|
Yes and no.
Interest rates control demand, demand controls appreciation.
Until interest rates on home loans move beyond 6%, which they haven't for half a decade now, the demand will remain strong, and appreciation will continue. Once rates do begin to rise significantly, which GMAC and other companies I've consulted with felt would occur in 2003 (didn't) 2004 (didn't) 2005 (didn't) and are now saying 2006 (maybe), then inventory (the amount of homes for sale) will exceed demand, and appreciation will slow.
Will it be similar to the early 90s bubble that many Californians are familar with? Where home values seemed to plunge by -30% overnight? No. But we won't be appreciating anywhere near the +15 to +20% per year that we are now, that is certain.
__________________
|