Monday, November 07, 2005
Quantitative Analysis
There is a comment over at the Housing Bubble 2 blog that is well worth reading. The commentor is an MIT staff member explaining that a 1% increase in interest rates corresponds to roughly a 10% decrease in housing affordability for standard loan types; it's more like a 16% decrease for those with ARMs and IO loans. If the mortgage tax reduction proposal is implemented, then we are looking at an additional 15% drop on top of each drop due to interest rate increases alone. Check it out.
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I went to three open houses yesterday in Novato. I saw other "lookers" at only one of the houses. Maybe the other lookers stayed home to watch the 49ers. Maybe the bad weather kept them away.
At one of the houses, I asked the realtor if the market had cooled. The realter said the market had cooled, and that buyers were "waiting." However, the realtor advised me to buy before interest rates went up.
I was at the 49ers game. They are terrible - trust me, no one stayed home to watch them on TV.
I like that line from the realtor - captured it perfectly: buyers are "waiting".
But then he/she blew any sense of integrity.
"They're waiting. Uh... no, no, never mind. Don't wait! Buy now, yes, before rates go up!"
My favorite industry line: "It's always a good time to buy."
Well, except when it isn't.
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