[quote=spdrun]CA Renter: I’ll believe it’s R.E. Bubble 2.0 when people are buying for monthly payments that exceed rents for the same property. Right now, it’s just investors chasing dividends and making money off the backs of the bum-losers who got themselves foreclosed on.[/quote]
What do you think will happen when rates rise? If wages don’t rise, the payments will rise beyond what people can afford (and many people can’t even afford what they’re paying now). Since rates are at such historic lows, it won’t take much to push monthly payments beyond what most of today’s (financed) buyers will be able to afford. Just going back to “normal” rates of 6-7% will make today’s prices totally unaffordable to those who are paying 30%+ of their monthly *gross* income on housing payments.
Not only that, but a 5% return on rentals won’t look so good if an investor can buy Treasuries paying 4%++ without all the hassles and expenses of managing a rental. All those cash-rich “investors” will flee the market if interest rates ever normalize, IMHO.
