11-08-2007, 08:08 PM
| | Mortgage rate may go up in next few years. But it
won't go up to extremely high level, like 10-12%. However, it could go up to 7-8%.
It's just like $3.50 a gallon gas won't stop people from driving, 7-8% interest may not stop people from buying because the economy appears to enter into a renewed salary increase cycle. All that is pointing to a more inflationary period ahead. Sooner or later, inflation will have to force the housing price higher.
Therefore, the second scenario in my projection is a relatively faster housing recovery, in other words, it may start to recover as fast as 3 years later, rather than 7 or 8 years proposed by New York Times' 1989 theory.
Well, we can't be certain at this moment. Most will key on how strong the economic growth is, and how strong the labor shortage triggered income inflation would be.