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You are NOT lucky at all, you actually made a huge financial mistake and financial suicide. You took a low interest rates mortgage on overpriced house in speculative market = Phoenix. When interest rates go up your house value is going to deflate.
Why would you take a mortgage @ 3.25% for 30 years when you know that interest rates can't go any lower and are actually going higher??????????????? When buying a house the goal is to lock LOW PURCHASING PRICE and not low interest rate. It is better to buy a house when interest rates are higher then when interest rates are low. You will secure low purchasing price because when interest rates are high purchasing price is lower. Then when interest rates are lowered again you finance and lower your payment + gain some home equity. You did everything wrong, you were lured by low interest rates and you signed a mortgage for overinflated and overpriced house.
Good Luck to you friend, you will need it in next few years!!!!
Generally speaking, you are correct. It does depend on the specific market though. Some markets will be able to absorb a slow rise in rates. Others like Phoenix will be decimated. I totally agree that a low purchase price should be the target, not the mortgage rate. Buyers these days are too focused on the payment amount.
Personally, I'm hoping rates skyrocket. We've been on the sidelines preparing for the right buying opportunity.
I have lived through three red hot housing markets and they were all at different interest rates. The first was when rates were in the teens and my house nearly doubled in two years. There are so many different which go into determining prices that you cannot single out just one or two. Nevertheless, a major factor is the cultural propensity people have to want to own their home and which means that they will make every effort and many sacrifices to do so. We are not a nation of renters.
In terms of property values, in the two very different markets where I own houses (Arizona and Massachusetts), values have not yet recovered to 2007-2008 prices and it is quite possible to buy a nice home in the $200,000 - $350,000 range. Where we are in Arizona, property does not sell especially fast. In Massachusetts it is much better.
For myself, I am four years in to a 15 years fixed at 3.125%. An increase in interest rates would be very good for my savings and investments. I welcome one.
Note to files: Interest rates and asset prices are inversely related.
That's all in this post, but that's not all in the real world. Out there, many other factors can also come into play.
except the last 45 years every time the fed raised short term rates 1% or more the intermediate term bonds went up in value that year . the only exception was 1994 when bonds fell as short term rates went up .
so there is more to your story too then just a flat out rule .
the left is how much rates went up on the short end . the right is how much an intermediate bond went up that year .
nope it ain't a rule . stocks still go up when rates go up too . so do home prices . in fact study's show stocks are not as effected by rates going up as they are to the speed that rates go up . slow gradual rises have been fine and assets still go up .. the level of rates also determines if yields and stocks are correlated or not .
nope it ain't a rule . stocks still go up when rates go up too . so do home prices . in fact study's show stocks are not as effected by rates going up as they are to the speed that rates go up . slow gradual rises have been fine and assets still go up .. the level of rates also determines if yields and stocks are correlated or not .
if anything it shows there is no rule .
Too bad bay area real estate has outperformed stocks with rental dividends factored in since 1958.
My dear friends, the real underlying questions is: are interest rates going up? If so, stocks, housing/real estate, gold all become less attractive. Also, interest rates rising suggests US Dollar strength. It is my view that the US Dollar, when strong, is a Global Deflation Machine. So higher interest rates and strong US dollar will CRUSH Real Estate Market, will cut those phony and overinflated prices in half and more.
What about real estate speculators and wanna be slumlords who bought two-three additional properties besides their own primary residence? A strong Dollar will crucify them, will flush them thru the sewage system.
We are in a very bad place. Our leaders have engineered a Great Global Debt Mirage. Debt makes you think the economy is growing. But, as the song says: "It aint necessarily so." Strong US Dollar + Higher Interest rates = very bad combination for Real Estate Prices and Valuations!!!!
Good Luck, because many of you are going to need it. Especially if you bought a house or two in the last few years during this fake hype!!!!
Pretty big. Let me guess Newport Beach? Anaheim hills?
No, Laguna Niguel.
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