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Participant[quote=waiting for bottom][quote=sdcellar]yep. lots of rationalization. i almost feel like i’m at the car dealer and he’s trying to scam me with the old ‘what can you spend a month’ routine…[/quote]
If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.
Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.
Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]
The problem with that thinking is that prices are partially dependent on interest rates. Rates go up, prices go down.
If a hypothetical 20% additional drop in prices was just caused by higher interest rates, your argument would be valid. But many think prices still have a way to go down independent of interest rates, with higher rates just making it more so. And in that case your payment would NOT be the same.
Participant[quote=waiting for bottom][quote=sdcellar]yep. lots of rationalization. i almost feel like i’m at the car dealer and he’s trying to scam me with the old ‘what can you spend a month’ routine…[/quote]
If rationalization is “I bought a house I like with the payment I can afford” then, yes, I have rationalized.
Seriously, you guys think there is no risk to timing the bottom? What do you think rates will do between now and then? I’ll give you a hint, not down.
Again – if my recent purchase falls 20% but rates go to 7.5%, I will have the same payment. There is equal – at best for your argument – chance of these happening. From my POV, 7.5% is a certainty, 20% down is not.[/quote]
The problem with that thinking is that prices are partially dependent on interest rates. Rates go up, prices go down.
If a hypothetical 20% additional drop in prices was just caused by higher interest rates, your argument would be valid. But many think prices still have a way to go down independent of interest rates, with higher rates just making it more so. And in that case your payment would NOT be the same.
June 14, 2009 at 7:39 PM in reply to: California’s foreclosure moratorium………..Are we hosed yet again or what? #415633ParticipantNot ready to slit the wrists, but I’m getting tired of this crap too.
Is it too much to see the real aftereffects of the bubble and the true inventory? I guess it is when the game is rigged.
June 14, 2009 at 7:39 PM in reply to: California’s foreclosure moratorium………..Are we hosed yet again or what? #415871ParticipantNot ready to slit the wrists, but I’m getting tired of this crap too.
Is it too much to see the real aftereffects of the bubble and the true inventory? I guess it is when the game is rigged.
June 14, 2009 at 7:39 PM in reply to: California’s foreclosure moratorium………..Are we hosed yet again or what? #416128ParticipantNot ready to slit the wrists, but I’m getting tired of this crap too.
Is it too much to see the real aftereffects of the bubble and the true inventory? I guess it is when the game is rigged.
June 14, 2009 at 7:39 PM in reply to: California’s foreclosure moratorium………..Are we hosed yet again or what? #416196ParticipantNot ready to slit the wrists, but I’m getting tired of this crap too.
Is it too much to see the real aftereffects of the bubble and the true inventory? I guess it is when the game is rigged.
June 14, 2009 at 7:39 PM in reply to: California’s foreclosure moratorium………..Are we hosed yet again or what? #416354ParticipantNot ready to slit the wrists, but I’m getting tired of this crap too.
Is it too much to see the real aftereffects of the bubble and the true inventory? I guess it is when the game is rigged.
ParticipantI understand that higher interest rates cause one to qualify for less. But the effect the higher rates have on demand also means that you NEED less.
Prices may take a few months to adjust to higher interest rates, but they will adjust. And lots of folks just on this blog have been waiting for years to buy, not just a few months.
Won’t a modest amount of cash for a down payment go farther with higher interest rates and lower prices? If a home costs $250,000 with an 8% mortgage and $350,000 with a 5% mortgage, won’t someone with $50,000 cash have 20% to put down in the former case but not the latter?
And folks who pay cash do save more on mortgage interest when rates are higher. But won’t there also be an opportunity cost? Couldn’t they put the $ in CD’s? Is the difference between what mortgage interest rates are and what you can earn in CD’s higher when rates are higher? I can remember earning close to 10% on a CD in the mid 1980’s. What were mortgage rates then?
ParticipantI understand that higher interest rates cause one to qualify for less. But the effect the higher rates have on demand also means that you NEED less.
Prices may take a few months to adjust to higher interest rates, but they will adjust. And lots of folks just on this blog have been waiting for years to buy, not just a few months.
