RE Market Crystal Ball
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Anonymous
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Am I the only one who thinks that houses right now at $600k with interest rates at 3.75% are going to be much lower priced (from a purchase price vantage point - ignoring monthly payment) when rates go higher? Unless we have significant inflation, wages aren't going to go up enough - prices will have to dip again to keep monthly payment level or increasing on a slower keel, right?
I realize maybe the payment will stay the same, but if you are putting money down, I would think it would be better to buy at a low price when rates are higher? FWIW we're not trying to time anything - we are looking right now and whatever we buy we're planning to stay in, but I don't think prices are that great now for those reasons. -Skeptical of agents and everyone saying now is the time to buy - not sure it is... |
Anonymous
| I agree. I think houses in DC are overvalued in general. |
Anonymous
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Depends. A $600K SFH or TH in a JKLMM neighborhood is not going to drop in price--that is at the very low end of those neighborhoods, and the least expensive homes in the most expensive neighborhoods will always be in high demand.
However, a $600K home in a less than desirable neighborhood might drop in price. |
Anonymous
But then you're paying more toward interest and less toward principal, so you will have less equity in the house. If you plan on refinancing to a lower rate fairly quickly, this makes sense, but who knows when rates will be this low again. |
Anonymous
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No, but I agree with your reasoning in principle.
Here is what I think will happen: prices will stagnant for 10-15 years until inflation catches up. In the past inflation was 3-6% so that could be 10 years in some areas or less in DC. Some forecasters believe this is the Obama administration's strategy. They artificially hold interests rates at 0% during a recession to cause massive inflation (15% in early 1990s). That 15% would help to artificially recover the housing market overnight however it would screw people with ARMs. It would depress buying power as well so prices would be affected but only if supply of buyers in a certain HHI disappear too. It would also screw us internationally because our prices would be much higher than China, India, and probably comparable to Europe. Of course mass inflation here would probably affect Europe currency too. The problem really is that there is no good solution to our current predicament. Some homeowners will get screwed and they are mostly young professionals. Could be a lost generation like in Japan. |
Anonymous
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Anonymous
Where are you writing from, Argentina? Inflation in the U.S. peaked at 6.29% in 1990. http://inflationdata.com/inflation/images/charts/Annual_Inflation/annual_inflation_chart.htm And there are a lot of housing options in the DC area that don't run $600K. Young professionals can find perfectly nice places to live without sinking a fortune into a house. |
Anonymous
| I think we've already hit the bottom in sought after neighborhoods (metro, schools). |
Anonymous
| If and when the federal government starts downsizing we will see a ripple effect throughout the region. If they start cutting defense spending too the impact could be substantial, even on nice houses in good neighborhoods. |
Anonymous
I would agree with his only if there had not been an artificial run up in prices during the bubble years. Also JKLM are elementary schools. Deal and Wilson aren't acceptable to most people. The expensive homes will drop too! |
Anonymous
It would be interesting to know what percentage of JKLMM 6th graders go on to public v private MS and HS. Is that information published by the schools? and if so, is it accurate? |
Anonymous
No, you're not the only one but that may be wishful thinking. Rates aren't going up for at least two years and even when rates were considerably higher, prices were climbing. There remains far more demand for housing than supply and D.C.'s population is increasing rather than shrinking. In my experience, housing within desireable neighborhoods inside the Beltway will hold their value and then some over the next decade. |
Anonymous
Not PP but imagine it was a typo and intended to refer to interest rates, which did in fact reach the teens in the 80s. |
Anonymous
| $600k houses are dumps in DC. House prices are out of line with rents. I rent a house in the JKLM for $2500/month. Buying a house would cost so much more. I also can't build equity in a falling market. House price are still unrealistic. |
Anonymous
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Another question: are they dropping the conforming loan limit soon? That will drop houses prices.
Have seen many houses in my neighborhood go under contract then have the deal fall through. |