Home prices have really gone up the last few months.

IMO this is a bounce. The investors aren't going to get great returns, some will get creamed if they stick around for too long.

 

Investors are reaching for yield in junk bonds and rental.

That should end well.....

 

One may take the opposite view that if the Fed is successful in creating significant inflation, then one should stick around long enough to benefit from that and the absurdly low fixed interest rates.
Trying to make money short term from real estate is difficult due to the high transaction costs. Despite the internet, brokerage commissions have not materially changed compared to pre-internet era.
An ultimate rise in interest rates would be bad for housing prices, but from a higher level.

 

Explain that one please.

 

it will probably be about six years until rates normalize, and that will be around 4%, and if we are still sitting on this much debt there will be hell to pay

better to borrow now,

 

Totally. The real strength of the market -- the middle class -- is not there, forbidden by restrictive credit requirements.


Housing is not a market. It's a buyers club.

 

oh shit man, that's just how my older sister use to beat me on a Sunday afternoon at Monopoly. By the time it was all said and done, she owned Park Place and Boardwalk, and all I owned was a few railroads and utilities.

 

There is still one hell of a shadow inventory. Banks, HUD (FHA), and VA are still holding on to a huge inventory of foreclosed houses. And don't be fooled by occasional statistics showing fewer foreclosures; banks are participating with their underwater Seller-mortgagors in helping them sell via Short Sales, a form of principal reduction, lessening the banks' inflow of foreclosed homes.


Shadow inventory 2: Lots of frustrated, would-be sellers are still holding on until the market improves sufficiently to get them less under water. They, too, will become foreclosed upon eventually or do Short Sales if their Banks will participate.

The younger generation don't want to buy, especially those that need to remain mobile to find work.

 

I hear ya, there are a lot of houses that need to be sold, and they need to be sold at any price, just to get them off the banks books

 

This is interesting to me because I wrote somewhere on this site, way back in the early days, that gov't would end up being the largest property owner in the US.

Mouths of babes and all.