Markets & Economy

Why rising home prices are not a bad thing

Cheap credit means homes are still affordable, but incomes must keep pace with inflation

Don't miss the real estate event of the summer
Join 4,000 real estate pros at Connect SF, Aug 7‑11, 2017

Long-term rates have fallen back near the lows of the year, despite Wall Street salespeople trying to frighten investors about inflation and Fed tightening. That extraction of funding from crowds is indefensible, but our situation is confusing. Example: We would like to unseat Assad in Syria, and we wish bad things for the ISIS mob; this week Assad's air force hit ISIS in Syria. Leaving this region to its own devices looks better all the time. Oil prices fell back to $105. The top reason for the new drop in rates: the revision of first-quarter GDP to a 2.9 percent contraction. The first quarter is ancient history, and optimists still blame winter weather, but a 2.9 percent dump is big. Throw out adjustments for inventories, trade and "Obamacare" spending, and the economy pooped along somewhere between 1 percent and zero. The second quarter has been widely expected to rebound at a 4 or 5 percent annual pace. It ends Monday (we'll get the first estimates next month), and stri...