Mortgage Rates and Housing Prices
Hey all – every once in a while someone asks if it’s a good time to buy a home because mortgage rates and housing prices are low. I came across this today, talking about whether buying a home today with prices and rates so low would good protection against inflation. Although it’s a pretty technical…
Hey all – every once in a while someone asks if it’s a good time to buy a home because mortgage rates and housing prices are low. I came across this today, talking about whether buying a home today with prices and rates so low would good protection against inflation. Although it’s a pretty technical (mathematic), it’s still pretty interesting as it’s based purely on historical data, and not gut feelings or opinions.
http://www.zerohedge.com/article/guest-post-how-increasing-inflation-could-affect-housing-prices-correlating-mortgage-rates-a
This was not kind news to pass on to someone just about to close on real estate in Brooklyn.. The other thing that keeps me awake at night is that the monthly cost of owning the place I’m buying is justifiable (i.e. holds up to rent) at the adjustable rate (3.25), but not at the 30-year fixed rate…. So the scenario is that in 5 or 7 years, if interest rates rise, I will be paying off the balance of the mortgage on a depreciated asset or trying to sell at a lower price. Either way, the equity is gone. Ugh.
Low Mortgage Rates are a good reason to buy only if you plan to hold the asset for a long time.