[quote=livinincali]
The biggest unknown right now is will rates move higher, how much will they move higher, and what potential effect does that have on the price of homes. In the worst case scenario I could see home prices significantly lower than they are now.[/quote]
I sorta see the opposite actually. Remember, we live in a global economy now. Watching Bloomberg, they are saying that people are buying blocks of homes in favored big town areas (like NY, LA, SF) from China with cash. This makes it hard to see prices selling for significantly less since unlike a stock, selling a house is less easy (move, less willing to take a loss, etc…). The recent buyers in the past 5 years were also very well financially qualified so those hands aren’t weak hands. They all have equity.
Also, every single developed nation has negative interest rates. Unlike 40-50 years ago, people nowadays buy international assets much more, especially in the US and there are insane levels of wealth out there.
Since international rates are negative, foreign people are more likely to BUY more US bonds. This pushes the yield even lower since the same equivalent bond in their country is like 2-3% lower…
Inflation is not a worry, everyone is concerned with deflation in Europe. I really think Feds won’t raise rates materially (to 75 basis points+) till 2020 or later…
