Investing 102

[GregWeld]

Originally Posted by Flash68

That is a nice anecdotal piece and I don't disagree, however, interest rates and home prices are for the most part inversely connected over time. It's not perfect, but it does largely follow that "hypothetical."

There's no question that they are linked..... but what the reality is is that prices don't go UP --- and buyers are forced to buy down to what they can afford on a monthly basis as rates rise... so while the two are related - the rise in rates doesn't mean that suddenly houses are going to go down 25%. It just doesn't happen. What you really see is that houses go UP quickly (too fast) as the rates are low.

What I was trying to show with my rate example is that while you might get a house a smidgen lower -- you'll more than make up for your "deal" in interest.

The perfect storm to buy has been the last two or three years --- falling house prices with the lowest rates in 50 years. Not likely to repeat that scenario --- as houses are already getting multi bids - prices inching up -- and it's almost a given that rates will climb from these historic lows.