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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: GraceZ who wrote (1122)	12/6/2001 2:35:48 PM
From: J. P.	Read Replies (2) \| Respond to of 306849

Are you saying that the asking price for a house with mortgage rates at 6.5% is the same with mortgage rates at 7.5%. Wouldn't that make the monthly payments higher and deter would be buyers? I really don't know the answer, just asking. The prices in Chicagoland seem to be just a tad easier, particularly on the higher end, but the asking prices still reflect about a 100% increase over the last 4 years or so. Another question: If real estate historically appreciates in the single digits annualy, why would double digit gains over the last few years be "sticky"?. What was different in the last 4 years that made this rapid rise in prices justified? Again, I'm not being sarcastic, I'm just really scratching my head on this one.

To: GraceZ who wrote (1122)	12/6/2001 3:00:49 PM
From: Robert Douglas	Read Replies (3) \| Respond to of 306849

The longer bond yields remaining high while the short rates are lowered is indicative of the market still seeing inflation on the horizon. While that may mean we won't see lower mortgage rates, it may mean housing will remain firmer than some here want to believe. Real estate is still seen as an inflation hedge. Yes, the steep yield curve we have is indicative of inflation expectations, but I don't think it follows that this will be good for housing. The period of the 1970's was one where inflation was high and housing did well, but that was because real interest rates were low, if not actually negative, during the period. With a highly leveraged asset like housing, it made for an ideal situation. That situation is not likely to be repeated.