[Rich Toscano]

Brian, that is a good explanation I think. Taking it a step further: maybe rising interest rates didn’t drop prices in the 80s because there wasn’t much forced selling, and so everything just kind of came to a standstill. But perhaps rising interest rates in an environment of forced selling would have very different results… ie, in that situation the rising rates could lead to lower purchase prices.

So I think we’ve identified why this time could be different — how a rate increase could lead to falling prices even though that hasn’t really happened previously. But I still don’t think that this is a given, because the govt can do a lot to halt the forced selling (as we’ve seen).

Rich

[Rich Toscano]

Brian, that is a good explanation I think. Taking it a step further: maybe rising interest rates didn’t drop prices in the 80s because there wasn’t much forced selling, and so everything just kind of came to a standstill. But perhaps rising interest rates in an environment of forced selling would have very different results… ie, in that situation the rising rates could lead to lower purchase prices.

So I think we’ve identified why this time could be different — how a rate increase could lead to falling prices even though that hasn’t really happened previously. But I still don’t think that this is a given, because the govt can do a lot to halt the forced selling (as we’ve seen).

Rich

[Rich Toscano]

Brian, that is a good explanation I think. Taking it a step further: maybe rising interest rates didn’t drop prices in the 80s because there wasn’t much forced selling, and so everything just kind of came to a standstill. But perhaps rising interest rates in an environment of forced selling would have very different results… ie, in that situation the rising rates could lead to lower purchase prices.

So I think we’ve identified why this time could be different — how a rate increase could lead to falling prices even though that hasn’t really happened previously. But I still don’t think that this is a given, because the govt can do a lot to halt the forced selling (as we’ve seen).

Rich

[Rich Toscano]

Brian, that is a good explanation I think. Taking it a step further: maybe rising interest rates didn’t drop prices in the 80s because there wasn’t much forced selling, and so everything just kind of came to a standstill. But perhaps rising interest rates in an environment of forced selling would have very different results… ie, in that situation the rising rates could lead to lower purchase prices.

So I think we’ve identified why this time could be different — how a rate increase could lead to falling prices even though that hasn’t really happened previously. But I still don’t think that this is a given, because the govt can do a lot to halt the forced selling (as we’ve seen).

Rich

[Rich Toscano]

I don’t think the relationship between rates going up and prices going down is so cut and dried. Look back at the early 80s – mortgage rates went well into the teens and home prices did not drop. Market activity shrieked to a halt, or so I’m told, but prices did not actually go down.

Generally speaking, there has been very little historical correlation between rates and housing expensiveness.

That said, a sufficiently violent rise in rates could certainly take down housing prices (especially given all the other factors in play). But I just don’t think it’s the done deal that a lot of people think (ie, “It’s ok if rates rise because prices will go down”).

Rich

[Rich Toscano]

I don’t think the relationship between rates going up and prices going down is so cut and dried. Look back at the early 80s – mortgage rates went well into the teens and home prices did not drop. Market activity shrieked to a halt, or so I’m told, but prices did not actually go down.

Generally speaking, there has been very little historical correlation between rates and housing expensiveness.

That said, a sufficiently violent rise in rates could certainly take down housing prices (especially given all the other factors in play). But I just don’t think it’s the done deal that a lot of people think (ie, “It’s ok if rates rise because prices will go down”).

Rich

[Rich Toscano]

I don’t think the relationship between rates going up and prices going down is so cut and dried. Look back at the early 80s – mortgage rates went well into the teens and home prices did not drop. Market activity shrieked to a halt, or so I’m told, but prices did not actually go down.

Generally speaking, there has been very little historical correlation between rates and housing expensiveness.

That said, a sufficiently violent rise in rates could certainly take down housing prices (especially given all the other factors in play). But I just don’t think it’s the done deal that a lot of people think (ie, “It’s ok if rates rise because prices will go down”).

Rich

[Rich Toscano]

I don’t think the relationship between rates going up and prices going down is so cut and dried. Look back at the early 80s – mortgage rates went well into the teens and home prices did not drop. Market activity shrieked to a halt, or so I’m told, but prices did not actually go down.

Generally speaking, there has been very little historical correlation between rates and housing expensiveness.

That said, a sufficiently violent rise in rates could certainly take down housing prices (especially given all the other factors in play). But I just don’t think it’s the done deal that a lot of people think (ie, “It’s ok if rates rise because prices will go down”).

Rich

[Rich Toscano]

I don’t think the relationship between rates going up and prices going down is so cut and dried. Look back at the early 80s – mortgage rates went well into the teens and home prices did not drop. Market activity shrieked to a halt, or so I’m told, but prices did not actually go down.

Generally speaking, there has been very little historical correlation between rates and housing expensiveness.

That said, a sufficiently violent rise in rates could certainly take down housing prices (especially given all the other factors in play). But I just don’t think it’s the done deal that a lot of people think (ie, “It’s ok if rates rise because prices will go down”).

Rich

[Rich Toscano]

[quote=scaredycat]Not sure. I ran it through google but it’s not a commonly used term….[/quote]

It was less about being particularly meaningful than fitting in well with the antiquated faux-Victorian language I employed a lot when I started the site (per the faq: http://piggington.com/frequently_asked_questions) IE, if it were commonly used in the modern era I wouldn’t have used it myself. As for the definition, it’s pretty much what it sounds like.

Rich

[Rich Toscano]

[quote=scaredycat]Not sure. I ran it through google but it’s not a commonly used term….[/quote]

It was less about being particularly meaningful than fitting in well with the antiquated faux-Victorian language I employed a lot when I started the site (per the faq: http://piggington.com/frequently_asked_questions) IE, if it were commonly used in the modern era I wouldn’t have used it myself. As for the definition, it’s pretty much what it sounds like.

Rich

[Rich Toscano]

[quote=scaredycat]Not sure. I ran it through google but it’s not a commonly used term….[/quote]

It was less about being particularly meaningful than fitting in well with the antiquated faux-Victorian language I employed a lot when I started the site (per the faq: http://piggington.com/frequently_asked_questions) IE, if it were commonly used in the modern era I wouldn’t have used it myself. As for the definition, it’s pretty much what it sounds like.

Rich

[Rich Toscano]

[quote=scaredycat]Not sure. I ran it through google but it’s not a commonly used term….[/quote]

It was less about being particularly meaningful than fitting in well with the antiquated faux-Victorian language I employed a lot when I started the site (per the faq: http://piggington.com/frequently_asked_questions) IE, if it were commonly used in the modern era I wouldn’t have used it myself. As for the definition, it’s pretty much what it sounds like.

Rich

[Rich Toscano]

[quote=scaredycat]Not sure. I ran it through google but it’s not a commonly used term….[/quote]

It was less about being particularly meaningful than fitting in well with the antiquated faux-Victorian language I employed a lot when I started the site (per the faq: http://piggington.com/frequently_asked_questions) IE, if it were commonly used in the modern era I wouldn’t have used it myself. As for the definition, it’s pretty much what it sounds like.

Rich

[Rich Toscano]

Yes MostlyLurk, you’ve pretty much nailed it — you have to do something with the capital with a rate of return that exceeds the mortgage rate. But my point is that that is exceedingly easy in a time of serious currency debasement. If there’s enough of that even the rate of return in a bank account could exceed the mortgage rate over that time period.

Rich

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