I pretty much agree with you all the way Rich. For a study on how the housing market performed in a substantially higher rate environment one can look back at the early 80’s. Sorry guys no 50% pullback.
Conversely people conveniently ignore the value of a nice low fixed rate mortgage when the money supply tightens up. Over the past 10 years we have seen (what I would guess) staggering numbers of loans converting to fixed rate vehicles. Given a few years of tightening the money supply these mortgages will be very well positioned. Yes there may be depreciation but for those with a fixed payment that was established in 2007-2017 dollars, they will be in decent shape.
I do agree with your point rich that low rates don’t justify insane valuations. However those who are locked into those low rates from purchases made in the past 10 years (IMO) will be able to weather any storm caused by depreciation.
It will be interesting to see what a rollover will look like in a high rate environment as opposed to a low rate environment like we had in 2006/7.
Finally as per the norm, most people are missing the point about buying a home. Waiting 5 or 6 years to purchase, which I believe is what we will need to see a marked depreciation means your 11 year old is now close to 17 and about the move out. Or your 5 year old is close to getting our of elementary school. The single person or couple who do not plan to have kids live a life that is not even close to young families with multiple kids. Different lifestyles demand a different approach to this problem.
