I really do not feel, at this stage, another foreclosure wave !
All I understand is that real estate market will have UPs and DOWNs next 2-3 years by the pressure of rate hike. When the rates are slowly (I repeat slowly) increased by FED (may be once or twice a year), it is not coming down. In next 10 to 20 year time horizon, mortgages go up and inflation may go up.
30 Fixed rates at 3.25%-3.75% or 15 fixed at 2,5% or 2.75% may become history in USA for this century !
You donât forsee FED reducing rates in the next recession ? That seems to be one of the reasons why FED wanted to hike so they have a tool for the next recession.
I agree economy is pretty strong right now so no foreclosure wave for atleast a few years.
Rate reduction and increase is one of the tools FED used to control the economy. If they keep this low rates forever, they will not have this tool to control. It has been reduced gradually from high appx 18%(I do not remember) to lowest in 2008-2011.
Now, they wanted to increase to some level so that economy can be controlled. In year 2000 and 2008, they hiked the rate very fast to blow up the economy, but this time they take longer time to hike the rates. If I guess right, FED may likely increase one or max two times 0.25%.
The current focus for them is to bring back the rates to normal 5% level, but not to blow up the economy. Still we may have economical issues, but rates are getting hardened. They keep the rates higher and higher as long as they reach the safe limit to control the economy and they will not let it touch back to zero FED rate level.
After 2008, FED has computerized everything to see the strength an weakness of economy (google stress test).
Like short sale, low rates are getting into history.
Real estate may have impact on growth by rate hike (less eligibility), but economy may continue to grow.
[quote=âJil, post:148, topic:1037â]
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The current focus for them is to bring back the rates to normal 5% level, but not to blow up the economy. Still we may have economical issues, but rates are getting hardened. They keep the rates higher and higher as long as they reach the safe limit to control the economy and they will not let it touch back to zero FED rate level.
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Like short sale, low rates are getting into historyâŚ
[/quote]Thatâs what I thought they are doing too.
You are not as smart as Jil because economic crash would eventually happen, the other two may not. The poll didnât specify time so 2. has the highest chance of winning.