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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (56444)	3/22/2006 12:53:44 AM
From: mishedlo	Respond to of 110194

Because of the teaser rate phenomenon, we could see payments rise while housing prices stagnate. Those adjustables just delayed the impact of housing inflation for a significant portion of the population. I am not sure I understand. Payments are certainly going to rise when interest rates reset, but how did that "delay the impact of housing inflation"? Oh wait, delay the "impact" as opposed to delay the "inflation". I did not see it until I put what you said in quotes to ask. Well the impact will be severe, and thinking ahead not only will it "delay" the impact it will exacerbate the impact. In fact it exacerbated the inflation itself. How many thought they could afford more than they could? Too many. That increased the price pressure for as long as interest rates were held artificially low. It will increase the "fallout" on the way down too (as in rising bankruptcies and rising foreclosures) as those rates start to reset. GREBB day was missed (I think) but it is coming soon to a location near you (if it has not happened already). Where do you live Les? I have not noticed an unusual rise in homes for sale here. Mish

To: Les H who wrote (56444)	3/22/2006 1:40:19 AM
From: John Vosilla	Read Replies (1) \| Respond to of 110194

So how do you measure housing inflation? By changes in your monthly payment including changes in RE taxes and insurance? Changes in median prices in your area? Changes in rents in your area? To me the fairest computation would be: Change in monthly payment based on median price with average 30 yr fixed rate with 20% down and corresponding RE taxes and insurance added in. Take that and multiply by the percentage of the households that are owner occupied homeowners. Then take the change in median monthly rent and multiply by the percentage of households that are renters. Add together and adjust for any measurable change in size,quality ect.. that can be quantified.