Another worry is the fed funds rate vs the prime rate. Although the prime rate was in the 4 plus percent range, the fed funds rate was 1 percent. Money left in savings accounts did almost nothing. The 1 percent return forced money into the stock market and (you guessed it) housing. Money now has a safe haven at 5% just sitting in a World Savings account. The savings rates will continue to rise as the fed raises interest rates driving more investors out of the volatility of stocks and housing. Leading to a downward “explosion” in the housing market.
I have trouble not seeing a depression like decline in the general economy as housing declines. If borrowing against the house is not available as values decline, where does the money come from to fuel consumer spending?
It is so obvious, one wonders how it will be avoided?