Re:Danes Get 20-Year 0% Mortgages
by nostrademons on Tuesday January 05, 2021 @07:04PM
(#25653097)
> But I'd definitely rather be buying a house in a high interest rate environment... don't like the tail risk given how low rates are.
Don't forget the tail risks of inflation.
The risk of not buying a house in a low-rate environment is that inflation takes off, the price of the house goes up 10x to match the price of everything, your rent goes up alongside everything else, but the people who bought still have the same payment as before. Interest rates went up to ~18% in 1981, but that still didn't take average prices down from the $47K in 1980 back to the $17K they were in 1970. A real estate bear market is usually 10-20%, not the 3-10x that home prices go up in a high inflation environment.
Re:Danes Get 20-Year 0% Mortgages
by sizzle on Wednesday January 06, 2021 @12:53AM
(#25654989)
You seem very knowledgeable on the market trends. What do you think the effects of COVID-19 will have on the market, given unemployment broke records and all that?
Don't forget the tail risks of inflation.
The risk of not buying a house in a low-rate environment is that inflation takes off, the price of the house goes up 10x to match the price of everything, your rent goes up alongside everything else, but the people who bought still have the same payment as before. Interest rates went up to ~18% in 1981, but that still didn't take average prices down from the $47K in 1980 back to the $17K they were in 1970. A real estate bear market is usually 10-20%, not the 3-10x that home prices go up in a high inflation environment.