by Calculated Risk on 8/12/2005 08:03:00 PM

AP reporter Michael Liedtke writes on housing: Real estate strong despite higher interest. Of course I'm drawn to this quote from Dr. Leamer, UCLA Anderson Forecast Director:

"It's very hard to understand the psychology of any market," said UCLA economics professor Edward Leamer. "But it's fundamentally clear that the housing market is in a fragile and dangerous situation."

The article is balanced and touches on the San Diego and Boston housing markets. It concludes:

It's difficult to predict how high mortgage rates will have to rise before home prices are hurt, but industry observers like Karevoll believe the tipping point is somewhere between 7 and 8 percent.

Meanwhile, current mortgage rates remain enticing, especially to buyers who remember when rates were still above 10 percent in the 1990s, said Denver-area real estate agent Bill Kosena.

"Interest rates are extremely low," he said. "I don't know how it gets any better than it is."

How it gets better is prices more aligned with incomes. Also, based on New Home Sales, I believe the "tipping point" is far lower than 7 or 8%.