I think it was Warren Buffet that stated something along the line of this: The best return on investment that you can get is based on the price paid, not the interest rate.

It appears that the American consumer is either tapped out or has gotten wise to the scam of the high price/low interest rate snakeoil.

Warning to homeowners who need to unload: Sell now, or be priced in forever!!!

Ha!

Some time ago, owning a home became an "investment" instead of a form of shelter. That and the idea that everyone should own a home is part of what created this mess. For most of the last fifty or sixty years, equity was increased by paying down the mortgage and that was accomplished by living in your house for 20 or 30 years. When we get back to that kind of thinking, I think that prices will eventually stabilize and then increase at a modest rate (1% per year?).

any chance 30-year fixed gets down to 4 by the end of the year?

Half or more of mortgages refinanced between the summer of 2004 and the end of 2008 were cash-out, as it happens. The peak: Spring and summer of 2006, when nearly nine out of every 10 refinancing borrowers did a cash-out deal. These were the frenzied "home as ATM" days.........

And now we are being asked(forced) to subsidize the payments on these loans thru loan modification(AKA section 8 for non-poor people who are financially reckless),8k tax rebates and various other gov't programs.

True or False:
The housing market bubble was driven primarily thru reckless lending/borrowing and too much risk taking both by banks, borrowers and buyers of derivatives.

If you say "true" then ask yourself. Are you truly in concert with the logical consequence? That there was no *valid* reason for the housing run up. That your home is worth whatever it was worth in 1999 and maybe less. I am a homeowner, and would welcome a return to these numbers. They are coming, i dont care how much our gov't is willing to spend to prop them up.

I miss "Little Debbie." Where's another rose colored glasses wearing perma-bull with enough credentials to argue a weak position? Agreement and harmony is boring. There's got to be some "real estate is always a good investment" agent out there to argue with.

Let me add- There were many 8k rebate methadone purchasers that were clamoring for an extension on closing on here a couple months ago. I wonder how they will feel in a year whey they realize they traded 8k for 50k....oh wait, i already know....victim.

@drunk richard - if interest rates hit 4%, that would be a pretty darn good steal - sure is possible though as we are really not very far off at all...dont think that we will see much more of a downturn in interest rates though and would not hold your breath.

Two types of homes in the city. Massively overpriced clean homes and massively overpriced turds. Forget the interest rates. Home prices are the issue.

The low interest rates are in fact the problem inhibiting the return of prices to normal.

Play with an online loan amortization calculator and see for yourself.

500K loan at 4% equates to $2387/month and total over 30 years of $859, 350.

250 K loan at 10% equates to $2193/month and total over 30 years of $789,814

Overpriced homes at low interest are a scam.

If you look at some of the financial websites (ie. Bankrate, Yahoo Finance, etc), interest rates are at 4.125% on a 30 yr fixed, and 3.75% on a 15 yr fixed... That's cheap money! This is a great time to buy, but that's not to say we've seen the bottom of the housing market.

Please consider moving to a 15 year loan if you can possibly do it. Beginning with the first month you will be paying more principal than interest. That is fantastic. Also, consider refinancing to a 5/1 ARM (preferably a 15 year amortization) as we have seen a rate as low at 2.99. Wow.

Agree that refinancing now is a great opportunity, especially at these 15 year fixed rates. Of course, this applies only to those who are able to refinance ( i.e those with equity), and best for those who plan to stay in their homes for at least a couple of years to recoup refinancing costs.

Problem is, many who are underwater do not qualify to refinance at these fantastically low rates. They spent away their opportunity by buying at the bubble peak, or already blowing their home ATM-refinance cash out on "stuff".

Aw shucks.

Walking away is likely the best option in many of these cases. Get a big u-haul for all of your stuff, and then Jingle mail, jingle mail, jingle all the way!!!

Hey Darwin Rules...I jingled all the way recently, and it feels wonderful!

To those folk that swear that renting is throwing your money away...Well I have been on both lawns. I say you have to pay to stay somewhere. It feels good to call maintenance to resolve an issue, and not my savings account...priceless! To be 15 minutes from work and not have to deal with the MARC? PRICELESS! To not have to worry about ever recouping lost equity in my lifetime, paying all that money on an underwater house that will never surface when I need it most? PRICELESS!

My new budget, sans the house and all the bills that come with it, includes me boosting my savings and lowering my out of pocket expenses. I wouldn't care if the interest rate was 1%, there are better ways to save and invest money, and owning isn't all it is made out to be!

Hey Jamie! Life is good not owning and living in Baltimore!

Glad to hear your life has improved, Wallace. (Though of course I wish you didn't have a bad experience to begin with.)