I agree with your assessment. I almost bought a house last October… I wanted to offer 6.4% below asking price, but the listing agent essentially yelled at me and said that was too low, so I never wrote an offer. I should have written one, haggled and maybe split the difference, but I didn’t, so I’m still renting as I’ve had since I sold my house in the summer of 2005.

Anyways, I think that mortgage rates hit bottom in October:
http://www.freddiemac.com/pmms/pmms30.htm

People are slowly catching up with what you wrote, which explains the fact that nominal mortgage interest rates will continue to go up, regardless of how much money the Fed prints. 30-yr fixed rates today have an APR of slightly over 5.0%. Not as low as two months ago, but may still be a steal.

I agree with your assessment. I almost bought a house last October… I wanted to offer 6.4% below asking price, but the listing agent essentially yelled at me and said that was too low, so I never wrote an offer. I should have written one, haggled and maybe split the difference, but I didn’t, so I’m still renting as I’ve had since I sold my house in the summer of 2005.

Anyways, I think that mortgage rates hit bottom in October:
http://www.freddiemac.com/pmms/pmms30.htm

People are slowly catching up with what you wrote, which explains the fact that nominal mortgage interest rates will continue to go up, regardless of how much money the Fed prints. 30-yr fixed rates today have an APR of slightly over 5.0%. Not as low as two months ago, but may still be a steal.

I agree with your assessment. I almost bought a house last October… I wanted to offer 6.4% below asking price, but the listing agent essentially yelled at me and said that was too low, so I never wrote an offer. I should have written one, haggled and maybe split the difference, but I didn’t, so I’m still renting as I’ve had since I sold my house in the summer of 2005.

Anyways, I think that mortgage rates hit bottom in October:
http://www.freddiemac.com/pmms/pmms30.htm

People are slowly catching up with what you wrote, which explains the fact that nominal mortgage interest rates will continue to go up, regardless of how much money the Fed prints. 30-yr fixed rates today have an APR of slightly over 5.0%. Not as low as two months ago, but may still be a steal.

Hmmm, a little fuzzy on who it was, but I think it was Roubini that wrote about this predicament, and there was a policy piece where the IMF put together a piece that a global power was going to need to leverage up on debt to fuel global growth as well as its own, and the way to get out of the debt was to take down their currency, all the while inflating their way out of it. I wish I could remember where I read this piece, but your thoughts have been debated by world class economists and I dont’ disagree.

Someone help me out here on the IMF piece….

Hmmm, a little fuzzy on who it was, but I think it was Roubini that wrote about this predicament, and there was a policy piece where the IMF put together a piece that a global power was going to need to leverage up on debt to fuel global growth as well as its own, and the way to get out of the debt was to take down their currency, all the while inflating their way out of it. I wish I could remember where I read this piece, but your thoughts have been debated by world class economists and I dont’ disagree.

Someone help me out here on the IMF piece….

I also think that your ideas have merit. I don’t think anyone disagrees about upcoming inflation and much higher interest rates. I think the biggest question is how long they can keep the charade going. I believe the can keep it going for quite awhile and an external catalyst will be the event that cracks it open.

The question is will it be a year, 2 years, 5 years? Hard to say.

Given the rates of return on any investment and the potential for rampant rates, it is very hard to argue with logic that says you can have a tangible asset using borrowed money at a rate that will be phenomally low compared to rates in the future.

The depreciation question should not be ignored though. How much will property depreciate AT current interest rate levels. Then how much further will it depreciate when the rates skyrocket? Tough call isnt it? If rates go as high as I think they will, then I think your logic is correct.

Prediction, look for more federal intervention into the housing market this year in the form of stimulus.

I also think that your ideas have merit. I don’t think anyone disagrees about upcoming inflation and much higher interest rates. I think the biggest question is how long they can keep the charade going. I believe the can keep it going for quite awhile and an external catalyst will be the event that cracks it open.

The question is will it be a year, 2 years, 5 years? Hard to say.

Given the rates of return on any investment and the potential for rampant rates, it is very hard to argue with logic that says you can have a tangible asset using borrowed money at a rate that will be phenomally low compared to rates in the future.

The depreciation question should not be ignored though. How much will property depreciate AT current interest rate levels. Then how much further will it depreciate when the rates skyrocket? Tough call isnt it? If rates go as high as I think they will, then I think your logic is correct.

Prediction, look for more federal intervention into the housing market this year in the form of stimulus.