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I would say yes, but not right away. The reason prices are going up is because many people are in the market due to the low interest rates. Unlike what the other poster is saying, it has nothing to do with supply and demand, especially in Texas. Their isn't a shortage of supply as a matter of fact there is TOO much supply. The demand is coming from the low interest rates. If interest rates gets back up in the 6% range or so the prices will drop because it will lower the amount of applicants which in turn will mean more houses will sit, especially expensive homes. The reason 6% or higher was fine in the early 2000's is because they were qualifying people like hot cakes, that's not happening now. if you don't have the down payment and the higher interest rates will make your payment above what you can afford, then you will not get the loan. Too me this is good. I'd rather see higher interest rates and lower prices than the other way around. Contrary to popular belief not everyone is suppose to own a house.
What we just saw is a dead cat bounce as rates were held low for so long.
Home prices are going up and interest rates are going up...
Buyers who could afford but waiting for prices to go down will now jump in thinking that the rates are not returning to the low that they saw recently..further pushing price up.
Then once these buyers are gone, the housing price rise will take a breather...waiting for the economy to pick up and enable new buyers to afford the now higher price and higher rates...
If the economy picks up, then price and rates will stabilize at their market levels.
If economy doesn't pick up, then rising price and interest rate will pressure house price down and then hurting the economy again...
If the economy get hurt, help will come again......
Repeat this in cycles of 10 to 30 years and that's all we have.
And they will rent and their rent will go up and up as interest rates rise and inflation erodes the value of their dollar.
Prices have firmed up here, but we are still about half of top prices at the top of the bubble market. Prices have barely started back up from the bottom of the market.
I've talked to many people over the past couple of years who would not buy "yet" because they felt that prices would go down more. Well, the market has turned and prices will not be going down more. From here on, prices go up and interest rates go up.
But rent if you want to rent. The world need renters, too. I'm very happy to have you pay my mortgage for me.
Not everyone who is on the market for a new house is renting.
In my area prices are at pre-bubble level as it was before last housing boom.
Rates going up should bring more buyers into the market as they realize they have missed the boat on the super low rates and they had better get in before rates go up any more.
Seriously, anything lower than 10% is really cheap money.
Any of you who are hesitating to buy had better get going. Rates aren't going any lower. Mortgage rates right now are way below the actual rate of inflation (not what our government is claiming is the rate of inflation)
No way. Higher interest sqeezes even more people out of the market and there weren't that many already.
No way. Higher interest sqeezes even more people out of the market and there weren't that many already.
The effect actually depends on price point.
If the $400,000 buyer reduces his target price to $350,000, generally, the $350,000 seller will not see a diminished interest.
Ditto on down to the low end.
The largest effects will hit the mid-high end seller, in the $800,000--$1.2 million range +/-.
Particularly if their buyers want JUMBO funding and if JUMBO gets nutty.
The effect actually depends on price point.
If the $400,000 buyer reduces his target price to $350,000, generally, the $350,000 seller will not see a diminished interest.
Ditto on down to the low end.
The largest effects will hit the mid-high end seller, in the $800,000--$1.2 million range +/-.
Particularly if their buyers want JUMBO funding and if JUMBO gets nutty.
What about $1.5M+ or $2M+? Would the movement at that range be any different than the $800k - $1.2M range and if so, why?
What about $1.5M+ or $2M+? Would the movement at that range be any different than the $800k - $1.2M range and if so, why?
Sure, one can expect ripples here and there.
But when you get to certain price points, you are into a different buyer pool in most markets, and they are not hat in hand hoping the lender will ignore that they bought furniture on instant credit last weekend.
And of course, local inventory levels have a great inpact, too. Supply and demand.
And where I am, if a buyer wants to go $2 million for a house, they have a bit of a playground if they are flexible on location.
Last edited by MikeJaquish; 06-28-2013 at 08:41 AM..
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