San Diego Housing Market News and Analysis
Inflation in 2017 so far: 0.0%
User Forum Topic
Submitted by gzz on September 3, 2017 - 12:38pm
This supports what I have been saying here for a while, that interest rates in the USA are anomalously high compared to other rich developed countries.
The most likely course of rates in the next few years is a bumpy and gradual decrease.
This means, for housing:
(1) payments for new buyers do not go up, even as prices go up
(2) current owners can refi at even lower rates, further decreasing the already low incentive to ever sell
(3) the return on bonds for new capital, one of the major alternative investments to real estate, will go even lower*
*(falling rates of course increase the value of existing bonds, so for bond buyers who do not hold to maturity, bonds will also be a good investment)
(4) income growth has been faster than inflation, and the general deflation in physical and digital goods leaves more money for scarce positional goods, specifically more money for both rent and buying residential real estate
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