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Low Interest Rates Make It A Bad Time To Buy
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2009 Jan 13, 8:08am 12,673 views 144 comments
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In recent months, Americans have been disappointed and appalled by Wall Street, banks, the big-budget film “Australia,†investment counselors, Detroit, the governors of at least two states, hedge fund managers and even the geese at La Guardia, which used to know better than to interfere with those metal birds they fly among.
After Sunday, you could add Super Bowl advertising to that lengthening list of letdowns.
Few commercials that ran during Super Bowl XLIII on NBC offered viewers anything special. To paraphrase a line from the movie “Sabrina,†you could pick some ads out of a hat blindfolded and come up with better ones.
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Realtors hunting for the few fools not yet parted with their money keep insisting that low rates are a good thing for buyers. Not true. Low interest rates make it a bad time to buy.
First of all, house prices move inversely to interest rates. If rates have nowhere to go but up, then prices have nowhere to go but down.
Secondly, anyone buying with an adjustable rate will get a nasty surprise when his rate later increases at the same time that the value of his house has fallen.
Though I suppose if you get a 30-year fixed rate loan and don't care about resale value because you never plan to leave, then maybe it's OK to buy and bet that inflation will wipe out most of your loan. Not many signs of inflation yet, so such a bet might not pay off.
#housing