It won't change anything. We have supposively been on the verge of a housing bubble for over 3 years. How can you ever disprove it? After hundreds of articles and thousands of doom and gloom posts, we have experienced remarkable housing appreciation. If the market droped 50% tommorow, people who listened to those doom and gloomers would still be behind those who purchased a home over 3 years ago. But maybe one day they will prove to be 'right' and we will see some isolated places where housing falls 10-20%.
Of course the real cause of 'housing bubbles' is a combination of regional employment losses and overdevelpment. Rising interest rates, believe it or not, have not been a major factor.
The only places that might see a decline in real estate prices are those places that are already overpriced in the first place (Boston, NYC, SF, LA, etc.)
Rising interest rates, believe it or not, have not been a major factor.Absolutely right. I remember in the late 70's when interest rates were 17-18-20% and homes were still selling with "creative financing"
I also remember after that Carter period when a 9 or 10% mortgage was a real bargain and 12% was the norm.
Of course the real cause of 'housing bubbles' is a combination of regional employment losses and overdevelpment. Rising interest rates, believe it or not, have not been a major factor.
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How about the huge changes in lending practice? People buy houses now which would have been far beyond their reach under the old rules. I remember when most advisors told people not to spend more than two years gross income on a house. Two and a half years was considered pretty much the absolute max. Now we have two income couples who spend one partner's entire income on the mortgage payment.