Looks likethe short squeeze is continuing this morning.

[SD Realtor]

Tough call tg… I have been really starting to think that one out myself as well….

I have always been a big believer of stagflation but now I am beginning to question those thoughts. A simple calculation that is pretty much uselss was just running a quick mortgage payment on a 600k loan at 6% gives you a 3597 payment and 6600 (at 1.1%) for annual prop tax. A 540k loan at 7% gives you 3592 payment and about 6k annual prop tax. So that 10% drop breaks you even for these particular amounts. BTW at 8% you need 490k to match the payment.

SD Realtor

[an]

tg, that’s the main reason I mentioned those 2 names. When both camps are saying inflation and high interest rate, I listen very carefully.

Regarding home price, I still think, regardless of what happen to the interest rate over the next several year, we’ll return back to fundamental and probably will undershoot on the way down just as it overshoot on the way up. Fundamental to me is rent. So, when my monthly mortgage make sense compare to renting a similar place, then it would be a logical time for me to buy and hold for a long long time. So if rates goes to double digits, I wouldn’t counting out returning to mid 90s price unless wage inflation also adjust with goods inflation. Which would then bring up the rent and we might not see any drop in RE price at all, but then we all would be making $200k, so a $500k house doesn’t look so expensive anymore.

[NotCranky]

I used to tell people on the fence that sometimes the best time to buy is when you can, as long as you have a safety net. Then things got really stupid and I said it is crazy to buy a house.In your case and market TemeculaGuy I might actually go back to the old standard. In anycase, your risk isn’t that great either way and as I said I wouldn’t get too upset about it.If increased rates are coming prices should go down proportionally.Given all the other downward factors, at the very least, you get the same house at the same payment(and better tax bill), not a lesser house. The only thing that concerns me with your location is that prices have been slammed pretty good already. It seems retirees from cold or hot, meteorlogically speaking, non-bubble areas,or even bubble areas,or from an inner city shack to a nice house there, would begin to see Temecula as a good trade if it goes down any further. I sure would in that situation.In that case though, you will be the first to know if that starts to happen in mass. Not that you asked for my assurances, but you are fine.

[Author]

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