Patient Renter: If I had to guess, I would bet on a major credit contraction being the culprit that kicks the legs out from under the table.
The Fed is doing their level best to ignore core inflation and pricing pressure, because they know full well that if they increase interest rates it will have a very negative impact on the economy.
I also think the loose underwriting standards are already on the way out. There has been much reporting in the MSM about the elimination of zero doc loans in certain sectors, and how credit is tightening up. Given that the MSM has long been a mouthpiece for the NAR and RE propaganda machines, this represents a major change of pace. There is still much of the Pollyanna reportage featuring “Baghdad Bob”-type pronouncements by Lereah, Yun and Co (“the market has hit bottom; sales will come back up, etc”), but a more sanguine level of realism is now present as well.
You’re right about the speculation, of course, but it’s fun to try and parse the data and divine the ultimate outcome of this mess.