San Diego Housing Market News and Analysis
Where's the money coming from to increase home prices?
User Forum Topic
Submitted by powayseller on March 25, 2006 - 9:02am
What's the source of money that is being used to drive housing prices to ever higher levels?
If it were cash, we would see less cash spent on other items, and not so many 100% financing deals. We can rule this out.
The answer is: debt. What is the source of this new debt? And who are the lenders? Investors buying these loans, deeds of trust, MBS, we are told. But that doesn't explain the influx of new debt.
I still wonder: since the property values and loans of some US housing markets have increased several orders of magnitude over the past few years (right?), what is the source of this new money that can be loaned, and where was this money prior to 1999?
Did our government print this extra money?
A related question: if the government is really printing all that extra money to finance the trade deficit, and the foreign banks are sending it back here by buying Tbonds/bills, how can the long end of the yield curve ever rise above the short end?
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