Rising Interest Rates And Another Housing Bubble Mistake- by NEIL SISKIND

This is the same problem we had with Former Chairman Greenspan in 2006 and 2007. No words and no understanding about housing. Just raising of interest rates as wages remains stagnant, and as gas prices rise.

Chairman Powell did not make even one comment about housing in his press conference Tuesday. This is like deja vu. Rates now are much lower than in 2006 and 2007. But its is about relativity and the trajectory- not, necessarily, the rate.

Rates are still low- but where jobs are, and where housing is, are related to today’s standards- not 2007 standards. Changes in these factors do not depend on where we were in 2007, they depend on where we are today vs. where they go. Low rates have caused this housing bubble. The fact that they are going higher is a change compared to what caused it. This is all that matters. If wages are out of whack with present prices (as happened in 2005-2007), then, as interest rates rise,as gas prices rise, as consumer product costs rise, as costs of debt rise, home prices will decline … or a bubble will pop … however you want to say it.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s