The Phaserl


Why Another Great Real Estate Crash Is Coming

by Michael Snyder, Economic Collapse Blog:

There are very few segments of the U.S. economy that are more heavily affected by interest rates than the real estate market is.  When mortgage rates reached all-time low levels late last year, it fueled a little “mini-bubble” in housing which was greatly celebrated by the mainstream media.  Unfortunately, the tide is now turning.  Interest rates are starting to move up steadily, even though the Federal Reserve has been trying very hard to keep that from happening.  A few weeks ago, when Federal Reserve Chairman Ben Bernanke suggested that the Fed may start to “taper” the rate of quantitative easing eventually, the bond market had a conniption and the yield on 10 year U.S. Treasuries shot up dramatically.  In an attempt to calm the market, the Fed stopped all talk of a “taper” and that helped settle things down for a brief period of time.  But now the yield on 10 year U.S. Treasuries is starting to rise aggressively again.  Today it closed at 2.71 percent, and many analysts believe that it will go much higher.  This is important for the housing market, because mortgage rates tend to follow the yield on 10 year U.S. Treasuries.  And if mortgage rates keep rising like this, another great real estate crash is inevitable.

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2 comments to Why Another Great Real Estate Crash Is Coming

  • Frank Zak

    Mortgage rates are 4.39% today. That is incredibly low.
    Real estate prices often rise with rising mortgage rates.
    People unfamiliar with real estate often make this
    rookie mistake of thinking rising mortgage rates hurt prices.

    California is up 45% off the bottom. Where was Zero Hedge
    and everyone else when the bottom occured ? I called the exact bottom
    to the month on SGT.

    These idiots are trying to save face by calling a top when
    they havent even called the bottom yet.

    To downplay real estate and play up silver is insanity.


  • FR10


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