“Housing prices have risen dramatically not because of simple supply and demand, but because the Fed literally created demand by making the cost of borrowing money artificially cheap” Ron Paul 2007

The real estate market as measured by price increase (not volume of sales) is recovering. This recovery is mainly attributable to low interest rates engineered by the Federal Reserve’s quantitative easing (money printing) policies combined with low for sale inventory.

In “Student Loans and Unemployment are Holding Back the Economy and Real Estate Market” I noted the reasons for low inventory:

-the foreclosure rate has been dropping and fewer distressed properties are being put on the market (although there are signs that this trend may be reversing);

-many home owners are still underwater from the last real estate bust and can’t sell;

-still other home owners who have positive equity in their homes are viewing the recent uptick in home prices as a sign that prices will continue to rise and are holding back on listing their homes hoping for higher prices; and

-new home starts in the past five years are well below their historic average

A new survey from Fannie Mae shows that 40% of homeowners think now is a good time to sell up from 16% a year ago.

Just as more home owners start thinking its a good time to sell..........:

Read More on why the shortage may soon turn to a glut