Yet another 1st time home buyer in Hou - need suggestion

[emirate25]

Agree with garden oaks, oak forest close to wife's job and close to inner loop

[kaartman]

Thanks everyone.

[Meyerland]

Originally Posted by H'ton

The bold statement stood out to me...

I believe people have an artificial sense of interest rates. Sure it means you can borrow at a lower rate but what does it really do to supply and demand? The lower the interest rates, the more people who are willing to make a purchase. More demand= higher prices and low interest rates artificially inflate the price of a house. Couple that with the last few boom years in Houston and I really feel you have an false housing market right now. I am definitely sitting this out for at least the next year.

I am actually waiting for interest rates to RISE, Why?

-It lowers the actual cost of he house because there is LESS demand. Would you rather buy a $550 k house at 3% interest or that same house for $450k at 5% interest. I'd take the 100k discount right of the top and STILL have the ability to re-finance in the future because i didn't LOCK my self into that artificially inflated price.

Also, I feel that people need to understand that the more cash you have to put into the purchase the more power you have and the less you will look at interest rates and you will look at ACTUAL VALUE of the house. This is especially true if you can save and put down a 25%, 33.3% or 50% down payment.

Where are these houses that drop 100K with a rise in interest rates? I have never seen that happen before.

[kaartman]

Originally Posted by H'ton

The bold statement stood out to me...

I believe people have an artificial sense of interest rates. Sure it means you can borrow at a lower rate but what does it really do to supply and demand? The lower the interest rates, the more people who are willing to make a purchase. More demand= higher prices and low interest rates artificially inflate the price of a house. Couple that with the last few boom years in Houston and I really feel you have an false housing market right now. I am definitely sitting this out for at least the next year.

I am actually waiting for interest rates to RISE, Why?

-It lowers the actual cost of he house because there is LESS demand. Would you rather buy a $550 k house at 3% interest or that same house for $450k at 5% interest. I'd take the 100k discount right of the top and STILL have the ability to re-finance in the future because i didn't LOCK my self into that artificially inflated price.

Also, I feel that people need to understand that the more cash you have to put into the purchase the more power you have and the less you will look at interest rates and you will look at ACTUAL VALUE of the house. This is especially true if you can save and put down a 25%, 33.3% or 50% down payment.

I hear you .... I am going to wait for next 4 - 6 months to see if there will be any downward trend in the home prices due to oil slump. But, to me a drop of 100k for a 550k home may never happen. (I don't know the history of home prices during downturn of 2009).

I am hopping that interest rates wont shoot up and screw me in the end if I don't buy at the right time.

[Dirt McGirt]

Re: home prices and interest rates, there are academic, empirical studies that show little to no correlation. Usually interest rates rise in periods of economic growth or inflation, both of which should have a positive impact on home prices that offset the increase in mortgage costs.

Given interest rates are national but real estate is local, oil is a much more relevant metric for changes in Houston real estate.

The worst case for Houston would be oil stays low but the U.S. Economy grows leading to higher interest rates while the Houston region contracts.