Interest rates

[(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.

[CA renter]

[quote=DWCAP]Access to money is a much much better measure to cause price declines. If the FHA increased their costs/downs and/or the GSE’s went back to the pre-crisis limits, then you would see price declines following demand drying up. (That is why you will never see that.) Marginal changes in costs of the money, when historicallly very low, wont do much.[/quote]

This is very true, but there is an interplay between rates and availability of money, all else being equal.

It’s not a coincidence that we’ve seen lower rates and an increase in available credit over the past few decades — not to mention a significant increase in asset prices. They are closely related, IMHO.

What we don’t know is how long this low rate/excess credit/high asset price environment can last.

[CA renter]

[quote=DWCAP]Access to money is a much much better measure to cause price declines. If the FHA increased their costs/downs and/or the GSE’s went back to the pre-crisis limits, then you would see price declines following demand drying up. (That is why you will never see that.) Marginal changes in costs of the money, when historicallly very low, wont do much.[/quote]

This is very true, but there is an interplay between rates and availability of money, all else being equal.

It’s not a coincidence that we’ve seen lower rates and an increase in available credit over the past few decades — not to mention a significant increase in asset prices. They are closely related, IMHO.

What we don’t know is how long this low rate/excess credit/high asset price environment can last.

[CA renter]

[quote=DWCAP]Access to money is a much much better measure to cause price declines. If the FHA increased their costs/downs and/or the GSE’s went back to the pre-crisis limits, then you would see price declines following demand drying up. (That is why you will never see that.) Marginal changes in costs of the money, when historicallly very low, wont do much.[/quote]

This is very true, but there is an interplay between rates and availability of money, all else being equal.

It’s not a coincidence that we’ve seen lower rates and an increase in available credit over the past few decades — not to mention a significant increase in asset prices. They are closely related, IMHO.

What we don’t know is how long this low rate/excess credit/high asset price environment can last.

[CA renter]

[quote=DWCAP]Access to money is a much much better measure to cause price declines. If the FHA increased their costs/downs and/or the GSE’s went back to the pre-crisis limits, then you would see price declines following demand drying up. (That is why you will never see that.) Marginal changes in costs of the money, when historicallly very low, wont do much.[/quote]

This is very true, but there is an interplay between rates and availability of money, all else being equal.

It’s not a coincidence that we’ve seen lower rates and an increase in available credit over the past few decades — not to mention a significant increase in asset prices. They are closely related, IMHO.

What we don’t know is how long this low rate/excess credit/high asset price environment can last.

[CA renter]

[quote=DWCAP]Access to money is a much much better measure to cause price declines. If the FHA increased their costs/downs and/or the GSE’s went back to the pre-crisis limits, then you would see price declines following demand drying up. (That is why you will never see that.) Marginal changes in costs of the money, when historicallly very low, wont do much.[/quote]

This is very true, but there is an interplay between rates and availability of money, all else being equal.

It’s not a coincidence that we’ve seen lower rates and an increase in available credit over the past few decades — not to mention a significant increase in asset prices. They are closely related, IMHO.

What we don’t know is how long this low rate/excess credit/high asset price environment can last.

[moneymaker]

Personally I think it has more to do with what is happening over seas than here in the US. We live in a global economy so when inflation happens in say China it affects us here. My question for everybody out there is “is the housing market a free market economy?” I think not! With big government intervention. As an aside suppose rents go up with inflation, free market would imply there would be fewer renters, price up demand down, but the reality is quite different. When rents go up it is harder for people to save the down payment needed to buy a house and hence they are stuck in a vicious cycle of renting.

[moneymaker]

Personally I think it has more to do with what is happening over seas than here in the US. We live in a global economy so when inflation happens in say China it affects us here. My question for everybody out there is “is the housing market a free market economy?” I think not! With big government intervention. As an aside suppose rents go up with inflation, free market would imply there would be fewer renters, price up demand down, but the reality is quite different. When rents go up it is harder for people to save the down payment needed to buy a house and hence they are stuck in a vicious cycle of renting.

[moneymaker]

Personally I think it has more to do with what is happening over seas than here in the US. We live in a global economy so when inflation happens in say China it affects us here. My question for everybody out there is “is the housing market a free market economy?” I think not! With big government intervention. As an aside suppose rents go up with inflation, free market would imply there would be fewer renters, price up demand down, but the reality is quite different. When rents go up it is harder for people to save the down payment needed to buy a house and hence they are stuck in a vicious cycle of renting.

[moneymaker]

Personally I think it has more to do with what is happening over seas than here in the US. We live in a global economy so when inflation happens in say China it affects us here. My question for everybody out there is “is the housing market a free market economy?” I think not! With big government intervention. As an aside suppose rents go up with inflation, free market would imply there would be fewer renters, price up demand down, but the reality is quite different. When rents go up it is harder for people to save the down payment needed to buy a house and hence they are stuck in a vicious cycle of renting.

