Interest rates will go up, house prices go down.

If any of you are trying to wait for house price to go down so you can buy that dream home of yours, well I got news for you. Interest will go up to match the exact same payment you will make as if you are to purchase an overpriced house today. Let us all take this into perspectives here.

In 2 - 3 years, yes, we will likely see a lot of drop in the prices of houses. I am guessing we still have another 10% - 20% to go depending on the area. So you wait and wait until the prices are now at rock bottom. It is now 3 years later. Everyone is trying to rush into buying a home to get a bite out of the house they want like a manic stray dog that hasn't ate anything in years. But when they try to buy it, look what happened, interest rates have shot up to insane levels. Now the home you have been watching and waiting for a LONG 3 years, you can buy it and almost taste it, but the interest rates are now at a double digit of more than 10%! The payment you have to make on it are close (if not more) than if you were to purchase an over-inflated house today!

On top of that, because house prices have dropped so much, it will be even harder for you to get a decent equity in your house because it just doesn't isn't as worth as much! Wow, what a disaster!

On the other hand, if you were to purchase a home today, you could be making payments and at the same time, continue to earn equity every time you make your payments. Within 3 years, you would have equity to not just go on a long vacation in Hawaii, but you can even use that equity to purchase another house!

Wow, talk about misfortune! I'd feel real sorry for those buyers who will later only to regret, "Only if I purchased a house 3 years back in 2007, atleast I would have had some equity".
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September 24 2007 - US
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Replies (76)

Profile picture for 2 Big 2 Fail
I am so sick of agents calling homes overpriced when they are complaining about not having any customers. If you think all of us sellers are delsuional and overpriced, then perhaps you need to leave the profession. SInce the slump began, 100,000 realtors have went elsewhere. JOIN THEM!
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September 24 2007
LOL, alpine giving good advice... Now if he would only follow his own advice.....
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September 24 2007
Did you even read anything I said?
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September 24 2007
Alpine, you need to read the whole thing - not the first sentence.
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September 24 2007
The "PURPOSE" of my thread, is to acknowledge buyers to buy a home now before they are in for a real disaster later when interest rates have ballooned. There is not a lot of time before the interest rates starts going up. I'm guessing the interest rates will start going up beginning of next year's spring.
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September 24 2007
Profile picture for 2 Big 2 Fail
I read the whole thing. Just curious how you plan on convincing people to buy houses right now while calling the houses of today "overpriced." That is counter-productive, don't you think?
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September 24 2007
Because it takes brains to sell something in today's market. Buyers will not fall for, 'House prices will not go down' anymore.
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September 24 2007
Profile picture for 2 Big 2 Fail
Also, how do you know that rates are going up?
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September 24 2007
" Also, how do you know that rates are going up?"

Don't you know a lot of the lenders are dead broke right now? How else do you expect them to come out of this train wreck? By begging people for donations?
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September 24 2007
Profile picture for 2 Big 2 Fail
But it seems that Helicopter Ben is more inclined to lower rates instead of raising them to prevent a recession.
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September 24 2007
Profile picture for truetech
I agree with agent smith whole heartedly
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September 24 2007
The problem is the underlying premise isn't true (prices will go down), even if you accept the prediction (interest rates will go up). While that might have happened nationally back in the late 70s, early 80s, it didn't happen in Seattle and I'm sure other places. So you paid more for a house at a higher interest rate.
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September 25 2007
Profile picture for klarek the realist
"Steepest price drops in 16 years"

http://biz.yahoo.com/ap/070925/home_price_index.html?.v=3

Oh if only I bought in 2007, then I would have lost my entire savings!!!

You cheerleaders are pathetic.
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September 25 2007
Profile picture for LongIslandBubble
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September 25 2007
Klarek wrote: "Oh if only I bought in 2007, then I would have lost my entire savings!!! You cheerleaders are pathetic. "

You should try living somewhere that has a good economy. Then your savings might be better too!
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September 25 2007
Profile picture for tldtms
I really wish my Realtor would post on this board. She is down to earth and tells me like it is. Lowball every single house, or wait another 6 months till they drop the price. It dont matter to me if I wait or buy a lowball offer now. I will buy your house at my offer or you go into forclousure.
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September 25 2007
tldtms--what part of the country?

Let us know how that works out.
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September 25 2007
Profile picture for klarek the realist
Kary, the economy here is fine. In fact, this region has the highest household GDP in the country. Sorry, that is not the problem, try again.
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September 25 2007
Profile picture for Aldreth
Exactly tldtms...
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September 25 2007
that's just silly, not everyone selling is going into foreclosure. Come on guys.
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September 25 2007
Profile picture for klarek the realist
Yeah mpal, not EVERYBODY, just record numbers of people. Thanks for shining some light on this pile of dung market.
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September 25 2007
well maybe those of us who are not in foreclosure should remove our homes from the market so you will have a better idea at who you can lowball!
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September 25 2007
Profile picture for Aldreth
Its only going to get worse. The market isn't going to miraculously get better. There are too few salaries that support a house of above 400k, or even 300k for that matter.
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September 25 2007
Profile picture for weaver727
Agent Smith, doesn't really make sense: You in one breath say prices are going to drop, and in another say we should buy now, because we'll gain equity. How much equity will a home gain when prices are falling? If you buy a home, and it becomes worth less than when you purchased it, I would think any equity would get eaten up by that drop in value.

And, can we really predict what interest rates will do? Even if you need to buy at a high rate, you can always refi later when they drop. You yourself said the price will be the same even if the values drop, because of interest. Ok, fine. I'll wait until I have more money, buy when values are low and rates are high, and refi when the rates come back down again. Then the property will gain equity, and after a refi I might even have more liquidity.
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September 25 2007
Profile picture for klarek the realist
No, aldreth. Didn't you hear Kary? It's because some of the local economies suck. Like here in Fairfax County, the highest household GDP in the country. LOL
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September 25 2007
I don't think thats true Aldreth, but I guess it depends where you live.
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September 25 2007
Profile picture for Aldreth
Seattle, and yes it is true. I make a very good living. I can see the problems plain as day, yet so many people try to deny them. Insert whatever explanation you want, (good local economy/no land to build on/prices always go up/blah blah blah).

Answer these questions...

If RE is always an (investment) and always goes up in value

1.) Why have house inventories DOUBLED?

2.) Since salaries have decreased the last 4 years, why have housing prices increased?

3.) Why is it ALWAYS a good time to buy?

4.) Why do I see 8 for sale signs at every intersection?

5.) Why have 160 US Lenders IMPLODED?

6.) Why has US BUILDER LENNAR reported their biggest loss in their 53 year history?

7.) Why have people made a bank run on Countrywide?

8.) Why did Shiller say this? "the collapse of home prices might turn out to be the most severe since the Great Depression." Shiller was the economist who predicted the bursting of the dot-com bubble earlier this decade."

9.) Why is the American Dollar worth less than the Canadian Dollar?

I could go on, but what would be the point?
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September 25 2007
Income isn't the only story. I'd be concerned more about employment levels and trends.
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September 25 2007
1) because people want or need to move
2)I don't know anyone who's salary has decreased, quite the opposite
3) because if you want to buy a house you should
4) I don't know, because I don't see 8 for sale signs at every intersection
5) don't know, but will pay more attn to your posts to find out
6) because they overbuilt
7) because they watched it's a wonderful life
8) who's Shiller? :)
9) cause Canada is awesome
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September 25 2007
Profile picture for klarek the realist
mpal, every response you gave is absolutely idiotic. Except for number 9. Please stop talking about a subject you know NOTHING about.
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September 25 2007
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