Hi Jay - For a housing price collapse, mortgage rates would have to move up to above 6.75%, not just move up half a point after the rates have dropped over a point in the last 9 months.
Here in the Valley, single family residential pricess seem to be dropping about 5-6 % per year, with occasional pauses. On the outskirts of the Valley, I would expect there would be a little more decline, maybe 10%.
Rest of the US is very mixed, with the East and West Coasts ahving the biggest drops.
The Re-fis will slow much quicker, but won't go away. The tax cuts will take up some of that slack until more hiring occurs.
Also, many of the re-fis have resulted in lower montly mortagage payments, so there is an ongoing benefit of additional disposable income.
My working thesis is the meltdown doesn't happen this time -maybe starting late 2004 or later. Next time the FED will have very few bullets, debt will not have come down enough, the Federal defict will begin to seriously crowd out private investment, etc.
I expect a moderate boomlet - in the future, it maybe seen as an "echo" of last boom....
I would expect a big rotation from Tech to ? some other category, mostly likely NOT financials, maybe natural resources. |