[moneymaker]

Personally I think it has more to do with what is happening over seas than here in the US. We live in a global economy so when inflation happens in say China it affects us here. My question for everybody out there is “is the housing market a free market economy?” I think not! With big government intervention. As an aside suppose rents go up with inflation, free market would imply there would be fewer renters, price up demand down, but the reality is quite different. When rents go up it is harder for people to save the down payment needed to buy a house and hence they are stuck in a vicious cycle of renting.

[scaredyclassic]

i understand the concept of higher rates theoretically beingg ood for buyers, but man, the same loan I bought a month ago would cost 10% more a month for the payment. i doubt i could get the house for 10% less (i mean, maybe i could, since price is kind of fuzzy and indeterminate, but what i mean is i doubt the market has really fallen proportionately to the rise in monthly payment).

Not sure what that means, but, it is kind of nice assuming you’re going to hold on to the loan for a long time to ahve that low rate. Yeah, maybe you can refinance later, assuming you ahve the equity, and the good credit, but a locked in long term low interest rate is nothing to sneeze at.

I am also of the camp that reflexively mocks reltors who cry out ‘buy now while rates are low’ and it does sound cheesy and make you want to take the contrary side, but conisder– just because a realtor is saying it doesn’t necessarily make it untrue. Sometimes people who you are suspicious of actually say something true.

it might be biased, distorted and loaded with various caveats, it might be only possibly true, it might be just an opinion, but buying at a low interest rate is not necessarily in and of itself a bad thing! At least i’m going to keep telling myself that.

[scaredyclassic]

i understand the concept of higher rates theoretically beingg ood for buyers, but man, the same loan I bought a month ago would cost 10% more a month for the payment. i doubt i could get the house for 10% less (i mean, maybe i could, since price is kind of fuzzy and indeterminate, but what i mean is i doubt the market has really fallen proportionately to the rise in monthly payment).

Not sure what that means, but, it is kind of nice assuming you’re going to hold on to the loan for a long time to ahve that low rate. Yeah, maybe you can refinance later, assuming you ahve the equity, and the good credit, but a locked in long term low interest rate is nothing to sneeze at.

I am also of the camp that reflexively mocks reltors who cry out ‘buy now while rates are low’ and it does sound cheesy and make you want to take the contrary side, but conisder– just because a realtor is saying it doesn’t necessarily make it untrue. Sometimes people who you are suspicious of actually say something true.

it might be biased, distorted and loaded with various caveats, it might be only possibly true, it might be just an opinion, but buying at a low interest rate is not necessarily in and of itself a bad thing! At least i’m going to keep telling myself that.

[scaredyclassic]

i understand the concept of higher rates theoretically beingg ood for buyers, but man, the same loan I bought a month ago would cost 10% more a month for the payment. i doubt i could get the house for 10% less (i mean, maybe i could, since price is kind of fuzzy and indeterminate, but what i mean is i doubt the market has really fallen proportionately to the rise in monthly payment).

Not sure what that means, but, it is kind of nice assuming you’re going to hold on to the loan for a long time to ahve that low rate. Yeah, maybe you can refinance later, assuming you ahve the equity, and the good credit, but a locked in long term low interest rate is nothing to sneeze at.

I am also of the camp that reflexively mocks reltors who cry out ‘buy now while rates are low’ and it does sound cheesy and make you want to take the contrary side, but conisder– just because a realtor is saying it doesn’t necessarily make it untrue. Sometimes people who you are suspicious of actually say something true.

it might be biased, distorted and loaded with various caveats, it might be only possibly true, it might be just an opinion, but buying at a low interest rate is not necessarily in and of itself a bad thing! At least i’m going to keep telling myself that.

[scaredyclassic]

i understand the concept of higher rates theoretically beingg ood for buyers, but man, the same loan I bought a month ago would cost 10% more a month for the payment. i doubt i could get the house for 10% less (i mean, maybe i could, since price is kind of fuzzy and indeterminate, but what i mean is i doubt the market has really fallen proportionately to the rise in monthly payment).

Not sure what that means, but, it is kind of nice assuming you’re going to hold on to the loan for a long time to ahve that low rate. Yeah, maybe you can refinance later, assuming you ahve the equity, and the good credit, but a locked in long term low interest rate is nothing to sneeze at.

I am also of the camp that reflexively mocks reltors who cry out ‘buy now while rates are low’ and it does sound cheesy and make you want to take the contrary side, but conisder– just because a realtor is saying it doesn’t necessarily make it untrue. Sometimes people who you are suspicious of actually say something true.

it might be biased, distorted and loaded with various caveats, it might be only possibly true, it might be just an opinion, but buying at a low interest rate is not necessarily in and of itself a bad thing! At least i’m going to keep telling myself that.

[Author]

Posts