Asked by Charles Husen, Pleasant Hill, CA • Tue Dec 14, 2010
Since we must chose to say that low interest rates either help buyer or help sellers. Would it not be better and also more mathematically accurate to explain to sellers that now is the time to sell because of the low interest rates?
The math suggests that as rates rise, the price of the home must be discounted to keep the same payment. So does it not make sense to suggest to sellers that now is the time to sell?
Two weeks ago $515,000 home, 20% down had a payment of $2,000.
Tomorrow the same home in a 5% rate environment, to have a $2,000 payment must be sold for $466,000.
Once China slows it's purchase of our treasury bonds in a 2 years and rates go to 8% then that same house, to have the same payment will have to be sold for $341,000.
This is a 47% loss due to interest.
Upper end sellers are unrealistic on prices. They need a push to sell NOW!
Should we not be on the roof yelling to the upper end fence sitters, "NOW IS THE TIME TO SELL, BEFORE RATES GO UP!"
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