Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: JBTFD who wrote (94497)	2/21/2009 5:16:27 PM
From: Broken_Clock	Read Replies (1) of 116555

When I hear that someone is posting longer term median house prices against median income and ignoring the effect of interest rate === May be to some extent, but the lowering of rates was an illusional too. Most of the really low rates were made on some type of ARM. Very few would lock in on 30 yr. fixed at 5% when they could get a teaser at 2 or 3% IO(I even heard of 1% ARM's!). That style of loan really drove the RE market up in 2005 and over the cliff. That is artificial because it's not sustainable. A better comparison would be to gauge the climb compared to average 30 yr fixed rates in different time periods using a basket of similar homes. The size of homes has also increased pretty dramatically, overall, IMO.

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