Do low interest rates suggest it is "a good time to buy?"

Reasons why this conventional wisdom may not be true:

1) Low interest rates inflate prices (i.e. a cash buyer would get a better deal if not for artificially low interest rates). Thus, low interest rates tend to benefit sellers more than buyers as buyers end up deeper in debt.

2) As interest rates decrease, potential buyers can "afford" to borrow more (i.e. pay more for a given asset), so if you buy at higher interest rates you stand to gain from a decrease in rates. Similarly, an increase in rates puts downward pressure on asset prices and you stand to become the victim of increasing rates if you buy at low rates with a short-term horizon.

3) Borrowing at higher interest rates guarantees a greater return on every pre-paid dollar (i.e. a greater return on paying off the debt earlier).

If that's not enough for you also see my previous post on the subject back in 2008 and #3 in this post.

Don't forget to check back to Dan's Deep Creek Blog for your future updates on Deep Creek real estate.