Agent of Reality,
When rates rise, prices will rise. Not because rates are rising, but because of WHY rates will rise. Rates are directly linked to the general market (i.e. unemployment figures, positive political moves, increase in GDP, etc), and if, for example, the stock market rises, rates will rise as a result. Sure the market may take time to adjust, because the housing market is last to recover, but prices will still increase over time. If Rich plans on buying and selling in a short period of time, then maybe he will see lower prices; but the long term will see an increase (5-7 years).
I like to think that if the Fed decides to FINALLY increase rates again from the 0%, then lending requirements will loosen. Currently, banks are unable to make the margins that they were when rates weren't at 0%, and as a result are more strict in their lending. So when these rates do rise, and Bernanke has some sense talked into him, the housing market will benefit; it may take a while because these things don't happen quickly, but it WILL HAPPEN. Again, these rates rising will be a positive sign for the economy as a whole, and we will start to see consumer sentiment across the board increase. Happy consumers means more buying, more buying means a stronger economy, and a stronger economy means a better housing market.
It is your type of thinking that is keeping the real estate market down. If buyers weren't so scared of making the big move, we would already see a bigger uptick in contracts on properties. We are already seeing more buyers out and about, and we are certainly benefiting from sellers becoming a bit more realistic with their prices.
Stop spreading negative words like these, it doesn't help anyone. If only the question and answer was as easy as, "Ask yourself what happens when rates rise? Answer - prices will drop further." Nothing in a behemoth of an economy like the U.S. is that simple, there are just too many factors at play. I don't claim to be an economist, but I know real estate, and my gut instinct (and the facts and history) tells me that now IS the right time to buy. Keep in your hole if you don't like our opinions, otherwise, the more negativity we hear, the worse off EVERYONE who has any stake in our economy will be.
Thanks for your opinion,
Fairfield County's Most Tech Savvy Realtor
William Raveis Real Estate