3 ms·

Could you explain why this is good for the renter with a ton of cash?

• bitcurious 4y ago
  Sticker price for houses will fall, so if you're a cash buyer you get a discount. Monthly prices won't, so if you're a mortgage buyer you're paying more to the bank and less to yourself.
• cjenkins 4y ago
  My understanding is as interest rates go up prices need to come down as people only have $X/month to allocate towards housing. EX: If you have $100 to put towards housing per month you can put $90 towards the house itself and $10 towards interest on the loan in low interest environments, but only $80 towards the house and $20 in high interest environments. If people can only put $80 per month towards the house you're selling that ultimately means the house price can't be as high as when people are able to put $90 per month towards the house. For the renter with a lot of cash this means you can come out ahead if you're able to minimize the loan or outright purchase in cash a house. The renter with a lot of cash gets to benefit from the lower prices from higher interest rates while minimizing the downsides of higher interest rates.