Mortgage rates continue to be very close to their all-time lows. Low mortgage rates plus lower home prices plus higher real incomes add up to make housing much more affordable—according to the National Assoc. of Realtors' index of affordability shown here—than at any time in the past 20 years (with the exception of early last year, when mortgage rates were briefly lower than they are today).
low rates mean they can only go higher, which prob means lower or stagnant house prices. homes are not an investment, they are a consumption. thinking otherwise has led this country to great crises.
ReplyDeleteHousing is rebounding, building steam now. Probably no glory days ahead, but appreciation is possible.
ReplyDeleteThink about it: At one point, USA freight car loadings were down 33 percent from peak. If that goes back to norm, then there has to be upside in other sectors.
setptizoniom: Rates will rise when and if the economy strengthens or is perceived to be strengthening. Since higher rates will be caused by stronger growth, they will not be the cause of slower growth. Rates would have to climb an awful lot, and the Fed would have to tighten an awful lot, before rates became a threat to growth. That's years down the road.
ReplyDeletecould rates rise even without improvement? an currency crises?
ReplyDeleteRates have closely followed the improving perception of the economy's health for the past year. If the economy were to stop improving on the margin, I have difficulty seeing how Treasury yields would rise further. Perhaps a really ugly stagflation or recession+inflation environment could do it, and that would probably include a dollar collapse.
ReplyDeletei admire you unflagging optimism. you are clearly well informed and a real thinker.
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