I wouldn’t say I’m feeling particularly bullish but I must say I’m starting to question the depth of future price declines in the areas & prices I’m looking (East CV, RB West, 56 corridor, etc @ 600-800k).
I absolutely don’t see prices moving upwards for years; not until there is wage inflation and that’s in the distant future.
However, the infamous ARM recast graph is starting to concern me less and less. As an example, I have an IO loan that adjusts soon and at today’s index it’s going to drop nearly 1.5% to the 3.% range. I’m actually looking forward to the recast at that rate despite the additional principle payments which are negligible.
If you believe the world governments are going to keep rates low until such time as wage inflation kicks in (which I think they are going to have to do) then a large portion of that second wave of ARM adjustments may not be as bad as it looks.
In that scenario I can see several years of flat/slowly declining prices with inflation eating away.
So I think everything goes back to the job market. That’s really the key to everything.
Assuming the lady and I are still employed towards the end of this year, I suspect we’ll end up buying assuming we can get something that’s taken it’s fair share of price declines. Especially if rates are still in the 5.x range which I suspect they will be.
