Falling yields over the past 30 years…
Have lowered monthly mortgage payments…
This has inflated housing prices…
If you think about what Quantitative Easing is, it is simply the Government buying Bonds to keep Interest Rates low. This props up housing prices. I thought the goal of the Government was to make housing “affordable” to all Americans. But it is clear that artificially forcing Interest Rates lower makes housing prices more expensive.
I almost forgot this great testimony from Kansas City Fed President Thomas Hoenig from the other day -
http://www.businessinsider.com/fed-president-hoenig-the-deleveraging-of-this-country-has-to-take-place-2010-8
"If the American people are looking for the housing market to be their investment opportunity, I think they're making a mistake."
"The facts are, we have an excess supply. And we created that by providing financing and leverage that was almost nonsense. So, now we have to adjust from that. Housing may eventually start to rise again as other assets across the country begin to rise again. But it is not something that I think that the American Consumer should be speculating on, in terms of their investments."
Holy ****! Did he really say that "(HOUSING) IS NOT SOMETHING THAT I THINK THE AMERICAN CONSUMER SHOULD BE SPECULATING ON"!?!? The President of a US Federal Reserve Bank?!?!
Does anybody still want to buy a house for investing purposes?
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