gut feeling

[Rich Toscano]

[quote=bearishgurl][quote=LuckyInOC]PS: I just realized the spell checker on this site does not understand ‘affordability’ – kind of ironic when most of the users do…[/quote]

There’s a spell-checker on this site??[/quote]

No… if there’s any spell checking taking place your browser is doing it.

[sreeb]

[quote=sdrealtor]sreeb
That is a kicker but its alot longer than you think. Not sure exactly how the saying goes but something like Markets can stay irrational far longer than you can stay liquid.

BB just sent out a balloon to expect very low interest rates for at least another year or two.[/quote]

If he can get away with it, he will leave them at zero forever. I agree, it will be delayed far longer than I expect and then occur faster than anyone believes possible.

I have been too early many times and it is always expensive, though perhaps not as expensive as being too late….

[sreeb]

[quote=sdrealtor]sreeb
That is a kicker but its alot longer than you think. Not sure exactly how the saying goes but something like Markets can stay irrational far longer than you can stay liquid.

BB just sent out a balloon to expect very low interest rates for at least another year or two.[/quote]

If he can get away with it, he will leave them at zero forever. I agree, it will be delayed far longer than I expect and then occur faster than anyone believes possible.

I have been too early many times and it is always expensive, though perhaps not as expensive as being too late….

[sreeb]

[quote=sdrealtor]sreeb
That is a kicker but its alot longer than you think. Not sure exactly how the saying goes but something like Markets can stay irrational far longer than you can stay liquid.

BB just sent out a balloon to expect very low interest rates for at least another year or two.[/quote]

If he can get away with it, he will leave them at zero forever. I agree, it will be delayed far longer than I expect and then occur faster than anyone believes possible.

I have been too early many times and it is always expensive, though perhaps not as expensive as being too late….

[sreeb]

[quote=sdrealtor]sreeb
That is a kicker but its alot longer than you think. Not sure exactly how the saying goes but something like Markets can stay irrational far longer than you can stay liquid.

BB just sent out a balloon to expect very low interest rates for at least another year or two.[/quote]

If he can get away with it, he will leave them at zero forever. I agree, it will be delayed far longer than I expect and then occur faster than anyone believes possible.

I have been too early many times and it is always expensive, though perhaps not as expensive as being too late….

[sreeb]

[quote=sdrealtor]sreeb
That is a kicker but its alot longer than you think. Not sure exactly how the saying goes but something like Markets can stay irrational far longer than you can stay liquid.

BB just sent out a balloon to expect very low interest rates for at least another year or two.[/quote]

If he can get away with it, he will leave them at zero forever. I agree, it will be delayed far longer than I expect and then occur faster than anyone believes possible.

I have been too early many times and it is always expensive, though perhaps not as expensive as being too late….

[CA renter]

[quote=davelj][quote=sreeb]

The kicker is how long they will be able to do that. If the Fed raises the borrowing rate for banks, they won’t be able to hold back inventory and the supply will balloon. [/quote]

I’m not following your logic here. What is the relationship between the “borrowing rate for banks” and inventory that is being held back?

[quote=sreeb]
If interest rates for buyers increase, demand will implode. [/quote]

What does history tell us about the relationship between interest rates, inflation (rents, specifically), and housing prices? (Not that history is always a good precedent, but it should be considered, yes?)[/quote]

I’m guessing sreeb is referring to the fact that the IR curve might flatten, and/or that money would become tighter and they would want to dispose of their REO inventory in anticipation of falling collateral value in order to minimize losses.

————–

As to the relationship between housing prices and interest rates, it looks like they track each other. It’s interesting to see that whenever we see a low spot in the interest rate chart, it precedes a rising trend in housing prices.

Conversely, you see interest rates spiking right before home prices begin to roll over (in general).

So, while it *appears* that housing prices are rising along with interest rates (and they have), I think that’s a result of the psychology of the market. It looks like the Fed sees the rising trend in house prices, and raises rates in order to head them off. A spike in rates does indeed look like it causes prices to roll over about a year or so later.

My guess is that housing prices lag interest rate moves because housing prices are “sticky” and it takes a while for buyers and sellers to adjust to the new numbers (just like today’s sellers think 2005 prices were “normal,” prices probably won’t change overnight).

Another thing to consider is that housing was specifically targeted during this credit bubble and people were able to get loans that consumed over 50% (!!!) of their pay. When you’ve hit the affordability ceiling on monthly payments, there’s no doubt that rising rates would affect housing prices. This is exactly why the Fed is holding rates down, IMHO.

