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Discussion: (5 comments)

  1. Here is what could and will go wrong. Everyone in the country that could refinance to a mortgage rate of 4% or lower has done so. Contrary to Bernanke’s rhetoric that “QE to Infinity” would lower mortgage rates, they have just risen to a six month high as the 10 Year Treasury rose 60 basis points from its 2012 low. If mortgage rates just rose to a modest 5% the housing market would come to a grinding halt as no one would trade a 3.5% mortgage for a 5% mortgage. As I’ve detailed earlier, there are 3.9 vacant housing units available for rent. Almost half of the new housing units under construction are apartments. The Wall Street shysters are converting millions of foreclosed homes into rental units. This avalanche of rental properties will depress rents and destroy the modeled ROI calculations of the brilliant Wall Street Ivy league MBAs. These lemmings will all attempt to exit their “investments” at the same time. The FHA is already broke. The mounting losses from their 3.5% down payment to future deadbeats program will force them to curtail this taxpayer financed debacle. There will be few first time home buyers, as young people saddled with a trillion dollars of student loan debt are incapable of buying a home.

    http://www.zerohedge.com/news/2013-02-25/guest-post-its-always-best-time-buy

    1. The Unknown One

      “If mortgage rates just rose to a modest 5% the housing market would come to a grinding halt ..”

      Bullcrap. I bought my current house in March of 2010 at 5.25%. I’m not suffering for it, either.

      Obviously refinancings would go down, but since, as your article said, “Everyone in the country that could refinance to a mortgage rate of 4% or lower has done so,” who cares? Home purchase activity depends more on job creation, population growth, household formation and the state of existing housing stock, not as much on interest rates.

      1. Obviously refinancings would go down, but since, as your article said, “Everyone in the country that could refinance to a mortgage rate of 4% or lower has done so,” who cares? Home purchase activity depends more on job creation, population growth, household formation and the state of existing housing stock, not as much on interest rates.

        You are missing the fact that activities and prices are set at the margin. If the rate goes up people will not be able to pay as much as they did for new homes. That means that prices would fall and many will wind up with homes that are less than the outstanding amount on their mortgages. The price drop will hurt those who have homes that are worth less.

  2. MacDaddyWatch

    New home sales up 15% (way above expectations), inventories at current selling rates plunge to 4.1 months and are down to the lowest level since 2005, spectacular affordability as far as the eye can see, 19 of 20 areas as measured by Case-Schiller showed higher prices with the NY area as the only looser.

    This is the real deal. The rest is hoopla.

  3. Housing collapse 2025 is in the early innings.

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