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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I think you might end up screwed, because even as prices are rising, you're not going to have these super low rates forever.  [/quote]

Lower rates are cheaper financing, that's true, as in a $400K loan at 6% is less per month than a $400K loan at 8%. BUT, when the upshift in rates occurs, the PRICES of homes, especially the non-cash market, will decline. This is simple finance math.

Not sure my finance pedantry helps the OP, but the market in metro DC and especially NOVA is driven by the warmongering that's been going on since 9/11. Believe it or not, if Trump were to scale back Middle East warmongering, that might help you see lower prices. HRC seems to be the neocon dream, so her election would keep them rising. Neither of those is a reason to vote for anyone, IMO.

If I were OP, I'd work to enjoy/resign myself to the townhouse. I'd also work on upping my non-home equity savings, probably in shorter (less than 3 years) maturity treasuries. And I'd keep in mind that being a teacher means a much more stable income than most have, even if that income seems smaller![/quote]

You're missing the key fact that interest rates increase when prices are increasing.  The economy would be roaring at the same time should there be a massive increase in rates.  Or simply runaway inflation. I wouldn't count on an increase in rates resulting in a decrease in prices.  It hasn't worked that way in the past. [/quote]

[b]The decrease in prices due to increasing interest rates is finance math. If interest rates rise, ceteris paribus, prices decrease. Talk to a bond trader if you doubt this. [/b]

[/quote]

This is a fallacy. Housing prices are not corporate bonds -- prices and yields do not move inversely. I realize a lot of people believe that once rates increase, prices will fall. Historically, that hasn't happened at all because housing prices are not that elastic. Yes, we've been in an unprecedented era of artificially depressed rates, but the Fed is going to move VERY gradually to normalize -- could take a decade or more. It will take greater economic strength to push rates up -- and greater economic strength generally translates to more buying power. So this idea that when rates rise housing prices will fall in tandem is just foolish and wishful thinking. Might it happen? Sure. Is it possible? Maybe at the margins. But is it likely? Not really.[/quote]

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