[theDentist]

Part of this "stagnation" is the higher interest rates. Drop them a bit more and watch the market rocket back.

[pgyanke]

The interest rates that govern mortgages (primarily the 10 year note) are market driven, not driven by the Fed. There is no one to "drop the rates" other than increased demand for fixed-income securities.

[LN2Campy]

drop them a bit and watch the dollar tank, too.

[Liberty Valance]

Exactly.

[mc6809e]

Part of this "stagnation" is the higher interest rates.

Another part is a drop in immigration rate.

[Polybius]

Part of this "stagnation" is the higher interest rates. Drop them a bit more and watch the market rocket back.

Wait until the grace period for interest-only gimmick loans begin to expire in the near future, sending monthly payments and foreclosures rocketing, and watch buyers continue to refuse to pay the highly inflated prices made possible only by extremely risky gimmick loans.

Buyers are wising up to the fact that buying a $200,000 house for $400,000 because a bank is willing to lend $400,000 on very risky terms is not a smart move.

[The South Texan]

"Part of this "stagnation" is the higher interest rates. Drop them a bit more and watch the market rocket back."

Interest rates are still relatively low compared to what was the average before the 1990's. When we bought our first house in 1996, I recall people telling me we were getting steal with a 7.75% interest rate. We built our second house in May 2005 and we financed it @ 6.1% . Today according to Yahoo via Lending Tree a 30 year is 6.5. I am not a real estate expert, but I have a hard time believing people are not buying a home based on a 1/2 % to 1% difference in interest rates from just a year ago. If it jumps to 10 or 11%, maybe.

I think people are just asking to much for some property thinking they can hit the jackpot with appreciation and with energy prices being where they are, potential buyers are being more savy and not just buying the first home they walk into.

[o_zarkman44]

I purchased my first home in the early 1980's and paid nearly 16% interest on it. It nearly wiped us out! We had to relocate 3 or 4 years later and sold the house for the payoff, losing everything we had put in to it including a 20% cash down payment. We lost thousands of dollars in walking away with nothing.

It can get a whole lot worse than 7 or 8% interest, believe me. Thank goodness there are no Jimmy Carters lurking as presidential material.
I think higher energy costs during that recession cycle had a lot of bearing on inflation and interest rates. I can see parallels in the current economy that could lead to a similar scenario if it is mismanaged like Carter did.