My pal Les Jones always has something interesting to say about real estate. Yesterday he asked another thought-provoking question (“Can you think of any other downsides?“) when he posted yesterday about the idea of buying when interest rates are UP rather than down,
Here’s the gist of the theory. When interest rates rise, fewer people will be able to afford a house at a particular price. To make the house affordable to buyers, sellers will have to lower their prices.
Assuming the same monthly payments for the same house, it’s better to buy when the price is lower and the interest rate is higher than when the price is higher and the interest rate is lower.
Why? If you buy the house when it’s high, the price never comes down. On the other hand, if you buy when the price is low and the interest rates are high you can refinance later.
Perhaps the theory is pretty good when dealing with buyers. But as a Realtor, I do half my business with sellers as well. And it’s with the sellers that the theory falls flat … you decide. Would you want your house to sell for a higher price or a lower price?
Otherwise it seems a good theory.
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