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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: Tommaso who wrote (4045)4/9/2004 11:18:23 PM
From: yard_man   of 116555
 
you make a good point -- if we can admit that prices are "relatively high" with respect to the trend -- the last thing you want to do is "speculate using leverage" that there is a "new trend" of persistently higher appreciation.

OTOH, there is an inconsitency in your reasoning -- there are two ideas there -- one exposure to debt is a no-no -- and exposure to floating rates is a no-no. If you really think rates are going up and can recognize that housing price appreciation is above long term trends -- then you would favor waiting -- since higher rates will surely bring prices down => more house for the same amount of money that one puts down. Many mortgages are now written to be non-assumable, but I suppose even that could change if we ever got the high interest rate environment that you think possible --

I don't think higher interest rates are likely in the short to intermediate term -- but if they did occur -- one would certainly be better off waiting to purchase.

I don't think rates will rise significantly from here for years, but I still think one would be better off waiting on purchasing -- if in a relatively high cost area.

(re historical trends of appreciation: the length of time over which something has been true, doesn't count for a lot -- if the thing abruptly changes tomorrow.)
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