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Ok, its a possibility.... and what that means is that it will become harder and harder to afford a house..... basically thats what happened in the country in the past 7-8 years.... and it was possible because inventory was less and there were bidding wars.... and once we are in that situation, it will happen again, but there is one event that needs to occur before we get there.... and that is the massive inventory in the market (increasing by the day) has to go back to the levels we had 7-8 years back.... and every interest point increase is going to delay that process more and more....
After the price correction in 1989, it took 9 years for the house prices to get back to the 1989 levels... and this is not accounting for inflation, so I'm talking absolute prices !! yikes.
I believe it will become harder and harder to afford a house, just like it was prior to the boom.
Perhaps, but how much less?
A drop of 5% would not cover the loss if interest rates increase.
Saying "It will cost less in the spring" really isn't answering the question.
I don't have time to rehash the good advice others have given on the subject. I will simply refer the OP (and yourself) to reread, for example:
How can housing prices and interest rates go way up??
While interest rates have an impact on the price of homes, it is not the only factor.
When inflation kicks in the cost of everything goes up, especially hard assets such as real estate. At the same time, the government raises interest rates both voluntarily (in order to try to take some money out of the system to ease inflation) and involuntarily (because they have to pay higher rates to attract investors). This makes the cost of money higher for all financial products, including mortgages.
So, in severe inflationary periods, you have both housing prices and interest rates going up. This happened before in the late 1980s.
Problem with your theory is that the money is not actually circulating in the country's economic system because the banks who received the TARP funds are doing all they can to avoid lending it to consumers, but instead are hoarding it for themselves. Why just yesterday several people with good credit posted on here that their banks were cutting the limits on their credit cards and HELOCs for no good reason.
I was not talking about TARP, as eventually that will be paid back. I was refering to the "stimulous" package as well as the multi-trillion dollar budgets that we are going to have for the next two or three years.
Could the objectivity of your opinions be shaded by the fact that you are seeking to SELL a home in the near future?
I'm stating my opinion, just like everyone else. Questioning my objectivity is a cop out. I'm reading many posts that lack objectivity. This is the internet afterall.
I've given good advice myself, thank you very much.
Oh, and is there a reason you are directing me back to my own posts?
I was not talking about TARP, as eventually that will be paid back. I was refering to the "stimulous" package as well as the multi-trillion dollar budgets that we are going to have for the next two or three years.
I still don't see a case for hyper-inflation within 3 years, especially with the rising unemployment rate (which hurts the economy because consumers have less money to spend if they aren't working and 70% of our economy is based on consumer spending). Add to that the inability of even good credit risks to obtain credit these days. This stimulus package is also smaller than the last one under Bush, so nothing outstanding there. Federal budgets have been in the trillions since as far back as the mid-90s. As you can see below, Obama's first budget submission is not outrageously higher than the last one Bush submitted. Obama is not spending a significant amount more than Bush has done so why should it come to hyper-inflation in 3 years because of what Obama is doing?
2010 United States federal budget - $3.60 trillion (submitted 2009 by President Obama)
2009 United States federal budget - $3.10 trillion (submitted 2008 by President Bush)
2008 United States federal budget - $2.90 trillion (submitted 2007 by President Bush)
2007 United States federal budget - $2.77 trillion (submitted 2006 by President Bush)
2006 United States federal budget - $2.7 trillion (submitted 2005 by President Bush)
I'm stating my opinion, just like everyone else. Questioning my objectivity is a cop out. I'm reading many posts that lack objectivity. This is the internet afterall.
I've given good advice myself, thank you very much.
Oh, and is there a reason you are directing me back to my own posts?
Not a cop out, but just wondering if you are mixing in some wishful thinking.
Of course you've given good advice on CD!
The posts I linked are not yours, but are from dman, zulu and seren.
I still don't see a case for hyper-inflation within 3 years, especially with the rising unemployment rate (which hurts the economy because consumers have less money to spend if they aren't working and 70% of our economy is based on consumer spending). Add to that the inability of even good credit risks to obtain credit these days. This stimulus package is also smaller than the last one under Bush, so nothing outstanding there. Federal budgets have been in the trillions since as far back as the mid-90s. As you can see below, Obama's first budget submission is not outrageously higher than the last one Bush submitted. Obama is not spending a significant amount more than Bush has done so why should it come to hyper-inflation in 3 years because of what Obama is doing?
2010 United States federal budget - $3.60 trillion (submitted 2009 by President Obama)
2009 United States federal budget - $3.10 trillion (submitted 2008 by President Bush)
2008 United States federal budget - $2.90 trillion (submitted 2007 by President Bush)
2007 United States federal budget - $2.77 trillion (submitted 2006 by President Bush)
2006 United States federal budget - $2.7 trillion (submitted 2005 by President Bush)
This is not a Bush v. Obama thing. (I wish that people would let it go already and move on) You simply cannot sustain multi-trillion dollar government spending without it leading to inflation. I think you are also leaving out the $787 billion economic stimulous package signed into law in February, which will probably take a year or two to work its way into the economy.
Unemployment is not going to go up forever. Nor will the current credit situation last forever.
Again, just my opinion. I think we are in for a repeat of the late 1980's: inflation leading to increased housing prices along with increase interest rates.
ok we got side tracked a little there....
As we all know even consumers are holding up spending by hoarding onto cash in their banks, taking money out of 401k etc.
What the govt is trying to do it that eventually weaken the dollar (also known as inflation) so that people will put that into some hard assets like gold, land houses etc.... thats their plan of action....
The reason the dollar is still strong is because the entire world is having a ball with their own bailouts !!
It will be interesting to see how all that pans out in the future.
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