Hey, look, here on October 25, 2004, we predicted the coming crash! OK, well, the post, titled “It’s All About the Interest Rates, Stupid,” was actually a reblog of a New York Times story that predicted the coming crash. Still.
The real problem lurking below the surface of the real estate market, according to The New York Times, is the large number of the adjustable rate mortgages (ARMs) and interest-only loans that people have taken over the past couple of years to enable them to afford the monthly payments on the increasingly expensive homes they are buying. If rates do rise a few percentage points over the next couple of years, a lot of these folks could find themselves unable to make their payments. But The Donald isn’t too worried: “I just don’t think that the politicians can allow the rates to go up because then the economy beyond real estate will tank.”
It’s All About the Interest Rates, Stupid [Brownstoner]