit more cash to lower the balance a bit, but you may have already accounted for that.

The higher rates will help drag pricing down but pricing will FOLLOW the rates and that rubber band is a few months at least and not instantly. I am thinking over a longer term rates will be in double digits but that will be a ways out I believe.

Your illustration is very useful though. The moral of the story is if you are waiting to pounce when prices dump due to high rates, make sure you have a nice pile.

[SD Realtor]

Make no mistake about it, those who will benefit most from the rising rate environment will be the ones who have piles of cash. I didnt run your numbers AN but I do agree with your premise, the only comment I may throw in is that the 120k used to put down for the 600k home is now used for buying the 500k home so the buyer is coming in with a bit more cash to lower the balance a bit, but you may have already accounted for that.

The higher rates will help drag pricing down but pricing will FOLLOW the rates and that rubber band is a few months at least and not instantly. I am thinking over a longer term rates will be in double digits but that will be a ways out I believe.

Your illustration is very useful though. The moral of the story is if you are waiting to pounce when prices dump due to high rates, make sure you have a nice pile.

[SD Realtor]

Make no mistake about it, those who will benefit most from the rising rate environment will be the ones who have piles of cash. I didnt run your numbers AN but I do agree with your premise, the only comment I may throw in is that the 120k used to put down for the 600k home is now used for buying the 500k home so the buyer is coming in with a bit more cash to lower the balance a bit, but you may have already accounted for that.

The higher rates will help drag pricing down but pricing will FOLLOW the rates and that rubber band is a few months at least and not instantly. I am thinking over a longer term rates will be in double digits but that will be a ways out I believe.

Your illustration is very useful though. The moral of the story is if you are waiting to pounce when prices dump due to high rates, make sure you have a nice pile.

[an]

SD R, I didn’t use 120k for both case. I use 20% down, so I guess you can say the $600k case, the buy would need to come in w/ another $20k. What I was trying to illustrate is the saving you get from taxes might be less than the interest you have to pay over 30 years. So, one have to calculate all the possible scenario based on what they want to do w/ the house in the future.

I totally agree that in a rising rate environment, cash is king. Imagine if rates goes to 15% and to maintain the same monthly payment, price would have to drop to $270k. That $120k will be 44% down payment instead of only 20%. However, this doesn’t count in monthly payment tracking inflation. If monthly payment track inflation, then price would drop less.

sdduuuude, refi opportunity is really depend on when you buy and future rates. Lets say you buy @7.5% in 2 years but it won’t get below 7.5% again for 30+ years, then the refi opportunity is 0% just like if you buy right now at 5%. If you buy when rates are at its peak, then your probability of refi is much much higher.

[an]

SD R, I didn’t use 120k for both case. I use 20% down, so I guess you can say the $600k case, the buy would need to come in w/ another $20k. What I was trying to illustrate is the saving you get from taxes might be less than the interest you have to pay over 30 years. So, one have to calculate all the possible scenario based on what they want to do w/ the house in the future.

I totally agree that in a rising rate environment, cash is king. Imagine if rates goes to 15% and to maintain the same monthly payment, price would have to drop to $270k. That $120k will be 44% down payment instead of only 20%. However, this doesn’t count in monthly payment tracking inflation. If monthly payment track inflation, then price would drop less.

sdduuuude, refi opportunity is really depend on when you buy and future rates. Lets say you buy @7.5% in 2 years but it won’t get below 7.5% again for 30+ years, then the refi opportunity is 0% just like if you buy right now at 5%. If you buy when rates are at its peak, then your probability of refi is much much higher.

[an]

SD R, I didn’t use 120k for both case. I use 20% down, so I guess you can say the $600k case, the buy would need to come in w/ another $20k. What I was trying to illustrate is the saving you get from taxes might be less than the interest you have to pay over 30 years. So, one have to calculate all the possible scenario based on what they want to do w/ the house in the future.

I totally agree that in a rising rate environment, cash is king. Imagine if rates goes to 15% and to maintain the same monthly payment, price would have to drop to $270k. That $120k will be 44% down payment instead of only 20%. However, this doesn’t count in monthly payment tracking inflation. If monthly payment track inflation, then price would drop less.

sdduuuude, refi opportunity is really depend on when you buy and future rates. Lets say you buy @7.5% in 2 years but it won’t get below 7.5% again for 30+ years, then the refi opportunity is 0% just like if you buy right now at 5%. If you buy when rates are at its peak, then your probability of refi is much much higher.

[an]

SD R, I didn’t use 120k for both case. I use 20% down, so I guess you can say the $600k case, the buy would need to come in w/ another $20k. What I was trying to illustrate is the saving you get from taxes might be less than the interest you have to pay over 30 years. So, one have to calculate all the possible scenario based on what they want to do w/ the house in the future.

I totally agree that in a rising rate environment, cash is king. Imagine if rates goes to 15% and to maintain the same monthly payment, price would have to drop to $270k. That $120k will be 44% down payment instead of only 20%. However, this doesn’t count in monthly payment tracking inflation. If monthly payment track inflation, then price would drop less.

sdduuuude, refi opportunity is really depend on when you buy and future rates. Lets say you buy @7.5% in 2 years but it won’t get below 7.5% again for 30+ years, then the refi opportunity is 0% just like if you buy right now at 5%. If you buy when rates are at its peak, then your probability of refi is much much higher.

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