If I could pick a time to buy a house, it would be at a time when interest rates are at an all time high. Three reasons:
1. Since people buy a monthly payment, rather than price, it means that it would deflate house prices. IOW, the principle would have to be a smaller part of my monthly payment and therefore prices would be lower.
2. Since most of my payment is interest, I would get a bigger interest deduction on my income taxes
3. When interest rates DO come down, my home will be worth more so I could, if necessary, sell at a profit.
4. When interest rates do come down, I can refinance and save possibly hundreds, or more, per month.
OTOH, if I buy when interest rates are at historic lows, there are many reasons not to buy, all relating, but in a negative way, to the same numbered items above:
1. Since people buy a monthly payment, rather than price, it means that it would increase house prices. IOW, the principle would have to be a larger part of my monthly payment and therefore prices would be higher.
2. Since most of my payment is principle, I would get a lower interest deduction on my taxes. In fact, it may be so low that I fall into the standard deduction.
3. When interest rates DO go up, my home will be worth less, so I run the risk of being underwater, and the house becomes a ball and chain, forcing me to remain there even if the local economy tanks.
4. When interest rates do go up, I can refinance! Hahaha! Actually, buying when interest rates are at historic lows means you can only expect your monthly payment to remain the same or go up as real estate taxes kick in. There will be no “refinance to save hundreds per month” in your future.
Bottom line: This is a very, VERY bad time to buy a house.
According to Yahoo this was ... “Unexpected”