Are you nuts? If we wait until the bottom of unemployment we should see another 20% drop in prices.
Remember unemployed broke dicks without credit can't buy very many houses. Let alone employed broke dicks with or with out credit.
Most people have to sell their present home to get the down for their next. Kind a screwed there. Better hang tight until Obamama's printing press money kicks in next year for construction. However, state governments are going bust and must bum money or screw everyone in sight.
You think they'll let up on houses? Really?
Remember unemployed broke dicks without credit can't buy very many houses. Let alone employed broke dicks with or with out credit.
Most people have to sell their present home to get the down for their next. Kind a screwed there. Better hang tight until Obamama's printing press money kicks in next year for construction. However, state governments are going bust and must bum money or screw everyone in sight.
You think they'll let up on houses? Really?
10 Reasons Why Buying a Home in Southern California today is a Mistake. California Housing and Financial Market Analysis produces no Green Shoots. » Dr. Housing Bubble Blog
One argument making the rounds from bottom callers is mortgage rates are at historical lows. I actually take this argument as a reason not to buy. Why? Well look at the above chart. Mortgage rates are being artificially pushed down by the government through various programs at the Federal Reserve. This cannot go on forever. Here is a scary thought. I ran the numbers above to find the average 30 year fixed rate since 1971. Want to know what that is? 9.08 percent. Big deal right? Well let us run the numbers with the current 4.81% rate and the 9.08% rate on a $500,000 mortgage:
PI @ 4.8% $500k = $2,623/month
PI @ 9.08% $500k = $4,051/month
Now here is the thing, sure you can buy the home at the low rate but let us say rates in 5 to 7 years when you are looking to sell are now closer to the historical average? Who are you going to sell too? If we have a Japan like multi-decade stagnant economy, you better get ready to stay in your home for the duration. Like I said, rates have only one way to go and that is up. Some view this as a plus, I view this as a liability. Give me a good price and a higher interest rate over a high price and a low interest rate any time. You have more option with a low priced home with a high interest rate. You can refinance at another time, pay it down quicker cutting into principal faster, or you can sell and have a bigger pool because it is a better price. A low rate by itself is not a good thing. If that were the case, those teaser 1.25% toxic mortgages would be all the rage again.
No comments:
Post a Comment