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rising interest

 
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john p
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PostPosted: Sat Feb 18, 2006 11:48 pm GMT    Post subject: rising interest Reply with quote

I am a first time buyer that is competing with other buyers that are trading up from starter homes or condominiums.

One big disadvantage I have is that others that have bought 5 years ago can have a bigger down payment due to the appreciation of their first purchase.

With rising interest, home prices will be pressured to drop due to affordability and the decrease of buyers.

If prices drop due to interest rate increases, people who are trading up will face two disadvantages. First, their down payment will be minimized because their appreciation will decrease. Second, the mortgage rate in their current property will most likely be lower than the current rate so it won't make as much sense for them to walk away from the cheaper cost of capital.

The third advantage is the portablity of not currently owning. I am finding that there is a big tug of war between generations and buyers and sellers. Because the expectations are varied and you can find experts and data to support just about any position, people can be very stubborn which I think explains the increase in the number of days on the market most houses seem to be sitting.

Am I on the right track with this thinking???
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