[quote=gzz]“ What I am curious about is how a bank would fund a mortgage at 6% when inflation is at 9%.”
They borrow at 0% in checking and 3% in savings accounts, loan at 6%.
There’s no human right to get a return on your savings above inflation. China has had inflation that is double savings account rates for about 30 years now.
All the recent drama is making people forget the long term worldwide trend is aging demographics and a glut of savings.[/quote]
Talking about demographics, millenials have started their house buying later the previous generations, so a huge chunk of them are getting to their mid 30s, so they’ll be looking to buy. It’s still extremely difficult and costly to build here in CA, so simple econ 101 (supply vs demand) tells me either they can’t buy here, or they’ll have to reduce their expenditure somewhere else to buy here. Or, they can choose to rent here, which will continue to drive up rent as their move out of their parents’ homes.
There are more millenials than baby boomers. Also, another fact to consider is, people are living longer and they don’t downsize like the used to. So, the supply will continue to be constraint, unless those baby boomers sell. Something tells me, they are sitting on a paid off home with very low tax rate. So, economic crash wouldn’t matter to them.
