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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Spekulatius who wrote (4701)8/27/2002 11:31:48 AM
From: GraceZRead Replies (1) of 306849
 
If this happens there is a good chance that his property has appreciated because it is more affordable.

While I tend to agree that the person who buys a house when prices are down and rates are higher is better off, your answer is only superficially correct.

I think if you examine the way in which prices of property appreciated in this recent rise you'll see that a more expensive property went up in price faster (affordable stayed more affordable and expensive got even more expensive), it appreciated at a faster rate. So a person buying a 500k property wound up with far greater price appreciation than the low price bargain. My sister's million dollar home is worth 2 million, my 160 house is worth 280k under the same conditions of increased demand and falling rates. Lower rate of increase as well as quite a few less bucks in equity.

Now here's the kicker....does the 2 million $ house fall faster in a downturn or does the 280k? If rates rise will all houses have price appreciation at a slower rate or will some areas or price points tend to hold their value better in a pullback? Its not an easy question to answer because so much depends on the dynamics of the individual market.
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