"So millions are buying homes with no down payments. Or they have adjustable-rate mortgages or interest-only mortgages or optional payment mortgages.
What brings such a great party to an end?
'Interest rates going up just 2 percent would do it,' says Peter Morici, a business professor at the University of Maryland in College Park. That, he says, would suppress prices, lower sales and put a real squeeze on those who were marginally qualified to buy because their payments would suddenly go up."
It's coming folks. I think the upper middle class will take the hardest hit when real estate pops, as far as the citizenry goes (expect higher taxes to bail out the numerous banks and real-estate dependent corporations that tumble.) For the lower middle-class like myself, I think the end result will be break-even status. I bought a house I could afford before the bubble inflated, and I was able re-finance at a decent rate during this artificially low interest rate period.
The working poor are hurting now, because they are locked out of the high-flying market (unless they take a risk some gimmicky interest-only mortgage product.) Whether things will improve after the bubble is iffy in my opinion; prices won't fall into their territory, and the side effects of a housing market crash won't help their income prospects any.
So, all in all, the Cheney administration is comfortable with the impending doom because rich, white Republican Christians will probably do okay. The crushing of the upper middle class (who have probably bought into homes that will quickly lose value while their mortgage payments jump) is just icing on the case. In the end, it's just another way of concentrating wealth in America.