Will Real Estate Return to its "Normal" 2005/2006 Levels

2 posts / 0 new
Last post
Smaulgld
Smaulgld's picture
Offline
Joined: 06/24/2013
Hat Tips: 50
Posts: 287
Will Real Estate Return to its "Normal" 2005/2006 Levels

Smaulgld

The mind is its own place, and in itself can make a heaven of hell, a hell of heaven..”
― John Milton, Paradise Lost

As the real estate market gained steam earlier this year, a common anti bubble meme emerged- “this ain’t no bubble, home prices aren’t at their 2005-2006 levels”.

Now that interest rates are rising, the real estate market cheerleaders are at it again with a new meme:”interest rates are still lower now then when they were in 2005-2006″

Inherent in both these statements is the wishful thinking that real estate can continue to head higher because prices and interest rates are lower today than they were back in 2005/2006.

The 2005/2006 real estate peak isn’t the benchmark for which real estate must return.

The 2005-2006 peak in real estate was a fantasy bubble land mountain top driven by: cheap credit, lax lending standards, excessive issuance of AAA rated mortgage backed securities (MBS’s) that in reality were junk, and predatory lending.

The current housing bubblet is not driven by any of the above factors. It is driven by one factor

 
Edited by admin on 11/08/2014 - 06:01

__________________

http://www.smaulgld.com

Smaulgld
Smaulgld's picture
Offline
Joined: 06/24/2013
Hat Tips: 50
Posts: 287
here is the counter argument from Business insider

a constant cheerleader for QE and the "recovery" http://www.businessinsider.com/impact-of-rising-mortgage-rates-on-housing-2013-7

__________________

http://www.smaulgld.com

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Topic locked
Syndicate contentComments for "Will Real Estate Return to its "Normal" 2005/2006 Levels"