Hi Zack,

I have not run all the numbers for an investment prespective but I do know that at a higher purchase price the depreciation deduction is much higher-almost 1000 dollars. This will offest the almost 1000 dollar lost mortgage interest deduction.

You also are assuming that interest rates will eventually come back to the level it is at now and that it will pay to refinance. I often find on my own properties that it takes almost 7 years to recoup refinance costs for a 1 point move in interest rates especially on a relatively low mortgage say 200,000.

Cori Kaplan

Cori, I commend you on using the correct numbers, 1% rate increase = 10% price drop. There was an article originally in time that had this incorrect as .5% rate increase = 10% drop in price that I have seen reference many many times and have received in folders from buyers agents a couple of times. That said, from an investment standpoint, the drop in price is a total killer, the person is looking for an investment and better rates don't matter, actually, for an investment, they hurt because you have a smaller tax deduction on the mortgage interest. You'd be much better off from an investment perspective of paying 270k at 7% than 300k at 6%. This is true for non-investors too as rates can always be refinanced, purchase price cannot.

Interesting link although I'd be very interested in the data backing it. I'm definitely bearish on housing for the next few years also although I'd like to see what bring about these forecasts and what data FiServ uses.

Hi ELizabeth,

Here is alink to a recent CNN poll for the forecast on LI

http://cgi.money.cnn.com/tools/homepricedata/index.html?mark…

It is predicted that houses will continue to fall over the next 2 years. Nevertheless, if interest rates also increase now may be a good time to purchase. If a home is selling for 300,000 with a 6% interest rate now, it will be the same as a 10% fall in prices with a 7% rate. With the price of oil rising and intflation looming, interest rates are trending upwards.

So, find an area that you would like to live in and buy for the long term. Over the long term, real estate is the best investment!

Cori Kaplan

2 years, CDs will likely give you the greatest return. If you're a believer in the scarcity of commodities and that its not a bubble, buy ETFs like XLE (energy so high correlation to oil) or SLX (steel companies) or you could be really crazy and actually buy futures on commodities, but that's not for the faint of heart. Houses, historically, have been very poor investments in terms of return. Your return is basically inflation. In the short term, in this market, its very very likely your return will be negative nominally and seriously negative in real terms if you buy a house for 2 years. The United Guaranty corp has declare large parts of the area declining markets. I'm in westchester and it appears the entire county is considered declining, so if you're looking for an investment, housing is not the way to go.

Zack

Dear Elizabeth,
The best place to buy a home on Long Island is only where the best schools are.
A home will be able to sell in any market if it is in a good school district.
Parents want the best education possible for their children.
They will seek these areas when searching to buy a home.

I happen to be selling homes in a very desireable area on Long Island; in Nassau County,
Bellmore, Merrick and surrounding areas.

Please contact me and I can arrange some showings to you in your price range.

Camille Dandola , Licensed Sales Associate
516-312-6245 cell

Please check my website for school information

Henry
917-497-0729
http://www.QueensLIRealtor.com

Any real estate you purchase to "hold," will eventually appreciate in value. Are you going to live in this house? If so, find an area you love and purchase a house that feels like home.

It's a great market to buy into.

No one knows where we will be in 2 years, but even in this market, my house is still worth at least 3x's what I paid for it...I am not going to sell because I don't have to...will wait for the market to improve again.

Realtors cannot give investment advice, but I am happy to share all the data with you for my area, if you are interested in the North Fork.