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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: bozwood who wrote (4681)8/26/2002 9:24:48 PM
From: SpekulatiusRead Replies (2) of 306849
 
<< My point is that the financial position of someone who pays $500k for an asset is not the same as the financial position of a person who pays $375k for that exact same asset.>> Of course the person who bought for 375k is much better of even if he has the same payments due to higher interest rates. The reasons are so obvious that its almost embarassing to post them: First there may be a good chance that interest rates come down and he can refinance. If this happens there is a good chance that his property has appreciated because it is more affordable.
That does not necessarily imply that a buy at 500k is a bad investment, it just means that the odds to make money are much better if the market were depressed due to higher interest rate.
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