[hardtke]

But long term treasury yields are now lower than short term treasury yields. This indicates that the market expects inflation and interest rates to drop in the future. As long as this is true, prices for houses will not go down as everyone assumes that a refi will be possible in 1-2 years. Housing market will be stuck while this sorts itself out.

[adam_arthur]

You can’t refi with negative or low equity, as most who bought in the last year are likely to have.

If inflation does come down rapidly, it’s likely to be coupled with a sharp increase in unemployment.

Rates fell significantly from 2005 to 2012, yet housing continued to fall. Whether lower rates or higher unemployment is the stronger force this time remains to be seen.

Given housing is by far at a historical peak in real terms, I suspect a reversion to the mean in real prices is more likely than not

[UncleOxidant]

> This indicates that the market expects inflation and interest rates to drop in the future.

It indicates that the market thinks the Fed will be effective. It's also (generally) indicative that a recession is on the horizon. We're starting to see the layoffs in certain sectors (tech especially). Unemployment rising tends to cause more mortgage defaults which will tend to lower home prices.

> As long as this is true, prices for houses will not go down as everyone assumes that a refi will be possible in 1-2 years.

A lot of potential buyers don't qualify at current (and rising) rates. They've been taken out of the market entirely. Wells Fargo saying that applications for new mortgages are down 90%. Assuming that's happening industrywide (no reason to doubt that) it's going to start effecting prices - and already is in some markets.