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Reply to "Why don’t people understand that low rates work against them?"
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[quote=Anonymous][quote=Anonymous]I don’t agree with any of this. [b]Sure if rates go up you (specifically) may buy less house (to keep monthly pmt the same) but it’s not like there won’t be a buyer for the $1.5 mil house that sold when rates were lower. It just may be a different person.[/b] In some areas of the country, the distribution of buyers may be degenerate (no pun intended) but probably not here in the DMV. A richer person will buy that house at a higher rate just like you’ll buy a cheaper house too.[/quote] I think this is right. New buyers will buy less; those trading up will go up half a step rather than a full step. But as long as demand outstrips supply, all these houses will sell, just to different people who make more money than the people they previously would've sold to. There are plenty of buyers at all price points now; everyone'll just move one category to the left. At the top of the scale, I suspect that the market isn't much affected by interest rates. If you're spending $10m on a house you're probably not sweating the interest. At the bottom, the cheapest houses will require more income, so that may soften. I would expect rental rates to rise slightly, and the number of first-time-homebuyers to fall slightly. But for everything in the middle, I don't think the change will be huge.[/quote]
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