[quote=DWCAP]Access to money is a much much better measure to cause price declines. If the FHA increased their costs/downs and/or the GSE’s went back to the pre-crisis limits, then you would see price declines following demand drying up. (That is why you will never see that.) Marginal changes in costs of the money, when historicallly very low, wont do much.[/quote]
This is very true, but there is an interplay between rates and availability of money, all else being equal.
It’s not a coincidence that we’ve seen lower rates and an increase in available credit over the past few decades — not to mention a significant increase in asset prices. They are closely related, IMHO.
What we don’t know is how long this low rate/excess credit/high asset price environment can last.
