"What is is going to do is cause them to kill the housing market by notching up the interest rates."
It will destroy the housing market. I know several people who decided to upgrade from 200k homes to 500k homes and instead of locking in the low rates they signed arms. How many people used the equity in their homes to purchase other items and take lavish vacations. 3 years from now we will be looking at a lot of homes up for foreclosure especially seeing that a bunch of economist seemed baffled as to why salary increases have been somewhat stagnant since 01. If inflation heats up and raises do not keep up with inflation watch out. I was surprised to learn that the cost of housing is inaccurately figured into inflation. My mother and I purchased a town home last year for 223K as an investment property. I recieved a notice in the mail that my property taxes have gone up roughly 70%. Apparently the home was last assessed at 125K and they assessed it for 215K. Scary thing is a house in the neighborhood just sold for $267K. Is an increase in property taxes figured into the equation ? What about homeowners insurance if that goes up as well ? These states must be hurting for money because here in MD vehicle registration has also increased as well as parking fees and tolls. Betcha none of those items are factored into inflation.
There is more talk veryday about a housing bubble. Just google housing bubble and you come up with lots of advertisements for hpw to make money if house prices crash. There are even alot of bloggers in on the bubble talk.
http://thehousingbubble.blogspot.com/
http://shorebubble.blogspot.com/