Confused with the current market

[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.

[sdcellar]

Interest paid in this context is somewhat irrelevant (or you’re looking at it backwards, at least). At the end of thirty years, one will have paid the exact same amount of money (regardless of P&I breakdown) and have an asset that has the same price regardless of what you bought it at. It is the same house, after all.

So, in reality, with the higher interest rate, you’ll come out ahead based on the lower down payment and the increased tax deduction benefit based on the “higher” interest you paid along the way.

[sdcellar]

Interest paid in this context is somewhat irrelevant (or you’re looking at it backwards, at least). At the end of thirty years, one will have paid the exact same amount of money (regardless of P&I breakdown) and have an asset that has the same price regardless of what you bought it at. It is the same house, after all.

So, in reality, with the higher interest rate, you’ll come out ahead based on the lower down payment and the increased tax deduction benefit based on the “higher” interest you paid along the way.

[sdcellar]

Interest paid in this context is somewhat irrelevant (or you’re looking at it backwards, at least). At the end of thirty years, one will have paid the exact same amount of money (regardless of P&I breakdown) and have an asset that has the same price regardless of what you bought it at. It is the same house, after all.

So, in reality, with the higher interest rate, you’ll come out ahead based on the lower down payment and the increased tax deduction benefit based on the “higher” interest you paid along the way.

[sdcellar]

Interest paid in this context is somewhat irrelevant (or you’re looking at it backwards, at least). At the end of thirty years, one will have paid the exact same amount of money (regardless of P&I breakdown) and have an asset that has the same price regardless of what you bought it at. It is the same house, after all.

So, in reality, with the higher interest rate, you’ll come out ahead based on the lower down payment and the increased tax deduction benefit based on the “higher” interest you paid along the way.

[sdcellar]

Interest paid in this context is somewhat irrelevant (or you’re looking at it backwards, at least). At the end of thirty years, one will have paid the exact same amount of money (regardless of P&I breakdown) and have an asset that has the same price regardless of what you bought it at. It is the same house, after all.

So, in reality, with the higher interest rate, you’ll come out ahead based on the lower down payment and the increased tax deduction benefit based on the “higher” interest you paid along the way.

[smshorttimer]

[quote=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.[/quote]

Our pile only goes so far in San Diego Co., but a higher-interest environment is an interesting thought.

And I bet I’m not the only fence-sitter rooting for an expiration of the tax credit. I’m also not foolish enough to assume it would exert a huge downward push on prices, though.

[smshorttimer]

[quote=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.[/quote]

Our pile only goes so far in San Diego Co., but a higher-interest environment is an interesting thought.

And I bet I’m not the only fence-sitter rooting for an expiration of the tax credit. I’m also not foolish enough to assume it would exert a huge downward push on prices, though.

[smshorttimer]

[quote=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.[/quote]

Our pile only goes so far in San Diego Co., but a higher-interest environment is an interesting thought.

And I bet I’m not the only fence-sitter rooting for an expiration of the tax credit. I’m also not foolish enough to assume it would exert a huge downward push on prices, though.

[smshorttimer]

[quote=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.[/quote]

Our pile only goes so far in San Diego Co., but a higher-interest environment is an interesting thought.

And I bet I’m not the only fence-sitter rooting for an expiration of the tax credit. I’m also not foolish enough to assume it would exert a huge downward push on prices, though.

[smshorttimer]

[quote=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.[/quote]

Our pile only goes so far in San Diego Co., but a higher-interest environment is an interesting thought.

And I bet I’m not the only fence-sitter rooting for an expiration of the tax credit. I’m also not foolish enough to assume it would exert a huge downward push on prices, though.

[SD Realtor]

sms you are DEFINITELY not the only fence sitter waiting for the expiration. For sure I would agree with the premise that buying a lower priced home in a higher rate environment is advantageous to the buyer. As AN pointed out it gets blurry because of alot of variables. I think it works for some and doesn’t work for others. Depends on the pile.

[SD Realtor]

sms you are DEFINITELY not the only fence sitter waiting for the expiration. For sure I would agree with the premise that buying a lower priced home in a higher rate environment is advantageous to the buyer. As AN pointed out it gets blurry because of alot of variables. I think it works for some and doesn’t work for others. Depends on the pile.

[SD Realtor]

sms you are DEFINITELY not the only fence sitter waiting for the expiration. For sure I would agree with the premise that buying a lower priced home in a higher rate environment is advantageous to the buyer. As AN pointed out it gets blurry because of alot of variables. I think it works for some and doesn’t work for others. Depends on the pile.

[SD Realtor]

sms you are DEFINITELY not the only fence sitter waiting for the expiration. For sure I would agree with the premise that buying a lower priced home in a higher rate environment is advantageous to the buyer. As AN pointed out it gets blurry because of alot of variables. I think it works for some and doesn’t work for others. Depends on the pile.

[Author]

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