Higher interest rates and higher prices don’t mix, according to this article in First Tuesday Journal.In “Are we in for another housing bust?” Author Jeffrey Marino argues that today’s higher prices can’t, and shouldn’t, remain. Only when employment and wages rise will significant numbers of buyers be able to support mortgages on homes at todays prices.
I have argued for some time that the declining purchasing power of middle class families will continue to suppress the California real estate market in most locals. This effect is being felt now as the anomalies of a manipulated market return to fundamentals. Hang on for a bumpy 2014-2015 as artificial stimulants like buyer incentives and unsustainable low rates are phased out.