The 5 American Cities Most Threatened by Rising Interest Rates

Investing" in a home can be a disaster, the recession taught us that.

While many billions have been made investing in real estate, it's not the easy-money sector that people once thought. With interest rates rising sharply just as people are starting to get back on their feet, the tailwinds home prices have been experiencing recently could moderate quickly or, worse, reverse course.

Real estate is still about location, location, location, and some cities are at a greater risk than others. Those that will feel the sting from rising rates first are those that are already priced on the outer limits of affordability.

The price-to-rent ratio is one way to reliably measure how "expensive" owning a home in a market is relative to the other housing alternatives available to buyers. A high ratio means buyers are paying a hefty premium for their slice of the American dream when they could just rent instead. The question with these already richly priced cities is: Will buyers soon be paying too much?

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  • Report this Comment On August 25, 2013, at 7:08 AM, laporte1010 wrote:

    I am 75 years old, and I can tell you that owning a home is still the Best Way and Safest Way to Invest for Capital Appreciation...just Make Sure You Can Afford Owning a Home!

    We bought our 1st home for $17,000, and sold it for $45,000.

    We bought our 2nd home for $132,000, and sold it for $325,000.

    We bought our 3rd home for $200,000, and sold it for $400,000.

    We bought our 4th home (the one we are in now) for $884,000, and it is now worth $1,500,000 (at one time, back in 2005, it was worth $1,800,000.

    The key is to make sure your mortgage payments are no more than the rent you would be willing to pay...that way when your home is paid for, even if your home value has gone down, you still get whatever the value is at the time of your selling it; whereas if you rent you will get nothing, Ever!

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