Additionally, Baby Boomers were in their peak home buying years in the 1970s-2000s. I believe they they’ll be entering their peak selling years over the next couple of decades.

Home prices:

http://mysite.verizon.net/vzeqrguz/housingbubble/

Mortgage rates:

http://mortgage-x.com/trends.htm

——————-
edit: just saw your post, sreeb, after I posted mine.

[CA renter]

[quote=davelj][quote=sreeb]

The kicker is how long they will be able to do that. If the Fed raises the borrowing rate for banks, they won’t be able to hold back inventory and the supply will balloon. [/quote]

I’m not following your logic here. What is the relationship between the “borrowing rate for banks” and inventory that is being held back?

[quote=sreeb]
If interest rates for buyers increase, demand will implode. [/quote]

What does history tell us about the relationship between interest rates, inflation (rents, specifically), and housing prices? (Not that history is always a good precedent, but it should be considered, yes?)[/quote]

I’m guessing sreeb is referring to the fact that the IR curve might flatten, and/or that money would become tighter and they would want to dispose of their REO inventory in anticipation of falling collateral value in order to minimize losses.

————–

As to the relationship between housing prices and interest rates, it looks like they track each other. It’s interesting to see that whenever we see a low spot in the interest rate chart, it precedes a rising trend in housing prices.

Conversely, you see interest rates spiking right before home prices begin to roll over (in general).

So, while it *appears* that housing prices are rising along with interest rates (and they have), I think that’s a result of the psychology of the market. It looks like the Fed sees the rising trend in house prices, and raises rates in order to head them off. A spike in rates does indeed look like it causes prices to roll over about a year or so later.

My guess is that housing prices lag interest rate moves because housing prices are “sticky” and it takes a while for buyers and sellers to adjust to the new numbers (just like today’s sellers think 2005 prices were “normal,” prices probably won’t change overnight).

Another thing to consider is that housing was specifically targeted during this credit bubble and people were able to get loans that consumed over 50% (!!!) of their pay. When you’ve hit the affordability ceiling on monthly payments, there’s no doubt that rising rates would affect housing prices. This is exactly why the Fed is holding rates down, IMHO.

Additionally, Baby Boomers were in their peak home buying years in the 1970s-2000s. I believe they they’ll be entering their peak selling years over the next couple of decades.

Home prices:

http://mysite.verizon.net/vzeqrguz/housingbubble/

Mortgage rates:

http://mortgage-x.com/trends.htm

——————-
edit: just saw your post, sreeb, after I posted mine.

[CA renter]

[quote=davelj][quote=sreeb]

The kicker is how long they will be able to do that. If the Fed raises the borrowing rate for banks, they won’t be able to hold back inventory and the supply will balloon. [/quote]

I’m not following your logic here. What is the relationship between the “borrowing rate for banks” and inventory that is being held back?

[quote=sreeb]
If interest rates for buyers increase, demand will implode. [/quote]

What does history tell us about the relationship between interest rates, inflation (rents, specifically), and housing prices? (Not that history is always a good precedent, but it should be considered, yes?)[/quote]

I’m guessing sreeb is referring to the fact that the IR curve might flatten, and/or that money would become tighter and they would want to dispose of their REO inventory in anticipation of falling collateral value in order to minimize losses.

————–

As to the relationship between housing prices and interest rates, it looks like they track each other. It’s interesting to see that whenever we see a low spot in the interest rate chart, it precedes a rising trend in housing prices.

Conversely, you see interest rates spiking right before home prices begin to roll over (in general).

So, while it *appears* that housing prices are rising along with interest rates (and they have), I think that’s a result of the psychology of the market. It looks like the Fed sees the rising trend in house prices, and raises rates in order to head them off. A spike in rates does indeed look like it causes prices to roll over about a year or so later.

My guess is that housing prices lag interest rate moves because housing prices are “sticky” and it takes a while for buyers and sellers to adjust to the new numbers (just like today’s sellers think 2005 prices were “normal,” prices probably won’t change overnight).

Another thing to consider is that housing was specifically targeted during this credit bubble and people were able to get loans that consumed over 50% (!!!) of their pay. When you’ve hit the affordability ceiling on monthly payments, there’s no doubt that rising rates would affect housing prices. This is exactly why the Fed is holding rates down, IMHO.

Additionally, Baby Boomers were in their peak home buying years in the 1970s-2000s. I believe they they’ll be entering their peak selling years over the next couple of decades.

