[quote=CA renter]
But in the 70s and 80s, there was wage inflation, and the Baby Boomers were in their peak buying years. They were also more likely to have more stable jobs and healthcare/pension plans.
People today have to factor in job instability (making it less likely they can “hold on” through a downturn) and the increased need for savings for retirement and health problems.
I’m not sure we’re seeing any wage inflation in the near term, or do you think I’m missing something?
Also, if rates weren’t important, why is the govt willing to destroy our currency in order to get interest rates down to “save the housing market”?
[/quote]
I never said rates weren’t important right now, which is why I said, “Don’t get me wrong, I think it’s important to have sub-6% mortgage rates for the next 12-18 months as we clear out most of the foreclosure detritus…” So, again, I think rates are important right now because the market is in disequilibrium and the way to help correct that is through low rates. But a couple of years down the road when most of the “must sell” inventory is cleared out, rates won’t matter as much. Not irrelevant, mind you, but just not as important. But that’s a ways off judging by all the inventory out there.
Where wage inflation is concerned, I’m not seeing it either. Right now. But I assume that we’re going to see some positive inflation a few years down the road – wages, rents, etc. If we don’t, then rates aren’t going to climb that much… and it won’t be an issue where buying a house is concerned.
