Housing + More Reforms = Even Higher Rates

Don’t read this Los Angeles Times article if you’re in a good mood. And if you do read it… then don’t consider how higher rates will dampen the purchase market. And if you do consider it intuitively, then don’t peek through the small slits in the fingers of your hand when reading this:


The going rate last month = $400k @ 4.125% = $1,938 p&i.
The going rate this month = $400k @ 5.125% = $2,178 p&i.

12% higher payment. In one month. And this is before they mess with Fannie/Freddie.

For perspective, a buyer who was planning to buy a $500k home, with 20% down, to lock in a $1,938 payment… now has to reduce their offer price to $445k, for the same home. That’s $55k, or 11%!

And if you just couldn’t help yourself from internalizing the information above, then whatever you do… absolutely, positively, do not read this prediction I made in late 2008.
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This entry was posted in cardiff real estate, market outlook, observations and opinion, seeking alpha. Bookmark the permalink.

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