Home prices:

http://mysite.verizon.net/vzeqrguz/housingbubble/

Mortgage rates:

http://mortgage-x.com/trends.htm

——————-
edit: just saw your post, sreeb, after I posted mine.

[CA renter]

[quote=davelj][quote=sreeb]

The kicker is how long they will be able to do that. If the Fed raises the borrowing rate for banks, they won’t be able to hold back inventory and the supply will balloon. [/quote]

I’m not following your logic here. What is the relationship between the “borrowing rate for banks” and inventory that is being held back?

[quote=sreeb]
If interest rates for buyers increase, demand will implode. [/quote]

What does history tell us about the relationship between interest rates, inflation (rents, specifically), and housing prices? (Not that history is always a good precedent, but it should be considered, yes?)[/quote]

I’m guessing sreeb is referring to the fact that the IR curve might flatten, and/or that money would become tighter and they would want to dispose of their REO inventory in anticipation of falling collateral value in order to minimize losses.

————–

As to the relationship between housing prices and interest rates, it looks like they track each other. It’s interesting to see that whenever we see a low spot in the interest rate chart, it precedes a rising trend in housing prices.

Conversely, you see interest rates spiking right before home prices begin to roll over (in general).

So, while it *appears* that housing prices are rising along with interest rates (and they have), I think that’s a result of the psychology of the market. It looks like the Fed sees the rising trend in house prices, and raises rates in order to head them off. A spike in rates does indeed look like it causes prices to roll over about a year or so later.

My guess is that housing prices lag interest rate moves because housing prices are “sticky” and it takes a while for buyers and sellers to adjust to the new numbers (just like today’s sellers think 2005 prices were “normal,” prices probably won’t change overnight).

Another thing to consider is that housing was specifically targeted during this credit bubble and people were able to get loans that consumed over 50% (!!!) of their pay. When you’ve hit the affordability ceiling on monthly payments, there’s no doubt that rising rates would affect housing prices. This is exactly why the Fed is holding rates down, IMHO.

Additionally, Baby Boomers were in their peak home buying years in the 1970s-2000s. I believe they they’ll be entering their peak selling years over the next couple of decades.

Home prices:

http://mysite.verizon.net/vzeqrguz/housingbubble/

Mortgage rates:

http://mortgage-x.com/trends.htm

——————-
edit: just saw your post, sreeb, after I posted mine.

[CA renter]

[quote=davelj][quote=sreeb]

The kicker is how long they will be able to do that. If the Fed raises the borrowing rate for banks, they won’t be able to hold back inventory and the supply will balloon. [/quote]

I’m not following your logic here. What is the relationship between the “borrowing rate for banks” and inventory that is being held back?

[quote=sreeb]
If interest rates for buyers increase, demand will implode. [/quote]

What does history tell us about the relationship between interest rates, inflation (rents, specifically), and housing prices? (Not that history is always a good precedent, but it should be considered, yes?)[/quote]

I’m guessing sreeb is referring to the fact that the IR curve might flatten, and/or that money would become tighter and they would want to dispose of their REO inventory in anticipation of falling collateral value in order to minimize losses.

————–

As to the relationship between housing prices and interest rates, it looks like they track each other. It’s interesting to see that whenever we see a low spot in the interest rate chart, it precedes a rising trend in housing prices.

Conversely, you see interest rates spiking right before home prices begin to roll over (in general).

So, while it *appears* that housing prices are rising along with interest rates (and they have), I think that’s a result of the psychology of the market. It looks like the Fed sees the rising trend in house prices, and raises rates in order to head them off. A spike in rates does indeed look like it causes prices to roll over about a year or so later.

My guess is that housing prices lag interest rate moves because housing prices are “sticky” and it takes a while for buyers and sellers to adjust to the new numbers (just like today’s sellers think 2005 prices were “normal,” prices probably won’t change overnight).

Another thing to consider is that housing was specifically targeted during this credit bubble and people were able to get loans that consumed over 50% (!!!) of their pay. When you’ve hit the affordability ceiling on monthly payments, there’s no doubt that rising rates would affect housing prices. This is exactly why the Fed is holding rates down, IMHO.

Additionally, Baby Boomers were in their peak home buying years in the 1970s-2000s. I believe they they’ll be entering their peak selling years over the next couple of decades.

Home prices:

http://mysite.verizon.net/vzeqrguz/housingbubble/

Mortgage rates:

http://mortgage-x.com/trends.htm

——————-
edit: just saw your post, sreeb, after I posted mine.

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