http://en.wikipedia.org/wiki/Supply_and_demand
Don't pay any attention to those real estate con-jobs about current investment, the bottom is still one are two years away. The other day I read that there had been 11,000 homes foreclosed in Gwenette county GA. this year, that is a drop in the bucket for the current 10 million unsold homes and the other few million lots developed but not built on. The inventory of unsold homes is actually increasing due to foreclosure.
I completely agree with you, but mortgage rates are part of “affordability”. Homes have to come down in price but affordability will take longer, homes will sell more slowly, and inventory will take longer to clear if homes come down in price and mortgages go to 15% than if homes come down in price and and mortgages stay at 6%. This isn’t obvious?
You might answer, “homes just have to go lower still if lending rates rise”. Well, yes, which will require longer to sell off inventory, which will result in more foreclosures than if the inventory is reduced faster, and which will hit the economy harder. This isn’t obvious?