Toggle navigation
Toggle navigation
Home
DCUM Forums
Nanny Forums
Events
About DCUM
Advertising
Search
Recent Topics
Hottest Topics
FAQs and Guidelines
Privacy Policy
Your current identity is: Anonymous
Login
Preview
Subject:
Forum Index
»
Real Estate
Reply to "Why don’t people understand that low rates work against them?"
Subject:
Emoticons
More smilies
Text Color:
Default
Dark Red
Red
Orange
Brown
Yellow
Green
Olive
Cyan
Blue
Dark Blue
Violet
White
Black
Font:
Very Small
Small
Normal
Big
Giant
Close Marks
[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I share this perspective. Low rates lead to a higher listing price. You think you have more purchase power because you pay less in monthly interest, but this is offset by the higher principal balance from the higher listing price. Once rates rise and the monthly interest payment increases, the listing price will go down unless wages and purchase power have increased proportionally to the higher interest rates. If listing prices go down, home values go down. You might have a 30-yr mortgage for a $1.5M home at 3% that suddenly you can't sell at $1.5M because the interest rates on new 30-yr loans is 5%-6%. "Historically low" interest rates are unsustainable and will eventually revert higher, as we are already seeing. To be clear, this is very different than a market crash. In other threads, where this concern was raised, I noticed a lot of insulting posts as well. The insults were not very detailed and failed to explain convincingly why this was a dumb concern. I find it interesting. Almost as if there are a lot of people on DCUM who want to vigorously quell suggestions that home values might go down if economic and fiscal policy conditions change. [/quote] Because there is no evidence historically that price increases supported by rate decreases revert when rates rise again. There may be some inflationary effects that reduce real prices over the long term, but with respect to actual nominal price declines due to rate increases, no. There is simply no evidence.[/quote] Have rates ever been so low? Do you need historical evidence to acknowledge that if rates double, people are going to struggle with an extra $500 per month in interest payments? [/quote] They buy less house... this is how it's always been.[/quote]
Options
Disable HTML in this message
Disable BB Code in this message
Disable smilies in this message
Review message
Search
Recent Topics
Hottest Topics