Not necessarily conflicting, but difficult to maintain both in the expected timeframe.
Liquidity is easy to explain as to why it's useful. Affordability doesn't necessarily parse from that unless you watch the movement of interest rates (rates drop as money becomes more readily available to lenders). It really only works outright for new homebuyers; those with existing mortgages don't feel the benefits unless they go to, say, refinance and the difference in rates is significant. With me, personally, the issue isn't the rate, it's the drop in home value, which is where this prop-up is getting it's steam.
As rates drop, new homebuyers enter the market more easily (and, ideally, without entering a loan that is more than they can handle). This puts a run on real estate (not to the degree we saw over the last several years), boosting home values. That in turn helps those who are currently upside-down (in negative equity, like myself). The further impacts from that are a little outside my realm, but I believe there are implications in terms of the local/municipal economies that benefit by way of property taxes as well. This all sounds great, of course, until you realize that this isn't going to happen overnight.
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timeasmymeasure
no subject
Date: 2008-09-08 04:11 pm (UTC)Liquidity is easy to explain as to why it's useful. Affordability doesn't necessarily parse from that unless you watch the movement of interest rates (rates drop as money becomes more readily available to lenders). It really only works outright for new homebuyers; those with existing mortgages don't feel the benefits unless they go to, say, refinance and the difference in rates is significant. With me, personally, the issue isn't the rate, it's the drop in home value, which is where this prop-up is getting it's steam.
As rates drop, new homebuyers enter the market more easily (and, ideally, without entering a loan that is more than they can handle). This puts a run on real estate (not to the degree we saw over the last several years), boosting home values. That in turn helps those who are currently upside-down (in negative equity, like myself). The further impacts from that are a little outside my realm, but I believe there are implications in terms of the local/municipal economies that benefit by way of property taxes as well. This all sounds great, of course, until you realize that this isn't going to happen overnight.