And what will the Fed do if its beloved housing recovery falters?
Who Will Buy the Houses to Sustain the Real Estate Market?
The current real estate recovery is characterized by higher home prices driven by low inventory and high demand relative to the existing inventory.
The demand is driven by Fed induced low interest rates that has invited speculators to the real estate market.
In many areas fewer homes are being sold this year than last year (when not many homes were sold), yet prices continue to soar.
A sales down, prices up dynamic is not the characteristic of a healthy sustainable real estate market.
I have written that the current low inventory/high demand temporary market will soon reverse as more inventory becomes available while demand softens as investors and others are driven from the market by higher interest rates.
As I mentioned in a recent WSJ Marketwatch article, a healthy housing market thrives on a vibrant jobs market. Currently the job market is weak, especially among millennials who should be providing the pipeline for future homes sales.
http://smaulgld.com/can-the-housing-recovery-continue/
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