2008-12-26housingdoom.com

"Sambucci makes sense. Without government interference, in the current environment, the trend would be to higher rates and lower prices. At some point, there is an interest rate at which lenders are willing to lend without government backstops. To compensate prospective buyers for the higher rates though, prices have to drop to a more attractive price. After all, it stands to reason that when economic conditions improve, rates will go down and refinancing becomes attractive. Consequently, higher rates are less of a psychological barrier to buying that higher home prices.

If the government wants to jumpstart the housing market, they should quit tinkering with it.


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