Won’t a modest amount of cash for a down payment go farther with higher interest rates and lower prices? If a home costs $250,000 with an 8% mortgage and $350,000 with a 5% mortgage, won’t someone with $50,000 cash have 20% to put down in the former case but not the latter?
And folks who pay cash do save more on mortgage interest when rates are higher. But won’t there also be an opportunity cost? Couldn’t they put the $ in CD’s? Is the difference between what mortgage interest rates are and what you can earn in CD’s higher when rates are higher? I can remember earning close to 10% on a CD in the mid 1980’s. What were mortgage rates then?
ParticipantI understand that higher interest rates cause one to qualify for less. But the effect the higher rates have on demand also means that you NEED less.
Prices may take a few months to adjust to higher interest rates, but they will adjust. And lots of folks just on this blog have been waiting for years to buy, not just a few months.
Won’t a modest amount of cash for a down payment go farther with higher interest rates and lower prices? If a home costs $250,000 with an 8% mortgage and $350,000 with a 5% mortgage, won’t someone with $50,000 cash have 20% to put down in the former case but not the latter?
And folks who pay cash do save more on mortgage interest when rates are higher. But won’t there also be an opportunity cost? Couldn’t they put the $ in CD’s? Is the difference between what mortgage interest rates are and what you can earn in CD’s higher when rates are higher? I can remember earning close to 10% on a CD in the mid 1980’s. What were mortgage rates then?
ParticipantI understand that higher interest rates cause one to qualify for less. But the effect the higher rates have on demand also means that you NEED less.
Prices may take a few months to adjust to higher interest rates, but they will adjust. And lots of folks just on this blog have been waiting for years to buy, not just a few months.
Won’t a modest amount of cash for a down payment go farther with higher interest rates and lower prices? If a home costs $250,000 with an 8% mortgage and $350,000 with a 5% mortgage, won’t someone with $50,000 cash have 20% to put down in the former case but not the latter?
And folks who pay cash do save more on mortgage interest when rates are higher. But won’t there also be an opportunity cost? Couldn’t they put the $ in CD’s? Is the difference between what mortgage interest rates are and what you can earn in CD’s higher when rates are higher? I can remember earning close to 10% on a CD in the mid 1980’s. What were mortgage rates then?
ParticipantI understand that higher interest rates cause one to qualify for less. But the effect the higher rates have on demand also means that you NEED less.
Prices may take a few months to adjust to higher interest rates, but they will adjust. And lots of folks just on this blog have been waiting for years to buy, not just a few months.
Won’t a modest amount of cash for a down payment go farther with higher interest rates and lower prices? If a home costs $250,000 with an 8% mortgage and $350,000 with a 5% mortgage, won’t someone with $50,000 cash have 20% to put down in the former case but not the latter?
And folks who pay cash do save more on mortgage interest when rates are higher. But won’t there also be an opportunity cost? Couldn’t they put the $ in CD’s? Is the difference between what mortgage interest rates are and what you can earn in CD’s higher when rates are higher? I can remember earning close to 10% on a CD in the mid 1980’s. What were mortgage rates then?
Participant[quote=SD Realtor]We may get some traction on the bear side. Rates are moving up quick. Prices tend to not react in lock step though but that indeed may knock some of the wind out of this rally. Of course if you are a buyer this hurts unless you are in cash. [/quote]
How will it hurt the buyers without cash? I know, higher interest rates, but like you write it helps with the “traction on the bear side”, meaning lower principle. There’s only so much buying power in the market and with the economy that’s only getting worse.
I’d rather get the low price than the low interest rate. You can refinance later.
Participant[quote=SD Realtor]We may get some traction on the bear side. Rates are moving up quick. Prices tend to not react in lock step though but that indeed may knock some of the wind out of this rally. Of course if you are a buyer this hurts unless you are in cash. [/quote]
How will it hurt the buyers without cash? I know, higher interest rates, but like you write it helps with the “traction on the bear side”, meaning lower principle. There’s only so much buying power in the market and with the economy that’s only getting worse.
I’d rather get the low price than the low interest rate. You can refinance later.
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