...Your Next Stop: The Twilight Zone
02/04/2010
"Here is one hand, and here is another; therefore I know at least two external things exist." -- G. E. Moore's response to external world skepticism
"...You might be right, but on the other hand,
I have five fingers." -- John Sidney Kornblum's response for the rest of us
Submitted for your approval...
Take the simple equation .0512(P-.2P)=.0745(.75P-.2P):
If P is the value of a property during its 2008 high and,
if 5.12% was the interest rate available at that time (it was) and,
if 20% of P is used as a down payment and the rest is borrowed and,
if .75P equals its value today i.e. assuming a depreciation of 25%.
Then,
you will lose all the benefits of buying at today's lower prices (when compared to their highs) as soon as interest rates reach 7.45%--a figure many expect in the not-to-distant future.
To put it another way, a property bought at its present price will cost you the same as, or more than, it did during the height of the market if you purchase it at the present price, but when interest rates equal 7.45% or more.
However, if you buy it now before interest rates increase, it will cost you 25% less than it did at the height of the market.
--Leigh Zaph. (any comments can be emailed to us at webitorials@manhattanhomesinc.com, thanks).
"...You might be right, but on the other hand,
I have five fingers." -- John Sidney Kornblum's response for the rest of us
Submitted for your approval...
Take the simple equation .0512(P-.2P)=.0745(.75P-.2P):
If P is the value of a property during its 2008 high and,
if 5.12% was the interest rate available at that time (it was) and,
if 20% of P is used as a down payment and the rest is borrowed and,
if .75P equals its value today i.e. assuming a depreciation of 25%.
Then,
you will lose all the benefits of buying at today's lower prices (when compared to their highs) as soon as interest rates reach 7.45%--a figure many expect in the not-to-distant future.
To put it another way, a property bought at its present price will cost you the same as, or more than, it did during the height of the market if you purchase it at the present price, but when interest rates equal 7.45% or more.
However, if you buy it now before interest rates increase, it will cost you 25% less than it did at the height of the market.
--Leigh Zaph. (any comments can be emailed to us at webitorials@manhattanhomesinc.com, thanks).
