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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (4701)	8/26/2002 10:04:28 PM
From: Lizzie Tudor	Respond to of 306849

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. In California your property taxes are limited to a small increase every year over the original assessment when the house was purchased. Buying the 375K house will save you a ton of money over the years in property taxes. L

To: Spekulatius who wrote (4701)	8/27/2002 11:31:48 AM
From: GraceZ	Read Replies (1) \| Respond to 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.