Even If Real Estate Prices Go Down......Interest Rates May Go UP

By
Real Estate Broker/Owner with Realty Works Temecula BRE No: 01233850

This information came straight from Fox Business, and in this article it states very clearly that "Even if real estate prices go down, interest rates may go up", which will nullify any gain you would hope to obtain from any price decrease.  No one can predict the market and waiting could be the worst thing an investor can do.  

Other real estate "Investment 101" bullet points:

  • No one knows where the bottom of the market is until it is on the way back up.  
  • Go for the long haul - Rarely do people increase their wealth by owning property for short periods of time.
  • All investments fluctuate in value over time.
  • Long-term investing in cash flow-producing assets like real estate is the way to go.
  • In the long run, say 10 years down the road it won't matter that there were price fluctuations in prior years, it's the overall equity that investors earn their equity.
  • Don't be concerned about waiting until prices inch down a few percentage points, as stated because if interest rates go up from where they are then the wait was not beneficial.

  • Buy a property to live in as your personal residence and change it to a rental.  Owner occupants can get better financing and can put down a smaller down payment if needed.  Moving out in a year or two into another personal residence that can become a rental property a couple of years later.  


Jane Grant is a licensed Real Estate Broker in California, DRE 01109492

 

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Re-Blogged 2 times:

Re-Blogged By Re-Blogged At
  1. Lori Cain 04/28/2012 06:55 PM
  2. Charles Stallions 05/19/2012 07:52 PM
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Rainmaker
717,785
Juli Vosmik
Dominion Real Estate Partners, LLC, Scottsdale, AZ - Scottsdale, AZ
Scottsdale/Cave Creek, AZ real estate 480-710-0739

Jane, based on your Temecula CA real estate market reports, your area, like so many, appears to be on the upward trend as to values.  The only thing we know for sure about the current real estate market is that mortgage interest rates are still at their lowest in history.  Did we reach the "bottom" of the values in real estate?  In many areas, it's a strong possibility, based on the current statistics, low inventory and very quick marketing times.  

Apr 24, 2012 02:52 PM #1
Ambassador
1,281,176
Kathleen Daniels
KD Realty - 408.972.1822 - San Jose, CA
San Jose Homes for Sale - Probate Specialist

Jane, That is so true.  Those buyers sitting on the fence waiting for the perfect moment to make their purchase may only end up paying more than what they think they might save by waiting. 

Apr 24, 2012 06:28 PM #2
Rainmaker
1,360,113
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl.

It interest rates would take a bounce it would probably make buyers start jumping off the fence.

Apr 24, 2012 07:21 PM #3
Rainmaker
1,421,573
Joan Cox
Metro Brokers - House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Jane, GREAT information, and surely this interest rate cannot stay this low for much longer!   I think that is why we are having a buying frenzy in Denver right now!

Apr 25, 2012 06:13 AM #4
Rainmaker
247,368
Greg Cook
Platinum Home Mortgage - Temecula, CA
Mortgage Consultant NMLS ID# 283159

Great points Jane, the focus on short term prices is creating a generation of real estate speculators not investors.

Real estate has always been (well almost always) considered a long term investment and the interest rate has more impact on long term cost than purchase price.

If you need proof, see how much interest is paid over the course of a 30 year loan and it's at least double the principal balance.

Apr 25, 2012 11:48 AM #5
Rainmaker
952,997
Georgie Hunter
Hawai'i Life Real Estate Brokers - Haiku, HI
Maui Real Estate sales and lifestyle info

We sure have had a long run with these super low interest rates, and you just know they can only go up.

Apr 25, 2012 08:09 PM #6
Rainmaker
360,402
Sidney Kutchuk
Property Management & Sales at REALTY WORKS TEMECULA, CA 92590 (951) 217-6745 - Temecula, CA
Property Management & Sales Experts 951-217-6745

If we have not yet hit bottom we are very close to it here in Temecula CA. BUY NOW!

Apr 25, 2012 09:38 PM #7
Rainmaker
1,198,810
Tony & Darcy Cannon
Keller Williams Legacy - Woods Cross, UT
The C Team

Jane, That is great information!  Great post and important for buyers to understand! 

Apr 26, 2012 09:29 PM #8
Rainmaker
697,695
Cindy Edwards
RE/MAX Checkmate - Johnson City, TN
CRS, GRI, PMN - Northeast Tennessee - 423-677-6677

Hi Jane,

I just stopped over to your facebook page as well, that's how I ended up here.  Great blog, great information.  I hope you're okay that I'm going to share this with my facebook as well.

Apr 28, 2012 03:50 AM #9
Ambassador
811,169
Fred Griffin Licensed Real Estate Broker
Frederick Griffin, Licensed Real Estate Broker - Tallahassee, FL
Tallahassee Florida. Call 850-339-4861

"No one knows where the bottom of the market is until it is on the way back up." 

    What a great statement - and when people realize that we are at the bottom, there will be a Buying Frenzy.

Apr 28, 2012 07:12 PM #10
Rainmaker
1,607,234
Debbie Gartner
Floor Coverings International Westchester NY & Stamford CT - White Plains, NY
The Flooring Girl - Westchester hardwood flooring

Great post, Jane.  Suggested as there is so much sound advice here.  Yes, it seems that the interest rates have a much larger impact than the home price changing a bit.

Apr 29, 2012 02:52 AM #11
Rainmaker
598,880
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Jane - YEP!!! That is an absolute given.  While we (Realtors & MLOs) may not know what the market will be like in a year, we do know that rates will rise.  It is absolutely inevitable.  Waiting to buy when you can afford to buy now is just a bad business decision.  JMHO  :)

May 01, 2012 09:49 AM #12
Rainmaker
705,510
Sharon Parisi
Keller Williams Dallas Premier Realty - Dallas, TX
Dallas Homes

Jane, you speak words of wisdom and experience!  The bottom line is that if the circumstances and numbers work for individual buyers, it is a great time to purchase!

May 02, 2012 01:36 PM #13
Rainmaker
605,309
Teri Eckholm
REMAX Specialists - White Bear Lake, MN
Acreage & Lakeshore REALTOR Minneapolis St Paul

Jane--I love your points. Good information to share. Bottomline...no one can time the market!

May 02, 2012 02:00 PM #14
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Rainmaker
651,284

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