These guys are confident the Fed won’t be raising rates for a while – one says it won’t be until 2020. In the meantime, 30-year jumbo fixed rates are back into the mid-3s (WFB advertising 3.625%, APR 3.641%), creating an ideal selling season when you’d least expect it!
Jim Klinge
Klinge Realty Group
Broker-Associate, Compass
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- 682 S. Coast Hwy 101, Suite #110
Encinitas, CA 92024 - (858) 997-3801 call or text
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CA DRE #01527365, CA DRE #00873197
It’s very simple really but not many want to hear it.
The Banks will go broke if home prices crash again, They can only raise interest rates when inflation has made wages high enough to afford the homes at current prices or higher at higher interest.
It is as simple as that. Anyway IMO.
The housing market is NOT 5% of the economy it is more like 25%
The banks are inflating their way out of nearly going out of business 6 years ago. In times of inflation (which is going on now) hard assets (houses, collectible items, gold, etc) go “up” in value. I used the quotes around “up” because they’re not really increasing in value. The dollars purchasing power is going down, this makes assets seem like they’re going up in value. This is why a cup of coffee 50 years ago costs 10 cents and now it 5 dollars. Wages tend to also increase in times of inflation but it’s secondary to asset inflation.
Banks know all this which is why they’re sitting on houses letting people live for free instead of foreclosing on them. They can foreclose whenever they want.
The people that are getting screwed by all this are those just entering the job market + first time home buyers. Their purchasing power isn’t as great as those that came before them.