BobS
Stockstrader: Everything you say sounds on target, at least in theory. You may have been around in the 1970s and 1980s when those homeowners who had old fixed rate 30 year loans way below prevailing rates of inflation were “the smartest guys in the room”. If it was a VA rate at say, 5%, when everyone was getting a new loan at 12%, and said loan could be passed on to any buyer of the property, this actually boosted the value of the property considerably.
The inflationary scenario you portray looks entirely plausable; the only question I have is why aren’t long term rates higher now. Investors aren’t irrational (usually). Who would be crazy enough to buy a 30 year government bond today @ 5%, or lend on a 30 year mortgage @ 6%. Yet those are today’s rates.
I agree with your thesis, I just don’t yet see the market supporting it.
