The Fed's QE3 was possibly timed before the election to further spur the stock market and real estate market. Low rates push money into riskier investment, thus juicing the stock market, and they keep mortgage rates low.
Low mortgage rates let buyers afford more house, and reduce the monthly payment for variable rates ARM mortgages taken out during the housing boom.
This housing market is run on Fed intervention. What happens when the government stops being the only mortgage buyer and gives that back to the private market? What happens when interest rates go back to more normal levels, say 5-7%?
There is a reason I am still renting. I am still a housing bear. Yeah, a realtor housing bear, ha.
Barry Ritholtz gets this right. Be sure to read his take on it here.
Today's North County Times story about bidding wars corroborates our housing reports for this year: the San Diego housing market is heating up. Bob and I have been writing this year about higher demand and falling supply, at both the low end and high end of the market. As a result, we anticipate some price rises. These price increases could reverse after the spring buying frenzy.
The North County Time story attributes the bidding wars to a sharp fall in supply (20% year over year).
I continue to see that government intervention is helping to stabilize the market, so this "recovery" is not based on fundamentals of a healthy housing market.