Interest rates

[(former)FormerSanDiegan]

[quote=briansd1]
Hard to look to recent history for guidance.

I remember people claiming that real estate prices would never drop without an employment downturn.

But, surprise, surprise, we had a real estate crash that caused general unemployment, which then caused more more unemployment.

I think that rising rates will cause stagnation and more choices for buyers.[/quote]

It depends on what accompanies higher interest rates.

If rates are rising becuase of an improving economy, as in recovery stages of the business cycle, there could actually be more demand as interest rates rise. (See all historical recoveries for example)

If interest rates are rising because of increased inflation, then it takes more dollars to buy the same thing (rent, property) and prices also go up (see the 1970’s).

Interest rates do not go up in a vacuum. Most people that assume that interest rate increases translate into lower home prices ignore all the other variables.

[AK]

I’ve run the numbers. After taxes, monthly cash flow isn’t much different between 4% and 5%. Most buyers seem to focus on short-term affordability … perhaps rightly so, since home equity is just about completely illiquid these days.

So I’d guess there won’t be any major short-term effect on prices. OTOH this also means you haven’t missed out on the deal of a lifetime.

[AK]

I’ve run the numbers. After taxes, monthly cash flow isn’t much different between 4% and 5%. Most buyers seem to focus on short-term affordability … perhaps rightly so, since home equity is just about completely illiquid these days.

So I’d guess there won’t be any major short-term effect on prices. OTOH this also means you haven’t missed out on the deal of a lifetime.

[AK]

I’ve run the numbers. After taxes, monthly cash flow isn’t much different between 4% and 5%. Most buyers seem to focus on short-term affordability … perhaps rightly so, since home equity is just about completely illiquid these days.

So I’d guess there won’t be any major short-term effect on prices. OTOH this also means you haven’t missed out on the deal of a lifetime.

[AK]

I’ve run the numbers. After taxes, monthly cash flow isn’t much different between 4% and 5%. Most buyers seem to focus on short-term affordability … perhaps rightly so, since home equity is just about completely illiquid these days.

So I’d guess there won’t be any major short-term effect on prices. OTOH this also means you haven’t missed out on the deal of a lifetime.

[AK]

I’ve run the numbers. After taxes, monthly cash flow isn’t much different between 4% and 5%. Most buyers seem to focus on short-term affordability … perhaps rightly so, since home equity is just about completely illiquid these days.

So I’d guess there won’t be any major short-term effect on prices. OTOH this also means you haven’t missed out on the deal of a lifetime.

[Huckleberry]

I stand by my original post…

The consumer is de-leveraging and paying down debt, not taking on risky high priced debt, such as depreciating assets (houses).

The housing market is dependent on demand. Higher mortgage rates remove potential buyers (demand).

Diminishing demand means no pricing power = lower prices (basic economics).

[Huckleberry]

I stand by my original post…

The consumer is de-leveraging and paying down debt, not taking on risky high priced debt, such as depreciating assets (houses).

The housing market is dependent on demand. Higher mortgage rates remove potential buyers (demand).

Diminishing demand means no pricing power = lower prices (basic economics).

[Huckleberry]

I stand by my original post…

The consumer is de-leveraging and paying down debt, not taking on risky high priced debt, such as depreciating assets (houses).

The housing market is dependent on demand. Higher mortgage rates remove potential buyers (demand).

Diminishing demand means no pricing power = lower prices (basic economics).

[Huckleberry]

I stand by my original post…

The consumer is de-leveraging and paying down debt, not taking on risky high priced debt, such as depreciating assets (houses).

The housing market is dependent on demand. Higher mortgage rates remove potential buyers (demand).

Diminishing demand means no pricing power = lower prices (basic economics).

[Huckleberry]

I stand by my original post…

The consumer is de-leveraging and paying down debt, not taking on risky high priced debt, such as depreciating assets (houses).

The housing market is dependent on demand. Higher mortgage rates remove potential buyers (demand).

Diminishing demand means no pricing power = lower prices (basic economics).

[(former)FormerSanDiegan]

[quote=Huckleberry]I stand by my original post…

The consumer is de-leveraging and paying down debt, not taking on risky high priced debt, such as depreciating assets (houses).

The housing market is dependent on demand. Higher mortgage rates remove potential buyers (demand).

Diminishing demand means no pricing power = lower prices (basic economics).[/quote]

If those higher interest rates are accompanied by a recovering economy (including jobs) then there may be no net reduction in the number of buyer(demand). If the recovery stalls or reverses, rates are likely to dip again.

[(former)FormerSanDiegan]

[quote=Huckleberry]I stand by my original post…

The consumer is de-leveraging and paying down debt, not taking on risky high priced debt, such as depreciating assets (houses).

The housing market is dependent on demand. Higher mortgage rates remove potential buyers (demand).

Diminishing demand means no pricing power = lower prices (basic economics).[/quote]

If those higher interest rates are accompanied by a recovering economy (including jobs) then there may be no net reduction in the number of buyer(demand). If the recovery stalls or reverses, rates are likely to dip again.

[(former)FormerSanDiegan]

[quote=Huckleberry]I stand by my original post…

The consumer is de-leveraging and paying down debt, not taking on risky high priced debt, such as depreciating assets (houses).

The housing market is dependent on demand. Higher mortgage rates remove potential buyers (demand).

Diminishing demand means no pricing power = lower prices (basic economics).[/quote]

If those higher interest rates are accompanied by a recovering economy (including jobs) then there may be no net reduction in the number of buyer(demand). If the recovery stalls or reverses, rates are likely to dip again.

[(former)FormerSanDiegan]

[quote=Huckleberry]I stand by my original post…

The consumer is de-leveraging and paying down debt, not taking on risky high priced debt, such as depreciating assets (houses).

The housing market is dependent on demand. Higher mortgage rates remove potential buyers (demand).

Diminishing demand means no pricing power = lower prices (basic economics).[/quote]

If those higher interest rates are accompanied by a recovering economy (including jobs) then there may be no net reduction in the number of buyer(demand). If the recovery stalls or reverses, rates are likely to dip again.

[Author]

Posts