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

To: Elroy Jetson who wrote (16133)	1/17/2004 6:15:36 PM
From: JBTFD	Read Replies (2) \| Respond to of 306849

I can see the effect of CMOs in retrospect more than I can see what they may cause in the future. I see one major factor of the rise in prices from the 80's to now is that interest rates have gone from 15 some percent to 5 some percent. That trend has had a stimulative effect on prices. As for the future, what happens when you have an abundance of money to lend and a shortage of people who want to borrow? A lowering of the underwriting standards. (like today's 100% financing etc) After that it feels to me like pushing on a string. We are at the end of a 20 year declining interest rate environment. So my question is what will be the stimulus for housing prices going forward? The only one I can think of is wage inflation. I dont see that on the horizon either. Who knows, I wouldn't be surprised to see another round of rate cuts this year (for the elections) to keep the economy propped up, but after that it seems like the path of least resistance is toward lower prices.