tag:blogger.com,1999:blog-11027528911364475.post100541274695813883..comments2024-02-18T21:10:05.205-08:00Comments on EconomPic: Mortgage Financing on the Cheap... Will It Work?Jakehttp://www.blogger.com/profile/07946497592651234440noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-11027528911364475.post-74068346144315013762008-12-20T10:10:00.000-08:002008-12-20T10:10:00.000-08:00As Keynes once said "we're all dead in the long ru...As Keynes once said "we're all dead in the long run". So yes, the short run does matter. Especially when the short run could mean Depression.<BR/><BR/>While I agree that low rates don't do much (i.e. I will not buy a home even with 0% financing if I think the home price will drop another 20%), it will bring in a mrginal buyer which is positive for price levels.<BR/><BR/>In addition, your point that this will cause people to "buckle down" is also positive for home valuations as this would directly decrease the supply of homes in the marker. Less supply = higher values.Jakehttps://www.blogger.com/profile/07946497592651234440noreply@blogger.comtag:blogger.com,1999:blog-11027528911364475.post-85058994211814905252008-12-19T13:24:00.000-08:002008-12-19T13:24:00.000-08:00Does the short-run really matter? This isn't a qui...Does the short-run really matter? This isn't a quick fix crisis. Trading these short-term moves is a dicey proposition based on isolated moves alone. The real question...is it even a question...is whether these moves will work at all for housing. The easy answer is no. Low rates do nothing to stop the macro fall in house prices and you can't refinance or buy unless you have stellar credit and 20% down/equity. As the saying goes, in bad times banks will only lend to those who don't need to borrow. This will just make people buckle down for even longer in their homes while not stimulating much new demand on the macro picture. These makes housing even more illiquid as people hunker down in their homes to ride out the 30 year mortgage.Anonymousnoreply@blogger.com