Why are increasing interest rates a good thing?

[UnrealizedPotential]

But isn't it possible that if the average 30 year fixed went from 4.50% to 6.50%
(still fairly low historically) home prices 'could' drop enough to make it a 'wash' or maybe even a gain for the buyer ?

I would say that it is iffy at best. In the New York City or San Francisco or possibly Los Angeles housing markets I doubt that home prices would come down enough to help much. In other markets there is more of a chance, but less of an advantage because the prices are lower from a starting point.

But is it possible? Of course. But the question to me is how likely is it? How much of an advantage would there be if home prices did come down significantly?


Unfortunately in markets where it would help the most, IMO it would be the least likely to happen. Also, one has to consider that home owners may be less likely to sell in a down market.

 

[marko]

that double digit interest income is liable to come with an increasing tax obligation .. that might be unpleasant for some

I'll take my chances.

Reminds me of when I got my first company car. An S Class Mercedes. Someone told me "yeah, but watch out; you're going to have to pay taxes on that lease payment! It counts as income."

I replied: "So, I get to drive an $80,000 car but I have to pay an extra $2500 in taxes? Oh....ok".