patrick.net

That was "due to some cork popping"

In every local market we basically bid up the cost of housing to the point of unaffordability. The house itself isn't what we're paying all the money for, rather it's the rents we avoid that determines the cost.

That plus what financing -- interest rates, down payments -- is available and how much banks are willing to lend to people in general.

Apparently nobody who understood economics was paying attention 2002-2006 as the free market (pbuh) decided to do a Martingale on home valuations.

That caused home prices to triple during the bubble but all those good times have left a cratered economy since we did not use that money to invest in new productive capacity, just granite counters and 56" TVs.

And the present economy is still fake. Pull out the trillion-plus annual Federal deficit and let's see how well the economy holds together. States are going to either have to raise taxes or cut spending.

Trillion plus deficit! Hundred billion a month. $5000/mo is a decent salary so that's TWENTY MILLION JOBS directly dependent on unsustainable deficit spending.

The core problem is all the debt we ran up in the previous decade. It's all going to go bad unless they can turn the inflation machines back on. And if it goes bad, we will find us returning to 1990s prices even with a lot more money around, because all that money might as well be on the moon as far as the middle class is concerned.

Seem Patrick posted a relevant story to my question just now.

http://bayarearealestatetrends.com/2010/11/no-600-billion-of-quantative-easing-wont-make-your-home-price-go-up/?utm_source=patrick.net#header

Does the Fed really not get that many people want to refinance but can't due to negative equity? Does sequential lowering of interest rates ever closer to 0 get people to habitually refinance or will most have refinanced anyway? If so why bother with further moves to lower interest rates. I mean who who a 6+% mortgage did NOT already refinance at 4.2% if they could??