Today's News: "Housign stabilizing...." What will happend when interest rates start climbing? How the real estate market will behave?

[art4ari]

I read on the news today the housing market is stabilizing (8.5 month supply)...and prices will start to rise"

What will happen when mortgage interest rates go up! lets say to 8% or 9%... or 13%? What will happen to the home prices?? and sales? Where our loans would be? Where the modified loans will stand? How low our home prices will go?

Any opinions?

[Moe Bedard]

I think it is Realtor propaganda for the sole purpose of "trying" to stabilize housing by encouraging people to buy. They have to do it for the economy and to make things nice and rosy.

[art4ari]

thanks Moe...I think the statements are making things worse.

I am thinking about the affordability in the future when rates go up. Salaries will not keep up with it.

That means the home prices have to drop sharply. Specially in areas like california where prices are still very high. People are still buying thinking the current rates are great. Yes its great if they plan never sell, ever.

Lets say the rate goes up to 10%. The average price in some parts of CA is 400k now.(3+2). To qualify for a loan this size, the income should be in the range of 12,000k minimum with a 3% down and a payment of 3500.00. With 20% down is 3000.00

Rentals in CA are for the same home is about 2300.00. How are we going to cope with this discrepancy? I sense another bubble to come once rates go up, and people decide to up or downgrade their homes, Imposible. No way they can sell in the future of higher interest.