People are waiting around for the housing bubble to collapse. What is missing is fear in the market. Inventory is growing and 20,000 units seem like a lot, but if you travel to the Phoenix area they are north of 43,000 units.
This entire market is fed by banks and lending institutions. What people don't realize, is that institutions that are about to go bankrupt are holding on by their fingernails until the last moment when their fingers give out.
The most crucial element in this whole mess is the interest rate. So far the Fed has increased rates 16 times and yawn, it did nothing. The Feds are pushing on a string.
The real issue here, is if the money supply rapidly collapses, interest rates have to rise. This could be accomplished by no one showing up for the next treasury auction. You need money, be willing to pay more for it.
A sudden snap in the interest rate to say 8% could cause a panic and put fear into the housing market. Where would it come from, a major bankruptcy, a run on a foreign bank, Fannie Mae drops dead take your pick.
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