I doubt we have seen the top in home foreclosures. I think it's just the tip of the iceberg. The again I been wrong a lot recently, so many everything will be roses.
Huh? Of course it's related to inflation. The point I'm making is higher mortgage rates will cause more foreclosures. Pretty much all of California and South Florida are on I/O ARMs. Many are just barely making payments. A 1 or 2% increase in their rate should push them over the limit. Add that with declining home values and it's a recipe for disaster. Although many will disagree with me, higher rates make buying a less attractive option. Therefore higher rates helps to reduce home values. If prices are already falling since the bubble has popped, higher rates could help them fall faster. Regardless, I don't think this is the bottom in housing. When everything is said and done though, there should be some good deals out there.
I'm in real estate and I am watching the market anticipate a rate hike. Every lender in my area was 6.00 or below now you can't find anything below 6.5. It'll be very interesting to see what happens
You make a valid point. Residential real estate is driven by two things.......demand/supply AND affordability. If RE was purchased like you buy groceries, rates wouldn't matter. But nearly all houses are purchsed with a combination of debt and equity. The debt side being the biggest portion. And since most people purchase RE on terms (how much down, how much a month), the rates and terms matter and can drive price up/down, irrespective of demand/supply.
A top in FORECLOSURES... Thats at least 18-24 months away, wont find a bottom in housing until 2010-2011, then everything will go sideways for who knows how many years then finally by 2013-2014 prices should start to crawl back higher. MANY MANY years for this bubble to unwind, this kind of bubble doesnt fix itself in a 1-2 years, it takes many years. Near me on single block there are 5 houses for sale.....No one is buying...