[mumblemumble]

> owners with their 2.75% mortgages aren't going to be inclined to sell.

Or able to sell.

This is the other side of historically low rates pushing home prices up by allowing people to pay higher prices while keeping their mortgage payment affordable. If (when?) rates go back up, that may cause prices to fall. This could also put people underwater on their homes, and even trigger another (hopefully smaller?) wave of foreclosures if they suddenly can't make payments anymore and also can't sell the house at a price that will cover the remaining balance of their home loan.

[FollowingTheDao]

> Or able to sell.

This is crucial. Many people sometime need to sell. When people cannot buy it they lower the price. When they lower the price the valuation of neighboring houses goes down. If people also have less money saved because of higher oil prices, well, they another compounding factor.

Rates are going to go up, and it is much to late in the game for them to rise without serious repercussions.

[treis]

The "bid" order book is extremely deep though. Lots of people priced out that are willing and able to buy at lower prices. So it's unlikely the we get into a bubble popping situation. Worst likely case is static nominal prices while inflation erodes the real prices.

The only sort of cataclysmic risk out there is a change in government regulations. Zoning changes, Prop13, or some action banning investors owning SFHs. But none of that seems remotely imenent.

[mumblemumble]

In 2008/2009, there were also lots of people who were previously priced out, but that didn't help stem the tide of foreclosures. The depth of the "order book" is far from the whole story when you're dealing with an illiquid, non-fungible good that's also encumbered by a lien.

Here's a concrete example that I can take from my own life experience: there was a house we were quite interested in buying. The house's realistic value for the market at the time should have been something we could afford. But the owners simply couldn't let it go for less than about $50,000 more than that, because that was the price at which they could pay off their home loan. So, too bad, no deal. And apparently nobody else would buy it at that price, either. About a year later, this gorgeous, well-cared-for house was foreclosed on, and then at some later date people broke in and ripped out all the copper and whatnot, and so this house eventually got auctioned off as a rehab/teardown job for a (presumable) fraction of what we would have bought it for.