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Old 11-28-2012, 11:37 AM
 
Location: Lafayette, CA
2,518 posts, read 4,012,365 times
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Quote:
Originally Posted by CAVA1990 View Post
Isn't it more lack of credit demand that's keeping rates low?
I definitely think that's part of it, but I think the bigger motivator is that Bernanke/Obama think that lower rates will help underwater homeowners get above water through loan mods. These underwater owners are still a huge drag on the economy, and Obama's policies have always been "keep the owner in the home" instead of letting the free market run its course.

Also, let me rephrase my previous statement about rates (since none of these factors operate within a vacuum). Cheap rates AND artificially low inventory since banks are letting debtors squat for 1-3 years depending in which state you live in. So we're seeing higher transaction prices, but at the cost of transaction volume (which is why Shiller thinks this supposed bull rally is not really a recovery).
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