[MrB]

Ran into this with a rent to own property recently - we would have been better off NOT selling at this time, but were contractually obligated to let them buy at any time they obtained financing.

Live and learn.

[Go Gordon]

Their monthly payments would be larger even for a house of the same price. That’s discouraging some people from selling, thereby limiting the supply of available homes

Nonsense. How can selling your house and buying another cause a limited SUPPLY of homes?

[cuban leaf]

I used to sell real estate in Seattle. In my opinion, my belief was that the best time to buy was when rates are really high.

The reason is simple: People don’t buy a price. They buy a monthly payment. It means High interest rates are good for the buyer in several ways:
1. The price of the house is low (relatively speaking).
2. The interest part of the loan may be high enough to positively impact your taxes.
3. When interest rates drop, you can re-finance, sometimes saving hundreds or more per month.

If you buy when rates are low it means:
1. If rates go up, it will negatively affect the price of your house.
2. The interest part of your payments will have less positive impact on your taxes.
3. Little if any hope of your monthly payment ever going lower.

[USNBandit]

I don't know, the rates are pretty low right now. I just sold my home while transferring to another state. I took a loss, but am moving into a much more active market in Northern VA.

My new mortgage is a VA loan, nothing down, no origination fee. 3.75%. Had I put down 10% I would have only knocked the percentage down an eighth of a point. Historically speaking 3.75% is pretty awesome.

[cuban leaf]

BTW, in that “people buy a monthly payment, not a price’ statement is the dirty little secret regarding why interest rates are not going up any time soon. When you increase interest rates, it has the effect of reducing prices, all things being equal.

The last thing they want is headlines about house prices dropping. Especially with so many people STILL underwater on their mortgages.

[who_would_fardels_bear]

Oh my! Hold the presses! Something which is economically good for some people is bad for others!

Quick let's put the direst possible spin on it!

[JohnKinAK]

I don’t buy into the premise that interest rates affect home values. Demand drives home values, a lower interest rate means that all things being equal, a borrower has more purchasing power. The reason homes aren’t selling is because of the poor economy and stagnate (if not decreasing) wages. The American middle class’ purchasing power peaked in the late 60’s and has been in decline ever since. We’re in a depression, and most people’s wages aren’t keeping up with inflation. Who’s going to buy a when real inflation is double digits?

[RetiredArmy]

There are tons of house around our area here in Alabama for sale. Signs everywhere. But, NONE are selling. Not a one.