It is "pretty clear" that the U.S. housing market is cooling off but it looks poised for a soft landing given overall strength in the economy, U.S. Federal Reserve Chairman Ben Bernanke said Thursday.
Some places it will be softer than others.
America is a nation that runs on debt. When interest rates go up the cost of credit goes up. When the price goes up demand goes down. Almost nobody was buying the 800 sq ft house for $500,000 with cash, they were mortgaging them. At some point even the dumbest topless dancer turned mortgage broker isn’t going to be able to justify a loan with a stratospheric DTI, on an imaginary appraised value.
The way it works in America is if you can’t make the payment you can’t have the goods. Higher interest rates, combined with falling real wage rates, means most people can’t make the payment. Sellers will have to lower their price if they want to sell the house.
That LO that sold you on doing an ARM and paying points, if you want to find her she’s back at her old job, working the pole.
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