Did Bernanke kill housing recovery?

[Rambo35]

Last week’s Fed meeting left a rather big impact on financial markets. Bernanke somewhat fumbled the ball a few times and while the USD has rallied slightly for a few days, interest rates have been surging which continues to mortgage rates and could dampen the housing recovery which many have accredited with stronger equity markets together with QE.

While stronger interest rates and a potential QE exit act as positive factors for the USD, an overall weak economy will counter those impacts and a declining housing market may initiate much weaker economic data going forward which will pressure the Fed to remain committed to QE which will act negative on the USD.

It may be me, but it appears that the USD is doomed either way you look at it given the massive twin deficit which continues to grow as nobody cares about it until it is too late. The USD is the most government manipulated currency and those who believe Bernanke that the Fed is independent should really conduct a reality check. The good news is that Bernanke is essentially out as he got fired in a nice way; Janet Yellen next?

 

[Martinghoul]

A declining housing mkt? When was the last time you visited Miami and SoCal?

 

[NVP]

the US have meddled long enough with the global markets.....time to turn down the QE tap and let the battle commence........

N

 

[Rambo35]

A declining housing mkt? When was the last time you visited Miami and SoCal?

The housing market is is regional and you will always have some sectors outperform others. Even during the housing market crash you had pockets which showed an increase in prices. So it all depends on where you are located. I was talking about the general housing market which has been on the rise for a while, but Bernanke may have killed it. Time will tell.

 

[Martinghoul]

The housing market is is regional and you will always have some sectors outperform others. Even during the housing market crash you had pockets which showed an increase in prices. So it all depends on where you are located. I was talking about the general housing market which has been on the rise for a while, but Bernanke may have killed it. Time will tell.

Yep, agree with you... It's just that places like Miami and SoCal and Nevada were the real problem areas during the crash and they're bouncing hard. And it's a lot of cash buyers, quite a few of them from overseas. Still, I agree with you, it could all stop very quickly.

 

[scose-no-doubt]

I been seeing a few businesses letting Miami properties for fairly high GBP rates relative to the property values in $... another bubble?

 

[Martinghoul]

I been seeing a few businesses letting Miami properties for fairly high GBP rates relative to the property values in $... another bubble?

Well, if it's GBP-denominated rental yield, it sounds a little too freaky... Still depends on how it's done.

Generally speaking, housing recovery in the US is, to a very large extent, a function of demographics, as well as an improvement in the general economic climate. There's a whole lot of pent up demand.

 

[scose-no-doubt]

Demand was never the issue was it? Now credit-worthiness of borrowers...

 

[Martinghoul]

Demand was never the issue was it? Now credit-worthiness of borrowers...

When I say "demand", I iz talking "DEMAND", y'know?

 

[Hakuna Matata]

housing mkts are FUBAR. JBTFD while you still can. Endex.

 

[Rambo35]

Demand was never the issue was it? Now credit-worthiness of borrowers...

I agree that demand was not the problem, the inability to purchase homes was the issue which is why bankers decided to overlook the fact that borrower could not pay the mortgage which is what bankers actually wanted as housing values rose they made profits regardless. It was only a matter of time until it all collapsed and now we are back to that all over again.

 

[elisab]

Interest rates on mortgages will become dangerous for the resumption of the real estate only after the rise above 4% of the tBond.

 

[Rambo35]

Interest rates on mortgages will become dangerous for the resumption of the real estate only after the rise above 4% of the tBond.

It will definitely cause some issues and it appears that history is about to repeat itself.

 

[forexkunta]

Bubble? What Bubble? I see no chance of a Bubble? Sound familiar? The current education of economists past and future, does not equip them to have the slightest chance of detecting a bubble in anything. Not even their chewing gum, so yes history is about to repeat itself, but at about 10 times the magnitude of the Great Depression. And the EU is about to pass a bill to confiscate more money from your bank account, just like they did in Cypress. Certainly am glad I am not in Europe right now, but it will become common practice in the US in the future as well. God help us all!

 

[elisab]

If you bet on a fall of EurUsd, here are other two markets in which to go short.

 

[elisab]

Bernanke said that mortgage rates are still low, a signal that in the coming months there might be some upward pressure on yields, but I doubt that mortgage rates will rise above 5%.

 

[elisab]

Recent data on the U.S. real estate sector showed some weakness due to the rise of interest rates. I'm waiting for the data on sale of existing homes (today) and new ones(tomorrow).

 

[Rambo35]

Recent data on the U.S. real estate sector showed some weakness due to the rise of interest rates. I'm waiting for the data on sale of existing homes (today) and new ones(tomorrow).

I think higher interest rates will have a negative impact on housing and that we will see that weakness in GDP figures towards the end of this year.

 

[elisab]

I think higher interest rates will have a negative impact on housing and that we will see that weakness in GDP figures towards the end of this year.

I partially agree with you. Beyond a certain level, the real estate will begin to suffer, but I think that we have not yet seen that threshold (let’s say 4% TBond??)

 

[Rambo35]

I partially agree with you. Beyond a certain level, the real estate will begin to suffer, but I think that we have not yet seen that threshold (let’s say 4% TBond??)

I am not sure at what level the TBond has to trade for the full effect to take place, but we already see the return of those mortgages which added to problems and that is not a good sign.