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Bill,
Lets agree to disagree AND agree on this one.
You are correct in saying that interest rates are one of the biggest
factors in house prices as the interest rate drives the payment and
that drives the price people can afford to pay.
During the last period of low interest rates (lowest in 40 years) there
were and still are larges parts of the US that saw 0% to 5% average
appreciation. Hence the boom happened and no one noticed in those
markets.
Wholesale rates have gone from 1% to 4% and we haven't seen a bust in
RE prices. We have seem some markets fall (San Diego CA being one),
some markets stall, some continue to rise and some markets continue to
remain flat.
Most people post examples that are local to where they live and they
expect that the US as a whole is similar. Not even close.
Over a year ago the WSJ published a survey that shows the 10 least
affordable markets and 10 most affordable. Most the least affordable
were in CA or in other coastal cities. The most affordable were in
upstate NY, OH, IN, IL, TX. NYC was one of the least affordable and
further north or west was the most affordable (average person earned 3x
what it took to buy the average home). In one state you have wide
differences with the affordable areas showing appreciation rates that
were under 5% for the prior few years.
The nice thing about RE investing is you can find deals in any market.
John Corey
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Re: Real Estate to slow soon....
