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Recent house price increases due to increased purchasing power, not economy

By golfplan18   2013 Feb 2, 12:11am   292 views   0 comments   watch (0)   quote

There are many reports showing increasing home prices of 5% or more; for 2012 Case Shiller, Core Logic, NAr, Data Quick, and many others. In addition, it seems like home builders are having a rally as their stock prices have increased. However, there is one overall factor that determines home values. The main driver of this increase are mortgage rates, the cost of renting money from lenders. The home values increases not due to economic activity, increased wages, easy credit, or some sort of miracle recovery. Since 2007 mortgage rates have dropped almost 40% at the end of 2012 where...


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