We have been mentioning that rates may not get much lower, based on the market’s inability to absorb more debt and the Fed’s inability to push rates down further. A much larger concern is pending inflation and what will happen to rates when inflation resumes. This should be one of the largest incentives to “buy now” for any “fence-sitters” waiting for prices to fall further. Over the last several quarters the Fed has increased our money supply or pumped more dollars into our economy faster than at any other time in our history by a significant margin. This vast increase in our money supply cannot do anything but result in inflation when our economy returns to a semblance of health.
When inflation does set in, rates will sky-rocket, significantly offsetting any benefits to be gained from slightly lower housing values.
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