This article is very negative. Depending on how soon this stuff happens, this could have some more severe downward pressure on prices:
1. Higher down payments
2. Big reduction in FHA
3. Higher mortgage insurance FHA
4. Higher (possibly much higher) rates across the board
…wow.[/quote]
Why is this even a surprise? I think people on this board give too much credit to the FED and the governments in what they can do to influence the economy (as well as the housing price).
For all those who think that we have to speculate because FED forces us so, I think the end of that era (where they can create new demands when there is none) is near. I personally do not think the recent rise of inflation around the world is caused by the FED, rather it is a supplier side disruption caused by global warming (I have no opinion on whether global warming is caused by human being or not, but the current trend is undeniable) with its impact on the food price and the fragile world-wide political system under the threat of food-inflation (which helps to reduce other productions besides agriculture).
The FED and the governments has basically no tools to influence on a supply-side inflation despite claims that Volcker successfully tackled it previously. On the contrary, the political instability caused by the supply-side inflation is going to force many governments around the world to add unnessary inflation-curbing measures that would hurt the economy growth going forward.
We are headed for more downward pressures in growth and a rising inflation, another era of stagflation but not necessarily caused by the FED. In fact, with the record debt levels, there are little rooms for people in the power to maneuver. They can only wait for the higher price, the resulting recessions and the aging population to help reduce the demands to bring a new equilibrium, or new innovations in technology to improve the supply. JMHO.
And personally, I am still waiting for more price corrections in the SD housing market for me to jump in again.
