I wouldn’t focus so much on the home prices as the inventory numbers. As long as inventory is high and growing we will not see a price increase but a price decline. You will know when we are getting close to the bottom when the inventory begins to get cleared out. But don’t think once we hit the bottom we will see a reversal straight back up. Housing prices will stay low for years. All the things that fueled the double digit price gains of the last boom are gone.
As for interest rates, if they continue to go higher and with financing more difficult it will only put more downward pressure on prices. Just remember what got us here in the first place, low interest rates and creative financing. We already know the creative financing element is now gone so if the interest rate component also gets negative, will just add more fuel to the downward pressure. Keep your powder dry.
