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Now close your eyes and imagine what will happen to home prices if interest rates went up to oh....6-7% for a 30-year fixed.
Everything else being equal that would drop home prices 20% or so across the nation.
That's the other shoe waiting to drop on the housing market. It will happen eventually.
EXACTLY what I'm thinking. Anyone who is putting down big money on a house in a market that's not already majorly depressed is in for a hurtin' (unless of course they plan to die where they bought)
What would be the perfect storm if this is you....a spike in interest rates....you buy after the market drops 25%. Interest rates swing back down a year or so later and you refinance.
Happened to me with my first house, think about the equity flood you get....bought for 150k, moved out 5 years later for 200k.
Most economists agree that no matter what economic inidicators the Obama Administration uses to tout it's "recovery" policies, the real "bottom" will not be hit until housing prices necessarily hit their own bottom.
But you won't hear Barack Obama tell you that. And his supporters don't care, anyway.
That 3% is over half of an overleveraged "homeowner's" (emphasis on quotes) down payment, and all of an FHA "homeowner's" downpayment. That "owner" is now a glorified renter.
Every cloud has a silver lining. The penny saver will snatch that house from the person who was obviously not fit to be a homeowner.
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