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Mortgage rates do not affect cash buyers. Despite low interest rates-- and high dollar amounts-- there are surprisingly many cash buyers in the Bay Area. http

• Domenic_S 13y ago
  This is secondhand so take it for what it's worth, but I've heard that a lot of these all-cash offers are folks who tap their extended family for spare cash, buy the house, then "re"-finance into a normal mortgage and pay the family back. Rates do affect cash buyers who use this strategy. Also, many cash buyers are flippers, but the flippers need to sell to normals who take mortgages. So impact there, too.
  • prostoalex 13y ago
    I don't think you can refinance, what you can do is take out a home equity loan. Regardless, you can get those at fixed rates or (currently cheaper) ARM rates, I'd imagine someone intending to stay in the Bay Area would choose the former.
• tomkarlo 13y ago
  Buyers don't buy in a vacuum. When mortgage rates rise, it reduces the buying power of a large portion of the market, and the value of the homes themselves decline as a result. Yes, a cash buyer could still pay the same amount, but why would they?
  • muzz 13y ago
    In efficient markets, buyers are theoretically not irrational either. In theory, the cash buyers of today have factored in their expectations of rising interest rates and the effect on home values going forward.
    • tomkarlo 13y ago
      Does anyone really still believe that real estate represents an efficient market? Regardless, if someone did believe that, and factored in expectations of rising rates, they simply wouldn't be a buyer in this market.