{"id":2472,"date":"2021-08-30T18:17:19","date_gmt":"2021-08-30T18:17:19","guid":{"rendered":"https:\/\/www.realtrends.com\/blog\/2021\/08\/30\/is-the-fed-creating-a-housing-bubble-by-keeping-rates-low\/"},"modified":"2025-03-13T02:39:02","modified_gmt":"2025-03-13T02:39:02","slug":"is-the-fed-creating-a-housing-bubble-by-keeping-rates-low","status":"publish","type":"post","link":"https:\/\/www.realtrends.com\/blog\/2021\/08\/30\/is-the-fed-creating-a-housing-bubble-by-keeping-rates-low\/","title":{"rendered":"Is the Fed creating a housing bubble by keeping rates low?"},"content":{"rendered":"\n
\"HW+<\/figure><\/div>\n\n\n\n

Remember that pretty girl from your\u00a0history class in college \u2014 the one who would blow hot and cold, so you never really knew what she was thinking? The U.S. housing market can be like that girl: you can get many mixed messages (especially about a housing bubble<\/a>) unless you are paying attention. But who has time for that? Hey, that\u2019s all I do, so you\u2019ve come to the right place.<\/p>\n\n\n\n

The latest messaging is that the Federal Reserve<\/strong> is creating a housing bubble by keeping rates so low that prices can skyrocket. Or that Americans who recently purchased homes are going to get all their equity wiped out when housing prices take a nosedive. Recently, CNBC<\/strong> contributor Peter Boockvar was quoted in Trading Nation<\/a>  as saying:<\/p>\n\n\n\n

\u201cI feel bad for the people who bought homes over the past year because they\u2019re the ones that paid the very elevated prices.\u201d The article goes on to say that \u201c<\/strong>He singles out those who put down 5% amid historically low mortgage rates. If home prices correct by 10%, Boockvar sees a world of pain.\u201d <\/p>\n\n\n\n

A world of pain because a purchaser had the financial wherewithal to buy a home for their family during a time with historically low mortgage rates<\/a>? Really? <\/p>\n\n\n\n

To be fair, there is potential for pain if one purchased a home at the \u201ctop of the market\u201d with a very low down payment right before a job-loss recession. This is one of the risks of \u201clate-cycle lending.\u201d Taking on debt, with little selling equity, then losing your means of repaying that debt is a crappy situation for anyone \u2014 and if it happens to a bunch of people at once, it\u2019s even worse.\u00a0But how likely is that scenario in the current market?<\/p>\n\n\n\n

The factors that would need to be present to cause that pain are the following:<\/p>\n\n\n\n